Booz Allen Hamilton
Booz Allen Hamilton Holding Corp (Form: DEF 14A, Received: 06/20/2014 16:39:24)


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(RULE 14a-101)
INFORMATION REQUIRED IN PROXY STATEMENT
SCHEDULE 14A INFORMATION
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the Securities Exchange Act of 1934 (Amendment No.        )
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BOOZ ALLEN HAMILTON HOLDING CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
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Notice of
Annual Meeting
of Stockholders
and Proxy
Statement
July 31, 2014












Booz Allen Hamilton Holding Corporation
8283 Greensboro Drive
McLean, Virginia 22102
 
 
 
 
 
 
 
June 20, 2014
Dear Stockholder:
I am pleased to invite you to join me, our Board of Directors, senior leadership and fellow stockholders at our Annual Meeting of Stockholders to be held at 8:00 a.m. (EDT) on July 31, 2014, at The John C. Newman Auditorium, located in our offices at 8283 Greensboro Drive, McLean, VA 22102. This year’s annual meeting is a special occasion as 2014 is Booz Allen Hamilton’s 100 th anniversary in business. Enc losed with this proxy statement are your proxy card, the 2014 annual report to stockholders and the 2014 annual report on Form 10-K.
Items of business to be transacted at our annual meeting are:
1. election of four directors;
2. approval, in a non-binding advisory vote, of the compensation program for our executives;
3. approval of our amended Equity Incentive Plan;
4. approval of our amended Annual Incentive Plan;
5.
approval of our amended Certificate of Incorporation and the conversion of all of our issued and outstanding shares of Class B non-voting common stock and Class C restricted common stock into shares of our Class A common stock;
6. ratification of the appointment of Ernst & Young LLP as our independent registered public accounting firm for fiscal year 2015; and
7. consideration of any other business that may properly be brought before the annual meeting.
The Board of Directors recommends that you vote FOR Proposals 1, 2, 3, 4, 5, and 6.
Your vote is important. Whether you plan to attend the annual meeting or not, you may access electronic voting via the Internet or the automated telephone voting feature, both of which are described on your enclosed proxy card, or you may sign, date and return the proxy card in the envelope provided. If you plan to attend the annual meeting, you may vote in person.
Registration and seating will begin at 7:30 a.m. Each stockholder will be asked to sign an admittance log and may be asked to present a valid picture identification. Stockholders holding stock in brokerage accounts must bring a copy of a brokerage statement reflecting their stock ownership as of the June 9, 2014 record date. Cameras and recording devices will not be permitted at the meeting.
On behalf of the Board of Directors, I want to thank you for your continued support of and investment in Booz Allen Hamilton.
Sincerely,
Ralph W. Shrader, Ph.D.
Chairman and Chief Executive Officer










NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF BOOZ ALLEN HAMILTON HOLDING CORPORATION
 
 
 
 
Time:
 
8:00 a.m. (EDT), July 31, 2014
 
 
Place:
 
The John C. Newman Auditorium, located in our offices at 8283 Greensboro Drive, McLean, VA 22102
 
 
Proposals:
 
1. The election of four director nominees named in the proxy statement;
 
 
 
 
2. A non-binding advisory vote on the compensation program for the Company's Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section of the proxy statement (a "say-on-pay" vote);
 
 
 
 
 
3.      The approval of the Second Amended and Restated Equity Incentive Plan of the Company;
 
 
 
 
 
4.       The approval of the Amended and Restated Annual Incentive Plan of the Company;
 
 
 
 
 
5. The adoption of the Third Amended and Restated Certification of Incorporation and conversion of Class B non-voting common stock and Class C restricted common stock into Class A common stock;
 
 
 
 
 
6. The ratification of the selection of Ernst & Young LLP as the Company’s independent registered public accounting firm for the Company’s fiscal year 2015; and
 
 
 
 
7.      The transaction of any other business that may properly be brought before the annual meeting.
 
 
Who Can Vote:
 
Only holders of record of the Company’s Class A common stock, Class C restricted common stock and Class E special voting common stock on June 9, 2014 will be entitled to vote at the annual meeting.
 
 
Date of Mailing:
 
This proxy statement and accompanying materials are first being mailed to stockholders on June 20, 2014.
Douglas S. Manya
Secretary
McLean, Virginia
June 20, 2014












TABLE OF CONTENTS TO PROXY STATEMENT
 
PROXY STATEMENT SUMMARY
 
 
IMPORTANT INFORMATION ABOUT ANNUAL MEETING AND PROXY PROCEDURES
 
 
 
 
ELECTION OF DIRECTORS
 
 
Board Structure
 
 
Class I Election
 
 
Class I Nominees
 
 
CONTINUING DIRECTORS
 
 
CORPORATE GOVERNANCE AND GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
 
 
Board of Directors
 
 
Board Leadership Structure
 
 
Succession Planning and Talent Reviews
 
 
Risk Oversight
 
 
Annual Board Performance Assessment
 
 
Board Independence
 
 
Selection of Nominees for Election to the Board
 
 
Director Orientation and Continuing Education
 
 
Communications with the Board
 
 
Board Committees
 
 
Director Compensation
 
 
Director Ownership Guidelines
 
 
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
 
 
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
 
 
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
 
 
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
 
 
Policies and Procedures for Related Person Transactions
 
 
Related Person Transactions
 
 
COMPENSATION DISCUSSION AND ANALYSIS
 
 
Compensation Philosophy
 
 
Setting Executive Compensation
 
 
Compensation Elements
 
 
Frequency of Advisory Vote to Approve Executive Compensation
 
 
Executive Ownership Guidelines
 
 
Risk Assessment
 
 
Government Limitations on Reimbursement of Compensation Costs
 
 




Policy on Recovering Bonuses in the Event of a Restatement
 
 
Certain Change in Control Provisions
 
 
Policies on Timing of Equity Grants
 
 
Effect on Accounting and Tax Treatment on Compensation Decisions
 
 
Compensation Tables and Disclosures
 
 
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
 
 
AUDIT COMMITTEE REPORT
 
 
PRE-APPROVAL OF SERVICES BY INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
 
 
ADVISORY VOTE ON EXECUTIVE COMPENSATION
 
 
APPROVAL OF SECOND AMENDED AND RESTATED EQUITY INCENTIVE PLAN
 
 
APPROVAL OF AMENDED AND RESTATED ANNUAL INCENTIVE PLAN
 
 
ADOPTION OF THIRD AMENDED AND RESTATED CERTIFICATE OF INCORPORATION
 
 
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FEES
 
 
OTHER BUSINESS
 
 
Appendix A
Appendix B
Appendix C
Appendix D






PROXY STATEMENT SUMMARY
This summary highlights information contained elsewhere in this proxy statement but does not contain all information that you should read and consider prior to voting. For more complete information regarding our financial performance, please review our Annual Report on Form 10-K for the fiscal year ended March 31, 2014.
2013 Annual Meeting of Stockholders
Date and Time:  July 31, 2014 and 8:00 a.m. EDT.
Place:  The John C. Newman Auditorium, located in our offices at 8283 Greensboro Drive, McLean, VA 22102.
Record date:  Stockholders as of June 9, 2014 are entitled to vote.
Voting Matters and Board Recommendations
 
1.    Election of Directors
The Board recommends a vote FOR each of the director nominees.
Name
 
Age
 
Director
Since
 
Occupation
 
Committee
Memberships
Ralph W. Shrader
 
69
 
2008
 
Chairman and Chief Executive Officer of the Company
 
EC, NCGC
Joan Lordi C. Amble
 
61
 
2012
 
Former Executive Vice President, Finance of American Express Company
 
AC
Peter Clare
 
49
 
2008
 
Managing Director of The Carlyle Group
 
EC, CC, NCGC
Philip A. Odeen
 
78
 
2008
 
Former Chairman of AES Corporation
 
CC, NCGC
AC    Audit Committee                  EC    Executive Committee             
CC    Compensation Committee              NCGC    Nominating and Corporate Governance Committee     
    
2.    Advisory Vote on Executive Compensation
The Board rec ommends a vote FOR the approval, in a non-binding advisory vote, of the compensation program for the Company's named executive officers, as disclosed in the Compensation Discussion and Analysis section of this proxy statement.
    
3.    Approval of Amended Equity Incentive Plan
The Board rec ommends a vote FOR the approval  of the Second Amended and Restated Equity Incentive Plan of the Company.

4.    Approval of Amended Annual Incentive Plan
The Board rec ommends a vote FOR the approval of of the Amended and Restated Annual Incentive Plan of the Company .

5.    Approval of Adoption of Third Amended and Restated Certificate of Incorporation
The Board rec ommends a vote FOR the approval of the adoption of the Third Amended and Restated Certification of Incorporation and conversion of all outstanding Class B non-voting common stock and Class C restricted common stock into Class A common stock.

6.    Ratification of Auditors for Fiscal Year 2015
The Board rec ommends a vote FOR the ratification of the appointment of Ernst & Young LLP as the Company’s independent registered public accounting firm for fiscal year 2015.



i



Business Highlights
Company Performance
Full year revenue down 4.9% to $5.5 billion
Adjusted EBITDA increased 1.0% to $534.0 million
Adjusted Diluted EPS decreased 1.2% to $1.63
Total backlog decreased 14.7% to $9.8 billion
Free cash flow was $311.8 million in fiscal 2014
Adjusted EBITDA, Adjusted Diluted Earnings Per Share and Free Cash Flow may differ from similarly titled measures presented by other companies in our industry and are not recognized measures under U.S. Generally Accepted Accounting Principles, or GAAP. A reconciliation between these non-GAAP financial measures and the most directly comparable financial measure calculated and presented in accordance with GAAP can be found in Appendix A to this proxy statement.
Business Developments
Continued to develop our engineering capabilities through investment, which enables us to bring our clients broader and deeper technical expertise.
Applied predictive analytics across government and in industries from professional sports and pharmaceuticals to the airline industry.
Built on existing client work to develop a catalog of more than a dozen products and services available to a spectrum of clients.
Made significant investments in innovation, technical capabilities, and penetration of new markets with higher margins (e.g., commercial, international).
Named again to Fortune magazine's list of “The World's Most Admired Companies” and earned recognition as an exemplary company from numerous other publications and third-party organizations.
Returning Cash to Stockholders
Total Shareholder Return
as of March 31, 2014

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During fiscal 2014, we declared and paid $346 million in dividends to stockholders - four regular dividends of $0.10 per share each and two special dividends of $1.00 per share each.
We expect to declare and pay regular quarterly cash dividends in the future; however, the actual declaration of any such future dividends and the establishment of the per share amounts, record dates, and payment dates are subject to the discretion of the Board of Directors, which will take into consideration future earnings, cash flows, financial requirements, and other factors.
 
  Executive Compensation Highlights
Our executive compensation philosophy is centered on our use of a partnership-style culture and compensation model, which fosters internal collaboration through a single profit center and a firm-wide compensation pool.
Our executive compensation program during fiscal 2014 was structured so that each of our executives is assigned to a cohort level (with a separate and distinct level assigned to our chief executive officer) and all executives within the same level receive the same compensation.
  Corporate Governance Highlights
On average, our directors attended over 95% of the Board of Directors meetings.
The Board of Directors held regular executive sessions of non-management directors.
The Board of Directors conducts an annual discussion on management succession planning.
We have adopted an Insider Trading Policy prohibiting short sales and derivative transactions in our equity as well as strongly discouraging hedging of our stock.
We have adopted a Related Party transactions policy.
Equity awards include a provision for the recoupment of equity-based compensation in the event of misconduct leading to a financial restatement.
Our investor relations team and management regularly engage with current and potential stockholders.

Corporate Citizenship Highlights
In fiscal 2014, more than 15,000 employees indicated that they volunteered on a regular basis, supporting hundreds of volunteer and charitable activities, including FIRST Robotics, Rebuilding Together, Tragedy Assistance Program for Survivors, and Toys for Tots.
Launched the “Centennial Community Challenge,” a major volunteerism program among Booz Allen employees aiming to contribute 100,000 hours of community service during our anniversary year.
Recognized by the Business and Professional Women's Foundation, GI Jobs, U.S. Army, and National Guard for support to veterans and wounded warriors in employment and contracting, and ranked by Forbes magazine for the second year in a row as the #1 employer for veterans.
Created mutually-beneficial centennial partnerships with leading business and non-profit institutions including the National Gallery of Art Washington, the Aspen Institute, and the USS Midway Museum.
Small business program rated in the top 10% by the Defense Contract Management Agency.
Approximately $741 million spent with various small and small disadvantaged businesses, representing more than 59% of subcontracted spending.
Maintained 12 active mentor-protégé agreements with small businesses through various federal Mentor-Protégé programs.


iii



IMPORTANT INFORMATION ABOUT ANNUAL MEETING AND PROXY PROCEDURES
The Board of Directors is soliciting proxies to be used at the Annual Meeting of Stockholders to be held on July 31, 2014, beginning at 8:00 a.m. (EDT) at The John C. Newman Auditorium, located in our offices at 8283 Greensboro Drive, McLean, VA 22102. This proxy statement and the accompanying materials are being mailed to stockholders beginning June 20, 2014.
We will bear all costs of soliciting proxies. Pursuant to rules adopted by the Securities and Exchange Commission, or SEC, we have elected to deliver a notice of Internet availability of proxy materials to stockholders and provide Internet access to those proxy materials. Stockholders may obtain paper copies of the proxy materials free of charge by following the instructions provided in the notice of Internet availability of proxy materials.
Unless the context otherwise indicates or requires, as used in this proxy statement, references to: (i) the “Company,” “we,” “us,” “our” or our “company” refer to Booz Allen Hamilton Holding Corporation, its consolidated subsidiaries and predecessors; (ii) “Booz Allen Holding” refers to Booz Allen Hamilton Holding Corporation exclusive of its subsidiaries; (iii) “Booz Allen Hamilton” refers to Booz Allen Hamilton Inc., our primary operating company and a wholly-owned subsidiary of Booz Allen Holding; (iv) “our Board” or “the Board” means the Board of Directors of the Company; (v) “stockholder” means holders of our common stock; (vi) “fiscal,” refers to our fiscal years ended March 31; and (vii) “you,” “your,” “yours” or other words of similar import in this proxy statement refers to stockholders entitled to vote on the matters to be presented at the annual meeting.

Do I need an admission ticket to attend the annual meeting?

No; however, you must present both proof of ownership and valid photo identification to attend the annual meeting.

If you hold shares through an account with a bank or broker, contact your bank or broker to request a legal proxy from the owner of record to vote your shares in person. This will serve as proof of ownership.

A recent brokerage statement or letter from your broker showing that you owned shares in your account as of the record date, June 9, 2014, also serves as proof of ownership.

If you do not have proof of ownership and valid photo identification, you will not be admitted into the annual meeting.

Who is entitled to vote at the annual meeting?

Holders of the following classes of the Company’s common stock are entitled to vote at the annual meeting: Class A common stock, Class C restricted common stock and Class E special voting common stock. The Board has established the record date for the annual meeting as June 9, 2014. Only holders of record of the Company’s Class A common stock, Class C restricted common stock, and Class E special voting common stock on the record date are entitled to receive notice of the meeting and to vote at the meeting.

How many shares must be present to hold the annual meeting?

In order for us to lawfully conduct business at the annual meeting, the holders of stock representing a majority of the voting power of all shares issued and outstanding and entitled to vote at the meeting must be present in person or represented by proxy. This is referred to as a quorum.

How many shares may I vote?

On June 9, 2014, 144,451,573, 914,101, and 4,424,814 shares of our Class A common stock, Class C restricted common stock, and Class E special voting common stock, respectively, were outstanding. Each share of Class A common stock, Class C restricted common stock, and Class E special voting common stock is entitled to one vote, and stockholders do not have the right to cumulate their votes for the election of directors.



1



What am I voting on and what are the Board’s recommendations?

Proposal
Description
Board’s Voting Recommendation
1
Election of 4 director nominees
FOR  all nominees
2
Advisory vote to approve the compensation program for the Company’s Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section of the proxy statement (a “say-on-pay” vote)
FOR  Proposal 2
3
Management proposal to approve the Second Amended and Restated Equity Incentive Plan of the Company
FOR  Proposal 3
4
Management proposal to approve the Amended and Restated Annual Incentive Plan of the Company
FOR  Proposal 4
5
Management proposal to approve the Company’s Third Amended and Restated Certificate of Incorporation to convert all outstanding shares of Class B non-voting common stock and Class C restricted common stock to Class A common stock
FOR  Proposal 5
6
Ratification of appointment of Ernst & Young LLP as the Company's independent registered accounting firm for fiscal year 2015
FOR  Proposal 6

What is the difference between holding shares as a stockholder of record and as a beneficial owner?

If your shares are registered directly in your name with the Company’s registrar and transfer agent, Computershare, you are considered a “stockholder of record” with respect to those shares. We mail the proxy materials and our annual report to you directly.

If your shares are held in a brokerage account or bank, you are considered the “beneficial owner” of those shares, which are held in “street name.” In this case, the proxy materials and our annual report were forwarded to you by your broker or bank. As the beneficial owner, you have the right to direct your broker or bank how to vote your shares by following the voting instructions included in the mailing.

What is the procedure for voting?

If you are a stockholder of record of Class A common stock, Class C restricted common stock, or Class E special voting common stock, you can vote your shares at the annual meeting by attending the meeting and completing a ballot or you can give a proxy to be voted at the annual meeting in one of three ways: (1) over the telephone by calling a toll-free number provided on the enclosed proxy card, (2) electronically via the Internet as described in the enclosed proxy card, or (3) date, sign, and complete the proxy card and return it in the enclosed envelope, which requires no postage stamp if mailed in the United States.

If you are a beneficial owner of Class A common stock, you can vote your shares at the annual meeting by attending the meeting in person if you have requested and received a legal proxy from your bank or broker which you must bring with you to the meeting, or you can give a proxy to be voted at the annual meeting in one of three ways: (1) over the telephone by calling a toll-free number provided on the enclosed proxy card, (2) electronically via the Internet as described in the enclosed proxy card, or (3) date, sign, and complete the proxy card and return it in the enclosed envelope, which requires no postage stamp if mailed in the United States.

Can I change my proxy?

You may revoke your proxy before it is voted at the annual meeting by delivering a signed revocation letter to the Secretary at 8283 Greensboro Drive, McLean, VA 22102 or by submitting a new proxy, dated later than your first proxy, in one of the ways described in the answer to the previous question. If you are attending in person and have previously mailed your proxy card, you may revoke your proxy and vote in person at the meeting.


2



Can other matters be decided at the annual meeting?

The Board is not aware of any other matters to be presented at the annual meeting. If any other matter proper for action at the meeting should be presented, the holders of the accompanying proxy will vote the shares represented by the proxy on such matter in accordance with their best judgment. If any matter not proper for action at the meeting should be presented, the holders of the proxy will vote against consideration of the matter or the proposed action.

What is the vote required for each proposal?

For each of the proposals being considered at the annual meeting, approval of the proposal requires the affirmative vote of a majority of the shares entitled to vote at the annual meeting represented either in person or by proxy at the annual meeting, except that directors shall be elected by a plurality of the votes validly cast at the annual meeting.

As of the record date, an entity controlled indirectly by senior employees of the The Carlyle Group, or Carlyle, controlled shares of our voting common stock representing greater than 50% of the combined voting power of our Class A common stock, Class C restricted common stock, and Class E special voting common stock. As a result, Carlyle controls sufficient shares of our voting common stock to assure the approval and adoption of the proposal to elect the four director nominees named in this proxy statement.

What if I am a stockholder of record and do not provide voting instructions when returning a proxy?

Stockholders should specify their choice for each matter on the proxy card. Proxies that are signed and returned but do not contain voting instructions will be voted:

FOR the election of all director nominees as set forth in this proxy statement;
FOR the advisory vote to approve the compensation program for the Company's Named Executive Officers, as disclosed in the Compensation Discussion and Analysis section of the proxy statement (a "say-on-pay" vote);
FOR the management proposal to approve the Second Amended and Restated Equity Incentive Plan of the Company;
FOR the management proposal to approve the Amended and Restated Annual Incentive Plan of the Company;
FOR the management proposal to approve the Company’s Third Amended and Restated Certificate of Incorporation to convert all shares of Class B non-voting common stock and Class C restricted common stock to Class A common stock; and
FOR the ratification of the appointment of Ernst & Young LLP as the Company's independent registered accounting firm for fiscal year 2015.

What if I am a beneficial owner and do not give voting instructions to my broker?

If your shares are held by a broker in “street name,” your brokerage firm may vote your shares on certain “routine” matters if you do not provide voting instructions. The ratification of an independent registered public accounting firm is an example of a routine matter. If you do not provide voting instructions, your brokerage firm may either vote your shares on routine matters or leave your shares unvoted. When a brokerage firm votes its customers' shares on a routine matter without receiving voting instructions, these shares are counted both for establishing a quorum to conduct business at the meeting and in determining the number of shares voted for or against the routine matter. A brokerage firm cannot vote your shares on non-routine matters, such as the election of directors, the advisory vote to approve executive compensation, the management proposal to approve the Second Amended and Restated Equity Incentive Plan of the Company, the management proposal to approve the Amended and Restated Annual Incentive Plan of the Company, and the proposal to approve the Company's Third Amended and Restated Certificate of Incorporation to convert all of the outstanding shares of Class B non-voting common stock and Class C restricted common stock to Class A common stock. If your brokerage firm has not received voting instructions on a non-routine matter, these shares will be considered “broker non-votes” to the extent that the brokerage firm submits a proxy.

How are abstentions and broker non-votes counted?

Abstentions will be treated as present for purposes of determining a quorum but will not be included in vote totals and will not affect the outcome of the vote.

3




Broker non-votes are counted for purposes of establishing a quorum but will have no effect on the outcome of the non-routine proposals.

Who will count the votes?

A representative from Broadridge Financial Services will tabulate the votes and act as the inspector of election for the annual meeting.

When will the Company announce the voting results?

The preliminary voting results will be announced at the annual meeting. The Company will report the final results on our website and in a Current Report on Form 8-K filed with the SEC.

Can I receive a copy of the Annual Report?

The annual report of the Company on Form 10-K for the fiscal year ended March 31, 2014 is being furnished concurrently with this proxy statement to persons who were stockholders of record as of June 9, 2014, the record date for the annual meeting. These materials do not form part of the material for the solicitation of proxies.

What is “householding” and how does it affect me?

In some cases, stockholders holding their shares in a brokerage or bank account who share the same surname and address and have not given contrary instructions are receiving only one copy of our annual report and this proxy statement. This reduces the volume of duplicate information received at your household and helps to reduce costs. If you would like to have additional copies of these documents mailed to you, please call or write our Secretary at 8283 Greensboro Drive, McLean, Virginia 22102, telephone: (703) 902-5000. If you want to receive separate copies of the proxy statement, annual report to stockholders, or Notice of Internet Availability of Proxy Materials in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker, or other nominee record holder.

How do I submit a proposal for action at the annual of meeting of stockholders in 2015?

Under applicable SEC rules and regulations, the Company will review for inclusion in next year’s proxy statement stockholder proposals received by February 20, 2015. Proposals should be sent to the Secretary of the Company at 8283 Greensboro Drive, McLean, Virginia 22102.

Pursuant to our second amended and restated bylaws, stockholder proposals not included in next year’s proxy statement may be brought before the 2015 Annual Meeting of Stockholders by a stockholder of the Company who is entitled to vote at the meeting, who has given a written notice to the Secretary of the Company at 8283 Greensboro Drive, McLean, Virginia 22102 containing certain information specified in the bylaws and who was a stockholder of record at the time such notice was given. Such notice must be delivered to or mailed and received at the address in the preceding paragraph no earlier than April 2, 2015 and no later than May 2, 2015, except that if the date of the 2015 Annual Meeting of Stockholders is changed, and the meeting is held before July 1, 2015 or after October 9, 2015, such notice must be delivered at the address in the preceding paragraph no earlier than 120 days prior to the new date of such annual meeting and not later than the close of business on the later of (i) the ninetieth day prior to the new date of such annual meeting and (ii) the tenth day following the day on which a public announcement of the new date of such annual meeting is first made.


4




ELECTION OF DIRECTORS
Board Structure
The Company currently has ten directors divided into three classes: four in Class I, three in Class II, and three in Class III. The terms of office of the four Class I directors expire at the 2014 Annual Meeting of Stockholders.
Class I Election
The four nominees for election as Class I directors are listed below. If elected, the nominees for election as Class I directors will serve for a term of three years and until their successors are elected and qualify. Unless you instruct us on the proxy card to vote differently, we will vote signed, returned proxies FOR the election of such nominees. If for any reason any nominee cannot or will not serve as a director, we may vote such proxies for the election of a substitute nominee designated by the Board.
Class I Nominees
To be elected, a nominee must receive the vote of a plurality of the votes validly cast at the annual meeting represented either in person or by proxy at the annual meeting. The Class I Nominees are as follows:
  
 
 
 
 
 
Director
 
Age, Principal Occupation, Business
Experience and Other Directorships Held
 
Director
Since
 
 
 
 
 
Ralph W. Shrader
(Class I)


 
Dr. Shrader is our Chairman and Chief Executive Officer and has served in these positions since 2008. From 2008 to 2014, he also served as our President. He also served as Chairman and Chief Executive Officer of Booz Allen Hamilton Inc. since 1999. Dr. Shrader has been an employee of our company since 1974. He is the seventh chairman since our company's founding in 1914 and has led our company through a significant period of growth and strategic realignment. Dr. Shrader is active in professional and charitable organizations, and is past Chairman of the Armed Forces Communications and Electronics Association. Specific qualifications, experience, skills and expertise include:
 
2008
 
 
• Operating and management experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning; and
• Deep understanding of our Company, its history, and culture.

Dr. Shrader is 69 years old.
 
 

5



 
 
 
 
 
Director
 
Age, Principal Occupation, Business
Experience and Other Directorships Held
 
Director
Since
 
 
 
 
 
Joan Lordi C. Amble
(Class I)
 
Ms. Amble was the Executive Vice President, Finance for the American Express Company from May 2011 to December 2011, and also served as its Executive Vice President and Corporate Comptroller from December 2003 until May 2011. Prior to joining American Express, Ms. Amble served as Chief Operating Officer and Chief Financial Officer of GE Capital Markets, a service business within GE Capital Services, Inc., overseeing securitizations, debt placement, and syndication, as well as structured equity transactions. From 1994 to March 2003, Ms. Amble served as vice president and controller for GE Capital. Ms. Amble is the President of JCA Consulting, LLC and serves on the board of directors of Brown-Forman Corporation, since 2011, XM Radio, since 2006; merged Sirius XM Radio Inc., since 2008, and on the Board of Overseers at UCLA Health Services, since January 2013. Ms. Amble also served as a director at Broadcom Corp. from 2009 to 2011. Specific qualifications, experience, skills and expertise include:
 
2012
 
 
• Public company directorship and audit committee experience;
• Operating and management experience;
• Core business skills, including financial and strategic planning; and
• Expertise in finance, financial reporting, compliance and controls and global businesses.

Ms. Amble is 61 years old.
 
 
 
 
 
 
 
Peter Clare
(Class I)
 
Mr. Clare is a Managing Director of The Carlyle Group, a private equity firm, as well as Co-Head of its U.S. Buyout Group. Mr. Clare has been with The Carlyle Group since 1992. He has served on the boards of directors of CommScope, Inc., since 2011, Pharmaceutical Product Development, LLC, since 2011, and Sequa Corporation, since 2007. Mr. Clare served as a director of ARINC Incorporated from 2007 to 2013 and Wesco Aircraft Holdings, Inc. from 2006 to 2012. Specific qualifications, experience, skills and expertise include:
 
2008
 
• Operating experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning;
• Public company directorship and committee experience; and
• Expertise in finance, financial reporting, compliance and controls and global businesses.

Mr. Clare is 49 years old.
 
 

6



 
 
 
 
 
Director
 
Age, Principal Occupation, Business
Experience and Other Directorships Held
 
Director
Since
 
 
 
 
 
Philip A. Odeen
(Class I)
 
Mr. Odeen served as the Chairman of the board of directors and Lead Independent Director of AES Corporation from 2009 to 2013, and as a director of AES from 2003 to 2013. Mr. Odeen served as the Chairman of the board of Convergys Corporation from 2008 to 2013, and as a director of Convergys Corp. from 2000 to 2013. He serves as a director of QinetiQ North America, Inc., since 2006, ASC Signal Corporation, since 2009, and DRS since 2012. From 2006 to 2007, Mr. Odeen served as Chairman of the board of Avaya, and as a director of Avaya from 2001 to 2007. He served on the board of Reynolds and Reynolds Company from 2000 to 2007, and as its Chairman from 2006 to 2007, and was a director of Northrop Grumman from 2003 to 2008. Mr. Odeen retired as Chairman/CEO of TRW Inc. in December 2002. Specific qualifications, experience, skills and expertise include:
 
2008
 
 
• Operating and management experience;
• Core business skills, including financial and strategic planning;
• Understanding of government contracting;
• Expertise in executive compensation and corporate governance; and
• Public company directorship and committee experience.

Mr. Odeen is 78 years old.
 
 





The Board of Directors recommends a vote FOR
all of the Class I nominees.

7



CONTINUING DIRECTORS
The five directors whose terms will continue after the annual meeting and will expire at the 2015 annual meeting (Class II) or the 2016 annual meeting (Class III) are listed below. Current director, Samuel R. Strickland (Class II), will be retiring from the Board on June 30, 2014, prior to the 2014 annual meeting. As of the date of this proxy statement, the Board has not yet appointed a successor for Mr. Strickland.
 
 
 
 
 
 
Director
  
Age, Principal Occupation, Business
Experience and Other Directorships Held
  
Director
Since
 
 
 
 
 
Ian Fujiyama
(Class II)
 
Mr. Fujiyama is a Managing Director of The Carlyle Group, a private equity firm, as well as a member of the firm's Aerospace, Defense and Government Services team.  In 1999, Mr. Fujiyama spent two years in Hong Kong and Seoul working with The Carlyle Group's Asia buyout fund, Carlyle Asia Partners. He currently serves as a member of the board of directors of Dynamic Precision Group. He served on the board of directors of ARINC Incorporated from 2007 to 2013. Specific qualifications, experience, skills and expertise include:

 
2008
 
• Operating experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning; and
• Expertise in finance, financial reporting, compliance and controls and global businesses.

Mr. Fujiyama is 41 years old.
 
 

 
 
 
 
 
Mark Gaumond
(Class II)
 
Mr. Gaumond has 35 years of experience working with senior management and audit committees of public and privately-held companies. He held senior positions with Ernst & Young LLP from 2002 to 2010, retiring from the firm as Senior Vice Chair for the Americas, and previously was a partner with a 27-year career at Andersen LLP. Mr. Gaumond has a BA degree from Georgetown University and an MBA from New York University. He is member of the American Institute of Certified Public Accountants. He serves as a director of Cliff's Natural Resources, Inc., since 2013, Rayonier, Inc., since 2010, the Fishers Island Development Corporation and the Walsh Park Benevolent Corporation, and is a former trustee of The California Academy of Sciences. Specific qualifications, experience, skills and expertise include:

 
2011
 
 
• Expertise in finance, financial planning, and compliance and controls;
• Core business skills, including financial and strategic planning;
• Public company audit committee experience.

Mr. Gaumond is 63 years old.
 
 


8



 
 
 
 
 
Director
 
Age, Principal Occupation, Business
Experience and Other Directorships Held
 
Director
Since
 
 
 
Allan M. Holt
(Class III)
  
Mr. Holt, a Partner and Managing Director of The Carlyle Group, a private equity firm, is currently the Co-Head of the the firm's U.S. Buyout group focusing on opportunities in the Aerospace/Defense/Government Services, Consumer, Healthcare, Industrial & Transportation, Technology and Telecom/Media sectors. Mr. Holt has been with The Carlyle Group since 1992 and is based in Washington, D.C. He serves on the boards of directors of Axalta Coating Systems, since 2013, HCR Manor Care, Inc., since 2009, NBTY, Inc., since 2010, and SS&C Technologies, Inc., since 2005, as well as on the nonprofit boards of directors of The Hillside Foundation, Inc., The National Children's Museum and The Smithsonian National Air and Space Museum. Mr. Holt served on the boards of directors of Fairchild Imaging from 2001 to 2011, and HD Supply, Inc. from 2007 to 2012. Specific qualifications, experience, skills and expertise include:
  
2010
 
 
• Operating experience;
• Understanding of government contracting;
• Core business skills, including financial and strategic planning; and
• Experience in finance, financial reporting, compliance and controls and global businesses.

Mr. Holt is 62 years old.
 
 

 
 
 
 
 
Arthur E. Johnson
(Class III)
 
Mr. Johnson retired as Senior Vice President, Corporate Strategic Development of Lockheed Martin Corp. in 2009, a position he held since 1999. Mr. Johnson has over 20 years of senior leadership experience in the information technology and defense businesses. Mr. Johnson brings extensive IT management experience to the Board, having held senior positions at IBM, Loral Corporation and Lockheed Martin. He serves on the boards of directors of AGL Resources, Inc., since 2002, and Eaton Corporation, since 2009, and as an independent trustee of the Fixed Income and Asset Allocation funds of Fidelity Investments, since 2008. Mr. Johnson served as a director of Delta Airlines, from 2005 to 2007, and IKON Office Solutions Corporation, from 1999 to 2008. Specific qualifications, experience, skills and expertise include:
 
2011
 
 
• Public company directorship and audit committee experience;
• Operating and management experience;
• Understanding of government contracting; and
• Core business skills, including financial and strategic planning.

Mr. Johnson is 67 years old.
 
 


9




 
 
 
 
 
Director
 
Age, Principal Occupation, Business
Experience and Other Directorships Held
 
Director
Since
 
 
 
 
 
Charles O. Rossotti
(Class III)
 
Mr. Rossotti has served as a Senior Advisor to The Carlyle Group, a private equity firm, since June 2003. Prior to this position Mr. Rossotti served as the Commissioner of the Internal Revenue Service from 1997 to 2002. Mr. Rossotti co-founded American Management Systems, Inc., an international business and information technology consulting firm in 1970, where he served at various times as President, Chief Executive Officer and Chairman of the Board until 1997. Mr. Rossotti serves as a director for Primatics Financial, since 2011, Quorum Management Solutions, since 2010, The AES Corporation, since 2003 and as its Chairman since 2013, ECi Software Solutions since 2014 and as a trustee of Carlyle Select Trust, since 2014. Mr. Rossotti formerly served as a director of Merrill Lynch & Co., Inc., from 2004 to 2008, Bank of America Corporation, from 2009 to May 2013, Compusearch Software Systems, from 2005 to 2010, and Apollo Global, from 2006 to 2012. Specific qualifications, experience, skills and expertise include:
 
2008
 
 
• Operating and management experience;
• Core business skills, including financial and strategic planning;
• Understanding of government contracting;
• Expertise in finance, financial reporting, compliance and controls and global businesses; and
• Public company directorship and audit committee experience.

Mr. Rossotti is 73 years old.
 
 


10



CORPORATE GOVERNANCE AND GENERAL INFORMATION CONCERNING THE BOARD OF DIRECTORS AND ITS COMMITTEES
Board of Directors
The primary focus of the Board is promoting shareholder value by fostering the long-term success of the Company. The Board is responsible for supporting and overseeing management, which is responsible for the Company’s strategy and operations.
The Board generally holds four regular meetings per year, and special meetings as necessary. The Board meets in executive session during each regular meeting; non-management directors also typically meet in executive sessions during each regular meeting. In accordance with the Company’s Corporate Governance Guidelines, if no lead director has been selected to preside over the executive sessions of the non-management directors, a presiding director shall be selected among the non-management directors. Mr. Clare was appointed by the non-management directors to serve as the presiding director on May 23, 2013. The presiding director presides over executive sessions at which the Chairman is not present. At least annually, independent directors also meet in executive session during a regular Board meeting.
The Board and its committees establish annual calendars of activities to guide the development of their agendas during the year.  All directors are invited to propose agenda topics when the annual calendars are established as well as in advance of each regular Board meeting. In addition, directors are free to raise topics that are not on a meeting agenda or suggest topics for future agendas.  Each director is provided written materials in advance of each meeting, and the Board and its committees provide feedback to and make requests of management at each of their meetings.
Directors are expected to attend each Board meeting, each meeting of the committees on which they serve, and the Annual Meeting of Stockholders. During fiscal 2014, the Board met six times, including four regular meetings and two special meetings. The average director attendance at Board and Board committee meetings was 93% and 98%, respectively, during fiscal 2014. Each of our directors who served as a director during fiscal 2014, except for Mr. Holt, attended 75% or more of the aggregate total number of meetings of the Board held during fiscal 2014. In addition, each of our directors who served as a director during fiscal 2014 attended 75% or more of the total number of meetings held by all Board committees on which he or she served. All directors attended the Annual Meeting of Stockholders on August 1, 2013.
As noted above, the Board has adopted Corporate Governance Guidelines. The Board and the Nominating and Corporate Governance Committee are responsible for reviewing and amending these guidelines as they deem necessary and appropriate. The Nominating and Corporate Governance Committee is responsible for overseeing the system of corporate governance of the Company. The Corporate Governance Guidelines are available without charge on the Investor Relations portion of our website, www.boozallen.com. This website also includes the Company’s Code of Business Ethics and Conduct, which is applicable to our directors and all employees, and the Company's Code of Ethics for Senior Financial Officers, each of which was adopted by the Board and each of which may be accessed without charge. The Code of Ethics for Senior Financial Officers applies to the Company’s Chief Executive Officer, Chief Financial Officer, Controller and any other persons performing similar functions. We will disclose on the Investor Relations portion of our website any amendments to the Code of Business Ethics and Conduct or Code of Ethics for Senior Financial Officers and any waiver granted to an executive officer or director under these codes. The information found on the Company's website is not part of this Proxy Statement nor is it incorporated into any other filings the Company makes with the SEC.
Board Leadership Structure
As noted in our Corporate Governance Guidelines, the Board has no policy with respect to the separation of the offices of Chairman and Chief Executive Officer. The Board believes that it is important to retain its flexibility to allocate the responsibilities of the offices of the Chairman and Chief Executive Officer in any way that is in the best interests of the Company at a given point in time. The Board has concluded that it currently is in the best interests of stockholders for Dr. Shrader to serve as both our Chairman and Chief Executive Officer. The Board believes that the combination of these roles enables the effective and efficient execution of the Company’s strategy by permitting the most senior executive of the Company, who has an in-depth understanding of, and is responsible for, the Company’s operations, leads our executive management committee, and with over 40 years of service to the Company and experience in industry, to work closely with the Board in establishing the overall strategy and direction of the Company, and to effectively communicate our strategy to our stockholders, clients and employees.

11



Succession Planning and Talent Reviews

The Board periodically undertakes executive succession planning and talent reviews. On an annual basis, the Chairman leads the Board in an in-depth discussion concerning Chief Executive Officer and senior management succession. Chief Executive Officer succession is also discussed by the Board in an executive session outside the presence of any management directors. Management also updates the Board on key talent indicators such as recruiting and retention for the overall employee population throughout the year.

The Board approved several senior management changes in fiscal 2014. Our Chief Operating Officer, Horacio D. Rozanski, was appointed to the additional position of President effective January 1, 2014. In connection with the appointment of Mr. Rozanski as President, Dr. Shrader resigned as President effective January 1, 2014, but continues to serve as Chairman and Chief Executive Officer. In addition, on January 31, 2014, the Board accepted the resignation of our Chief Financial Officer and Chief Administrative Officer, Mr. Strickland, effective on June 30, 2014. In connection with the planned resignation of Mr. Strickland, the Board approved the appointment of Kevin L. Cook, currently our Controller, to the position of Chief Financial Officer, effective on July 1, 2014.
Risk Oversight

The Board and its committees play an important role in overseeing the Company's risk management processes, and risk management considerations form a regular element of the Board's dialogue with management. One of the primary tools that facilitates the Board’s oversight of risk (and actions being taken to mitigate it) is the Company’s Enterprise Risk Management Framework, or ERM Framework. Under the leadership of our President and Chief Operating Officer, the Company undertook an effort to identify and classify into tiers the top risks facing its business; as part of this effort, management and the Board discussed the Company’s risk appetite with respect to different types of risk and developed action plans to mitigate and monitor risk. The process for regularly updating the ERM Framework enables effective and efficient identification of risks and facilitates the incorporation of risks into decision making. Under the ERM Framework, our President and Chief Operating Officer prepares a quarterly update for the Board of our enterprise risks and leads an annual risk analysis and mitigation planning process with the Board. In addition to updates provided through the ERM Framework, the Board receives other information and briefings as part of its risk oversight role. During the course of the year, the lead management official with responsibility for each of our major markets provides a comprehensive overview of the market, including risks and challenges. The Board is also regularly updated by other elements of management, including the Chief Financial Officer, General Counsel, Controller, and Director of Internal Audit concerning significant risks facing the Company and processes that have been implemented to mitigate these risks. In addition to this dialogue between management and the entire Board, the Board's committees have more specific roles concerning elements of the Company's risk management processes. For example, the Audit Committee receives regular reports concerning the status of the Company's ethics and compliance program, its controls over internal controls over financial reporting, and significant communications from the Company's regulators. The Board's Compensation Committee is responsible for overseeing risks related to the Company's compensations policies and practices, as well as its executive succession plans, while its Nominating and Corporate Governance Committee oversees risks arising from the Company's governance processes.
Annual Board Performance Assessment

Annually, the Board and each of its committees perform an assessment of their operations and effectiveness, and set goals for the future. The core of this process involves our Secretary interviewing each director individually. The comments of the directors are compiled and presented, as applicable, to the full Board or the appropriate committee. Each committee and the Board identify key matters to be addressed, and these matters become part of future agendas for the Board and its committees.
Board Independence
As a controlled company, as that term is defined under the rules of the New York Stock Exchange, we are not required to have a majority of independent directors. The Board has determined that Messrs. Odeen, Gaumond and Johnson and Ms. Amble are independent under the independence criteria for directors established by the New York Stock Exchange, Rule 10A-3 under the Securities Exchange Act of 1934, or the Exchange Act, and the independence criteria adopted by the Board. The independence criteria adopted by the Board are set forth in the Company's Corporate Governance Guidelines.
Selection of Nominees for Election to the Board

12



The Nominating and Corporate Governance Committee recommends to the Board appropriate criteria for the selection of new directors based on the strategic needs of the Company and the Board, and periodically reviews the criteria adopted by the Board and, if deemed desirable, recommends to the Board changes to such criteria. The Board seeks members from diverse professional backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. The Board does not have a formal policy with respect to diversity; however, it affirms the value the Company places on diversity and inclusion within its entire employee population. Diversity is one of many factors the Nominating and Corporate Governance Committee considers when recommending director nominees to the Board. The Committee defines diversity in an expansive way to be reflective of the diversity of the Company and representative of the clients it serves. Exceptional candidates who do not meet all of these criteria may still be considered. The Board seeks director candidates who have experience in positions with a high degree of responsibility, are, or have been, leaders in the companies or institutions with which they are, or were, affiliated, and are selected based upon the contributions they can make to the Company.
Stockholders wishing to nominate a candidate for director must provide written n otice in care of the Secretary, to 8283 Greensboro Drive, McLean, Virginia 22102, not fewer than 90 days nor more than 120 days prior to the first anniversary of the preceding year's annual meeting.
Director Orientation and Continuing Education

New directors are provided a multi-stage orientation generally timed to coincide with our Board meetings as part of our effort to integrate them in their role as directors and familiarize them with the Company. Orientation sessions are led by members of management and are focused on various elements of our business strategy, client service offerings, internal business operations, and corporate governance among other areas. During the course of the year, representatives of management brief the Board on topics designed to provide directors a deeper understanding of various aspects of our business such as applicable legal developments, ethics and compliance programs and the evolving regulatory environment. In addition, directors are encouraged to participate in continuing education programs to better understand and execute their duties and responsibilities.
Communications with the Board
Stockholders, or other interested third parties, who wish to contact our Board may send written correspondence, in care of the Secretary, to 8283 Greensboro Drive, McLean, Virginia 22102. Communications may be addressed to an individual director, to the non-management directors as a group, or to the Board as a whole, marked as confidential or otherwise. Communications not submitted confidentially, which are addressed to directors that discuss business or other matters relevant to the activities of our Board, will be preliminarily reviewed by the office of the Secretary and then distributed either in summary form or by delivering a copy of the communication. Communications marked as confidential will be distributed, without review by the office of the Secretary, to the director, or group of directors, to whom they are addressed. With respect to other correspondence received by the Company that is addressed to one or more directors, the Board has requested that the following items not be distributed to directors, because they generally fall into the purview of management, rather than the Board: junk mail and mass mailings, service complaints and inquiries, resumés and other forms of job inquiries, solicitations for charitable donations, surveys, business solicitations, and advertisements.
Board Committees
Our Board has four standing committees: an Executive Committee, an Audit Committee, a Compensation Committee and a Nominating and Corporate Governance Committee. The charter of each committee is available without charge on the Investor Relations portion of our website, www.boozallen.com. The following chart identifies the members and chair of each standing committee.

13



Director
Executive Committee
Audit Committee
Compensation Committee
Nominating and Corporate Governance Committee
Ralph W. Shrader
Chair
 
 
Chair
Joan Lordi C. Amble 1
 
Member 2
 
 
Peter Clare
Member
 
Member
Member
Ian Fujiyama
Member
 
Member
 
Mark Gaumond 1
 
Chair 2
 
 
Allan M. Holt
 
 
 
 
Arthur E. Johnson 1
 
Member
 
 
Philip A. Odeen 1
 
 
Chair
Member
Charles O. Rossotti
 
 
 
 
Samuel R. Strickland
 
 
 
 
1 Independent Director
2 Audit Committee Financial Expert
The following is a brief description of our committees.
The Executive Committee
Our Executive Committee is responsible, among its other duties and responsibilities, for assisting our Board in fulfilling its responsibilities. Our Executive Committee is responsible for approving certain corporate actions and transactions, including acquisitions of assets other than in the ordinary course of business and outside hires of certain senior officers or the termination of such employees . The members of our Executive Committee are Dr. Shrader (Chairman) and Messrs. Clare and Fujiyama. The Executive Committee did not meet during fiscal 2014.
The Audit Committee
Our Audit Committee is responsible, among its other duties and responsibilities, for overseeing our accounting and financial reporting processes, the audits of our financial statements, the qualifications and independence of our independent registered public accounting firm, the effectiveness of our internal control over financial reporting, and the performance of our internal audit function and independent registered public accounting firm. Our Audit Committee reviews and assesses the qualitative aspects of our financial reporting, our processes to manage business and financial risks, and our compliance with significant applicable legal, ethical and regulatory requirements. Our Audit Committee is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm.
The members of our Audit Committee are Messrs. Gaumond (Chairman) and Johnson and Ms. Amble, each of whom is an independent director as required by New York Stock Exchange listing standards and Rule 10A-3 of the Exchange Act. The Board has determined that each member of our Audit Committee is financially literate and has determined that Mr. Gaumond and Ms. Amble are each an “audit committee financial expert” as such term is defined under Item 407(d)(5) of Regulation S-K promulgated under the Securities Act. Mr. Gaumond and Ms. Amble currently serve on the audit committees of three public companies (including us), and Mr. Johnson currently serve on the audit committees of two public companies (including us). In accordance with our Audit Committee Charter, Messrs. Gaumond’s and Johnson’s and Ms. Amble’s obligations as members of other audit committees have been disclosed to the Board.
The Audit Committee met eight times during fiscal 2014.
The Compensation Committee
Our Compensation Committee is responsible, among its other duties and responsibilities, for reviewing and approving all forms of compensation to be provided to, and employment agreements with, the executives and directors of our company and its subsidiaries (including the Chief Executive Officer), establishing and reviewing the general compensation philosophy of our Company and its subsidiaries, and reviewing, approving, and overseeing the administration of the employee benefits plans of our Company and its subsidiaries.

14



The members of our Compensation Committee are Messrs. Odeen (Chairman), Clare and Fujiyama. Mr. Odeen is an independent director. Messrs. Clare and Fujiyama are not independent directors. As a controlled company, as that term is defined under the rules of the New York Stock Exchange, we are not required to have an independent Compensation Committee. The Compensation Committee charter requires that at least two members of the Compensation Committee must satisfy the requirements of “non-employee director” for purposes of Rule 16b-3 under the Exchange Act. Messrs. Odeen and Fujiyama currently satisfy these requirements.
The Compensation Committee has the authority to delegate any of its responsibilities to subcommittees as the Compensation Committee may deem appropriate, provided that the subcommittees are composed entirely of directors satisfying the independence standards then applicable to the Compensation Committee generally. The Compensation Committee has delegated to a Rule 16b-3 subcommittee its responsibility under the Company's Amended and Restated Equity Incentive Plan with respect to the approval of acquisitions and dispositions of Company securities by officers and directors of the Company for purposes of Section 16(b) of the Exchange Act. The members of the Rule 16b-3 subcommittee are Messrs. Odeen and Fujiyama.
The Compensation Committee has not engaged a compensation consultant; however, the Compensation Committee is briefed by management, which consults with Mercer HR Consulting, or Mercer, which provides executive compensation design and best practice data and assists us in determining market competitive positioning. During fiscal 2014, Mercer provided data analyses, market assessments regarding executive compensation, and counsel regarding proxy disclosure and preparation of related reports. Additionally, Mercer provided design guidance and subject matter expertise on the development of our people model. This design and guidance focused on our career architecture including the definition of performance expectations. The Compensation Committee assessed the independence of Mercer and concluded that Mercer's work for the Company does not raise any conflict of interest issues.
Each of our executive officers, who collectively comprise our Executive Management Committee, participates in the discussion and consideration of compensation to be awarded to all executives. See “Executive Compensation.” A special committee of the Board composed of Messrs. Gaumond and Odeen, rather than the Compensation Committee, approves equity grants for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended. We determined it would be advisable to set up this special committee to review and approve certain compensation that is intended to be performance based compensation for purposes of Section 162(m) of the Code.
The Compensation Committee met four times during fiscal 2014.
Nominating and Corporate Governance Committee
Our Nominating and Corporate Governance Committee is responsible, among its other duties and responsibilities, for identifying and recommending candidates to the Board for election to our Board (including candidates proposed by stockholders), reviewing the composition of the Board and its committees, developing and recommending to the Board corporate governance guidelines that are applicable to us, and overseeing Board and Board committee evaluations.
The members of our Nominating and Corporate Governance Committee are Dr. Shrader (Chairman) and Messrs. Clare and Odeen. Mr. Odeen is an independent director. Dr. Shrader and Mr. Clare are not independent directors. As a controlled company, as that term is defined under the rules of the New York Stock Exchange, we are not required to have an independent Nominating and Corporate Governance Committee.
Under the terms of the Amended and Restated Stockholders Agreement, as amended, a maximum of three nominees for election to our Board, who may be full-time employees of Carlyle, are to be designated by Carlyle and a maximum of two members of the Board, who must be full-time employees of Booz Allen Hamilton, are to be designated by Booz Allen Holding’s Chief Executive Officer, subject to certain conditions and restrictions. Under the terms of the Amended and Restated Stockholders Agreement, as amended, Carlyle and our executive officers will be required to vote the voting shares over which they have voting control in favor of Carlyle’s and the Chief Executive Officer’s designees. See “Certain Relationships and Related Party Transactions — Related Person Transactions — Stockholders Agreement.” Mr. Clare has been designated for election by Carlyle. Dr. Shrader has been designated for election by our Chief Executive Officer.
Except as described above, there is no difference in the manner in which the Nominating and Corporate Governance Committee evaluates a nominee for director designated by Carlyle or our Chief Executive Officer or recommended by a stockholder.

15



The Nominating and Corporate Governance Committee met four times during fiscal 2014.
Director Compensation
Directors who are employed by us or by Carlyle do not receive any additional compensation for their services as directors. For fiscal 2014, non-employee directors received an annual retainer of $100,000 and an annual equity award with a fair market value equal to $80,000. In addition, the chair of our Compensation Committee received an additional annual payment of $10,000, and the chair of our Audit Committee received an additional annual payment of $20,000. Directors may elect to receive all or a portion of their annual retainer and any additional payments for service as a chair in the form of restricted stock, which will be granted under our Amended and Restated Equity Incentive Plan, which we refer to as our Equity Incentive Plan. Our directors do not receive additional fees for attending Board or committee meetings.
Director Compensation Table
 
Name
 
Fees Earned
($)
 
Option
Awards
($)(8)
 
Stock
Awards
($)(1)
 
Other
($)(7)
 
Total
($)
Joan Lordi C. Amble
 
100,000(2)
 

 
80,006(2)
 

 
180,006

Mark E. Gaumond
 
120,000(3)
 

 
80,007(3)
 

 
200,007

Arthur E. Johnson
 
100,000(4)
 

 
80,006(3)
 

 
180,006

Philip A. Odeen
 
110,000(5)
 

 
80,006(4)
 
20,000

 
210,006

Charles O. Rossotti
 
100,000(6)
 

 
80,013(6)
 
20,000

 
200,013

 
(1)
This column represents the grant date fair value of the stock awards granted to our directors in fiscal 2014. Where the stock awards were the result of voluntary elections to receive cash retainers in stock, the value reflected in the Stock Awards column represents only the excess of the fair market value of the stock awards over the cash retainer amount paid if in the form of stock. The aggregate fair value of the awards was computed in accordance with FASB ASC Topic 718 using the valuation methodology and assumptions set forth in Note 17 to our financial statements for the fiscal year ended March 31, 2014, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by the director.

(2)
Ms. Amble elected to receive her annual retainer in the form of cash, and she was awarded 3,880 shares of restricted stock for her $80,000 annual equity grant. The grant date fair market value of the shares was $80,006, based on the $20.62 closing price of our stock on the August 21, 2013 grant date.

(3)
Mr. Gaumond elected to receive his annual retainer in the form of cash and his additional payment for service as the chair of the Audit Committee in the form of restricted stock, and was awarded a total of 4,850 shares of restricted stock in lieu of $20,000 for the chair retainer and for his $80,000 annual equity grant. The grant date fair market value of the shares was $100,007, based on the $20.62 closing price of our stock on the August 21, 2013 grant date.

(4)
Mr. Johnson elected to receive his annual retainer in the form of cash, and was awarded 3,880 shares of restricted stock for his $80,000 annual equity grant. The grant date fair market value of the shares was $80,006, based on the $20.62 closing price of our stock on the August 21, 2013 grant date.

(5)
Mr. Odeen elected to receive his annual retainer in the form of cash and his additional payment for service as the chair of the Compensation Committee in the form of restricted stock. He was awarded a total of 4,365 shares of restricted stock in lieu of $10,000 for the chair retainer and for his $80,000 annual equity grant. The grant date fair market value of the shares was $90,006, based on the $20.62 closing price of our stock on the August 21, 2013 grant date.

(6)
Mr. Rossotti elected to receive his annual retainer in the form of restricted stock, and was granted a total of 8,730 shares of restricted stock in lieu of $100,000 for the annual retainer and for his $80,000 annual equity grant. The grant date fair market value of the shares was $180,013, based on the $20.62 closing price of our stock on the August 21, 2013 grant date.


16



(7)
In connection with the payment of two $1.00 special dividends in fiscal 2014, holders of certain options granted pursuant to our Equity Incentive Plan received dividend equivalent rights that entitle the director to receive, on the later of the dividend payment date and the option's fixed vesting date, a cash payment based on the amount of the special dividend, subject to vesting of the related option. The dividend equivalents granted to our directors in connection with the special dividends are included in this column.

(8)
The following table sets forth, by grant date, the aggregate number of option awards outstanding at the end of fiscal 2014. Messrs. Gaumond and Johnson and Ms. Amble have not received option awards.
Option Awards for Service as a Director
 
Name
 
Number of
Securities
Underlying
Unexercised
Options
Exercisable
 
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
 
Option Awards
Equity Incentive Plan
Awards: Number of
Securities Underlying
Unexercised Unearned
Options
 
Option
Exercise
Price ($)
 
Option
Expiration
Date
Philip A. Odeen
 
7,960

 
690(a)
 
860(b)
 
6.08

 
5/7/2019
 
 
 
 
 
 
470(c)
 
6.08

 
5/7/2019
Charles O. Rossotti
 
7,960

 
690(a)
 
860(b)
 
6.08

 
5/7/2019
 
 
 
 
 
 
470(c)
 
6.08

 
5/7/2019
 
(a)
The options vest and become exercisable, subject to the continued service of the director, on June 30, 2014. All service-vesting options fully vest and become exercisable immediately prior to the effective date of certain change in control events.

(b)
The options vest and become exercisable, subject to the continued service of the director, on June 30, 2014 based on achievement of EBITDA performance goals, with the ability to “catch up” on missed goals if (x) the missed performance goal was at least 90% of target level and (y) cumulative EBITDA performance reaches the target cumulative levels during the five-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of the event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of their invested capital.

(c)
The options vest and become exercisable, subject to the continued service of the director, on June 30, 2014 based on achievement of cumulative cash flow performance goals, with the ability to “catch up” on missed goals if cumulative achievement reaches the target cumulative levels during the five-year vesting period. In addition, any unvested performance options at the time of a change in control event vest immediately prior to the effective date of event if Carlyle achieves a specified internal rate of return as a result of the event or the investment proceeds to Carlyle are at least a specified multiple of their invested capital.
Director Ownership Guidelines
Equity ownership guidelines for all of our non-employee directors are in place to further align their interests to those of our stockholders. Each of our non-employee directors has five years from the later of commencement of service on the Board or adoption of the guidelines on February 23, 2012, to achieve equity ownership with a value equivalent to three times their annual retainer. In calculating a director’s ownership, Class A common stock, and vested in-the-money options and vested and unvested restricted stock issued under the Equity Incentive Plan will be considered owned by the non-employee director.



17



COMPENSATION COMMITTEE INTERLOCKS
AND INSIDER PARTICIPATION
The current members of our Compensation Committee are Messrs. Odeen (Chairman), Clare and Fujiyama. Messrs. Clare and Fujiyama are employed by The Carlyle Group. Explorer Coinvest LLC, or Coinvest, is controlled indirectly by senior employees of the The Carlyle Group. Coinvest is a party to a stockholders agreement with Booz Allen Holding and other stockholders. The Carlyle Group is an affiliate of Carlyle Investment Management L.L.C., which is party to a management agreement with Booz Allen Holding and Booz Allen Hamilton pursuant to which Carlyle Investment Management provides Booz Allen Holding and its subsidiaries, including Booz Allen Hamilton, with advisory, consulting and other services for a fee. See “Certain Relationships and Related Party Transactions — Related Person Transactions — Stockholders Agreement,” and “— The Management Agreement.” No member of our Compensation Committee serves as a member of the board or compensation committee of any other entity that has one or more executive officers serving as a member of our Board or Compensation Committee.

18



SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The following table indicates information as of June 3, 2014 regarding the beneficial ownership of our common stock by:
each person, or group of persons, who is known to beneficially own more than 5% of any class of our common stock;
each of our directors;
each of the named executive officers; and
all of our directors and executive officers as a group. 
The percentages shown are based on 144,433,541, 525,370, 914,101 and 4,419,184 shares of Class A common stock, Class B non-voting common stock, Class C restricted common stock and Class E special voting common stock outstanding as of June 3, 2014. The rights of the holders of Class A common stock, Class C restricted common stock and Class E special voting common stock are identical, except with respect to dividend and other distributions, vesting and conversion. Class A common stock, Class C restricted common stock and Class E special voting common stock are entitled to one vote per share on all matters voted on by our stockholders. The Class B common stock is non-voting common stock. Upon a transfer of Class B non-voting common stock and Class C restricted common stock, we will issue shares of Class A common stock to the transferee on a one-for-one basis. Class E special voting common stock underlies certain outstanding options. When each option is exercised and a share of Class A common stock is issued to the option holder in respect thereof, we will repurchase the underlying share of Class E special voting common stock.
The amounts and percentages owned are reported on the basis of the SEC’s rules governing the determination of beneficial ownership of securities. The SEC’s rules generally attribute beneficial ownership of securities to each person who possesses, either solely or shared with others, the voting power or investment power, which includes the power to dispose of those securities. The rules also treat as outstanding all shares of capital stock that a person would receive upon exercise of stock options or warrants held by that person that are immediately exercisable or exercisable within 60 days. These shares are deemed to be outstanding and to be beneficially owned by the person holding those options for the purpose of computing the number of shares beneficially owned and the percentage ownership of that person, but they are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Under these rules, one or more persons may be a deemed beneficial owner of the same securities and a person may be deemed a beneficial owner of securities to which such person has no economic interest. Unless otherwise indicated, the persons or entities identified in this table have sole voting and investment power with respect to all shares shown as beneficially owned by them, subject to applicable community property laws.
Information with respect to beneficial ownership has been furnished by each director, executive officer, or beneficial owner of more than 5% of the shares of a class of our voting common stock. Except as otherwise noted below, the address for each person listed on the table is c/o Booz Allen Hamilton Inc., 8283 Greensboro Drive, McLean, Virginia 22102.
 
 
 
 
Shares Beneficially
Owned
 
Combined Voting Power of Shares of All Classes of Common Stock Beneficially Owned
Name and Address
 
Class of
Stock
 
Number of
Shares
 
Percentage
of Class
 
Total
Percentage
Principal Stockholders
 
 
 
 
 
 
 
 
Explorer Coinvest LLC(1)
 
Class A
 
65,660,000
 
45.46%
 
43.84%
Shares Subject to Voting Proxy
 
Class A
 
7,198,576
 
4.98%
 
 
 
 
Class B
 
525,370
 
100.00%
 
 
 
 
Class C
 
914,101
 
100.00%
 
 
 
 
Class E
 
4,419,184
 
100.00%
 
 
 
 
Total(2)
 
13,057,231
 
 
 
8.37%
Baron Capital Group, Inc., and related entities and person(3)
 
Class A
 
7,622,455
 
5.28%
 
 
 
 
Class B
 
 
 
 
 
 
 
Class C
 
 
 
 
 
 
 
Class E
 
 
 
 
 

19



 
 
Total
 
7,622,455
 
 
 
5.09%
Michael Jones
 
Class A
 
571,640
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
58,660
 
6.42%
 
 
 
 
Class E
 
56,307
 
1.29%
 
 
 
 
Total
 
686,607
 
 
 
**
Christopher Kelly
 
Class A
 
196,322
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
67,450
 
7.38%
 
 
 
 
Class E
 
71,794
 
1.65%
 
 
 
 
Total
 
335,566
 
 
 
**
Patrick Peck
 
Class A
 
94,018
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
67,450
 
7.38%
 
 
 
 
Class E
 
71,794
 
1.65%
 
 
 
 
Total
 
233,262
 
 
 
**
Ghassan Salameh
 
Class A
 
59,879
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
99,170
 
10.85%
 
 
 
 
Class E
 
2
 
*
 
 
 
 
Total
 
159,051
 
 
 
**
Executive Officers and Directors
 
 
 
 
 
 
 
 
Ralph W. Shrader
 
Class A(4)(5)
 
1,704,723
 
1.18%
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
156,680
 
17.14%
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
1,861,403
 
 
 
1.24%
Samuel R. Strickland
 
Class A(5)(6)
 
699,059
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
106,230
 
11.62%
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
805,289
 
 
 
**
Joan Lordi C. Amble
 
Class A
 
7,204
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
7,204
 
 
 
**
Peter Clare(10)
 
Class A
 
 
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
 
 
 
Ian Fujiyama(10)
 
Class A
 
 
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
 
 
 
Mark Gaumond
 
Class A
 
23,462
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
23,462
 
 
 
**
Allan M. Holt(10)
 
Class A
 
 
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
 
 
 
Arthur E. Johnson
 
Class A
 
24,463
 
*
 
 

20



 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
24,463
 
 
 
**
Joseph Logue
 
Class A(5)(7)
 
384,614
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
46,927
 
1.07
 
 
 
 
Total
 
431,541
 
 
 
**
John Mayer
 
Class A(5)(8)
 
481,274
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
61,330
 
6.71%
 
 
 
 
Class E
 
7
 
*
 
 
 
 
Total
 
542,611
 
 
 
**
Philip A. Odeen
 
Class A(11)
 
42,689
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
42,689
 
 
 
**
Charles O. Rossotti
 
Class A(12)
 
400,192
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
 
 
 
 
 
Class E
 
 
 
 
 
 
Total
 
400,192
 
 
 
**
Hoaracio D. Rozanski
 
Class A(5)(9)
 
437,065
 
*
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
58,660
 
6.42
 
 
 
 
Class E
 
56,307
 
1.29
 
 
 
 
Total
 
552,032
 
 
 
**
Executive Officers and Directors as a Group (19 Persons)(4)(5)(13)
 
Class A
 
5,170,428
 
3.54%
 
 
 
 
Class B
 
 
 
 
 
 
Class C
 
391,920
 
42.87%
 
 
 
 
Class E
 
183,950
 
4.51%
 
 
 
 
Total
 
5,746,298
 
 
 
3.81%

 
 *
Represents beneficial ownership of less than 1%.
**
Represents voting power of less than 1%.
(1)
Explorer Coinvest LLC is a U.S. entity that is owned by investment funds managed by The Carlyle Group. Explorer Manager, L.L.C. controls Explorer Coinvest LLC and is the non-member manager of Explorer Coinvest LLC. Twenty-two senior Carlyle professionals, each own equal, and collectively own the entire interests, in Explorer Manager, L.L.C. All members of the board of directors expressly disclaim beneficial ownership of the shares reported herein. The address for Explorer Coinvest LLC is 1001 Pennsylvania Avenue, NW, Washington, D.C. 20004.
(2)
Reflects shares of common stock over which Coinvest holds a voting proxy with respect to certain matters pursuant to irrevocable proxy and tag-along agreements between Carlyle and a number of other stockholders, including all of the executive officers.
(3)
Based on a Schedule 13G/A jointly filed with the SEC on February 14, 2014 by BAMCO, Inc., Baron Capital Group, Inc., Baron Capital Management, Inc. and Ronald Baron, (a) each of Baron Capital Group, Inc. and Ronald Baron had shared voting power over 6,782,455 shares and shared dispositive power over 7,662,455 shares, (b) BAMCO, Inc. had shared voting power over 6,488,283 shares and shared dispositive power over 7,328,283 shares and (c) Baron Capital Management, Inc. had shared voting power over 294,172 shares and shared dispositive power over 294,172 shares. The Schedule 13/G contained information as of December 31,

21



2013 and may not reflect current holdings of our common stock . The address of each reporting person is 767 Fifth Avenue, 49 Floor, New York, New York 10153.
(4)
Includes 199,551 shares that Dr. Shrader has the right to acquire through the exercise of options. Dr. Shrader shares investment power and voting power with his wife, Mrs. Janice W. Shrader, for 1,431,249 shares in the Ralph W. Shrader Revocable Trust.
(5)
Excludes shares of common stock owned by other parties to the amended and restated stockholders agreement, as amended, of which the executive officer may be deemed to share beneficial ownership. The executive officer disclaims beneficial ownership of such excluded shares. All shares owned by the executive officer are subject to an irrevocable proxy and tag-along agreement with Carlyle.
(6)
Includes 58,626 shares that Mr. Strickland has the right to acquire through the exercise of options and 276,998 shares held by the Samuel Strickland Revocable Trust. Mr. Strickland has sole investment power and voting power for the shares in the Samuel Strickland Revocable Trust.
(7)
Includes 267,922 shares that Mr. Logue has the right to acquire through the exercise of options.
(8)
Includes 245,813 shares that Mr. Mayer has the right to acquire through the exercise of options.
(9)
Includes 212,326 shares that Mr. Rozanski has the right to acquire through the exercise of options.
(10)
Does not include shares of common stock held by Explorer Coinvest LLC, which is controlled indirectly by senior employees of Carlyle. Messrs. Clare, Fujiyama, and Holt are directors of Booz Allen Holding and Managing Directors of Carlyle. Such persons disclaim beneficial ownership of the shares held by Explorer Coinvest LLC.
(11)
Includes 10,000 shares that Mr. Odeen has the right to acquire through the exercise of options.
(12)
Includes 10,000 shares that Mr. Rossotti has the right to acquire through the exercise of options.
(13)
Includes 1,433,594 shares that the directors and executive officers, in aggregate, have the right to acquire through the exercise of options.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based on a review of reports filed by the Company’s directors, executive officers and beneficial holders of 10% or more of our outstanding shares, and upon representations from those persons, all reports required to be filed by the Company’s reporting persons during fiscal 2014 were filed on time with the exception of Horacio D. Rozanski, Karen M. Dahut, Joseph Logue and Elizabeth M. Thompson who each filed a Form 4 one day late with respect to reporting an option grant that occurred on May 23, 2013.

22



CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
Policies and Procedures for Related Person Transactions
We adopted a written related person transactions policy pursuant to which related persons, namely our executive officers, directors and principal stockholders, and their immediate family members, are not permitted to enter into certain transactions, or materially modify or amend an ongoing transaction, with us, in which the amount involved exceeds $120,000, without the consent of our Audit Committee or any designated member of the Audit Committee. Any request for us to enter into or materially modify or amend certain such transactions is required to be presented to our Audit Committee for review, consideration and approval. All of our directors and executive officers are required to report to our Audit Committee any such related person transaction. In approving or rejecting the proposed transaction, our Audit Committee will take into account, among other factors it deems appropriate, whether the proposed related person transaction is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances, the extent of the related person’s interest in the transaction and, if applicable, the impact on a director’s independence. Under the policy, if we should discover related person transactions that have not been approved, our Audit Committee will be notified and will determine the appropriate action, including ratification, rescission, or amendment of the transaction.
Related Person Transactions
Stockholders Agreement
In connection with the acquisition of Booz Allen Hamilton by Carlyle on July 31, 2008, Booz Allen Holding, Explorer Coinvest LLC, an entity controlled indirectly by senior employees of Carlyle, certain members of the management of Booz Allen Holding and certain other stockholders of Booz Allen Holding entered into the stockholders agreement. Effective November 16, 2010, the stockholders agreement was amended and restated and, on June 12, 2012, the amended and restated stockholders agreement was further amended. While our second amended and restated bylaws do not limit the Board from increasing the number of directors, under the amended and restated stockholders agreement, as amended, the number of directors on the Board of Booz Allen Holding was set at a minimum of six directors and may be increased, by action of the Board, to not more than twelve directors. The number of directors on the Board is currently set at ten. Subject to certain conditions and restrictions, a maximum of three of the nominees for election to our Board, who may be full-time employees of Carlyle, are to be designated by Coinvest, and a maximum of two members of the Board, who must be full-time employees of Booz Allen Hamilton, are to be designated by Booz Allen Holding’s Chief Executive Officer. Under the terms of the amended and restated stockholders agreement, as amended, Coinvest and our executive officers will be required to vote the voting shares over which they have voting control in favor of Coinvest’s and the Chief Executive Officer's designees. At such time as Coinvest ceases to own at least 40% of the economic interests in Booz Allen Holding represented by its issued and outstanding common stock, Coinvest and our executive officers will use commercially reasonable efforts to amend the Board representation provisions of the amended and restated stockholders agreement, as amended, consistent with the reduced ownership position of Coinvest at that time.
Under the terms of the amended and restated stockholders agreement, as amended, Coinvest may compel each executive officer who is a party to the amended and restated stockholders agreement, as amended, to sell a certain number of securities issued by Booz Allen Holding in the event that Coinvest proposes to transfer securities issued by Booz Allen Holding to a third party purchaser.
Under the amended and restated stockholders agreement, as amended, in the event of any sale of shares of Class B non-voting common stock or Class C restricted common stock pursuant to the exercise of bring-along rights by Carlyle, certain transfers following an initial public offering, or pursuant to the exercise of registration rights (discussed below), such shares will be converted into shares of Class A common stock.
Coinvest has registration rights under the amended and restated stockholders agreement, as amended, with respect to 65,660,000 shares of Class A common stock that it owned as of June 3, 2014 and, in certain circumstances, other stockholders of Booz Allen Holding who are a party to the amended and restated stockholders agreement, as amended, may have the right, subject to certain exceptions, to request that certain securities (including shares of Class A common stock held by such stockholders and shares of Class A common stock issuable upon exercise of options or upon conversion from Class B or Class C common stock) be registered. To the extent that Coinvest acquires shares of Class B or Class C common stock or options exercisable for shares of Class A common stock, it would have registration rights with respect to the shares of Class A common stock issuable upon conversion or exercise thereof. Booz Allen Holding has agreed to indemnify the stockholders that are a party to the amended and restated stockholders

23



agreement, as amended, and their affiliates from liabilities resulting from the registration of securities of Booz Allen Holding pursuant to the amended and restated stockholders agreement, as amended.
Booz Allen Holding has certain repurchase rights under the amended and restated stockholders agreement, as amended, with respect to Class A, Class B, Class C and Class E common stock and options issued to a management stockholder under the Equity Incentive Plan for up to nine months after the occurrence of certain events specified in the amended and restated stockholders agreement, as amended. Similar repurchase rights exist for Class A, Class B, Class C and Class E common stock and options held by other stockholders of Booz Allen Holding that become an employee, consultant or independent contractor for certain competitors of Booz Allen Hamilton.
The amended and restated stockholders agreement, as amended, includes a waiver by management stockholders of certain rights to receive payments or other benefits that would constitute a “parachute payment” made in connection with a “change in ownership or control” of a corporation, within the meaning of Section 280G of the Internal Revenue Code of 1986, or the Code, as amended, which could reasonably be expected to result in the imposition of an excise tax on the management stockholder under Section 4999 of the Code or in the loss of any income tax deductions by Booz Allen Holding or the person making such payment under Section 280G of the Code. This waiver does not apply in certain circumstances, including at such time as Booz Allen Holding has publicly traded securities and where Booz Allen Holding obtains the requisite stockholder approval of such payments or the unaffiliated directors determine the waiver should not apply.
The amended and restated stockholders agreement, as amended, will terminate upon a sale or change of control of Booz Allen Holding or such time as more than 60% of its equity securities have been sold to the public.
Irrevocable Proxy and Tag-Along Agreements
In connection with the amendment and restatement of the stockholders agreement, Coinvest made a unilateral offer to each individual stockholder who was a party to the original stockholders agreement to grant such stockholder a new pro rata tag-along right on certain transfers by Coinvest to third-party purchasers. In exchange for this tag-along right, Coinvest has received an irrevocable proxy from each stockholder who entered into such agreement to vote such stockholders’ securities with respect to the election and removal of directors and to approve any company sale that has already been approved by the Board of Booz Allen Holding and the holders of a majority of our voting shares. This new tag-along right and proxy have been granted pursuant to separate irrevocable proxy and tag-along agreements entered into between Coinvest and each such individual stockholder and became effective on November 16, 2010. These arrangements will terminate at such time as Coinvest ceases to own at least 25% of the economic interests in Booz Allen Holding represented by its issued and outstanding common stock or such time as more than 60% of its equity securities have been sold to the public.
The Management Agreement and Indemnification Agreements
On July 31, 2008, Booz Allen Holding and Booz Allen Hamilton entered into a management agreement with TC Group V US, L.L.C., a company affiliated with Carlyle, or TC Group. On June 7, 2012, TC Group assigned all of its right, title and interest in, and obligations under, the management agreement to Carlyle Investment Management L.L.C., or Carlyle Investment Management. Pursuant to the management agreement, Carlyle Investment Management, as the assignee of TC Group, provides Booz Allen Holding and its subsidiaries, including Booz Allen Hamilton, with advisory, consulting and other services. Booz Allen Holding pays Carlyle Investment Management an aggregate annual fee of $1.0 million for such services, plus expenses. Furthermore, in consideration for any additional investment banking services provided by Carlyle Investment Management and other services other than advisory and consulting services described above, Carlyle Investment Management is entitled to receive additional reasonable compensation as agreed by the parties.
The management agreement also provides that Booz Allen Hamilton will indemnify Carlyle Investment Management and its officers, employees, agents, representatives, members and affiliates against certain liabilities relating to or arising out of the performance of the management agreement and certain other claims and liabilities. We have entered into indemnification agreements with each of our directors and executive officers. The indemnification agreements provide the directors and our executive officers with contractual rights to the indemnification and expense advancement rights provided under our second amended and restated bylaws, as well as contractual rights to additional indemnification as provided in the indemnification agreements.
We believe that the management and indemnification agreements are, in form and substance, substantially similar to those commonly entered into in transactions of like size and complexity sponsored by private equity firms. We further believe that the fees incurred by us under the management agreement are customary and within the range charged

24



by similarly situated sponsors. In addition, from time to time and in the ordinary course of business and at arms-length, we engage other Carlyle portfolio companies as subcontractors or service providers and they engage us as subcontractors or service providers. The cost and revenue associated with these related party transactions were approximately $368 thousand and $444 thousand, respectively, for fiscal 2014.
The Acquisition
In connection with the acquisition of Booz Allen Hamilton by Carlyle, our current and former executive officers (or their related family trusts) received a combination of current and deferred cash consideration as well as stock and options in Booz Allen Holding. Of the overall cash consideration, $158.0 million was structured as an interest in the deferred payment obligation and $80.0 million was deposited into escrow to fund certain purchase price adjustments, future indemnification claims under the merger agreement and for certain other adjustments. The remainder of the cash consideration was paid on the closing date as part of the acquisition. The current and former executive officers (or their related family trusts) receive their pro rata share of any payments of the deferred payment obligation and any releases of funds held in escrow to selling stockholders.
As of March 31, 2014, there was approximately $81.3 million of the deferred payment obligation outstanding, which includes accrued interest of $1.3 million, with approximately $38.6 million of indemnified pre-acquisition claims outstanding against the deferred payment obligation that may offset the future amount paid back to selling stockholders should such claims settle unfavorably. The ultimate value of our current and former executive officers’ (or their related family trusts’) interests in the deferred payment obligation will not be known until all such claims are resolved.

Other Relationships
Bryan E. Shrader, a principal at the Company, is the son of Dr. Ralph Shrader, our Chairman of the Board and Chief Executive Officer. He earned a base salary and bonus of $280,000 and retirement contributions of $28,789 in fiscal 2014. He also participates in the Company’s other benefit programs on the same basis as other employees at the same level. Mr. Shrader continues to be employed by us during fiscal 2015 under similar terms.
Cameron A. Mayer, a senior associate at the Company, is the son of Mr. John Mayer, an Executive Vice President of the Company. He earned a base salary and bonus of $209,802 and retirement contributions of $22,221 in fiscal 2014. Mr. Mayer also participates in the Company’s other benefit programs on the same basis as other employees at the same level. Mr. Mayer continues to be employed by us during fiscal 2015 under similar terms.
Albert L. Iannitto, an associate at the Company, is the brother-in-law of Mr. Joseph Logue, an Executive Vice President of the Company. He earned a base salary of $118,065 and retirement contributions of $9,796 in fiscal 2014. Mr. Iannitto also participates in the Company’s other benefit programs on the same basis as other employees at the same level. Mr. Iannitto continues to be employed by us during fiscal 2015 under similar terms.
Jennifer M. Piper, a lead associate at the Company, is the daughter of Mr. John M. McConnell, our Vice Chairman and an Executive Vice President of the Company. She earned a base salary of $112,402 and retirement contributions of $9,077 in fiscal 2013. Ms. Piper also participates in the Company’s other benefit programs on the same basis as other employees at the same level. Ms. Piper continues to be employed by us during fiscal 2015 under similar terms.
During fiscal 2014, we recorded expenses of $460,080 for the hiring and use of an aircraft solely for business purposes by a company of which our Chairman of the Board and Chief Executive Officer, Dr. Shrader, is the sole owner. The payments we made to the affiliate of Dr. Shrader for such use were based on the market rate charged to third parties for use of the aircraft. In addition, we recorded expenses of $16,974 in fiscal 2014 for technical consulting services incurred by such affiliate in connection with the operation of the aircraft and paid by the Company.

25



COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis provides a detailed description of our executive compensation philosophy and programs, the compensation decisions the Compensation Committee has made under those programs and the factors considered in making those decisions. The following discussion of compensation arrangements of our named executive officers for fiscal 2014 should be read together with the compensation tables and related disclosures set forth below. Although this Compensation Discussion and Analysis focuses on our named executive officers for fiscal 2014, the structure of our compensation programs is consistent for all Executive and Senior Vice Presidents.
Our named executive officers for fiscal 2014 were:
 
 
Title
Dr. Ralph W. Shrader
Chairman and Chief Executive Officer
Horacio D. Rozanski
President and Chief Operating Officer
Samuel R. Strickland
Executive Vice President, Chief Financial Officer and Chief Administrative Officer
Joseph Logue
Executive Vice President
John D. Mayer
Executive Vice President

Compensation Philosophy
Our executive compensation programs are based on the core belief that:
Transparency and collaboration increase overall performance.
Executive performance must be measured over both a short- and long-term horizon in order to maximize stockholder value creation.
Although we are a corporation, we use a partnership-style culture and compensation model which fosters internal collaboration through a single profit center and a firm-wide compensation pool.

The compensation of our named executive officers is performance-based and centered around a single profit center and firm-wide compensation pool. As further described below, each of our executives (including the named executive officers), which we define to include our Executive Vice Presidents and Senior Vice Presidents, were assigned to a cohort level (plus a separate and distinct level for our Chief Executive Officer), and all executives within each level are provided the same number of “points” and, generally, receive the same compensation. The separate level for our Chief Executive Officer is assigned 10% more points than executives in the highest cohort level, recognizing the Chief Executive Officer's unique role. We periodically undertake an evaluation of all of our executives, who are then assigned to a cohort level based on a review of each of their roles, responsibilities, competencies, and performance. From time to time, we may also pay additional amounts to one or more executives to recognize special roles or responsibilities. This distinctive system allows us to motivate our executives to act in the best interests of the Company through an emphasis on client service and by encouraging the rapid and efficient allocation of our people across markets, clients and opportunities.

Utilizing this philosophy, our executive compensation program has been designed to:
Attract, motivate and retain executives of outstanding ability to meet and exceed the demands of our clients;
Focus on optimizing stockholder value and fostering an ownership culture; and
Create appropriate firm-level rewards and penalties for exceeding or falling short of performance targets.

Setting Executive Compensation

Our compensation program allows us to attract and retain top tier talent and provide significant incentives for exceeding our performance targets, while also providing significant penalties for under-performance. The Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, and Chief Personnel Officer together recommend the target compensation for each level by reviewing historical compensation and considering factors such as projected financial performance, growth, and market conditions for the coming fiscal year. The recommendation is then reviewed with the Company's Executive Management Committee. The result is the dollar value per point multiplied by the number of points assigned to each executive to determine target compensation. Based upon their collective experience and reasoned business judgment, our Compensation Committee considers the recommendation from management and approves the final targeted monetary value per point.

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Benchmarking Compensation

We use relevant quantitative and qualitative measures to evaluate compensation for the fiscal year based on overall performance objectives and broad market parameters to include:
Peer Market Analysis (from proxy statements of peer companies); and
Technical Industry Market Survey Analysis (cross industry surveys for companies of similar size).

Our management consults with Mercer HR Consulting, which provides peer group analysis of market position and executive compensation design. For fiscal 2014, peer comparisons were performed against five companies which were selected based on similarities to the Company in size and/or industry as well as operational similarities. The selected companies were Accenture, ICF International, Leidos Holdings, Inc., ManTech International, and CACI International. In addition, management obtains market analysis and executive compensation survey data from nationally recognized survey providers, including Mercer U.S. Long Term Incentive and Equity Compensation Survey, Towers Watson Top Management Survey, and Towers Watson Professional Services Executive Survey. Salary, cash incentive compensation, and long-term stock incentives are considered in these analyses; however, we do not use survey data to set compensation; instead, we use it to confirm that our compensation is within a competitive range.
Compensation Elements

Our executive compensation consists of the following components, which are designed to provide a mix of fixed and at-risk compensation that is heavily tied to the achievement of our short and long-term financial goals and designed to promote a long-term career with the Company:

Element
Objective
Base Draw
Reflects the requirements of the marketplace to attract and keep our executive talent
Annual Incentives
Rewards our executives for performance against key operational and financial targets
Long Term Equity Incentives
Rewards our executives for growing our Company over the long term and aligns their interests with our stockholders
Benefits
Provides for the health and welfare of our executives
Retirement Benefits
Promotes long term commitment of our executives to the Company and builds financial security

A substantial amount of each executive's total annual compensation opportunity, including base draw and annual incentives, is at-risk and is directly tied to our annual financial performance. Our Chief Executive Officer and each of the other named executive officers' target annual compensation mix is approximately 60% base draw and approximately 40% annual incentives with both compensation elements tied to our performance. Other than as required by applicable federal, state and local labor law requirements, 100% is at risk based on annual performance targets and is delivered in a mix of cash and restricted stock as described below.
Base Draw

Our executives receive a monthly base draw payment, which is comparable to salary. In the event that annual Company performance is significantly below expectations, the base draw paid to each executive is at risk and any excess draw payments could be required to be returned, subject to the limitations established by applicable federal, state and local labor law requirements. For fiscal 2014, base draw was set at $2,500 per point and paid monthly. The base draw payout per point has remained constant for the past 7 years, and is expected to remain the same for fiscal 2015. For fiscal 2014, each of our named executive officers earned the base draw set forth in the “Salary” column of the Summary Compensation Table.

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Annual Incentive

The annual incentive portion of our executives' compensation is provided through our annual bonus program, which is delivered in cash and restricted stock, based on achievement of the Company's performance target metric with upward or downward adjustments for exceeding or falling below the targets. The performance target metric is set at or near the beginning of each fiscal year. For fiscal 2014, the annual incentive is based on actual Bonus EBITDA as compared to the target Bonus EBITDA. Payment of the annual incentive payments at target levels would generally occur when actual Bonus EBITDA is equal to the target Bonus EBITDA. A portion of any variance between target and actual Bonus EBITDA is reflected as an adjustment to the pool of funds available for the annual incentive payment, or the bonus pool. The amount of the adjustment is determined by the Compensation Committee in its sole discretion. A positive variance between the target and actual Bonus EBITDA would generally result in an increase in the bonus pool and a negative variance would generally result in a decrease in the bonus pool.

Bonus EBITDA is defined as our consolidated earnings before subtracting interest, taxes, depreciation, amortization, stock-option based and other equity-based compensation expenses, management, transaction and similar fees paid to the principal stockholders or their affiliates, as reflected on our audited consolidated financial statements for such fiscal year, and adjusting for certain extraordinary and non-recurring items as determined by the Compensation Committee. We base the annual incentive portion of our executives' compensation on Bonus EBITDA because we believe it is a direct reflection of the cash flow and operating profitability of our business and represents the element of our performance that executives can most directly impact through their management of the business.

Our Compensation Committee reviews the Bonus EBITDA result and approves any adjustments to the plan bonus pool based on year end operating results. The final bonus pool as approved by our Compensation Committee is distributed to our executives on a consistent per point basis.

FY14 Target Bonus EBITDA
$ 553.0 million
FY14 Actual Bonus EBITDA
$549.8 million

The target bonus pool for the achievement of fiscal year 2014 target Bonus EBITDA was $30.1 million. Based upon the actual results, the Compensation Committee approved a bonus pool of $30.45 million. The Compensation Committee approved a slight increase to the bonus pool notwithstanding actual results being less than one percent under target, given the relatively strong performance of the Company, which exceeded that of many others in the U.S. Government services industry, in the face of substantial challenges in the U.S. Government contracting environment.
In approving a $30.45 million bonus pool, the Compensation Committee took into consideration the difficult competitive and economic environment the Company faced last year, including the October 2013 U.S. Government shutdown during which the Company maintained all of its staff, thereby generating employee goodwill, and the unprecedented weather-related closures in the fourth quarter. Despite these challenges, the Company still increased net income and EBITDA as compared to the prior fiscal year by increasing the productivity of consulting staff and aggressively managing costs, while continuing to make strategic and tactical investments necessary for the long term health of the business.

Annual Incentive - Cash Component

The cash component of the annual incentive is the same for each executive within the same level. For the named executive officers, 55% of the annual incentive is provided in cash with the remainder delivered in restricted stock as described below. Executives who announce their retirement, which shall occur before the end of the calendar year, or whose expected termination is known before the issuance of the equity portion of the annual bonus and under circumstances that entitle them to a full or pro-rated bonus will be paid their annual bonus entirely in cash.

As explained below in the Defined Contribution Retirement Plan and Other Retirement Benefits section, as part of the annual bonus program we have developed a "supplemental bonus" to transition the prior Excess ECAP plan. The amount of the supplemental bonus is tied to Company performance and will vary based on total compensation per point.


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Annual Incentive - Equity Component

The equity component of the annual incentive award is granted in restricted stock and vests ratably over three years, subject to certain exceptions. The equity portion is intended to enable executives to own meaningful amounts of our stock.

For the named executive officers, 45% of the annual incentive is delivered in the form of restricted stock. The Company determines the number of shares of restricted stock to be granted to each executive by multiplying the total annual bonus amount by 45% and then applying a 20% premium to reflect the decreased liquidity and increased risk associated with the restricted stock. The resulting amount is divided by the fair market value of our stock on the date of grant to determine the number of shares granted.

Beginning in fiscal year 2015, the equity component of the annual incentive will be granted in restricted stock units instead of restricted stock. The restricted stock units are substantially similar to restricted stock with the actual shares being delivered at settlement as opposed to grant. Based on a review of our peer group and other public companies, restricted stock units are more common than restricted stock awards.

Annual Incentive - Fiscal 2014 Payments

The cash payments received by each of our named executive officers for fiscal 2014 is reflected in the “Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table. The equity grants for fiscal 2013 performance granted in fiscal 2014 are reflected in this year's “Stock Awards” column of the Summary Compensation Table. The equity grants for fiscal 2014 performance granted in fiscal 2015 will be reflected in next year's “Stock Awards” column of the Summary Compensation Table. Total payments for fiscal 2014 for each of our named executive officers under the annual bonus program are reflected below:
 
Name
Total Annual Incentive 1
($)
Amount Paid in Cash 1
($)
Amount to be Delivered in
Restricted Stock Units 2  
($)
Dr. Ralph W. Shrader
1,281,375

779,175
502,200
Horacio D. Rozanski
1,155,229

701,629
453,600
Samuel R. Strickland 3
840,000

840,000
Joseph Logue
1,155,229

701,629
453,600
John D. Mayer
889,891

533,491
356,400
 
(1)
Includes supplemental cash bonus payment.
(2)
Includes 20% premium.
(3)
Mr. Strickland retires on June 30, 2014 and his annual incentive was paid entirely in cash.

Certain of our named executive officers will be eligible to receive special cash bonuses for fiscal 2015 as described below under "Employment Agreements."

Long Term Incentives

We believe that our executives should hold meaningful amounts of equity to align their interests to those of our stockholders, and, accordingly, long-term equity compensation is an important component of our compensation program. Our long-term incentive program consists of awards of stock options to our executives under the Equity Incentive Plan. We believe stock options further our objective of aligning the interests of our executives with those of our stockholders by providing our executives with a continuing stake in our long-term success and by rewarding them based on the future growth in our equity value. We award stock options only upon hire of an executive and/or upon promotion, so that each executive within the same level would receive the same award value of options and total compensation. We do not grant stock options on an annual basis. Messrs. Rozanski and Logue received a grant of options, as reflected in the Grants of Plan Based Awards table below, upon each their promotion to a higher cohort.

For options granted on or after February 23, 2012, the vesting of stock options is time-based over 5 years. For options granted before February 23, 2012, the terms of the options granted to our named executive officers under the Equity Incentive Plan were negotiated between members of management and Carlyle at the time Carlyle acquired

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a majority equity interest in our company. A portion of the options vest based on continued service and the remainder vest based on achievement of EBITDA and cumulative cash flow performance goals.

The EBITDA target for option vesting for fiscal 2013 was $413.8 million, with the annual target level increasing by 12% each year thereafter. The annual cash-flow target for fiscal 2013 before adjustment was $267.6 million, with future annual targets increasing by approximately 12% per year, and subject to upward or downward adjustments for changes in net revenue growth.

For purposes of the options, “EBITDA” is calculated in the same manner as Bonus EBITDA under the annual performance bonus program; and “cash flow” means (i) EBITDA for a fiscal year less (ii) the increase in adjusted working capital (accounts receivable (net) less accounts payable, less other accrued expenses) in the fiscal year (which may be a positive or a negative number) less (iii) any overruns in the annual budget for capital expenditures in the financial plan approved by the Board for that fiscal year.

Certain of our named executive officers received special restricted stock grants in fiscal 2015 as described below under "Employment Agreements."
Benefits and Perquisites

Our employees are eligible to participate in a full complement of benefit plans. Our executives also participate in enhanced medical and dental plans, life insurance, AD&D and personal liability coverage at the Company's expense. Our executives receive perquisites including initiation fees for club memberships and reasonable dues on an annual basis, up to $15,000 per year for financial counseling, up to $7,500 every three years to update an estate plan, up to $3,000 for preparation of estate plans following relocation to a new tax jurisdiction and a one-time reimbursement of up to $5,000 for retirement financial planning. We believe that our executive benefits and perquisite programs are reasonable and necessary to sustain a fully competitive executive compensation program. For more detail on the perquisites that our named executive officers receive, see footnote 6 to the Summary Compensation Table below.
Other Payments

Some of our executives received options in 2008 pursuant to our Officers' Rollover Stock Plan to replace compensatory stock options previously granted by our predecessor. Holders of these options received dividend equivalent rights in connection with the payment of certain special dividends. The dividend equivalent rights entitle the executive to receive a cash payment on the option's fixed exercise date. The amount of the cash payment is based on the difference between adjustments made to the option exercise price in connection with the special dividends and the amount of the special dividends. The amount of the dividend equivalent payment credited for the two special dividends declared in fiscal 2013 is included in the Non-Qualified Deferred Compensation Table below.

In connection with the payment of the two $1.00 special dividends in fiscal 2014, holders of certain options granted pursuant to our Equity Incentive Plan received dividend equivalent rights that entitle the executive to receive, on the option's fixed vesting date, a cash payment based on the amount of the special dividend, subject to vesting of the related option. The amount of the dividend equivalent payment credited for the two special dividends declared in fiscal 2014 is included in the “All Other Compensation” column of the Summary Compensation Table below.
D efined Contribution Retirement Plan and Other Retirement Benefits

We provide retirement benefits to our executives (including our named executive officers) in order to help them build financial security for retirement, while allowing them to direct the investment of their retirement savings as they choose.

Employees’ Capital Accumulation Plan

All employees, including our named executive officers, were automatically eligible to participate in the tax-qualified Employees' Capital Accumulation Plan, or ECAP. We funded contributions to ECAP annually for each of our named executive officers. Effective April 1, 2014, ECAP transitioned from a discretionary contribution plan to an annual 401(k) matching program. All employees, including our named executive officers, will be eligible for an annual matching contribution of up to 6% of their eligible annual income as determined by the Internal Revenue Code. Each executive is also eligible to receive a payment that is equivalent to the annual tax-deferred contribution he or she is permitted to

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make to ECAP under the Internal Revenue Code. Executives may elect to have these funds deposited into a pre-tax or Roth 401(k), or the executive may simply receive the funds as a cash payment and taxed accordingly.

Our executives also historically received a supplemental cash payment equal to a percentage of eligible compensation in excess of the annual compensation limit of the Internal Revenue Code, plus an additional 23% investment incentive, which was intended to supplement the retirement plan contribution. In order to further tie the compensation of our executives to the performance of the Company, this supplemental cash payment, or Excess ECAP, was replaced last year with a separate bonus plan to deliver additional cash in connection with the annual incentive bonus which is dependent upon overall Company performance. The final Excess ECAP payment occurred in June 2013.

Additional Retirement Benefits

We provide additional retirement benefits to our executives (including our named executive officers) in order to provide them with additional security in retirement and promote a long-term career with our company. Our executives participate in the Officers' Retirement Plan, under which the executive may retire with full benefits after a minimum of either (x) age 60 with five years of service as an executive or (y) age 50 with ten years of service as an executive. An eligible executive who retires and does not receive severance benefits is entitled to receive a single lump sum retirement payment equal to $10,000 for each year of service as an executive, pro-rated as appropriate, and an annual allowance of $4,000 for financial counseling and tax preparation assistance. Our retirees are also eligible to receive comprehensive coverage for medical, pharmacy and dental health care. The premiums for this health care coverage are paid by the Company.
Employment Agreements

Historically, we have not entered into employment agreements with our executive officers. However, in January 2014, the Compensation Committee determined that it was appropriate to enter into employment agreements, effective April 1, 2014, with certain of our senior level executives, including Messrs. Rozanski and Logue to reflect recent leadership changes, to align their compensation to the market for similarly situated executives and to ensure retention of these critical leaders.

Under the employment agreements, each of Messrs. Rozanski and Logue will be entitled to receive a special cash bonus for fiscal 2015 in the amount of $525,000 and $425,000, respectively (such amount, the “Special Cash Bonus”). The payment of the Special Cash Bonus is subject to the continued employment of each executive through March 31, 2015, compliance with the terms of the employment agreements, and the Company generating more than $1.00 of net income. Each of Messrs. Rozanski and Logue also received a special grant of restricted common stock of 268,818 shares. The restricted stock will vest 33% on March 31, 2016, 34% on March 31, 2017, and 33% on March 31, 2018, subject to the executive’s continued employment through such dates.

The employment agreements provide for base salary and annual incentives that are consistent with that currently provided to the executives (and described above). Each executive officer will be eligible to participate in the employee benefit and executive perquisite programs of the Company on the same terms as similarly situated executive officers of the Company. Payments upon termination of employment will be governed by the Company’s severance, transition, retirement, disability or other policies, as applicable, as in effect from time to time, and subject the terms and conditions of such policies. The officer is required to provide the Company with not less than 90 days’ notice of termination of employment for any reason other than death or disability (or such longer notice period as is provided in the relevant officer policy). In addition, each executive agreed to be bound by perpetual confidentiality provisions and non-compete and non-solicit covenants while employed with us and for one year following termination of employment.

Frequency of Advisory Vote to Approve Executive Compensation

At the 2011 Annual Meeting of Stockholders, over 99% of the votes cast were in favor of our executive compensation structure and the stockholders elected to hold future votes on a three year cycle. There is an advisory vote scheduled for this Annual Meeting of Stockholders.

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Executive Holding Requirements

Equity holding requirements for all of our executives are in place to further align their interests to those of our stockholders. Until an executive has satisfied the holding requirements set forth below, the executive can not sell any equity granted as equity compensation by the firm. The applicable multiples for our named executive officers are set forth in the following table:
 
Named Executive Officers:
  
Ownership Guideline:
Chief Executive Officer
  
5x base draw
Other Named Executive Officers
  
3x base draw

In calculating an executive's ownership, Class A Common Stock, Class B Non-Voting Common Stock, and Class C Restricted Stock, vested in-the-money stock options and vested and unvested restricted stock issued under the Equity Incentive Plan, and all stock options issued under the Officers' Rollover Stock Plan will be considered owned by the executive.
Risk Assessment

We conducted an internal risk assessment of our compensation programs. Based on our approach of compensating our executives to foster the financial success of the Company as a whole and other elements of our compensation system, our Company's Executive Management Committee and the Compensation Committee of the Board, with the information from our internal review, concluded that our executive compensation program does not encourage undue risk-taking.
Government Limitations on Reimbursement of Compensation Costs

As a government contractor, we are subject to applicable federal statutes and the Federal Acquisition Regulation, or the FAR, both of which govern the reimbursement of costs by our government clients. FAR 31.205-6(p) limits the allowability of senior executive compensation to a benchmark compensation cap established each year by the Administrator of the Office of Federal Procurement Policy under Section 39 of the Office of Federal Procurement Policy Act (41 U.S.C. 435). The benchmark cap applies to the five most highly compensated employees in management positions. When comparing senior executive compensation to the benchmark cap, all wages, salary, bonuses and deferred compensation, if any, for the year, as recorded in our books and records, must be included. The current benchmark compensation cap, effective after January 1, 2012 and as published in the Federal Register, is $952,308. Any amounts over the cap are considered unallowable and are therefore not recoverable under our government contracts. The FAR also limits the allowability of reimbursement for non-senior executive compensation. On December 31, 2011 the National Defense Authorization Act for Fiscal Year 2012 (NDAA or Act) was enacted. The Act extends the current executive compensation cap on the five most highly compensated executives to cover all employees of Department of Defense (DoD) contractors. The FAR was amended on June 26, 2013 to impose this limitation on all contracts awarded by DoD, NASA, or the Coast Guard. On December 26, 2013, the Bipartisan Budget Act was enacted. This Act reduced the current executive compensation cap on the five most highly compensated executives to $487,000 and extended to cover all employees of federal contractors.  To date, the FAR has not been amended to impose this limitation.
Policy on Recovering Bonuses in the Event of a Restatement

We have included provisions in our Annual Incentive Plan and our Equity Incentive Plan that provide us with the ability to impose the forfeiture of bonuses and equity compensation and the recovery of certain bonus amounts and gains from equity compensation awarded under those plans in the event of an accounting restatement due to material non-compliance with any financial reporting requirements under the securities laws with respect to individuals who engage in misconduct or gross negligence that results in a restatement of our financial statements, individuals subjected to automatic forfeiture under Section 304 of the Sarbanes-Oxley Act of 2002, and, to the extent that, based on erroneous data, any award or payment is in excess of what would have been paid under the accounting restatement during the three-year period preceding the date on which a financial restatement is required, current or former executives, or as otherwise required under applicable laws or regulations. In addition, if an individual engages in certain other misconduct, we have the discretion to suspend vesting of all or a portion of any award and/or require the forfeiture or disgorgement to us of any equity award (including gains on the sale of the stock, if any) that vested, was paid or settled in the twelve months prior to or any time after the individual engaged in such misconduct.

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Certain Change in Control Provisions

Options granted under our Equity Incentive Plan prior to our initial public offering contain provisions that accelerate vesting in connection with certain change in control events. Under the Equity Incentive Plan, “change in control” is generally defined as the acquisition by any person (other than Carlyle) of 50% or more of the combined voting power of our company's then outstanding voting securities, the merger of our company if its stockholders immediately prior to the merger together with Carlyle do not own more than 50% of the combined voting power of the merged entity, the liquidation or dissolution of our company (other than in a bankruptcy proceeding or for the purposes of effecting a corporate restructuring or reorganization) or the sale of all or substantially all the assets of our company to non-affiliates. Vesting of options granted under our Equity Incentive Plan prior to our initial public offering is accelerated only as a result of events that result in liquidity to Carlyle. These provisions were negotiated at the time of Carlyle's investment in our company and are designed to motivate management to assist our principal stockholders in achieving a favorable return on their investment in our company.

Options granted under the Officers' Rollover Stock Plan vest upon a change in control.

For options granted after our initial public offering, in the event of a change in control, unless the plan administrator determines otherwise, all time-vesting awards under the Equity Incentive Plan will fully vest and a pro-rated portion of outstanding performance-vesting awards will vest based on the performance achieved as of the change in control.

In addition, if during the five year period after a change in control our executives' retiree medical plan is terminated or modified in a manner that is materially adverse to our executives, our executives, including our named executive officers, will be guaranteed their existing benefits under the plan through the fifth anniversary of the change in control and receive at the end of the five-year period a cash payment equal to the excess of the actuarial cost of the executive's benefits under the plan that would be accrued on the company's financial statements on the fifth anniversary of the change in control in the absence of the termination or modification over the amount that is accrued on our financial statements on the fifth anniversary of the change in control giving effect to the termination or modification (but excluding the accrual on the payment itself).
Policies on Timing of Equity Grants

It is our policy not to time the granting of equity awards in relation to the release of material, non-public information. Accordingly, regularly scheduled awards are permitted to be granted at times when there is material non-public information. We expect that we will generally grant awards to new hires and promotion awards effective at the time of the next scheduled Compensation Committee or Board of Directors meeting, and annual awards in June. In addition, it is our policy not to grant equity awards with effect from, or with an exercise price based on market conditions as they existed on, any date prior to the date on which the party in which granting authority is vested (typically our Compensation Committee or our Board of Directors) takes formal action to grant them.
Effect of Accounting and Tax Treatment on Compensation Decisions

Section 162(m) of the Internal Revenue Code imposes a limit on the amount of compensation that we may deduct in any one year with respect to certain “covered employees,” unless certain specific and detailed criteria are satisfied. Performance-based compensation, as defined in the Internal Revenue Code, is fully deductible if the programs are approved by stockholders and meet other requirements. As described above, all of our short-term non-equity incentive compensation is determined based upon the achievement of certain predetermined financial performance goals and follow criteria that generally permit us to deduct such amounts without being subject to limits under Section 162(m). Pursuant to applicable Treasury regulations, Section 162(m) does not apply to compensation paid or stock options or restricted stock granted under the compensation agreements and plans described in our initial public offering prospectus during the reliance transition period ending on the earlier of the date the agreement or plan is materially modified or the first stockholders meeting at which directors are elected during 2014. While we will continue to monitor our compensation programs in light of Section 162(m) and seek to pay deductible compensation whenever possible consistent with our overall compensation philosophy, our Compensation Committee considers it important to retain the flexibility to design compensation programs that are in the best long-term interests of our company and our stockholders, particularly as we continue our transition from a private to a public company. As a result, we have not adopted a policy requiring that all compensation be deductible and our Compensation Committee may conclude that paying compensation at levels that are subject to limits under Section 162(m) is nevertheless in the best interests of our company and our stockholders.


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Other provisions of the Internal Revenue Code can also affect compensation decisions. Section 409A of the Internal Revenue Code, which governs the form and timing of payment of deferred compensation, imposes sanctions, including a 20% penalty and an interest penalty, on a recipient of deferred compensation that does not comply with Section 409A. Our Compensation Committee takes into account the potential implications of Section 409A in determining the form and timing of compensation awarded to our executives and strives to structure its nonqualified deferred compensation plans to meet these requirements.

Section 280G of the Internal Revenue Code disallows a company's tax deduction for payments received by certain individuals in connection with a change in control to the extent that the payments exceed an amount approximately three times their average annual compensation and Section 4999 of the Internal Revenue Code imposes a 20% excise tax on those payments. As described above, options and restricted stock awarded under our Officers' Rollover Stock Plan and options granted under our Equity Incentive Plan have or will contain provisions that accelerate vesting of all or a portion of the awards in connection with a change in control. To the extent that payments upon a change in control are classified as excess parachute payments, our company's tax deduction would be disallowed under Section 280G.

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Compensation Tables and Disclosures
 
SUMMARY COMPENSATION TABLE
Name and Principal
Position
Year  1
Salary
Bonus 2
Stock
Awards  3
Option
Awards
Non-Equity
Incentive Plan
Compensation  4
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings  5
All Other
Compensation  7
Total
   
   
($)
($)
($)
($)
($)
($)
($)
($)
Dr. Ralph W. Shrader
Chairman and Chief Executive Officer  
2014
1,162,500

94,570
601,122
684,605

10,000
702,134

3,254,931

2013
1,162,500

431,385
612,266

10,000
1,579,196

3,795,347

2012
1,162,500

376,887
439,379

10,000
531,936

2,520,702

Horacio D. Rozanski  6
President and Chief Operating Officer
2014
1,050,000

85,275
426,600
211,500
616,354

13,807
718,163

3,121,699

Samuel R. Strickland
EVP, Chief Financial Officer and Chief Administrative Officer
2014
1,050,000

141,975
542,948
937,654

10,000
379,153

3,061,730

2013
1,050,000

389,640
553,014

10,000
1,981,871

3,984,525

2012
1,050,000

340,425
396,858

10,100
444,808

2,242,191

Joseph Logue  6
Executive Vice President
2014
1,050,000

85,275
426,600
211,500
616,354

14,729
835,360

3,239,818

John D. Mayer  6
Executive Vice President
2014
825,000

65,816
426,600
467,675

10,000
802,881

2,597,972

2013
825,000

306,135
434,511

10,000
1,899,956

3,475,602

2012
825,000

267,463
311,817

10,000
390,119

1,804,399

   
(1)
Each year is a reflection of our fiscal year which runs from April 1 to March 31. For example, 2014 reflects fiscal 2014 - April 1, 2013 to March 31, 2014.
(2)
This column represents the cash portion of the annual bonus paid in excess of the bonus paid under our annual performance bonus program based on Bonus EBITDA as described in "Compensation Discuss and Analysis -- Compensation Elements -- Annual Incentive."
(3)
This column represents the grant date value of restricted stock granted on July 1, 2013 as part of FY13 annual incentive. See “Compensation Discussion and Analysis -- Compensation Elements -- Annual Incentive.” The aggregate fair value of the awards was computed in accordance with FASB ASC Topic 718 using the valuation methodology and assumptions set forth in Note 17 to our financial statements for the fiscal year ended March 31, 2014, which are incorporated by reference herein, modified to exclude any forfeiture assumptions related to service-based vesting conditions. The amounts in this column do not reflect the value, if any, that ultimately may be realized by the executive.
(4)
This column reflects the cash portion of the annual bonus and supplemental bonus under our annual performance bonus program, which provides awards based on the achievement of corporate performance objectives. The portion of the award paid in cash is reported in the Summary Compensation Table with respect to the year in which the bonus is earned. The portion of the award paid in restricted stock is reported in the Summary Compensation Table with respect to the year in which the restricted stock is granted (which occurs in the following fiscal year). The annual performance bonus program is described more fully at “Compensation Discussion and Analysis - Annual Incentive.”
(5)
This column reflects the change in value of the cash retirement benefit accrued under the Officers' Retirement Plan for each of our named executive officers.
(6)
Messrs. Rozanski and Logue were not designated as named executive officers prior to 2014. Mr. Mayer was designated as a named executive officer in 2011 and 2013, but not in 2012.
(7)
The table below describes the elements included in All Other Compensation. The amounts reported in this column for years 2012 and 2013 have been updated from what was previously reported to reflect a reallocation among the reported fiscal years of a portion of the Company Non-Qualified Retirement Contribution. This change is based on reporting these contributions in the year of approval as opposed to the year of payment.



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OTHER COMPENSATION TABLE
Name
Dividend
Equivalents
on Vested
Stock
Options a
Club
Memberships
Financial
Counseling
Qualified
Company
Contributions
to 401(k)
Company Non-
Qualified
Retirement
Contributions
to Employees  b
Executive
Medical Plan
Contributions
Tax
Gross-Up c
Life
Insurance
Other d
Total
  
($)
($)
($)
($)
($)
($)
($)
($)
($)
($)
Dr. Ralph W. Shrader
280,000
11,556

15,000
38,769
273,623
35,502
12,788

21,791

13,105
702,134

Horacio D. Rozanski
402,040
26,737

11,950
35,436
189,418
35,502
1,815

2,160

13,105
718,163

Samuel R. Strickland
18,000
2,511

5,215
37,658
247,388
35,502
7,459

12,315

13,105
379,153

Joseph Logue
532,000
14,736

10,000
35,436
189,418
35,502
2,192

2,971

13,105
835,360

John D. Mayer
460,000
20,950

11,690
35,436
194,918
35,502
13,273

18,007

13,105
802,881

 
 
(a)
In connection with the payment of the two $1.00 special dividends in fiscal 2014, holders of certain options granted pursuant to our Equity Incentive Plan received dividend equivalent rights that entitle the executive to receive, on the option's fixed vesting date, a cash payment based on the amount of the special dividend, subject to vesting of the related option. The dividend equivalent earned in connection with the special dividends are included in this column.
(b)
Represents retirement plan contributions paid by the Company to the named executive officer as described above under “Compensation Discussion and Analysis -- Compensation Elements -- Defined Contribution Retirement Plan and Other Retirement Benefits.”
(c)
Includes tax gross-ups relating to life insurance coverage.
(d)
Includes: dental, supplemental medical, accident insurance, personal excess liability coverage, estate planning, and milestone anniversary awards.

GRANTS OF PLAN BASED AWARDS
   
 
  Estimated Future Payouts 
Under Non-Equity Incentive Plan Awards  1
 
Estimated Future Payouts
Under Equity Incentive
Plan Awards
 2
All Other
Stock
Awards;
Number of
Shares or
Stock
Units  3
All Other
Option
Awards;
Number of
Securities
Underlying
Options 4
Exercise
or Base
Price of
Option
Awards
 
($/Sh)
Grant Date
Fair Value
of Stock
and Option
Awards
 
($)
Threshold  
Target  
Max  
 
Threshold
Target
Max
Name
Grant
Date
($)
($)
($)
 
($)
($)
($)
Dr. Ralph W. Shrader
7/1/2013
 
434,775

 
 
 
426,870

 
34,213
 
 
601,122
Horacio D. Rozanski
7/1/2013
 
392,700

 
 
 
385,560

 
24,280
 
 
426,600
 
5/23/2013
 
 
 
 
 
 
 
 
45,000

18.35
 
Samuel R. Strickland
7/1/2013
 
392,700

 
 
 
385,560

 
30,902
 
 
542,948
Joseph Logue
7/1/2013
 
392,700

 
 
 
385,560

 
24,280
 
 
426,600
 
5/23/2013
 
 
 
 
 
 
 
 
45,000

18.35

 
John D. Mayer
7/1/2013
 
308,550

 
 
 
302,940

 
24,280
 
 
426,600
 
 
(1)
Reflects the portion of the target bonus levels for fiscal 2014 under our annual performance bonus plan, which provides awards based on the achievement of corporate performance objectives, payable in cash. The annual performance bonus plan is described more fully at “Compensation Discussion and Analysis - Compensation Elements - Annual Incentive.” Non-equity incentive plan awards have no minimum threshold or maximum cap payouts. The actual cash bonuses paid under the plan for fiscal 2014 are reflected in the Summary Compensation Table.
(2)
Reflects the dollar value of the portion of the target bonus levels for fiscal 2014 under our annual performance bonus plan that is delivered in restricted stock, including a 20% premium. Equity incentive plan awards have no minimum threshold or maximum cap payouts. The actual number of shares of restricted stock awarded under the plan with

36



respect to fiscal 2014 performance will be granted in the 2015 fiscal year based on the fair market value of our Class A common stock on the date of grant and will be reflected in the 2015 Summary Compensation Table. The annual performance bonus plan is described more fully under “Compensation Discussion and Analysis - Compensation Elements - Annual Incentive.”
(3)
Reflects the portion of the fiscal 2013 bonus under our annual performance bonus plan delivered in the form of restricted stock in July 2013.
(4)
The options vest and become exercisable, subject to continued employment, ratably on June 30, 2014, 2015, 2016, 2017 and 2018. These options fully vest and become exercisable immediately prior to the effective date of certain change in control events.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END
   
Option Awards  2
 
Stock Awards
Name
Number of
Securities
Underlying
Unexercised
Options
Exercisable
Number of
Securities
Underlying
Unexercised
Options
Unexercisable
 
Number of
Securities
Underlying
Unexercised
Unearned
Options
 
Option
Exercise Price
 
($)
 
Option
Expiration
Date
 
Number of 
Shares or Units of Stock
That Have Not
Vested 5
Market Value of
Shares or Units
of Stock That
Have Not Vested
($)  6
Dr. Ralph W. Shrader
 
 
 
 
 
 
 
 
 
59,620

1,311,640

 
140,000


 

 
4.28

 
11/19/2018
 
 
 
 

59,551

4  

 
0.01

 
9/15/2014
 
 
 
Horacio D. Rozanski
 
 
 
 
 
 
 
 
 
42,311

930,842

 
111,020


 

 
4.28

 
11/19/2018
 
 
 
 
27,000

6,000

1  
7,800

2  
6.45

7  
4/29/2020
 
 
 
 
 
 
 
4,200

3  
6.45

7  
4/29/2020
 
 
 
 

45,000

1  

 
18.35

 
5/23/2023
 
 
 
 

56,306

4  

 
0.01

 
9/15/2014
 
 
 
 
 
56,306

4  

 
0.01

 
9/15/2015
 
 
 
Samuel R. Strickland
 
 
 
 
 
 
 
 
 
53,850

1,184,700

 

6,000

1  
7,800

2  
6.45

7  
4/29/2020
 
 
 
 
 
 
 
4,200

3  
6.45

7  
4/29/2020
 
 
 
 

49,626

4  

 
0.01

 
9/15/2014
 
 
 
Joseph Logue
 
 
 
 
 
 
 
 
 
42,311

930,842

 
185,000


 

 
4.28

 
11/19/2018
 
 
 
 
18,000

6,000

1  
7,800

2  
6.45

7  
4/29/2020
 
 
 
 
 
 
 
4,200

3  
6.45

7  
4/29/2020
 
 
 
 

45,000

1  

 
18.35

 
5/23/2023
 
 
 
 

46,922

4  

 
0.01

 
9/15/2014
 
 
 
 
 
46,922

4  

 
0.01

 
9/15/2015
 
 
 
John D. Mayer
 
 
 
 
 
 
 
 
 
42,311

930,842

 
185,000


 

 
4.28

 
11/19/2018
 
 
 
 
27,000

6,000

1  
7,800

2  
6.45

7  
4/29/2020
 
 
 
 
 
 
 
4,200

3  
6.45

7  
4/29/2020
 
 
 
 

24,813

4  

 
0.01

 
9/15/2014
 
 
 
 
 
(1)
The options were granted pursuant to the Equity Incentive Plan and will vest and become exercisable, subject to the continued employment of the named executive officer, as set forth in the table below. These options fully vest and become exercisable immediately prior to the effective date of certain change in control events.

37



Name
Option Exercise Price
June 30, 2014
June 30, 2015
June 30, 2016
June 30, 2017
June 30, 2018
Total
Horacio D. Rozanski
$6.45
3,000
3,000
6,000
 
$18.35
9,000
9,000
9,000
9,000
9,000
45,000
Samuel R. Strickland
$6.45
3,000
3,000
6,000
Joseph Logue
$6.45
3,000
3,000
6,000