SCHEDULE 14A

DEF 14A 1 renaissance101052_def14a.htm DEFINITIVE PROXY STATEMENT

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549

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RENAISSANCE LEARNING, INC. 2911 Peach Street P.O. Box 8036 Wisconsin Rapids, Wisconsin 54495-8036

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

April 21, 2010

To the Shareholders of Renaissance Learning, Inc.:

The 2010 annual meeting of shareholders of Renaissance Learning, Inc. will be held at the company’s principal executive offices, 2911 Peach Street, Wisconsin Rapids, Wisconsin, on Wednesday, April 21, 2010 at 1:00 p.m., local time (and at any adjournment thereof), for the following purposes:


	(1)	To elect the seven directors nominated by the board of directors to serve as directors of the company until the 2011 annual meeting of shareholders and until their successors are elected and qualified;

	(2)	To ratify the appointment of Deloitte & Touche LLP as our independent auditors for 2010; and

	(3)	To transact such other business as may properly come before the annual meeting (and any adjournment thereof), all in accordance with the accompanying proxy statement.

Shareholders of record at the close of business on Monday, February 22, 2010, are entitled to notice of and to vote at the annual meeting.

All shareholders are cordially invited to attend the annual meeting in person. However, whether or not you expect to attend the annual meeting in person, you are urged to complete, date and sign the accompanying proxy card and return it as soon as possible in the enclosed envelope which has been provided for your convenience. If you send your proxy card and then decide to attend the annual meeting to vote your shares in person, you may still do so. Your proxy is revocable in accordance with the procedures set forth in the proxy statement.

Important Notice Regarding Internet Availability of Proxy Materials for the Annual Meeting of Shareholders to be held on April 21, 2010:

The annual report and proxy statement are available at www.rlrninvest.com.


	By Order of the Board of Directors,

	Mary T. Minch, Secretary

March 10, 2010

RENAISSANCE LEARNING, INC.
2911 Peach Street
P.O. Box 8036
Wisconsin Rapids, Wisconsin 54495-8036
March 10, 2010

PROXY STATEMENT

This proxy statement is furnished by our board of directors for the solicitation of proxies from the holders of our common stock in connection with the annual meeting of shareholders to be held at the company’s principal executive offices, 2911 Peach Street, Wisconsin Rapids, Wisconsin, on Wednesday, April 21, 2010 at 1:00 p.m., local time, and at any adjournment thereof. It is expected that the notice of annual meeting of shareholders, this proxy statement and the accompanying proxy card, together with our annual report to shareholders for fiscal 2009, will be mailed to shareholders starting on or about March 12, 2010.

Shareholders can ensure that their shares are voted at the annual meeting by signing and returning the accompanying proxy card in the envelope provided. The submission of a signed proxy will not affect a shareholder’s right to attend the annual meeting and vote in person. Shareholders who execute proxies retain the right to revoke them at any time before they are voted by filing with the secretary of the company a written revocation or a proxy bearing a later date. The presence at the annual meeting of a shareholder who has signed a proxy does not, by itself, revoke that proxy unless the shareholder attending the annual meeting files a written notice of revocation of the proxy with the secretary of the company at any time prior to the voting of the proxy.

Proxies will be voted as specified by the shareholders. Where specific choices are not indicated, proxies will be voted FOR the election of each of the individuals nominated by our board of directors to serve as a director and FOR the proposal to ratify Deloitte & Touche LLP as our independent auditors for 2010.

The board of directors knows of no other matters to be presented for shareholder action at the annual meeting. If any other matters properly come before the annual meeting, the persons named as proxies will vote on such matters in their discretion.

The expense of printing and mailing proxy materials, including expenses involved in forwarding proxy materials to beneficial owners of common stock held in the name of another person, will be paid by us. No solicitation, other than by mail, is currently planned, except that certain of our officers or employees may solicit the return of proxies from shareholders by telephone.

Only shareholders of record at the close of business on Monday, February 22, 2010 (this date is referred to as the “record date”) are entitled to receive notice of and to vote the shares of common stock registered in their name at the annual meeting. As of the record date, we had outstanding 29,288,648 shares of our common stock, $.01 par value. Each share of common stock entitles its holder to cast one vote on each matter to be voted upon at the annual meeting.

Under Wisconsin law and our by-laws, the presence of a quorum is required to conduct business at the annual meeting. A quorum is defined as the presence, either in person or by proxy, of a majority of the outstanding shares of common stock entitled to vote at the annual meeting. The shares represented at the annual meeting by proxies that are marked, with respect to the election of directors, “withhold authority” or, with respect to the other proposal, “abstain,” will be counted as shares present for the purpose of determining whether a quorum is present. Broker non-votes (i.e., proxies from brokers or nominees indicating that such persons have not received instructions from beneficial owners to vote shares as to a matter with respect to which the brokers or nominees do not have discretionary power to vote) will also be counted as shares present for purposes of determining a quorum.

With respect to the vote required to approve the proposals at the annual meeting, the following rules apply:


	•	The affirmative vote of a plurality of the shares of common stock present, either in person or by proxy, at the annual meeting and entitled to vote is required for the election of directors. For this purpose, “plurality” means that the individuals receiving the largest number of votes are elected as directors, up to the maximum number of directors to be chosen at the election. In the election of directors, votes may be cast in favor or withheld. Votes that are withheld and broker non-votes will have no effect on the outcome of the election of directors.

	•	The proposal to ratify Deloitte & Touche LLP as our independent auditors for 2010 requires that a majority of the votes cast be voted to approve the proposal. Abstentions and broker non-votes will not be counted as votes cast and, therefore, will have no effect on the approval of this proposal.

Under rules adopted by the Securities and Exchange Commission in 2008, we are making this proxy statement and our Annual Report to Shareholders available on the Internet in addition to mailing a printed copy of these materials to each shareholder.

To obtain directions to attend our annual meeting and vote in person, please call our investor relations department at (715) 424-3636.

SECURITY OWNERSHIP OF MANAGEMENT AND CERTAIN BENEFICIAL OWNERS

The following table sets forth certain information as of the record date (unless otherwise specified) regarding the beneficial ownership of shares of our common stock by (i) each director and nominee for director, (ii) the principal executive officer and the principal financial officer of the company and the company’s other named executive officers who were serving as such on December 31, 2009, (iii) all directors and executive officers as a group and (iv) each person believed by us to be the beneficial owner of more than 5% of our outstanding common stock. Other than as described in the footnotes below, the persons listed in the following table do not own any other securities that give them the right to acquire beneficial ownership of such securities within 60 days. Except as otherwise indicated, the business address of each of the following is 2911 Peach Street, P.O. Box 8036, Wisconsin Rapids, Wisconsin 54495-8036.


	Amount and Nature of Beneficial Ownership(1)			Percent of Outstanding Shares(16)
Judith Ames Paul		8,041,424	(2)		27.4	%
Terrance D. Paul		8,041,424	(3)		27.4	%
Randall J. Erickson		5,022	(4)			*
John H. Grunewald		76,647	(5)			*
Harold E. Jordan		78,167	(6)			*
Mark D. Musick		7,196	(7)			*
Addison L. Piper		84,647	(8)			*
Steven A. Schmidt		66,255	(9)			*
Mary T. Minch		42,221	(10)			*
Marian L. Staton		11,749	(11)			*
Roy E. Truby		10,520	(12)			*
All directors and executive officers as a group (14 persons)		16,465,272	(13)		55.8	%
Louis S. Harrison		2,000,000	(14)		6.8	%
Robert S. Held		2,000,000	(15)		6.8	%




*	Less than 1% of the outstanding common stock.

(1)	Except as otherwise noted, the persons named in this table have sole voting and investment power with respect to all shares of common stock listed.

(2)	Includes options to purchase 61,435 shares of common stock which are currently exercisable as of the record date. Also includes 219,780 shares held by Global Equity Holding Partnership, a family partnership. Ms. Paul is married to Terrance D. Paul, and Mr. Paul’s shares of common stock are not included in the number of shares beneficially owned by Ms. Paul, even though Ms. and Mr. Paul are deemed to share voting and investment power over their combined stock holdings.

(3)	Includes options to purchase 61,435 shares of common stock which are currently exercisable as of the record date. Also includes 219,780 shares held by Global Equity Holding Partnership, a family partnership. Mr. Paul is married to Judith Ames Paul, and Ms. Paul’s shares of common stock are not included in the number of shares beneficially owned by Mr. Paul, even though Mr. and Ms. Paul are deemed to share voting and investment power over their combined stock holdings.

(4)	Includes 3,522 unvested restricted stock units as of the record date. Mr. Erickson’s restricted stock units vest upon termination of his service as a director. Mr. Erickson has no voting power and no dispositive power with regard to the unvested restricted stock units.

(5)	Includes options to purchase 39,307 shares of common stock which are currently exercisable as of the record date. Also includes 1,435 shares of unvested restricted stock and 24,905 unvested restricted stock units as of the record date. Mr. Grunewald’s restricted stock and restricted stock units vest upon termination of his service as a director. Mr. Grunewald has sole voting power and no dispositive power with regard to the unvested restricted stock. With regard to the unvested restricted stock units, Mr. Grunewald has no voting power and no dispositive power. Mr. Grunewald disclaims beneficial ownership of 1,050 of the shares of common stock indicated in the table, as such shares are held by his wife.

(6)	Includes 12,520 shares of common stock held in a joint account over which Mr. Jordan shares voting power with his wife. Also includes options to purchase 39,307 shares of common stock which are currently exercisable as of the record date. Also includes 1,435 shares of unvested restricted stock and 24,905 unvested restricted stock units as of the record date. Mr. Jordan’s restricted stock and restricted stock units vest upon termination of his service as a director. Mr. Jordan has sole voting power and no dispositive power with regard to the unvested restricted stock. With regard to the unvested restricted stock units, Mr. Jordan has no voting power and no dispositive power.

(7)	Includes 7,196 shares of unvested restricted stock units, which vest upon termination of Mr. Musick’s services as a director. Mr. Musick has no voting power and no dispositive power with regard to the unvested restricted stock units.

(8)	Includes options to purchase 33,307 shares of common stock which are currently exercisable as of the record date. Also includes 1,435 shares of unvested restricted stock and 24,905 unvested restricted stock units as of the record date. Mr. Piper’s restricted stock and restricted stock units vest upon termination of his service as a director. Mr. Piper has sole voting power and no dispositive power with regard to the unvested restricted stock. With regard to the unvested restricted stock units, Mr. Piper has no voting power and no dispositive power.

(9)	Includes 41,801 shares of unvested restricted stock as of the record date. With regard to the unvested restricted stock, Mr. Schmidt has sole voting power and no dispositive power. Also includes 13,762 shares of stock held in a joint account with Mr. Schmidt’s wife.


(10)	Includes options to purchase 1,674 shares of common stock which are currently exercisable as of the record date. Also includes 23,147 shares of unvested restricted stock as of the record date. With regard to the unvested restricted stock, Ms. Minch has sole voting power and no dispositive power.

(11)	Includes options to purchase 1,468 shares of common stock which are currently exercisable as of the record date. Also includes 6,601 shares of unvested restricted stock as of the record date. With regard to the unvested restricted stock, Ms. Staton has sole voting power and no dispositive power.

(12)	Includes 5,718 shares of unvested restricted stock as of the record date. With regard to the unvested restricted stock, Mr. Truby has sole voting power and no dispositive power.

(13)	Includes options to purchase 237,933 shares of common stock, which are currently exercisable as of the record date. Also includes 81,572 shares of unvested restricted stock and 85,433 unvested restricted stock units as of the record date.

(14)	The address of Louis S. Harrison is 333 West Wacker Drive, Suite 1700, Chicago, Illinois 60606-1247. The information in this table is based on a Schedule 13G that was filed by Mr. Harrison with the Securities and Exchange Commission reporting that he had, as of December 31, 2009, sole voting power and sole dispositive power over 2,000,000 shares of common stock held in a trust for which Mr. Harrison serves as the sole trustee.

(15)	The address of Robert S. Held is 333 West Wacker Drive, Suite 1700, Chicago, Illinois 60606-1247. The information in this table is based on a Schedule 13G that was filed by Mr. Held with the Securities and Exchange Commission reporting that he had, as of December 31, 2009, sole voting power and sole dispositive power over 2,000,000 shares of common stock held in a trust for which Mr. Held serves as the sole trustee.

(16)	Based on 29,288,648 shares outstanding as of the record date.

PROPOSAL ONE: ELECTION OF DIRECTORS

The number of directors constituting the full board of directors is currently fixed at seven. Directors are elected at each annual meeting of shareholders to hold office for a one-year term and until their successors are duly elected and qualified. Accordingly, the board of directors has selected, based on the recommendations of the nominating and governance committee, all of the members currently serving on the board as nominees for election at the annual meeting. On July 2, 2009, Mr. Randall J. Erickson was appointed to the board of directors after being recommended for appointment to the board of directors by Terrance D. Paul, the chief executive officer of the company, and subsequently by the nominating and governance committee.

All of the nominees, except for Mr. Erickson, have served as directors since the last annual meeting of shareholders.

All nominees have indicated a willingness to serve as directors, but if any of them should decline or be unable to act as a director, the persons named in the proxy card will vote for the election of another person or persons as the board of directors recommends.

The nominating and governance committee has adopted guidelines for evaluating and selecting candidates for election to the board of directors. According to the guidelines, the board of directors should be composed of:


	•	Directors who will bring to the board of directors a variety of experience and backgrounds.

	•	Directors who will form a central core of business executives with substantial senior management experience and financial expertise.

	•	Directors who will represent the balanced, best interests of the shareholders as a whole and the interests of the company’s stakeholders, as appropriate, rather than special interest groups or constituencies.

	•	Qualified individuals who reflect a diversity of experience, gender, race and age.

The following nominees have been selected after taking into consideration the nominating and governance committee’s guidelines.

NOMINEES STANDING FOR ELECTION


Name and Age of Director		Office

Judith Ames Paul Age 63	Ms. Paul is the co-founder of the company and has been chairman of the board of directors since February 2006. From 1986 until July 2001, and again from August 2002 until July 2003, Ms. Paul served as chairman of the board, and from July 2001 until August 2002, and again from July 2003 until February 2006, Ms. Paul served as co-chairman with Mr. Paul. Ms. Paul has been a director since 1986. Ms. Paul acts as our spokesperson and is a leading teacher advocate. Ms. Paul holds a bachelor’s degree in elementary education from the University of Illinois. Judith Paul is Terrance Paul’s wife.

	Ms. Paul brings a variety of experience to the board of directors, as evidenced by her experience as the co-founder of the company, the chairman of the board of directors and a teacher advocate. Ms. Paul also brings to the board a passion for education, a commitment to ensuring that all children have opportunities for learning and a strong focus on customer care.

Terrance D. Paul Age 63	Mr. Paul is the co-founder of the company and has been our chief executive officer since February 2006. From February 2006 to April 2006, Mr. Paul also served as our president. From August 2002 until July 2003, Mr. Paul served as our chief executive officer. From July 1996 until July 2001, Mr. Paul served as vice chairman of the board and from July 2001 until August 2002, and again from July 2003 until February 2006, Mr. Paul served as co-chairman with Ms. Paul. Mr. Paul has been a director since 1986. Mr. Paul holds a law degree from the University of Illinois and an MBA from Bradley University. Terrance Paul is Judith Paul’s husband.

	As the company’s chief executive officer and former president, Mr. Paul helps form a core of business executives with substantial management experience and financial expertise on the board of directors. Mr. Paul also brings to the board his background and experience in research and statistical methods, expertise in information theory, extensive business experience with former employers as a manager and executive, and substantial knowledge of the education field and the efficacy of educational assessments.



Name and Age of Director		Office

Randall J. Erickson Age 50	Mr. Erickson has been a director since July 2009. Since June 2002, Mr. Erickson has served as Senior Vice President and General Counsel of Marshall & Ilsley Corporation (M&I), a bank holding company headquartered in Milwaukee, Wisconsin. In addition, Mr. Erickson has served as Chief Administrative Officer of M&I since April 2007, and served as Corporate Secretary of M&I from June 2002 to April 2007. Since June 2002, Mr. Erickson has served as General Counsel of M&I Marshall & Ilsley Bank, a wholly owned subsidiary of M&I (M&I Bank), and served as Corporate Secretary from June 2002 to April 2007 of M&I Bank. From 1990 to May 2002, Mr. Erickson practiced law with Godfrey & Kahn, S.C., a law firm headquartered in Milwaukee, Wisconsin. Mr. Erickson is a director of the University of Wisconsin – La Crosse Foundation and a member of the Board of Visitors of the University of Wisconsin – Milwaukee School of Education. Mr. Erickson holds a bachelor’s degree from University of Wisconsin-LaCrosse and a law degree from the University of Wisconsin Law School.

	As an executive officer and general counsel of M&I, and as a former attorney with Godfrey & Kahn, S.C., Mr. Erickson brings his substantial experience working with public companies to the board of directors and will help form a core of business executives with substantial management experience and financial expertise on the board of directors.

John H. Grunewald Age 73	Mr. Grunewald has been a director since September 1997. From September 1993 to January 1997, Mr. Grunewald served as the executive vice president, chief financial officer and secretary of Polaris Industries Inc., a manufacturer of snowmobiles, all-terrain vehicles and personal watercraft. Mr. Grunewald currently serves as a director and chairman of the audit committee of Restaurant Technologies, Inc., a supplier of full service cooking oil management systems to restaurants, as a director and chairman of the audit committee of Keystone Mutual Funds, a management investment company, and as a director and chairman of the audit committee of WCM Industries, Inc., a manufacturer of wall faucets, wall hydrants, yard hydrants and bath drains. Mr. Grunewald also serves on the board of Rise, Inc., a charitable institution providing occupations for handicapped and disabled children. Mr. Grunewald holds a bachelor’s degree in business from St. Cloud State University and an MBA in business finance from the University of Minnesota. Mr. Grunewald holds a certified public accountant (CPA) and a certified management accountant (CMA) designation. Mr. Grunewald is also a certified director as designated by the National Association of Corporate Directors (NACD).

	As the former chief financial officer of Polaris Industries Inc., and as a member of various business and non-profit organization boards, Mr. Grunewald brings a substantial amount of financial expertise to the board of directors and will help form a core of business executives with substantial management experience and financial expertise on the board of directors.


Name and Age of Director		Office

Harold E. Jordan Age 59	Mr. Jordan has been a director since April 2000. Since December 1990, Mr. Jordan has served as the chief executive officer of World Computer Systems, Inc., a computer programming services company, from December 1990 until June 2005, he also served as its president, and from January 1986 until December 1990, he served as its executive vice president. In addition, from October 1997 until April 2006, Mr. Jordan served as the president and chief executive officer of Madras Packaging, LLC, a plastic molding company. From May 1987 until December 1996, Mr. Jordan practiced law with Jordan & Keys, a law firm, which he founded, and since January 1997, has been of counsel to the firm. Mr. Jordan currently serves as a member of the board of visitors of the University of Wisconsin Law School, a trustee emeritus of the board of trustees of Lawrence University and a member of the board of managers of Haverford College. Mr. Jordan holds a bachelor’s degree from Lawrence University and a law degree from the University of Wisconsin Law School.

	As the chief executive officer of World Computer Systems, Inc., the former chief executive officer of Madras Packaging, LLC, a former attorney with Jordan & Keys, and as a member of the boards of several institutions of higher learning, Mr. Jordan brings a variety of experience to the board of directors as well as help form a core of business executives with substantial management experience and financial expertise on the board of directors.


Name and Age of Director		Office

Mark D. Musick Age 62	Mr. Musick has been a director since April 2009. From 1992 to 1995 and 1997 to 2002, Mr. Musick served as chair of the Governing Board of the National Assessment of Educational Progress (NAEP), which directs the program known as the Nation’s Report Card. Mr. Musick was appointed by three U.S. Secretaries of Education to chair the Governing Board of NAEP. Mr. Musick is president emeritus of the Southern Regional Education Board (SREB) for which he served as president from 1989 to 2005. SREB is a nonprofit, nonpartisan organization that works with leaders and policy-makers in sixteen member states to improve pre-K through postsecondary education. Since 2006, Mr. Musick has held the James H. Quillen Chair of Excellence in Education and Teaching at East Tennessee State University. Mr. Musick currently serves as a lead director of the board of ACT, Inc., a not-for-profit organization that administers the ACT collegiate admissions test. Mr. Musick is a member of the board of directors of the National Commission on Teaching and America’s Future, a nonpartisan, nonprofit, advocacy group dedicated to improving teaching quality nationwide, and a member of the board of directors of the National Center for the Improvement of Educational Assessment, a nonprofit organization that seeks to improve student achievement through enhanced practices in educational assessment and accountability. Mr. Musick holds a bachelor’s degree and master’s degree from Virginia Polytechnic Institute and State University.

	Mr. Musick brings a variety of experience to the board of directors, as evidenced by his experience as the chair of the Governing Board of NAEP, the president of SREB, the lead director of the board of ACT, Inc., and as the James H. Quillen Chair of Excellence in Education and Teaching at East Tennessee State University. Mr. Musick contributes a unique understanding of issues relating to pre-kindergarten through senior high school education assessment, as well as an understanding of education markets.


Name and Age of Director		Office

Addison L. Piper Age 63	Mr. Piper has been a director since July 2001. Since January 2004, Mr. Piper has served on the board of directors of Piper Jaffray Companies (Piper Jaffray), a financial services firm. From January 2004 until December 2006, Mr. Piper served as vice chairman of the board of directors of Piper Jaffray. From 1987 until December 2003, Mr. Piper served as the chairman of the board of directors of the predecessor of Piper Jaffray. Mr. Piper joined the firm in 1969 and has held various management positions since that time, including chief executive officer from 1983 until December 1999. Mr. Piper currently serves on the board of trustees of Minnesota Public Radio and the board of trustees of American Public Media Group, the parent organization of Minnesota Public Radio, and as a regent of St. Olaf College. Mr. Piper also serves as a director and member of the audit committee of Leuthold Funds, Inc., a management investment company. Mr. Piper holds a bachelor’s degree from Williams College and an MBA from Stanford University.

	As a director of Piper Jaffray, a former chief executive officer, a member of the audit committee of Leuthold Funds, Inc., a member of the board of trustees of American Public Media, and a regent of St. Olaf College, Mr. Piper brings a variety of experience to the board of directors as well as help form a core of business executives with substantial management experience and financial expertise on the board of directors.

The company is a “controlled company” under applicable NASDAQ Stock Market LLC (the “NASDAQ Stock Market”) rules because Mr. and Ms. Paul, as a group, own more than 50% of the voting power for the election of directors. The company is therefore exempt from certain independence requirements of the NASDAQ Stock Market rules, including the requirement to maintain a majority of independent directors on the company’s board of directors. Although the company is exempt from these requirements, a majority of the members of the board of directors are “independent,” as defined under the current listing standards of the NASDAQ Stock Market. Under this definition, the independent members of the board are Messrs. Erickson, Grunewald, Jordan, Musick and Piper.

The positions of chairman of the board and chief executive officer of the company are currently separate, with Ms. Paul serving as chairman and Mr. Paul serving as chief executive officer. The company believes this leadership structure is appropriate at this time because it allows the company to fully benefit from the leadership ability, industry experience and history with the company that each of these individuals possesses. The board has also appointed Harold E. Jordan as lead director to chair meetings of the independent directors of the board of directors. Mr. Jordan’s duties as lead director include: (i) presiding at executive sessions of the non-employee directors and all other meetings of directors where the chairman of the board is not present; (ii) serving as liaison between the chairman of the board and non-employee directors; (iii) reviewing meeting agendas for the board; (iv) having the authority to call meetings of the non-employee directors; and (v) if requested by major shareholders, ensuring that he is available for consultation and direct communication.

The board of directors has standing nominating and governance, compensation and audit committees, each of which is described in more detail below. The board of directors held four meetings in 2009. Each incumbent director, except for Messrs. Musick and Erickson, attended all of the meetings of the board of directors held during 2009 and all of the meetings of the board committees on which the director served in 2009. Messrs. Musick and Erickson did not attend all of the meetings of the board of directors and all of the meetings of the board committees on which they served in 2009 because Mr. Musick did not join the board until April 29, 2009 and Mr. Erickson did not join the board until July 2, 2009. Mr. Musick attended all of the meetings of the board of directors and all of the meetings of the board committees on which he served between the date of his election on April 29, 2009 and December 31 2009, and Mr. Erickson attended all of the meetings of the board of directors and all of the meetings of the board committees on which he served between the date of his appointment on July 2, 2009 and December 31, 2009. Directors are expected to attend each regular and special meeting of the board and of each board committee on which the director serves. Directors are also expected to attend the annual meeting of shareholders. Four of the directors then in office attended last year’s annual meeting of shareholders.

Parties who wish to communicate with the board of directors, or with a specific member of the board, may direct written communications to Ms. Mary T. Minch, our corporate secretary, at the following address: 2911 Peach Street, P.O. Box 8036, Wisconsin Rapids, Wisconsin 54495-8036. Ms. Minch will forward all such communications to the full board, or to the director to whom the communication is addressed, as applicable, at its next scheduled meeting.

Nominating and Governance Committee. The nominating and governance committee is responsible for, among other things: (i) identifying, as necessary, new candidates who are qualified to serve as directors, (ii) reviewing the qualifications of candidates for board memberships, including any candidates nominated by shareholders, based upon the guidelines adopted by the committee, (iii) recommending to the full board of directors nominees to stand for election at annual shareholders meetings, to fill vacancies on the board of directors, and to serve on committees of the board of directors, (iv) coordinating the annual self-evaluation of the full board of directors and each of its committees, (v) establishing and reviewing, for recommendation to the full board of directors, corporate governance principles and (vi) developing succession plans for the directors. The nominating and governance committee has a written charter which was filed as an exhibit to the Company’s 2009 definitive proxy statement. The nominating and governance committee reviews and, as appropriate, recommends to the board of directors proposed changes to its charter in February of each year. The charter was last amended in February 2009. The members of the nominating and governance committee are Messrs. Jordan (Chairman), Erickson, Grunewald, Musick and Piper. All of the members of the nominating and governance committee are “independent,” as defined under the current listing standards of the NASDAQ Stock Market. The nominating and governance committee met two times in 2009.

The nominating and governance committee will consider candidates for director nominated by shareholders in accordance with the procedures set forth in the company’s by-laws. Under the by-laws, nominations, other than those made by the board of directors or the nominating and governance committee, must be made pursuant to timely notice in proper form to the secretary of the company. To be timely, a shareholder’s request to nominate a person for director, together with the written consent of such person to serve as a director, must be received by the secretary of the company at our principal office (i) with respect to an election held at an annual meeting of shareholders, not less than 120 days prior to the anniversary date of the annual meeting of shareholders in the immediately preceding year or (ii) with respect to an election held at a special meeting of shareholders for the election of directors, not less than the close of business on the eighth day following the date of the earlier of public announcement or notice of such meeting. To be in proper written form, the notice must contain certain information concerning the nominee and the shareholder submitting the nomination.

In addition, the nominating and governance committee has adopted guidelines for evaluating and selecting candidates for election to the board of directors. Under these guidelines, each director should:


	•	be an individual of the highest character and integrity and have an inquiring mind, vision and the ability to work well with others;

	•	be free of any conflict of interest which would violate any applicable law or regulation or interfere with the proper performance of the responsibilities of a director;

	•	possess substantial and significant experience which would be of value to the company in the performance of the duties of a director; and

	•	have sufficient time available to devote to the affairs of the company in order to carry out the responsibilities of a director.

The nominating and governance committee’s guidelines for selecting board candidates indicate that the board should be composed of directors who, among other things, will bring to the board a variety of experience and backgrounds. In assessing the “variety of experience and backgrounds” of candidates, the committee considers diversity, including race, gender and ethnicity. The nominating and governance committee implements this policy by considering all aspects of each individual’s experience and background in the director nomination process, and assesses the effectiveness of the policy through regular reviews of the composition of the board on an individual-by-individual basis and as a whole.

The nominating and governance committee will evaluate eligible shareholder-nominated candidates for election to the board in accordance with the selection guidelines, the full text of which can be found in the nominating and governance committee charter.

Compensation Committee. The compensation committee is responsible for, among other things: (i) reviewing the company’s executive compensation goals, policies and philosophies and monitoring the appropriateness of the company’s executive compensation practices, (ii) reviewing and, as appropriate, approving management’s recommendations regarding executive compensation, (iii) reviewing and, as appropriate, approving the company’s executive compensation plans, including designating plan participants, establishing objectives and applicable performance measurement criteria and making awards, (iv) reviewing surveys and other data to gauge the competitiveness and appropriateness of levels and elements of executive compensation and benefits, (v) to the extent not undertaken by the board of directors, reviewing the level and composition of compensation, benefits and perquisites provided to non-employee members of the board of directors, (vi) evaluating the performance of the company’s executive officers and (vii) monitoring the company’s employee benefit plans.

The compensation committee has a written charter which was filed as an exhibit to the company’s 2009 definitive proxy statement. The compensation committee reviews and, as appropriate, recommends to the board of directors proposed changes to its charter in February of each year. The charter was last amended in February 2009. The members of the compensation committee are Messrs. Jordan (Chairman), Erickson, Grunewald, Musick and Piper. To serve on the compensation committee, each member must be considered “independent,” as defined under the applicable rules of the NASDAQ Stock Market and the Securities Exchange Act of 1934, and must qualify as an “outside director,” as defined under the Internal Revenue Code. Each member of the compensation committee satisfies these requirements. The compensation committee held four meetings in 2009.

In October of 2009, the company’s human resources department prepared an executive compensation report that presented competitive compensation information for the company’s executive officers. This report was taken into account by our chief executive officer when making recommendations for executive compensation to the compensation committee. In addition, this report was taken into account by the compensation committee when setting the compensation for our chief executive officer.

The compensation committee has the authority to hire experts in the field of executive compensation, including the authority to approve the expert’s fees and terms of retention, to assist it in the performance of its duties. In the past, management has engaged Watson Wyatt & Company, an independent compensation consultant, to review, validate, and suggest recommendations for improvements to the methodologies used by the human resources department in preparing its annual executive compensation report. However, neither the committee nor management retained a compensation consultant in 2009 because the company made no changes to its overall executive compensation structure during the year.

Additional information regarding the compensation committee processes and procedures relating to the consideration and determination of executive compensation policies and decisions is included in the “Executive Compensation – Compensation Discussion and Analysis” section of this proxy statement.

On a periodic basis, the compensation committee requests that the company’s human resources department prepare a non-employee director compensation report that presents competitive compensation information for the company’s non-employee directors. The non-employee director compensation report examines the total compensation package, including cash and equity compensation components, for the company’s non-employee directors. The report also provides summaries of published third-party surveys of non-employee director compensation. In addition, the human resources department compiles non-employee director compensation data for publicly traded companies comparable to the company in terms of industry (education), industry sectors (software and technology), annual revenues and market capitalization. The non-employee director compensation report also addresses best practices and principles established by the National Association of Corporate Directors and The Center for Board Leadership to help define considerations in establishing non-employee director compensation. The non-employee director compensation report is taken into account by our chief executive officer and the full board of directors as a reference of competitive compensation information.

At the request of the compensation committee, a non-employee director compensation report was last prepared in February 2010. Additional information regarding non-employee director compensation is included in the “Non-Employee Director Compensation” section of this proxy statement.

Audit Committee. The audit committee is a separately designated standing committee of the board which was established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934. The audit committee is responsible for, among other things: (i) appointing or replacing our independent auditors, (ii) reviewing the scope, results and costs of the audit with our independent auditors, (iii) reviewing the performance, qualifications and independence of the independent auditors, (iv) approving all audit and permitted non-audit services to be performed by the independent auditors, (v) reviewing our system of internal controls; (vi) reviewing our protection of assets programs; and (vii) overseeing compliance with our code of business conduct and ethics.

The board of directors has delegated primary risk oversight responsibilities to the audit committee. The audit committee regularly receives reports regarding risk analysis and risk management. As part of its risk assessment and risk management responsibilities, the audit committee also reviews the company’s protection of assets programs, including insurance, as well as an annual report regarding the company’s enterprise risk assessment process prepared by management. Pursuant to the annual enterprise risk assessment process, which was established in 2009, management polled the company’s senior vice presidents regarding risks in their specific areas of responsibility as well as company-wide risks, summarized the risks that were identified in the survey and vetted the summary with all senior and executive vice presidents, the president, the chief compliance officer and the chief executive officer. In July 2009, management presented the enterprise risk assessment process as well as the categories of risk identified in the survey to the board of directors to ensure that the board understood the company’s risk assessment and risk management process, as well as any risks facing the company. Following this meeting, management reviewed the categories of risk facing the company, developed detailed risk factors from the risk categories and assigned an owner to each risk factor. The owner of each risk factor was responsible for meeting with a team to discuss mitigating factors then in place, risk tolerance for the remaining level of risk, the next step and timeline to further mitigate or eliminate the risk altogether. In February 2010, the board received another presentation from management regarding the major findings from the enterprise risk assessment process and the steps taken to reduce risk.

The audit committee has a written charter which is attached hereto as Annex A. The audit committee reviews and, as appropriate, recommends to the board of directors proposed changes to its charter in February of each year. The charter was last amended in February 2004. The members of the audit committee are Messrs. Grunewald (Chairman), Erickson, Jordan, Musick and Piper. The board of directors has determined that Messrs. Erickson and Grunewald are “audit committee financial experts” as that term is defined in Item 407(d)(5) of Regulation S-K. Further, all of the members of the audit committee are “independent,” as independence for audit committees is defined under the current listing standards of the NASDAQ Stock Market. The audit committee held five meetings in 2009. In addition, a teleconference was held after the end of each of the fourth quarter of 2008 and the first, second and third quarters of 2009 between management, the independent auditors, a member of the audit committee (generally the audit committee chairman), and any other audit committee member who desired, or was requested, to participate to discuss the company’s quarterly financial statements and all audit and non-audit services performed by the independent auditors.

The audit committee has adopted a code of business conduct and ethics which is applicable to all employees, including our chief executive officer and our chief financial officer, as well as members of our board of directors. The code was filed as an exhibit to our Form 10-K for the year ended December 31, 2008.

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

The board of directors has delegated to the compensation committee responsibility for, among other things, reviewing the company’s executive compensation goals, policies and philosophies and monitoring the appropriateness of the company’s executive compensation practices, and reviewing management’s recommendations regarding executive compensation and, as appropriate, approving the same. The compensation committee also oversees our executive compensation plans, including our incentive bonus plan and our 1997 stock incentive plan, with responsibility for determining the awards to be made under such plans to our executive officers. Generally, the compensation committee reviews and, as appropriate, approves compensation arrangements for our executive officers in July of each year. Management then administers the compensation arrangements in accordance with the policies developed by the compensation committee.

Information concerning the structure, roles and responsibilities of the compensation committee is set forth in the “Proposal One: Election of Directors – Compensation Committee” section of this proxy statement. A discussion and analysis of the policies and decisions that shape the executive compensation program, including the specific program objectives and elements, is set forth below.

For purposes of this discussion, the following individuals comprised our named executive officers in 2009: Judith A. Paul, chairman; Terrance D. Paul, chief executive officer; Steven A. Schmidt, president and chief operating officer; Mary T. Minch, executive vice president-finance, chief financial officer and secretary; Marian L. Staton, executive vice president-sales; and Roy E. Truby, senior vice president-state and federal programs. While Ms. Paul is not one of the three most highly compensated executive officers of the company, she is included in the list of named executive officers due to her significant role within the company.

Objectives of the Program. In carrying out its duties to establish the executive compensation program, the compensation committee is guided by the company’s desire to achieve the following objectives:


	•	attract and retain high-quality leadership;

	•	provide competitive compensation opportunities that support the company’s overall business strategy and objectives; and

	•	effectively serve the interests of the company’s shareholders.

These objectives are implemented by the compensation committee through its executive compensation program. In 2009, the compensation program established by the compensation committee was comprised of the following three primary components:


	•	base salary;

	•	annual cash incentive bonus; and

	•	long-term equity based compensation awards.

The compensation committee has the flexibility to use these primary components, along with certain other benefits, in a manner that will effectively implement its stated objectives with respect to the compensation arrangements for each of the company’s executive officers. Each of the primary components, and certain other benefits, are discussed in more detail below.

Executive Compensation Review Process. Generally, the compensation committee reviews and, as appropriate, approves compensation arrangements for executive officers in July of each year. When making compensation decisions for our executive officers, the compensation committee takes many factors into account, including the committee’s objectives set forth above, the executive’s position, level of responsibility, tenure, performance and contributions over the prior year, expected future contributions towards achieving the financial growth of the company, and any retention concerns. The compensation committee also takes into account the recommendations for executive compensation made by our chief executive officer. In addition to the factors set forth above, the compensation committee takes into account an executive compensation report prepared annually by the company’s human resources department that presents competitive compensation information for the company’s executive officers.

The executive compensation report details the total aggregate compensation for each executive officer, including each primary component of compensation: base salary, annual cash incentive bonus and long-term equity based compensation awards. The report also provides summaries of published third-party surveys of executive compensation that show current and projected salary trends, on a year-by-year percentage basis, for select groups of U.S. regional and national companies. In addition, the human resources department compiles executive officer compensation data for publicly traded companies comparable to the company in terms of industry (education), industry sectors (software and technology), annual revenues and market capitalization. This data is presented in the report for each of the company’s executive officer positions, specifically the positions of chairman, chief executive officer, president and chief operating officer, chief financial officer, executive vice president-sales and senior vice president-state and federal programs. For each position, comparative compensation data is provided for specific compensation elements including, but not limited to: base salary, cash bonuses, total cash compensation, total long-term incentives, equity awards and total direct compensation. Since 2007, additional compensation elements were added for comparative purposes including data examining total short-term incentives and “all other compensation.” The report presents this comparative compensation data in median, as well as 25^th and 75^th percentile statistics.

The compensation committee recognizes the inability to provide exact comparative compensation data due to both the difficulty of matching the position responsibilities of our executive officers to the executive officers of other public companies based solely on title and the difficulty of comparing our company to other companies in terms of comparable industry and sector focuses and various financial metrics. As a result, the annual executive compensation report is taken into account by the compensation committee as a reference of competitive compensation information and is not used for benchmarking purposes.

Primary Components of Executive Compensation. As described above, the aggregate compensation paid to our executive officers is comprised of three primary components: base salary, annual cash incentive bonus and long-term equity based compensation awards. Each component is described below in more detail. When setting the compensation arrangements for each executive officer, the compensation committee considers these components individually, as well as on an aggregate (total compensation) basis.

Base Salary

The base salaries of our executive officers are approved by the compensation committee, and also approved by the full board of directors, after consideration of a number of factors, including the executive’s position, level of responsibility, tenure and performance. The compensation committee also considers the information provided in the annual executive compensation report detailed above, along with the executive compensation recommendations made by our chief executive officer. In addition, the compensation committee evaluates whether the base salary levels of our executives are appropriate relative to our size and financial performance. Relying primarily on these factors, the compensation committee sets the base salaries of our executive officers at levels designed to meet its objective of attracting and retaining highly qualified individuals. The compensation committee also believes that the continuity of leadership derived from the retention of executive officers serves the best interests of the company’s shareholders. The base salaries of our executive officers are not benchmarked at any specific level and the compensation committee does not assign relative weights or importance to any specific measure of the company’s financial performance. The annual cash incentive bonus is based on a percentage of base salary; as a result, a higher base salary will result in a higher bonus, if company performance goals are met. The value of the long-term equity based compensation awards is not determined based on base salary and, therefore, an increase in base salary does not automatically result in an increase in long-term equity based compensation award levels.

The compensation committee made no changes to the base salaries of Ms. Paul, Mr. Paul, Mr. Schmidt and Ms. Minch in 2009. The compensation committee concluded that all such executive officers were each fairly compensated based upon the financial performance of the company and the other factors listed above. There have been no changes to the base salaries of Ms. Paul since July 2003 and Mr. Paul since February 2006. In May 2009, the chief executive officer approved an increase to Ms. Staton’s salary from $190,000 to $200,000 and Mr. Truby’s base salary from $207,000 to $242,000. Because Ms. Staton and Mr. Truby were not designated as executive officers until October 2009, the chief executive officer, rather than the compensation committee, was responsible for approving the increase in Ms. Staton’s and Mr. Truby’s salaries. In November 2009, the compensation committee approved an increase to Ms. Staton’s base salary from $200,000 to $225,000. In the determination of their base salaries, there are no specific goals set for Mr. Schmidt, Ms. Minch, Ms. Staton and Mr. Truby against which their performance is specifically measured. However, in addition to the data reviewed with respect to how Mr. Schmidt, Ms. Minch, Ms. Staton and Mr. Truby compensation compares to the data compiled for executive officers of other publicly traded companies comparable in terms of industry and size, the compensation committee took into account certain personal performance factors. The compensation committee discussed the scope of their job responsibilities, their performance with respect to maintaining company morale, implementing controls, initiating cost control measures, developing a solid leadership team, and their ability to fulfill the duties and assignments of their respective positions. To a lesser degree, the compensation committee also considered certain company performance factors, such as improved order rates and growth in subscription-based products.

In addition to her base salary, Ms. Staton also receives a sales commission based on the achievement of sales goals during the relevant measurement period. Rather than using a calendar year for the measurement period of Ms. Staton’s sales, the company uses the period from July 1 to June 30 to coincide with the sales cycle for school districts. Ms. Staton’s commission is based upon company-wide sales figures as compared against a pre-determined baseline representing expected sales for the period. Ms. Staton may also receive an escalating quarterly bonus payment for each quarter that sales meet or exceed the quarterly baseline target. For the July 1, 2009 to June 30, 2010 period, if the company’s sales meet the baseline at the end of the measurement period, Ms. Staton will be paid an additional $100,000, as well as another $100,000 if sales are 20% over sales for the prior year. For the July 1, 2008 to June 30, 2009 period, Ms. Staton received a sales commission of $28,903.

Annual Cash Incentive Bonus

The company has adopted the incentive bonus plan to establish a correlation between the cash incentive bonus earned by participants under the plan and the company’s financial performance. The cash incentive bonus is a key component of the compensation committee’s objective to serve the interests of its shareholders and is designed to motivate participants to achieve company performance goals and enhance shareholder value. The incentive bonus plan permits plan participants to receive an annual cash incentive bonus based on a percentage of their base salary. Cash incentive bonuses are payable following the conclusion of the 12-month period upon which the bonus is based, if the company’s performance goals are met. These performance goals are set by our chief executive officer and reviewed by the compensation committee. In setting the performance goals, our chief executive officer balances the potential cash incentive bonuses payable under the incentive bonus plan with the overall costs to the company associated with the plan.

The two performance goals established under the incentive bonus plan are measured based on the company’s revenues and operating income over the measurement period (July 1 to June 30) as compared with the results for the preceding 12-month period. Rather than using a calendar year for the measurement period, the company uses the period from July 1 to June 30 to coincide with the sales cycle for school districts. Equal weight is given to each of the performance goals under the plan. Cash incentive bonuses are earned provided that the company’s revenues and operating income each meet or exceed the results for the preceding 12-month period. The range of cash incentive bonuses payable under the plan is subject to a minimum amount (no bonus if the company’s revenues or operating income decline compared to the preceding 12-month period) and a maximum amount (a maximum bonus expressed as a percentage of base salary if the company’s revenues and operating income each meet or exceed a predetermined maximum level). An escalating cash incentive bonus is earned if, during the measurement period, the company experiences any increases in revenues and operating income between the predetermined minimum and maximum levels. For the July 1, 2008 to June 30, 2009 period Mr. Schmidt received a cash incentive bonus of $28,104, Ms. Minch received a cash incentive bonus of $9,872 and Mr. Truby received a cash incentive bonus of $9,851. Because Ms. Staton is eligible to receive a sales commission, she is not eligible to receive an annual cash incentive bonus.

In July 2009, the compensation committee approved Mr. Schmidt and Ms. Minch as the only executive officers eligible to participate under the incentive bonus plan for the measurement period beginning July 1, 2009 and ending June 30, 2010. Because Mr. Truby was not designated as an executive officer until October 2009, the chief executive officer, rather than the compensation committee, was responsible for determining that Mr. Truby was eligible to participate under the bonus plan for the measurement period beginning July 1, 2009 and ending June 30, 2010. Under the terms of the incentive bonus plan, Mr. Schmidt, Ms. Minch and Mr. Truby are eligible to receive a cash incentive bonus based on specific increases in the company’s revenues and operating income. An escalating cash incentive bonus is earned if, during the measurement period, the company achieves any increases in revenues and operating income. Mr. Schmidt’s bonus opportunity is 100% of base salary times a revenue growth factor plus an operating income factor. Ms. Minch’s and Mr. Truby’s bonus opportunity is 60% of base salary times a revenue growth factor plus an operating income factor. Any cash incentive bonuses to be received by Mr. Schmidt, Ms. Minch and Mr. Truby under the plan will be earned as of June 30, 2010, for the 12-month period then ended.

For the period beginning on July 1, 2009 to June 30, 2010, the revenue and operating factors are based on the following table:


Revenue	Revenue	Op Income	Op Income
Growth	Growth	Growth	Growth
(In $million)	Factor	(In $million)	Factor
$45	50%	$28	50%
$40	40%	$26	40%
$35	35%	$24	35%
$30	30%	$22	30%
$25	25%	$20	25%
$20	20%	$16	20%
$15	15%	$12	15%
$10	9%	$8	9%
$7.5	6%	$6	6%
$5	4%	$4	4%
$2.5	1.5%	$2	1.5%
$0	0%	$0	0%

Long-Term Equity Based Compensation Awards

Long-term equity based compensation awards are granted to the company’s executive officers pursuant to our 1997 stock incentive plan. The compensation committee believes that long-term equity based compensation awards are an effective incentive for senior management to increase the long-term value of the company’s common stock as well as aiding the company in attracting and retaining senior management. These objectives are accomplished by making awards under the plan, thereby providing senior management with a proprietary interest in the continued growth and performance of the company. The compensation committee approves long-term equity based compensation award after taking into consideration the recommendations made by our chief executive officer and a review of a number of factors, including the performance of the company, the relative levels of responsibility of the executive and his or her contributions to the business, and general market competitiveness.

Under the 1997 stock incentive plan, the compensation committee has the flexibility to approve stock options, stock appreciation rights or stock awards. Since July 2005, the compensation committee has used restricted stock for purposes of awarding long-term equity based compensation to executive officers. The compensation committee believes that restricted stock creates a retention incentive. In addition, because the value of restricted stock varies based upon the performance of the company’s common stock, the compensation committee believes that restricted stock furthers the committee’s objective of creating a performance incentive to improve the growth of the company and, therefore, enhance shareholder value.

Restricted stock awards are generally subject to a four-year vesting period, vesting 25% per year beginning one year from the date of the initial award. Unearned restricted stock compensation is recorded by the company based on the market price on the grant date and is expensed equally over the vesting period. Dividends are paid on restricted stock that is granted, even if such restricted stock is unvested. The compensation committee may approve grants to executive officers at any time during the year, as it deems appropriate. The grant date of such awards is always set for a date occurring on or subsequent to the date the compensation committee approves such grants. The grant date is generally tied to the beginning of the executive officer trading window.

In April and October of 2009, the compensation committee approved restricted stock grants for Mr. Schmidt and Ms. Minch, and approved restricted stock grants for Ms. Staton and Mr. Truby in October 2009. In April 2009, the chief executive officer approved restricted stock grants for Ms. Staton and Mr. Truby because they were not designated as executive officers until October 2009. The grants made to executive officers were approved based upon the compensation committee’s review of the factors noted above, including the following specific personal and company performance factors: (i) increases in orders, revenue and income; (ii) cost and headcount reductions; (iii) the performance of specific job duties; (iv) the demonstration of solid leadership in difficult economic conditions. The committee placed specific emphasis on focusing on long-term strategies and success of the company, as well as providing an enhanced retention incentive to Mr. Schmidt, Ms. Minch, Ms. Staton and Mr. Truby when determining the amount of the grants. Ms. Paul and Mr. Paul do not participate in the company’s equity incentive plans.

Other Benefits. The company provides all eligible employees, including executive officers, with certain benefits, including health and dental coverage, company-paid term life insurance coverage, disability insurance, paid time off and paid holiday programs.

In addition, executive officers are entitled to participate in the company’s 401(k) plan, which is available to all of the company’s U.S. employees who meet certain service requirements, and in the Company’s supplemental executive retirement plan, which is only available to senior management. Company matching contributions, which are limited to a maximum of 4.5% of pre-tax compensation on a combined basis for both plans, and vesting provisions, are the same under both plans. Discretionary contributions by the company may also be made to the plans, although no discretionary contributions have been made since the inception of each of the plans.

The company provides certain perquisites to senior management such as paid periodic physical examinations. The compensation committee reviews a schedule of executive perquisites as part of its review of the executive compensation program in July of each year. Upon review, the compensation committee determined that the perquisites provided to its executive officers in 2009 were reasonable.

The company provides the foregoing compensation programs to provide executive officers with benefits that are competitive with those in the marketplace without incurring substantial cost to the company.

Employment Agreements. The company does not have employment agreements with any of its executive officers.

Material Tax and Accounting Implications of the Program. Federal income tax law prohibits publicly held companies from deducting certain compensation paid to a named executive officer that exceeds $1 million during the tax year. To the extent that compensation is based upon the attainment of performance goals set by the compensation committee pursuant to plans approved by our shareholders, the compensation is not included in the computation of this limit. The compensation committee intends, to the extent feasible and where it believes it is in the best interests of the company and our shareholders, to attempt to qualify executive compensation as tax deductible.

Section 409A of the Internal Revenue Code, which was signed into law in October 2004, amended the tax rules to impose restrictions on funding, distributions and elections to participate in nonqualified deferred compensation arrangements. The committee generally seeks to structure the compensation arrangements of our executive officers so that they are either not characterized as nonqualified deferred compensation under Section 409A or they otherwise meet the requirements of Section 409A.

The company has conducted a review of its compensation policies and practices as they relate to risk management practices and risk-taking incentives. Based on the review of its compensation policies and practices, the company has concluded that there are no risks arising from its compensation policies and practices for its employees that are reasonably likely to have a material adverse effect on the company.

COMPENSATION COMMITTEE REPORT

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


The Compensation Committee:

Harold E. Jordan, Chairman	Mark D. Musick

Randall J. Erickson	Addison L. Piper

John H. Grunewald

The following table sets forth summary compensation information for our named executive officers in 2009.

SUMMARY COMPENSATION TABLE


Name and Principal Position	Year		Salary ($)(1)		Stock Awards ($)(2)		Non-Equity Incentive Plan Compensation ($)		Change in Pension Value and Nonquali- fied Deferred Compensation Earnings ($)(3)		All Other Compen- sation ($)(4)		Total ($)

Judith Ames Paul		2009	$	176,000		–		–	$	59,031	$	9,005	$	244,036
Chairman		2008		182,398		–		–		–		9,281		191,679
		2007		175,425		–		–		12,260		8,967		196,652

Terrance D. Paul		2009	$	458,000		–		–	$	114,980	$	21,695	$	594,675
Chief Executive Officer		2008		475,087		–		–		–		22,452		497,539
		2007		457,320		–		–		19,486		21,652		498,458

Steven A. Schmidt		2009	$	365,609	$	120,003	$	28,104	$	31,220	$	30,296	$	575,232
President and Chief		2008		371,582		345,009		19,853		–		62,611		799,055
Operating Officer		2007		348,058		219,003		–		10,149		40,168		617,378

Mary T. Minch		2009	$	214,293	$	85,004	$	9,872		–	$	17,165	$	326,334
Executive Vice President		2008		210,089		124,985		6,562		–		34,583		376,219
Finance, Chief Financial		2007		188,684		138,799		–		–		28,168		355,651
Officer and Secretary

Marian L. Staton		2009	$	246,364	$	12,005		–	$	9,514	$	13,203	$	281,086
Executive Vice
President-Sales

Roy E. Truby		2009	$	229,539	$	29,998	$	9,851	$	8,848	$	13,469	$	291,705
Senior Vice President-
State & Federal
Programs




(1)	Includes base salary and commission, where applicable. Salary adjustments for our named executive officers are generally reviewed by the compensation committee in July of each year.

(2)	Reflects restricted stock granted under our 1997 stock incentive plan. These figures reflect the grant date fair value computed in accordance with FASB ASC Topic 718 (which superseded FAS 123R on September 15, 2009), which is equal to the product of the market price on the date of grant and the number of shares of restricted stock granted. Pursuant to recently adopted SEC regulations, the reward amounts for 2007 and 2008 were recalculated to reflect the grant date fair value in accordance with FASB ASC Topic 718.

(3)	These figures reflect the aggregate interest and other earnings accrued under our supplemental executive retirement plan in 2009. Ms. Minch does not participate in the supplemental executive retirement plan.

(4)	These figures reflect 401(k) plan and supplemental executive retirement plan (SERP) matching amounts contributed by the company. The breakdown of 401(k) and SERP payments contributed by the company in 2009 is as follows: Ms. Paul - $7,920 and $0; Mr. Paul – $11,025 and $9,585; Mr. Schmidt – $11,025 and $6,679; Ms. Minch – $10,087 and $0; Ms. Staton – $11,022 and $0; and Mr. Truby – $10,773 and $0. These figures also reflect term life insurance premiums and disability insurance premiums in the amount of $449 and $636, respectively, for each of Ms. Paul, Mr. Paul, Mr. Schmidt, Ms. Minch, Ms. Staton, and Mr. Truby. In addition, these figures reflect payments for dividends paid on unvested shares of restricted stock as follows: Ms. Paul - $0; Mr. Paul – $0; Mr. Schmidt – $11,507; Ms. Minch – $5,993; Ms. Staton – $1,096; and Mr. Truby – $1,612.

Base Salaries. The base salaries of our executive officers are set by the compensation committee, and approved by the full board of directors, after consideration of a number of factors, including the executive’s position, level of responsibility, tenure and performance. Additional considerations relied upon by the compensation committee to set base salaries are set forth in the “Executive Compensation – Compensation Discussion and Analysis” section, above.

The following table provides information regarding incentive plan awards and other equity-based awards granted to our named executive officers during 2009.

GRANTS OF PLAN-BASED AWARDS FOR FISCAL 2009

All Other
Stock
Awards:
Number
of Shares
of Stock
or Units
(#)

All Other
Option
Awards:
Number of
Securities
Under-lying
Options (#)

Exercise
of Base
Price of
Option
Awards
($/Sh)

Grant Date
Fair Value
of Stock
and Option
Awards
($)(3)

Estimated Future Payouts Under Non-
Equity Incentive Plan Awards(2)

Estimated Future Payouts Under
Equity Incentive Plan Awards

Grant
Date (1)

Threshold
($)

Target
($)

Maximum
($)

Threshold
(#)

Target
(#)

Maximum
(#)

Name

Judith A. Paul

–

Terrance D. Paul

–

Steven A. Schmidt

–

(4)

364,320

(4)

–

4/29/09

(7)

–

2,058

–

20,004

10/23/09

(8)

–

9,149

–

99,999

Mary T. Minch

–

(4)

127,975

(4)

–

4/29/09

(7)

–

1,029

–

10,002

10/23/09

(8)

–

6,862

–

75,002

Marian L. Staton

–

(5)

100,000

(5)

200,000

(5)

–

4/23/09

(6)

683

6,004

10/23/09

(8)

549

6,001

Roy E. Truby

–

145,200

(4)

–

4/23/09

(6)

2,275

19,997

10/23/09

(8)

915

10,001



(1)	Reflects grants made under our 1997 stock incentive plan. A description of our 1997 stock incentive plan is set forth in the “Executive Compensation – Compensation Discussion and Analysis” section of this proxy statement.

(2)	Reflects cash incentive bonuses payable under our incentive bonus plan. A description of our incentive bonus plan is set forth in the “Executive Compensation – Compensation Discussion and Analysis” section of this proxy statement.

(3)	Reflects the grant date fair value computed in accordance with FASB ASC Topic 718, which is equal to the product of the market price on the date of grant and the number of shares of restricted stock granted.


(4)	Cash incentive bonuses can be earned by Mr. Schmidt, Ms. Minch and Mr. Truby under our incentive bonus plan based on increases in our revenues and operating income during the measurement period (July 1, 2009 to June 30, 2010) as compared with the results for the preceding period (July 1, 2008 to June 30, 2009). The threshold, or minimum, amount payable under the plan is $0, up to a maximum of 100% of Mr. Schmidt’s base salary and 60% of Ms. Minch’s and Mr. Truby’s base salaries. Under the July 1, 2008 to June 30, 2009 plan year, Mr. Schmidt received a cash incentive bonus of $28,104, Ms. Minch received a cash incentive bonus of $9,872 and Mr. Truby received a cash incentive bonus of $9,851. Because Ms. Staton is eligible to receive a sales commission, she is not eligible to receive an annual cash incentive bonus.

(5)	Ms. Staton may receive an escalating quarterly bonus payment for each quarter that sales meet or exceed the quarterly baseline target for expected sales for the period. For the July 1, 2009 to June 30, 2010 period, if the company’s sales meet the baseline at the end of the measurement period, Ms. Staton will be paid a threshold amount of $100,000, as well as another $100,000 if sales are 20% over sales for the prior year. Ms. Staton did not receive a bonus for the July 1, 2008 to June 30, 2009 period.

(6)	Because Ms. Staton and Mr. Truby were not appointed as executive officers until October 2009, these awards were approved by the chief executive officer and were granted on April 23, 2009, with such date occurring during the executive officer trading window. On that date, the closing market price of our common stock was $8.79.

(7)	These awards were approved by the compensation committee at its regularly scheduled meeting on April 29, 2009. The grant date occurred on April 29, 2009, with such date occurring during the executive officer trading window. On that date, the closing market price of our common stock was $9.72.

(8)	These awards were approved by the compensation committee at its regularly scheduled meeting on October 21, 2009. The grant date occurred on October 23, 2009, with such date occurring during the executive officer trading window. On that date, the closing market price of our common stock was $10.93.

The following table provides information regarding outstanding option awards and stock awards held by our named executive officers at fiscal year-end.

OUTSTANDING EQUITY AWARDS AT FISCAL YEAR-END


	Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable(1)	Number of Securities Underlying Unexercised Options (#) Unexercisable(1)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)(2)		Option Expiration Date(3)	Number of Shares or Units of Stock That Have Not Vested (#)(4)		Market Value of Shares or Units of Stock That Have Not Vested ($)(5)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

Judith A. Paul	8,316	-	-	$	30.063	9/1/2010		-		-	-	-
	8,547	-	-		29.25	3/1/2011		-		-	-	-
	7,280	-	-		34.34	9/1/2011		-		-	-	-
	7,759	-	-		32.22	3/1/2012		-		-	-	-
	14,784	-	-		16.91	9/1/2012		-		-	-	-
	14,749	-	-		16.95	3/1/2013		-		-	-	-

Terrance D. Paul	8,316	-	-	$	30.063	9/1/2010		-		-	-	-
	8,547	-	-		29.25	3/1/2011		-		-	-	-
	7,280	-	-		34.34	9/1/2011		-		-	-	-


	Option Awards						Stock Awards
Name	Number of Securities Underlying Unexercised Options (#) Exercisable(1)	Number of Securities Underlying Unexercised Options (#) Unexercisable(1)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)(2)		Option Expiration Date(3)	Number of Shares or Units of Stock That Have Not Vested (#)(4)			Market Value of Shares or Units of Stock That Have Not Vested ($)(5)		Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)

	7,759	-	-		32.22	3/1/2012		-			-	-	-
	14,784	-	-		16.91	9/1/2012		-			-	-	-
	14,749	-	-		16.95	3/1/2013		-			-	-	-

Steven A. Schmidt	-	-	-		-	-		1,579	(7)	$	17,937	-	-
	-	-	-		-	-		1,061	(8)		12,053	-	-
	-	-	-		-	-		2,555	(10)		29,025	-	-
	-	-	-		-	-		1,831	(12)		20,800	-	-
	-	-	-		-	-		3,894	(13)		44,236	-	-
	-	-	-		-	-		4,047	(15)		45,974	-	-
	-	-	-		-	-		15,547	(17)		176,614	-	-
	-	-	-		-	-		1,357	(18)		15,416	-	-
	-	-	-		-	-		2,058	(22)		23,379	-	-
	-	-	-		-	-		9,149	(23)		103,933	-	-

Mary T. Minch	1,674	-	-	$	23.89	7/20/2015		1,532	(6)	$	17,404	-	-
	-	-	-		-	-		1,153	(8)		13,098	-	-
	-	-	-		-	-		851	(10)		9,667	-	-
	-	-	-		-	-		1,614	(12)		18,335	-	-
	-	-	-		-	-		2,921	(13)		33,183	-	-
	-	-	-		-	-		1,618	(15)		18,380	-	-
	-	-	-		-	-		4,975	(17)		56,516	-	-
	-	-	-		-	-		1,018	(18)		11,564	-	-
	-	-	-		-	-		1,029	(22)		11,689	-	-
	-	-	-		-	-		6,862	(23)		77,952	-	-

Marian L. Staton	303	-	-	$	29.75	1/5/2011		589	(8)	$	6,691	-	-
	94	-	-		29.25	3/1/2011		258	(9)		2,931	-	-
	275	-	-		34.34	9/1/2011		264	(11)		2,999	-	-
	293	-	-		32.22	3/1/2012		544	(13)		6,180	-	-
	503	-	-		16.91	9/1/2012		432	(15)		4,908	-	-
	-	-	-		-	-		543	(18)		6,168	-	-
	-	-	-		-	-		683	(20)		7,759	-	-
	-	-	-		-	-		549	(23)		6,237	-	-

Roy E. Truby	-	-	-		-	-		1,311	(14)	$	14,893	-	-
	-	-	-		-	-		539	(16)		6,123	-	-
	-	-	-		-	-		678	(19)		7,702	-	-
	-	-	-		-	-		2,275	(21)		25,844	-	-
	-	-	-		-	-		915	(24)		10,394	-	-



(1)	Reflects options granted under our 1997 stock incentive plan.


(2)	All options have an exercise price equal to 100% of the fair market value of the common stock on the date of grant.

(3)	Subject to earlier expiration in the event of termination of employment, all options expire ten years from the date of grant.

(4)	Reflects restricted stock granted under our 1997 stock incentive plan. Except as noted in the footnotes below, restricted stock vests in four equal annual installments beginning on the first anniversary of the date of grant.

(5)	These figures reflect the market value of the respective share awards based on a year-end 2009 closing market price of $11.36 per share of our common stock.

(6)	This award began vesting in four equal annual installments on April 21, 2007.

(7)	This award began vesting in four equal annual installments on April 26, 2007.

(8)	These awards began vesting in four equal annual installments on July 21, 2007.

(9)	These awards began vesting in four equal annual installments on January 26, 2008.

(10)	These awards began vesting in four equal annual installments on February 7, 2008.

(11)	These awards began vesting in four equal annual installments on April 20, 2008.

(12)	These awards began vesting in four equal annual installments on April 23, 2008.

(13)	These awards began vesting in four equal annual installments on July 23, 2008.

(14)	These awards began vesting in three equal annual installments on July 23, 2008.

(15)	These awards began vesting in four equal annual installments on April 29, 2009.

(16)	These awards began vesting in two equal annual installments on April 29, 2009.

(17)	These awards began vesting in four equal annual installments on July 21, 2009.

(18)	These awards began vesting in four equal annual installments on October 29, 2009.

(19)	These awards began vesting in two equal annual installments on October 29, 2009.

(20)	These awards begin vesting in four equal annual installments on April 23, 2010.

(21)	These awards begin vesting in two equal annual installments on April 23, 2010.

(22)	These awards begin vesting in four equal annual installments on April 29, 2010.

(23)	These awards begin vesting in four equal annual installments on October 23, 2010.

(24)	These awards begin vesting in two equal annual installments on October 23, 2010.

The following table provides information regarding amounts realized on option awards and stock awards during 2009 by our named executive officers.

OPTION EXERCISES AND STOCK VESTED FOR FISCAL 2009


		Option Awards		Stock Awards
	Name	Number of Shares Acquired on Exercise (#)	Value Realized on Exercise ($)	Number of Shares Acquired on Vesting (#)		Value Realized on Vesting ($)

Judith A. Paul		–	–	–			–

Terrance D. Paul		–	–	–			–

Steven A. Schmidt		–	–	13,762	(1)	$	129,353	(1)

Mary T. Minch		–	–	8,164	(2)	$	75,668	(2)

Marian L. Staton		–	–	1,449	(3)	$	13,607	(3)

Roy E. Truby		–	–	2,517	(4)	$	24,434	(4)




(1)	Mr. Schmidt had 1,277 shares of restricted stock vest on February 7, 2009 for a realized value of $11,697 (based on the February 6, 2009 closing price of our common stock of $9.16), 915 shares of restricted stock vest on April 23, 2009 for a realized value of $8,500 (based on the April 22, 2009 closing price of our common stock of $9.29), 1,578 shares of restricted stock vest on April 26, 2009 for a realized value of $14,628 (based on the April 24, 2009 closing price of our common stock $9.27), 1,349 shares of restricted stock vest on April 29, 2009 for a realized value of $12,505 (based on the April 28, 2009 closing price of our common stock of $9.27), 6,243 shares of restricted stock vest on July 21, 2009 for a realized value of $58,684 (based on the July 20, 2009 closing price of our common stock of $9.40), 1,947 shares of restricted stock vest on July 23, 2009 for a realized value of $18,691 (based on the July 22, 2009 closing price of our common stock of $9.60), and 453 share of restricted stock vest on October 29, 2009 for a realized value of $4,648 (based on the October 28, 2009 closing price of our common stock of $10.26).

(2)	Ms. Minch had 426 shares of restricted stock vest on February 7, 2009 for a realized value of $3,902 (based on the February 6, 2009 closing price of our common stock of $9.16), 1,533 shares of restricted stock vest on April 21, 2009 for a realized value of $13,015 (based on the April 20, 2009 closing price of our common stock of $8.49), 807 shares of restricted stock vest on April 23, 2009 for a realized value of $7,497 (based on the April 22, 2009 closing price of our common stock of $9.29), 540 shares of restricted vest on April 29, 2009 for a realized value of $5,006 (based on the April 28, 2009 closing price of our common stock of $9.27), 246 shares of restricted stock vest on July 20, 2009 for a realized value of $2,312 (based on the July 17, 2009 closing price of our common stock $9.40), 2,813 shares of restricted stock vest on July 21, 2009 for a realized value of $26,442 (based on the July 20, 2009 closing price of our common stock of $9.40), 1,460 shares of restricted stock vest on July 23, 2009 for a realized value of $14,016 (based on the July 22, 2009 closing price of our common stock of $9.60), and 339 shares of restricted stock vest on October 29, 2009 for a realized value of $3,478 (based on the October 28, 2009 closing price of common stock of $10.26).


(3)	Ms. Staton had 130 shares of restricted stock vest on January 26, 2009 for a realized value of $983 (based on the January 23, 2009 closing price of our common stock of $7.56), 132 shares of restricted stock vest on April 20, 2009 for a realized value of $1,274 (based on the April 17, 2009 closing price of our common stock of $9.65), 144 shares of restricted stock vest on April 29, 2009 for a realized value of $1,335 (based on the April 28, 2009 closing price of our common stock of $9.27), 589 shares of restricted stock vest on July 21, 2009 for a realized value of $5,537 (based on the July 20, 2009 closing price of our common stock of $9.40), 273 shares of restricted stock vest on July 23, 2009 for a realized value of $2,621 (based on the July 22, 2009 closing price of our common stock of $9.60), and 181 shares of restricted stock vest on October 29, 2009 for a realized value of $1,857 (based on the October 28, 2009 closing price of common stock of $10.26).

(4)	Mr. Truby had 540 shares of restricted stock vest on April 29, 2009 for a realized value of $5,006 (based on the April 28, 2009 closing price of our common stock of $9.27), 1,298 shares of restricted stock vest on July 23, 2009 for a realized value of $12,461 (based on the July 22, 2009 closing price of our common stock of $9.60), and 679 shares of restricted stock vest on October 29, 2009 for a realized value of $6,967 (based on the October 28, 2009 closing price of common stock of $10.26).

The following table provides information regarding the nonqualified deferred compensation of our named executive officers in 2009.

NONQUALIFIED DEFERRED COMPENSATION FOR FISCAL 2009


	Name	Executive Contributions in Last FY ($)(1)			Registrant Contributions in Last FY ($)(1)			Aggregate Earnings in Last FY ($)(2)		Aggregate Withdrawals/ Distributions ($)	Aggregate Balance at Last FYE ($)


Judith A. Paul			$	35,200			–	$	59,031	–	$	325,824

Terrance D. Paul			$	91,600		$	9,585	$	114,980	–	$	650,629

Steven A. Schmidt			$	10,960		$	6,679	$	31,220	–	$	166,688

Mary T. Minch				–			–		–	–		–

Marian L. Staton			$	48,987			–	$	9,514	–	$	87,689

Roy E. Truby			$	47,878			–	$	8,848	–	$	104,723




(1)	These figures represent amounts contributed by the executive officer and the registrant under our supplemental executive retirement plan. All executive and registrant contributions have been reported in the “Summary Compensation Table” in either current or prior years as salary or other compensation.

(2)	These figures represent the aggregate interest and other earnings accrued under our supplemental executive retirement plan.

Supplemental Executive Retirement Plan (SERP). The company’s SERP provides participating executive officers with the ability to defer up to 20% of their total cash remuneration, which includes their base salary, commissions and bonuses. The SERP allows participating executive officers to cancel the deferral election during the plan year due to unforeseeable emergency, hardship, or disability. Under the SERP, participating executive officers may also receive company matching and discretionary contributions, although no discretionary contributions have been made since the inception of the SERP. Company matching contributions are limited to a maximum of 4.5% of pre-tax compensation on a combined basis for the SERP and the company’s 401(k) plan. Company matching and discretionary contributions vest ratably over the executive officer’s first four years of service, with full vesting of past and future company contributions once four years of service is reached.

Executive officers participating in the SERP elect to invest their deferred compensation and company matching contributions in any number of identified publicly traded mutual funds, although the percentage allocated to any single investment fund may not be less than 1%. Upon termination of employment, the market value of the participating executive officer’s account balance is distributable to the executive officer. The executive officer may elect the manner in which the balance is distributed. The distribution election choices for the 2009 plan year ranged from a lump sum distribution to a pay-out over 10 years if the executive officer’s employment terminated on or after age 60 (or age 55, if the executive officer has at least 10 years of service) or on or after suffering a disability. However, an executive officer is only entitled to a lump sum distribution if the executive’s employment terminates prior to these events or on the executive’s death, to the extent such lump sum distribution is permissible under Section 409A of the Internal Revenue Code.

POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL

We do not have employment or change in control agreements with any of our named executive officers, nor do we currently intend to enter into any such agreements. Likewise, we have not implemented a specific policy with respect to severance agreements with our named executive officers; as a result, such agreements are negotiated on a case-by-case basis.

Stock Incentive Plan. Under our 1997 stock incentive plan, in the event of a change in control of the company (as defined in the plan), all unvested restricted stock awards granted to our named executive officers will become fully vested. The value to each of our named executive officers of the accelerated vesting of any unvested restricted stock awards had a change in control of the company occurred on December 31, 2009 (based on the year-end closing market price of $11.36 per share of our common stock) would have been as follows: Ms. Paul - $0; Mr. Paul – $0; Mr. Schmidt – $489,367; Ms. Minch – $267,788; Ms. Staton - $43,873; and Mr. Truby - $64,956.

Under the restricted stock agreements entered into between the company and each named executive officer, in the event such executive terminates employment for any reason other than death, all unvested restricted stock held by the executive shall be forfeited to the company. If the named executive officer terminates employment due to death, any unvested restricted stock that would have vested in the calendar year will immediately vest. As a result, had a named executive officer terminated their employment due to death on December 31, 2009, such executive officer would not have received any additional value because any restricted stock that would vest in calendar year 2009 would have previously vested.

Incentive Bonus Plan. Under our incentive bonus plan, in the event a named executive officer terminates employment for any reason other than death, disability (as defined in the plan) or retirement (meaning the termination of employment after the named executive officer has reached age 62 and has completed 10 years of service with the company, or due to early retirement with the consent of the compensation committee), such executive will not receive any cash incentive bonus, even if the company’s performance goals are met.

In the event a named executive officer terminates employment for death, disability or retirement, such executive is eligible to receive a cash incentive bonus based on the executive’s base salary earned in the applicable fiscal year through the date of termination, if an award is otherwise payable under the plan. The value to each participating named executive officer of such cash incentive bonus had any of these situations occurred on December 31, 2009 (assuming for purposes of this calculation that the company’s financial performance for the twelve-month period ended December 31, 2009 is the same as the company’s financial performance for the twelve-month period ending June 30, 2010) would have been as follows: Mr. Schmidt – $71,006; Ms. Minch – $24,942; and Mr. Truby – $28,299.

NON-EMPLOYEE DIRECTOR COMPENSATION

The following table provides information concerning the compensation of our non-employee directors during 2009.

NON-EMPLOYEE DIRECTOR COMPENSATION FOR FISCAL 2009


Name(1)	Fees Earned or Paid in Cash ($)			Stock Awards ($)(2)(3)			Option Awards ($)(4)		Total ($)

Randall J. Erickson		$	8,000		$	35,247		–		$	43,247

John H. Grunewald		$	18,000		$	75,780		–		$	93,780

Harold E. Jordan		$	19,000		$	75,780		–		$	94,780

Mark D. Musick		$	12,000		$	71,012		–		$	83,012

Addison L. Piper		$	16,000		$	75,780		–		$	91,780

Gordon H. Gunnlaugsson(5)		$	8,000		$	37,573		–		$	45,573

Judith A. Ryan(6)		$	8,000		$	36,107		–		$	44,107


(1)	Ms. Paul, our chairman, and Mr. Paul, our chief executive officer, are not included in this table because they are employees of the company and they receive no compensation for their services as directors. The compensation received by Ms. Paul and Mr. Paul as an employee of the company is shown in the “Summary Compensation Table,” above.

(2)	Reflects restricted stock units granted under our 1997 stock incentive plan. These figures reflect the grant date fair value for the fiscal year ended December 31, 2009 in accordance with FASB ASC Topic 718, which is equal to the product of the market price on the date of the grant and the number of shares granted.

(3)	Messrs. Grunewald, Jordan and Piper received a restricted stock unit grant on March 2, 2009 and September 1, 2009, Mr. Gunnlaugsson and Dr. Ryan received a restricted stock unit grant on March 2, 2009, Mr. Musick received a restricted stock unit grant on April 29, 2009 and September 1, 2009, and Mr. Erickson received a restricted stock unit grant on September 1, 2009. The grant date fair value of the 4,979 restricted stock units granted on March 2, 2009 was $35,002, as computed in accordance with FASB ASC Topic 718. The grant date fair value of the 3,601 restricted stock units granted to Mr. Musick on April 29, 2009 was $35,002, as computed in accordance with FASB ASC Topic 718. The grant date fair value of the 3,500 restricted stock units awarded to each non-employee director on September 1, 2009 was $35,000, as computed in accordance with FASB ASC Topic 718. In addition, Messrs. Grunewald, Jordan and Piper received a restricted stock unit grant in connection with the company’s dividend issuances on March 9, 2009, June 1, 2009, September 1, 2009 and December 1, 2009, Mr. Musick received a restricted stock unit grant in connection with the company’s dividend issuances on June 1, 2009, September 1, 2009 and December 1, 2009, and Mr. Erickson received a restricted stock unit grant in connection with the company’s dividend issuances on September 1, 2009 and December 1, 2009. Mr. Gunnlaugsson received a restricted stock unit grant in connection with the company’s dividend issuances on March 9, 2009, June 1, 2009, and Dr. Ryan received a restricted stock unit grant in connection with the company’s dividend issuances on March 9, 2009. The March 9, 2009 grant date fair value of the 172 restricted stock units granted to Messrs. Grunewald, Gunnlaugsson, Jordan and Piper and Dr. Ryan was $1,104, as computed in accordance with FASB ASC Topic 718. The June 1, 2009 grant date fair value of the 144 restricted stock units granted to Messrs. Grunewald, Gunnlaugsson, Jordan and Piper was $1,466 and the 25 restricted stock units granted to Mr. Musick was $255, as computed in accordance with FASB ASC Topic 718. The September 1, 2009 grant date fair value of the 148 restricted stock units granted to Messrs. Grunewald, Jordan and Piper was $1,480 and the 25 restricted stock units granted to Mr. Musick was $250, as computed in accordance with FASB ASC Topic 718. The December 1, 2009 grant date fair value of the 154 restricted stock units granted to Messrs. Grunewald, Jordan and Piper was $1,728, the 45 restricted stock units granted to Mr. Musick was $505, and the 22 restricted stock units granted to Mr. Erickson was $247, as computed in accordance with FASB ASC Topic 718. Each of these awards was made pursuant to our 1997 stock incentive plan. As of December 31, 2009, Messrs. Grunewald, Jordan and Piper held in the aggregate 1,435 shares of unvested restricted stock and 24,905 unvested restricted stock units, Mr. Musick held in aggregate 7,196 unvested restricted stock units, and Mr. Erickson held in aggregate 3,522 unvested restricted stock units.


(4)	As of December 31, 2009, the following non-employee directors had, in the aggregate, outstanding, fully vested option awards for the following number of shares of our common stock: Mr. Grunewald – 39,307; Mr. Jordan – 39,307; and Mr. Piper – 33,307. Each of these awards were made pursuant to our 1997 stock incentive plan.

(5)	Effective June 12, 2009, Mr. Gunnlaugsson retired from the board of directors of the company.

(6)	Dr. Ryan’s term as a member of the board of directors expired on April 29, 2009, and she did not stand for re-election

In 2009, non-employee directors received a $16,000 annual cash retainer, paid quarterly, plus out-of-pocket expenses. In addition, an annual cash retainer was paid to the chairman of the audit committee, the compensation committee and the nominating and governance committee in the aggregate amount of $2,000, $1,500 and $1,500, respectively.

In addition to cash compensation, each non-employee director receives an equity compensation award under the company’s 1997 stock incentive plan, generally in March and September of each year. Messrs. Grunewald, Jordan and Piper received restricted stock unit grants on March 2, 2009 and September 1, 2009 for 4,979 and 3,500 restricted stock units, respectively. Mr. Musick joined the board upon his election as director on April 29, 2009, and, accordingly, received restricted stock unit grants on April 29, 2009 and September 1, 2009 for 3,601 and 3,500 restricted stock units, respectively. Mr. Erickson was appointed to the board on July 2, 2009, and, accordingly, received a restricted stock unit grant on September 1, 2009 of 3,500 restricted stock units. Mr. Gunnlaugsson and Dr. Ryan received restricted stock unit grants on March 2, 2009 for 4,979 restricted stock units.

Messrs. Grunewald, Jordan and Piper also received restricted stock unit grants on March 9, 2009, June 1, 2009, September 1, 2009 and December 1, 2009 for 172, 144, 148 and 154 restricted stock units, respectively, Mr. Musick received restricted stock unit grants on June 1, 2009, September 1, 2009 and December 1, 2009 for 25, 25 and 45 restricted stock units, respectively, and Mr. Erickson received a restricted stock unit grant on December 1, 2009 for 22 restricted stock units. Mr. Gunnlaugsson received restricted stock unit grants on March 9, 2009 and June 1, 2009 for 172 and 144 restricted stock units, respectively. Dr. Ryan received a restricted stock unit grant on March 9, 2009 for 172 restricted stock units. These grants were made as part of the company’s dividend issuance on the same date. The restricted stock units will fully vest upon a non-employee director’s termination of service as a member of the board of directors. Dividends, in the form of additional restricted stock units, are paid on restricted stock units that are outstanding.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION

No member of the compensation committee has ever been an officer or employee of our company or any of our subsidiaries and none of our executive officers has served on the compensation committee or board of directors of any company of which any of our directors is an executive officer.

AUDIT COMMITTEE REPORT

The audit committee consists of Messrs. Grunewald (Chairman), Erickson, Jordan, Musick and Piper. In accordance with its written charter adopted by the board of directors, the audit committee assists the board in fulfilling its responsibility to our shareholders, the investment community and governmental agencies relating to corporate accounting, financial reporting practices and the quality and integrity of our financial reports. The primary responsibility of the audit committee is to oversee our accounting and financial reporting processes and the audits of our financial statements and to report the results of its activities to the board of directors. It is not the responsibility of the audit committee to plan or conduct audits or to determine that our financial statements are complete, accurate or in accordance with generally accepted accounting principles. Management is responsible for preparing our financial statements, and our independent auditors are responsible for auditing our financial statements. Deloitte & Touche LLP (Deloitte) currently serves as our independent auditors and has done so since May 2002.

Auditor Independence and 2009 Audit. In discharging its duties, the audit committee obtained from Deloitte a formal written statement describing all relationships between Deloitte and the company that might bear on Deloitte’s independence, consistent with Rule 3526 of the Public Company Accounting Oversight Board, “Communication with Audit Committees Concerning Independence.” In connection with the receipt of this written statement, the audit committee discussed with Deloitte matters relating to Deloitte’s independence.

The audit committee also discussed and reviewed with Deloitte all communications required by generally accepted auditing standards, including those described in AU Section 380, “The Auditor’s Communication With Those Charged With Governance.” In addition, with and without management present, the audit committee discussed and reviewed our audited financial statements as of and for the year ended December 31, 2009 and the results of Deloitte’s examination thereof.

Based on these reviews and discussions with management and Deloitte, the audit committee recommended to the board of directors that our audited financial statements be included in our annual report on Form 10-K for the year ended December 31, 2009.

Audit Fees. The aggregate fees billed for professional services rendered by Deloitte for (1) the audit of our financial statements as of and for the year ended December 31, 2009, (2) the review of the financial statements included in our Form 10-Q filings for 2009 and (3) consents and other services provided during 2009 related to Securities and Exchange Commission (SEC) matters, were $275,000. The aggregate fees billed for professional services rendered by Deloitte for (1) the audit of our financial statements as of and for the year ended December 31, 2008, (2) the review of the financial statements included in our Form 10-Q filings for 2008 and (3) consents and other services provided during 2008 related to SEC matters, were $275,000.

Audit-Related Fees. The aggregate fees billed in 2009 and 2008 for assurance and related services rendered by Deloitte that are reasonably related to the performance of the audit or review of our financial statements, were $0 and $0, respectively.

Tax Fees. The aggregate fees billed in each of 2009 and 2008 for professional services rendered by Deloitte for tax compliance, tax advice and tax planning, were $20,000. Services rendered in this category consisted of tax compliance, including federal and state tax return review.

All Other Fees. The aggregate fees billed in 2009 and 2008 for products and services provided by Deloitte, other than services reported above, were $5,200 and $2,000, respectively. Services rendered in this category consisted of a review of a comment letter from the SEC and the company’s responses in 2009, and access to an accounting research database in 2008 and 2009.

Pre-Approval Policies and Procedures. As part of its written charter, the audit committee has adopted policies which provide that our independent auditors may only provide those audit and non-audit services that have been pre-approved by the audit committee, subject, with respect to non-audit services, to a de minimis exception (described below) and to the following additional requirements: (1) such services must not be prohibited under applicable federal securities rules and regulations and (2) the audit committee must make a determination that such services would be consistent with the principles that the independent auditor should not audit its own work, function as part of management, act as an advocate of the company or be a promoter of the company’s stock or other financial interests. The chairman of the audit committee has the authority to grant pre-approvals of permitted non-audit services between meetings, provided that any such pre-approval must be presented to the full audit committee at its next scheduled meeting.

During 2009, all of the non-audit services provided by Deloitte were pre-approved by the audit committee. Accordingly, the committee did not rely on the de minimis exception noted above. This exception waives the pre-approval requirements for non-audit services if certain conditions are satisfied, including, among others, that such services are promptly brought to the attention of and approved by the audit committee prior to the completion of the audit.

The Audit Committee:


John H. Grunewald, Chairman	Mark D. Musick

Randall J. Erickson	Addison L. Piper

Harold E. Jordan

CERTAIN RELATIONSHIPS AND TRANSACTIONS

The audit committee charter includes a written provision that the responsibilities of the audit committee include a review and approval of all related-party transactions with directors, executive officers, 5% shareholders, members of their family and persons or entities affiliated with any of them. While the charter does not provide specific procedures as to the review of related-party transactions, the audit committee requires management to present to the committee at each quarterly meeting the details of any such transactions. Any such related-party transactions are reviewed and evaluated by the audit committee members based on the specific facts and circumstances of each transaction. The audit committee’s philosophy is to minimize related-party transactions, and as such, the company has entered into only a limited number of related-party transactions in recent years.

During 2009, the company reimbursed Terrance D. Paul, our chief executive officer, and Judith A. Paul, the chairman of the board of directors, for expenses in connection with the use of their airplane for company-related travel. The aggregate dollar value of the amount of these transactions was approximately $311,902. Pursuant to its charter, the audit committee reviewed and approved these transactions.

PENDING LEGAL PROCEEDINGS

None of our directors, officers or beneficial owners of more than 5% of shares of our common stock is an adverse party or has an interest adverse to us in any material pending legal proceeding.

SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

Section 16(a) of the Securities Exchange Act of 1934 requires our directors and executive officers, among others, to file reports with the Securities and Exchange Commission within specified time frames disclosing their ownership, and changes in their ownership, of our common stock. Copies of these reports must also be furnished to us. Based solely on a review of these copies, we believe that all filing requirements were complied with during 2009, except for reports inadvertently filed late by each of our non-employee directors in connection with an award of restricted stock units made pursuant to the company’s 1997 stock incentive plan on March 2, 2009.

PROPOSAL TWO: RATIFICATION OF INDEPENDENT AUDITORS

The audit committee has appointed Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 31, 2010 and has directed that such appointment be submitted to the shareholders for ratification. Deloitte & Touche LLP has audited our consolidated financial statements since the fiscal year ended December 31, 2002. Representatives of Deloitte & Touche LLP will be present at the annual meeting to make any statement they may desire and to respond to questions from shareholders.

If the shareholders do not ratify the appointment of Deloitte & Touche LLP, the audit committee will take such action into account in reconsidering the appointment of our independent auditors for the fiscal year ending December 31, 2010.

The affirmative vote of a majority of the votes cast on this proposal shall constitute ratification of Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 31, 2010. Abstentions and broker non-votes will not be counted as votes cast and, therefore, will have no effect on the approval of this proposal.

The board of directors recommends a vote FOR the ratification of the appointment of Deloitte & Touche LLP as our independent auditors for the fiscal year ending December 31, 2010, and your proxy will be so voted unless you specify otherwise.

SUBMISSION OF SHAREHOLDER PROPOSALS

In accordance with our by-laws, nominations, other than by or at the direction of the board of directors or the nominating and governance committee, of candidates for election as directors at the 2011 annual meeting of shareholders and any other shareholder proposed business to be brought before the 2011 annual meeting of shareholders must be submitted to us not later than December 30, 2010. Shareholder proposed nominations must be made in accordance with the applicable provisions of our by-laws, which are described above under “Proposal One: Election of Directors – Nominating and Governance Committee.” Shareholder proposed business must also be made in accordance with our by-laws which provide, among other things, that such proposals must be accompanied by certain information concerning the proposal and the shareholder submitting the proposal. To be considered for inclusion in the proxy statement solicited by the board of directors, shareholder proposals for consideration at the 2011 annual meeting of shareholders must be received by us at our principal executive offices, 2911 Peach Street, P.O. Box 8036, Wisconsin Rapids, Wisconsin 54495-8036 on or before November 12, 2010. Proposals should be directed to Ms. Mary T. Minch, our corporate secretary. To avoid disputes as to the date of receipt, we suggest that any shareholder proposal be submitted by certified mail, return receipt requested.

OTHER MATTERS

Although we are not aware of any other matters that may come before the annual meeting, if any such matters should be presented, the persons named in the accompanying proxy card intend to vote such proxy in accordance with their best judgment.

You may obtain a copy of our annual report on Form 10-K for the fiscal year ended December 31, 2009 at no cost by writing to Investor Relations, Renaissance Learning, Inc., 2911 Peach Street, P.O. Box 8036, Wisconsin Rapids, Wisconsin 54495-8036, or by accessing the following website: www.rlrninvest.com.


	By Order of the Board of Directors,

	Mary T. Minch, Secretary

ANNEX A

RENAISSANCE LEARNING, INC.
AMENDED AND RESTATED
AUDIT COMMITTEE CHARTER

Effective as of February 11, 2004
Amended as of February 9, 2010


I. Purpose

The Audit Committee shall assist the Board of Directors in fulfilling its responsibility to the shareholders, to the investment community and to governmental agencies relating to corporate accounting, financial reporting practices, and the quality and integrity of the financial reports of the Company. The primary responsibility of the Committee is to oversee the Company’s accounting and financial reporting processes and the audits of the Company’s financial statements and to report the results of its activities to the Board. It is not the responsibility of the Committee or any member of the Committee to plan or conduct audits or to determine that the Company’s financial statements are complete and accurate and are in accordance with generally accepted accounting principles. Management of the Company is responsible for preparing the Company’s financial statements, and the independent public accountants are responsible for auditing the Company’s financial statements.


II. Committee Composition

The Committee shall be comprised of at least three members, consisting solely of “independent” directors who are “financially literate” at the time of their appointment to the Committee. A director is “independent” if he or she meets the requirements for independence set forth in the rules of the NASDAQ Stock Market and the SEC. A director is “financially literate” if he or she meets the requirements for financial literacy set forth in the rules of the NASDAQ Stock Market, which provide that the director must be able to read and understand fundamental financial statements, including the balance sheet, income statement and cash flow statement. In addition, no member of the Committee shall have participated in the preparation of the Company’s financial statements during any of the past three years.

At least one member of the Committee shall have accounting or related financial management experience, in accordance with the requirements of the NASDAQ Stock Market. A director is deemed to qualify under these requirements if he or she has past employment experience in finance or accounting or other comparable experience which results in his or her financial sophistication.

The Board of Directors may determine that one or more members of the Committee shall be an “audit committee financial expert,” as defined by SEC rules.

The members of the Committee shall be elected by the Board to hold such office until their successors shall be duly elected and qualified. Unless a Chairman is elected by the Board, the members of the Committee may designate a Chairman by majority vote of the full Committee membership.


III. Meetings and Reports

The Committee shall meet as frequently as the Committee deems necessary, but not less frequently than four times each year. Special Meetings of the Committee may be called at any time by any member thereof on not less than three days notice. In order to foster open communication, the Committee should meet at least annually with management and the independent public accountants in separate executive sessions to discuss any matters that the Committee or each of these groups believe should be discussed privately. The Committee shall report periodically to the Board of Directors regarding the Committee’s activities, findings and recommendations. The Committee shall also meet with the independent public accountants to review the arrangements (including proposed fees) and scope of the annual audit.

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The Committee may conduct its business and affairs at any time or location it deems appropriate. Attendance and participation in a meeting may take place by conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other. Any action to be taken at any meeting of the Committee may be taken without a meeting, if all members of the Committee consent thereto in writing and such writing or writings are filed with the minutes of the Committee. All decisions of the Committee shall be determined by the affirmative vote of a majority of the members thereof, and a report of any actions taken by the Committee shall be delivered at the next meeting of the Board of Directors.

Certain responsibilities of the Committee have been delegated to the Chairman of the Committee, as set forth in Section IV, below. In the event the Chairman of the Committee acts on behalf of the full Committee pursuant to such delegated powers, the Chairman of the Committee shall deliver a report of his activities at the next meeting of the Committee.


IV. Responsibilities and Powers

The Committee shall be responsible for the following:


A.	Oversight of the Independent Public Accountants

	1.	Appoint the independent public accountants to audit the books and records of the Company and approve audit engagement fees and terms. Monitor and evaluate the performance, independence and qualifications of the independent public accountants, who shall report directly to the Committee. Discharge the independent public accountants when circumstances warrant. Review the scope, costs and results of the independent audit of the Company’s books and records through conferences and direct, private communications with the independent public accountants.

	2.	Ensure the independence of the Company’s independent public accountants. For this purpose, the Committee shall obtain a formal written statement listing all relationships between the independent public accountants and the Company from the independent public accountants on an annual basis. Review and discuss with the independent public accountants any disclosed relationships or services that may impact the objectivity and independence of the independent public accountants and take appropriate action to ensure the independent public accountants’ independence.

	3.	Review and approve hiring decisions by the Company involving any partner or employee of the independent public accountant who worked on the Company’s account during the preceding three years. No audit engagement team member that participated in the audit of the Company within one year prior to the proposed date of hire may be hired by the Company as a senior executive.

	4.	In conjunction with the independent public accountants, ensure the rotation of the lead and concurring audit engagement partners so that no such person provides auditing services for more than five years before being rotated, and ensure that such partners do not provide audit services to the Company for five years after being rotated. For all other audit partners, rotation is required every seven years, and such persons are subject to a two-year time out.

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B.	Financial Statement and Disclosure Matters

	1.	Review with management and the independent public accountants the Company’s audited financial statements and MD&A to be included in the Company’s Annual Report on Form 10-K. Such review shall be conducted prior to the release of such information to the public and/or the filing of such report with the SEC. The Chairman of the Committee may represent the entire Committee for purposes of this review. In addition, the Committee shall make a recommendation to the Board of Directors regarding inclusion of the audited financial statements in the Company’s Form 10-K.

	2.	Review with management and the independent public accountants the Company’s unaudited financial statements to be included in the Company’s Quarterly Reports on Form 10-Q. Such review shall be conducted prior to the release of such information to the public and/or the filing of such reports with the SEC. The Chairman of the Committee may represent the entire Committee for purposes of this review.

	3.	Prior to the release of annual and quarterly financial information to the public and/or the filing of annual, quarterly and any other periodic reports with the SEC, discuss with the Chief Executive Officer and the Chief Financial Officer of the Company (1) the process undertaken to prepare and review the Company’s financial information to be included in the Company’s earnings releases and/or periodic reports (which will involve a discussion of the Company’s disclosure controls and procedures), (2) the participants in the process, and (3) the results of the review. In particular, the Committee should discuss with the Chief Executive Officer and Chief Financial Officer any significant deficiencies in the Company’s internal controls and any alleged fraud (whether material or not) involving management or other employees with significant roles in internal controls. The Chairman of the Committee may represent the entire Committee for purposes of this review.

	4.	As part of the review of the Company’s Annual Report on Form 10-K, review and discuss with management and the independent public accountants (1) all critical accounting policies and practices used in the audited financial statements, (2) all alternative treatments of financial information within generally accepted accounting principles that have been discussed with management, the ramifications of the use of such alternative disclosures and treatments, and the treatment preferred by the independent auditors, and (3) other written communications between the independent auditors and management, such as any management letter or schedule of unadjusted differences.

	5.	Review the programs that the Company has instituted to correct any deficiencies noted by the independent public accountants in their annual review.

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	6.	Review with management any changes in accounting principles significantly affecting the Company, as well as any significant unusual nonoperating or nonrecurring items and the general quality of earnings reported by the Company.

	7.	Review any significant disagreements between management and the independent public accountants in connection with the preparation of the Company’s financial statements.

C.	Approval of Audit and Non-Audit Services

	1.	Except as provided below, pre-approve all audit and permitted non-audit services to be provided by the Company’s independent public accountants.

	2.	Pre-approval of permitted non-audit services is not required if (1) the aggregate amount of all such non-audit services constitutes not more than 5% of the total amount of revenues paid by the Company to the independent public accountants during the fiscal year in which the non-audit services are provided, (2) such services were not recognized by the Company at the time of engagement to be non-audit services, and (3) such services are promptly brought to the attention of the Committee and approved by the Committee prior to the completion of the audit.

	3.	The following are prohibited non-audit services which may not be performed by any independent public accountant for the Company: (1) bookkeeping or other services related to the accounting records or financial statements of the Company, (2) financial information systems design and implementation, (3) appraisal or valuation services, fairness opinions or contribution-in-kind reports, (4) actuarial services, (5) internal audit outsourcing services, (6) management functions or human resources, (7) broker or dealer, investment adviser, or investment banking services, (8) legal services and expert services unrelated to the audit, and (9) any other service that the Public Company Accounting Oversight Board determines, by regulation, is impermissible. If a non-audit service is not on the foregoing list, it is considered a permitted non-audit service for purposes hereof.

	4.	The Company’s independent public accountant may provide permitted non-audit services so long as the Committee has pre-approved such services and provided that as part of its approval process, the Committee has determined that the services would be consistent with the basic principles that the independent public accountant should not audit its own work, function as part of management, act as an advocate of the Company or be a promoter of the Company’s stock or other financial interests.

	5.	The Chairman of the Committee may represent the entire Committee with respect to the matters discussed in paragraph C.4, above. Any actions taken by the Chairman in this regard must be reported to the full Committee at its next scheduled meeting.

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D.	Internal Controls

	1.	Review with management and the independent public accountants, on an annual basis, the adequacy of the Company’s internal controls and internal control over financial reporting, accounting policies and procedures, special audit steps adopted in light of material control deficiencies and particular concerns of the Committee, management or the independent public accountants.

E.	Risk Assessment and Risk Management

	1.	Review the Company’s protection of assets programs, including insurance.

F.	Code of Business Conduct and Ethics

	1.	Establish, review and update as needed a Code of Business Conduct and Ethics (Code) and ensure that management has established a system to enforce the Code.

	2.	Review reported incidents under the Code, as well as the results of any investigations conducted, on a quarterly basis. The Chairman of the Committee shall initiate investigations when required under the Code.

	3.	Establish procedures for the receipt, retention and treatment of complaints received by the Company regarding accounting, internal accounting controls or auditing matters, and the confidential, anonymous submission by employees of concerns regarding questionable accounting or auditing matters.

	4.	Review lawsuits and claims against the Company which pose significant risk of loss.

	5.	Review and approve any transaction to which the Company is a party involving a related party, as defined in the rules of the NASDAQ Stock Market.

G.	Committee Administration

	1.	Review and assess the adequacy of this Charter on at least an annual basis.

	2.	Review and assess on an annual basis whether the Committee has satisfied its responsibilities during the prior year in compliance with this Charter.

	3.	Provide an Audit Committee Report to be included in the Company’s annual proxy statement, which states whether the Committee has: (1) reviewed and discussed with management the Company’s audited financial statements, (2) discussed with the independent public accountants the matters required to be discussed by AU Section 380, (3) received the written disclosures and the letter from the independent public accountants required by PCAOB Rule 3526 and discussed with the independent public accountants the independent public accountants’ independence, and (4) based on the review and discussion of the audited financial statements with management and discussions with the independent public accountants, the Committee recommended to the Board of Directors that the audited financial statements be included in the Company’s Form 10-K for the last fiscal year for filing with the SEC.

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		4.	Direct and supervise an investigation into any matter the Committee deems necessary and appropriate.

		5.	In the course of fulfilling its duties, the Committee has the authority to retain its own independent legal, accounting and other advisors in its sole discretion. The Committee also has the authority to incur ordinary administrative expenses that are necessary to carry out its duties. The Company shall provide for appropriate funding, as determined by the Committee, for payment of any such fees and expenses.

		6.	Take action in connection with such other powers and responsibilities as the Board of Directors may, from time to time, determine.

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	PLEASE MARK VOTES	REVOCABLE PROXY
	AS IN THIS EXAMPLE	RENAISSANCE LEARNING, INC.

THIS PROXY IS SOLICITED BY
THE BOARD OF DIRECTORS

FOR USE AT THE ANNUAL MEETING OF
SHAREHOLDERS ON APRIL 21, 2010

The undersigned appoints Mary T. Minch and Steven A. Schmidt, and each of them, as proxies, each with the power to appoint his or her substitute, and authorizes each of them to represent and to vote, as designated below, all of the shares of common stock of Renaissance Learning, Inc. held of record as of February 22, 2010 by the undersigned at the 2010 annual meeting of shareholders of Renaissance Learning, Inc. to be held on April 21, 2010 and at any adjournment thereof.


		For	With- hold	For All Except
1.	ELECTION OF DIRECTORS: (To serve until the 2011 Annual Meeting and until their successors are elected and qualified)	o	o	o


01-Judith Ames Paul	05-Harold E. Jordan
02-Terrance D. Paul	06-Mark D. Musick
03-Randall J. Erickson	07-Addison L. Piper
04-John H. Grunewald

INSTRUCTION: To withhold authority to vote for any individual nominee, mark “For All Except” and write that nominee’s name in the space provided below.


		For	Against	Abstain
2.	RATIFICATION OF DELOITTE & TOUCHE LLP AS INDEPENDENT AUDITORS FOR 2010.	o	o	o

3.	IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING.

This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted “FOR” the election of all nominees for directors and “FOR” the ratification of Deloitte & Touche LLP as independent auditors for 2010 (which proposals are being proposed by the Board of Directors).

The Board of Directors Recommends a Vote FOR Items 1 and 2.

THIS PROXY WHEN PROPERLY EXECUTED WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, WILL BE VOTED FOR EACH PROPOSAL.

[IMAGE]

Detach above card, sign, date and mail in postage paid envelope provided. [IMAGE]

RENAISSANCE LEARNING, INC.

PLEASE ACT PROMPTLY

PLEASE COMPLETE, DATE, SIGN, AND MAIL THIS PROXY CARD PROMPTLY

IN THE ENCLOSED POSTAGE-PAID ENVELOPE.

Please sign exactly as name appears hereon. When shares are held by joint tenants, both should sign. When signing as attorney, executor, administrator, trustee or guardian, please give full title as such. If a corporation, please sign in full corporate name by President or other authorized officer. If a partnership, please sign in partnership name by authorized person.

IF YOUR ADDRESS HAS CHANGED, PLEASE CORRECT THE ADDRESS IN THE SPACE PROVIDED BELOW AND RETURN THIS PORTION WITH THE PROXY IN THE ENVELOPE PROVIDED.