EURONET WORLDWIDE, INC.
4601 COLLEGE BOULEVARD
SUITE 300
LEAWOOD, KANSAS 66211

913-327-4200

 

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

TO BE HELD ON MAY 20, 2009

 

Euronet Worldwide, Inc., a Delaware corporation (“Euronet,” the “Company,” “we” or “us”), will hold the Annual Meeting of our Stockholders on Wednesday, May 20, 2009 at 2:00 p.m. (Central time) at Hyatt Place, 5001 W. 110th Street, Overland Park, Kansas 66211, USA, to consider and vote upon the following matters:

 

 

Our Board of Directors has fixed the close of business on March 31, 2009, as the record date for the determination of Stockholders entitled to notice of, and to vote at, the Annual Meeting and at any adjournment of the meeting.

 

All Stockholders are cordially invited to attend the meeting in person. However, to assure your representation at the meeting, you are urged to promptly vote and submit your proxy by telephone or internet or by marking, signing, dating and returning the enclosed proxy in the postage prepaid envelope provided for that purpose. Any Stockholder attending the meeting may vote in person even if he or she returned a proxy.

 

By Order of the Board,

 

 

Jeffrey B. Newman

Executive Vice President,

General Counsel and Secretary

 

April 16, 2009

EURONET WORLDWIDE, INC.
4601 COLLEGE BOULEVARD
SUITE 300
LEAWOOD, KANSAS 66211

913-327-4200

 

PROXY STATEMENT

 

 

ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 20, 2009

 

Euronet Worldwide, Inc. (“Euronet,” the “Company,” “we” or “us”) is furnishing this proxy statement in connection with the solicitation of proxies by our Board of Directors (the “Board”), for use at the Annual Meeting of Stockholders to be held on Wednesday, May 20, 2009, at 2:00 p.m. (Central time), at Hyatt Place, 5001 W. 100th Street, Overland Park, Kansas 66211, USA, and at any adjournment of the meeting (the “Annual Meeting”).

 

Record Date; Quorum; Shares Outstanding

 

Stockholders at the close of business on March 31, 2009 (the “Record Date”) are entitled to notice of, and to vote at, the Annual Meeting. The Stockholders will be entitled to one vote for each share of common stock, par value $0.02 per share (the “Common Stock”), held of record at the close of business on the Record Date. To take action at the Annual Meeting, a quorum composed of holders of one-third of the shares of Common Stock outstanding must be represented by proxy or in person at the Annual Meeting. On February 28, 2009, there were 50,406,566 shares of Common Stock outstanding. No shares of preferred stock are outstanding.

 

Date of Mailing

 

We are first sending this proxy statement, the accompanying proxy and our annual report to Stockholders for the year ended December 31, 2008 (the “Annual Report”) to Stockholders on or about April 16, 2009.

 

Shares of Common Stock represented by valid proxies that we receive at any time up to and including the day of the Annual Meeting will be voted as specified in such proxies. Any Stockholder giving a proxy has the right to revoke it at any time before it is exercised by attending the Annual Meeting and voting in person or by filing with Euronet’s Secretary an instrument of revocation or a duly executed proxy bearing a later date.

 

Each share of Common Stock issued and outstanding as of the Record Date will have one vote on each of the matters presented herein. Votes cast by proxy or in person at the Annual Meeting will be tabulated by the inspector of elections appointed for the Annual Meeting. To vote by mail, please complete the accompanying proxy card and return it to us as instructed in the proxy card. To vote using the telephone or electronically through the Internet, please refer to the instructions included with the proxy card. We will treat shares that are voted “For,” “Against” or “Withheld From” a matter as being present at the meeting for purposes of establishing a quorum. We will treat abstentions and broker non-votes also as shares that are present and entitled to be voted for purposes of determining the presence of a quorum.

 

Election of Directors

 

In an uncontested election, a Director nominee must be elected by a majority of the votes cast, in person or by proxy, regarding the election of that Director nominee. A “majority of the votes cast” for the purposes of Director elections means that the number of votes cast “For” a Director nominee’s election exceeds the number of votes cast as “Withheld From” for that particular Director nominee. If an incumbent Director is not re-elected in an uncontested election and no successor is elected at the same meeting, the Director must submit an offer to resign.

 

In a contested election, which occurs when the number of Director nominees exceeds the number of open seats on the Board at any time before the meeting, Director nominees will be elected by a plurality of the shares represented at the meeting. A “plurality” means that the open seats on the Board will be filled by those Director nominees who received the most affirmative votes, regardless of whether those Director nominees received a majority of the votes cast with respect to their election.

 

At the Annual Meeting, the election of Directors is considered to be uncontested because we have not been notified of any other nominees as required by our Bylaws. To be elected, each Director nominee must

receive a majority of votes cast regarding that nominee. Abstentions will have no effect on the election of Directors.

 

Amendments to the Certificate of Incorporation

 

Approval of the amendments to the Certificate of Incorporation require the affirmative vote of the holders of a majority of the outstanding common stock entitled to vote on the amendments. Abstentions will have the effect of a no vote.

 

Other Matters

 

All other matters will be determined by a vote of a majority of the shares present in person or represented by proxy and voting on such matters. Under Delaware law, abstentions are not considered votes cast and will have no effect on whether a matter is approved.

 

Broker Non-Votes

 

On certain routine matters, such as the election of Directors or the ratification of the appointment of KPMG as our independent registered public accounting firm, if you do not provide instructions on how you wish to vote, your broker will be allowed to vote for you. Your broker is prohibited from voting on other proposals. Those proposals for which your broker is not allowed to, or does not, vote on your behalf will result in broker “non-votes.” Broker non-votes will not count in determining the number of votes cast with respect to a proposal that requires a majority of votes cast and, therefore, will not affect the outcome of voting on such proposal. Broker non-votes will have the effect of a no vote with respect to the proposed amendments to the Certificate of Incorporation.

 

We will bear the entire cost of this solicitation of proxies. Our Directors, officers, and employees, without additional remuneration, may solicit proxies by mail, telephone and personal interviews. We will, if requested, reimburse banks, brokerage houses and other custodians, nominees and certain fiduciaries for their reasonable out-of-pocket expenses incurred in connection with the distribution of proxy materials to their principals.

 

We have retained InvestorCom, Inc., a proxy solicitation firm, for assistance in connection with the solicitation of proxies for the Annual Meeting for a fee of $5,000, plus additional charges per call for certain telephone solicitations, plus reimbursement of direct-out-of-pocket expenses for such items as printing, mailing, messenger delivery and other related items.

 

Stockholder Inquiries

 

If you have any questions about the matters proposed in this proxy statement or the procedures for voting your shares, please contact:

 

InvestorCom, Inc.
51 Locust Avenue
New Canaan, CT 06840
Banks and brokers call collect: (203) 972-9300
All others call toll-free: (877) 972 0090

 

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 20, 2009

 

This proxy statement and our annual report to Stockholders for the year ended December 31, 2008 are available to you at www.edocumentview.com/EEFT

 

WE WILL FURNISH ADDITIONAL COPIES OF THE ANNUAL REPORT, EXCLUDING EXHIBITS, WITHOUT CHARGE TO ANY STOCKHOLDER UPON WRITTEN REQUEST TO OUR GENERAL COUNSEL AND SECRETARY, JEFFREY B. NEWMAN, AT OUR ADDRESS SET FORTH HEREIN. WE WILL FURNISH EXHIBITS TO THE ANNUAL REPORT TO STOCKHOLDERS UPON WRITTEN REQUEST AND PAYMENT OF AN APPROPRIATE PROCESSING FEE.

 

As of the close of business on February 28, 2009, we had 50,406,566 shares of Common Stock issued and outstanding. The following table sets forth certain information with respect to the beneficial ownership of our Common Stock as of February 28, 2009, by: (i) each Euronet Director, nominee for Director and executive officers named in the summary compensation table, (ii) all Euronet Directors, nominees for Director and executive officers as a group, and (iii) each Stockholder known by Euronet beneficially to own more than 5% of our Common Stock.

 

 

 

 

 

Our Directors are as follows:

 

 

 

 

Classified Board

 

We currently have seven Directors divided among three classes as follows:

 

Class I — Michael J. Brown, Andrew B. Schmitt and M. Jeannine Strandjord;

 

Class II — Dr. Andrzej Olechowski and Eriberto R. Scocimara; and

 

Class III — Paul S. Althasen and Thomas A. McDonnell.

 

Messrs. Althasen and Brown are management Directors. The Board has determined that the five remaining Directors are independent Directors as defined in the listing standards for the Nasdaq Global Select Market.

 

Two Class III Directors are to be elected at the Annual Meeting for three-year terms ending at the Annual Meeting of Stockholders in 2012. The Board has nominated Paul Althasen and Thomas McDonnell for election as Class III Directors. Unless otherwise instructed, each signed and returned proxy will be voted for Mr. Althasen and Mr. McDonnell. Mr. Althasen and Mr. McDonnell have consented to serve as Directors of Euronet. If either Mr. Althasen or Mr. McDonnell is unable or subsequently declines to serve as a Director at the time of the Annual Meeting, the proxies will be voted for any alternative nominee who shall be designated by the present Board to fill the vacancy. We are not aware of any reason why Mr. Althasen or Mr. McDonnell will be unable or will decline to serve as a Director.

 

Nominees for Election at the Annual Meeting

 

The following information relates to the nominees indicated above, both of whom have served on our Board for at least five years.

 

PAUL S. ALTHASEN has served on our Board since May 2003. Mr. Althasen currently serves as Executive Vice President of Euronet. He joined Euronet in February 2003 in connection with Euronet’s acquisition of e-pay Limited, a UK company. Mr. Althasen is a co-founder and former CEO and Co-Managing Director of e-pay, and he was responsible for the strategic direction of e-pay since its formation in 1999. From 1989 to 1999, Mr. Althasen was a co-founder and Managing Director of MPC Mobile Phone Center, a franchised retailer of cellular phones in the UK. Previously, Mr. Althasen worked for Chemical Bank in London where he traded financial securities. Mr. Althasen has a B.A. (Honors) degree in business studies from the City of London Business School.

THOMAS A. MCDONNELL has been a Director of Euronet since its incorporation in December 1996 and he previously served on the boards of Euronet’s predecessor companies. Since October 1984, he has served as Chief Executive Officer of DST Systems, Inc., a Stockholder of Euronet. Since January 1973 (except for a 30 month period from October 1984 to April 1987) he has also served as President of DST Systems, Inc. From 1973 to September 1995, he served as Treasurer of DST Systems, Inc. Mr. McDonnell is currently a director of DST Systems, Inc., Commerce Bancshares, Inc., Garmin Ltd., Blue Valley Ban Corp. and Kansas City Southern. He is a member of the audit committees of Kansas City Southern, Commerce Bancshares, Inc. and Garmin Ltd. Mr. McDonnell has a B.S. in Accounting from Rockhurst College and an M.B.A. from the Wharton School of Finance.

 

As noted above, Mr. McDonnell currently serves on the boards of five other public companies. He has served on multiple public company boards during his entire, thirteen-year tenure as a Euronet Director. Nevertheless, during his tenure as a Euronet director, and in particular during his three-year term now expiring, Mr. McDonnell has participated assiduously in Euronet Board matters and made valuable contributions as a Director. The Board therefore unanimously recommends that you vote for Mr. McDonnell as a Class III Director despite his membership on other public company boards.

 

Other Directors

 

The following information relates to our other Directors whose terms of office will extend beyond 2009. All of these Directors have served on our Board for at least five years.

 

MICHAEL J. BROWN is one of the founders of Euronet and has served as our Chairman of the Board and Chief Executive Officer since 1996 and served as our President from December 11, 2006 to June 11, 2007. He also founded our predecessor in 1994 with Daniel R. Henry, our former President and Chief Operating Officer. Mr. Brown has been a Director of Euronet since our incorporation in December 1996 and previously served on the boards of Euronet’s predecessor companies. In 1979, Mr. Brown founded Innovative Software, Inc., a computer software company that was merged in 1988 with Informix. Mr. Brown served as President and Chief Operating Officer of Informix from February 1988 to January 1989. He served as President of the Workstation Products Division of Informix from January 1989 until April 1990. In 1993, Mr. Brown was a founding investor of Visual Tools, Inc. Visual Tools, Inc. was acquired by Sybase Software in 1996. Mr. Brown is currently a director of Blue Valley Ban Corp. and Nexxus Lighting, Inc. Mr. Brown received a B.S. in electrical engineering from the University of Missouri — Columbia in 1979 and a M.S. in molecular and cellular biology at the University of Missouri — Kansas City in 1997.

 

ANDREW B. SCHMITT has served on our Board since September 24, 2003. Mr. Schmitt has served as President and Chief Executive Officer of Layne Christensen Company since October 1993. For approximately two years prior to joining Layne Christensen Company, Mr. Schmitt was a partner in two privately owned hydrostatic pump and motor manufacturing companies and an oil and gas service company. He served as President of the Tri-State Oil Tools Division of Baker Hughes Incorporated from February 1988 to October 1991. Mr. Schmitt serves on the board of directors of Layne Christensen Company, as well as the boards of its subsidiaries and affiliates. Mr. Schmitt holds a bachelor of science degree from the University of Alabama School of Commerce and Business.

 

M. JEANNINE STRANDJORD has served on our Board since March 26, 2001. From September 2003 until November 2005 when she retired, Ms. Strandjord served as Senior Vice President and Chief Integration Officer of Sprint Corporation (“Sprint”) with responsibility for implementation of Sprint’s transformation, including overall program management of comprehensive process redesign and organizational development. From January 2003 to September 2003, she was Senior Vice President of Financial Services of Sprint. Other jobs at Sprint included Chief Financial Officer of the Global Markets Group, Senior Vice President and Treasurer, Vice President and Controller, and Vice President and Chief Financial Officer of Amerisource, a subsidiary of Sprint, where she started at Sprint in 1985. Prior to joining Sprint, Ms. Strandjord was with Macy’s Midwest and had held positions with Kansas City Power & Light Co. and Ernst and Whinney. Ms. Strandjord holds a bachelor’s degree in accounting and business administration from the University of Kansas and is a certified public accountant. She is a member of the

board of six registered investment companies which are a part of American Century Funds, a member of the board and the audit committee of DST Systems, Inc. and a member of the board of Charming Shoppes, Inc.

 

DR. ANDRZEJ OLECHOWSKI has served on our Board since May 2002. He previously served as a Director of Euronet from its incorporation in December 1996 until May 2000. Dr. Olechowski is currently the President of Conseil DG, a Polish consulting company. From 1995 until 2008, Dr. Olechowski served as a Senior Advisor for Central Europe Trust, Poland, a consulting firm. He has held several senior positions with the Polish government: from 1993 to 1995, he was Minister of Foreign Affairs and in 1992 he was Minister of Finance. From 1992 to 1993, and again in 1995, he served as economic advisor to President Walesa. From 1991 to 1992, he was Secretary of State in the Ministry of Foreign Economic Relations and from 1989 to 1991 he was Deputy Governor of the National Bank of Poland. From May 1998 to June 2000, Dr. Olechowski served as the Chairman of Bank Handlowy w Warszavie SA (Poland). Currently, Dr. Olechowski sits on the Supervisory Boards of Bank Handlowy w Warszawie SA (Poland) and Vivendi (France) and the boards of various charitable and educational foundations. He received a Ph.D. in Economics in 1979 from the Central School of Planning and Statistics in Warsaw.

 

ERIBERTO R. SCOCIMARA has been a Director of Euronet since its incorporation in December 1996 and previously served on the boards of Euronet’s predecessor companies. Since April 1994, Mr. Scocimara has served as President and Chief Executive Officer of the Hungarian-American Enterprise Fund (“HAEF”), a private company that is funded by the U.S. government and invests in Hungary. Since 1984, Mr. Scocimara has also been the President of Scocimara & Company, Inc., an investment management company. Mr. Scocimara is currently a director of HAEF, American Reprographics Company (ARP) and several privately owned companies. He is a member of the audit committee of ARP. He was a member of the board of Roper Industries until June 2006 and was the chairman of the audit committee of Roper Industries until February 2006. He has a Licence de Science Economique from the University of St. Gallen, Switzerland, and an M.B.A. from Harvard University.

 

Board Recommendation

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT YOU VOTE “FOR” THE ELECTION OF MR. PAUL S. ALTHASEN AND MR. THOMAS A. MCDONNELL AS CLASS III DIRECTORS OF EURONET.

 

Our Stockholders are being asked to approve a proposal to amend our Certificate of Incorporation to eliminate the requirement that the Company indemnify all non-executive employees and agents of the Company. The Board has adopted, declared advisable and directed to be submitted to the Stockholders a proposed amendment to Article EIGHTH of the Certificate of Incorporation. The Board recommends that the Stockholders vote “FOR” the proposed amendment. As amended, Article EIGHTH would read in its entirety as follows:

 

EIGHTH: The Corporation shall indemnify each person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, by reason of the fact that the person is or was a director or an officer of the Corporation, or is or was a director or officer of the Corporation serving at the request of the Corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, to the fullest extent permitted by Section 145 of the General Corporation Law of the State of Delaware, as it may be amended from time to time.

 

Reasons and Effect of the Proposed Amendment

 

Article EIGHTH of Euronet’s Certificate of Incorporation currently requires that the Company indemnify, in addition to Directors and officers of the Company, all individuals serving as employees and agents of the Company, to the fullest extent permitted under Section 145 of the Delaware General Corporation Law. Under the proposed amendment to Article EIGHTH, the requirement that the Company indemnify all employees and agents of the Company would be eliminated. Under Section 145 of the Delaware General Corporation Law, the Company would be permitted to indemnify employees and agents as determined by the Company from time to time to the extent permitted by Section 145. The Company would continue to be required under Article EIGHTH to indemnify each person who is or was a Director or officer of the Company, or is or was a Director or officer of the Company serving at the request of the Company as a Director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, including service with respect to an employee benefit plan, to the fullest extent permitted by Section 145 of the Delaware General Corporation Law, as amended from time to time. The amendment is not being proposed in response to any specific indemnification claim or matter.

 

The Board believes that it would be in the best interests of the Company and its Stockholders to give the Board the flexibility to determine on a case-by-case basis whether non-executive employees or agents of the Company should be entitled to be indemnified by the Company, rather than requiring such indemnification for all non-executive employees and agents in the Certificate of Incorporation. The Board does not believe that mandatory indemnification is required to attract and retain qualified non-executive employees and agents of the Company. Mandatory indemnification of non-executive employees and agents could result in substantial liability and expense to the Company with little benefit to the Company, and such indemnification could be deemed to apply to a broad range of agents of the Company. For example, a Delaware chancery court held in a recent case that mandatory indemnification of agents could include indemnification of an outside law firm. For these reasons, the Board believes that the Certificate of Incorporation should be amended to eliminate mandatory indemnification of all non-executive employees and agents of the Company.

 

Required Votes and Board Recommendations

 

The affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon is required for the approval of the proposed amendment to Article EIGHTH of our Certificate of Incorporation.

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL 2 REGARDING APPROVAL OF THE PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO ELIMINATE THE MANDATORY INDEMNIFICATION OF NON-EXECUTIVE EMPLOYEES AND AGENTS OF THE COMPANY.

 

Our Stockholders are being asked to approve a proposal to amend our Certificate of Incorporation to permit Stockholder action to be taken only at a duly called annual or special meeting of Stockholders and to eliminate Stockholder action by written consent. The Board has adopted, declared advisable and directed to be submitted to the Stockholders a proposed amendment to the Certificate of Incorporation to add Article ELEVENTH as set forth below. The Board recommends that the Stockholders vote “FOR” the proposed amendment. Article ELEVENTH would read in its entirety as follows:

 

ELEVENTH: Any action required or permitted to be taken by the stockholders of the Corporation must be taken at a duly called annual or special meeting of stockholders of the Corporation, and the power of stockholders to consent in writing, without a meeting, to the taking of any action is specifically denied. Notwithstanding the foregoing sentence, the holders of any class or series of Preferred Stock shall be entitled to take action by written consent to such extent, if any, as may be provided herein.

 

Reasons and Effect of the Proposed Amendment

 

Under the Delaware General Corporation Law, unless otherwise provided in a corporation’s certificate of incorporation, any action required or permitted to be taken by stockholders at a meeting may be taken without notice, without a meeting and without a stockholder vote if a written consent setting forth the action to be taken is signed by the holders of outstanding shares of stock having the requisite number of votes that would be necessary to authorize the action at a meeting of stockholders at which all shares entitled to vote were present and voted. Our Certificate of Incorporation does not currently address Stockholder action by written consent. Consequently, the holders of the requisite number of shares of our Common Stock may take action without notice, without a meeting and without a Stockholder vote. If adopted, the proposed amendment to our Certificate of Incorporation will eliminate the potential for Stockholders to act by written consent and will require that any action of Stockholders be taken at a duly called annual or special meeting of Stockholders.

 

The Board is proposing the amendment at this time in order to give all Stockholders of the Company the opportunity to participate in determining any proposed action of Stockholders and to allow the Board the opportunity to give advance consideration to, and to give the Stockholders its recommendation with respect to, any such proposed action. The Board believes that it is appropriate to prevent the holders of a majority of outstanding voting securities from taking unannounced action and from using the written consent procedure to take action affecting the rights of all of our Stockholders without such action being fully considered by all of our Stockholders at a formal meeting of Stockholders. The proposed amendment is also intended to protect the Company and its Stockholders from unfair or coercive takeover tactics. As part of a hostile takeover attempt, hostile bidders often attempt to force a response by the target company through threats or attempts to secure stockholder action without a meeting, which may not provide the board of directors of the target company with a reasonable opportunity to consider whether such hostile bid or stockholder proposal is in the best interests of the stockholders of the target company. The proposed amendment is intended to eliminate the Company’s vulnerability to such tactics and to ensure that appropriate takeover bids for the Company can be considered in a deliberate, proper and fully informed manner.

 

The proposed amendment will prevent Stockholders from taking action other than at an annual or special meeting of Stockholders. The bylaws provide that only the Board may call special meetings of Stockholders. Consequently, if the proposed amendment is approved, the Stockholders would no longer have the ability to take corporate action between annual meetings of Stockholders without the approval of the Board.

 

Potential Anti-Takeover Effect and Other Provisions

 

The proposal to eliminate the ability of Stockholders to act by written consent could have a potential anti-takeover effect. The effect of the proposal might render more difficult or discourage a merger, tender

offer, proxy contest or change in control and the removal of management, which Stockholders might otherwise deem favorable. The proposal, if adopted, may be disadvantageous to Stockholders to the extent that it has the effect of delaying or discouraging a future takeover attempt that is not approved by the Board but which a majority of the Stockholders may deem to be in their best interests. The amendment to the Certificate of Incorporation is not being proposed in response to any attempt to acquire control of the Company, to obtain representation on the Board, or to take significant corporate action and the Company is not aware of any such plans. Our Board does not currently have any plans to implement additional measures that may have an anti-takeover effect.

 

Various provisions of our Certificate of Incorporation and bylaws and of Delaware corporate law may discourage, delay or prevent a change in control or takeover attempt of Euronet by a third party that is opposed by our Board, including the following: (a) authorization of “blank check” preferred stock that could be issued by our Board to make it more difficult for a third party to acquire, or to discourage a third party from acquiring, a majority of our outstanding voting stock; (b) classification of our Board into three classes serving staggered three-year terms; (c) non-cumulative voting for Directors; (d) control by our Board of the size of our Board; (e) limitations on the ability of Stockholders to call special meetings of Stockholders; (f) a supermajority vote requirement for Stockholder approval of amendments to the provisions of the Certificate of Incorporation providing for a classified Board and authorizing the Board to determine the number of Directors; and (g) advance notice requirements for nominations of candidates for election to our Board or for proposing matters that can be acted upon by our Stockholders at Stockholder meetings.

 

In addition, we have adopted a stockholder rights plan, which permits holders of rights to acquire our Common Stock for effectively one-half of the market price if a person or entity acquires 15% or more of our Common Stock, subject to certain conditions. Also, a “change of control” constitutes an event of default under our credit agreement, and holders of our outstanding convertible debentures may require us to purchase the debentures upon a “change of control” (as defined in the indentures for the debentures) and may receive additional shares upon conversion of the debentures in connection with a “change of control”. As of March 16, 2009, we had $245 million principal amount of convertible debentures outstanding.

 

We also are subject to Section 203 of the Delaware General Corporation Law. In general, Section 203 prohibits a publicly held Delaware corporation from engaging in a business combination with an interested stockholder for a period of three years following the date the person became an interested stockholder, unless the business combination or the transaction in which the person became an interested stockholder is approved in a prescribed manner. Generally, a business combination includes mergers, consolidations, sales or other dispositions of assets having an aggregate value in excess of 10% of the consolidated assets of the corporation and certain transactions that would increase the interested stockholder’s proportionate share ownership in the corporation. Generally, an interested stockholder is a person who owns 15% or more of a corporation’s voting stock or is an affiliate or associate of the corporation and owned 15% or more of the corporation’s voting stock within three years prior to the determination of interested stockholder status. The existence of this provision could prevent a takeover of Euronet with respect to transactions not approved in advance by our Board, including takeover attempts that might result in a premium over the market price of our Common Stock.

 

Required Votes and Board Recommendations

 

The affirmative vote of the holders of a majority of the outstanding shares of Common Stock entitled to vote thereon is required for the approval of the proposed amendment to our Certificate of Incorporation to add new Article ELEVENTH.

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL 3 REGARDING APPROVAL OF THE PROPOSED AMENDMENT TO OUR CERTIFICATE OF INCORPORATION TO PERMIT STOCKHOLDER ACTION TO BE TAKEN ONLY AT A DULY CALLED ANNUAL OR SPECIAL MEETING AND TO ELIMINATE STOCKHOLDER ACTION BY WRITTEN CONSENT.

 

Our Board has adopted, subject to the approval of our Stockholders, amendments to the 2006 Stock Incentive Plan which are summarized below. A copy of the 2006 Stock Incentive Plan, as proposed to be amended, is attached as Appendix 1 to this Proxy Statement. The following description of the material features of the 2006 Stock Incentive Plan, as proposed to be amended, is qualified in its entirety by reference to the provisions of the 2006 Stock Incentive Plan set forth in Appendix 1.

 

Summary of Proposed Amendments

 

We are asking the Stockholders to approve the following proposed amendments to the 2006 Stock Incentive Plan:

 

 

We believe that equity compensation aligns the interests of management and employees with the interests of other Stockholders. We are proposing the amendments to the 2006 Stock Incentive Plan so that we can continue to grant equity compensation to management and employees.

 

Description of 2006 Stock Incentive Plan

 

General

 

The 2006 Stock Incentive Plan provides for grants of non-qualified stock options and incentive stock options. The 2006 Stock Incentive Plan also provides for grants of restricted shares, restricted stock units, bonus shares, stock appreciation rights, performance awards, performance units and performance shares. The objectives of the 2006 Stock Incentive Plan are to strengthen key employees’ commitment to our success, to stimulate key employees’ efforts on our behalf and to help us attract new employees with the education, skills and experience we need and retain existing key employees.

 

Prohibitions of Repricing

 

The 2006 Stock Incentive Plan has been amended to prohibit the “repricing” of outstanding stock options and stock appreciation rights unless prior Stockholder approval is obtained. The terms of such awards may not be amended to reduce the exercise price of such awards or to cancel such awards in exchange for other stock options or stock appreciation rights with an exercise price that is less than the exercise price of such awards without Stockholder approval. The prohibition does not apply to equitable adjustments of awards in connection with stock splits and similar transactions.

 

Eligibility and Limits on Awards

 

Any Director, key employee or independent contractor of Euronet or any majority owned subsidiary is eligible to receive awards under the 2006 Stock Incentive Plan. As of December 31, 2008, there were five non-employee directors, seven executive officers and approximately 2,500 employees other than executive officers who are eligible to receive awards. No determination has been made as to which of our employees and directors will receive grants under the 2006 Stock Incentive Plan, as proposed to be amended, and therefore the benefits to be allocated to any individual or to any group of employees or directors are not presently determinable.

 

The 2006 Stock Incentive Plan places limits on the maximum amount of awards that may be granted to any employee in any one year period. Under the 2006 Stock Incentive Plan, no employee may receive awards that cover in the aggregate more than 400,000 shares in any one-year period. We are proposing to amend the 2006 Stock Incentive Plan to increase this amount to 500,000 shares. This limitation includes awards of bonus shares that are paid in that same year on account of the satisfaction of one or more performance goals under our Executive Annual Incentive Plan.

 

Administration

 

The 2006 Stock Incentive Plan may be administered by our Board or one or more committees of our Board (collectively, the “Plan Committee”). The 2006 Stock Incentive Plan is currently administered by the Compensation Committee. The Plan Committee selects the eligible participants to whom awards will be granted and sets the terms of such awards, including any performance goals applicable to annual and long-term incentive awards. The Plan Committee may delegate its authority under the 2006 Stock Incentive Plan to officers of the Company, subject to guidelines prescribed by the Plan Committee, but only with respect to grants made to employees who are not subject to Section 16 of the Exchange Act or Section 162(m) of the Code.

 

Shares Reserved for Awards

 

If the proposed amendment is approved, the 2006 Stock Incentive Plan will provide for up to 8 million shares of Common Stock to be used for awards, in addition to shares reallocated from the Prior Plan. The

shares issued under the 2006 Stock Incentive Plan may consist, in whole or in part, of authorized and unissued shares or treasury shares, and to the extent any award under the 2006 Stock Incentive Plan is exercised, cashed out, terminates, expires or is forfeited without payment being made in the form of shares of Common Stock, the shares subject to such award that were not so paid will again be available for distribution under the 2006 Stock Incentive Plan. In addition, except with respect to certain share limitations applicable to incentive stock options, any shares of Common Stock that are used for full or partial payment of the purchase price of shares of Common Stock with respect to a stock option exercise and any shares of Common Stock withheld by us for the purpose of satisfying any tax withholding obligation shall automatically become available under the 2006 Stock Incentive Plan and not counted against the authorized limit. Unless otherwise determined by the Plan Committee, stock options may be exercised by payment in cash or tendering shares of Common Stock to us in full or partial payment of the exercise price, or by net exercise.

 

We are also proposing to amend the 2006 Stock Incentive Plan to authorize the issuance under the 2006 Stock Incentive Plan of the following additional shares of Common Stock: (1) shares available for the issuance of awards under the Prior Plan and (2) shares subject to awards outstanding under the Prior Plan to the extent such awards expire or are cancelled or terminated without shares of Common Stock being issued. As of March 31, 2009, 172,185 shares remained available for issuance in connection with new awards under the Prior Plan and 1,435,349 shares were subject to awards outstanding under the Prior Plan. If the proposed amendments to the 2006 Stock Incentive Plan are approved by the Stockholders, thereafter no additional awards will be granted under the Prior Plan. Awards outstanding under the Prior Plan will remain subject to the terms of the Prior Plan. If the proposed amendments to the 2006 Stock Incentive Plan are not approved by the Stockholders, additional awards may be granted under the Prior Plan until March 25, 2012.

 

The number of shares of Common Stock authorized for awards is subject to adjustment for changes in capitalization, reorganizations, mergers, stock splits, and other corporate transactions as our Board or the Plan Committee determines to require an equitable adjustment. The 2006 Stock Incentive Plan will remain in effect until all the shares available have been used to pay awards, subject to the right of our Board to amend or terminate the 2006 Stock Incentive Plan at any time. Unless the 2006 Stock Incentive Plan is re-approved by the Stockholders, no awards will be issued pursuant to the Plan after May 20, 2019.

 

General Terms of Awards

 

The Plan Committee selects the service providers (employees, non-employee directors and independent contractors) who receive awards and sets the term of each award. The Plan Committee has the power to determine the terms of the awards granted, including the number of shares subject to each award, the form of consideration payable upon exercise, the period in which the award may be exercised after termination of employment, and all other matters.

 

The Plan Committee will also set the vesting conditions of the award, except that vesting will be accelerated if there is a change of control of Euronet and a participant’s employment is terminated other than for cause or “Good Reason” as defined in the 2006 Stock Incentive Plan within one year following such change of control.

 

Awards granted under the 2006 Stock Incentive Plan are not generally transferable by the holder except in the event of the employee’s death or unless otherwise required by law or provided in an award agreement. An award agreement may provide for the transfer of an award in limited circumstances to certain members of the grantee’s family or a trust or trusts established for the benefit of such a family member. Any such transfer, if permitted under the award agreement, cannot be for consideration, other than nominal consideration. Other terms and conditions of each award will be set forth in award agreements, which can be amended by the Plan Committee.

 

Performance Awards

 

Performance Unit and Performance Share awards may be granted under the 2006 Stock Incentive Plan. Such awards will be earned only if corporate, business unit or individual performance objectives over performance cycles, established by or under the direction of the Committee, are met. Awards may be paid in the form of cash, shares of Common Stock or any combination thereof, as determined by the Committee.

Similarly, the exercise, vesting or payment, as the case may be, of stock options, stock appreciation rights, restricted stock and restricted stock units may be made subject to the achievement of performance goals, and such awards are referred to in the plan as “Performance Awards.” The performance objectives may vary from participant to participant, group to group and period to period and may be based on internal or external requirements. Performance Awards that are intended to constitute “qualified performance-based compensation” (see discussion below under the heading “Federal Income Tax Consequences”) will be based on satisfaction of certain performance objectives set forth and described in the 2006 Stock Incentive Plan. The proposed amendments to the 2006 Stock Incentive Plan modify the enumerated performance goals to include: (i) operating income (either in the aggregate or on a per share basis); (ii) net earnings on either a LIFO or FIFO basis (either in the aggregate or on a per share basis); (iii) where applicable, growth or rate of growth of any of the performance goals; and (iv) accomplishment of mergers, acquisitions, dispositions, public offerings or similar extraordinary business transactions.

 

If a Performance Award is granted by the Plan Committee under the 2006 Stock Incentive Plan, then the lapsing of restrictions thereon and the distribution of cash, shares or other property pursuant thereto, as applicable, will be subject to the achievement of one or more objective performance goals established by the Committee, which are to be based on the attainment of one or any combination of the following:

 

 

The applicable incentive goals may be applied on a pre- or post-tax basis and the Plan Committee may, when the applicable incentive goals are established, provide that the formula for such goals may include or exclude items to measure specific objectives, such as losses from discontinued operations, extraordinary gains or losses, the cumulative effect of accounting changes, acquisitions or divestitures, foreign exchange impacts and any unusual, nonrecurring gain or loss. As established by the Plan Committee, the incentive goals may

include, without limitation, GAAP and non-GAAP financial measures. In addition to the foregoing performance goals, the performance goals shall also include any performance goals that are set forth in the Company’s Executive Annual Incentive Plan, which was last approved by the Company’s Stockholders on May 18, 2006, which are incorporated into the Plan by reference.

 

If the Stockholders approve the proposed amendments to the 2006 Stock Incentive Plan, the expanded list of performance goals will be deemed to be Stockholder-approved performance goals in accordance with the requirements of Section 162(m) of the Code until the first meeting of Stockholders in 2014. Under Section 162(m), performance goals must be approved by the Stockholders every five years in order for awards based upon such goals to constitute “qualified performance-based compensation.” The end of the five-year period under Section 162(m) of the Code for the Stockholder-approved performance goals currently set forth in the 2006 Stock Incentive Plan is the first meeting of Stockholders in 2011.

 

Restricted Stock

 

Restricted shares of Common Stock may also be awarded. The restricted shares will vest and become transferable upon the satisfaction of conditions set forth in the respective restricted share award agreement. Restricted share awards may be forfeited if, for example, the recipient’s employment terminates before the award vests.

 

Restricted Stock Units

 

Restricted stock units (“RSUs”) relating to shares of Common Stock may also be awarded under the 2006 Stock Incentive Plan. An RSU entitles the holder to receive one share of Common Stock for each RSU that vests. The RSUs will vest and become payable in accordance with the terms of the respective RSU award agreement.

 

Stock Options

 

The 2006 Stock Incentive Plan will permit the granting to eligible employees of incentive stock options (“ISOs”), which qualify for special tax treatment, and non-qualified stock options. The exercise price for any ISO will not be less than the fair market value of a share of Common Stock on the date of grant. No stock option may be exercised more than ten years after the date of grant.

 

Stock Appreciation Rights

 

Stock Appreciation Rights (“SARs”) may be granted either singly (freestanding SARs) or in combination with underlying stock options (tandem SARs). SARs entitle the holder upon exercise to receive an amount equal in value to the excess of the fair market value of the shares covered by such right over the grant price. The payment upon a SAR exercise may be either in cash, in whole shares of equivalent value or both. If the proposed amendments to the 2006 Stock Incentive Plan are approved, no SAR, once granted, may be “repriced” unless approved by the Stockholders.

 

Change of Control Provisions

 

The 2006 Stock Incentive Plan provides that, if within the one-year period commencing on a Change of Control (as defined in the 2006 Stock Incentive Plan), a participant’s employment or other relationship with Euronet is terminated and such termination was by Euronet without cause or by the participant with “Good Reason,” then, subject to certain limitations on payment as set forth in the 2006 Stock Incentive Plan for “specified employees”, all stock options and SARs will become fully vested and immediately exercisable, the restrictions applicable to restricted stock outstanding and other stock-based awards will lapse and Performance Awards outstanding will be vested and paid out on a prorated basis, based on the maximum award opportunity of such awards and the number of months elapsed compared with the total number of months in the performance cycle. The Committee may also make certain adjustments and substitutions in connection with a Change of Control or similar transactions or events as described under “Shares Reserved for Awards.”

Federal Income Tax Consequences

 

Based on current provisions of the Code and the existing regulations thereunder, the anticipated U.S. federal income tax consequences of awards granted under the 2006 Stock Incentive Plan are as described below. The following discussion is not intended to be a complete discussion of applicable law and is based on the U.S. federal income tax laws as in effect on the date hereof:

 

Non-Qualified Stock Options.  An employee receiving a non-qualified option does not recognize taxable income on the date of grant of the non-qualified option. In general, the employee must recognize ordinary income at the time of exercise of the non-qualified option in the amount of the difference between the fair market value of the shares of Common Stock on the date of exercise and the option price. The ordinary income recognized will constitute compensation for which tax withholding generally will be required. The amount of ordinary income recognized by an employee will be deductible by us in the year that the employee recognizes the income if we comply with the applicable withholding requirements.

 

Shares of Common Stock acquired upon the exercise of a non-qualified option will have a tax basis equal to their fair market value on the exercise date or other relevant date on which ordinary income is recognized, and the holding period for the shares of Common Stock generally will begin on the date of exercise or such other relevant date. Upon subsequent disposition of shares of Common Stock, the employee will recognize long-term capital gain or loss or short-term capital gain or loss depending upon the amount of time that the employee has held the shares of Common Stock.

 

If an employee pays the exercise price, in whole or in part, with previously acquired shares of Common Stock, the employee will recognize ordinary income in the amount by which the fair market value of the shares of Common Stock received exceeds the exercise price. The employee will not recognize gain or loss upon delivering the previously acquired shares of Common Stock to us. Shares of Common Stock received by an employee, equal in number to the previously acquired common shares exchanged therefore, will have the same basis and holding period for long-term capital gain purposes as the previously acquired shares of Common Stock. Shares of Common Stock received by an employee in excess of the number of such previously acquired shares of Common Stock will have a basis equal to the fair market value of the additional shares of Common Stock as of the date ordinary income is recognized. The holding period for the additional shares of Common Stock will commence as of the date of exercise or such other relevant date.

 

Incentive Stock Options.  ISOs are defined by Section 422 of the Code. An employee who is granted an ISO does not recognize taxable income either on the date of grant or on the date of exercise. Upon the exercise of an ISO, the difference between the fair market value of the shares of Common Stock received and the option price is, however, a tax preference item potentially subject to the alternative minimum tax.

 

Upon disposition of shares of Common Stock acquired from the exercise of an ISO, long-term capital gain or loss is generally recognized in an amount equal to the difference between the amount realized on the sale or disposition and the exercise price. However, if the employee disposes of the shares of Common Stock within two years of the date of grant or within one year of the date of the transfer of the shares of Common Stock to the employee (a “Disqualifying Disposition”), then the employee will recognize ordinary income, as opposed to capital gain, at the time of disposition. In general, the amount of ordinary income recognized will be equal to the lesser of (a) the amount of gain realized on the disposition, or (b) the difference between the fair market value of the shares of Common Stock received on the date of exercise and the exercise price. Any remaining gain or loss is treated as a short-term or long-term capital gain or loss, depending on the period of time the shares of Common Stock have been held. We are not entitled to a tax deduction upon either the exercise of an ISO or the disposition of shares of Common Stock acquired pursuant to the exercise of an ISO, except to the extent that the employee recognizes ordinary income in a Disqualifying Disposition. For alternative minimum taxable income purposes, on the later sale or other disposition of the shares of Common Stock, generally only the difference between the fair market value of the shares of Common Stock on the exercise date and the amount realized on the sale or disposition is includable in alternative minimum taxable income.

If an employee pays the exercise price, in whole or in part, with previously acquired shares of Common Stock, the exchange should not affect the ISO tax treatment of the exercise. Upon the exchange, and except as otherwise described herein, no gain or loss is recognized by the employee upon delivering previously acquired shares of Common Stock to us as payment of the exercise price. The shares of Common Stock received by the employee, equal in number to the previously acquired shares of Common Stock exchanged therefore, will have the same basis and holding period for long-term capital gain purposes as the previously acquired shares of Common Stock. The employee, however, will not be able to utilize the prior holding period for the purpose of satisfying the ISO statutory holding period requirements. Shares of Common Stock received by the employee in excess of the number of previously acquired shares of Common Stock will have a basis of zero and a holding period which commences as of the date the shares of Common Stock are transferred to the employee upon exercise of the ISO. If the exercise of any ISO is effected using shares of Common Stock previously acquired through the exercise of an ISO, the exchange of the previously acquired shares of Common Stock will be considered a disposition of the shares of Common Stock for the purpose of determining whether a Disqualifying Disposition has occurred.

 

Restricted Stock.  The recognition of income from an award of restricted stock for federal income tax purposes depends on the restrictions imposed on the shares. Generally, taxation will be deferred until the first taxable year the shares of Common Stock are no longer subject to substantial risk of forfeiture. At the time the restrictions lapse, the employee will recognize ordinary income equal to the then fair market value of the shares. The employee may, however, make an election to include the value of the shares in gross income in the year of award despite such restrictions. Generally, we will be entitled to deduct the fair market value of the shares transferred to the employee as a business expense in the year the employee includes the compensation in income.

 

Stock Appreciation Rights.  To the extent that the requirements of the Code are met, there are no immediate tax consequences to an employee when a SAR is granted. When an employee exercises the right to the appreciation in fair market value of shares represented by a SAR, payments made in shares of Common Stock are normally includable in the employee’s gross income for regular income tax purposes. We will be entitled to deduct the same amount as a business expense in the same year. The includable amount and corresponding deduction each equal the fair market value of the shares of Common Stock payable on the date of exercise.

 

Other Stock-Based Performance Awards.  Any cash payments or the fair market value of any shares of Common Stock or other property an employee receives in connection with other stock-based awards, incentive awards, or as unrestricted payments equivalent to dividends on unfunded awards or on restricted stock are includable in income in the year received or made available to the employee without substantial limitations or restrictions. Generally, we will be entitled to deduct the amount the employee includes in income as a business expense in the year of payment.

 

Deductibility of Awards.  Section 162(m) of the Code places a $1,000,000 annual limit on the compensation deductible by us or a majority owned subsidiary paid to certain executives. The limit, however, does not apply to “qualified performance-based compensation.” We believe that awards of stock options, SARs and certain other “performance-based compensation” awards under the 2006 Stock Incentive Plan will qualify for the performance-based compensation exception to the deductibility limit.

 

Other Tax Consequences

 

State tax consequences may in some cases differ from those described above. Awards under the 2006 Stock Incentive Plan will in some instances be made to employees who are subject to tax in jurisdictions other than the United States and may result in tax consequences differing from those described above.

 

Other Information

 

The 2006 Stock Incentive Plan became effective on May 18, 2006, and will remain in effect, subject to the right of our Board to terminate the 2006 Stock Incentive Plan (subject to certain limitations set forth in the 2006 Stock Incentive Plan), until all shares subject to it have been purchased or acquired according to the

2006 Stock Incentive Plan’s provisions. Any awards granted before the 2006 Stock Incentive Plan is terminated may extend beyond the expiration date. No awards will be issued under the 2006 Stock Incentive Plan after May 20, 2019 unless the 2006 Stock Incentive Plan is re-approved by Stockholders. The closing price of our Common Stock on March 31, 2009, as reported by The Wall Street Journal, was $13.06 per share.

 

Our Board may amend the 2006 Stock Incentive Plan at any time. However, no amendment may be made without Stockholder approval if the approval is required under applicable law, regulation, or stock exchange rule, or if the amendment would decrease the grant or exercise price of any stock option, SAR or other stock-based award to less than fair market value on the date of grant (except as discussed above under “Shares Reserved for Awards”). No amendment may be made without the written consent of the grantee of an award if the amendment adversely affects in any material way any award previously granted under the 2006 Stock Incentive Plan.

 

The following persons and groups have received grants of stock options to purchase the following number of shares under the 2006 Stock Incentive Plan since its inception through March 31, 2009: (a) the Named Executive Officers, Michael J. Brown — options to purchase 226,308 shares, Rick L. Weller — options to purchase 148,613 shares, Gareth J. Gumbley — options to purchase 9,466 shares, Juan C. Bianchi — options to purchase 42,596 shares, and Roger W. Heinz — options to purchase 18,106 shares, (b) all current executive officers as a group (8 persons) — options to purchase 743,345 shares, (c) all current Directors who are not executive officers as a group (5 persons) — no options to purchase shares, (d) the nominees for Director, Paul S. Althasen — no options to purchase shares and Thomas A. McDonnell — no options to purchase shares, (e) Kevin J. Caponecchi, President — options to purchase 224,423 shares, and (f) all employees, including all current officers who are not executive officers, as a group — options to purchase 985,300 shares. The amounts shown include shares subject to options that may have been forfeited in whole or in part.

 

The following persons and groups have received awards of restricted stock and restricted stock units for the following number of shares under the 2006 Stock Incentive Plan since its inception through March 31, 2009: (a) the Named Executive Officers, Michael J. Brown — 215,855 shares, Rick L. Weller — 52,400 shares, Gareth J. Gumbley — 92,990 shares, Juan C. Bianchi — 228,440 shares and Roger W. Heinz — 90,970 shares, (b) all current executive officers as a group (8 persons) — 784,956 shares, (c) all current Directors who are not executive officers as a group (5 persons) — 52,500 shares, (d) the nominees for Director, Paul S. Althasen — 22,000 shares and Thomas A. McDonnell — 10,500 shares, (e) Nikos Fountas, Managing Director, Euronet Worldwide Greece — 72,500 shares, and (f) all employees, including all current officers who are not executive officers, as a group — 535,587 shares. The amounts shown include shares subject to awards that may have been forfeited in whole or in part.

Equity Compensation Plan Information

 

The table below sets forth information with respect to shares of Common Stock that may be issued under our equity compensation plans as of December 31, 2008.

 

 

 

 

Required Votes and Board Recommendations

 

Approval of the amendments to the 2006 Share Incentive Plan requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and voting on such matter.

 

OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” PROPOSAL 4 REGARDING AMENDMENTS TO THE 2006 STOCK INCENTIVE PLAN.

 

We are requesting our Stockholders to ratify the selection by our Audit Committee of KPMG LLP as Euronet’s independent registered public accounting firm for 2009. KPMG LLP will audit the consolidated financial statements of Euronet and its subsidiaries for 2009, review certain reports we will file with the SEC, audit the effectiveness of our internal control over financial reporting, provide our Board and Stockholders with certain reports, and provide such other services as our Audit Committee and its Chairperson may approve from time to time.

 

KPMG LLP served as our independent registered public accounting firm for 2008, and performed professional services for us as described below in the “Audit Matters” section. Representatives of KPMG LLP are expected to be present at the Annual Meeting and will have the opportunity to make a statement if they desire and to respond to appropriate questions. Although our Audit Committee has selected KPMG LLP, it nonetheless may, in its discretion, terminate KPMG’s engagement and retain another independent registered public accounting firm at any time during the year, if it concludes that such change would be in the best interests of Euronet and its Stockholders.

 

Required Votes and Board Recommendations

 

Approval of the ratification of KPMG LLP as our independent registered public accounting firm for 2009 requires the affirmative vote of a majority of the shares of Common Stock present in person or represented by proxy at the Annual Meeting and voting on such matter.

 

THE BOARD UNANIMOUSLY RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE SELECTION OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR 2009.

 

The Board held five meetings during 2008. The Board has established an Audit Committee, a Compensation Committee and a Nominating & Corporate Governance Committee. During 2008, each Director attended at least 75% of the total number of meetings held by the Board and Board committees on which he or she served (during the period for which he or she was a Director).

 

Audit Committee

 

The Audit Committee of the Board, composed solely of independent Directors, met four times in 2008. The following four Directors are members of the Audit Committee: M. Jeannine Strandjord, Chair, Thomas A. McDonnell, Eriberto R. Scocimara and Andrew B. Schmitt. The Audit Committee operates under a written charter adopted by the Board, which is published on Euronet’s website at http://www.euronetworldwide.com/investors/index.asp under the Corporate Governance menu.

 

The Board has determined that each of the Audit Committee members is independent, as that term is defined under the enhanced independence standards for audit committee members in the Securities Exchange Act of 1934 and rules promulgated thereunder, as amended and incorporated into the listing standards of the Nasdaq Global Select Market.

 

The Board has determined that all of the members of the Audit Committee are “audit committee financial experts” as that term is defined in the rules promulgated by the SEC pursuant to the Sarbanes-Oxley Act of 2002.

 

The Audit Committee has oversight responsibilities with respect to our financial reporting process and systems of internal controls regarding finance, accounting and legal compliance. The Audit Committee is responsible for retaining, evaluating, and monitoring our independent registered public accounting firm and for

providing an audit committee report for inclusion in our proxy statement. The Audit Committee is also responsible for maintaining open communication among the Audit Committee, management and our outside auditors. However, the Audit Committee is not responsible for conducting audits, preparing financial statements, or assuring the accuracy of financial statements or filings, all of which is the responsibility of management and/or the outside auditors.

 

Compensation Committee

 

The Compensation Committee of the Board met five times in 2008 to determine policies regarding the compensation of our executives and to review and approve the grant of options, restricted stock, restricted stock units and cash bonuses to our executives. The purpose of the Compensation Committee is to make determinations and recommendations to the Board with respect to the compensation of our Chief Executive Officer and other senior executive officers. Thomas A. McDonnell, Chair, M. Jeannine Strandjord, Dr. Andrzej Olechowski, Andrew B. Schmitt and Eriberto R. Scocimara are the current members of the Compensation Committee. The Board has determined that all the members of the Compensation Committee are independent as defined under the general independence standards of the listing standards of the Nasdaq Global Select Market.

 

The Compensation Committee performs its functions and responsibilities pursuant to a written charter adopted by our Board, which is published on Euronet’s website at http://www.euronetworldwide.com/investors/index.asp, under the Corporate Governance menu.

 

Under its charter, our Compensation Committee is authorized to delegate its responsibilities to one or more subcommittees or Directors, in accordance with restrictions set forth in the charter. Under the terms of our incentive plans, our Compensation Committee is authorized to administer the plans and may delegate its authority under such plans to another committee of the Board or a Director.

 

During 2008, the Compensation Committee delegated its authority to management in only two respects. It delegated to Mr. Brown, our CEO and Chairman of the Board, (i) the determination whether or not to grant a personal/strategic portion of annual cash bonus payable to executives, which is limited to 35% of the threshold annual cash bonus amount, and (ii) the allocation of certain equity awards to employees other than senior executives of Euronet as permitted in Euronet’s 2006 Stock Incentive Plan.

 

Our human resources department supports the Compensation Committee in its work and in some cases acts pursuant to delegated authority to fulfill various functions in administering the day-to-day ministerial aspects of our compensation and benefits plans.

 

Annual Process for Determining Compensation of Executive Officers

 

As further described in the “Compensation Discussion and Analysis,” our Compensation Committee, together with senior management and outside consultants engaged by the committee, conducts an annual review of our overall compensation program for executive officers and directors. With respect to executive officer compensation, our Compensation Committee reviews each of the key components of compensation — base salary and short- and long-term incentives, both within Euronet and as compared to peers and survey data to determine whether each of these components is consistent with our compensation philosophy and its related goals and objectives. Upon the recommendation of our Chief Executive Officer with respect to the compensation of each executive officer who directly reports to him, and, based on the findings of any outside consultants that may be engaged to assist in this review, our Compensation Committee then determines the compensation for all key executives. The Compensation Committee makes all determinations related to our Chief Executive Officer.

 

Process for Determining Non-Employee Director Compensation

 

Our Compensation Committee makes recommendations to the Board regarding Board compensation and benefits for non-employee Directors, including cash, equity-based awards and other compensation. In determining non-employee Director compensation, our Compensation Committee seeks advice from outside

compensation consultants who are retained by the committee to, among other functions: (i) conduct a competitive assessment of non-employee Director compensation compared to competitive practice, (ii) inform the committee of emerging trends in director pay practices, (iii) advise on stock ownership guidelines for non-employee Directors, and (iv) assess the amount of compensation that is adequate to compensate our Directors for their time and effort with respect to Board obligations. If, after the annual review of non-employee Director compensation by our Compensation Committee, the committee determines that any changes should be made to such program, it will recommend such changes to our Board for approval.

 

Outside Executive Compensation Consultants

 

In October 2007, the Compensation Committee directly retained Towers Perrin, outside compensation consultants, to assist the committee and to perform functions in connection with executive compensation matters for the committee annually including: (i) conducting a competitive assessment of key executives’ total direct compensation (e.g., sum of base salary, annual bonus and long-term incentive opportunity), (ii) evaluating appropriateness of annual incentive plan targets and standards, (iii) assessing whether the structure (the mix of cash and equity compensation, as well as annual and long term incentives) is appropriate and competitive, (iv) comparing Euronet’s annual share utilization and earnings per share dilution for equity-based compensation to competitive practice and institutional investor guidelines, (v) comparing Euronet’s expense for stock-based compensation to its peer companies, (vi) advising the committee regarding design changes to compensatory programs and the development of new programs based on strategic goals, competitive assessment and regulatory changes, (vii) informing the committee of emerging trends in executive compensation, the institutional investor climate and corporate governance and accounting developments, (viii) providing and periodically advising on stock ownership or retention guidelines for senior executives, and (ix) providing the committee with regular updates regarding changes in regulatory and legislative developments.

 

Nominating & Corporate Governance Committee

 

The Nominating & Corporate Governance Committee met twice during 2008 and met in February 2009 to evaluate the performance of the Board during 2008. Andrew B. Schmitt, Chair, M. Jeannine Strandjord, Dr. Andrzej Olechowski, Eriberto R. Scocimara and Thomas A. McDonnell are the current members of the Nominating & Corporate Governance Committee. The Board has determined that all of the members of the Nominating & Corporate Governance Committee are independent as defined under the general independence standards of the listing standards of the Nasdaq Global Select Market.

 

The Nominating & Corporate Governance Committee performs the functions of a nominating committee. The Nominating & Corporate Governance Committee’s charter describes the committee’s responsibilities, including developing corporate governance guidelines and seeking, screening and recommending Director candidates for nomination by the Board. This charter is published on our website at http://www.euronetworldwide.com/investors/index.asp under the Corporate Governance menu. Euronet’s Corporate Governance Guidelines contain information regarding the selection, qualification and criteria for Director nominees and the composition of the Board, and are published on Euronet’s website at http://www.euronetworldwide.com/investors/index.asp under the Corporate Governance menu.

 

The Nominating & Corporate Governance Committee evaluates each Director in the context of the Board as a whole, with the objective of recommending a Director who can best perpetuate the success of the business and represent Stockholder interests through the exercise of sound judgment using its diversity of experience in these various areas. As determining the specific qualifications or criteria against which to evaluate the fitness or eligibility of potential Director candidates is necessarily a dynamic and an evolving process, the Board believes that it is not always in the best interests of Euronet or its Stockholders to attempt to create an exhaustive list of such qualifications or criteria. Appropriate flexibility is needed to evaluate all relevant facts and circumstances in context of the needs of the Board and Euronet at a particular point in time. Accordingly, the Nominating & Corporate Governance Committee reserves the right to consider those factors as it deems relevant and appropriate, including the current composition of the Board, the balance of management and independent Directors, the need for Audit Committee expertise and the evaluations of other potential Director candidates. In determining whether to recommend a Director for re-election, the Nominating & Corporate

Governance Committee also considers the Director’s past attendance at meetings and participation in and contributions to the activities of the Board.

 

As general guidelines, members of the Board and potential Director candidates for nomination to the Board will be persons with appropriate educational background and training and who:

 

 

In addition, any new Directors nominated by the Board (a) who serve as a member of Euronet’s Audit Committee will not be permitted to serve on the audit committee of more than two other boards of public companies, (b) who serve as chief executive officers or in equivalent positions will not be permitted to serve on more than two boards of public companies in addition to the Board, and (c) generally are not permitted to serve on more than four other boards of public companies in addition to the Board. These policies were adopted in November 2003 and the Board determined that they will not be applied to incumbent Directors, unless the Board considers that failure to comply is impairing the quality of a Director’s service on the Board.

 

The Board values the contributions of a Director whose years of service has given him or her insight into Euronet and its operations and believes term limits are not necessary. In general, Directors will not be nominated for election to the Board after their 73rd birthday, although the full Board may nominate Director candidates older than 73 under special circumstances.

 

Director Candidate Recommendations and Nominations by Stockholders

 

The Nominating & Corporate Governance Committee’s charter provides that the Nominating & Corporate Governance Committee will consider Director candidate recommendations by Stockholders. Director candidates recommended by Stockholders are evaluated in the same manner as candidates recommended by the Nominating & Corporate Governance Committee. Stockholders should submit any such recommendations to the Nominating & Corporate Governance Committee through the method described under “Other Matters — Recommendations or Nominations of Individuals to Serve as Directors” below. In addition, in accordance with Euronet’s Bylaws, any Stockholder of record entitled to vote for the election of Directors at the applicable meeting of Stockholders may nominate persons for election to the Board of Directors if such Stockholder complies with the notice procedures set forth in the Bylaws and summarized in “Other Matters — Deadline to Propose or Nominate Individuals to Serve as Director” below.

 

Communications with the Board of Directors

 

The Board has approved a formal policy for Stockholders to send communications to the Board or its individual members. Stockholders can send communications to the Board and specified individual Directors by mailing a letter to the attention of the Board or a specific Director (c/o the General Counsel) at Euronet

Worldwide, Inc., 4601 College Blvd., Suite 300, Leawood, Kansas 66211 or by sending an email to directors@eeft.com.

 

Upon receipt of a communication for the Board or an individual Director, the General Counsel will promptly forward any such communication to all the members of the Board or the individual Director, as appropriate. If a communication to an individual Director deals with a matter regarding Euronet, the General Counsel will forward the communication to the entire Board, as well as the individual Director. Neither the Board nor a specific Director is required to respond to Stockholder communications and when responding shall do so only in compliance with the Corporate Governance Guidelines.

 

Director Attendance at Annual Meeting

 

Euronet has a policy encouraging its Directors to attend the Annual Meeting of Stockholders. One Director, Michael J. Brown, attended our 2008 annual meeting.

 

Code of Conduct

 

The Board has adopted a Code of Business Conduct & Ethics for Directors, Officers and Employees (the “Code of Conduct”) that applies to all of our employees and Directors, including the Chief Executive Officer, the Chief Financial Officer and the Controller (the “Senior Financial Officers”). The Code of Conduct is available on Euronet’s website at http://www.euronetworldwide.com/investors/index.asp under the Corporate Governance menu. Any amendment to or waiver of the Code of Conduct will be disclosed on a Form 8-K or on our website.

 

Overview and Philosophy

 

The Compensation Committee, which currently consists of five independent Directors, administers our executive compensation programs. The Compensation Committee is responsible for establishing policies that govern both annual cash compensation and equity ownership programs.

 

Our executive compensation policies have the following objectives:

 

 

The overall compensation program is also designed to reward a combination of strong individual performance, strong performance by Euronet in meeting its long-term strategic goals and stock price appreciation.

 

Our compensation package for executive officers consists of a balance of base salary, certain employee benefits, annual bonuses under our Executive Annual Incentive Plan, which are based on a combination of corporate and individual performance criteria and stock options or grants of restricted stock or restricted stock units (collectively referred to as “restricted stock”), which vest over a period of years and/or upon the achievement of certain performance-based criteria. The base salary and benefit components are intended to compensate executive officers for day-to-day activity in accordance with each executive officer’s employment arrangement with us. The annual bonus component is intended to reward executive officers for strong performance. The stock option and restricted stock awards are intended to help align executive officers’ interests with those of the Stockholders.

 

To serve the best interests of Stockholders, the Compensation Committee follows an executive compensation philosophy that emphasizes performance-based compensation. In determining compensation, the Compensation Committee considers measures of performance against pre-determined financial and strategic goals and objectives. This approach provides Euronet’s top executive officers with an incentive to achieve strategic long-term goals that benefit Stockholders.

 

The Compensation Committee’s executive compensation philosophy also aligns the economic interests of executive officers and Stockholders by ensuring that nonvested performance-based equity incentive awards represent a substantial portion of an executive officer’s total compensation package.

 

The Compensation Committee considers input from our Chief Executive Officer and Chief Financial Officer regarding the responsibilities and accomplishments of individual executive officers, information as to potential achievability of incentive goals and levels of various compensation elements necessary to provide incentives for and retain executive management. Our Chief Executive Officer makes recommendations to the Compensation Committee on each of the other executive officer’s compensation. Executive officers are not involved in proposing or seeking approval for their own compensation. For the Chief Executive Officer’s review, the independent Directors meet in executive session to rate the Chief Executive Officer’s performance and determine appropriate compensation levels.

 

In determining executive compensation for 2008, the Compensation Committee considered the information contained in an executive compensation analysis completed in July 2008, together with advice received from the Committee’s compensation consultant, Towers Perrin. The Compensation Committee made no changes in 2008 with respect to structural components of the compensation of the executive officers listed in the Summary Compensation Table (the “Named Executive Officers”) and their level of base salary with the exception of the increases in Gareth Gumbley’s and Roger Heinz’s base salaries discussed below.

Performance Criteria

 

In determining the annual compensation of each executive officer, including the Chief Executive Officer, the Compensation Committee considers Euronet’s financial performance both on an absolute basis and relative to comparable companies. In addition, it assesses individual performance against quantitative and qualitative objectives. Factors considered by the Committee in assessing individual performance include, but are not limited to:

 

 

The Compensation Committee considers all factors collectively in determining executive officers’ annual compensation. The weight given to a particular factor may vary from year to year depending on the goals and objectives of the organization, thus enabling the Compensation Committee to align annual financial objectives with strategic leadership initiatives.

 

Incentive Plan

 

In order to broaden senior management accountability for company-wide financial and strategic goals and to emphasize long-term performance of Euronet, the Compensation Committee has adopted, and Stockholders have approved, the Executive Annual Incentive Plan for certain members of senior and executive management, including the Named Executive Officers. Under this plan, a portion of the executive officers’ compensation is based on the achievement of goals defined by the Compensation Committee upon consultation with management. This plan is designed to focus the efforts of our key leaders by creating common accountability around specific long-term objectives.

 

The stated goal for Messrs. Brown and Weller under the performance-based program under this plan for 2008 was to increase the annual earnings per share, subject to certain adjustments approved by the Compensation Committee (“Cash EPS” or “Adjusted EPS”) as compared to 2007. Management believes, and the Compensation Committee concurs, that a current focus on Cash EPS improvement is an important component in delivering Stockholder value and an appropriate measure for Messrs. Brown and Weller. For Messrs. Gumbley, Bianchi and Heinz, 2008 incentive targets consisted of growth in operating unit performance compared to 2007. The specific goals under this program are discussed in more detail in the section entitled “Elements of Compensation — Annual Bonus” below.

 

For 2008, Company performance targets for Messrs. Brown and Weller were largely not achieved; therefore, they did not receive any cash payments associated with those objectives and only earned a small portion of their restricted stock awards. Additionally, minimal progress was made related to performance-based targets from previous years’ awards that a portion of share-based compensation expense recorded in prior years for Messrs. Brown and Weller was reversed in 2008 reflecting the decreased likelihood of shares being earned under those awards.

 

Peer Group

 

The Compensation Committee believes that it is essential for our continued success that overall compensation policies allow us to be competitive in attracting and retaining executive talent. However, the Committee does not establish compensation targets solely based on peer group compensation amounts, because it believes that individual and company performance should be the primary determinants of annual compensation.

In 2008, the Compensation Committee, with assistance from management and Towers Perrin, reviewed and expanded the Peer Group of companies against which compensation for executive officers is benchmarked. The Peer Group includes 23 companies having similar financial characteristics and that operate in similar industries. These companies are:

 

 

The peer group used previously included the following companies:

 

 

The review of our peer group in 2008 for appropriateness in terms of business mix, revenue and market capitalization size and the number of companies in the group, resulted in our expanding the previous peer group of 12 companies. Some historical peers were removed because they no longer existed due to merger or acquisition, and others because they no longer met sufficient criteria for inclusion in the group. The addition of new companies to the Peer Group serves to reduce the impact of year-over-year change resulting from peers that are merged or acquired over time as well as providing a broader perspective on the market for executive talent. Members of the current Peer Group were included because they met some or all of the following criteria:

 

 

Our Actual Performance

 

The Compensation Committee conducted a review of our performance compared to the performance of the Peer Group using several critical financial and Stockholder metrics. The Compensation Committee then assessed actual and target levels of compensation of our executive officers in light of the results of this review. The Compensation Committee determined that compensation provided to the Chief Executive Officer and other executive officers was appropriately aligned with our performance. The charts below outline key comparisons between Euronet and the Peer Group. The Compensation Committee also considered actual performance compared to anticipated performance, taking into consideration our strategic plans.

 

Our analysis of Euronet in comparison to the Peer Group was completed during the middle of 2008, and statistics for the most recent relevant period (fiscal year 2007 for financial performance data, share price

performance data are as of March 31, 2008) of the Peer Group and selected market indices are summarized in the table below:

 

 

 

All financial data are in millions unless otherwise noted.

 

Based on the overall size of the peer companies, we compared executive compensation data with the median statistics of the relevant peer data. We also consider general industry market data that are regressed or size-adjusted for Euronet’s revenue size; these data are used as a secondary reference to the Peer Group. For total shareholder returns, Euronet was in the 50th percentile for 1-year and 5-year returns and the 25th percentile for 3-year returns compared to the Peer Group as of March 31, 2008.

 

Elements of Compensation

 

Each element of compensation is described below, including a discussion of the specific actions taken by the Compensation Committee for 2008 concerning the Chief Executive Officer and other executive officers.

 

Base Salary

 

In determining salary adjustments for the Chief Executive Officer and other executive officers, the Compensation Committee considered each executive officer’s individual performance and the competitive salary levels for executives with similar responsibilities within the Peer Group. Adjustments are not made each year. The only salary increases for the Named Executive Officers during 2008 was the increase of Mr. Gumbley’s base salary to £170,000 per year effective with his promotion to Senior Vice President — Managing Director, Prepaid Processing Segment on May 19, 2008 and the increase of Mr. Heinz’s base salary to €312,930 effective with his promotion to Senior Vice President — Managing Director, Europe EFT Processing Segment on October 1, 2008.

 

Annual Bonus

 

In determining annual bonuses, the Compensation Committee considers the overall performance of Euronet and individual performance of each executive officer. In measuring individual performance, the Compensation Committee measures the level of responsibility of an executive officer against his base salary and other elements of compensation in order to determine whether overall compensation is sufficient to retain and motivate highly qualified individuals.

 

The Executive Annual Incentive Plan, which was approved by Stockholders in 2006, covers officers holding the office of Vice President and above. Bonuses to executive officers are closely correlated to Euronet’s financial performance. In March 2008, the Compensation Committee established 2008 incentive targets for executive officers that were based on the growth in Cash EPS as compared to 2007 for Messrs. Brown and Weller. For Messrs. Gumbley, Bianchi and Heinz, 2008 incentive targets consisted of

growth in operating unit performance compared to 2007. For 2008, Messrs. Brown and Weller were entitled to receive annual bonuses based on the achievement of a predetermined threshold, target and maximum Cash EPS growth objectives. Messrs. Gumbley, Bianchi and Heinz were entitled to receive annual bonuses based on the achievement of a predetermined threshold, target and maximum growth in operating income of their respective operating units. If the threshold growth objectives were not met, Messrs. Brown and Weller were eligible for a portion of the bonuses based on the achievement of personal and strategic goals. The percentage of respective base salary each was eligible to receive was: 17.5% for Mr. Brown and 10.5% for Mr. Weller. The Compensation Committee also established maximum annual bonuses that could be awarded to each executive officer under the Executive Annual Incentive Plan for 2008. The maximum percentage of respective base salary was 200% for Mr. Brown, 120% for Mr. Weller and 100% for Messrs. Bianchi, Gumbley and Heinz.

 

Growth in Cash EPS for 2008 was less than the predetermined threshold; therefore, Messrs. Brown and Weller were only eligible for the personal and strategic portion of the bonuses and were paid $87,500 and $34,125, respectively, for achieving those goals. Growth in operating income of the Money Transfer Segment, Prepaid Processing Segment and the Europe, Middle East and Africa (“EMEA”) EFT Processing division each exceeded threshold objectives set for awarding of bonuses; therefore, Mr. Gumbley was paid $248,523, Mr. Bianchi was paid $270,000 and Mr. Heinz was paid $172,000.

 

Stock Incentive Programs

 

Our stock incentive plans are designed to promote an alignment of long-term interests between our employees and our Stockholders and to assist in the retention and motivation of employees. The Compensation Committee can grant to key employees of Euronet and its subsidiaries a variety of stock incentives, including nonqualified stock options, ISOs, SARs, restricted stock, performance awards and other stock-based incentives. Grants are usually approved by the Compensation Committee during regularly scheduled committee meetings, of which there are typically four per year occurring at regular intervals. The Compensation Committee intends that performance-based stock incentives serve as a significant portion of our executive officers’ total compensation package. They are granted in consideration of anticipated performance. Stock incentives offer the executive officers significant long-term incentives to increase their efforts on behalf of Euronet and its subsidiaries, to focus managerial efforts on enhancing Stockholder value and to align the interests of the executive officers with the Stockholders. In certain circumstances, executives are awarded time-based stock incentives to provide a significant retention incentive. Grants of stock incentives are designed to be competitive with the companies in the Peer Group for the level of job the executive officer holds and to motivate the executive officer to contribute to an increase in our stock price over time.

 

The Compensation Committee’s compensation philosophy is to have stock incentives that generally pay more for superior performance and less if performance does not achieve that level. The Compensation Committee, in determining stock incentive grants to the individual executive officers, considered the award levels granted to executive officers in prior years and award levels granted to executives with similar job responsibilities in the Peer Group. The Compensation Committee also compared the performance of the companies in the Peer Group to the performance of Euronet.

 

Historically, our annual awards of equity incentives to executive officers have been made during the fourth quarter of each year; however, during the fourth quarter 2007, as a result of ongoing acquisition discussions with MoneyGram International, Inc., the Compensation Committee determined that it was appropriate to defer the award of stock incentives to executives. Awards that would ordinarily have been made to executives in December 2007 were approved at a meeting of the Compensation Committee on March 6, 2008. Messrs. Brown and Weller were granted 76,251 and 21,855 shares of performance-based restricted stock, respectively, that will vest based on annual improvement of Cash EPS as described more fully in the Compensation Tables below. As a result of this delay in awards, there has been a “bunching” in fiscal year 2008 of two groups of equity incentive awards — those made in March 2008 and those made in December 2008 as described more fully in the Compensation Tables below.

In July 2008, Mr. Gumbley and Mr. Heinz were granted restricted stock awards related to their expanded leadership roles. Certain stock incentive grants vest based only on the satisfaction of certain service conditions and others vest based on subsidiary performance. Messrs. Gumbley and Heinz were granted 84,000 and 45,000 shares of restricted stock, respectively, under terms that are described more fully in the Compensation Tables below.

 

In December 2008, executive officers were granted a combination of stock options and restricted stock. The restricted stock awards vest based on achieving a pre-determined level of cumulative Cash EPS for the years 2009 through 2011. Certain stock options vest based only on the satisfaction of service conditions. Other stock options vest based on service conditions and also require that the price for Euronet Common Stock must average at least $16.00 per share for a 30-day calendar period prior to December 16, 2011. If the share price does not reach the $16.00 level in the three-year period, the options terminate and are cancelled. These awards are further described in the paragraphs and tables below.

 

As described above, the Compensation Committee reviewed Euronet’s performance in recent years in relation to the Peer Group in order to confirm that the performance measures the Compensation Committee previously set for performance-based incentive stock awards were sufficiently rigorous and demanding. After this review, the Compensation Committee determined that Euronet’s historical performance has generally merited the level of compensation awarded to the executive officers. The Compensation Committee also concluded that executive compensation reflects an appropriate mix of base salary, incentive bonuses, discretionary bonuses, service-based equity compensation and performance-based equity compensation to provide sufficient retentive and motivational value to align the interests of executives with our Stockholders.

 

While the Compensation Committee approved in 2008 incentive stock awards to the Named Executive Officers, more than 62% of all such incentive stock awards will vest only upon achievement of certain minimally established financial-based performance goals.

 

Benefits

 

Our employees are entitled to receive medical, dental, life and short-term and long-term disability insurance benefits and may participate in our 401(k) plan. For 401(k) participants, we match 50% of participant deferrals on the first six percent of a participant’s deferrals, provided the participant’s deferrals are at least four percent of salary.

 

With the exception of Mr. Brown, who is prohibited from participating in an Employee Stock Purchase Plan (“ESPP”) by Internal Revenue Service regulations because his ownership of Euronet exceeds five percent, all of our employees are entitled to participate in the ESPP, which was adopted in 2001. This plan, which has been established in accordance with certain federal income tax rules set forth in Section 423 of the Code, permits employees to purchase stock from us at a price that is equal to 85% of the lower of the trading price on the opening or closing of certain three-month “offering periods.”

 

Retirement Plans

 

We do not sponsor a defined benefit pension plan or any other deferred compensation plan for executives or any of our other employees.

 

Perquisites and Other Compensation

 

The Compensation Committee believes the compensation plan described above is sufficient for attracting and retaining talented management and that providing significant perquisites is neither necessary nor in our Stockholders’ best interests. Accordingly, executive officers did not receive significant perquisites during the fiscal year ended December 31, 2008.

 

Employee Stock Ownership

 

Euronet also encourages broad-based employee stock ownership through various Stockholder approved stock compensation plans. Approximately 220 employees have received supplemental bonuses in a

combination of cash, stock options and restricted stock, and currently have unvested stock options or restricted stock. This means that, like other Stockholders, employees broadly participate in both the “upside opportunity” and the “downside risk” of our performance. The allocation of stock bonus awards is progressive, so that as an employee’s total compensation increases, an increasing percentage of total compensation is paid in stock. This ensures that higher paid employees have a greater “at risk” financial interest in the sustained success of Euronet and its Stockholders.

 

Repricing of Equity Awards

 

The Compensation Committee believes that equity awards should be made based upon conditions and financial metrics established as of the time of each award and that the terms of awards outstanding should not be revised as conditions change. The Compensation Committee is therefore committed not to engage in re-pricing of outstanding equity awards, except in the context of certain corporate reorganizations or with the approval of Stockholders. This policy has been confirmed through an amendment of our 2006 Stock Incentive Plan, which restricts us from engaging in repricings except in certain corporate reorganizations, without the approval of our Stockholders. The Compensation Committee extends its policy against re-pricing to all of Euronet’s equity plans.

 

The following table sets forth certain information regarding the compensation awarded or paid to our Chief Executive Officer, our Chief Financial Officer and the three other most highly compensated of our executive officers (the “Named Executive Officers”) for the year ended December 31, 2008 for the periods indicated:

 

Summary Compensation Table

 

 

 

 

Grants of Plan-Based Awards for 2008

 

The following table summarizes estimated future payouts under non-equity incentive plan awards made to Named Executive Officers during the fiscal year ended December 31, 2008.

 

 

 

 

Shares Available to Issue Under Incentive Plans

 

The following table summarizes the shares available to issue under each Company incentive plan and the activity during the fiscal year ended December 31, 2008.

 

 

 

 

The following table summarizes estimated future payouts under equity incentive plan awards made to Named Executive Officers during the fiscal year ended December 31, 2008.

 

 

 

 

Outstanding Equity Awards at Fiscal Year-End for 2008

 

The following table sets forth equity awards outstanding for the Named Executive Officers as of December 31, 2008.

 

 

 

 

Option Exercises and Restricted Stock Vested for 2008

 

The following table sets forth certain information concerning options exercised and restricted stock vested for the Named Executive Officers during the fiscal year ended December 31, 2008.

 

 

 

 

Employment Agreements

 

Messrs. Brown, Weller and Bianchi

 

Messrs. Brown, Weller and Bianchi have employment agreements that have substantially the same terms, except in respect to the levels of compensation, and as otherwise discussed below or under “Compensation Tables” above. The agreements with Messrs. Brown and Weller were entered into in October 2003 and were amended and restated in April 2008, principally to bring them into conformity with the provisions of the Jobs Creation Act of 2004. The agreement with Mr. Bianchi was entered into during 2007 in connection with his hiring. Mr. Bianchi’s agreement was also amended in April 2008.

 

The employment agreements have indefinite terms and provide that they may be terminated by the executives at any time upon 60 days’ notice for Messrs. Brown and Weller and 30 days’ notice for Mr. Bianchi. The agreements may be terminated by Euronet with or without “cause” provided that, in the case of termination due to “cause,” Euronet provides the executive with 14 days’ notice. The agreements define “cause” to mean: (i) conviction of the executive of, or the entry of a plea of guilty or nolo contendere by the executive to, any felony or any misdemeanor involving moral turpitude; (ii) fraud, misappropriation or embezzlement by the executive; (iii) willful failure or gross misconduct in the performance of the executive’s assigned duties; (iv) willful failure by the executive to follow reasonable instructions of any officer to whom the executive reports or the Board of Directors; and (v) the executive’s gross negligence in the performance of his assigned duties. In each case, the employment agreements provide that, in a three-year period following a “change in control,” termination for “cause” is limited to only mean an act of dishonesty by an executive constituting a felony that was intended to or resulted in gain or personal enrichment of the executive at Euronet’s expense. Euronet’s termination of an executive’s employment for cause does not result in separation payments, separation benefits or accelerated or extended vesting of unvested stock option or restricted stock awards.

 

If Euronet terminates an executive absent cause and prior to a “change in control” as discussed below, the employment agreements provide that the executive will be entitled to certain severance benefits for a period of 24 months, including the payment of the executive’s then current base salary, the continuation of the vesting and rights to exercise any then outstanding equity-based awards and the maintenance of certain employee benefits.

 

In general, voluntary termination by Messrs. Brown and Weller does not result in separation payments, separation benefits or accelerated or extended vesting of unvested stock options or restricted stock, except under certain circumstances constituting constructive termination. These circumstances include certain changes in conditions of the executives’ employment, such as a significant diminution in responsibilities or salary or a forced relocation. In such circumstances, these executives are entitled to the same severance benefits as if they were terminated by Euronet absent cause, prior to a “change of control.” In addition, voluntary termination by

Mr. Bianchi prior to a “change in control” generally entitles Mr. Bianchi to the same severance benefits as a termination absent cause.

 

The following table summarizes the severance benefits due Messrs. Brown and Weller upon their termination by Euronet without cause, or their voluntary termination due to their constructive termination, and, in the case of Mr. Bianchi, the severance benefits due upon his termination without cause by Euronet or upon his voluntary termination for any reason:

 

 

 

 

In the event of a “change of control,” all equity incentive awards outstanding held by Messrs. Brown, Weller and Bianchi will become immediately vested and the term of the employment agreements become fixed at three years from the date of the change of control and they may be terminated without cause only upon payment to the executive of a lump sum within five days of the termination equal to the full amount of base salary that would have been payable during the remaining term of the agreement (or for two years, if the remaining term is less than two years), discounted at a rate of 7.5% per annum. These provisions also apply if the executive resigns for “good reason” following a “change of control.” In addition, the executive’s equity incentive awards will continue to vest through the later of three years from the “change of control” date or two years from the date of termination, if the executive is terminated without cause or resigns for “good reason” following a “change of control.” “Good reason” includes certain changes in conditions of employment, as a result of which the executive can be considered to have been constructively terminated, including a significant diminution in responsibilities or salary or a forced relocation. In general, the employment agreements provide that “change of control” includes: (i) completion of any merger, consolidation or sale of substantially all of our assets and such merger results in our Stockholders immediately prior to the merger holding less than 50% of the surviving entity; (ii) replacement of over 25% of our Directors without the approval of at least 75% of the Directors in office as of the effective date of the employment agreement or of Directors so approved; or (iii) the acquisition by any person or group of persons of 40% or more of the voting rights of our outstanding voting securities. At current compensation levels, if the remaining term of the agreement was three years and assuming the amounts due under the change of control provisions outlined above would be paid in a lump sum, the following table summarizes amounts that would accrue to Messrs. Brown, Weller and Bianchi:

 

 

 

 

Additionally, the employment agreements entitle the executives to certain rights to income and excise tax gross-up amounts in the event Section 4999 of the Code, or any similar tax law, applies to the change in

control payments. If an executive is entitled to such tax gross-up payments, the gross-up payments will be made either to the executive or directly to the Internal Revenue Service. The gross-up amounts are subject to additional conditions and limitations and exclude excise taxes or other penalties under Section 409A of the Code. The Compensation Committee has considered the above “change of control” provisions, the “change of control” provisions of the Peer Group, and determined that the provisions offered to executives by Euronet are reasonable and appropriate.

 

In the event of the death of an executive officer, the provisions of our stock compensation plans stipulate that all unvested equity incentive awards outstanding shall vest immediately. As of December 31, 2008, the value of unvested equity incentive awards outstanding that would vest in the event of death was $3,613,448 for Mr. Brown, $1,084,498 for Mr. Weller and $2,196,438 for Mr. Bianchi.

 

In the event of disability of an executive officer, the employment agreements with Messrs. Brown, Weller and Bianchi provide for the payment of a lump-sum disability benefit equal to 12 months’ of the current base salary, which represents $500,000 for Mr. Brown, $325,000 for Mr. Weller and $300,000 for Mr. Bianchi. In addition, the provisions of our stock compensation plans stipulate that all restricted stock awards outstanding shall vest immediately. As of December 31, 2008, the value of restricted stock outstanding that would vest in the event of disability was $3,041,716 for Mr. Brown, $860,092 for Mr. Weller and $2,132,118 for Mr. Bianchi. The employment agreements with Messrs. Brown, Weller and Bianchi also provide that any outstanding equity-based awards will continue to vest and the executives’ right to exercise any such awards will continue for a period of 12 months after termination due to disability.

 

Messrs. Brown, Weller and Bianchi must not disclose confidential information during the term of the employment agreements and following termination. Each of the agreements includes a restriction on the ability of the executive to compete with Euronet or solicit our employees during the severance period following termination. Any severance payments are conditioned on the executive officer complying with these restrictions.

 

Messrs. Gumbley and Heinz

 

Mr. Gumbley is an employee of our subsidiary, E-Pay Australia Pty. Ltd. and has been seconded for two years to work in the offices of our UK subsidiary, E-Pay Limited, under a Secondment Agreement dated May 11, 2008. His employment agreement is generally governed by Australian law, but during the duration of his secondment to the UK, Mr. Gumbley’s employment relationship will be governed by UK law.

 

Under UK law, an employment agreement may not be terminated unless the employer has a “fair reason” for dismissal, which includes reasons relating to the poor performance or incapability of the employee, elimination of the employee’s position or other “substantial reasons.” If the employee is terminated in the absence of a fair reason, the dismissal may be considered unfair, and the employer may be liable for damages determined by a UK employment tribunal. These damages vary depending upon the circumstances, but are limited by law to six months’ base salary, plus any bonus that may be considered earned prior to dismissal. Our Secondment Agreement with Mr. Gumbley does not include provisions governing his dismissal without cause or quantifying potential damages, because such provisions would in most respects be unenforceable under UK law. As a result, we cannot accurately estimate the cost to Euronet if Mr. Gumbley were terminated without cause; however, for purposes of the compensation table below, we assume he would receive six months’ base salary, benefits and continued vesting of equity incentives.

 

Voluntary termination by Mr. Gumbley does not result in separation payments, separation benefits or accelerated or extended vesting of unvested stock options or restricted stock.

 

Mr. Gumbley’s Secondment Agreement includes provisions governing a “change of control” that are similar to those of Messrs. Brown, Weller and Bianchi discussed above.

At current compensation levels, assuming the maximum due under the change of control provisions outlined above would be paid in a lump sum, the following table summarizes amounts that would accrue to Mr. Gumbley:

 

 

 

 

Mr. Gumbley’s Secondment Agreement does not include any provisions relating to death or disability benefits, and these benefits, if any, would be afforded by Australian or UK state insurance schemes at no cost to Euronet (other than social insurance contributions made during Mr. Gumbley’s employment).

 

Mr. Heinz is an employee of our German subsidiary, EFT Services GmbH. His employment agreement, which has been in place since he joined Euronet in 1997, is governed by German law.

 

Mr. Heinz’s employment agreement is a two-year, fixed term agreement, which renews automatically on December 31st every two years unless notice of non-renewal is given by Euronet at least 6 months prior to each renewal date. The agreement renewed for two years on December 31, 2008 and will next expire on December 31, 2010. The agreement may not be terminated by Euronet for any reason other than a “serious material breach” of the agreement by Mr. Heinz. “Serious material breach” would be considered to exist only in the event of a serious violation by Mr. Heinz of his duties as a manager of EFT Services GmbH, such as criminal conduct, fraud or egregious conduct such as harassment. If Euronet were to terminate Mr. Heinz’s employment agreement in the absence of serious material breach at any time other than upon the expiration of the agreement and after proper notice, Euronet would be liable to pay Mr. Heinz the entire amount of compensation due during the remaining two year term.

 

Voluntary termination by Mr. Heinz does not result in separation payments, separation benefits or accelerated or extended vesting of unvested stock options or restricted stock.

 

Mr. Heinz’s employment agreement does not include any provisions relating to death or disability benefits, and these benefits, if any, would be afforded by the German state insurance scheme at no cost to Euronet (other than social insurance contributions made during Mr. Heinz’s employment).

 

The following table summarizes the severance benefits that would be due Messrs. Gumbley and Heinz upon their termination by Euronet without cause, assuming the maximum level of damages were found to be payable by Euronet by the relevant employment tribunal: