UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

Proxy Statement Pursuant to Section 14(a) of the Securities
Exchange Act of 1934 (Amendment No. __)

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þ		Definitive Proxy Statement
o		Definitive Additional Materials
o		Soliciting Material Pursuant to §240.14a-12

 

VERINT SYSTEMS INC.

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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330 South Service Road
Melville, New York 11747

August 31, 2010

Dear Verint Systems Inc. Stockholder:

You are cordially invited to attend a special meeting of the stockholders of Verint Systems Inc., which will be held on Tuesday, October 5, 2010, at 11:00 A.M. Eastern Time at the Hilton Garden Inn, 1575 Round Swamp Road, Plainview, New York, 11803.

All holders of record of Verint Systems Inc. common stock as of August 30, 2010 are entitled to vote at this special meeting.

As described in the accompanying proxy statement, you will be asked to approve the issuance of shares of common stock upon the conversion of our Series A Convertible Perpetual Preferred Stock and to approve the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan.

Enclosed is a proxy statement for the special meeting and your proxy card or voting instruction card. If you are the registered holder of your shares, then you may vote your shares by signing, dating, and returning the enclosed proxy card without delay in the enclosed return envelope. If you hold your shares in “street name” through a bank, broker, or other nominee, then you may vote your shares by mailing your signed voting instruction card in the enclosed return envelope.

		Sincerely,
		Dan Bodner
		President and Chief Executive Officer

Verint Systems Inc.
330 South Service Road
Melville, New York 11747

NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD ON OCTOBER 5, 2010

A special meeting of the stockholders of Verint Systems Inc. (“Verint”), a Delaware corporation, will be held on Tuesday, October 5, 2010, at 11:00 A.M. Eastern Time at the Hilton Garden Inn, 1575 Round Swamp Road, Plainview, New York, 11803 (the “Special Meeting”) for the following purposes:

	(1)		To approve the issuance of shares of common stock upon conversion of our Series A Convertible Perpetual Preferred Stock issued to Comverse Technology, Inc. in connection with the acquisition of Witness Systems, Inc. in 2007;
	(2)		To approve the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan; and

(3)

To transact such other business as may properly come before the Special Meeting or any adjournment or postponement thereof.

The board of directors has fixed the close of business on August 30, 2010 as the record date for the determination of stockholders entitled to notice of, and to vote at, the Special Meeting or any adjournment or postponement thereof.

A list of stockholders entitled to vote at the Special Meeting will be available for examination by any stockholder, for any purpose concerning the meeting, during ordinary business hours at our principal executive offices, located at 330 South Service Road, Melville, New York 11747, during the ten days preceding the Special Meeting.

		By Order of the Board of Directors,
		Peter Fante
		Secretary

August 31, 2010

YOUR VOTE IS IMPORTANT. IF YOU ARE THE REGISTERED HOLDER OF YOUR SHARES, THEN YOU MAY VOTE YOUR SHARES BY SIGNING, DATING, AND RETURNING THE ENCLOSED PROXY CARD WITHOUT DELAY IN THE ENCLOSED RETURN ENVELOPE. IF YOU HOLD YOUR SHARES IN “STREET NAME” THROUGH A BANK, BROKER, OR OTHER NOMINEE, PLEASE FOLLOW THE SPECIFIC INSTRUCTIONS YOU RECEIVE FROM THEM TO VOTE YOUR SHARES.

IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON OCTOBER 5, 2010: THE PROXY MATERIALS ARE AVAILABLE AT WWW.PROXYVOTE.COM.

TABLE OF CONTENTS

Questions and Answers About the Special Meeting			1
Proposal No. 1 Approval of Issuance of Common Stock Upon Conversion of Preferred Stock			6
Proposal No. 2 Approval of the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan			10
Other Matters			20
Director Compensation			21
Executive Compensation			23
Compensation Committee Interlocks and Insider Participation			62
Security Ownership of Certain Beneficial Owners and Management			62
Stockholder Proposals for the Next Annual Meeting			65
Solicitation of Proxies			66

Verint Systems Inc.
330 South Service Road
Melville, New York 11747

PROXY STATEMENT

We first mailed this proxy statement and proxy card to stockholders entitled to vote at the Special Meeting on or about August 31, 2010. The Special Meeting will be held on Tuesday, October 5, 2010, at 11:00 A.M. Eastern Time at the Hilton Garden Inn, 1575 Round Swamp Road, Plainview, New York, 11803. Directions to the Special Meeting can be found at the back of this proxy statement.

QUESTIONS AND ANSWERS ABOUT THE SPECIAL MEETING

Although we encourage you to read this proxy statement in its entirety, we include this question and answer section to provide some background information and brief answers to several questions you might have about the Special Meeting.

Questions Relating to Proxy Materials

Q: Why did I receive this proxy statement?

A: The board of directors is soliciting your proxy to vote at the Special Meeting because you were a holder of Verint Systems Inc. common stock as of August 30, 2010 (the “Record Date”) and are entitled to vote at the Special Meeting. As of the Record Date, there were 34,712,353 shares of common stock outstanding. This proxy statement summarizes the information you need to know to vote on the proposals expected to be presented at the Special Meeting.

Q: What does it mean if I receive more than one set of proxy materials?

A: You may receive more than one set of voting materials, including multiple copies of this proxy statement and multiple paper proxy cards or voting instruction cards. For example, if you hold your shares in more than one brokerage account, you may receive a set of proxy materials for each brokerage account in which you hold shares. If you are a stockholder of record and your shares are registered in more than one name, you will receive more than one set of proxy materials. Please follow the instructions on each proxy card or voting instruction card that you receive to ensure that all your shares are voted.

Questions Relating to Voting

Q: What are the voting recommendations of the board of directors?

A: The board of directors recommends the following votes:

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FOR approval of the issuance of shares of common stock upon conversion of our Series A Convertible Perpetual Preferred Stock (“Preferred Stock”) issued to Comverse Technology, Inc. (“Comverse”) in connection with the acquisition of Witness Systems, Inc. (“Witness”) in 2007 (Proposal No. 1);

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FOR approval of the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan (Proposal No. 2); and

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In accordance with their judgment on any other matters which may properly come before the meeting.

Q: Will any other matters be voted on?

A: We are not aware of any other matters that will be brought before the stockholders for a vote at the Special Meeting. If any other matter is properly brought before the meeting, your proxy will authorize your appointed proxies to vote on such matters using their discretion.

Q: How many votes do I have?

A: Each share of common stock that you owned at the close of business on the Record Date is entitled to one vote. These shares include:

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shares held directly in your name as the “stockholder of record”; and

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shares held for you as the beneficial owner through a broker, bank, or other nominee in “street name”.

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

A: Most of our stockholders hold their shares through a broker, bank, or other nominee rather than directly in their own name. As summarized below, there are some distinctions between shares held of record and those owned beneficially.

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Stockholder of Record: If your shares are registered directly in your name with our transfer agent, American Stock Transfer and Trust Company, you are considered the stockholder of record, and the proxy materials are being sent directly to you by us. As the stockholder of record, you have the right to grant your voting proxy directly to us or to vote in person at the Special Meeting.

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Beneficial Owner: If your shares are held in a stock brokerage account, by a bank, or other nominee, you are considered the beneficial owner of shares held in street name, and the proxy materials are being forwarded to you by your broker, bank, or their nominee, who is the record stockholder for those shares. As the beneficial owner, you have the right to direct your broker, bank, or other nominee on how to vote and are also invited to attend the Special Meeting. Since you are not the stockholder of record, you may not vote these shares in person at the Special Meeting, but you may instruct your designee to vote your shares as described below. You may vote shares beneficially held by you as set out in the voting instruction card you receive from your broker, bank, or their nominee.

Q: How do I vote?

A: You can vote by completing, signing, dating, and mailing the enclosed proxy card in the envelope provided. If your shares are held in the name of your broker, bank, or other nominee, you should submit voting instructions to your bank, broker, or other nominee. Please refer to the voting instruction card included in these proxy materials by your bank, broker, or other nominee. When a proxy is returned properly, the shares represented by the proxy will be voted in accordance with your instructions. You are urged to specify your choice by marking the appropriate boxes on the enclosed proxy card. If a proxy card is dated, signed, and returned without specifying choices, the shares will be voted as recommended by the proxies listed on the proxy card.

You may also come to the Special Meeting and cast your vote there. Please bring the admission ticket that can be found on the back cover of this proxy statement. If your shares are held in the name of your broker, bank or other nominee and you wish to vote at the Special Meeting, you must bring a valid photo ID and a legal proxy from the record holder of your shares indicating that you were the beneficial owner of the shares on the Record Date.

Q: Can I change my vote?

A: If you are a stockholder of record, you can change your vote or revoke your proxy at any time before the Special Meeting by:

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notifying our Secretary in writing before the Special Meeting that you have revoked your proxy;

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signing and delivering a later dated proxy to our Secretary; or

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voting in person at the Special Meeting.

Any such written notice or later dated proxy must be received by our Secretary at our principal executive offices or at the Special Meeting before the vote at the Special Meeting. If you are a beneficial owner, you may submit new voting instructions only by contacting your bank, broker, or other nominee.

Q: What will happen if I do not instruct my bank, broker, or other nominee how to vote?

A: If you are a beneficial owner and you do not instruct your bank, broker, or other nominee how to vote, your bank, broker, or other nominee may vote your shares at its discretion on routine matters but not on non-routine matters. There are no routine matters being presented at the Special Meeting. Thus, banks, brokers, and other nominees cannot vote on any of the proposals without instructions from the beneficial owner. Without your voting instructions on these matters, a “broker non-vote” will occur. Shares held by brokers and banks that do not have discretionary authority to vote uninstructed shares on non-routine matters are not counted or deemed to be present or represented for the purpose of determining whether stockholders have approved a particular matter, but will be counted in determining whether a quorum is present at the Special Meeting. Accordingly, broker non-votes will have no impact on the calculation of votes on any of the proposals submitted, but will be viewed as present for quorum purposes.

Q: Who are the proxies and what do they do?

A: The persons named as proxies in the proxy materials, Dan Bodner, Douglas Robinson and Peter Fante, were designated by the board of directors. All properly submitted votes will be counted (except to the extent that authority to vote has been withheld) and where a choice has been specified by you as provided in the paper proxy card or voting instruction card, it will be voted in accordance with the instructions you indicate.

Q: How are votes counted?

A: The shares represented by all valid proxies received will be voted in the manner specified on the proxies. Where specific choices are not indicated on a valid proxy, the shares represented by such proxies received will be voted:

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FOR approval of the issuance of shares of common stock upon conversion of our Preferred Stock;

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FOR approval of the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan; and

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in accordance with the best judgment of the persons named in the enclosed proxy, or their substitutes, for any other matters which properly come before the Special Meeting.

Q: How many shares must be present to hold the Special Meeting?

A: Holders of a majority of the shares of our outstanding common stock as of the Record Date, or 17,356,177 shares, must be represented in person or by proxy at the Special Meeting in order to conduct business. This is called a quorum. If you vote, your shares will be part of the quorum. Abstentions, “withhold” votes, and broker non-votes also will be counted in determining whether a quorum exists.

Q: What vote is required to approve each proposal?

A: So long as there is a quorum, the voting requirement for each of the proposals is as follows:

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The proposal for the approval of the issuance of shares of common stock upon conversion of our Preferred Stock requires the affirmative “FOR” vote of the holders of a majority of our outstanding common stock, including Comverse, pursuant to the Certificate of Designation, Preferences, and Rights, a copy of which has been filed with our Current Report on Form 8-K filed with the SEC on May 30, 2007 (the “Certificate of Designation”). Pursuant to NASDAQ Listing Rule 5635(e)(4), the proposal also requires the affirmative “FOR” vote of the majority of the total votes cast on the proposal. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.

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The proposal for the approval of the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan requires the affirmative “FOR” vote of the majority of those shares present in person or represented by proxy and entitled to vote at the Special Meeting. Abstentions and broker non-votes are not counted as votes “for” or “against” this proposal.

Q: What is the impact of shares owned by Comverse Technology, Inc. on the vote?

A: We are considered a “controlled company” under the listing rules of the NASDAQ stock market based on Comverse’s ownership of more than 50% of our voting power. We expect that Comverse will vote for the proposals contained herein, including Proposal No. 1 with respect to the issuance of common stock upon conversion of our Preferred Stock, which is currently held by Comverse. If Comverse votes in this manner, the proposals will be approved.

Q: Who is paying the costs of soliciting these proxies?

A: The expense of this solicitation, including the cost of preparing, assembling, and mailing the Notice of Special Meeting, proxy card and proxy statement, will be borne by us. In addition to the solicitation of proxies by use of the mails, some of our officers and regular employees, without extra remuneration, may solicit proxies personally, by telephone or otherwise. In addition, arrangements will be made with brokerage houses and other custodians, nominees and fiduciaries to forward proxy cards and proxy materials to their principals, and we will reimburse them for their expenses in forwarding these materials.

Q: What do I need to do to attend the Special Meeting?

A: You are entitled to attend the Special Meeting only if you were a stockholder of record as of the close of business on August 30, 2010 or hold a valid proxy for the Special Meeting. You should be prepared to present photo identification for admittance. If you are not a stockholder of record but hold shares through a broker, bank or nominee, and you wish to attend the meeting, you should provide proof of beneficial ownership as of the Record Date, such as your most recent account statement prior to August 30, 2010, a copy of the voting instruction card provided by your broker, bank or nominee, or similar evidence of ownership. If you are not a stockholder of record, note that you will not be able to vote your shares at the meeting unless you have a proxy from your broker. If you do not provide photo identification or comply with the other procedures outlined above, you will not be admitted to the Special Meeting.

Questions Relating to Approval of Issuance of Shares of Common Stock Upon Conversion
of Preferred Stock

Q: What is the Preferred Stock?

A: We entered into a Securities Purchase Agreement (the “Securities Purchase Agreement”), dated May 25, 2007, with Comverse, our majority stockholder, for the purchase and sale of shares of our Preferred Stock. Pursuant to the Securities Purchase Agreement, on May 25, 2007, Comverse acquired 293,000 shares of our Preferred Stock for aggregate cash consideration of $293.0 million. Proceeds from the issuance of the Preferred Stock were used, together with the proceeds of the term loan under our credit agreement and cash on hand, to finance the consideration for our acquisition of Witness (the “Merger”). We refer to the transactions contemplated by the Securities Purchase Agreement as the “Private Placement”.

The Preferred Stock was issued at a purchase price of $1,000 per share and ranks senior to our common stock. Following the Special Meeting, in the event that Proposal No. 1 is approved, each share of Preferred Stock will be entitled to a number of votes equal to the number of shares of our common stock into which such Preferred Stock would have been convertible at the conversion rate (as described below) (as may be adjusted from time to time, the “Conversion Rate”) in effect on the date the Preferred Stock was issued to Comverse (the “Issue Date”), and each share of Preferred Stock will be convertible at the option of the holder thereof into a number of shares of our common stock equal to the liquidation preference then in effect divided by the conversion price then in effect. The initial conversion price is and was set at $32.66 (as may be adjusted from time to time) and the initial Conversion Rate is and was set at 30.6185 shares of common stock for each share of Preferred Stock that is converted. We also have the right in certain circumstances to cause the mandatory conversion of the Preferred Stock into shares of common stock at the then-applicable Conversion Rate. If it were converted at August 30, 2010, the Preferred Stock would have been convertible into approximately 10.2 million shares of our common stock. Comverse will also have demand and customary “piggyback” registration rights with respect to the Preferred Stock and the shares of common stock underlying the Preferred Stock.

Q: Why are we seeking stockholder approval for the conversion of the Preferred Stock?

A: We chose to include the issuance of the Preferred Stock in financing a portion of the Witness acquisition because this form of financing provided timely access to cash at prices that we believe were competitive. Alternative sources of cash were limited because of our extended filing delay. Although the Preferred Stock was issued to our majority stockholder, Comverse, the terms and conditions of the Preferred Stock were negotiated on an arm’s-length basis and were approved by our board of directors as well as our audit committee, which is comprised entirely of independent directors. The Preferred Stock has no voting, conversion, or registration rights until the issuance of the underlying common stock is approved by our stockholders. Additionally, the terms of the Preferred Stock set forth in the Certificate of Designation set forth certain increases in the dividend rate applicable to the Preferred Stock in the event we do not obtain stockholder approval of the conversion of the Preferred Stock into common stock within 180 days of the last day of the fiscal quarter following the first date on which we were in compliance with SEC reporting requirements under the Exchange Act, which is January 31, 2011. We are now asking you for this approval. The Certificate of Designation requires the affirmative “FOR” vote of the holders of a majority of our outstanding common stock to approve the proposal.

Additionally, although we issued the Preferred Stock at a time when our common stock was not listed on NASDAQ, under the NASDAQ listing rules, we are seeking stockholder approval for the issuance of common stock in connection with the Private Placement in order to comply with Rule 5635 of the NASDAQ Listing Rules and the limitations set forth therein (“NASDAQ Listing Rule 5635”). NASDAQ Listing Rule 5635 requires stockholder approval prior to the issuance of securities in connection with a transaction other than a public offering involving the sale, issuance or potential issuance by us of our common stock (or securities convertible into or exercisable for common stock) equal to 20% or more of the common stock or 20% or more of the voting power outstanding before the issuance.

You are being asked to approve the issuance of shares of common stock issuable upon conversion of the Preferred Stock because the issuance of such shares of common stock would exceed 19.99% of the voting power and number of shares of common stock outstanding prior to the Private Placement.

Under NASDAQ voting rules, the affirmative “FOR” vote of a majority of the total votes cast on the proposal is required to approve the proposal.

PROPOSAL NO. 1
APPROVAL OF ISSUANCE OF COMMON STOCK UPON CONVERSION OF
PREFERRED STOCK

Background

On May 25, 2007, we entered into the Securities Purchase Agreement with Comverse, our majority stockholder, pursuant to which Comverse purchased, in cash, an aggregate of 293,000 shares of our Preferred Stock, par value $0.001 per share, at an aggregate purchase price of $293 million. Proceeds from the issuance of the Preferred Stock were used, together with the proceeds of the term loan under our credit agreement and cash on hand, to finance the consideration for our acquisition of Witness. The terms of the Preferred Stock are set forth in the Certificate of Designation.

The Preferred Stock was issued at a purchase price of $1,000 per share and ranks senior to our common stock. The Preferred Stock does not have voting or conversion rights until the underlying shares of common stock are approved for issuance by a vote of holders of a majority of our common stock, at which time each share of Preferred Stock will be entitled to a number of votes equal to the number of shares of our common stock into which such Preferred Stock would have been convertible at the Conversion Rate in effect on the date the Preferred Stock was issued to Comverse. Following receipt of stockholder approval for the issuance of the underlying shares, each share of Preferred Stock will be convertible at the option of the holder thereof into a number of shares of our common stock equal to the liquidation preference then in effect divided by the conversion price then in effect. The initial conversion price is and was set at $32.66 (as may be adjusted from time to time) and the initial Conversion Rate is and was set at 30.6185 shares of common stock for each share of Preferred Stock that is converted. We also have the right in certain circumstances to cause the mandatory conversion of the Preferred Stock into shares of common stock at the then-applicable Conversion Rate. If it were converted at August 30, 2010, the Preferred Stock would have been convertible into approximately 10.2 million shares of our common stock. As the sole holder of the Preferred Stock, Comverse and its affiliates have a material interest in Proposal No. 1.

The following is a summary of the material terms of the Securities Purchase Agreement and the terms of the Preferred Stock. While we believe that this description covers the material terms of those documents and instruments, it may not contain all of the information important to you and is qualified in its entirety by reference to the agreements and documents, dated May 25, 2007, which were included as exhibits to the Current Report on Form 8-K filed by us on May 30, 2007.

Terms of the Preferred Stock

The terms, rights, obligations, and preferences of the Preferred Stock are set forth in the Certificate of Designation.

Ranking

The Preferred Stock ranks, with respect to payment of dividends and distribution of assets upon the liquidation, winding-up, or dissolution of Verint,

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senior to our common stock, par value $0.001 per share, whether now outstanding or hereafter issued, and to each other class or series of stock of established after the Issue Date by our board of directors, the terms of which do not expressly provide that such class or series ranks senior to or pari passu with the Preferred Stock as to payment of dividends and distribution of assets upon our liquidation, winding-up, or dissolution (collectively referred to as “Junior Stock”);

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pari passu with each class or series of our stock (including any series of preferred stock established after the Issue Date by the board of directors), the terms of which expressly provide that such class or series ranks pari passu with the Preferred Stock as to payment of dividends and distribution of assets upon our liquidation, winding-up, or dissolution; and

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junior to each other class or series of our stock (including any series of preferred stock established after the Issue Date by the board of directors with the approval or consent of the holders of Preferred Stock pursuant to Section 4.3 of the Certificate of Designation), the terms of which expressly provide that such class or series ranks senior to the Preferred Stock as to payment of dividends and distribution of assets upon our liquidation, winding-up, or dissolution (collectively referred to as “Senior Stock”).

Holders’ Right to Convert

If Proposal No. 1 is adopted, each share of Preferred Stock will be convertible at the option of the holder thereof into a number of shares of our common stock equal to the liquidation preference then in effect divided by the conversion price then in effect, which is currently set at $32.66 and is subject to adjustment.

Mandatory Conversion

If Proposal No. 1 is adopted, we have the right, at our option, to cause the Preferred Stock to be automatically converted into common stock at the conversion price then in effect, but only if the closing sale price of the common stock immediately prior to such conversion equals or exceeds the conversion price then in effect by: (i) 140%, on or after the third anniversary of the Issue Date but prior to the fourth anniversary of the Issue Date, and (ii) 135%, on or after the fourth anniversary of the Issue Date.

Put Right

The terms of the Preferred Stock also provide that upon a fundamental change, as defined in the Certificate of Designation, the holders of the Preferred Stock will have the right to require us to repurchase the Preferred Stock for 100% of the liquidation preference then in effect. If we fail to repurchase the Preferred Stock as required upon a fundamental change, then the number of directors constituting the board of directors will be increased by two, and the holders of the Preferred Stock will have the right to elect two directors to fill such vacancies. Upon repurchase of the Preferred Stock subject to the fundamental change repurchase right, the holders of the Preferred Stock will no longer have the right to elect additional directors, the term of office of each additional director will terminate immediately upon such repurchase, and the number of directors will, without further action, be reduced by two. In addition, in the event of a fundamental change, the conversion rate will be increased to provide for additional shares of common stock issuable to the holders of the Preferred Stock upon conversion, based on a sliding scale depending on the acquisition price, as defined in the Certificate of Designation, ranging from zero to 3.7 additional shares of common stock for every share of Preferred Stock converted into common stock following a fundamental change.

Preemptive Rights

No holder of Preferred Stock has a right to purchase shares of our capital stock sold or issued by us except to the extent that such a right may from time to time be set forth in a written agreement between us and any such holder of Preferred Stock.

Dividends

Cash dividends on the Preferred Stock are cumulative and are accrued quarterly at a specified dividend rate on the liquidation preference in effect at such time. Initially, the specified dividend rate was 4.25% per annum per share, however, in accordance with the terms of the Certificate of Designation, beginning with the first quarter after the initial interest rate on the term loan under our credit agreement had been reduced by 50 basis points or more (i.e., the quarter ended April 30, 2008), the dividend rate was reset to 3.875% per annum and is now fixed at this level, unless this Proposal No. 1 is not approved prior to January 31, 2011, in which case the dividend rate will increase by 1% on such date and on the last day of each subsequent fiscal quarter until a proxy statement relating to such approval has been mailed. If we determine that we are prohibited from paying cash dividends on the Preferred Stock under the terms of our credit agreement or other debt instruments, we may elect to make such dividend payments in shares of our common stock, which common stock will be valued at 95% of the volume weighted average price of our common stock for each of the five consecutive trading days ending on the second trading day immediately prior to the record date for such dividend.

Liquidation Preference

In the event of any voluntary or involuntary liquidation, dissolution, or winding-up of Verint (each, a “Liquidation Event”), each holder of Preferred Stock will be entitled to receive out of our assets available for distribution to our stockholders, before any distribution of assets is made on our common stock or any other Junior Stock, but after any distribution on any of our indebtedness or Senior Stock, an amount equal to $1,000 per share of Preferred Stock (the “Issue Price”) held by such holder, plus an amount equal to the sum of all accrued and unpaid dividends, whether or not declared (the “Liquidation Preference”). If upon such liquidation, dissolution, or winding up, whether voluntary or involuntary, the assets to be distributed to and among the holders of shares of Preferred Stock will be insufficient to permit payment of the Liquidation Preference in full to the holders of Preferred Stock, then our entire assets available for distribution to holders of Preferred Stock will be distributed to and among the holders of the shares of Preferred Stock then outstanding pro rata to and among them in proportion to the full amounts of Liquidation Preference they would otherwise be entitled to receive pursuant to this provision.

Voting Rights

The Preferred Stock does not have voting or conversion rights until the underlying shares of common stock are approved for issuance by a majority vote of our stockholders. If Proposal No. 1 is adopted, each holder of Preferred Stock will be entitled to a number of votes in respect of the Preferred Stock owned by it equal to the number of shares of our common stock into which such holder’s Preferred Stock would be convertible at the Conversion Rate in effect on the Issue Date.

Comverse’s Right to Sell

Comverse has been able to sell the Preferred Stock since six months after the closing of the Merger in either private or public transactions. Commencing on December 15, 2010, the date that is 180 days after we regained compliance with our SEC reporting requirements, if Proposal No. 1 is adopted, the holders of the Preferred Stock will have demand and customary piggyback registration rights with respect to the Preferred Stock and the shares of common stock underlying the Preferred Stock.

Fees and Expenses

We have agreed to pay all expenses that result from a registration under the registration rights relating to the Preferred Stock, other than underwriting commissions and taxes. Under the registration rights agreement, we have also agreed to indemnify the holder of the Preferred Stock, its directors, officers, and employees against liabilities that may result from the sale of the Preferred Stock, including Securities Act liabilities.

Certain Consequences if Proposal No. 1 is Approved

If Proposal No. 1 is approved, we may issue a significant number of shares of common stock to Comverse, or a subsequent holder, upon conversion of the Preferred Stock, and in such event, our existing stockholders will incur dilution to their voting and economic interests and will own a smaller percentage of the outstanding common stock. Furthermore, the anti-dilution protection provided to the Preferred Stock could increase the number of shares of the common stock issuable pursuant to the conversion of the Preferred Stock and the existing stockholders could incur additional dilution. Additionally, each holder of Preferred Stock will be entitled to a number of votes in respect of the Preferred Stock owned by it equal to the number of shares of our common stock into which such holder’s Preferred Stock would be convertible at the Conversion Rate in effect on the Issue Date.

Further Information

The terms of the Private Placement and Preferred Stock are complex and only briefly summarized above. For further information on the Private Placement and the rights of the holder of the Preferred Stock, please refer to the full text of the agreements and documents filed as exhibits to the Current Report on Form 8-K filed with the SEC on May 30, 2007.

Board of Directors’ Recommendation

The board of directors unanimously recommends that you vote “FOR” Proposal No. 1.

PROPOSAL NO. 2
APPROVAL OF THE VERINT SYSTEMS INC.
2010 LONG-TERM STOCK INCENTIVE PLAN

Our board of directors adopted the Verint Systems Inc. 2010 Long-Term Stock Incentive Plan (the “Plan”) on August 3, 2010, subject to approval of our stockholders. The Plan, if approved by our stockholders, will expire in 2020.

Summary of the Plan

Set forth below is a summary of the principal features of the Plan. This summary is not intended to be exhaustive and is qualified in its entirety by reference to the terms of the Plan, a copy of which is included in this proxy statement as Appendix A.

Purpose

The purpose of the Plan is to attract and retain directors, employees, and consultants of Verint Systems Inc. (the “Company”) and its subsidiaries and to motivate such individuals, provide them with incentives and enable them to participate in our growth and success.

The Plan authorizes our board of directors to provide equity-based compensation in the form of (1) stock options, including incentive stock options (“ISOs”) entitling the participant to favorable tax treatment under Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”), (2) stock appreciation rights (“SARs”), (3) restricted stock, (4) restricted stock units (“RSUs”), (5) performance awards, (6) other stock-based awards (“Other Stock-Based Awards”), and (7) performance compensation awards. Each type of award is described below under “Types of Awards Under the Plan.”

Each of the awards will be evidenced by an award agreement setting forth the award’s terms and conditions.

The Plan is designed to comply with the requirements of applicable federal and state securities laws, and the Code, including, but not limited to, the performance-based exclusion from the deduction limitations under Section 162(m) of the Code for qualifying awards.

Our board of directors believes that it is in our best interest and the best interests of our stockholders to provide for an incentive plan under which compensation awards made to our named executive officers can qualify for deductibility for federal income tax purposes. Accordingly, the Plan has been structured in a manner such that awards under it can satisfy the requirements for the performance-based exclusion from the deduction limitations under Section 162(m) of the Code. In order for awards to satisfy the requirements for the performance-based exclusion from the deduction limitations under Section 162(m) of the Code, the Plan (which includes Performance Criteria (as hereinafter defined)) must be approved by our stockholders by a majority of the votes cast on the issue. The rules of the NASDAQ Stock Market, LLC require that the Plan be approved by a majority of the total votes cast on the proposal, and our by-laws require the approval of the majority of those shares present in person or represented by proxy and entitled to vote at the Special Meeting. Accordingly, if our stockholders do not approve the Plan by the vote described in the immediately preceding two sentences, no awards will be granted under the Plan, and it will not become effective.

Shares Available Under the Plan

Subject to adjustment as provided in the Plan, the number of our shares of common stock that may be issued or transferred (1) upon the exercise of stock options or SARs, (2) in payment of restricted stock and released from substantial risks of forfeiture thereof, (3) in payment of RSUs, (4) in payment of performance awards or performance compensation awards that have been earned, (5) as awards to non-employee directors, or (6) as Other Stock-Based Awards, will not exceed in the aggregate 4,000,000 shares of common stock. These shares may be shares of original issuance or treasury shares or a combination of the foregoing.

If any shares of common stock covered by any awards granted under the Plan are forfeited, cancelled, exchanged, withheld or surrendered or if an award terminates or expires without a distribution of shares of common stock to the participant, those shares will again be available for awards under the Plan. If two Awards are granted together in tandem, the shares underlying any portion of the tandem award which is not exercised or otherwise settled in shares will again be available for awards under the Plan. Any shares of common stock covered by an award that is settled in cash will again be available for awards under the Plan. In addition, if a participant elects to give up the right to receive compensation in exchange for shares of common stock based on fair market value, the shares will not count against the aggregate limit described above.

The aggregate number of shares of common stock for which ISOs may be granted will not exceed 2,000,000 of the shares of common stock reserved for purposes of the Plan. Further, no participant will be granted stock options or SARs, in the aggregate, for more than 1,500,000 shares of common stock during any fiscal year and no participant will be granted performance awards that are intended to be “qualified performance-based compensation” under Section 162(m) of the Code, in the aggregate, for more than 500,000 shares of common stock (or the cash value thereof) during any single Performance Period (as hereinafter defined).

No Repricing

Repricing of options and SARs is prohibited without stockholder approval under the Plan.

Eligibility

Any employee of, or consultant to, us or any of our subsidiaries (including any prospective employee) and non-employee directors of our board of directors or the board of directors of any of our subsidiaries may be selected to participate in the Plan. In addition, employees and consultants of our affiliates may be eligible to receive cash-settled performance awards and cash-settled RSUs under the Plan. The committee designated by our board of directors in accordance with the Plan (the “Committee”) determines which persons will receive awards and the number of shares of common stock subject to such awards. All of our approximately 2,600 personnel, including executive officers and directors, are eligible to participate in the Plan.

Types of Awards Under the Plan

Stock Options. Stock options may be granted that entitle the participant to purchase shares of common stock at a price not less than fair market value per share at the date of grant. The exercise price is payable (1) in cash, check, or wire transfer at the time of exercise, (2) by the transfer to us of shares of common stock owned by the participant having a value at the time of exercise equal to the total stock option exercise price (the shares must have been owned by the participant for at least 6 months), (3) subject to rules established by the Committee, through delivery of irrevocable instructions to a broker to sell the shares otherwise deliverable upon exercise of the stock option and to deliver to us an amount equal to the aggregate exercise price, or (4) by a combination of the foregoing.

No stock option may be exercisable more than 10 years from the date of grant. Each grant will specify the period of continuous service with us or any of our subsidiaries that is necessary before the stock options will become exercisable. Stock options will be evidenced by an award agreement containing such terms and provisions, consistent with the Plan, as the Committee may approve.

SARs. A SAR is a right to receive from us an amount equal to the spread between the grant price of the SAR and the value of our shares of common stock on the date of exercise. The Committee has the right to determine whether the amount payable on exercise of a SAR may be paid by us in cash, in shares of common stock, or in any combination thereof. SARs may be granted in tandem with another award, in addition to another award, or freestanding and unrelated to another award. If a SAR is granted in tandem with another award, it may be granted before, at the same time as the other award or at a later time. No SAR may be exercisable more than 10 years from the date of grant.

SARs with a grant price equal to or greater than the fair market value per share as of the date of grant are intended to qualify as “performance-based compensation” under Section 162(m) of the Code. SARs will be evidenced by an award agreement containing such terms and provisions, consistent with the Plan, as the Committee may approve.

Restricted Stock. A grant of restricted stock involves the immediate transfer by us to a participant of ownership of a specific number of shares of common stock in consideration of the performance of services. The Committee will determine the participants to whom shares of restricted stock will be granted, the number of shares of restricted stock to be granted to each participant, the duration of the period during which, and any conditions under which, the restricted stock may be forfeited to us, and the other terms and conditions of such awards. Shares of restricted stock may not be sold, assigned, transferred, pledged, or otherwise encumbered, except as provided in the award agreement. Upon lapse of the applicable restrictions, we will either deliver the certificates to the participant or the participant’s legal representative, or our transfer agent will remove the restrictions relating to the transfer of such shares.

In the discretion of the Committee, dividends paid on any shares of restricted stock will be paid directly to the participant, withheld by us subject to vesting of the restricted stock pursuant to the terms of the applicable award agreement, or be reinvested in additional shares of restricted stock.

In the discretion of the Committee, restricted stock grants may, but are not required to, be designated by the Committee as Performance Compensation Awards (as hereinafter defined). Grants of restricted stock will be evidenced by an award agreement containing such terms and provisions, consistent with the Plan, as the Committee may approve.

RSUs. A grant of RSUs constitutes an agreement by us to deliver shares of common stock to the participant in the future in consideration of the performance of services. The Committee will determine the participants to whom RSUs will be granted, the number of RSUs to be granted to each participant, the duration of the period during which, and any conditions under which the RSUs may be forfeited to us, and the other terms and conditions of such awards. RSUs may not be sold, assigned, transferred, pledged, or otherwise encumbered.

Each RSU will have a value equal to the fair market value of a share. RSUs will be paid in cash, shares of common stock, other securities, or other property, as determined in the sole discretion of the Committee, upon the lapse of the applicable restrictions, or otherwise in accordance with the applicable award agreement.

In the discretion of the Committee, RSU grants may, but are not required to, be designated by the Committee as Performance Compensation Awards. RSU grants will be evidenced by an award agreement containing such terms and provisions, consistent with the Plan, as the Committee may approve.

Performance Awards. The Committee has the authority under the Plan to grant performance awards. These awards consist of a right which is (i) denominated in cash or shares of common stock, (ii) valued, as determined by the Committee, in accordance with the achievement of performance goals during Performance Periods established by Committee, and (iii) payable at such time and in such form as determined by the Committee. Each performance award will be subject to one or more specified performance goals that must be met within a specified period determined by the Committee (the “Performance Period”) to earn the performance award. The Committee will determine the amount of any performance award, the length of any Performance Period, and the amount and kind of any payment or transfer to be made pursuant to any performance award. To the extent earned, the performance awards may be paid in a lump sum or in installments following the close of the Performance Period as set forth in the applicable award agreement.

In the discretion of the Committee, performance awards may, but are not required to, be designated by the Committee as Performance Compensation Awards (as hereinafter defined). Performance awards will be evidenced by an award agreement containing such terms and provisions, consistent with the Plan, as the Committee may approve.

Other Awards. The Committee may grant to a participant an Other Stock-Based Award, which will consist of rights other than those awards described above and which is denominated or payable in, valued in whole or in part by reference to, or otherwise based on or related to, our shares of common stock (including securities convertible into shares). These awards must comply, to the extent deemed desirable by the Committee, with Rule 16b-3 as promulgated and interpreted by the SEC under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and other applicable laws. The Committee will determine the terms and conditions of these awards, including the price, if any, at which shares of common stock may be purchased pursuant to any Other Stock-Based Award granted under the Plan.

In the discretion of the Committee, Other Stock-Based Awards may, but are not required to, be designated by the Committee as Performance Compensation Awards (as hereinafter defined). Other Stock-Based Awards will be evidenced by an award agreement containing such terms and provisions, consistent with the Plan, as the Committee may approve.

Performance Compensation Awards. The Committee has the authority, at the time of grant of any restricted stock award, RSU award, performance award, or Other Stock-Based Award, to designate such award as a “Performance Compensation Award” in order to qualify such award as “performance-based compensation” under Section 162(m) of the Code. To qualify as a performance compensation award, the Committee must designate which participants will be eligible to receive Performance Compensation Awards for a particular Performance Period within the first 90 days of the Performance Period (or, if shorter, within the maximum period permitted under Section 162(m) of the Code).

The Committee has full discretion to select the length of such Performance Period, the type of Performance Compensation Awards to be issued, the Performance Criteria (as hereinafter defined) that will be used to establish performance goals, and the kinds and/or levels of the performance goals that will apply and the formula that will be used to determine whether a performance goal has been achieved.

During a Performance Period, one or more objective formulas shall be applied against the relevant performance goal to determine, with regard to the Performance Compensation Award of a particular participant, whether all or some portion of the Performance Compensation Award has been earned for the Performance Period.

Unless otherwise provided in the applicable award agreement, a participant must be employed by us on the last day of a Performance Period to be eligible for payment in respect of a Performance Compensation Award for the applicable Performance Period.

Performance Criteria. The Performance Criteria that will be used to establish the performance goal(s) will be based on the attainment by us (or one of our subsidiaries, divisions, or operational units) of specific levels of performance. The performance criteria (the “Performance Criteria”) that the Committee may set are limited to specified levels of or growth in the following, whether determined on a GAAP or non-GAAP basis: revenue, operating income, day sales outstanding, return on net assets, return on stockholders’ equity, return on assets, return on capital, stockholder returns, profit margin, contribution margin, earnings per share, net earnings, operating earnings, free cash flow, earnings before interest, taxes, depreciation and amortization, number of customers, growth of customers, operating expenses, capital expenses, customer acquisition costs, share price, or sales or market share.

If the Committee (1) anticipates or determines that any unusual or extraordinary corporate event, transaction, item or development affecting us, (2) anticipates or recognizes any unusual or nonrecurring event that affects us and our financial statements, or (3) anticipates or responds to changes in applicable laws, regulations, accounting principles or business conditions, then the Committee is authorized at any time during the first 90 days of a Performance Period, or at any time thereafter (but only to the extent the exercise of such authority after the first 90 days of a Performance Period would not cause the Performance Compensation Awards granted to any participant for the Performance Period to fail to qualify as “performance-based compensation” under Section 162(m) of the Code), to adjust or modify the calculation of a performance goal for the Performance Period to the extent permitted under Section 162(m) of the Code in order to prevent the dilution or enlargement of the rights of participants.

Administration

The Plan will be administered by the Committee. The Committee must be composed of at least two directors, each of whom is required to be a “non-employee director” (within the meaning of Rule 16b-3) and an “outside director” (within the meaning of Section 162(m) of the Code). In the absence of such a designated committee, our board of directors serves as the Committee. The Committee is authorized to interpret the Plan and related agreements and other documents.

Dividends

In the sole discretion of the Committee, a restricted stock award, RSU award, performance award, or an Other Stock-Based Award may provide the participant with dividends or dividend equivalents, payable in cash, shares of common stock, other securities, or other property on a current or deferred basis. In the case of awards with respect to which any applicable Performance Criteria have not been achieved, dividend equivalents may be paid only on a deferred basis, to the extent the underlying award vests.

Amendments

Our board of directors may amend, alter, suspend, discontinue, or terminate the Plan without further approval by our stockholders, except where (i) the amendment would materially increase the benefits accruing to participants under the Plan, (ii) the amendment would materially increase the number of securities which may be issued under the Plan, (iii) the amendment would materially modify the requirements for participation in the Plan, or (iv) stockholder approval is required by applicable law or NASDAQ Stock Market, LLC rules and regulations. If any amendment, alteration, suspension, discontinuance, or termination of the Plan would impair the rights of any participant, holder, or beneficiary of a previously granted award, the amendment, alteration, suspension, discontinuance, or termination will be not effective with respect to such person without the written consent of the affected participant, holder, or beneficiary.

Change in Control

In the event of a “change in control” (as defined in the Plan), to the extent outstanding awards under the Plan are not assumed, converted or replaced, all outstanding awards then held by a participant which are unexercisable or otherwise unvested will automatically be deemed exercisable or otherwise vested, as the case may be, and any specified performance goals will be deemed to be satisfied at target, immediately prior to the consummation of such change in control, unless the applicable award agreement provides to the contrary.

To the extent outstanding awards are assumed, converted or replaced in the event of a change in control, (i) any outstanding awards that are subject to performance goals will be assumed, converted, or replaced as if target performance had been achieved as of the date of the change in control, (ii) each performance award or Performance Compensation Award with service requirements will continue to vest with respect to such requirements during the remaining period set forth in the award agreement, and (iii) all other awards shall continue to vest (and/or the restrictions thereon shall continue to lapse) during the remaining period set forth in the applicable award agreement. If outstanding awards are assumed, converted, or replaced, if a participant’s employment or service with us or a subsidiary is terminated without cause (as defined in the Plan) or a participant terminates his or her employment or service with us or a subsidiary for good reason (as defined in the Plan) during the two year period following a change in control, all outstanding awards held by the participant that may be exercised will become fully exercisable and all restrictions will lapse and the awards will become vested and non-forfeitable.

Detrimental Activity

If the Committee determines (or discovers) that a Participant committed an act during the course of his or her employment or service that constitutes or would have constituted Cause for termination, the Committee will have the right to cancel any or all of Participant’s then outstanding Awards (whether or not vested).

Transferability

Each award under the Plan, and each right under any award, shall be exercisable during the participant’s lifetime only by the participant or by the participant’s guardian or legal representative. No award may be transferred except by will or by the laws of descent and distribution, except that the Committee may in the applicable award agreement or in an amendment to the award agreement provide that certain vested stock option awards may be transferred by the participant without consideration to certain family members, to certain trusts, or to specified types of partnerships, corporations, or limited liability companies on notice to and consent of the Committee. The participant remains liable for any withholding taxes required to be withheld upon the exercise of such stock option by the permitted transferee.

Adjustments

In the event that the Committee determines that any dividend or other distribution (whether in the form of cash, shares of common stock, other securities, or other property), recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, spin-off, combination, repurchase, or exchange of shares of common stock or our other securities, issuance of warrants or other rights to purchase shares of common stock or our other securities, or other corporate transaction or event affects the shares of common stock such that an adjustment is appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan, then the Committee shall equitably adjust any or all of (i) the number of our shares of common stock or other securities (or number and kind of other securities or property) with respect to which awards may be granted, (ii) the number of our shares of common stock or other securities (or number and kind of other securities or property) subject to outstanding awards, and (iii) the grant or exercise price with respect to any award or, if deemed appropriate, make provision for a cash payment to the holder of an outstanding award in consideration for the cancellation of such award, which, in the case of stock options and SARs shall equal the excess, if any, of the fair market value of the share subject to each such stock option or SAR over the per share exercise price or grant price of such stock option or SAR.

The Committee is also authorized to make equitable adjustments in the terms and conditions of, and the criteria included in, all outstanding awards in recognition of unusual or nonrecurring events (including, without limitation, the events described in the previous paragraph) affecting us, any of our subsidiaries, our financial statements or those of any of our subsidiaries, or of changes in applicable laws, regulations, or accounting principles, whenever the Committee determines that such adjustments are appropriate in order to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under the Plan.

Withholding Taxes

To the extent that we are required to withhold federal, state, local, or foreign taxes in connection with any payment made or benefit realized by a participant or other person under the Plan, we have the right to withhold from any award or from any compensation or other amount owing to a participant the amount (in cash, shares of common stock, other securities, other awards under the Plan or other property) of applicable withholding taxes and to take other action as may be necessary to satisfy all obligations for payment of such taxes. Subject to the foregoing, a participant may satisfy the withholding liability by delivering shares of common stock owned by the participant (which are not subject to any pledge or other security interest and which have been held by the participant for at least six months) with a fair market value equal to the withholding liability or have us withhold from the shares of common stock otherwise deliverable pursuant to an award, a number of shares of common stock equal to the withholding liability.

Compliance with Section 409A of the Internal Revenue Code

To the extent applicable, it is intended that the Plan and any grants made thereunder comply with the provisions of Section 409A of the Code, so that the income inclusion provisions of Section 409A(a)(1) of the Code do not apply to the participants. The Plan and any grants made under the Plan shall be administered in a manner consistent with this intent. Any reference in the Plan to Section 409A of the Code will also include any regulations or any other formal guidance promulgated with respect to such Section by the U.S. Department of the Treasury or the Internal Revenue Service.

Termination

No grant will be made under the Plan more than 10 years after the date on which the Plan is first approved by our board, but all grants made on or prior to such date will continue in effect thereafter subject to the terms thereof and of the Plan.

Federal Income Tax Consequences

The following is a brief summary of some of the federal income tax consequences of certain transactions under the Plan based on federal income tax laws in effect on January 1, 2010. This summary is not intended to be complete and does not describe state or local tax consequences. It is not intended as tax guidance to participants in the Plan.

Tax Consequences to Participants

Non-qualified Stock Options. In general, (1) no income will be recognized by a participant at the time a non-qualified stock option is granted; (2) at the time of exercise of a non-qualified stock option, ordinary income will be recognized by the participant in an amount equal to the difference between the exercise price paid for the shares of common stock and the fair market value of the shares, if unrestricted, on the date of exercise; and (3) at the time of sale of shares of common stock acquired pursuant to the exercise of a non-qualified stock option, appreciation (or depreciation) in value of the shares after the date of exercise will be treated as either short-term or long-term capital gain (or loss) depending on how long the shares have been held.

Incentive Stock Options. No income generally will be recognized by a participant upon the grant or exercise of an incentive stock opiton (ISO). The exercise of an ISO, however, may result in alternative minimum tax liability. If shares of common stock are issued to the participant pursuant to the exercise of an ISO, and if no disqualifying disposition of such shares is made by such participant within two years after the date of grant or within one year after the transfer of such shares to the participant, then upon sale of such shares, any amount realized in excess of the exercise price will be taxed to the participant as a long-term capital gain and any loss sustained will be a long-term capital loss.

If shares of common stock acquired upon the exercise of an ISO are disposed of prior to the expiration of either holding period described above (i.e. disqualifying disposition), the participant generally will recognize ordinary income in the year of disposition in an amount equal to the excess (if any) of the fair market value of such shares at the time of exercise (or, if less, the amount realized on the disposition of such shares if a sale or exchange) over the exercise price paid for such shares. Any further gain (or loss) realized by the participant generally will be taxed as short-term or long-term capital gain (or loss) depending on the holding period.

SARs. No income will be recognized by a participant in connection with the grant of a SAR. When the SAR is exercised, the participant normally will be required to include as taxable ordinary income in the year of exercise an amount equal to the amount of cash received and the fair market value of any unrestricted shares of common stock received on the exercise.

Restricted Stock. The recipient of restricted stock generally will be subject to tax at ordinary income rates on the fair market value of the restricted stock (reduced by any amount paid by the participant for such restricted stock) at such time as the shares are no longer subject to forfeiture or restrictions on transfer for purposes of Section 83 of the Code (“Restrictions”). However, a recipient who so elects under Section 83(b) of the Code within 30 days of the date of transfer of the shares will have taxable ordinary income on the date of transfer of the shares equal to the excess of the fair market value of such shares (determined without regard to the Restrictions) over the purchase price, if any, of such restricted stock. If a Section 83(b) election has not been made, any dividends received with respect to restricted stock that is subject to the Restrictions generally will be treated as compensation that is taxable as ordinary income to the participant.

RSUs. No income generally will be recognized upon the award of RSUs. The recipient of an award of RSUs generally will be subject to tax at ordinary income rates on the fair market value of unrestricted shares of common stock on the date that such shares are transferred to the participant under the award (reduced by any amount paid by the participant for such RSUs), and the capital gains/loss holding period for such shares will also commence on such date.

Performance Awards. No income generally will be recognized upon the grant of performance awards. Upon payment or transfer made under the terms of a performance award, the recipient generally will be required to include as taxable ordinary income in the year of receipt an amount equal to the amount of any cash received and the fair market value of any unrestricted shares of common stock received.

Other Stock-Based Awards. No income generally will be recognized upon the grant of other Stock-Based Awards. Upon payment of Other Stock-Based Awards, the recipient generally will be required to include as taxable ordinary income in the year of receipt an amount equal to the amount of cash received and the fair market value of any unrestricted shares of common stock received.

Tax Consequences to the Company or Subsidiary

To the extent that a participant recognizes ordinary income in the circumstances described above, we or the subsidiary for which the participant performs services may be entitled to a corresponding deduction provided that, among other things, the income meets the test of reasonableness, is an ordinary and necessary business expense, is not an “excess parachute payment” within the meaning of Section 280G of the Code and is not disallowed by the $1 million limitation on certain executive compensation under Section 162(m) of the Code.

Registration with the SEC

We intend to file a Registration Statement on Form S-8 relating to the issuance of shares of common stock under the Plan with the SEC pursuant to the Securities Act of 1933, as amended, as soon as is practicable after approval of the Plan by our stockholders.

New Plan Benefits

Because awards to be granted in the future under the Plan are at the discretion of the Committee, it is not possible to determine the exact benefits or amounts to be received under the Plan by our directors, employees, or consultants. However, as of the date of this proxy statement, we have granted awards to acquire 2,589,850 shares outside of our existing equity incentive plans. The vesting of these awards is, among other things, contingent on stockholder approval of a new equity compensation plan or having additional share capacity under one of our existing stockholder-approved equity compensation plans. Assuming that all of these awards were settled under the Plan, 1,410,150 shares (out of the 4,000,000 total shares being requested under the Plan) would remain available for future awards under the Plan. Please see the discussion under clauses (i), (ii), and (iv) under “Equity Compensation Plan Information” below for more information on the awards comprising these 2,589,850 shares. For grants made during our year ended January 31, 2010 to our named executive officers, please see the Grants of Plan-Based Awards Table.

Equity Compensation Plan Information

The following table provides information about our equity compensation plans (other than qualified employee benefits plans and plans available to stockholders on a pro rata basis) as of January 31, 2010 after giving effect to our assumption on May 25, 2007 of the following in connection with our acquisition of Witness: (a) the Witness Amended and Restated Stock Incentive Plan, the Witness Broad Based Option Plan, and the Witness Non-Employee Director Stock Option Plan, (b) all unvested awards previously issued under such plans as of May 25, 2007, (c) certain new-hire inducement grants made by Witness outside of its stockholder-approved equity plans prior to May 25, 2007, and (d) the passage of the expiration date for making new awards under the Witness Amended and Restated Stock Incentive Plan on November 18, 2009. In accordance with applicable NASDAQ rules at the time, the Witness Broad Based Option Plan was not approved by stockholders. No awards were assumed by us under the Witness Broad Based Option Plan or the Witness Non-Employee Director Stock Option Plan in connection with our acquisition of Witness. Since the closing of the Witness acquisition, we have not made, and do not in the future expect to make, additional awards under the Witness Broad Based Option Plan or the Witness Non-Employee Director Stock Option Plan and

these plans are therefore not included in column (c) in either of the tables below. The following table does not include awards for an aggregate of (i) 1,292,150 shares which were approved for grant by the stock option committee of our board of directors on March 4, 2009 and May 20, 2009 outside of our equity incentive plans, (ii) 339,506 performance shares outside of our equity incentive plans eligible to be earned by our executive officers based on the overachievement of specified performance goals, (iii) 355,150 shares originally granted as hybrid RSUs that were later converted into shares of cash-settled phantom stock,(iv) 958,194 shares pursuant to equity awards approved for grant by the stock option committee of our board of directors on March 17, 2010 and April 17, 2010 outside of our equity incentive plans and (v) 20,000 shares pursuant to equity awards approved for grant by our board of directors on March 18, 2010. The vesting of any awards made outside of our equity incentive plans is, among other things, contingent on stockholder approval of a new equity compensation plan or having additional share capacity under an existing stockholder-approved equity compensation plan. Assuming that all of the awards described in clauses (i), (ii), and (iv) above were settled under the Plan, 1,410,150 shares (out of the 4,000,000 total shares being requested under the Plan) would remain available for future awards under the Plan.

		(a)								(c)
		Number of				(b)				Number of Securities
		Securities to be				Weighted-Average				Remaining Available for
		Issued upon Exercise				Exercise Price of				Future Issuance under
		of Outstanding				Outstanding				Equity Compensation Plans
		Options, Warrants,				Options, Warrants				(Excluding Securities
Plan Category		and Rights				and Rights (1)				Reflected in Column (a))
Equity compensation plans approved by security holders			7,093,896	(2)		$	23.17				249,304	(3)
Equity compensation plans not approved by security holders			5,943	(4)		$	19.53				0
Total			7,099,839			$	23.16				249,304	(5)

All of our executive officers (including the named executive officers) and directors are eligible to participate in the Plan and thus have a personal interest in the approval of the Plan.

The board of directors unanimously recommends that you vote “FOR” Proposal No. 2.

OTHER MATTERS

As of the date of this proxy statement, we know of no business that will be presented for consideration at the Special Meeting other than the items referred to above. If any other matter is properly brought before the meeting for action by stockholders, the person or persons voting your shares pursuant to instructions by proxy card will vote your shares in accordance with their best judgment on such matters. The chairman of the Special Meeting may refuse to allow presentation of a proposal if the proposal was not properly submitted.

DIRECTOR COMPENSATION

Non-Employee Director Compensation for the Year Ended January 31, 2010

The following table summarizes the cash and equity compensation earned by each member of the board of directors during the year ended January 31, 2010 for service as a director.

						Fees Earned or
						Paid in				Stock				Option
						Cash				Awards				Awards				Total
Name						($)(1)				($)(2)				($)(2)				($)
Baker, Paul			(4	)			—				—				—				—
Bodner, Dan							—				—				—				—
Bunyan, John			(4	)			—				—				—				—
Dahan, Andre			(4	)			—				—				—				—
DeMarines, Victor							144,750				16,950	(3)			—				161,700
Minihan, Kenneth							132,750				16,950	(3)			—				149,700
Myers, Larry							196,500				16,950	(3)			—				213,450
Safir, Howard							147,000				16,950	(3)			—				163,950
Shah, Shefali			(4	)			—				—				—				—
Spirtos, John			(4),	(5)			—				—				—				—
Swad, Stephen			(4	)			—				—				—				—
Wright, Lauren			(4	)			—				—				—				—

The following table summarizes the aggregate number of unvested stock options and unvested shares of restricted stock held by each member of our board of directors (granted for service as a director) as of the end of the year ended January 31, 2010.

		Unvested Options				Unvested Stock Awards
Name		(#)				(#)
Baker, Paul			—				—
Bodner, Dan			—				—
Bunyan, John			—				—
Dahan, Andre			—				—
DeMarines, Victor			—				5,000
Minihan, Kenneth			—				5,000
Myers, Larry			—				5,000
Safir, Howard			—				5,000
Shah, Shefali			—				—
Spirtos, John			—				—
Swad, Stephen			—				—
Wright, Lauren			—				—

Although we do not presently have any stock ownership guidelines in place for our directors or officers, we are presently developing such guidelines in consultation with the compensation committee’s independent compensation consultant and other advisors. Our insider trading policy prohibits all personnel (including directors) from short selling in our securities, from short-term trades in our securities (open market purchase and sale within three months), and from trading options in our securities. Other than limited dispositions to the company to cover tax liabilities in connection with vestings, none of our present directors has sold any of our securities, including shares underlying equity awards, since January 2006.

Non-Independent Directors

Our non-independent directors, including Comverse designees and employee directors, do not currently receive any cash compensation for serving on the board of directors or any committee of the board of directors. These directors may receive grants of stock options or restricted stock for their service on the board of directors, in the discretion of the board of directors. None of the Comverse designated directors received an equity grant in the year ended January 31, 2010. Mr. Bodner has not been separately compensated for his service on the board of directors.

All directors (whether or not independent) are eligible to be reimbursed for their out-of-pocket expenses in attending meetings of the board of directors or board of directors committees.

Independent Directors

The board of directors is responsible for establishing independent director compensation arrangements based on recommendations from the compensation committee. These compensation arrangements are designed to provide competitive compensation necessary to attract and retain high quality independent directors. The compensation committee annually reviews the independent director compensation arrangements based on market studies or trends and from time to time engages an independent compensation consultant to prepare a customized peer group analysis. In recent years, the compensation committee and the board of directors have also placed special focus on the work load associated with the completion of our internal investigation, restatement, audits, and outstanding SEC filings in establishing independent director compensation arrangements.

Our independent directors currently receive both an annual cash retainer (paid quarterly) as well as per meeting fees for attendance of meetings of the board of directors and board of directors committees. Independent directors also receive an annual equity grant. As a result of the increased work load and time commitment associated with serving as a director during our extended filing delay period, during this period, we also introduced an annual fee for an independent director’s service as the board of directors or a committee chair, a special quarterly cash retainer (for the duration of our extended filing delay period which period ended in the quarter ended July 31, 2010), and a per diem fee for work done outside of board of directors and committee meetings.

The following table summarizes the compensation package for our independent directors for the year ended January 31, 2010.

Component of Compensation
Annual retainer (per annum)		$50,000
Board meeting fee		$1,500
Committee meeting fee		$750
Annual equity grant		5,000 shares of restricted stock (vesting annually for 12 months of service)
Special quarterly retainer (per quarter)		$10,000
Chairmanship fee (per annum)		Board			$25,000
		Audit			$20,000
		Compensation			$10,000
		Stock Option			$5,000
		Governance			$7,500
Per diem fee (for work outside meetings)		$2,500

Because the chairmanship of our board of directors, our compensation committee, and our corporate governance & nominating committee are presently held by Comverse-designated directors who do not, as noted above, receive any cash compensation for their service on our board of directors, these chairmanship fees are not currently being paid.

On March 19, 2009, the special quarterly retainer for Mr. Myers, chairman of the audit committee, was increased to $20,000 per quarter for the duration of our extended filing delay period (which period ended in the quarter ended July 31, 2010) in recognition of his special role and added responsibilities in overseeing the completion of our restatement and audits.

EXECUTIVE COMPENSATION

Compensation Discussion and Analysis

This Compensation Discussion and Analysis describes our executive officer compensation program and addresses how we made compensation decisions for the executive officers named below (the “named executive officers”) for the year ended January 31, 2010:

•

Dan Bodner, President and Chief Executive Officer and Corporate Officer

•

Douglas Robinson, Chief Financial Officer and Corporate Officer

•

Elan Moriah, President, Verint Witness Actionable Solutions and Verint Video Intelligence Solutions and Corporate Officer

•

Meir Sperling, President, Verint Communications Intelligence and Investigative Solutions and Corporate Officer

•

David Parcell, Managing Director, EMEA and Corporate Officer

•

Peter Fante, Chief Legal Officer, Chief Compliance Officer, Secretary, and Corporate Officer

We have included certain information in this “Compensation Discussion and Analysis” and this section generally for periods subsequent to January 31, 2010 that we believe may be useful for a more complete understanding of our compensation arrangements. While the focus of this discussion is on our compensation arrangements with our named executive officers (who are also referred to as “executive officers” or just “officers” below), in some cases we also provide information about compensation arrangements with our other executives or our employees generally where we believe it may be useful for providing context for our officer compensation arrangements.

Compensation Philosophy and Process

Philosophy and Objectives of Compensation Program

The primary objectives of our executive officer compensation programs are to:

•

attract and retain highly qualified and effective officers by providing a total compensation package that is competitive in the market in which we compete for talent;

•

incentivize our executive officers to execute on our operational and strategic goals and reward the successful achievement of such goals; and

•

align the interests of our officers with those of our stockholders.

Our executive officer compensation packages have historically been, and continue to be, comprised of a mix of base salary, annual cash bonus, and annual equity or equity-linked grant, plus limited perquisites. We believe this relatively simple mix of compensation elements allows us to successfully achieve the compensation objectives outlined above, however, the compensation committee periodically re-evaluates the company’s compensation philosophy, objectives, and tools. In recent years, due to our extended filing delay period, we have also made use of supplementary incentives in addition to our regular officer compensation packages.

We believe it is important that a significant portion of an officer’s compensation be “at-risk” by being tied to the performance of our business or our stock price. We believe this is addressed through the use of performance-based bonuses and performance-vested equity, wherein payment or vesting is directly dependent on performance, as well as through the use of equity-based compensation generally, such as stock options, restricted stock, or RSUs, whose value depends on our stock price. We believe that equity-based compensation that is subject to vesting based on continued employment is also an effective tool for retaining our officers, aligning their interests with those of our stockholders, and for building long-term commitment to the company.

Roles and Responsibilities

The compensation committee of the board of directors (the “compensation committee”) determines the base salaries and bonus structure for our executive officers. The compensation committee also establishes the performance goals that are used to determine how much of an officer’s annual target bonus is ultimately earned and evaluates the company’s and the officer’s performance against these goals in awarding actual bonus payments after the conclusion of the applicable performance period. The compensation committee is also responsible for overseeing our employee compensation programs generally, including our long-term incentive programs and any special compensation initiatives.

The stock option committee of the board of directors (the “stock option committee”), which is comprised solely of independent directors, is responsible for administering our equity compensation programs, including final approval of all equity grants, based on recommendations on size, scope, and structure from the compensation committee. The stock option committee has approved all equity grants to all personnel since our May 2002 IPO, except that equity grants to non-employee directors are approved by the full board of directors. Based on recommendations from the compensation committee, the stock option committee also establishes the performance goals that are used to determine how much of an officer’s performance-based equity award ultimately vests and evaluates the company’s and the officer’s performance against these goals in determining actual vesting levels after the conclusion of the applicable performance period.

Process Overview and Guidelines

In establishing the compensation package for our executive officers each year, the compensation committee reviews the various components and amounts of compensation being considered for each officer through the use of “tally sheets” or similar compensation summaries. The compensation committee, from time to time, engages a nationally recognized independent compensation consultant to prepare a peer group compensation “benchmarking” analysis for our officer compensation packages and to assist the compensation committee in structuring and evaluating proposed officer compensation packages or other executive compensation arrangements. The independent compensation consultant does not provide any other services to the company except advising the compensation committee on compensation for our officers, directors, or other personnel. Any advice provided with respect to non-officer or director personnel has been ancillary to officer compensation and has not exceeded $120,000 in fees and/or has been with respect to broad-based plans that do not discriminate in scope, terms, or operation in favor of our officers or directors and are available generally to all employees. The company pays the cost for the consultant’s services. With the compensation committee’s permission or at the compensation committee’s request, selected members of senior management generally work cooperatively with the compensation consultant in preparing proposals for officer compensation packages or other executive compensation arrangements for consideration by the compensation committee. The compensation consultant at all times remains independent of management, however, and forms its own views with respect to the recommendations it makes to the compensation committee. With the exception of his own package, the Chief Executive Officer also provides input to the compensation committee on each proposed executive officer compensation package. The compensation committee also meets in executive session (outside the presence of management) both with and without its independent compensation consultant and other advisors from time to time. The compensation committee is solely responsible for making final decisions on cash compensation for executive officers and the stock option committee is solely responsible for making final decisions on equity compensation for executive officers.

The composition of the peer group used for benchmarking analyses prepared by the compensation consultant is developed following discussions between the compensation committee, the compensation consultant, and members of senior management, and is reevaluated from year to year. The companies to be included in the peer group are selected from a sampling of publicly traded software and technology companies with annual revenues, market capitalizations, and/or enterprise values within a range above and below ours. In general, certain of our closest competitors do not fit within these parameters, either because they are much larger or much smaller than us, are privately held, or are foreign issuers who do not publicly file detailed compensation data.

For compensation for the year ended January 31, 2010, our compensation peer group consisted of:

•

McAfee Inc.,

•

Compuware Corporation,

•

THQ Inc.,

•

Sybase, Inc.,

•

Take-Two Interactive Software, Inc.,

•

Novell, Inc.,

•

FLIR Systems, Inc.,

•

Lawson Software, Inc.,

•

Salesforce.com, Inc.,

•

Quest Software, Inc., and

•

Nuance Communications, Inc.

Elements of compensation are considered by the compensation committee individually and in the aggregate. Based on the benchmarking analysis, the compensation committee initially uses a guideline of targeting cash compensation (salary and target bonus) at the median of our peer group for target performance and of targeting equity compensation at the 75^th percentile of our peer group (based on dollar value) for target performance. We believe that targeting cash compensation at the median and equity compensation at the 75^th percentile of our peer group ensures that we are well positioned to attract and retain the highest caliber of executive officer talent and properly incentivize our officers consistent with our compensation philosophy and objectives described above. The actual cash and equity target award levels for a given executive officer in a given year are not, however, determined solely based on these guidelines.

In establishing these actual cash and equity target award levels and the mix between cash compensation and equity compensation, the other factors considered by the compensation committee include:

•

the officer’s compensation for the previous year;

•

the officer’s performance in the previous year;

•

our performance in the previous year;

•

our growth from the previous year;

•

our outlook, budget, and cash forecast for the upcoming year;

•

the proposed packages for the other executive officers (internal pay equity);

•

the proposed merit increases, if any, being offered to our employees generally;

•

equity dilution and burn rates;

•

the value of previously awarded equity grants;

•

executive officer recruiting and retention considerations; and

•

compensation trends and competitive factors in the market for talent in which we compete.

We do not target a specific ratio of equity to cash.

Subject to the parameters of our compensation philosophy, the compensation committee believes that it is appropriate for our Chief Executive Officer to be compensated more highly from both a cash and an equity perspective than our other executive officers, and this approach has been supported by our peer group analyses. In establishing the relative compensation of the other executive officers, in addition to the factors above and peer group analyses, the compensation committee is especially mindful of internal pay equity and takes into account differences in the scope of each officer’s responsibilities.

For the reasons discussed below, in recent years, due to our extended filing delay period, we have placed increased emphasis on executive retention, particularly in sizing equity awards and in considering supplementary incentives in addition to our regular executive officer compensation packages. See “— Compensation and Awards During Our Extended Filing Delay Period” below.

Elements of Compensation

Base Salary

Base salaries for our executive officers are generally negotiated by us with the officer upon hiring based on prior compensation history, salary levels of our other executive officers, geographic location, and benchmarking data. Base salaries for our executive officers are subject to adjustment annually by the compensation committee as part of its regular compensation review process based on the benchmarking process and the other factors described above, as well as based on special achievements, promotions, and other facts and circumstances specific to the individual officer. For the year ended January 31, 2010, we did not increase base salaries for our executive officers due to the economic environment.

Annual Bonus

Each of our executive officers is eligible to receive an annual cash bonus. As with base salaries, target bonuses are established annually by the compensation committee as part of its regular compensation review process. In establishing target bonuses, in addition to the factors considered as part of the compensation review process generally, the compensation committee also considers the target bonus set forth in the executive officer’s employment agreement (if applicable), as well as special achievements, promotions, and other facts and circumstances specific to the individual officer.

Although an officer’s employment agreement may provide for a specified target bonus (a target bonus below which an officer may have “good reason” to resign under his employment agreement) and although the compensation committee establishes a bonus target for each officer annually, the actual bonus payment an officer receives is not guaranteed. Actual bonuses are paid based on company and officer performance, generally by reference to pre-defined performance goals established by the compensation committee as part of the regular compensation review process.

Performance goals are based on revenue, a measure of profitability, and a measure of cash generation. For the year ended January 31, 2010, the measure of profitability was operating income and the measure of cash generation was days sales outstanding (“DSO”). A portion of the bonus is also tied to the achievement of non-financial management business objectives (“MBOs”) approved by the compensation committee. The compensation committee uses the same budget prepared by management and approved by our board of directors for operating our business in establishing corresponding quantitative financial goals for executive officer bonuses. This operating budget is prepared annually through a highly detailed, bottom-up process involving dozens of employees around the world from each of our three operating segments and represents a consensus view from the organization on the performance we can drive from our business. In building the budget, we also analyze our transaction pipeline, speak with customers and partners, and consider projected industry growth rates from analysts and other third-party sources. We believe that using the same budget for operating the business and for establishing annual compensation performance goals helps to maximize the alignment between the interests of our executive officers and our stockholders. For executive officers with responsibility for a specific operating unit, unit revenue and unit profitability goals (contribution margin) are also incorporated into the officer’s performance goals. For the year ended January 31, 2010, the compensation committee set the performance goal levels for revenue and profitability above the corresponding budget levels in order to drive performance in excess of budget in a challenging economic environment.

Because our operating budget is an internal tool primarily designed to assist management and the board of directors in understanding and managing the operations of the business, it uses measures of revenue and operating income that are different from their GAAP counterparts. As a result, because the compensation committee establishes the compensation performance goals using this same budget, these performance goals are also different from their GAAP counterparts and may also be calculated differently from the non-GAAP metrics that we may disclose publicly from time to time. For example, our internal budget targets, and therefore our performance goals, may exclude the effect of acquisitions that occur during the year. The following table summarizes the differences between our reported GAAP revenue and GAAP operating income and the corresponding measures used for our operating budget and our compensation performance goals, subject to any additional adjustments the compensation committee may deem appropriate in a particular period:

Budget / Performance
Goal Metric		Differences from Corresponding GAAP Metric
Revenue		GAAP revenue excluding the impact of certain extraordinary business transactions and fair value adjustments relating to future support obligations under acquired contracts which would otherwise have been recognized on a stand-alone basis, as well as adjustments for sales concessions related to accounts receivable balances that existed prior to the date of an acquisition.
Operating income		GAAP operating income, adjusted for revenue as described above, and adjustments related to acquisitions including amortization of acquisition-related intangible assets, integration costs, acquisition-related write-downs, in-process research and development, impairment of goodwill and intangible assets, and special legal costs and settlement income, as well adjustments for stock-based compensation, expenses related to our restatement and extended filing delay, and certain other non-cash or non-recurring charges, including restructuring costs.

The financial performance goals established by the compensation committee generally come in the form of a range, wherein the officer may achieve a percentage of his target bonus (generally 50-75%) at the low end of the performance range (or threshold), 100% of his target bonus towards the middle of the performance range (target performance), and up to 200% of his target bonus at the high end of the performance range. Below threshold, the officer is not entitled to any bonus (for that goal). For performance that falls between points on the range, the bonus payout is calculated on a linear basis between those points. The compensation committee’s objective in establishing a range is to incentivize our officers to overachieve, while at the same time providing for a target performance number that can reasonably be achieved and lesser levels of reward for performance that approaches but does not achieve target performance. As a result, while the compensation committee takes into account the probability of achieving different levels of performance in establishing the threshold, target, and maximum for each performance goal and attempts to set the target at a level the compensation committee believes requires strong performance on the part of the officer, the compensation committee does not specifically attempt to identify a point in the range where it is as likely that the officer will fail to achieve the goal as it is that he will achieve the goal. Similarly, any MBO goals incorporated into an officer’s bonus plan are designed to require strong performance on the part of the officer, but are not intended to be so difficult to achieve that it is more likely than not that the officer will be unable to reach the goal.

For the year ended January 31, 2010, the independent members of the compensation committee established a maximum bonus pool for the executive officers equal to 3% of our budgeted non-GAAP operating income for the year ended January 31, 2010, which pool was then allocated among the executive officers on a percentage basis. The compensation committee also established target bonuses (below the amounts expected to result from the percentage allocations of the pool) and retained discretion to reduce the percentage allocations of the pool to or below these target bonus amounts based on, among other things, the level of achievement of the performance goals adopted by the compensation committee or the occurrence of extraordinary events, provided that any such adjustments (a) are consistent with and subject to the requirements set forth in Section 162(m) of the Internal Revenue Code and (b) do not result in an actual bonus payout that is less than 80% of the amount such executive officer would receive, if any, if bonuses were based solely on the financial performance goals (i.e., excluding for this purpose the MBO goal).

In establishing target bonuses for the executive officers other than Mr. Bodner, the compensation committee elected to set the target bonus for Messrs. Robinson and Moriah at approximately 60% of base salary and the target bonus for Messrs. Sperling, Parcell, and Fante at 40-50% of base salary. These percentages of base salary were based on the bonus target specified by the officer’s employment agreement (if applicable) and the regular compensation review process, including the committee’s review of benchmarking data provided by its independent compensation consultant. Mr. Bodner’s target bonus was also based on benchmarking data provided by the compensation committee’s independent compensation consultant as part of the regular compensation review process, but was not tied directly to his base salary. For the year ended January 31, 2010, we did not increase target bonuses for our executive officers due to the economic environment.

Annual Bonuses for the Year Ended January 31, 2010

The following summarizes the specific approach taken by the compensation committee for establishing annual bonuses for each executive officer the year ended January 31, 2010. Consistent with the terms of the officer bonus plans described above and taking into account the company’s circumstances during the performance period, in setting the bonus payouts for the year ended January 31, 2010, the compensation committee accepted management’s recommendation to reduce the bonus levels for each of Messrs. Bodner, Robinson, Moriah, and Fante from the amounts resulting from the formulaic plan calculation to amounts that management and the compensation committee believed more accurately reflected the performance achieved against the established performance goals. The compensation committee also approved management’s recommendation to authorize management to use the amount of this reduction to augment the bonuses for selected high performing employees below the officer level.

								Target Bonus														Calculated
				Max %				% of										Calculated				Payout Amount				Actual
				Bonus				Bonus								Calculated Achievement Against		Payout				(Prior to				Payout
Name		Description of Bonus Plan		Pool				Pool				$				Performance Goals		Percentage				Adjustments)				Amount(1)
Bodner		Bonus based 40% on company revenue,			41.39	%			12.5	%		$	600,000			Company revenue: 104.2%			136.0	%		$	897,150			$	780,072
		40% on company operating income,														Company operating income: 126.5%			182.8	%
		10% on DSO, and 10% on MBOs.														DSO: 111%			140.0	%
																MBO: 80%			80.0	%
Robinson		Bonus based 40% on company revenue,			14.65	%			4.4	%		$	212,400			Company revenue: 104.2%			136.0	%		$	317,591			$	276,145
		40% on company operating income,														Company operating income: 126.5%			182.8	%
		10% on DSO, and 10% on MBOs.														DSO: 111%			140.0	%
																MBO: 80%			80.0	%
Moriah		Bonus based 40% on company revenue,			14.65	%			4.4	%		$	212,400			Company revenue: 104.2%			136.0	%		$	321,839			$	276,170
		40% on company operating income,														Company operating income: 126.5%			182.8	%
		10% on DSO, and 10% on MBOs.														DSO: 111%			140.0	%
																MBO: 100%			100.0	%
Sperling		Bonus based 20% on company revenue,			10.34	%			3.1	%		$	149,736			Company revenue: 104.2%			136.0	%		$	217,391			$	217,391
		20% on company operating income,														Company operating income: 126.5%			182.8	%
		20% on unit revenue, 20% on unit														Unit revenue: 100.7%			102.6	%
		contribution margin (relating to the unit														Unit contribution margin: 108.4%			111.8	%
		for which Mr. Sperling was														DSO: 111%			140.0	%
		responsible), 10% on DSO, and 10% on MBOs.														MBO: 100%			100.0	%
Parcell		Bonus based 20% on company revenue,			7.76	%			2.3	%		$	112,472			Company revenue: 104.2%			136.0	%		$	159,280			$	159,280
		20% on company operating income,														Company operating income: 126.5%			182.8	%
		20% on unit revenue, 20% on unit														Unit revenue: 101.1%			104.5	%
		contribution margin (relating to the unit														Unit contribution margin: 85.2%			83.2	%
		for which Mr. Parcell was responsible),														DSO: 111%			140.0	%
		10% on DSO, and 10% on MBOs.														MBO: 80%			80.0	%
Fante		Bonus based 40% on company revenue,			11.21	%			3.4	%		$	162,500			Company revenue: 104.2%			136.0	%		$	246,228			$	211,288
		40% on company operating income,														Company operating income: 126.5%			182.8	%
		10% on DSO, and 10% on MBOs.														DSO: 111%			140.0	%
																MBO: 100%			100.0	%

Performance vs. Calculated Payout Matrices
(except as noted below, applies to each officer on a goal by goal
basis based on the officer’s individualized bonus plan per the table above)

Percentage of Company Revenue Goal Achieved		Payout Percentage (for goal)
Less than 80%			0	%
80%			50	%
88%			70	%
91%			80	%
97%			90	%
100%			100	%
103%			125	%
106%			150	%
109% or more			200	%

Percentage of Company Operating Income Goal Achieved		Payout Percentage (for goal)
Less than 32%			0	%
32%			50	%
60%			70	%
70%			80	%
90%			90	%
100%			100	%
110%			125	%
120%			150	%
130% or more			200	%

Percentage of DSO Goal Achieved		Payout Percentage (for goal)
Less than 80%			0	%
80%			50	%
87%			75	%
100%			100	%
107%			125	%
113%			150	%
120% or more			200	%

Sperling: Percentage of Unit Revenue Goal Achieved		Payout Percentage (for goal)
Less than 77%			0	%
77%			50	%
83%			70	%
90%			80	%
97%			90	%
100%			100	%
107%			125	%
112%			150	%
117% or more			200	%

Performance vs. Calculated Payout Matrices
(except as noted below, applies to each officer on a goal by goal
basis based on the officer’s individualized bonus plan per the table above)

Sperling: Percentage of Unit Contribution Margin Goal Achieved		Payout Percentage (for goal)
Less than 38%			0	%
38%			50	%
55%			70	%
73%			80	%
91%			90	%
100%			100	%
118%			125	%
132%			150	%
145% or more			200	%

Parcell: Percentage of Unit Revenue Goal Achieved		Payout Percentage (for goal)
Less than 78%			0	%
78%			50	%
83%			70	%
90%			80	%
97%			90	%
100%			100	%
106%			125	%
112%			150	%
118% or more			200	%

Parcell: Percentage of Unit Contribution Margin Goal Achieved		Payout Percentage (for goal)
Less than 56%			0	%
56%			50	%
67%			70	%
81%			80	%
94%			90	%
100%			100	%
112%			125	%
124%			150	%
135% or more			200	%

Equity Awards

Each of our executive officers is eligible to receive an annual equity award. Equity awards for executive officers are normally made as part of our regular annual equity grant to employees. Annual equity awards are established by the stock option committee based on recommended award levels resulting from the compensation committee’s regular compensation review process. In establishing each officer’s recommended annual equity award, in addition to the factors considered as part of the compensation review process generally, the compensation committee places special focus on internal pay equity among the executive officers.

Where possible, the board of directors (or the compensation committee or stock option committee) endeavors to establish the grant date well in advance of the grant and to schedule vesting dates to occur at a time when we would not normally be in a quarterly trading blackout (to reduce the chances that vesting-related tax events occur during blackout periods). Apart from seeking to grant or schedule vesting dates outside of blackout periods, we do not time our grants by reference to the release of earnings or other material information.

Prior to the year ended January 31, 2006, our preferred form of equity award was stock options. In recent years, we have moved to restricted stock and subsequently to RSUs as the preferred form of award. This move from stock options to restricted stock and RSUs resulted from a desire to decrease equity compensation expense under applicable accounting standards and to improve the retentive effect and perceived value of our equity awards, and was also informed by dilution considerations. The compensation committee periodically reviews the elements of compensation it uses, however, and we may in the future incorporate stock options as a component of our compensation packages for executive officers or others. To the extent that stock options are used, the exercise price of such options is always the closing price of our stock on the date of board of directors or stock option committee approval.

Since the beginning of the year ended January 31, 2008, annual equity awards for our executive officers have been divided evenly between time-vested awards and performance-vested awards. We moved to this 50-50 mix in order to further align officer incentives with company performance and put a greater proportion of our officer’s compensation “at risk”. Our current practice for time-based equity awards for officers is equal vesting over a three-year period. Performance-based equity awards to date have been comprised of three separate vesting periods corresponding to three separate performance periods, each concluding at the end of a fiscal year, though in some cases, the performance period has been less than 12 months in duration. The stock option committee sets the performance goal for each such performance period following the beginning of the performance period. We believe that waiting until the beginning of the applicable performance period to set the performance goal for that period allows greater precision in tailoring the incentive and retentive effect of these awards than would setting the goals for all periods at the time of grant.

The performance goal for each such performance period is revenue. The stock option committee establishes the revenue goal for each performance period based on a recommendation from the compensation committee. In making this recommendation, the compensation committee uses the same budget prepared by management and approved by our board of directors for operating our business. As described above in the discussion of annual bonuses, we believe that using the same budget for operating the business and for establishing annual compensation performance goals helps to maximize the alignment between the interests of our executive officers and our stockholders. As described above with respect to our annual bonus plans, because our revenue performance goals come from our annual operating budget, they are expressed on a non-GAAP basis. See “— Elements of Compensation — Annual Bonus” above for more information.

The revenue performance goal established by the stock option committee generally comes in the form of a range, wherein the officer may earn a portion of the award for the applicable performance period (generally ranging from 50-75%) at the low end of the performance range (or threshold) and 100% of the award at target performance. The stock option committee may also provide for the opportunity to earn in excess of 100% of the target award in the event actual performance exceeds target performance. For the year ended January 31, 2010, the stock option committee provided for such an opportunity for the new awards approved on March 4, 2009 and May 20, 2009. Performance awards granted in prior years did not provide for such an opportunity to overachieve. For performance that falls between points on the range, the amount earned is calculated on a linear basis between those points.

As with the compensation committee’s approach for annual bonuses, the stock option committee’s objective in establishing (after considering the compensation committee’s recommendation with respect to equity-based awards) a range for the performance goal is to incentivize our officers to overachieve (for awards which provide for an overachievement opportunity), while at the same time providing for a target performance number that can reasonably be achieved and lesser levels of reward for performance that approaches but does not achieve target performance. As a result, while the stock option committee takes into account the probability of achieving different levels of performance in establishing the threshold, target, and, if applicable, maximum performance levels of the range and attempts to set the target performance number at a level the stock option committee believes requires strong performance on the part of the officer, the stock option committee does not specifically attempt to identify a point in the range where it is as likely that the officer will fail to achieve the goal as it is that he will achieve the goal.

The following summarizes the performance versus payout matrices established by the stock option committee for the performance period ended January 31, 2010:

Performance vs. Payout Matrix (for awards approved July 2, 2007)
		Percentage of Eligible Performance
Percentage of Revenue Goal Achieved		Shares Earned for Period
Less than 82%			0	%
82%			50	%
100% or more			100	%

Performance vs. Payout Matrix (for awards approved May 28, 2008)
		Percentage of Eligible Performance
Percentage of Revenue Goal Achieved		Shares Earned for Period
Less than 82%			0	%
82%			50	%
100% or more			100	%

Performance vs. Payout Matrix (for awards approved March 4, 2009 or May 20, 2009)
		Percentage of Eligible Performance
Percentage of Revenue Goal Achieved		Shares Earned for Period
Less than 82%			0	%
82%			50	%
100%			100	%
112% or more			200	%

The stock option committee determines the amount earned by each officer under his outstanding performance equity awards after year-end following the finalization of results for the applicable performance period.

For the year ended January 31, 2010, the stock option committee determined that 107.4% of the revenue goal had been achieved for the performance period, resulting in the officers earning 100% of the performance shares eligible to be earned in such performance period under the third tranche of the July 2, 2007 awards, 100% of the performance shares eligible to be earned in such performance period under the second tranche of the May 28, 2008 awards, and 161.6% of the performance shares eligible to be earned in such performance period under the first tranche of the March 4, 2009 and May 20, 2009 awards.

Although we do not presently have any stock ownership guidelines in place for our officers or directors, we are presently developing such guidelines in consultation with the compensation committee’s independent compensation consultant and other advisors. Our insider trading policy prohibits all personnel (including officers and directors) from short selling in our securities, from short-term trades in our securities (open market purchase and sale within three months), and from trading options in our securities. Other than limited dispositions to the company to cover tax liabilities in connection with vestings, none of our current executive officers has sold any of our securities, including shares underlying equity awards, since January 2006.

Other Pay Elements

Except as described in the next section with respect to our extended filing delay period, we do not currently make use of other equity or cash based long-term incentive compensation arrangements, defined-benefit plans, or deferred compensation plans. We provide a limited amount of perquisites to our executive officers, which vary from officer to officer and region to region and include use of a company car or an annual car allowance, fuel reimbursement allowance, an annual allowance for professional legal, tax, or financial advice, certain statutory payments, payments for accrued vacation days (prior to separation from service), and supplemental company-paid life insurance. Executive officers in the United States also receive the same partial match of their 401(k) contributions as all other U.S. employees. Executive officers in the United Kingdom receive company contributions to a retirement fund on the same basis as other U.K. employees. Executive officers in Israel receive company contributions to a retirement fund, a severance fund, and a continuing education fund, in each case, on the same basis as other Israeli employees. Executive officers receive the same health insurance and company-paid group life and disability insurance offered to all other employees in the country in which the executive officer is employed.

Employment Agreements

As of the date of this proxy statement, each of our executive officers other than Mr. Sperling is party to a formal employment agreement with us. Mr. Sperling has a customary offer letter from us and a letter agreement regarding the release of his severance, retirement, and disability insurance funds in the event of a termination event, but does not currently have a formal employment agreement. Mr. Bodner’s employment agreement was signed on February 23, 2010, so he was not party to an agreement with us during the period covered by this section.

The following table summarizes the dates that each formal employment agreement or material amendment was signed:

Name		Date of Employment Agreement or Material Amendment
Bodner		• Employment agreement signed on February 23, 2010
Robinson		• Employment agreement signed on August 14, 2006
Moriah		• Initial employment agreement signed on September 18, 2007
		• Amended and restated agreement signed on October 29, 2009
Sperling		• No formal employment agreement as of the filing date of this report
Parcell		• Initial employment agreement signed on April 16, 2001
		• Supplemental employment agreement signed on June 13, 2008
Fante		• Initial employment agreement signed on September 18, 2007
		• Amended and restated agreement signed on November 10, 2009

Mr. Parcell’s original employment agreement was signed in 2001 in accordance with our local U.K. practice of entering into employment agreements with all U.K. employees. The other officer employment agreements were put in place following the negotiation of our first formal executive employment agreement in connection with the recruiting of Mr. Robinson as our new Chief Financial Officer. This process of entering into formal employment agreements with our executive officers has progressed iteratively and at different rates with each of our officers. We are currently in discussions regarding a formal employment agreement with Mr. Sperling and amended employment agreements with Mr. Robinson and Mr. Parcell. All of the employments agreements and amended agreements entered into with our officers since 2006 have been designed in consultation with the compensation committee’s independent compensation consultant at such time.

The terms and conditions of each of the executive officer employment agreements are discussed in greater detail below under “— Executive Officer Severance Benefits and Change in Control Provisions”, but in general, the employment agreements entered into with Messrs. Robinson, Fante, and Moriah during 2006 and 2007, and the supplemental employment agreement entered into with Mr. Parcell in 2008, provided for 12 months (inclusive of any notice period required by the officer’s existing employment agreement) of severance and certain other continued benefits in the event of an involuntary termination, as well as acceleration of unvested equity in the event of an involuntary termination in connection with a change in control. Mr. Robinson’s agreement provides for acceleration of unvested equity in connection with a change in control whether or not his employment was terminated. The new employment agreements or amended agreements entered into beginning in 2009 as part of the compensation committee review of executive compensation arrangements during 2008 and 2009 described below provide, among other things, for greater amounts of severance in the event of an involuntary termination in connection with a change in control as well as excise tax gross-ups for our U.S.-based executive officers.

Clawback Policy

Each of our executive officers who is party to an employment agreement with us is subject to a clawback provision which allows us to recoup from the officer, or cancel, all or a portion of the officer’s incentive compensation (including bonuses and equity awards) for a particular year if we are required to restate our financial statements for that year due to material noncompliance with any financial reporting requirement under the securities laws as a result of the officer’s misconduct. The clawback applies from and after the year in which the employment agreement was first signed to awards made during the term of the agreement. The amount to be recovered or forfeited is the amount by which the incentive compensation in the year in question exceeded the amount that would have been awarded had the financial statements originally been filed as restated.

Compensation and Awards During Our Extended Filing Delay Period

Introduction

Due to the protracted length of our extended filing delay period, we placed special emphasis on retention in our compensation philosophy during the last several years. As noted above, this has impacted the sizing of executive officer and other key employee equity awards, and has also included the use of special retention awards and bonuses, as well as modification of existing awards to improve their retentive effect, and ensuring that executive compensation packages are at market levels and contain market terms and conditions.

Due to our restatement and lack of audited financial statements during our extended filing delay period, for compensation for the year ended January 31, 2010, performance goals for cash bonuses and for performance-based equity, and corresponding year-end payout and vesting calculations, were based on preliminary, unaudited financial metrics and results. As a result, in addition to the regular discretion retained by the compensation committee in awarding annual bonuses, these performance goals and/or these year-end payouts and vesting calculations have been subject to equitable adjustment by the compensation committee or the stock option committee, as applicable, in connection with their regular annual determination of whether performance goals have been achieved, to take into account changes resulting from our revenue recognition review and other accounting adjustments unrelated to our operations. The compensation and stock option committees reserved the right to make such equitable adjustments to ensure that neither the company nor the officers unfairly benefited or were unfairly penalized by changes to our financial performance metrics resulting solely from changes to our accounting methodology.

Granting of Equity Awards

As a result of our inability to file required SEC reports during our extended filing delay period, we ceased using our Registration Statement on Form S-8 to make equity grants to employees during such period. As a result, on March 27, 2006, we suspended option exercises under our equity incentive plans and terminated purchases under our employee stock purchase plan for all employees, including executive officers. In addition, we did not make any equity awards to employees, including executive officers, during the year ended January 31, 2007. Our board of directors did not believe it was appropriate to make equity grants to executive officers under an exemption from registration at a time when grants could not be made to other employees. In connection with our suspension of option exercises, on March 27, 2006, the stock option committee also adopted a resolution generally extending the exercise period of our stock options for employees, including executive officers, whose employment is terminated during our extended filing delay period until the 30^th day following the date the board of directors determines we have become compliant with our SEC filing obligations (subject, however, to the original term of such stock options).

On May 24, 2007, we received a no-action letter from the SEC upon which we relied to make a broad-based equity grant to employees under a no-sale theory. The stock option committee approved this grant approximately 30 days later on July 2, 2007. On this same date, the board of directors and the stock option committee also approved an equity grant to our directors, executive officers, and certain other executives who were accredited investors in reliance upon a private placement exemption from the federal securities laws. In addition to a regular annual equity award, the July 2, 2007 equity award to our executive officers also included a special time-vested retention grant (the “2007 retention grants”). This special time-vested retention grant corresponded to special cash-based retention bonuses for certain key employees awarded during 2007 which the compensation committee deemed necessary to help retain these key employees during our extended filing delay period (the “2007 retention bonuses”). Other than Mr. Parcell, who was not an executive officer in the year ended January 31, 2007 and who received his 2007 retention award part in cash and part in stock, none of our executive officers received a 2007 retention bonus. These 2007 special retention programs were designed in consultation with the compensation committee’s independent compensation consultant.

We continued to rely on our no-action relief to make broad-based equity grants during our extended filing delay period, while simultaneously making annual grants to our executive officers and directors under a private placement exemption. We believe that these continued broad-based equity awards were an important part of our retention initiatives and also helped to incentivize participants and to build long-term commitment and goodwill to the company.

Modification of Equity Awards

Other than awards to our independent directors, all of the equity awards granted in the years ended January 31, 2008 and January 31, 2009 (including the 2007 retention grants awarded to the executive officers) were made subject to special “compliance” vesting conditions which overrode the regular time-vesting or performance-vesting schedule of the awards. These compliance vesting conditions required that we be both current with our SEC filings and that our common stock be re-listed on NASDAQ or another nationally recognized exchange for the awards to vest. The 2008 awards also required that we have received stockholder approval of a new equity compensation plan or have additional share capacity under an existing stockholder-approved equity compensation plan for the 2008 awards to vest. If any of these compliance vesting conditions were not satisfied on the date the awards would otherwise vest, the portion of the award that would otherwise vest would remain unvested until such time as all of the applicable compliance vesting conditions were satisfied, except that awards granted to non-officers in 2008 vested and settled in cash if the compliance vesting conditions were not satisfied on the award’s vesting date. This feature was included in the 2008 awards to non-officer employees as part of our retention initiative in lieu of a 2008 retention bonus program.

Following the payment of the 2007 retention bonuses in mid-2007 and early 2008 to certain key employees (other than executive officers, except, as noted above, for Mr. Parcell) and the cash settlement of the first half of the 2008 equity awards for employees (other than executive officers) in April 2009, the compensation and stock option committees concluded that, in light of these cash payments to other employees, the inability of the executive officers to derive any present value from their outstanding equity awards (as a result of our extended filing delay period at the time), and continued officer retention concerns on the part of senior management at the time, the officers (a) should be permitted to vest into the portions of their outstanding equity awards that would otherwise have vested but for the compliance vesting conditions and (b) to the extent feasible, should not be subject to compliance vesting conditions under future equity awards. The compensation and stock option committees believed that this approach of removing the risk of loss on the “earned” portions of these awards was important in ensuring that the officers were not being treated unfairly vis-à-vis other grantees and was preferable to paying a portion of these awards in cash as we did for other grantees. As a result, the compensation and stock option committees authorized us to enter into amendments with each of the executive officers to remove the compliance vesting conditions from their 2007 and 2008 equity awards, thereby permitting these awards to vest on their original schedule. As of the date of this proxy statement, we have finalized all of these amendments except for Mr. Parcell’s which was ultimately not signed due to local tax considerations; however, as of the date of this proxy statement, all of the compliance conditions in Mr. Parcell’s 2007 and 2008 equity awards have been satisfied. In addition, the 2009 annual equity awards to our executive officers approved on March 4, 2009 and May 20, 2009 (unlike the grants made to other employees) did not contain these compliance vesting conditions, however, our most recent officer grant, approved on March 17, 2010, did contain a plan capacity vesting condition due to plan capacity limitations at such time.

Review of Executive Compensation Arrangements

Over the course of the second half of 2008 and throughout 2009, the compensation committee, in consultation with its independent compensation consultant and other advisors, undertook a review of the employment terms of our senior management, including our executive officers, to ensure that these arrangements were at market levels and contained market terms and conditions. This review was motivated both by a desire to continue to improve executive retention during our extended filing delay period as well as by a desire to remain competitive from a compensation perspective generally. As a result of this process, we have entered into, or are currently in discussions regarding, new or amended employment agreements with each of our executive officers to provide, among other things, for enhanced severance benefits in the event of a termination in connection with a corporate transaction. A more detailed discussion of these updated arrangements is provided under “— Executive Officer Severance Benefits and Change in Control Provisions” below. In addition to the goals of enhancing executive officer retention and bringing the terms of our executive employment arrangements up to market generally, the compensation committee also believed that it was in our best interest to provide appropriate change in control protections to our executive officers so they would not be distracted by personal considerations in the event of a business combination transaction that may be beneficial to our stockholders but may result in the loss of the officer’s position.

2009 Retention Awards

In 2009, we entered into retention award letter agreements with each of our executive officers other than Mr. Bodner which provide for the payment of cash bonuses over a two-year period ending in April 2011 (the “2009 retention bonuses”). At Mr. Bodner’s request, the compensation committee did not approve a 2009 retention bonus for him. As with the 2007 retention programs, the 2009 retention bonus program was designed in consultation with the compensation committee’s independent compensation consultant.

Tax Implications

To maintain flexibility in compensating executive officers in a manner designed to promote varying corporate goals, the compensation committee has not adopted a policy that all compensation must be deductible under Section 162(m) of the Internal Revenue Code, however, we attempt to satisfy the requirements for deductibility under Section 162(m) wherever possible.

Compensation Committee Report

The compensation committee has reviewed and discussed the “Compensation Discussion and Analysis” section of this proxy statement with management. Based on its review and discussions with management regarding such section of this proxy statement, the compensation committee recommended to the board of directors that the “Compensation Discussion and Analysis” section be included in this proxy statement.

		Compensation Committee:
				Andre Dahan, Chairman Victor DeMarines Kenneth Minihan Shefali Shah

The foregoing report shall not be deemed incorporated by reference by any general statement incorporating by reference this proxy statement into any filing under the Securities Act of 1933, as amended, or under the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate this information by reference, and shall not otherwise be deemed filed under such Acts.

Compensation Programs and Risk

In connection with the preparation of our Annual Report on Form 10-K for the year ended January 31, 2010, we reviewed our compensation policies and practices. In light of this review, we believe that our compensation policies and practices are comparable to those used by similarly situated companies in our industry and the companies with which we compete for talent and are reasonably calculated to incentivize performance without encouraging unreasonable risk taking. Subject to regional differences, we attempt to structure our compensation policies and practices that are based on performance goals uniformly across the company, using quarterly or annual targets that are based on company performance or unit performance and/or sales commissions. Our commission plans contain provisions allowing us to reduce, withhold, or offset commissions for transactions that do not meet specified minimum requirements, even after the commission has been paid. We have also adopted quarter-end guidelines to help ensure that sales transactions are handled in a consistent and ethical manner at the end of each reporting period. In addition, as noted in the “Compensation Discussion and Analysis” above, our officer bonus and performance equity programs are subject to annual maximum payouts and our officer and other executive employment agreements contain clawback provisions.

Executive Compensation Tables

Summary Compensation Table

The following table lists the annual compensation of our named executive officers for the three years ended January 31, 2010.

		Year
		Ended																				Non-Equity
		January												Stock				Option				Incentive Plan				All Other
Name and Principal Position		31,				Salary				Bonus				Awards				Awards				Compensation				Compensation				Total
						($)				($)(1)				($)(2)				($)(2)				($)(3)				($)(4)				($)
Dan Bodner — President and			2010				600,000				—				601,620				—				780,072				41,818				2,023,510
Chief Executive Officer			2009				600,000				—				1,509,436				—				584,230				41,090				2,734,756
and Corporate Officer			2008				506,800				—				3,273,398				—				506,616				36,412				4,323,226
Douglas Robinson — Chief			2010				354,000				—				218,942				—				276,145				14,000				863,087
Financial Officer and			2009				354,000				—				754,531				—				206,818				24,000				1,339,349
Corporate Officer			2008				340,000				—				1,959,597				—				238,298				24,000				2,561,895
Elan Moriah — President,			2010				354,000				—				217,129				—				276,170				12,687				859,986
Verint Witness Actionable			2009				354,000				—				742,832				—				206,818				14,644				1,318,294
Solutions and Verint Video Intelligence Solutions and Corporate Officer			2008				340,000				—				1,285,086				—				213,650				11,969				1,850,705
Meir Sperling — President,			2010				317,528	(5)			—				460,590				—				217,391	(5)			82,360				1,077,869
Verint Communications			2009				345,899				—				669,475				—				205,040				97,030				1,317,444
Intelligence and Investigative Solutions and Corporate Officer			2008				277,601				—				1,254,316				—				245,586				93,388				1,870,891
David Parcell — Managing			2010				306,520	(6)			—				191,254				—				159,280	(6)			57,058				714,112
Director, EMEA and			2009				348,695				102,823	(7)			648,974				—				81,148				51,620				1,233,260
Corporate Officer			2008				376,470				67,413				560,116				—				146,356				52,188				1,202,543
Peter Fante — Chief Legal			2010				325,000				—				188,194				—				211,288				18,250				742,732
Officer, Chief Compliance			2009				325,000				—				629,219				—				158,229				14,000				1,126,448
Officer, Secretary and Corporate Officer			2008				292,500				25,590				989,631				—				139,410				48,672	(8)			1,495,803

Maximum Grant Date Value of Performance Awards

The following table sets forth the aggregate grant date fair value of the performance awards made to our executive officers during the years ended January 31, 2010, 2009, and 2008 assuming the highest level of performance had been achieved. Fair value is calculated based on the closing price of our common stock on the accounting grant date, which is not always the same as the date the stock option committee approved the grant, and award tranches are also grouped by accounting grant date. The accounting grant date is generally the date on which the performance goal for the applicable award tranche has been both established and communicated.

														Fair Value on Date
		Date of Committee				Accounting				Maximum				of Commitee
Name		Approval of Grant				Grant Date				Possible Shares				Approval
Dan Bodner		3/4/2009 (1st tranche)					3/18/2009				62,500			$	212,500
		5/28/2008 (2nd tranche)					3/18/2009				12,500			$	42,500
		7/2/2007 (3rd tranche)					3/18/2009				18,767			$	63,808
						Total YE 1/31/2010					93,767			$	318,808
		5/28/2008 (1st tranche)					5/28/2008				12,500			$	274,375
		7/2/2007 (2nd tranche)					5/28/2008				18,767			$	411,936
						Total YE 1/31/2009					31,267			$	686,311
		7/2/2007 (1st tranche)					1/31/2008				18,766			$	347,171
						Total YE 1/31/2008					18,766			$	347,171
Douglas Robinson		3/4/2009 (1st tranche)					3/18/2009				22,556			$	76,691
		5/28/2008 (2nd tranche)					3/18/2009				7,518			$	25,561
		7/2/2007 (3rd tranche)					3/18/2009				4,300			$	14,620
						Total YE 1/31/2010					34,374			$	116,872
		5/28/2008 (1st tranche)					5/28/2008				7,518			$	165,020
		7/2/2007 (2nd tranche)					5/28/2008				4,300			$	94,385
						Total YE 1/31/2009					11,818			$	259,405
		7/2/2007 (1st tranche)					1/31/2008				4,300			$	79,550
						Total YE 1/31/2008					4,300			$	79,550

														Fair Value on Date
		Date of Committee				Accounting				Maximum				of Commitee
Name		Approval of Grant				Grant Date				Possible Shares				Approval
Elan Moriah		3/4/2009 (1st tranche)					3/18/2009				22,556			$	76,690
		5/28/2008 (2nd tranche)					3/18/2009				7,518			$	25,561
		7/2/2007 (3rd tranche)					3/18/2009				3,767			$	12,808
						Total YE 1/31/2010					33,841			$	115,059
		5/28/2008 (1st tranche)					5/28/2008				7,518			$	165,020
		7/2/2007 (2nd tranche)					5/28/2008				3,767			$	82,686
						Total YE 1/31/2009					11,285			$	247,706
		7/2/2007 (1st tranche)					1/31/2008				3,766			$	69,671
						Total YE 1/31/2008					3,766			$	69,671
Meir Sperling		5/20/2009 (1st tranche)					6/20/2009				20,050			$	212,530
		5/28/2008 (2nd tranche)					3/18/2009				6,683			$	22,722
		7/2/2007 (3rd tranche)					3/18/2009				3,767			$	12,808
						Total YE 1/31/2010					30,500			$	248,060
		5/28/2008 (1st tranche)					5/28/2008				6,683			$	146,692
		7/2/2007 (2nd tranche)					5/28/2008				3,767			$	82,686
						Total YE 1/31/2009					10,450			$	229,378
		7/2/2007 (1st tranche)					1/31/2008				3,766			$	69,671
						Total YE 1/31/2008					3,766			$	69,671
David Parcell		3/4/2009 (1st tranche)					3/18/2009				20,050			$	68,170
		5/28/2008 (2nd tranche)					3/18/2009				6,683			$	22,722
		7/2/2007 (3rd tranche)					3/18/2009				2,834			$	9,636
						Total YE 1/31/2010					29,567			$	100,528
		5/28/2008 (1st tranche)					5/28/2008				6,683			$	146,692
		7/2/2007 (2nd tranche)					5/28/2008				2,833			$	62,184
						Total YE 1/31/2009					9,516			$	208,876
		7/2/2007 (1st tranche)					1/31/2008				2,833			$	52,411
						Total YE 1/31/2008					2,833			$	52,411
Peter Fante		3/4/2009 (1st tranche)					3/18/2009				20,050			$	68,170
		5/28/2008 (2nd tranche)					3/18/2009				6,683			$	22,722
		7/2/2007 (3rd tranche)					3/18/2009				1,934			$	6,576
						Total YE 1/31/2010					28,667			$	97,468
		5/28/2008 (1st tranche)					5/28/2008				6,683			$	146,692
		7/2/2007 (2nd tranche)					5/28/2008				1,933			$	42,429
						Total YE 1/31/2009					8,616			$	189,121
		7/2/2007 (1st tranche)					1/31/2008				1,933			$	35,761
						Total YE 1/31/2008					1,933			$	35,761

All Other Compensation Table⁽¹⁾

														Car Allowance
														or Cost of
		Employer				Severance								Company Car				Professional				Accrued				Statutory				Supplemental
		Retirement				Fund				Study Fund				Plus Fuel				Advice				Vacation				Recreation				Life
Name		Contribution				Contribution				Contribution				Allowance				Allowance				Payout				Payment				Insurance				Total
		($)				($)				($)				($)				($)				($)				($)				($)				($)
Dan Bodner			2,000				—				—				14,828				20,000				—				—				4,990				41,818
Douglas Robinson			2,000				—				—				12,000				—				—				—				—				14,000
Elan Moriah			2,000				—				—				10,687				—				—				—				—				12,687
Meir Sperling (2)			17,623				26,810				23,815				13,502				—				—				610				—				82,360
David Parcell (3)			20,098				—				—				21,778				8,023				7,159				—				—				57,058
Peter Fante			2,000				—				—				12,000				4,250				—				—				—				18,250

Grants of Plan-Based Awards for the Year Ended January 31, 2010

The following table sets forth information concerning equity grants to our named executive officers during the year ended January 31, 2010. For the sake of clarity, the table also contains information about awards made in other years to the extent that the performance goal for any tranche of such awards was set in the year ended January 31, 2010.

																																				All Other Stock				Accounting
																																				Awards:				Grant Date
												Estimated Possible Payouts												Estimated Future Payouts												Number of				Fair Value of
				Date of								Under Non-Equity Incentive												Under Equity Incentive												Shares of Stock				Stock and
				Committee								Plan Awards												Plan Awards												or Units				Option Awards
				Approval				Accounting				Threshold				Target				Max				Threshold				Target				Max
Name		Type of Award		of Grant				Grant Date				($)(1)				($)				($)				(#)(10)				(#)				(#)				(#)				(2)
Dan Bodner		RSU (Time-vested grant)(3)			3/4/2009				3/4/2009				—				—				—				—				—				—				93,750			$	389,063
		RSU (Performance-vested grant)(4)(5)(6)			3/4/2009				3/18/2009	(9)															15,625				31,250				62,500							$	106,250
					3/4/2009				3/17/2010	(9)															18,750				31,250				62,500							$	768,125
					3/4/2009				n/a	(9)															n/a				31,250				62,500								n/a
					5/28/2008				5/28/2008	(9)			—				—				—				12,500				12,500				12,500				—			$	274,375
					5/28/2008				3/18/2009	(9)			—				—				—				6,250				12,500				12,500				—			$	42,500
					5/28/2008				3/17/2010	(9)			—				—				—				7,500				12,500				12,500				—			$	307,250
					7/2/2007				1/31/2008	(9)			—				—				—				14,075				18,766				18,766				—			$	347,171
					7/2/2007				5/28/2008	(9)			—				—				—				14,075				18,767				18,767				—			$	411,936
					7/2/2007				3/18/2009	(9)			—				—				—				9,384				18,767				18,767				—			$	63,808
		Annual Bonus for YE 1/31/10			n/a				n/a				270,000				600,000				1,140,000				—				—				—				—				—
Douglas Robinson		RSU (Time-vested grant)(3)			3/4/2009				3/4/2009				—				—				—				—				—				—				33,835			$	140,415
		RSU (Performance-vested grant)(4)(5)(6)			3/4/2009				3/18/2009	(9)															5,639				11,278				22,556							$	38,345
					3/4/2009				3/17/2010	(9)															6,767				11,278				22,556							$	277,213
					3/4/2009				n/a	(9)															n/a				11,279				22,558								n/a
					5/28/2008				5/28/2008	(9)			—				—				—				7,518				7,518				7,518				—			$	165,020
					5/28/2008				3/18/2009	(9)			—				—				—				3,759				7,518				7,518				—			$	25,561
					5/28/2008				3/17/2010	(9)			—				—				—				4,512				7,520				7,520				—			$	184,842
					7/2/2007				1/31/2008	(9)			—				—				—				3,225				4,300				4,300				—			$	79,550
					7/2/2007				5/28/2008	(9)			—				—				—				3,225				4,300				4,300				—			$	94,385
					7/2/2007				3/18/2009	(9)			—				—				—				2,150				4,300				4,300				—			$	14,620
		Annual Bonus for YE 1/31/10			n/a				n/a				95,580				212,400				403,560				—				—				—				—				—
Elan Moriah		RSU (Time-vested grant)(3)			3/4/2009				3/4/2009				—				—				—				—				—				—				33,835			$	140,415
		RSU (Performance-vested grant)(4)(5)(6)			3/4/2009				3/18/2009	(9)															5,639				11,278				22,556							$	38,345
					3/4/2009				3/17/2010	(9)															6,767				11,278				22,556							$	277,213
					3/4/2009				n/a	(9)															n/a				11,279				22,558								n/a
					5/28/2008				5/28/2008	(9)			—				—				—				7,518				7,518				7,518				—			$	165,020
					5/28/2008				3/18/2009	(9)			—				—				—				3,759				7,518				7,518				—			$	25,561
					5/28/2008				3/17/2010	(9)			—				—				—				4,512				7,520				7,520				—			$	184,842
					7/2/2007				1/31/2008	(9)			—				—				—				2,825				3,766				3,766				—			$	69,671
					7/2/2007				5/28/2008	(9)			—				—				—				2,825				3,767				3,767				—			$	82,686
					7/2/2007				3/18/2009	(9)			—				—				—				1,884				3,767				3,767				—			$	12,808
		Annual Bonus for YE 1/31/10			n/a				n/a				95,580				212,400				403,560				—				—				—				—				—