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**UNITED STATES**

**SECURITIES AND EXCHANGE COMMISSION**

**Washington, D.C. 20549**

 

**Form 10-K/A**

**(Amendment No. 1)**

 

**S****         ****ANNUAL REPORT PURSUANT TO SECTION 13OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934**

 

**For the fiscal year ended March 31, 2010**

 

**£****         ****TRANSITIONREPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACTOF 1934**

 

**Commission File No.  001-33083**

 

**STANLEY, INC.**

(Exact name of registrant as specified in itscharter)

 

| **Delaware**             | ** ** | **11-3658790**                       |
|--------------------------|------------|--------------------------------------|
| (State of Incorporation) |       | (I.R.S. Employer Identification No.) |

 

**3101 Wilson Boulevard, Suite 700**

**Arlington, VA 22201**

(Address of Principal Executive Offices, IncludingZip Code)

 

**(703) 684-1125**

(Registrant’s Telephone Number, Including AreaCode)

 

Securities Registered Pursuant to Section 12(b) ofthe Act:

 

| **Title of Each Class** | ** ** | **Name of Exchange on Which Registered** |
|----------------------------------------|------------|-------------------------------------------------------------------|
| Common  Stock, $0.01 par value         |       | New  York Stock Exchange                                          |

 

Securities Registered Pursuant to Section 12(g) ofthe Act:**None**

 

Indicate by check mark if the registrant is a well-known seasonedissuer, as defined in Rule 405 of the Securities Act.  Yes  o   No  x

 

Indicate by check mark if the registrant is not required to file reportspursuant to Section 13 or Section 15(d) of the Act.  Yes o   No x

 

Indicate by check mark whether the registrant (1) has filed allreports required to be filed by Section 13 or 15(d) of the SecuritiesExchange Act of 1934 during the preceding 12 months (or for such shorterperiod that the registrant was required to file such reports), and (2) hasbeen subject to such filing requirements for the past 90 days. Yes  x   No  o

 

Indicate by check mark whether the registrant has submittedelectronically and posted on its corporate Web site, if any, every InteractiveData File required to be submitted and posted pursuant to Rule 405 ofRegulation S-T during the preceding 12 months (or for such shorter period thatthe registrant was required to submit and post such files). Yes  o   No  o

 

Indicate by check mark if disclosure of delinquent filers pursuant toItem 405 of Regulation S-K is not contained herein, and will not becontained, to the best of registrant’s knowledge, in definitive proxy orinformation statements incorporated by reference in Part III of this Form 10-Kor any amendment to this Form 10-K.  o

 

Indicate by check mark whether the registrant is a large acceleratedfiler, an accelerated filer, a non-accelerated filer, or a smaller reportingcompany. See the definitions of “large accelerated filer,” “accelerated filer,”and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

| Large  accelerated filer o |   | Accelerated  filer x         |
|----------------------------|--------|------------------------------|
|                       |   |                         |
| Non-accelerated  filer o   |   | Smaller  reporting company o |

 

Indicate by check mark whether the registrant is a shell company (asdefined in Rule 12b-2 of the Exchange Act). Yes  o   No  x

 

The aggregate market value of the voting stock held by non-affiliates ofthe Registrant on September 25, 2009 was approximately $489.8 million(based upon the closing price of $26.54 per share on September 25, 2009,as reported on the New York Stock Exchange). Only for the purpose of thiscomputation, all directors, executive officers and 10% beneficial owners(excluding the Registrant’s Employee Stock Ownership Plan) of the Registranthave been treated as affiliates.

 

As of June 1, 2010, there were 24,347,202 shares of the Registrant’scommon stock, par value $0.01 per share, outstanding.

 

DOCUMENTS INCORPORATED BY REFERENCE:

**None.**

 

 

 

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**TABLE OFCONTENTS**

 
| ** **        | ** **                                                                                       | **Page** |
|-------------------|--------------------------------------------------------------------------------------------------|----------|
| Explanatory Note  | i                                                                                                |
|              |                                                                                             |     |
| **PART III** |
| Item 10.     | Directors, Executive  Officers and Corporate Governance                                          | 1        |
| Item 11.     | Executive  Compensation                                                                          | 5        |
| Item 12.     | Security  Ownership of Certain Beneficial Owners and Management and Related Stockholder  Matters | 22       |
| Item 13.     | Certain  Relationships and Related Transactions, and Director Independence                       | 24       |
| Item 14.     | Principal  Accounting Fees and Services                                                          | 25       |
|              |                                                                                             |     |
| **PART IV**  |
| Item 15.     | Exhibits and  Financial Statement Schedules                                                      | 26       |
|              | Signatures                                                                                       | 27       |
|              | Index to  Exhibits                                                                               | 28       |
|              | Certifications                                                                                   |     |

 

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**EXPLANATORYNOTE**

 

Stanley, Inc.(the “Company,” “we,” “us” or “our”) is filing this Amendment No. 1 on Form 10-K/A(this “Amendment”) to its Annual Report on Form 10-K for the fiscal yearended March 31, 2010 (the “Original Filing” or “Form 10-K”), whichwas originally filed with the Securities and Exchange Commission (the “SEC”) onMay 20, 2010, solely to set forth information required by Items 10, 11,12, 13 and 14 of Part III of Form 10-K because a definitive proxystatement containing such information will not be filed within 120 days afterthe end of the fiscal year covered by the Original Filing. This Amendmentamends and restates in its entirety Items 10, 11, 12, 13 and 14 of Part IIIand amends Part IV of the Original Filing. Except as expressly set forthherein, this Amendment does not reflect events occurring after the date of theOriginal Filing or modify or update any of the other disclosures containedtherein in any way other than as required to reflect the amendments discussedabove. Accordingly, this Amendment should be read in conjunction with theOriginal Filing and the Company’s other filings with the SEC.

 

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**PART III**

 

**ITEM 10.  DIRECTORS, EXECUTIVE OFFICERS AND CORPORATEGOVERNANCE**

 

Our Board of Directorsis currently comprised of eight directors, with one vacancy.

 

**Directors**

 
| **Name**                                            | ** ** | **Age** | ** ** | **Principal  Occupation/  Position Held With the Company** |
|-----------------------------------------------------|------------|---------|------------|------------------------------------------------------------|
| Mr. Philip O. Nolan                       |       | 51      |       | Chairman, President and Chief Executive Officer            |
| Mr. George H. Wilson                      |       | 52      |       | Executive Vice President and Director                      |
| Mr. William E. Karlson                    |       | 50      |       | Director                                                   |
| Mr. James C. Hughes                       |       | 66      |       | Independent Director                                       |
| Lt. General Richard L. Kelly, USMC (Ret.) |       | 62      |       | Independent Director                                       |
| Mr. Charles S. Ream                       |       | 66      |       | Independent Director                                       |
| Mr. John P. Riceman                       |       | 69      |       | Independent Director                                       |
| General Jimmy D. Ross, USA (Ret.)              |       | 74      |       | Independent Director                                       |

 

Thefollowing is a brief biography of each of our directors, including theirexperience, qualifications, attributes and skills which contributed to theNominating and Corporate Governance Committee’s conclusion that each directoris qualified to serve on the Board in light of our business and structure:

 

*Mr. Philip O. Nolan* has beenour Chief Executive Officer since 2002 and our President and a member of ourBoard of Directors since 1996. In 2006, he became Chairman of our Board ofDirectors. From 1989 to 1995, Mr. Nolan served in various capacities,including program manager, general manager, Treasurer, Secretary and VicePresident. Prior to joining us in 1989, Mr. Nolan served on active duty inthe U.S. Navy from 1981 to 1988, most recently as Deputy Program Manager forWeapons Integration for the Submarine Launched Cruise Missile Project. Mr. Nolanremained an active member of the U.S. Navy Reserve following his release fromactive duty until his retirement in December 2005. Mr. Nolan receiveda B.S. degree in physics from the U.S. Naval Academy, an M.S.E. degree inengineering management from the Catholic University of America and a J.D.degree from George Washington University.

 

Mr. Nolan’s 21years of service as a senior executive officer and 14-year tenure as Presidentof our company, as well as his prior experience in the armed services, providethe Board of Directors with a deep understanding and appreciation of ourbusiness and the customers we serve. His service to Stanley, together with theleadership positions he has maintained in our industry, provide him withvaluable perspective on leadership and management challenges that face ourcompany.

 

*Mr. George H. Wilson*has been ourExecutive Vice President for strategic operations since April 2001 and hasserved as a member of our Board of Directors since July 2000. Prior tojoining us in April 1989, Mr. Wilson served on active duty as anofficer in the U.S. Navy submarine force from 1979 to 1986, and worked as aprogram manager at EG&G, and as a systems engineer at McDonnell DouglasCorporation. Since joining us, Mr. Wilson has served as program manager,director of systems integration, and Vice President of corporate development. Mr. Wilsonreceived a B.S. degree in electrical engineering from the U.S. Naval Academyand an M.B.A. degree in management of science, technology and innovation fromGeorge Washington University.

 

In addition to hissubstantial tenure as an executive of our company and his prior experience inthe armed services, Mr. Wilson’s role as head of our company’s strategicoperations and business development functions, our company’s legislativeliaison activities, as well as his active role in the business and professionalcommunity external to Stanley, through his memberships and active participationin industry groups, provides the Board of Directors with unique and valuableinsight into our company’s business operations, strategic goals and futureprospects.

 

*Mr. William E. Karlson* has been amember of our Board of Directors since 1996 and acted as Secretary of the Boarduntil February 2006. Mr. Karlson retired as one of our Senior VicePresidents in January 2009. Mr. Karlson also previously served asSenior Vice President and Vice President of the outsourced solutions divisionand of the corporate division. Prior to joining us in 1984, Mr. Karlsonwas an officer on deep-sea tractor tugboats for Faustug Marine from 1982 to1983. 

 

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Mr. Karlson has a B.S. degree in marineengineering and marine transportation from the U.S. Merchant Marine Academy andan M.S. degree in software systems engineering from George Mason University.

 

Prior to his retirementfrom the company in 2009, Mr. Karlson was one of the company’s longestserving employees.  Mr. Karlson’sexperience and familiarity with our company and his extensive knowledge ofseveral of our key clients provide the Board of Directors with a valuableperspective.

 

*Mr. James C. Hughes* has been amember of our Board of Directors since 2000. He has 25 years of experience as asenior executive and general counsel with government contracting and commercialcompanies. Mr. Hughes previously served as the Chief Corporate Services Officerof INOVA Health System, is the former President and Chief Executive Officer ofC3, Inc., has 12 years of senior management and leadership experience withBDM International, Inc. and is a former partner at the law firm ofDickstein, Shapiro and Morin. Mr. Hughes received a B.A. degree from theCollege of Arts and Sciences at Rutgers University, an M.A. degree from theCollege of Business and Public Administration at the University of Maryland anda J.D. degree from the University of Maryland.

 

Mr. Hughes bringsto our Board of Directors over 25 years of experience as an executive andgeneral counsel with government contracting and commercial companies andthrough such experience provides our Board of Directors with a deepunderstanding of the complex operational and governance matters that face apublic company.  As one of ourlongest-serving Board members, Mr. Hughes also provides the Board ofDirectors with a broad knowledge of our industry, history and culture.

 

*Lt. General Richard L. Kelly,USMC (Ret.)* has been a member of our Board ofDirectors since 2005. His 35-year military career culminated in his lastassignment as Deputy Commandant, Installations and Logistics, Headquarters,U.S. Marine Corps. He was responsible for the leadership, management, andmodernization of worldwide Marine Corps logistics/supply chain; facilities andreal estate; e-business and contracting; small business; and maintenance,distribution, and services. General Kelly is a Senior Fellow with LMIGovernment Consulting in McLean, Virginia. General Kelly also serves on theBoard of Directors of Cascades Designs, Inc., and the Board of Visitors ofthe Pennsylvania State University Smeal College of Business. General Kelly’sdegrees include a B.A. degree in history from Pennsylvania State University, aB.A. degree in economics and business administration from Chapman College, andan M.B.A. degree from Pepperdine University. He is a graduate of the NationalDefense University’s Industrial College of the Armed Forces (with distinction).General Kelly is also a distinguished graduate of both the Pennsylvania StateUniversity and Pittsburgh Central Catholic High School.

 

After a distinguishedcareer in the U.S. Marine Corps, General Kelly brings to the Board of Directorssubstantial leadership and management experience, as well as familiarity withour key customers within the Department of Defense and ongoing Department ofDefense initiatives and priorities that guide strategic businessdecisions.  General Kelly’s broadknowledge of the defense industry, together with his proven leadership andmanagement skills, make him a valued strategic adviser to the Board.

 

*Mr. Charles S. Ream* joined ourBoard of Directors in 2006. Mr. Ream was Executive Vice President andChief Financial Officer of Anteon International Corporation (acquired byGeneral Dynamics Corporation) from April 2003 to June 2006. From October 2000to December 2001, he served as Senior Vice President and Chief FinancialOfficer of Newport News Shipbuilding, Inc. From January 1998 to September 2000,Mr. Ream served as Senior Vice President of Finance for Raytheon SystemsCompany. From January 1994 to December 1997, he served as ChiefFinancial Officer of Hughes Aircraft Company. Prior to joining Hughes Aircraft,Mr. Ream was a partner with Deloitte & Touche LLP. Mr. Reamcurrently serves as the Chairman of the Audit Committee and member of theCompensation Committee of the Board of Directors of DynCorp International, Inc.He is also a member of the Board of Directors of The Allied Defense Group, Inc.,serving as Chairman of the Compensation Committee and a member of the AuditCommittee. Additionally, Mr. Ream is a member of the Board of Directorsand Chairman of the Audit Committee of Vangent, Inc. Mr. Ream servedon the Board of Directors of Stewart & Stevenson from 2004 to 2006. Mr. Reamreceived a B.S. degree in accounting and a Masters of Accounting degree fromthe University of Arizona and is a Certified Public Accountant (inactive).

 

Mr. Ream’sextensive experience with accounting for government contractors and the relatedreporting process of a public company, as well as his years of service onseveral other public company boards, enable Mr. Ream to provide valuable 

 

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strategic and business advice to theBoard of Directors, as well as providing valuable insight into financial andgovernance matters facing our company.

 

*Mr. John P. Riceman* has been amember of our Board of Directors since 2000. He has more than 30 years ofexperience as a senior executive and manager serving in key operating,marketing, financial, and administrative roles in growth-oriented professionalservices companies. From 1996 until 2009, Mr. Riceman was Chief ExecutiveOfficer of Premise, Inc., a financial management consulting firmspecializing in assisting its clients in the evaluation of potentialacquisitions of other firms and in the negotiation of the sale or purchase ofselected companies. Mr. Riceman has served as Chief Operating Officer ofIntegrated Microcomputer Systems, Inc. and C3, Inc., both governmentcontracting information technology companies. He also has 15 years of seniormanagement and leadership experience with BDM International, Inc. where heserved as Chief Financial Officer. Mr. Riceman received a B.S. degree inengineering from the U.S. Military Academy and an M.S. degree in OperationsResearch from the U.S. Naval Postgraduate School.

 

Mr. Riceman’ssubstantial management and financial experience provide him with extensiveknowledge of the complex financial and operational issues of a publicly-tradedcompany.  Mr. Riceman, as one of ourlongest-serving board members, brings invaluable perspective and a deepunderstanding of our company’s history and values.

 

*General Jimmy D. Ross, USA (Ret.)* has been amember of our Board of Directors since 2001. He was a U.S. Army militaryofficer for 36 years and retired as a four-star General in 1994. General Ross’last active duty assignment was as Commander of the United States Army MaterielCommand in Alexandria, Virginia-a worldwide command of 95,000 military andcivilian personnel and 126 different organizations. Following his militaryretirement, General Ross served as an executive with the American Red Cross andis currently a consultant to Cypress International. General Ross is also amember of the Board of Directors of VSE Corporation. General Ross received aB.S.E. degree from Henderson State University and an M.A. degree in businessmanagement from Central Michigan University. He is also a graduate of theIndustrial College of the Armed Forces, the U.S. Army Command and General StaffCollege, the U.S. Army Transportation Advanced Officer Course and the BasicInfantry Officer Course.

 

General Ross’s serviceas a distinguished officer in the U.S. Army, together with his last active dutyassignment as Commander of the United States Army Materiel Command, providesthe Board of Directors with significant familiarity of customers within theDepartment of Defense and ongoing Department of Defense initiatives andpriorities that guide strategic business decisions. In addition, his many yearsof service as a director of our company, as well as another public company,provide him with valuable perspective on governance and management issues.

 

**Executive Officers Who Are NotDirectors**

 
| **Name**                         | ** ** | **Age** | ** ** | **Position Held With the Company**           |
|----------------------------------|------------|---------|------------|------------------------------------------------------------------|
| Mr. James H. Brabston  |       | 42      |       | Chief Operating Officer                                          |
| Mr. John R. Brooks          |       | 55      |       | Senior Vice President of Mission Systems Group                   |
| Mr. Scott D. Chaplin   |       | 43      |       | Senior Vice President, General Counsel and Corporate  Secretary  |
| Mr. Brian J. Clark     |       | 39      |       | Executive Vice President, Chief Financial Officer  and Treasurer |
| Mr. Gregory M. Denkler |       | 51      |       | Executive Vice President of Shared Services                      |
| Mr. E. Patrick Flannery     |       | 42      |       | Senior Vice President of Business Operations Group               |
| Mr. Eric A. Wolking    |       | 35      |       | Senior Vice President of Technical Programs Group                |

 

*Mr. James H. Brabston* beganserving as our first Chief Operating Officer on April 12, 2010, afterserving as the Senior Vice President of our mission systems group since November 2007.Mr. Brabston joined our company in 1990. From 2003 to 2007, Mr. Brabstonserved as a Vice President and account manager for defense programs. Prior tobecoming Vice President, Mr. Brabston was a senior program managerdirectly responsible for all of our software development efforts beingperformed for the Department of the Army and U.S. Marine Corps. Mr. Brabstonhas also served in various functional, technical, and management capacities andhas led the deployment of our personnel in support of Operation DesertShield/Storm in Saudi Arabia and Operation Restore Hope in Somalia. Mr. Brabstonearned a B.A. degree in economics from Syracuse University, and an M.S. degreein software engineering from George Mason University.

 

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*Mr. John R. Brooks* succeeded Mr. Brabstonas Group Manager for our Mission Systems Group. Mr. Brooks has over 33years in the defense security and intelligence field with demonstrated successin operations, large-scale development projects, program management, practicalapplication of advanced technologies, networks and data applications andbusiness development. For the past two years, Mr. Brooks has served as theGeneral Manager of our Oberon Division. Mr. Brooks joined OberonAssociates in 2005 as Vice President, Strategic Planning and BusinessDevelopment, which was acquired by us in July 2008. Mr. Brooks’experience originated during his service as a highly decorated Military Policeand Military Intelligence officer in the U.S. Army. Mr. Brooks’ last Armyassignment was as the Senior Intelligence Officer G-2, 4th Infantry Division,the U.S. Army’s first digital fighting unit. After retirement from the U.S.Army, he joined General Dynamics as a Senior Manager, responsible fordevelopment of real-time collaboration and knowledge management technology andassociated business development targeted at the U.S. defense and intelligencemarket. Mr. Brooks is a graduate of The Citadel, The Military College ofSouth Carolina and various military schools.

 

*Mr. Scott D. Chaplin*is ourGeneral Counsel, Senior Vice President and Corporate Secretary. Mr. Chaplinis responsible for all legal matters affecting our company and also providesexecutive management oversight to our contracts, pricing and procurementdepartments. Prior to joining us in 2005, he served as Vice President andGeneral Counsel of BAE Systems Information Technology and prior to that as VicePresident and General Counsel of DigitalNet Government Solutions. Earlier inhis career, Mr. Chaplin practiced at the law firms of Reed Smith andMorgan Lewis & Bockius in Washington, D.C. He also served as JudicialClerk to the Honorable Marian Horn, Judge, United States Court of FederalClaims, Washington, D.C. Mr. Chaplin received a B.A. degree from theUniversity of Massachusetts at Amherst and a J.D. degree from AmericanUniversity.

 

*Mr. Brian J. Clark* has beenour Chief Financial Officer and Treasurer since April 2006 and anExecutive Vice President since November 2007. Prior to joining us, he heldvarious executive positions at Titan Corporation from 2001 to 2006, mostrecently as Vice President and Corporate Controller. Prior thereto he had beenTitan’s Vice President of Strategic Transactions where he managed the company’smergers and acquisitions program, as well as divestitures, equity jointventures and other strategic transactions. From 1996 to 2001, he held variouspositions at Arthur Andersen LLP, a public accounting firm, most recently as aSenior Manager. From 1994 to 1996, he held various positions at Deloitte &Touche LLP, a public accounting firm, most recently as a senior staffaccountant. Mr. Clark holds a B.S. degree in Accounting from VirginiaPolytechnic Institute and State University and is a Certified PublicAccountant.

 

*Mr. Gregory M. Denkler*has been ourExecutive Vice President of shared services since November 2007. Mr. Denklerwas Senior Vice President of operations from April 2003 until October 2007.From April 2000 to March 2003, Mr. Denkler was our VicePresident and General Manager of the information technology and businesssystems division. Prior to joining our company in 1989, Mr. Denkler servedon active duty in the U.S. Navy from 1981 to 1988, most recently as test andevaluation director for submarine weapon systems at the Naval Sea SystemsCommand. Mr. Denkler received a B.S. degree in oceanography from the U.S.Naval Academy and an M.B.A. degree from the Virginia Polytechnic Institute andState University.

 

*Mr. E. Patrick Flannery* has beenthe Senior Vice President of our business operations group since November 2007.Mr. Flannery joined our company in 1991. Prior to his current position, Mr. Flanneryserved as Vice President of corporate development and in program managementroles for many of the company’s key customers, including the U.S. Marine Corps,Department of Energy and Department of State. Mr. Flannery received a B.S.degree in business administration from the University of Delaware and an M.B.A.degree from Johns Hopkins University.

 

*Mr. Eric A. Wolking* has beenthe Senior Vice President of our technical programs group since April 2009.Mr. Wolking joined our company in 1996 and most recently served as theSenior Vice President of corporate development and the head of our mergers andacquisitions program. Previously, Mr. Wolking served as the director ofmidwest operations and as an account manager for our federal civilian programs.Mr. Wolking holds an M.B.A. degree from The Anderson School of Managementat the University of California, Los Angeles and a B.A. degree in internationalstudies and economics from American University.

 

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**Section 16(a) BeneficialOwnership Reporting Compliance**

 

Section 16(a) ofthe Exchange Act requires our directors and executive officers, and persons whoown more than ten percent of a registered class of our equity securities, tofile with the SEC initial reports of ownership and reports of changes inownership of common stock and other equity securities of the Company. Officers,directors and greater than ten percent stockholders are required by SECregulations to furnish us with copies of all Section 16(a) forms theyfile.

 

To our knowledge, basedsolely on a review of the copies of such reports furnished to us and writtenrepresentations that no other reports were required, during the fiscal yearended March 31, 2010, all Section 16(a) filing requirementsapplicable to the Company’s officers, directors and greater than ten percentbeneficial owners were complied with, except for a late report by Mr. Brabstonwith respect to the forfeiture of restricted shares by Mr. Brabston’sspouse on May 15, 2009 in connection with her resignation as an employeeof the Company, which was reported on May 21, 2009.

 

**Code of Ethics**

 

We have adopted theStanley, Inc. Code of Ethics that applies to all officers, directors andemployees. In addition, we have also adopted the Stanley, Inc. Code ofConduct for Directors and Executive Officers that further highlights theirparticular duties and commitments. Both the Code of Ethics and the Code ofConduct are available on our website at www.stanleyassociates.com. A requestfor a print copy may be made in writing addressed to Investor Relations,Stanley, Inc., 3101 Wilson Boulevard, Suite 700, Arlington, VA 22201.If we make any substantive amendments to either the Code of Ethics or the Codeof Conduct or grant any waiver from a provision of either code to any executiveofficer or director, we will promptly disclose the nature of the amendment orwaiver on our website.

 

**Audit Committee**

 

The Audit Committee wasestablished by the Board of Directors in accordance with Section 3(a)(58)(A) ofthe Exchange Act to oversee our corporate accounting and financial reportingprocesses and audits of our financial statements. The Audit Committee is composedof Messrs. Riceman (Chairman) and Ream and Lt. General Kelly.

 

The Board of Directorsreviews the NYSE listing standards definition of independence for AuditCommittee members on an annual basis and has determined that all members of ourAudit Committee are independent (as independence is currently defined inSections 303A.01 and .02 of the NYSE listing standards). The Board of Directorshas also determined that each of Messrs. Ream and Riceman qualify as an “auditcommittee financial expert,” as defined in applicable SEC rules and thatall members are financially literate, as required by the Audit Committeecharter. The Board made a qualitative assessment of the members’ level ofknowledge and experience based on a number of factors, including formal educationand experience. The Audit Committee charter provides that no member of theAudit Committee may serve on the audit committees of more than two other publiccompanies unless the Board determines that such service does not impair themember’s ability to serve effectively on the Company’s Audit Committee. Inaddition to service on our Audit Committee, Mr. Ream also serves on theAudit Committees of DynCorp International, Inc., Vangent, Inc. andThe Allied Defense Group, Inc. The Board of Directors has determined thatthis simultaneous service does not impair Mr. Ream’s ability to serveeffectively on our Audit Committee.

 

**ITEM 11.  EXECUTIVE COMPENSATION**

 

**CompensationCommittee Report (1)**

 

The Compensation Committee has reviewed and discussedthe following “Compensation Discussion and Analysis” with management. Basedupon such review, the related discussions and such other matters deemedrelevant and appropriate by the Compensation Committee, the CompensationCommittee has recommended to the Board of Directors that the “CompensationDiscussion and Analysis” be included in this report.

 

**TheCompensation Committee:**

 

James C. Hughes(Chairman)

 

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Charles S. Ream

General Jimmy D.Ross, USA (Ret.)

Lt. GeneralRichard L. Kelly, USMC (Ret.)

 

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(1)                                  The material in this report is not “solicitingmaterial,” is not deemed “filed” with the SEC and is not to be incorporated byreference in any filing we make under the Securities Act of 1933 or theExchange Act, whether made before or after the date hereof and irrespective ofany general incorporation language in any such filing.

 

**Compensation Committee Interlocksand Insider Participation**

 

Noneof the members of the Compensation Committee during fiscal 2010, or as of thedate of this report, is or has been one of our officers or employees and noneof our executive officers served on the compensation committee or board of anycompany that employed any member of our Compensation Committee or Board ofDirectors.

 

**Compensation Discussion and Analysis**

 

**Executive Compensation Policy**

 

*Overview*.  This section discusses the principlesunderlying our executive compensation program and what we believe to be themost important factors relevant to an analysis of our compensation decisionswith respect to our Named Executive Officers (set forth below) during fiscal2010. It provides qualitative information regarding the manner and context inwhich compensation was awarded to, and earned by, our Named Executive Officersand places in perspective the data presented in the tables and narratives thatfollow. The Compensation Committee of our Board of Directors, or the Committee,is responsible for overseeing our compensation program, including thecompensation awarded to our Named Executive Officers. For more information onthe process and procedures of the Committee, see “Information RegardingCommittees of the Board of Directors—Compensation Committee” above.

 

For fiscal 2010, ourNamed Executive Officers consisted of: Mr. Philip Nolan, Chairman,President and CEO; Mr. Brian Clark, Executive Vice President, ChiefFinancial Officer and Treasurer; Mr. Scott D. Chaplin, General Counsel,Secretary & Senior Vice President; Mr. Gregory Denkler, ExecutiveVice President, shared services; and Mr. George Wilson, Executive VicePresident, strategic operations.

 

*Compensation Philosophy andObjectives*. The Committee’s primary focus in fiscal 2010, as in prior years, was toformulate an executive compensation program that:

 

·             iscompetitive, in structure as well as amounts of compensation;

 

·             rewards theperformance of our executives in accordance with their relative contributionsto our financial and strategic objectives; and

 

·             emphasizesthe retention of the executive management team.

 

Similar to fiscal 2009,in fiscal 2010 our annual cash incentive program placed emphasis on the overallcorporate performance measures that we believe contribute both to our short-termperformance as well as to longer-term growth in stockholder value-consolidatedrevenue, earnings per share and free cash flow-and to more effectively rewardour executives for their respective contributions to our overall corporateperformance and/or the individual divisions they oversee.  We believe that our overall compensationprogram strikes the appropriate balance between competitiveness, executivemotivation and retention and our strategic plan and actual financialperformance, with the ultimate objective of increasing long-term performanceand stockholder return.

 

Based on our strongfiscal 2010 performance, as described in Management’s Discussion and Analysisincluded in the Form 10-K, we believe that the compensation for each ofour Named Executive Officers appropriately reflected our fiscal 2010 operatingresults.

 

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**DeterminingAmounts of Compensation**

 

Wedetermine the appropriate level for each component of executive compensation wepay based primarily, but not exclusively, on the Committee’s review ofcompetitive peer group and general compensation survey data, the Committee’sview of internal equity and consistency among executives at various levelswithin our organization, and the recommendation of Mr. Nolan, our CEO.There is no fixed or rigid formula for determining compensation, however, andthe Committee retains the flexibility to take into account other objective andsubjective considerations it deems relevant during the year, such as rewardingextraordinary executive contributions, overall company performance for the yearand increases or decreases in job responsibilities. 

 

*Competitive Market Data Review*.  As a first step in establishing compensationfor our executives, the compensation consultant retained by the Committeeduring fiscal 2010, Mercer (US), Inc., provided competitive data for basesalary, annual cash incentive awards and long-term stock-based incentives paidby a peer group of publicly-traded, U.S.-based professional services companiesthat serve the government sector and thus are in the same industry and competewith us for the same executive talent. The companies comprising our core peergroup for fiscal 2010 were increased from seven to twelve companies, six ofwhich are carryovers from fiscal year 2009. One company was removed due to its acquisition and five new companieswere added.  The Compensation Committee,with Mercer’s assistance, added five new publicly-traded U.S.-basedprofessional services companies that serve the government sector to the peergroup.  The companies comprising ourfiscal 2010 peer group are set forth below:

 

·             CACI International, Inc.

·             CIBER, Inc.

·             Dynamics Research Corp.

·             DynCorp International, Inc.

·             ICF International, Inc.

·             Kratos Defense and Security Solutions, Inc.

·             ManTech International Corp.

·             MAXIMUS, Inc.

·             NCI, Inc.

·             Sapient Corp.

·             SI International, Inc.

·             SRA International, Inc.

 

Mercer providedcompensation information for each of these companies, including SIInternational, Inc., which, despite its recent acquisition by Serco, Inc.,we believed remained part of our competitor group and the information on theirkey executives was publicly-available. While it reviewed this general surveydata, in fiscal 2010 as in fiscal 2009, the Committee predominantly looked tothe core peer group data as the primary source of competitive data as webelieve these companies are our true competitors and our primary source of, andcompetition for, executive talent.

 

The Committee reviewedthe core peer group and general survey information to obtain a generalunderstanding of current compensation practices, but did not specificallytarget, or “benchmark,” any element of compensation or the total compensationpaid to the executives to base, justify or provide a framework for anycompensation decision.

 

*Internal Equity*. One of thekey considerations of the Committee in determining each executive’scompensation for the year is to ensure that all executives within a certainlevel of management, such as Executive Vice Presidents or Senior VicePresidents, are treated similarly and equitably. These executives typicallyhave similar levels of responsibility and expectations and we believe thispromotes fairness and equally motivates our executives toward common companygoals and objectives. As discussed above, however, the Committee retains theflexibility to recognize outstanding executive performance during the year asit deems necessary.

 

*CEO Recommendations*. As inprior years, during fiscal 2010, Mr. Nolan, our CEO, providedrecommendations to the Committee with respect to base salary increases,performance targets and award amounts for the annual incentive compensationprogram and the value of long-term equity grants for each Named ExecutiveOfficer other than himself. Mr. Nolan based his compensationrecommendations on the same core peer group data reviewed by the Committee andhis subjective review of each officer’s overall performance and contribution toour business during the prior year. While the Committee considers therecommendations of Mr. Nolan, the Committee independently evaluates therecommendations and makes all final compensation decisions. The compensation ofMr. Nolan, including base salary amounts, performance targets

 

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and award amounts for the annual incentivecompensation program and the value of equity grants, are decided by theCommittee, and ratified by the Board of Directors.

 

**PrincipalElements of Compensation**

 

Similarto prior years, the compensation paid to our Named Executive Officers duringfiscal 2010 consisted of the following three primary components:

 

·                  *Base salary*—We provide a fixed base salary to ourexecutives to provide for a level of compensation that is assured;

 

·                  *Annual cash incentive awards*—We provide annual cash incentive awardsto our executives in order to reward them for achievement of annual performancegoals; and

 

·                  *Long-term equity incentive awards*—We provide long-term equity incentiveawards to our executives, comprised of service-based stock options andrestricted stock and performance-based restricted stock, which are intended toreward them for prior service and motivate them to stay with us and buildlong-term stockholder value.

 

We view these componentsas related, but having distinct attributes. Although the Committee does reviewthe total compensation paid to the Named Executive Officers during the year, wedo not generally believe that significant compensation derived from onecomponent of compensation should negate or reduce compensation from othercomponents.

 

*Base salary*.  In determining the fiscal 2010 base salaryincreases for our Named Executive Officers, the Committee considered the corepeer group data which indicated that, overall, fiscal 2009 base salaries forour executives were below the median of the competitive market. Because webelieve it is appropriate to pay base salaries, our only element of fixedcompensation, competitive with the market, the Committee awarded base salary increases for fiscal 2010, as setforth below:

 
| **Name**         | ** ** | **Increase  in Base Salary  (%)** | ** ** | **Fiscal  2010 Base Salary  ($)** | ** ** |
|------------------|------------|-----------------------------------|------------|-----------------------------------|------------|
| Mr. Nolan   |       | 12.5                              |       | $                                 | 450,000    |   |
| Mr. Clark   |       | 10.3                              |       | $                                 | 320,000    |   |
| Mr. Chaplin |       | 9.6                               |       | $                                 | 285,000    |   |
| Mr. Denkler |       | 7.7                               |       | $                                 | 280,000    |   |
| Mr. Wilson  |       | 7.7                               |       | $                                 | 280,000    |   |

 

The salary increases forMessrs. Chaplin, Denkler and Wilson were also based on internal equityconsiderations and our desire to treat each executive relatively equal.

 

*Annual Cash Incentive Awards*.  During fiscal 2010, each Named ExecutiveOfficer participated in our annual cash incentive award program. Each executive’sfiscal 2010 incentive amount was determined as follows:

 

·                  *Target Award. *Each executive’s target cash incentive award wasexpressed as a percentage of his base salary for the year, as set forth in thetable below.

 
| **Name**         | ** ** | **Threshold  Award  Percentage** | ** ** | **Threshold  Award********($)** | ** ** | **Target  Award  Percentage** | ** ** | **Target  Award ($)** | ** ** | **Overachieve  Award  Percentage** | ** ** | **Overachieve  Award********($)** | ** ** |
|------------------|------------|----------------------------------|------------|---------------------------------|------------|-------------------------------|------------|-----------------------|------------|------------------------------------|------------|-----------------------------------|------------|
| Mr. Nolan   |       | 35                               | %          | 157,500                         |       | 100                           | %          | 450,000               |       | 150                                | %          | 675,000                           |       |
| Mr. Clark   |       | 26.2                             | %          | 84,000                          |       | 75                            | %          | 240,000               |       | 112.5                              | %          | 360,000                           |       |
| Mr. Chaplin |       | 21                               | %          | 59,900                          |       | 60                            | %          | 171,000               |       | 90                                 | %          | 256,500                           |       |
| Mr. Denkler |       | 21                               | %          | 58,800                          |       | 60                            | %          | 168,000               |       | 90                                 | %          | 252,000                           |       |
| Mr. Wilson  |       | 21                               | %          | 58,800                          |       | 60                            | %          | 168,000               |       | 90                                 | %          | 252,000                           |       |

 

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·                  *Performance Goals. *The actual amount of the cash incentive award paid forfiscal 2010 was determined based upon the Committee’s review of the achievementof four general categories of information. Specifically, the Committee reviewedcertain objective financial and operational performance goals, which we believeare the best indicators of our annual performance, as well as subjective orqualitative goals within three additional categories: People, Process andPerspectives.

 

·                  *Financial and Operational PerformanceGoals. *As in fiscal 2009, the Committee focused and rewardedthe executives for the financial and operational performance measures for whichthey have direct control and which, we believe, most directly affect ourlong-term growth.  Under the annualincentive compensation plan, 70% of each executive’s potential incentivecompensation for the year was based on achievement of financial and operationalperformance objectives, similar to prior years. For those executivesresponsible for our overall corporate performance, including each NamedExecutive Officer, this portion of each executive’s annual incentive award wasbased on the following corporate measures:

 
| **Objective**        | ** ** | **Weighting** | ** ** |
|----------------------|------------|---------------|------------|
| Consolidated Revenue |       | 50            | %          |
| EPS                  |       | 35            | %          |
| Free Cash Flow       |       | 15            | %          |

 

The Committee establishedthreshold, target and overachieve targets for each of the Consolidated Revenue,Free Cash Flow and EPS metrics. Threshold, or 50% of target, emphasized that aminimum level of performance for each metric was necessary in order for the executiveto earn the award, while overachieve, or 150% of target, provided theexecutives the ability to earn above target annual incentive amounts if weexceeded our goals. In order to further focus the executives on the corporatemetrics that we believe are the key factors affecting our growth andstockholder return, the 50% “overachieve” potential annual incentive award forfinancial and operations performance was based on the Consolidated Revenue andEPS metrics only. The financial and operational goals were determined basedupon our fiscal 2010 financial plan, as determined by the senior managementteam and approved by the Board of Directors, and were as set forth below:

 
| **Corporate Performance Goal** | ** ** | **Threshold** | ** ** | **Target**    | ** ** | **Overachieve** | ** ** |
|------------------------------------------|------------|---------------|------------|---------------|------------|-----------------|------------|
| Consolidated Revenue                     |       | $850 Million  |       | $890 Million  |       | $928 Million    |       |
| EPS                                      |       | $1.65         |       | $1.72         |       | $1.79           |       |
| Free Cash Flow                           |       | $27.9 Million |       | $33.1 Million |       | N/A             |       |

 

·                  *People Goals. *As in fiscal 2009, Mr. Nolan recommended that 20%of the fiscal 2010 cash incentive would be based on the achievement of certaingoals relating to the quality of our workforce. The qualitative objectives inthis area for fiscal 2010 were to promote leadership to achieve corporateobjectives (to be evaluated based in part on the teamwork displayed amongsenior executives), achieve the highest quality workforce in our industry andenhance our culture.

 

·                  *Process and Perspectives Goals. *The remaining 10% of the potential fiscal 2010 cashincentive awards was split evenly between Process and Perspectives criteria,each of which were also recommended by Mr. Nolan. Such criteria includedmaintaining effective company communications, customer-focused internalorganizations and processes, achieving the highest levels of customersatisfaction, establishing lasting customer relationships and increasing namerecognition and visibility.

 

·                  *Determination of Award Amounts. *In evaluating fiscal 2010 financial performance, theCommittee noted that we exceeded our “overachieve” target amounts for EPS andGroup Revenue, exceeded our target amounts for Free Cash Flow and exceeded ourthreshold amount for Consolidated Revenue, EBIT, DSO and direct labor.

 

With respect to ourPeople and Process and Perspectives objectives, the Committee noted theteamwork among the senior management team, including the Named ExecutiveOfficers.

 

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*Long-Term Equity Incentive Awards.* We provide long-term equity incentive awards to our executives,including each of the Named Executive Officers, in the form of service-basedstock options and restricted stock awards, each of which vest ratably over athree-year period. We chose these forms of equity awards based on therecommendation of Mercer and our review of the core peer group data. Inaddition, as discussed above, we utilize these amounts, in part, to retainexecutives and we believe each provides a substantial retention mechanism.

 

During fiscal 2010, Mercer informed the Committee thatour executive team was, on average, positioned at the 75th percentile of thecore peer group in total direct compensation. In order to maintain theCommittee’s fiscal year 2009 objective to add more performance-based awards tothe compensation program, while at the same time spreading the expense of suchawards and the retention benefits over an extended period, the Committeecontinued to include the following in our long-term equity program for fiscal2010:

 

·                  two-thirdsof each executive’s annual equity award will be comprised of service-basedstock options and restricted stock grants, similar to prior years and generallyas determined and discussed below; and

 

·                  theremaining one-third straight service-based grants will be foregone in favor oflarger awards that are 100% performance-contingent and paid in restrictedstock.

 

The performance-basedrestricted stock awards granted in fiscal year 2009 had a four year term andwere intended to represent the one-third performance-contingent grants forfiscal years 2010-2012, thus no further performance-based awards were grantedin fiscal year 2010. The fiscal year 2009 performance-based restricted stockawards will be earned based on the achievement of Consolidated Revenue and EPStargets over a three-year performance period. The Committee chose these twoperformance metrics as it believes these metrics are the key indicators of ourgrowth and return on stockholder value over the next several years.Seventy-five percent of the awards will vest, if at all, upon achievement ofthe performance targets after three years, with the remaining 25% to vest oneyear after the performance criteria have been met based on continued service.In addition, in the event the Consolidated Revenue target is achieved duringthe first, second or third year of the three-year performance period, but theEPS target is not, the award may still be earned if both targets are achievedby fiscal year 2012. The Committee believes the structure of these awardsfurthers both our performance and retention objectives.

 

The service-based stockoption and restricted stock grant was targeted at 80% stock options and 20%restricted stock. We place greater emphasis on stock options as, while they area retention tool, we also believe stock options are inherentlyperformance-based as the executive only receives value from the award if theprice of our common stock increases.

 

Individual grant sizesfor the awards made in fiscal 2010 were primarily determined based on a valuecommensurate with the Mercer peer group data and with positioning theexecutives to be at approximately 75th percentile of the Mercer peer group intotal direct compensation, a level the Committee deemed appropriate. Becausethe Mercer peer group review indicated that our executive base salaries andtotal cash compensation (base salary plus incentive) were at the 25thpercentile and median of the Mercer peer group, respectively, a largerpercentage of each executive’s annual compensation was determined to bedelivered in the form of equity awards, which was consistent with our focus onperformance-based equity awards, retention and return on stockholder value.

 

Our equity awards aregranted at the beginning of each fiscal year in order to recognize theexecutive’s performance during the prior fiscal year as well as to incentivizeperformance and encourage retention for the coming years. Because our equityawards are designed to motivate our executives to stay with our company andincrease stockholder value, the Committee generally does not consider anexecutive’s current stock or option holdings as a material component in makingdecisions for additional awards.

 

The following table setsforth the equity awards for each Named Executive Officer during fiscal 2010 (inshares of common stock underlying awards):

 

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| ** **       | ** ** | **Fiscal 2010 Equity Awards** | ** ** |
|------------------|------------|----------------------------------------------|------------|
| **Name**         | ** ** | **Annual  Option  Award**                    | ** ** | **Annual  Restricted  Stock Award** | ** ** | **Total** | ** ** |
| Mr. Nolan   |       | 38,749                                       |       | 7,473 |   | 46,222 |   |
| Mr. Clark   |       | 17,714                                       |       | 3,416 |   | 21,130 |   |
| Mr. Chaplin |       | 12,621                                       |       | 2,433 |   | 15,054 |   |
| Mr. Denkler |       | 12,401                                       |       | 2,391 |   | 14,792 |   |
| Mr. Wilson  |       | 12,401                                       |       | 2,391 |   | 14,792 |   |

 

*EquityGrant Practices.*The Committee approves grants of equity awards, including to the NamedExecutive Officers, at the Committee’s first fiscal quarter meeting each year.Special grants to newly-hired employees are generally granted in the month ofhire. While our Board has delegated the authority for Mr. Nolan to approvegrants of stock option awards, up to certain maximum amounts, as a hiring andretention tool, to date, this authority has not been utilized. The exerciseprice of any option grant is equal to the fair market value of the shares onthe date of grant, which is the closing price of our common stock on the NewYork Stock Exchange.

 

**Changein Control Agreements**

 

As previously disclosed, we entered into changein control severance agreements with certain of our executive officers,including each of the Named Executive Officers. The amounts and types ofseverance benefits payable to the executives under the agreements weredetermined based on the prevailing structure and amounts within the core peergroup companies.

 

The agreements provide for a “double trigger,”meaning that the executives will only be entitled to the severance benefits ifa change in control occurs and the executive is terminated without cause orterminates his employment for good reason within a certain period of timefollowing a change in control (or a potential change in control). We believechange in control protections alleviates concerns regarding the possibleoccurrence of such a transaction, allowing our senior executives to focus theirattention on our business. We also believe, however, that if the executive isterminated without cause or the executive terminates employment for good reasonwithin a certain period of time following the transaction, the executive shouldbe afforded a certain level of protection from termination outside of hiscontrol.

 

For a more detailed discussion of the terms ofthese agreements, including a definition of the key terms and the estimatedbenefits payable thereunder, see the “Potential Payments Upon Termination orChange in Control” section below.

 

**Perquisites**

 

We do not providesubstantial perquisites or personal benefits to our executive officers,including the Named Executive Officers, that are not otherwise available to ouremployees generally. We provide our executives with an annual “executiveallowance,” to be paid monthly, so that our executives could spend this portionof their compensation as they choose from a list of designated items. Theseitems include: car allowance; physical exams; club membership not usedexclusively for business entertainment; air travel club memberships; firstclass business travel outside of normal company policy; additional businesstravel insurance; supplemental life insurance; season tickets to sporting orcultural events; and annual fees for certain corporate credit cards. Each NamedExecutive Officer’s executive allowance was determined based on our core peergroup review and internal equity principles. For fiscal 2010, each NamedExecutive Officer’s allowance was as follows: Mr. Nolan, $30,000; and Messrs. Clark,Chaplin, Denkler and Wilson, $20,000.

 

**Governmentand Tax Considerations**

 

*Government Limitations on Compensation*.  As a government contractor, we are subject tothe Federal Acquisition Regulation, or FAR, which governs the reimbursement ofcosts by our government customers. FAR 31.205-6(p) limits the allowabilityof senior executive compensation to a benchmark compensation cap establishedeach year by the Administrator of the Office of Federal Procurement Policyunder Section 39 of the Office of Federal Procurement Policy Act (41U.S.C. 435). The benchmark cap applies to the five most highly compensatedemployees in management positions in each home

 

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officeand each of our business segments. When comparing senior executive compensationto the benchmark cap, all wages, salary, bonuses and deferred compensation, ifany, for the year, as recorded in our books and records, must be included. Thecurrent benchmark compensation cap, effective January 1, 2010, and aspublished in the Federal Register, is $693,951. Any amounts over the cap areconsidered unallowable and are therefore not recoverable under our governmentcontracts.

 

*Deductibility of Executive Compensation*.  Section 162(m) of the InternalRevenue Code generally limits the tax deductibility of certain compensation inexcess of $1,000,000 paid in any one year to the principal executive officerand the other three highest paid executive officers (other than the principalfinancial officer). Qualified performance-based compensation will not besubject to this deduction limit if certain requirements are met. As describedabove, a portion of our annual cash incentive awards and our performance-basedrestricted stock awards are determined based upon the achievement of certainpre-determined performance goals, which permits us to deduct such awardsdespite the deduction limits otherwise imposed by Section 162(m). Inaddition, stock options are inherently performance-based and qualify for the qualifiedperformance-based compensation exemption from the deduction limits under Section 162(m).Only the base salaries and the service-based restricted stock awards are notexempt from the deduction limits imposed under Section 162(m). While wewill continue to monitor our compensation programs in light of Section 162(m),the Committee considers it important to retain the flexibility to designcompensation programs that are in the best long-term interests of our companyand our stockholders. As a result, the Committee may conclude that payingcompensation at levels that are not deductible under Section 162(m) isnevertheless in the best interests of the Company and our stockholders.

 

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**Executive Compensation Tables**

 

**SummaryCompensation Table**

 

The following table sets forth informationregarding compensation earned by our Named Executive Officers for serviceduring the last three completed fiscal years, whether or not such amounts werepaid in such year:

 
| **Name and Principal Position**                  | ** ** | **Year** | ** ** | **Salary  ($)(1)** | ** ** | **Stock  Awards  ($)(2)** | ** ** | **Option  Awards  ($)(2)** | ** ** | **Non-Equity  Incentive Plan  Compensation  ($)(3)** | ** ** | **All Other  Compensation  ($)(4)** | ** ** | **Total  ($)** | ** ** |
|-----------------------------------------------------------------|------------|----------|------------|--------------------|------------|---------------------------|------------|----------------------------|------------|-----------------------------------------------------------|------------|------------------------------------------|------------|----------------|------------|
| Philip O. Nolan                                            |       | 2010     |       | 437,693            |       | 188,469                   |       | 296,674                    |       | 575,400                                                   |       | 42,277                                   |       | 1,540,513      |       |
| Chairman, President &                                  |       | 2009     |       | 374,004            |       | 3,340,025                 |       | 231,647                    |       | 612,000                                                   |       | 41,142                                   |       | 4,598,818      |       |
| CEO                                                             |       | 2008     |       | 338,750            |       | 154,279                   |       | 431,859                    |       | 510,000                                                   |       | 50,890                                   |       | 1,485,778      |       |
|                                                            |       |     |       |               |       |                      |       |                       |       |                                                      |       |                                     |       |           |       |
| Brian J. Clark                                             |       | 2010     |       | 311,846            |       | 86,152                    |       | 135,624                    |       | 306,900                                                   |       | 31,983                                   |       | 872,505        |       |
| Executive Vice President &                             |       | 2009     |       | 280,558            |       | 1,982,109                 |       | 107,972                    |       | 332,775                                                   |       | 29,706                                   |       | 2,733,120      |       |
| CFO                                                             |       | 2008     |       | 257,500            |       | 98,656                    |       | 161,112                    |       | 292,500                                                   |       | 27,509                                   |       | 837,277        |       |
|                                                            |       |     |       |               |       |                      |       |                       |       |                                                      |       |                                     |       |           |       |
| Scott D. Chaplin                                                |       | 2010     |       | 277,923            |       | 61,360                    |       | 96,630                     |       | 218,600                                                   |       | 26,137                                   |       | 680,650        |       |
| Senior Vice President, General Counsel and Corporate  Secretary |       |     |       |               |       |                      |       |                       |       |                                                      |       |                                     |       |           |       |
|                                                            |       |     |       |               |       |                      |       |                       |       |                                                      |       |                                     |       |           |       |
| Gregory M. Denkler                                         |       | 2010     |       | 273,539            |       | 60,301                    |       | 94,946                     |       | 214,800                                                   |       | 32,516                                   |       | 676,102        |       |
| Executive Vice President                                        |       | 2009     |       | 233,163            |       | 1,323,158                 |       | 74,461                     |       | 230,100                                                   |       | 31,447                                   |       | 1,892,329      |       |
|                                                            |       | 2008     |       | 224,583            |       | 74,011                    |       | 120,828                    |       | 202,500                                                   |       | 33,862                                   |       | 655,784        |       |
|                                                            |       |     |       |               |       |                      |       |                       |       |                                                      |       |                                     |       |           |       |
| George H. Wilson                                           |       | 2010     |       | 273,539            |       | 60,301                    |       | 94,946                     |       | 214,800                                                   |       | 33,000                                   |       | 676,586        |       |
| Executive Vice President                                        |       | 2009     |       | 237,029            |       | 1,323,158                 |       | 74,461                     |       | 220,200                                                   |       | 31,488                                   |       | 1,886,336      |       |
|                                                            |       | 2008     |       | 224,167            |       | 86,372                    |       | 140,958                    |       | 202,500                                                   |       | 38,136                                   |       | 692,133        |       |

 

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(1)                                  For fiscal 2010, amounts reflect fiscalyear 2009 base salary until May 1, 2009, at which point fiscal 2010 base salaryamounts became effective. See the “Compensation Discussion andAnalysis—Principle Elements of Compensation—Base Salary” above for informationon each Named Executive Officer’s fiscal 2010 base salary.  Values reflect base salary actually receivedby each named executive officer in the years presented, which depending on theposition of pay periods within a calendar year, may not equal an NamedExecutive Officer’s stated annual salary.

 

(2)                                  The amounts reported in the Stock Awardscolumn and the Option Awards column reflect aggregate grant date fair valuecomputed in accordance with Financial Accounting Standards Board ASC Topic 718.These amounts reflect our calculation of the value of these awards at the grantdate and do not necessarily correspond to the actual value that may ultimatelybe recognized by the named executive officer. For 2010, assumptions used in thecalculation of these amounts are included in Note 12 to our audited financialstatements for the fiscal year ended March 31, 2010.

 

(3)                                  Amounts in this column reflect theamounts earned by each Named Executive Officer under our fiscal 2010 annualcash incentive plan. For additional information on this plan, see “CompensationDiscussion and Analysis—Annual Cash Incentive Awards” above and the Grants ofPlan-Based Awards Table below.

 

(4)                                  Amounts in this column for eachrespective Named Executive Officer are set forth in the table below and includean executive allowance, tax planning and preparation fees and matchingcontributions to our 401(k) plan for each Named Executive Officer. Foradditional information on each executive’s executive allowance for fiscal 2010,see “Compensation Discussion and Analysis—Perquisites” above. Amounts includedunder “tax planning and preparation” reflect actual cost to us for these taxservices on behalf of the executive.

 

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| ** **              | ** ** | **Executive  Allowance  ($)** | ** ** | **Tax Planning  and Preparation  ($)** | ** ** | **401(k)  Contributions  ($)** | ** ** | **Total  ($)** | ** ** |
|-------------------------|------------|-------------------------------|------------|--------------------------------------------------|------------|--------------------------------|------------|----------------|------------|
| Philip O. Nolan    |       | 30,000                        |       | 2,500                                            |       | 9,777                          |       | 42,277         |       |
| Brian J. Clark     |       | 20,000                        |       | 1,875                                            |       | 10,108                         |       | 31,983         |       |
| Scott D. Chaplin        |       | 20,000                        |       | 1,875                                            |       | 4,262                          |       | 26,137         |       |
| Gregory M. Denkler |       | 20,000                        |       | 2,500                                            |       | 10,016                         |       | 32,516         |       |
| George H. Wilson   |       | 20,000                        |       | 2,500                                            |       | 10,500                         |       | 33,000         |       |

 

**Grantsof Plan-Based Awards**

 

The followingGrants of Plan-Based Awards table provides additional information about cashincentive awards payable based on fiscal 2010 performance and restricted stockand option awards granted to our Named Executive Officers during fiscal 2010:

 
| ** **         | ** ** | ** **      | ** ** | **Estimated Possible Payouts  Under Non-Equity Incentive  Plan Awards(1)** | ** ** | **All Other  Stock  Awards:  Number of  Shares of  Stock or** | ** ** | **All Other  Option  Awards:  Number of  Securities  Underlying** | ** ** | **Exercise  or Base  Price of  Option** | ** ** | **Grant  Date Fair  Value of  Stock  and  Option** | ** ** |
|--------------------|------------|-----------------|------------|-----------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------|------------|---------------------------------------------------|------------|--------------------------------------------------------------|------------|
| **Name**           | ** ** | **Grant  Date** | ** ** | **Threshold  ($)**                                                                                  | ** ** | **Target  ($)**                                                                   | ** ** | **Maximum  ($)**                                                            | ** ** | **Units (#)  (2)**                           | ** ** | **Options (#)  (3)**                                    | ** ** | **Awards  ($/Sh)** | ** ** | **Awards  ($)(4)** | ** ** |
| Philip O. Nolan    |       |            |       | 157,500                                                                                             |       | 450,000                                                                           |       | 675,000                                                                     |       | —                                            |       | —                                                       |       | — |   | — |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | —                                            |       | 38,749                                                       |       | 25.22 |   | 296,674 |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | 7,473                                             |       | —                                                       |       | — |   | 188,469 |   |
|               |       |            |       |                                                                                                |       |                                                                              |       |                                                                        |       |                                              |       |                                                         |       |   |   |   |   |
| Brian J. Clark     |       |            |       | 84,000                                                                                              |       | 240,000                                                                           |       | 360,000                                                                     |       | —                                            |       | —                                                       |       | — |   | — |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | —                                            |       | 17,714                                                       |       | 25.22 |   | 135,624 |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | 3,416                                             |       | —                                                       |       | — |   | 86,152 |   |
|               |       |            |       |                                                                                                |       |                                                                              |       |                                                                        |       |                                              |       |                                                         |       |   |   |   |   |
| Scott D. Chaplin   |       |            |       | 59,900                                                                                              |       | 171,000                                                                           |       | 256,500                                                                     |       | —                                            |       | —                                                       |       | — |   | — |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | —                                            |       | 12,621                                                       |       | 25.22 |   | 96,630 |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | 2,433                                             |       | —                                                       |       | — |   | 61,360 |   |
|               |       |            |       |                                                                                                |       |                                                                              |       |                                                                        |       |                                              |       |                                                         |       |   |   |   |   |
| Gregory M. Denkler |       |            |       | 58,800                                                                                              |       | 168,000                                                                           |       | 252,000                                                                     |       | —                                            |       | —                                                       |       | — |   | — |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | —                                            |       | 12,401                                                       |       | 25.22 |   | 94,946 |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | 2,391                                             |       | —                                                       |       | — |   | 60,301 |   |
|               |       |            |       |                                                                                                |       |                                                                              |       |                                                                        |       |                                              |       |                                                         |       |   |   |   |   |
| George H. Wilson   |       |            |       | 58,800                                                                                              |       | 168,000                                                                           |       | 252,000                                                                     |       | —                                            |       | —                                                       |       | — |   | — |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | —                                            |       | 12,401                                                       |       | 25.22 |   | 94,946 |   |
|               |       | 5/6/2009        |       |                                                                                                |       |                                                                              |       |                                                                        |       | 2,391                                             |       | —                                                       |       | — |   | 60,301 |   |

 

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(1)                                  Amounts in these columns represent theestimated threshold, target and maximum possible payouts under our fiscal 2010annual cash incentive plan. For the actual amounts earned by the NamedExecutive Officers, see the “Non-Equity Incentive Compensation” column of theSummary Compensation Table. See the “Compensation Discussion andAnalysis—Annual Cash Incentive Awards” above for a discussion of thedetermination of the actual amounts awarded under the plan.

 

(2)                                  Amounts in this column represent thenumber of shares of our common stock underlying restricted stock awards issuedto our Named Executive Officers in fiscal 2010. These awards were grantedbased, in part, on each executive’s performance during fiscal year 2010. Seethe “Compensation Discussion and Analysis—Long-Term Equity Incentive Awards”above. These shares vest annually in three equal installments.

 

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(3)                                  Amounts in this column represent thenumber of shares of our common stock underlying options issued to our NamedExecutive Officers during fiscal 2010. These awards were granted based, inpart, on each executive’s performance during fiscal year 2010. See the “CompensationDiscussion and Analysis—Long-Term Equity Incentive Awards” above. These optionsvest annually in three equal installments.

 

(4)                                  Amounts in this column represent thegrant date fair value of the restricted stock and stock option awards in fiscal2010, as computed in accordance with ASC Topic 718.

 

**OutstandingEquity Awards at Fiscal Year-End**

 

The followingtable summarizes information regarding each unexercised stock option andunvested shares of restricted stock held by each of our Named ExecutiveOfficers as of March 31, 2010.

 
| ** **         | ** ** | **Option Awards**                                                                 | ** ** | **Stock Awards**                                                                    | ** ** |
|--------------------|------------|----------------------------------------------------------------------------------------|------------|------------------------------------------------------------------------------------------|------------|
| **Name**           | ** ** | **Number of  Securities  Underlying  Unexercised  Options (#)  Exercisable** | ** ** | **Number of  Securities  Underlying  Unexercised  Options (#)  Unexercisable** | ** ** | **Option  Exercise  Price ($)** | ** ** | **Option  Expiration  Date** | ** ** | **Number  of  Shares or  Units  of Stock  That Have  Not  Vested  (#) (5)** | ** ** | **Grant  Date** | ** ** | **Market  Value  of Shares or  Units of  Stock  That Have  Not  Vested  ($)(7)** | ** ** | **Equity  Incentive  Plan  Awards:  Number of  Unearned  Shares That  Have Not  Vested  (#) (6)** | ** ** | **Equity  Incentive  Plan  Awards:  Market  Value  of Shares  That Have  Not  Vested  ($) (7)** | ** ** |
| Philip  O. Nolan   |       | 12,000                                                                                 |       | —                                                                                   |       | 1.78 |   | 3/31/2010 |   | 3,370 |   | 5/3/2007 |   | 95,337 |   | 126,445 |   | 3,577,129 |   |
|               |       | 47,250                                                                                 |       | 54,000                                                                                   | (1)        | 8.65 |   | 5/4/2011 |   | 4,340 |   | 5/8/2008 |   | 122,779 |   |   |   |   |   |
|               |       | 59,926                                                                                 |       | 29,964                                                                                   | (2)        | 15.26 |   | 5/3/2012 |   | 4,982 |   | 5/6/2009 |   | 140,941 |   |   |   |   |   |
|               |       | 11,251                                                                                 |       | 22,503                                                                                   | (3)        | 25.15 |   | 5/8/2013 |   |   |   |   |   |   |   |   |   |   |   |
|               |       | —                                                                                 |       | 38,749                                                                                   | (4)        | 25.22 |   | 5/6/2014 |   |   |   |   |   |   |   |   |   |   |   |
|               |       |                                                                                   |       |                                                                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Brian J. Clark     |       | 14,000                                                                                 |       | —                                                                                   |       | 6.56 |   | 4/3/2016 |   | 2,155 |   | 5/3/2007 |   | 60,965 |   | 75,867 |   | 2,146,277 |   |
|               |       | 22,356                                                                                 |       | 11,179                                                                                   | (2)        | 15.26 |   | 5/3/2012 |   | 2,024 |   | 5/8/2008 |   | 57,259 |   |   |   |   |   |
|               |       | 5,244                                                                                  |       | 10,489                                                                                   | (3)        | 25.15 |   | 5/8/2013 |   | 2,278 |   | 5/6/2009 |   | 64,445 |   |   |   |   |   |
|               |       | —                                                                                 |       | 17,714                                                                                   | (4)        | 25.22 |   | 5/6/2014 |   |   |   |   |   |   |   |   |   |   |   |
|               |       |                                                                                   |       |                                                                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Scott D. Chaplin   |       | 8,500                                                                                  |       |                                                                                     |       | 5.50 |   |   |   | 1,888 |   | 5/3/2007 |   | 53,412 |   | 50,578 |   | 1,430,852 |   |
|               |       | 15,000                                                                                 |       | —                                                                                   |       | 7.86 |   |   |   | 1,396 |   | 5/8/2008 |   | 39,493 |   |   |   |   |   |
|               |       | 19,558                                                                                 |       | 9,782                                                                                    |       | 15.26 |   | 5/3/2012 |   | 1,622 |   | 5/6/2009 |   | 45,886 |   |   |   |   |   |
|               |       | 3,616                                                                                  |       | 7,234                                                                                    |       | 25.15 |   | 5/8/2013 |   |   |   |   |   |   |   |   |   |   |   |
|               |       | —                                                                                 |       | 12,621                                                                                   |       | 25.22 |   | 5/6/2014 |   |   |   |   |   |   |   |   |   |   |   |
|               |       |                                                                                   |       |                                                                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| Gregory M. Denkler |       | 6,000                                                                                  |       | —                                                                                   |       | 2.35 |   | 4/29/2013 |   | 1,618 |   | 5/3/2007 |   | 45,773 |   | 50,578 |   | 1,430,852 |   |
|               |       | 30,000                                                                                 |       | —                                                                                   |       | 3.33 |   | 5/4/2014 |   | 1,396 |   | 5/8/2008 |   | 39,493 |   |   |   |   |   |
|               |       | 27,000                                                                                 |       | 18,000                                                                                   | (1)        | 7.86 |   | 5/4/2016 |   | 1,594 |   | 5/6/2009 |   | 45,094 |   |   |   |   |   |
|               |       | 16,766                                                                                 |       | 8,384                                                                                    | (2)        | 15.26 |   | 5/3/2012 |   |   |   |   |   |   |   |   |   |   |   |
|               |       | 3,616                                                                                  |       | 7,234                                                                                    | (3)        | 25.15 |   | 5/8/2013 |   |   |   |   |   |   |   |   |   |   |   |
|               |       | —                                                                                 |       | 12,401                                                                                   | (4)        | 25.22 |   | 5/6/2014 |   |   |   |   |   |   |   |   |   |   |   |
|               |       |                                                                                   |       |                                                                                     |       |   |   |   |   |   |   |   |   |   |   |   |   |   |   |
| George H. Wilson   |       | 6,708                                                                                  |       | —                                                                                   |       | 3.33 |   | 5/4/2014 |   | 1,888 |   | 5/3/2007 |   | 53,412 |   | 50,578 |   | 1,430,852 |   |
|               |       | 27,000                                                                                 |       | 18,000                                                                                   | (1)        | 7.86 |   | 5/4/2016 |   | 1,396 |   | 5/8/2008 |   | 39,493 |   |   |   |   |   |
|               |       | 19,558                                                                                 |       | 9,782                                                                                    | (2)        | 15.26 |   | 5/3/2012 |   | 1,594 |   | 5/6/2009 |   | 45,094 |   |   |   |   |   |
|               |       | 3,616                                                                                  |       | 7,234                                                                                    | (3)        | 25.15 |   | 5/8/2013 |   |   |   |   |   |   |   |   |   |   |   |
|               |       | —                                                                                 |       | 12,401                                                                                   | (4)        | 25.22 |   | 5/6/2014 |   |   |   |   |   |   |   |   |   |   |   |

 

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(1)                                  50% of the remaining unvested sharessubject to this option vested on May 4, 2010, and the remaining shareswill vest on May 4, 2011.

 

(2)                                  The remaining unvested shares subject tothis option vested on May 3, 2010.

 

(3)                                  50% of the remaining unvested sharessubject to this option vested on May 8, 2010, and the remaining shareswill vest on May 8, 2011.

 

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(4)                                  33% of the remaining unvested sharessubject to this option vested on May 6, 2010, and the remaining shareswill vest on May 6, 2011, and May 6, 2012.

 

(5)                                  The remaining unvested shares subject tothe restricted stock grant dated May 3, 2007, vested on May 3, 2010;50% of the remaining unvested shares subject to the restricted stock grantdated May 8, 2008, vested on May 8, 2010, and the remaining will veston May 8, 2011; and 33% of the remaining unvested shares subject to therestricted stock grant dated May 6, 2009, vested on May 6, 2010, andthe remaining shares will vest on May 6, 2011 and May 6, 2012.

 

(6)                                  75% of the awards vest on the date theCompany files its Form 10-K for the fiscal year ended March 31, 2011with the SEC if, by such date, certain revenue and earnings per share targetshave been achieved by the Company (the “Performance Targets”), and 25% vest on March 31,2012 if the Performance Targets have previously been met.

 

(7)                                  Market value based on $28.29, the closingprice of our common stock on March 31, 2010, the last day of fiscal 2010.

 

**OptionExercises and Stock Vested**

 

The followingtable sets forth information regarding stock options exercised by our NamedExecutive Officers during fiscal 2010:

 
| ** **              | ** ** | **Option Awards**                                      | ** ** | **Stock Awards**                             | ** ** |
|-------------------------|------------|-------------------------------------------------------------|------------|---------------------------------------------------|------------|
| **Name**                | ** ** | **Number of  Shares  Acquired on  Exercise  (#)** | ** ** | **Value Realized  on Exercise  ($)(1)** | ** ** | **Number of  Shares  Acquired on  Vesting  (#)** | ** ** | **Value Realized  on Vesting  ($)(2)** | ** ** |
| Philip O. Nolan    |       | 24,000                                                      |       | 643,320                                           |       | 5,540 |   | 143,790 |   |
| Brian J. Clark     |       | —                                                      |       | —                                            |       | 3,166 |   | 82,089 |   |
| Scott D. Chaplin        |       | —                                                      |       | —                                            |       | 2,583 |   | 66,925 |   |
| Gregory M. Denkler |       | —                                                      |       | —                                            |       | 2,313 |   | 59,956 |   |
| George H. Wilson   |       | 53,292                                                      |       | 1,227,388                                         |       | 2,583 |   | 66,925 |   |

 

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(1)                                  Value realized based on differencebetween the closing price of our common stock on the date of exercise and theexercise price of the shares subject to the option.

 

(2)                                  Value realized is based on the closingprice of our common stock on the date of vesting.

 

**NonqualifiedDeferred Compensation**

 

On May 6,2009, the Board adopted the Stanley Executive Savings Plan, or the SavingsPlan, for the purpose of attracting high quality executives and promoting inthem increased efficiency and an interest in the successful operation of theCompany. Under our Savings Plan, a participant, including our Named ExecutiveOfficers, is permitted to defer receipt of up to 80% of their base salary and100% of their bonus, commissions and/or restricted stock awards. The Companyhas the discretion to make contributions to the Savings Plan at any time onbehalf of any participant. No participant has the right to receive anycontributions in a particular year regardless of whether contributions are madeon behalf of other participants.

 

In addition,pursuant to the terms of our 2002 Executive Deferred Compensation and EquityIncentive Plan, the Compensation Committee could elect to issue awards ofrestricted stock to the award recipient directly or to a rabbi trust, or theTrust, established by us on behalf of the recipients for tax deferral purposes.Awards of restricted stock were issued into the Trust on two occasions, in 2004and 2006, including on behalf of certain of the Named Executive Officers. Noother contributions have been made to the Trust. All unvested shares ofrestricted stock held in the Trust vested in full upon our initial publicoffering, and thus all shares in the Trust are fully vested.

 

While held in theTrust, the Named Executive Officers have no rights in the shares, including noright to vote the shares or to receive or retain any dividends anddistributions paid or distributed on the shares; provided, however, that any 

 

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dividends ordistributions paid will automatically be added to each executive’s aggregateshares held in the Trust. Other than any declaration of dividends or otherdistributions, there is no right to additional earnings on the shares held inthe Trust. Upon termination of employment for any reason, the Named ExecutiveOfficer will be entitled to receive all of the vested shares of stock held onbehalf of the recipient in the Trust.

 

The following table showsthe nonqualified deferred compensation for each Named Executive Officer as of March 31,2010, pursuant to the Savings Plan and the 2002 Executive Deferred Compensationand Equity Incentive Plan:

 
| **Name**                | ** ** | **Executive  Contributions  in  Last FY ($)(1)** | ** ** | **Registrant  Contributions  in Last FY ($)** | ** ** | **Aggregate  Earnings  in  Last FY  ($)(2)** | ** ** | **Aggregate  Withdrawals/  Distributions  ($)** | ** ** | **Aggregate  Balance at  Last FYE********($)(3)** | ** ** |
|-------------------------|------------|------------------------------------------------------------|------------|--------------------------------------------------------------|------------|---------------------------------------------------|------------|-------------------------------------------------|------------|-------------------------------------------------------------|------------|
| Philip O. Nolan    |       | 36,346                                                     |       | —                                                       |       | 457                                               |       | —                                          |       | 8,748,709                                                   |       |
| Brian J. Clark     |       | 53,539                                                     |       | —                                                       |       | 5,320                                             |       | —                                          |       | 483,209                                                     |       |
| Scott D. Chaplin        |       | —                                                     |       | —                                                       |       | —                                            |       | —                                          |       | —                                                      |       |
| Gregory M. Denkler |       | 37,154                                                     |       | —                                                       |       | 3,544                                             |       | —                                          |       | 4,599,066                                                   |       |
| George H. Wilson   |       | —                                                     |       | —                                                       |       | —                                            |       | —                                          |       | 6,215,030                                                   |       |

 

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(1)                                  Amounts represent the aggregate executivecontributions made by the Named Executive Officer under the Savings Plan.

 

(2)                                  Amounts represent the aggregatedividends, interest and market value changes accrued under the Savings Plan foreach Named Executive Officer.

 

(3)                                  Amounts represent the Named ExecutiveOfficer’s account balance under the Savings Plan and the value of the vestedshares held in Trust, which is based on the closing market price of our commonstock on March 31, 2010, or $28.29, multiplied by the number of vestedshares:

 
| **Name**                | ** ** | **Shares of  Vested  Restricted  Stock  (#)** | ** ** | **Aggregate  Value as of  March 31,  2010  ($)** | ** ** |
|-------------------------|------------|-----------------------------------------------|------------|-------------------------------------------------------|------------|
| Philip O. Nolan    |       | 307,950                                       |       | 8,711,906                                             |       |
| Brian J. Clark     |       | 15,000                                        |       | 424,350                                               |       |
| Scott D. Chaplin        |       | —                                        |       | —                                                |       |
| Gregory M. Denkler |       | 161,130                                       |       | 4,558,368                                             |       |
| George H. Wilson   |       | 219,690                                       |       | 6,215,030                                             |       |

 

**Potential Payments Upon Termination or Change inControl**

 

*Change in Control and Severance Payments*.  As discussed under “Compensation Discussionand Analysis-Adoption of Change in Control Agreements” above, we entered intoChange in Control Severance Agreements with each of the Named ExecutiveOfficers, as well as other senior officers, on June 26, 2008. We have summarizedand quantified the estimated payments under the agreements, assuming atermination event occurred on March 31, 2010, below.

 

The Change in Control Severance Agreements are “doubletrigger” agreements, meaning that the payment of the severance and benefitsthereunder require both a “change in control” (as defined below) and aqualifying termination of the executive’s employment without “cause” (asdefined below) or the executive terminates his employment for “good reason” (asdefined below) within 24 months (or 36 months in the case of Mr. Nolan)following a change in control. The term of the agreements is two years;provided, however, that the agreement will automatically extend for one-yearterms thereafter unless either we or the executive provides notice ofnon-renewal at least one year prior to the commencement of the renewal term.The term of any agreement will not expire, however, during a “potential changein control period” (as defined below) or prior to the expiration of 24 months(or 36 months in the case of Mr. Nolan) after the date of a change incontrol, including during a potential change in control period.

 

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Upon a change in control and qualifyingtermination, the Change in Control Severance Agreements provide for thefollowing:

 

·                  a lump sumpayment equal to two times (three times in the case of Mr. Nolan) the sumof the Named Executive Officer’s base salary plus the highest annual incentivebonus paid to the executive for the prior three years;

 

·                  an amountequal to the highest annual bonus paid to the executive for the prior threeyears, pro rated for the year of termination;

 

·                  immediatevesting of any unvested equity awards, but only to the extent any outstandingequity awards were not assumed or substituted by the successor company at thetime of the change in control; and

 

·                  continuationof perquisites and health and welfare benefits for a maximum of two years(three years in the case of Mr. Nolan), unless the executive breaches therelease agreement or any other agreement with us surviving his termination orthe executive becomes eligible under similar plans of a successor employer.

 

In addition, the agreements provide that if thepayment of any of the severance payments or benefits would trigger the excisetax provisions of the Internal Revenue Code, the executive is entitled to a taxgross-up payment to cover the cost of any such excise tax (and interest orpenalties relating thereto). Notwithstanding this provision of the agreements,if the excise tax provisions of the Code would not be triggered if theseverance payments and benefits payable to the executive were reduced by 10%,such payments and benefits are to be reduced and we will have no obligation topay the tax gross-up payment.

 

No payments are owed to any of the NamedExecutive Officers under the terms of the agreements if the executivevoluntarily terminates employment, is terminated for cause, or terminates as aresult of death or disability. In addition, the executives must sign a standardrelease agreement in favor of us in order to receive the payments and benefitsabove, and the agreements provide for a standard non-disparagement and two-yearnon-compete covenant (which non-compete will be at the option of the acquiringcompany).

 

For purposes ofthe Change in Control Severance Agreements, the following terms have thefollowing meanings:

 

·                  “cause” generally means:

 

·                  termination due to the executive’sconviction of a felony or entering into a guilty plea or plea of *nolo contendere* with respect to suchcrime;

 

·                  the executive’s willful and continuedfailure to substantially perform his duties and responsibilities;

 

·                  the executive’s engaging in fraud ordishonesty, or other willful misconduct or gross negligence of the executivewhich is materially injurious to us or our reputation, monetarily or otherwise;or

 

·                  the executive’s willful violation of ourpolicies, which conduct is materially injurious to us or our reputation,monetarily or otherwise.

 

·                  “change in control” generally means:

 

·                  any person acquires 50% or more of thetotal fair market value or total voting power of our common stock;

 

·                  any person acquires ownership of 30% ormore of the total voting power of our common stock;

 

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·                  a majority of the members of the Board ofDirectors is replaced during any 12-month period by directors whose appointmentor election is not endorsed by a majority of the members of the Board prior tothe date of appointment or election; or

 

·                  any person acquires more than 40% of thefair market value of our assets.

 

·                  “good reason” generally means:

 

·                  a material diminution in the executive’sbase salary;

 

·                  a material diminution in the executive’sauthority, duties or responsibilities;

 

·                  a material diminution in the authority,duties or responsibilities of the supervisor to whom the executive is requiredto report, including the requirement that the executive report to a corporateofficer or employee instead of directly to the Board of Directors (ifpreviously reporting to the Board);

 

·                  a material diminution in the budget overwhich the executive retains authority;

 

·                  a requirement that the executive be basedout of an office that is more than 50 miles from the executive’s location priorto a change in control and also more than 50 miles from the executive’s thencurrent principal residence; or

 

·                  any other action or inaction thatconstitutes a material breach by us of any written agreement between us and theexecutive.

 

·                  “potential change in control” generallymeans:

 

·                  we enter into an agreement, theconsummation of which would result in the occurrence of a change in control;

 

·                  we publicly announce an intention totake, or to consider taking actions, which, if consummated, would constitute achange in control;

 

·                  any person becomes the beneficial ownerof 20% or more of our outstanding common stock; or

 

·                  the Board of Directors adopts aresolution to the effect that, for purposes of the Change in Control SeveranceAgreement, a potential change in control has occurred; and

 

·                  a “potential change in control period”generally commences upon the occurrence of a potential change in control andlapses upon the occurrence of a change in control or, if earlier and asapplicable, upon the abandonment or termination of the applicable agreement orannounced actions described above, or one year after the Board resolution orany person acquires the 20% stock ownership described above. In addition, underthe agreements, any termination of the executive at the request of a thirdparty in contemplation of a change in control or potential change in controlwill be deemed to have occurred within a potential change in control period.

 

*Equity Plan*.  The terms of our equity incentive planprovide for the accelerated vesting of any unvested stock option or restrictedstock awards upon the occurrence of a change in control (which is generallydefined as described above in the Change in Control Severance Agreements),unless provision is made for assumption or substitution of such equity awardsby the successor company. This acceleration provision applies toperformance-based awards as well as service-based awards. This accelerationprovision applies equally to all employees receiving awards under the equityplan.

 

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*Estimated Benefits*.  The following table sets forth the estimatesof the potential severance payments, benefits and value of the acceleratedvesting of equity awards to be received by the Named Executive Officers underthe change in control severance agreements and equity plan, assuming that achange in control and/or qualifying termination occurred on March 31,2010, and the closing market price of our common stock on the NYSE on such dateof $28.29. For purposes of the table below, we have assumed that any unvestedstock options and restricted stock awards outstanding and unvested as of March 31,2010, have not been assumed or substituted by the successor company.

 

The amounts set forth below do not include anyamounts already earned or accrued through the termination date, but not yetpaid, including base salary through the date of termination, any unreimbursedbusiness expenses, and accrued but unused vacation pay, which is available toall our employees on a non-discriminatory basis. The amounts set forth belowalso do not include the value of the shares of restricted stock which will bereleased from the 2002 Executive Deferred Compensation and Equity IncentivePlan Trust or amounts payable under the Stanley Executive Savings Plan uponeach executive’s termination of employment. For more information regarding thevalue and number of vested shares of restricted stock held in the Trust or theamounts held in the Stanley Executive Savings Plan on behalf of each of theNamed Executive Officers, see the “Nonqualified Deferred Compensation” tableabove.

 
| **Name**                | ** ** | **Cash  Severance  (1) ($)** | ** ** | **Incentive  Bonus  (2) ($)** | ** ** | **Accelerated  Option  Awards  (3)($)** | ** ** | **Accelerated  Stock  Awards  (3)($)** | ** ** | **Benefits  (4)($)** | ** ** | **Tax  Gross-Up  Payment  (5)($)** | ** ** | **Total ($)** | ** ** |
|-------------------------|------------|-----------------------------------|------------|------------------------------------|------------|-----------------------------------------|------------|----------------------------------------|------------|----------------------|------------|------------------------------------|------------|--------------------|------------|
| Philip O. Nolan    |       | 3,798,001                         |       | 612,000                            |       | 1,375,461                               |       | 4,006,668                              |       | 199,200              |       | 3,019,479                          |       | 13,010,809         |       |
| Brian J. Clark     |       | 1,638,325                         |       | 332,775                            |       | 232,971                                 |       | 2,361,168                              |       | 108,188              |       | 1,549,917                          |       | 6,223,344          |       |
| Scott D. Chaplin        |       | 1,265,700                         |       | 231,900                            |       | 379,844                                 |       | 1,592,548                              |       | 115,051              |       | 1,135,174                          |       | 4,720,217          |       |
| Gregory M. Denkler |       | 1,250,300                         |       | 230,100                            |       | 543,785                                 |       | 1,583,722                              |       | 115,839              |       | 1,128,218                          |       | 4,851,964          |       |
| George H. Wilson   |       | 1,220,600                         |       | 220,200                            |       | 555,959                                 |       | 1,591,360                              |       | 115,222              |       | 1,101,600                          |       | 4,804,941          |       |

 

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(1)                                  Amounts in this column represent theNamed Executive Officer’s fiscal 2010 base salary and the executive’s highestannual incentive bonus payment for the prior three years, multiplied by theseverance multiple of two years, or three years for Mr. Nolan. Base salaryand annual incentive amounts used are as set forth in “Compensation Discussionand Analysis—Base Salary” and the Non-Equity Incentive Plan Compensation columnof the Summary Compensation Table, above, respectively. The fiscal 2009 bonuswas the highest bonus paid to each Named Executive Officer for the prior threeyears.

 

(2)                                  Amounts in this column represent eachNamed Executive Officer’s annual incentive bonus for fiscal 2009, which was thehighest bonus paid to each Named Executive Officer for the prior three years.Assuming a March 31, 2010 termination event, the bonus would not be prorated.

 

(3)                                  Amounts in this column represent thevalue of accelerated vesting of stock options and restricted stock (includingperformance-based restricted stock) held by the Named Executive Officer andunvested as of March 31, 2010. For stock options, amounts represent theintrinsic value of the unvested awards, or the difference between the closingmarket price of our common stock on March 31, 2010, and the exercise pricefor the shares underlying the options. For shares of restricted stock, amountsrepresent the number of unvested restricted shares multiplied by the closingmarket price of our common stock on March 31, 2010. For more informationregarding the number of unvested stock options and shares of restricted stockheld by each of the Named Executive Officers as of the end of fiscal 2010, seethe “Outstanding Equity Awards at Fiscal Year End” table above.

 

(4)                                  Amounts in this column include (i) thecontinuation of each Named Executive Officer’s perquisite allowance and taxplanning and preparation assistance for two years, or three years for Mr. Nolan,in each case based on the fiscal 2010 amounts set forth for each officer in thenotes to the Summary Compensation Table above, (ii) the value of thecontinuation of medical and dental insurance coverage for two years, or threeyears for Mr. Nolan, based on the estimated monthly COBRA costs for eachNamed Executive Officer as of the end of fiscal 2010; and (iii) salarypayment in lieu of 30 day notice as provided for under the agreement for eachNamed Executive Officer.

 

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(5)                                  Amounts in this column reflect the taxgross-up payment payable on behalf of the Named Executive Officer to cover thecost of any excise tax (and interest or penalties relating thereto) that wouldotherwise be payable by the Named Executive Officer due to the provision of theseverance payments and benefits payable in a change in control. We are not ableto deduct the amounts payable in tax gross-ups.

 

**Director Compensation**

 

Directors who are also our employees are notpaid any fees or other compensation for services as members of the Board ofDirectors or of any committee of the Board of Directors.  Directors who are not our employees are paidan annual fee of $95,000, of which 25% is required to be paid in shares of ourcommon stock and the remaining 75% is eligible to be paid in cash, equity, or acombination of the two, at the election of the director (with any fractionalshares payable in cash). The 25% of each director’s annual fee required to bepaid in common stock, and any additional shares of common stock issued as partof the director’s election, are shares of restricted stock which vest one yearafter grant, based on continued service.

 

The following table summarizes the compensationearned by our non-employee directors for their service as members of the Boardof Directors during fiscal 2010.

 
| **Name**                     | ** ** | **Fees Earned  or Paid  in Cash  ($)(1)** | ** ** | **Stock  Awards********(3)($)** | ** ** | **Total ($)** | ** ** |
|------------------------------|------------|----------------------------------------------------------|------------|---------------------------------|------------|--------------------|------------|
| James C. Hughes              |       | —                                                   |       | 66,308                          |       | 66,308             |       |
| Lt. General Richard L. Kelly |       | —                                                   |       | 66,308                          |       | 66,308             |       |
| Charles S. Ream              |       | 39,078                                                   |       | 33,154                          |       | 72,232             |       |
| John P. Riceman              |       | 17,819                                                   |       | 66,308                          |       | 84,127             |       |
| General Jimmy D. Ross        |       | 39,078                                                   |       | 33,154                          |       | 72,232             |       |
| William E. Karlson           |       | 45,516                                                   | (2)        | —                          |       | 45,516             |       |

 

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| (1)    |   | The Board of Directors  sets its annual compensation in August of each year. Accordingly, amounts set  forth in this column represent an $85,000 annual fee during the first part of  fiscal 2010 (April-August 2009), and a $95,000 annual fee during the  remainder of the fiscal year (September 2009-March 2010). During the first  part of fiscal 2010, Messrs. Hughes and Riceman and General Kelly elected to  receive the remaining 75% of their annual fee in shares of our common stock.  Mr. Ream and General Ross elected to receive the remaining 75% of their  annual fee for the same period equally in cash and in our common stock. In  the latter part of fiscal 2010, Messrs. Hughes and Karlson and General Kelly  elected to receive the remaining 75% of their annual fee in shares of our  common stock. Messrs. Ream and Riceman and General Ross elected to receive  the remaining 75% of their annual fee for the same period equally in cash and  in our common stock. Amounts do not include cash paid in lieu of fractional  shares, which amounts were de minimus. |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (2)    |   | Represents Mr. Karlson’s  pro-rated annual fee from his retirement as an officer of our company in  January 2009 through August 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (3)    |   | Represents the aggregate grant date fair value  computed in accordance with FASB ASC Topic 718.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |

 

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**ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDERMATTERS**

 

The following table sets forth certaininformation regarding the ownership of the Company’s common stock as of June 1,2010, by: (i) each director; (ii) each of the executive officersnamed in the Summary Compensation Table; (iii) all executive officers anddirectors of the Company as a group; and (iv) all those known by theCompany to be beneficial owners of more than 5% of its common stock. Except asotherwise noted, the address of the individuals below is c/o Stanley, Inc.,3101 Wilson Boulevard, Suite 700, Arlington, VA 22201.

 
| ** **                                                    | ** ** | **Beneficial  Ownership(1)** | ** ** |
|---------------------------------------------------------------|------------|------------------------------|------------|
| **Beneficial Owner**                                          | ** ** | **Number  of Shares**        | ** ** | **Percent of  Total** | ** ** |
| **Named Executive Officers and  Directors:**                  |       |                         |       |   |   |
| Philip O. Nolan(2)                                       |       | 1,868,127                    |       | 7.67 | % |
| Brian J. Clark(3)                                             |       | 213,492                      |       | * |   |
| Scott D. Chaplin(4)                                           |       | 130,491                      |       | * |   |
| Gregory M. Denkler(5)                                    |       | 275,497                      |       | 1.13 | % |
| George H. Wilson(6)                                      |       | 516,884                      |       | 2.12 | % |
| William E. Karlson(7)                                    |       | 1,037,897                    |       | 4.26 | % |
| James C. Hughes(8)                                       |       | 95,305                       |       | * |   |
| Lt. General Richard L. Kelly(9)                     |       | 25,985                       |       | * |   |
| Charles S. Ream(10)                                      |       | 12,526                       |       | * |   |
| John P. Riceman(11)                                      |       | 84,040                       |       | * |   |
| General Jimmy D. Ross(12)                                |       | 40,499                       |       | * |   |
| All executive officers and directors as a group (16  persons) |       | 4,736,230                    |       | 16.59 | % |
|                                                          |       |                         |       |   |   |
| **Other Stockholders:**                                       |       |                         |       |   |   |
| Wells Fargo Bank, N.A.(13)                                    |       | 2,943,416                    |       | 12.09 | % |
| 1525 West WT Harris Boulevard                                 |       |                         |       |   |   |
| Charlotte, NC 28262                                           |       |                         |       |   |   |

 

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| *      |   | Less than one percent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (1)    |   | This table is based  solely upon information supplied by officers, directors and principal  stockholders and Schedules 13D and 13G filed with the SEC. Unless  otherwise indicated in the footnotes to this table and subject to community  property laws where applicable, the Company believes that each of the  stockholders named in this table has sole voting and investment power with  respect to the shares indicated as beneficially owned. Applicable percentages  are based on 24,347,202 shares outstanding on June 1, 2010, adjusted as  required by rules promulgated by the SEC.                                                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (2)    |   | Consists of: a)  1,352,757 shares as to which Mr. Nolan has sole voting and investment  power, b) 160,155 shares held by our ESOP for his account as to which he has  shared voting and investment power, c) 148,907 unvested shares of restricted  stock as to which he has sole voting power and d) 206,308 shares issuable  pursuant to options exercisable within 60 days of June 1, 2010. Excludes  307,950 shares which are held for his account by the Executive Deferred  Compensation and Equity Incentive Plan Trust (“2002 Trust”) and 212,814  shares which are held in a dynasty trust, as to which he does not have voting  or investment power and, as such, disclaims beneficial ownership. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            |
| (3)    |   | Consists of: a) 63,226  shares as to which Mr. Clark has sole voting and investment power, b)  282 shares held by the ESOP for his account as to which he has shared voting  and investment power, c) 86,057 unvested shares of restricted stock as to  which he has sole voting power and d) 63,927 shares issuable pursuant to  options exercisable within 60 days of June 1, 2010. Excludes 15,000  shares which are held for his account by the 2002 Trust, as to which he does  not have voting or investment power and, as such, disclaims beneficial  ownership.                                                                                                                                          |

 

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| (4)    |   | Consists of: a) 10,828  shares as to which Mr. Chaplin has sole voting and investment power, b)  282 shares held by the ESOP for his account as to which he has shared voting  and investment power; c) 335 shares held by the ESOP for his spouse’s account  as to which he has shared voting and investment power; d) 57,768 unvested  shares of restricted stock as to which he has sole voting power and e) 61,278  shares issuable pursuant to options exercisable within 60 days of  June 1, 2010.                                                                                                                     |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (5)    |   | Consists of: a) 37,650  shares as to which Mr. Denkler has sole voting and investment power, b)  71,752 shares held by the ESOP for his account as to which he has shared  voting and investment power, c) 57,580 unvested shares of restricted stock as  to which he has sole voting power and d) 108,515 shares issuable pursuant to  options exercisable within 60 days of June 1, 2010. Excludes  161,130 shares which are held for his account by the 2002 Trust, as to which  he does not have voting or investment power and, as such, disclaims  beneficial ownership.                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (6)    |   | Consists of: a) 328,639  shares as to which Mr. Wilson has sole voting and investment power, b)  47,251 shares held by the ESOP for his account as to which he has shared  voting and investment power, c) 57,580 unvested shares of restricted stock as  to which he has sole voting power and d) 83,414 shares issuable pursuant to  options exercisable within 60 days of June 1, 2010. Excludes  219,690 shares which are held for his account by the 2002 Trust and 89,299  shares which are held in a dynasty trust, as to which he does not have voting  or investment power and, as such, disclaims beneficial ownership. |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (7)    |   | Consists of: a)  1,034,524 shares as to which Mr. Karlson has sole voting and investment  power and b) 3,373 unvested shares of restricted stock as to which he has  sole voting power. Excludes 194,799 shares which are held in a dynasty trust,  as to which he does not have voting or investment power and, as such,  disclaims beneficial ownership.                                                                                                                                                                                                                                                                                  |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (8)    |   | Consists of: a) 91,932  shares as to which Mr. Hughes has sole voting and investment power and  b) 3,373 unvested shares of restricted stock as to which he has sole voting  power. Excludes 10,000 shares which are held in the Justin A Hughes Trust,  dated July 8, 2009, as to which he does not have voting or investment  power and, as such, disclaims beneficial ownership.                                                                                                                                                                                                                                                    |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (9)    |   | Consists of: a) 22,612  shares as to which Lt. General Kelly has sole voting and investment power,  and b) 3,373 unvested shares of restricted stock as to which he has sole  voting power.                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (10)   |   | Consists of: a) 10,418  shares as to which Mr. Ream has sole voting and investment power, and b)  2,108 shares of unvested restricted stock as to which he has sole voting  power.                                                                                                                                                                                                                                                                                                                                                                                                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (11)   |   | Consists of: a) 63,160  shares as to which Mr. Riceman has sole voting and investment power, b)  2,108 unvested shares of restricted stock as to which he has sole voting  power, and c) 20,880 shares held in trust over which Mr. Riceman’s  spouse, as trustee, has sole voting and investment power. Mr. Riceman  disclaims beneficial ownership of the 20,880 shares, as to which he does not  have voting or investment power.                                                                                                                                                                                         |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (12)   |   | Consists of: a) 21,291  shares as to which General Ross has sole voting and investment power, b)  17,100 shares issuable pursuant to options exercisable within 60 days of  June 1, 2010, and c) 2,108 shares of unvested restricted stock as to  which he has sole voting power.                                                                                                                                                                                                                                                                                                                                                      |
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             |
| (13)   |   | Wells Fargo Bank, N.A.  is the trustee of the ESOP and the beneficial owner of 2,943,416 shares of  common stock held in the ESOP at June 1, 2010. For participants in our  ESOP, holdings include shares allocated to their individual accounts. Under  the terms of the ESOP, the trustee is currently obligated, with respect to  certain matters, to solicit participants to vote shares of our common stock  allocated to participants’ accounts, and the trustee generally will vote such  shares in accordance with the voting decisions of the participants.                                                                   |

 

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**Securities Authorized for Issuance Under Equity Compensation Plans**

 

The followingtable sets forth certain information relating to the number of shares of ourcommon stock subject to outstanding stock options and the number of sharesremaining available for future issuance under our equity compensation plans asof March 31, 2010.

 
| **Plan  Category**                                          | ** ** | **Number of Securities To Be  Issued Upon Exercise of  Outstanding Options,  Warrants and Rights (1)** | ** ** | **Weighted-average Exercise  Price of Outstanding Options,  Warrants and Rights** | ** ** | **Number of Securities  Remaining Available For  Future Issuance Under Equity  Compensation Plans  (Excluding Securities Reflected  in Column (a)) (2)** | ** ** |
|-------------------------------------------------------------|------------|--------------------------------------------------------------------------------------------------------|------------|-----------------------------------------------------------------------------------|------------|----------------------------------------------------------------------------------------------------------------------------------------------------------|------------|
| Equity Compensation Plans Approved By Security  Holders     |       | 1,731,521                                                                                              |       | $                                                                                 | 17.82      |                                                                                                                                                     | 2,795,990  |   |
| Equity Compensation Plans Not Approved By Security  Holders |       | —                                                                                                 |       | —                                                                            |       | —                                                                                                                                                   |       |
| Total                                                       |       | 1,731,521                                                                                              |       | $                                                                                 | 17.82      |                                                                                                                                                     | 2,795,990  |   |

 

----

| (1)    |   | Represents the  aggregate number of shares of our common stock subject to stock options  outstanding under our 1995 Stock Incentive Plan, 2002 Executive Deferred  Compensation and Equity Incentive Plan, and our 2006 Omnibus Incentive  Compensation Plan, as amended.                                                                                                                                                                                                 |
|--------|--------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                      |
| (2)    |   | Represents the  aggregate number of shares of common stock available for issuance under our  2006 Omnibus Incentive Compensation Plan, as amended, and Employee Stock  Purchase Plan, or the ESPP. 70,011 of the 400,000 shares of common stock  available for grant pursuant to the ESPP have been issued. No shares of  common stock remain available for grant under the 1995 Stock Incentive Plan  or 2002 Executive Deferred Compensation and Equity Incentive Plan. |

 

**ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTORINDEPENDENCE**

 

**Related-PersonTransactions Policy and Procedures**

 

We have adopted a written Related-PersonTransactions Policy that sets forth our policies and procedures regarding theidentification, review, consideration and approval or ratification of “related-personstransactions.” For purposes of our policy only, a “related-person transaction”is a transaction, arrangement or relationship (or any series of similartransactions, arrangements or relationships) in which we and any “relatedperson” are, were or will be participants involving an amount that exceeds$10,000. Transactions involving compensation for services provided to us as anemployee, director or consultant by a related person are not covered by thispolicy. A related person is any executive officer, director, or more than 5%stockholder of our company, including any of their immediate family members,and any entity owned or controlled by such persons.

 

Under the policy, where a transaction has beenidentified as a related-person transaction, management must present informationregarding the proposed related-person transaction to the Audit Committee (or,where Audit Committee approval would be inappropriate, to another independentbody of the Board) for consideration and approval or ratification. Thepresentation must include a description of, among other things, the materialfacts, the interests, direct and indirect, of the related persons, the benefitsto us of the transaction and whether any alternative transactions wereavailable. To identify related-person transactions in advance, we rely oninformation supplied by our executive officers, directors and certainsignificant stockholders.

 

In considering related-person transactions, theAudit Committee takes into account the relevant available facts andcircumstances including, but not limited to (a) the risks, costs andbenefits to us, (b) the impact on a director’s independence in the eventthe related person is a director, immediate family member of a director or anentity with which a director is affiliated, (c) the terms of thetransaction, (d) the availability of other sources for comparable servicesor products and (e) the terms available to or from, as the case may be,unrelated third parties or to or from employees generally. In the event adirector has an interest in the proposed transaction, the director must recusehimself or herself from the deliberations and

 

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approval.The policy requires that, in determining whether to approve, ratify or reject arelated-person transaction, the Audit Committee must look at, in light of knowncircumstances, whether the transaction is, or is not, consistent with the bestinterests of our company and our stockholders, as the Audit Committeedetermines in the good faith exercise of its discretion.

 

**Certain Related-Person Transactions**

 

During fiscal 2010 wedid not, and currently do not, have any proposed transaction with arelated-person that exceeds $120,000.

 

**Independenceof the Board of Directors**

 

As required under the NYSE listing standards, amajority of the members of our Board of Directors must qualify as “independent,”as affirmatively determined by the Board of Directors. The Board consults withthe company’s counsel to ensure that the Board’s determinations are consistentwith relevant securities and other laws and regulations regarding thedefinition of “independent,” including those set forth in pertinent listingstandards of the NYSE, as in effect from time to time.

 

Consistent with these considerations, the Boardhas affirmatively determined that the following five current directors areindependent directors under our Corporate Governance Guidelines, whichincorporate the independence requirements of the applicable NYSE listingstandards: Mr. Hughes, Lt. General Kelly, Mr. Ream, Mr. Ricemanand General Ross. In making this determination, the Board found that none ofthese directors had a material or other disqualifying relationship with us. TheBoard has determined that Mr. Nolan, our Chairman of the Board, Presidentand Chief Executive Officer, Mr. Wilson, one of our Executive VicePresidents and Mr. Karlson, our former Senior Vice President, are notindependent directors by virtue of their current or recent employment with us.Our director independence standards are included as Exhibit A to ourCorporate Governance Guidelines, available on our website atwww.stanleyassociates.com.

 

The Board of Directors has three committees: anAudit Committee, a Compensation Committee and a Nominating and CorporateGovernance Committee. The Board of Directors has determined that each member ofeach committee meets the applicable NYSE rules and regulations regarding “independence”and that each member is free of any relationship that would impair his or herindividual exercise of independent judgment with regard to the Company.

 

**ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES**

 

**IndependentPublic Accounting Firm Fees and Services**

 

The followingtable represents aggregate fees billed to us for the fiscal years ended March 31,2009, and March 31, 2010, by Deloitte & Touche, our independentregistered public accounting firm.

 
| ** **            | ** ** | **Fiscal  Year Ended** | ** ** |
|-----------------------|------------|------------------------|------------|
| ** **            | ** ** | **(in  thousands)**    | ** ** |
| ** **            | ** ** | **3/31/2009**          | ** ** | **3/31/2010** | ** ** |
| Audit Fees(1)         |       | $                      | 800,000    |   | $ | 828,600 |   |
| Audit-related Fees(2) |       | 143,805                |       | 46,400 |   |
| Tax Fees(3)           |       | 250,740                |       | 320,895 |   |
| All Other Fees        |       | —                 |       | — |   |
| Total Fees            |       | $                      | 1,194,545  |   | $ | 1,195,895 |   |

 

----

| (1)    |   | Audit fees principally  include those for services related to the annual audit of the consolidated  financial statements, SEC registration statements and other filings, annual  audit of internal control over financial reporting and consultation on  accounting matters. |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                         |
| (2)    |   | Audit-related fees  principally include acquisition due diligence and services related to  preparation for the audit of internal control over financial reporting.                                                                                                           |

 

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| (3) |   | Tax fees principally  include services related to domestic (federal, state and local) and  international tax compliance and acquisition due diligence. |
|-----|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------|

 

**Pre-ApprovalPolicies and Procedures**

 

The AuditCommittee has adopted procedures for the pre-approval of all audit andnon-audit services rendered by our independent registered public accountingfirm, Deloitte & Touche LLP. Pre-approval may be given as part of theAudit Committee’s approval of the scope of the engagement of the independentauditor or on an individual explicit case-by-case basis before the independentauditor is engaged to provide each service. The pre-approval of services may bedelegated to one or more of the Audit Committee’s members, but the decisionmust be reported to the full Audit Committee at its next scheduled meeting.

 

All of theservices set forth under the table “Independent Public Accounting Firm Fees andServices” above were approved by the Audit Committee pursuant to itspre-approval policy. The Audit Committee has determined that the rendering ofthe services other than audit services by Deloitte & Touche iscompatible with maintaining the independent registered public accounting firm’sindependence.

 

In connection withthe audits of our financial statements for the fiscal years ended March 31,2009 and 2010, there were no disagreements with Deloitte & Touche onany matter of accounting principles or practices, financial statementdisclosure, or auditing scope or procedure, that would have caused Deloitte &Touche to report the disagreement if it had not been resolved to thesatisfaction of Deloitte & Touche. Deloitte & Touche’sreports on the financial statements for the past two fiscal years did notcontain an adverse opinion or disclaimer of an opinion nor were they qualifiedor modified as to uncertainty, audit scope or accounting principles.

 

**ITEM15. EXHIBITS AND FINANCIAL STATEMENTSCHEDULES**

 

**15(a)(3) Exhibits**

 

The exhibits required to be filed as part of this Form 10-K/Aare listed in the Exhibit Index attached hereto and are incorporatedherein by reference.

 

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**SIGNATURES**

 

Pursuant to therequirements of Section 13 or 15(d) of the Securities Exchange Act of1934, the Registrant has duly caused this report to be signed on its behalf bythe undersigned, thereunto duly authorized.

 
| ** ** | **STANLEY, INC.**                           |
|------------|--------------------------------------------------|
| ** ** | ** **                                       |
|       | /s/ PHILIP O. NOLAN                              |
|       | Philip O. Nolan                                  |
|       | Chairman, President and  Chief Executive Officer |
|       | (Principal Executive  Officer)                   |
|       | June 22, 2010                               |

 

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**EXHIBITINDEX**

 
| **Exhibit No.** | ** ** | **Description**                                                                                                                                                                                                                                                                                                                                                                                   |
|----------------------|------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
| 2.1                  |       | Agreement and Plan of  Merger, dated as of May 6, 2010, among CGI Group Inc., CGI  Federal Inc., CGI Fairfax Corporation and Stanley, Inc.  (incorporated by reference to Exhibit 2.1 to the Company’s  Form 8-K, filed May 7, 2010)                                                                                                                      |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 2.2                  |       | Stockholders Agreement,  dated as of May 6, 2010, by and among Philip O. Nolan,  William E. Karlson, George H. Wilson, Gregory M. Denkler,  Brian J. Clark, Scott D. Chaplin and James H. Brabston, CGI  Group Inc. and CGI Federal Inc (incorporated by reference to  Exhibit 2.2 to the Company’s Form 8-K, filed May 7, 2010) |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.1                  |       | Amended and Restated  Certificate of Incorporation of Stanley, Inc. (incorporated by reference  to Exhibit 3.1 to the Company’s Form 10-K for the fiscal year ended  March 31, 2008)                                                                                                                                                                                     |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 3.2                  |       | Amended and Restated  Bylaws of Stanley, Inc. (incorporated by reference to Exhibit 3.2  to the Company’s Form 10-K for the fiscal year ended March 31,  2008)                                                                                                                                                                                                           |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 4.1                  |       | Specimen Stock  Certificate (incorporated by reference to Exhibit 4.1 to Pre-Effective  Amendment No. 2 to the Registration Statement on Form S-1 (File  No. 333-134053), filed July 28, 2006)                                                                                                                                                                           |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.1                 |       | 1995 Stock Incentive  Plan, as Amended as of October 11, 2001 (incorporated by reference to  Exhibit 10.1 to Pre-Effective Amendment No. 1 to the Registration  Statement on Form S-1 (File No. 333-134053), filed June 26,  2006)†                                                                                                                            |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.2                 |       | Executive Deferred  Compensation and Equity Incentive Plan, as of January 30, 2002  (incorporated by reference to Exhibit 10.6 to Pre-Effective Amendment  No. 2 to the Registration Statement on Form S-1 (File  No. 333-134053), filed July 28, 2006)†                                                                                                       |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.3                 |       | Amendment No. 1 to  Executive Deferred Compensation and Equity Incentive Plan, as of  June 28, 2006 (incorporated by reference to Exhibit 10.12 to  Pre-Effective Amendment No. 2 to the Registration Statement on  Form S-1 (File No. 333-134053), filed July 28, 2006)†                                                                                 |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.4                 |       | Amendment No. 2 to  Executive Deferred Compensation and Equity Incentive Plan, as of  November 6, 2008 (incorporated by reference to Exhibit 10.2 to the  Company’s Form 10-Q for the fiscal quarter ended December 26,  2008)†                                                                                                                                |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.5                 |       | Executive Deferred  Compensation and Equity Incentive Plan Trust, as of March 5, 2004  (incorporated by reference to Exhibit 10.7 to Pre-Effective Amendment  No. 2 to the Registration Statement on Form S-1 (File  No. 333-134053), filed July 28, 2006)†                                                                                                    |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.6                 |       | Amended and Restated  2006 Omnibus Incentive Compensation Plan (incorporated by reference to  Exhibit 10.1 to the Company’s Form 8-K, filed August 7, 2009)†                                                                                                                                                                                                             |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.7                 |       | Form of Restricted  Stock Award Agreement under the 2006 Omnibus Incentive Compensation Plan  (incorporated by reference to Exhibit 10.8 to the Company’s  Form 10-K for the fiscal year ended March 31, 2008)†                                                                                                                                                     |
|                 |       |                                                                                                                                                                                                                                                                                                                                                                                              |
| 10.8                 |       | Form of Incentive  Stock Option Award Agreement under the 2006 Omnibus Incentive Compensation  Plan (incorporated by reference to Exhibit 10.9 to the Company’s  Form 10-K for the fiscal year ended March 31, 2008)†                                                                                                                                               |

 

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| 10.9   |   | Form of  Nonqualified Stock Option Award Agreement under the 2006 Omnibus Incentive  Compensation Plan (incorporated by reference to Exhibit 10.10 to the  Company’s Form 10-K for the fiscal year ended March 31, 2008)†                                                                  |
|--------|--------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.10  |   | Amended and Restated  Revolving Credit and Term Loan Agreement, dated as of October 10, 2007  (incorporated by reference to Exhibit 10.11 to the Company’s  Form 10-K for the fiscal year ended March 31, 2008)                                                                                 |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.11  |   | Amendment to Amended  and Restated Revolving Credit and Term Loan Agreement, dated August 4,  2008 (incorporated by reference to Exhibit 10.10 to the Company’s  Form 10-Q for the fiscal quarter ended June 27, 2008)                                                                          |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.12  |   | Second Amendment to  Amended and Restated Resolving Credit and Term Loan Agreement, dated  March 27, 2009 (incorporated by reference to Exhibit 10.15 to the  Company’s Form 10-K for the fiscal year ended March 31, 2009)                                                                     |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.13  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and Philip O. Nolan (incorporated by reference to  Exhibit 10.2 to the Company’s Form 10-Q for the fiscal quarter  ended June 27, 2008)†                                              |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.14  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and Brian J. Clark (incorporated by reference to  Exhibit 10.3 to the Company’s Form 10-Q for the fiscal quarter  ended June 27, 2008)†                                               |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.15  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and George H. Wilson (incorporated by reference to  Exhibit 10.4 to the Company’s Form 10-Q for the fiscal quarter  ended June 27, 2008)†                                             |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.16  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and Gregory M. Denkler (incorporated by reference to  Exhibit 10.5 to the Company’s Form 10-Q for the fiscal quarter  ended June 27, 2008)†                                           |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.17  |   | Change in Control Severance  Agreement, dated June 26, 2008, by and between Stanley, Inc. and  E. Patrick Flannery (incorporated by reference to Exhibit 10.7 to  the Company’s Form 10-Q for the fiscal quarter ended June 27,  2008)†                                          |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.18  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and James H. Brabston (incorporated by reference to  Exhibit 10.8 to the Company’s Form 10-Q for the fiscal quarter  ended June 27, 2008)†                                            |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.19  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and Scott D. Chaplin (incorporated by reference to  Exhibit 10.9 to the Company’s Form 10-Q for the fiscal quarter  ended June 27, 2008)†                                             |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.20  |   | Change in Control  Severance Agreement, dated June 26, 2008, by and between  Stanley, Inc. and Eric A. Wolking (incorporated by reference to  Exhibit 10.24 to the Company’s Form 10-K for the fiscal year ended  March 31, 2009)†                                               |
|   |   |                                                                                                                                                                                                                                                                                                                     |
| 10.21  |   | Agreement and Plan of  Merger, dated June 10, 2008, by and among Stanley, Inc., Omaha  Acquisition Corporation, Oberon Associates, Inc. and the Significant  Shareholders named therein (incorporated by reference to Exhibit 2.1 to  the Company’s Form 8-K, filed on June 10, 2008) |

 

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| 10.22  |   | Stanley Executive  Savings Plan, dated as of May 6, 2009 (incorporated by reference to  Exhibit 10.26 to the Company’s Form 10-K for the fiscal year ended  March 31, 2009) †                                                                  |
|--------|--------|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|   |   |                                                                                                                                                                                                                                                                         |
| 12.1   |   | Computation of Ratio of  Earnings to Fixed Charges (incorporated by reference to Exhibit 12.1 to  the Company’s Form 10-K for the fiscal year ended March 31, 2010)                                                                                      |
|   |   |                                                                                                                                                                                                                                                                         |
| 21.1   |   | List of subsidiaries of  Stanley, Inc. (incorporated by reference to Exhibit 21.1 to the  Company’s Form 10-K for the fiscal year ended March 31, 2010)                                                                                             |
|   |   |                                                                                                                                                                                                                                                                         |
| 23.1   |   | Consent of  Deloitte & Touche LLP (incorporated by reference to  Exhibit 23.1 to the Company’s Form 10-K for the fiscal year ended  March 31, 2010)                                                                                        |
|   |   |                                                                                                                                                                                                                                                                         |
| 31.1   |   | Certification of Chief  Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002*                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                         |
| 31.2   |   | Certification of Chief  Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of  2002*                                                                                                                                                                   |
|   |   |                                                                                                                                                                                                                                                                         |
| 32.1   |   | Certification of Chief  Executive Officer and Chief Financial Officer pursuant to Section 906 of  the Sarbanes- Oxley Act of 2002 (incorporated by reference to  Exhibit 32.1 to the Company’s Form 10-K for the fiscal year ended  March 31, 2010) |

 

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* Filed herewith

*† *Denotes management contract or compensation plan orarrangement

 

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