Callidus Ex. 1011
`CBM2013-00053
`(Callidus v. Versata)
`
`(cid:40)(cid:91)(cid:17)(cid:3)(cid:20)(cid:19)(cid:20)(cid:20)(cid:3)(cid:19)(cid:20)(cid:18)(cid:20)(cid:23)
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`

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`I.
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`BACKGROUND AND QUALIFICATIONS
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`1. My name is Joseph E. DeHaven. I am cmrently a Senior Principal
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`Consultant in the Customer Solutions group at Callidus Software.
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`2.
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`I am over the age of eighteen and othetwise competent to make this
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`declaration. I make this declaration from my personal knowledge and if called to
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`testifY to the contents of it, could and would do so competently.
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`3.
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`I am a salaried Callidus employee. My compensation does not depend
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`in any way on the outcome of this proceeding. I have not been offered any
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`payment, incentive or inducement to provide this declaration.
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`4.
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`In preparing this Declaration, I reviewed US Patent No. 7,908,304
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`dated March 15, 2011 , US Patent No. 7,958,024 dated June 7, 2011, and US Patent
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`No. 7,904,326 dated March 8, 2011.
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`5.
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`I have worked in or have been associated with the insurance industiy
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`for more than 40 years. A copy of my resume is attached as Exhibit A.
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`6.
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`I struied my career at The Prudential on or about July 1970. From
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`July 1970 through August 1971, I was a Trainee (LevelS) in Newark, NJ. My
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`initial assigrunent was to leru·n the legacy IBM 705 and IBM 1401 policy
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`administration systems. These systems were used by The Prudential to administer
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`life insmance policy functions -
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`such as administering loans, accepting premium
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`payments, processing premium changes, distributing dividends -
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`and were known
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`as the Policy Adminisn·ation System. After a rotation through a few assignments
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`in this legacy policy administration system, I was a n·ainee for the new AOS policy
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`adminisn·ation system. The AOS policy adminisn·ation system was a more
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`advanced system to administer the srune life insurance policy functions listed
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`above.
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`7.
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`On or about August 1971 to Mru-ch 1973, I was promoted a number of
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`times to Supervising Accounting Exruniner (Levels 5 through 10). I was
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`2
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`Ex. 1011 02/14
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`responsible for a section of the Ordinmy Records and Control division in the
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`Central Accounting Unit that submitted daily policy accounting to the company
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`ledger system. At this time, I was located in Fm1 Washington, Pennsylvania.
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`8.
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`On or about Mm·ch 1973 to April 1977, I was a Payroll Technician
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`(Level 11). I was the lead technical resource for a field payroll operation for local
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`offices throughout the regional home office tenitmy (Pennsylvania, Mmyland,
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`Delawm·e and Washington, D.C.). At this time, I was located in Fort Washington,
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`Pennsylvania.
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`9.
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`On or about April 1977, I was promoted to Compensation Consultant
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`(Level20) and transfened to The Prudential ' s corporate office in the
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`Compensation Unit of the Ordinmy Agencies Department. In this role, I was
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`responsible for the design and modeling (used to estimate the price compensation)
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`of compensation plans and component changes with the Actum"ial Department. At
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`this time, I was located in Newm·k, New Jersey.
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`10. On or about 1982, I becmne a Compensation Systems Analyst (Level
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`28). In this role, I helped design compensation components including plan pricing.
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`I was also a business liaison to the systems unit in Roseland, New Jersey. As a
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`business liaison, 1 was responsible for conveying the details of new or modified
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`compensation plans and/or compensation component changes to the Compensation
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`Systems Progrmmning Area and negotiate delive1y timelines. Additionally, I
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`ensured that any unit tests perfonned met the requirements of our new of modified
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`plans and/or component changes.
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`11. On or about 1984, I was promoted to Manager, Compensation
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`Systems (Level 60). In this role, I had responsibilities similm· to those listed in
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`Pm·agraphs 9 and 10.
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`12. On or about 1989, I transferred to the Planning and Analysis Unit of
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`the Ordinaty Agencies Depmtment in the corporate office as Manager, Planning
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`3
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`Ex. 1011 03/14
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`and Analysis (Level 60). In this role, I was responsible for perfonnance analysis
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`and monitoring. Specifically, I was responsible for analyzing and monitoring key
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`perfonnance measures of the Ordimuy Agencies Department. I was also
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`responsible for maintaining the department budget for all operations.
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`13. On or about 1993, I transferred to the Accounting Unit within
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`Pmdential Preferred Financial Services (formerly known as Ordinmy Agencies
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`Department) as Manager, Accounting (Level 60). In this role, I was responsible
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`for detailed budget management of the Corporate Depmtment.
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`14. On or about Janumy 1995, I transferred to the Business Management
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`Consultants group as a Senior Business Management Consultant (Level 60). I
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`helped with all budget and financial matters throughout the Westem United States.
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`For exmnple, in this role, I was responsible for business operations m1d analyzing
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`and monitoring key perfonnance metrics ofWestem region offices. I worked
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`directly with the Managing Directors and Business Managers of each local office.
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`During this time, I was located in Scottsdale, Arizona. I held this position until I
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`retired fi:om The Pmdential on or about June 1999.
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`15.
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`I joined Callidus Software on or about November 1999 as a
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`Compensation Consultant in the Customer Solutions group. In this role, I was
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`responsible for gathering business requirements from clients and implementing
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`those requirements within Callidus' s TmeComp solution.
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`16. On or about 2002, I was promoted to Principal Consultant within the
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`Customer Solutions Depmtment. In this role, I had substantially the same role as
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`described in Pm·agraph 15.
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`17. On or about 2003, I was promoted to Principal Consultant and Project
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`Manager in the Customer Solutions Department. In this role, I continued my
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`responsibilities as Principle Consultant and assumed the role of Project Manager.
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`4
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`Ex. 1011 04/14
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`18. On or about July 2005, I was promoted to Senior Architect in the
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`Solutions Architecture group. In this role, I was responsible for visiting clients on
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`short term assigmnents, analyzing their needs, and making changes to their
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`implementations as needed. Additionally, I served as a business expett and
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`resource for numerous projects.
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`19. On or about 2007, I was promoted to Principal Architect within the
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`Solutions Architecture group. I continued to perform the role of Senior Architect,
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`but the promotion recognized my contribution and professional growth in my
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`assigmnent.
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`20. On or about Janumy 2011 , I retumed to the Customer Solutions group
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`as Senior Principal Consultant in the Customer Solutions group.
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`21. Over the yem·s, I have emned several professional designations. On or
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`about 1981, I emned the Chmtered Life Underwriter (CLU) designation fi:om The
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`American College. On or about 1981, I earned the Fellow Life Management
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`Institute (FLMI) designation from the Life Office Management Association. On or
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`about 1984, I eamed the Chmtered Financial Consultant (ChFC) designation from
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`The American College.
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`II. CALCULATING COMMISSIONS MANUALLY
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`22. When I was at The Pmdential, management payroll from 1973 to
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`1975 was manual (i.e., it was done by hand). At the time, The Pmdential had two
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`different management cmmnission schemes or plans, one of which was the New
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`Manpower Development Manager (NMDM) plan. Our group had a system for
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`managing this cmmnission scheme by manually processing transactions for the
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`sale ofvm·ious insurance products and services.
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`23 . Each week, my section in the Ordinmy Agencies payroll unit
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`calculated compensation under NMDM plan by hand. Generally, the NMDM plan
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`managed cmmnissions for managers responsible for new agent recmiting,
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`5
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`Ex. 1011 05/14
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`productivity and growth. Under this plan, a manager could receive an ovenide
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`commission, which was essentially a commission on another agent's commissions.
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`For example, if an agent received a $100 cmmnission, that agent's manager could
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`be entitled to 10% or 30% of that $100 cmmnission.
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`24.
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`First, to calculate this ovenide cmmnission, an employee in my group
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`would obtain copies of each transaction by gathering copies of one or more agent
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`pay statements. We would manually review each statement and consider the line
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`ofbusiness, policy year, the agent's length of service, and the agent's conunission
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`amount.
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`25. We screened out transactions ineligible for cmmnission by checking a
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`manager's license. Specifically, we were responsible for ensuring that the manager
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`was in confonnity with one or more regulatmy requirements. For example, we
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`ensured that all managers were properly licensed in all jurisdictions where his or
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`her agents sold business. In order to do this, I would need to be aware of which
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`requirements an agent had to comply with to be eligible to receive compensation.
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`At The Prudential, if my team had not already memorized this infonnation, we
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`could find this information in a reference manual called the Ordinruy Agency
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`Operations Manual, which smmnarized the vru·ious policies and procedures as
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`described by the corporate office. The corporate office was responsible for
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`maintaining this manual to reflect any new developments in process or procedure.
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`If the manager was not properly licensed in a jurisdiction in which his or her agents
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`sold business, the manager could not receive an ovenide cmmnission for that
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`transaction. Om group kept track of the states in which these managers were
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`licensed. We obtained this credential information :fimn District Agencies
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`Adininistration and, for managers and stored this infonnation in a document called
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`an Earnings Record Card (ERC), which was a large heavy stock card
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`approximately 15" x 24" in size that we consulted regulru·ly. When reviewing an
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`6
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`Ex. 1011 06/14
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`agent's pay statement, we would identifY in which jurisdiction the transaction was
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`completed and then check whether the manager was licensed in that same
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`jurisdiction. If the jurisdictions did not match, we would calculate the ovenide
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`commission for that transaction as zero and mark that line in an agent's statement
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`as "not payable. " This would happen occasionally when an agent sold business
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`outside of his or her home area, in which case we would have to withhold ovenide
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`COIIDIDSSlOnS.
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`26.
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`If, on the other hand, the jurisdictions matched and the manager was
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`determined eligible, we would proceed to the next step. At this point, our group
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`would have our tentative results, which identified those agent pay statements for
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`which managers were eligible for compensation and for which we would calculate
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`the management ovenide cotmnission. We would manually review each statement
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`and consider the line of business, policy year, the agent' s length of service, and the
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`agent's cmmnission amount. Based on that infonnation, my group would
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`manually calculate his or her manager' s ovenide cmrunission. The members of
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`my group would multiply the transaction amount with an appropriate ovenide rate
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`to compute the ovenide cmmnission amount. The members of my team would
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`know which rate to apply by having memorized the appropriate rate schedule.
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`27. After we analyzed all of the transactions, we would sum the override
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`cmmnissions for each transaction to anive at the manager' s override cmmnission
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`for that week. Each week' s compensation infonnation was recorded on the ERC.
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`The ERC for each manager had a row for each week of the year with additional
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`rows to calculate subtotals for each month, quatter, and yem·. We would manually
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`write in the dates and the totals for each week. The ERC also had columns for
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`various elements of gross pay, deductions and exemptions. The purpose of this
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`ERC was to manually track results (it was essentially a manual spreadsheet) for tax
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`and other repmting.
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`7
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`Ex. 1011 07/14
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`28. We calculated management ovenide commissions and paid them out
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`evety week. In order to track the amount paid each month, it was possible to go
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`back to evety transaction and recalculate the value for each month, but instead we
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`looked to the sum of the last four or five weeks as we notated it on the ERC. In
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`other words, although we could look up this infonnation manually evety time by
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`manually calculating each week's cmmnissions and ovenides, we created a
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`shorthand table of the same infonnation on the ERC, which provided a
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`substantially faster way of working with this information. This was invaluable
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`when tax statements were prepared both quarterly and annually.
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`29. At that time, The Prudential would distribute management ovenides
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`to managers with paper checks. If the manager had a preexisting debt (i.e., a prior
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`overpayment or a clawed-back cmmnission), we calculated the manager's net pay
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`by taking these deductions into account before preparing the check. These checks
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`would be typed by hand by the Payroll Unit, in which I worked. During my time
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`in this unit, I reviewed and signed manual pay statements. Manual checks were
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`stored in a double-locked supply cabinet. The paper check and statement were sent
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`to the Treasmy unit for review, check signature, and release.
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`30.
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`Even where payroll was largely automated at The Prudential, a
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`significant amount of manual conection activity was often required when the
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`system othetwise omitted a cmmnission authorization or made an error in
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`calculating commissions. On or about March 1973 until April1977, when I was in
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`the Ordinruy Agencies Field Payroll and Administration section, I would use the
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`srune system described in Pru·agraphs 21-28 to calculate compensation for those
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`sales representatives who were eligible to receive cmrunissions. These sales
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`representatives included special agents and brokers.
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`31.
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`From 1974 to 1977, I worked with the Field Adtninistration unit.
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`Among other responsibilities, we routinely processed a fonn called "Change in
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`8
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`Ex. 1011 08/14
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`Credit and Commissions." Management would submit this fmm when requesting
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`that a commission or credit be retroactively reassigned to another agent or sales
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`representative. First, we would request a copy of the transaction by obtaining the
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`physical policy application file. Once we had the file in hand, we manually
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`verified that a properly licensed representative had witnessed the application (i.e.
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`witness refers to physically signing the application), and that the agent to whom
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`the commission would be reassigned was properly licensed in the jurisdiction at
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`the time of sale. We would not approve any Change in Credit and Commissions
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`fonns if the new agent was not fully in compliance with licensing requirements. If,
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`on the other hand, the agent was in compliance with licensing requirements, we
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`would approve the retroactive change of credit and cmrunission back to policy
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`inception. If approved, the agent would receive an adjustment that appeared
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`manually on their weekly commission statement and paper check that reflected the
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`retroactive payment.
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`32. From 1974 to 1977, my Field Administration Unit also had a system
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`for preparing the paperwork to hire or onboard new agents. This paperwork
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`included documents that identified the agent, the tenns of the selling agreement
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`contract between the agent and The Prudential, and the agent's licenses and
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`appointments. As part of the onboarding process, our group detennined whether
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`the agent had a license and appointment to allow the agent to strut writing new
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`business. Also as pmt of the onbom·ding process, we also had a checklist of
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`approximately 20 different items with which the applicant had to comply in order
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`to for The Prudential to appoint the agent to sell new business as a full-time special
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`agent. Some of the items on the checklist conesponded to requirements under the
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`agent's selling agreement (e.g., that the agent be properly licensed).
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`33.
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`Each of the processes described above in Pm·agraphs 22-31 were often
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`completed collectively for multiple transactions in batch fonn (as opposed to
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`9
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`Ex. 1011 09/14
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`calculated on a transaction by transaction basis). In other words, we could
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`complete each step of the process for a stack of transactions before proceeding to
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`the next step. This would save substantial time and expense.
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`34. Based on my experience at The Prudential, my understanding is that
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`payroll and license compliance was perfmmed manually at least since the 1930's,
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`and likely substantially earlier than that.
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`I declare under penalty of perjmy that the foregoing is true and conect.
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`Executed at Florence, Arizona, this ~ ~~~ay of Avcusl
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`' 2013 .
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`10
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`Ex. 1011 10/14
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`Exhibit A
`Exhibit A
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`Ex. 1011 11/14
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`JOSEPH E. DeHAVEN
`compensation.design@dehaven.us +1 (602) 317-3227
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`
`
`
`
`Senior Compensation Design Professional with an extensive background
`in Compensation Project Management and IT Consulting who has a
`proven track record of accomplishment in the areas of
`Incentive Compensation Plan Design and Enterprise Incentive
`Management Systems Configuration.
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`INCENTIVE COMPENSATION DESIGN
`
`Enterprise Incentive Served as Senior Principal Consultant, Principal Architect and
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`Project Manager / Principal Consultant on Enterprise Incentive
`Management (EIM)
`Management (EIM) systems integration teams at multiple client sites
`Systems Integration
`worldwide.
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`o Client industries have included:
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` Financial (Insurance, Banking, Funds Management)
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` Telecommunications
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` Software
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` Retail
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`o Developed and maintained solid working relationships between
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`implementation team members and clients.
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`o Integrated variable compensation enterprise solutions with
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`assorted client systems including:
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` SAP, PeopleSoft, Portal Billing, JD Edwards
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` Ceridian, ADP, Seibel Systems
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`
`
`Compensation Design,
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`Development, and
`Led numerous design and modeling teams for a major insurance company
`Systems
`sales department through more than 25 major variable compensation
`Implementation
`design projects. Plans and features included:
`o Introduced Quality Incentive Payment (QUIP) and conditional vesting
`for agents.
`o Introduced disproportional lapse chargebacks (new in industry).
`Addressed industry seminar (LIMRA Quality Business Committee) on
`results.
`o Redesigned Expense Reimbursement Allowance (ERA) plans.
`o Designed and modeled Incentive Compensation Plan for new agents and
`functional management.
`o Considered benefits integration during the development of various
`pay plans. Revised disability plans (STD & LTD).
`o Designed a profitability surrogate entitled Expense Efficiency
`Report (EER) for Managing Director compensation plan.
`o Developed numerous growth and other unique incentive features to
`various plans to achieve objectives.
`
`
`
`
`
`
`Versatile, motivational achiever who utilizes business acumen to
`proactively solve problems. Risk manager whose innovations lead to
`significant new plan features. Develops strong teams by coaching,
`counseling and promoting individual growth. Sought out by clients
`and sales management for advice on compensation plan design and
`packaging, systems design and business management issues.
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`Amenable to travel. Will relocate for the right opportunity.
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`Ex. 1011 12/14
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`PROFESSIONAL EXPERIENCE
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`Callidus Software 1999 - Present
`
`
`Led Compensation Practice as Principal Architect.
`Led Compensation Center of Excellence
`Work with project team members to develop their background
`knowledge and increase their understanding of compensation
`design and product knowledge at client sites world wide.
`Analyze and review customer sales structures and those
`processes and policies related to applying sales credit and
`then calculating payments. Provide recommendations for process
`improvements.
`Coordinate activities and schedules of team members to provide
`timely on-budget implementations.
`Built strong base satisfied customers who gained value through
`successful software implementations.
`Document outstanding performance issues and systems
`limitations for future product enhancements.
`
`
` •
`
`
`•
`•
`
`•
`
`•
`
`•
`
`•
`
`Senior Principal Consultant
`Principal Architect
`Project Manager
`Principal Consultant
`Compensation Consultant
`
`USA
`Europe
`Middle East
`ASIA
`Australia
`
`
`The Prudential Insurance Company of America 1970-1999
`
`Senior Business
`Management Consultant,
`Accounting Manager,
`Planning and Analysis
`Manager
`
`Liberty Corner, NJ;
`Newark, NJ and Scottsdale,
`AZ, 1991-1999
`
`
`
`Compensation Systems
`Manager
`Compensation Systems
`Analyst
`Compensation
`Consultant,
`
`Newark, NJ, 1977-1991
`
`
`
`
`
`
`• Worked extensively with territory business/sales managers and
`managing directors to develop operations.
`• Trained/challenged territory management on financial analysis,
`sales, staffing and budgeting issues.
`• Administered $630 million fixed and variable expenses.
`• Audited internal operations and introduced individual
`accountability framework to staff nationally.
`• Administered Executive Compensation plans for sales
`executives.
`• Directed operational planning and analysis for division
`including: sales and staffing analysis, industry research,
`budgets and financial statements.
`
`
`• Modeled costs of various plans and alternatives through
`hundreds of scenarios using MS Office Professional.
`• Served as expert field, regional and corporate administrative
`contact for sales compensation.
`• Served as Human Resource Generalist on issues such as:
`o Ethics Hot Line and Chairman’s Review case resolution.
`o Employment contracts, Benefits design and administration.
`o Mediation, Workplace Relations, Diversity Training.
`o Pension projections. Staff Training and Development.
`o Performance counseling. Performance Appraisals
`o Progressive Discipline. Annual Compensation Process.
`
`
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`Ex. 1011 13/14
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`EDUCATION AND PROFESSIONAL DESIGNATIONS
`
`
`CLU, Chartered Life
`
`Underwriter
`ChFC, Chartered Financial
`Consultant
`
`FLMI, Fellow, Life
`Management Institute
`
`Business Administration
`
`
`
`
`
`
`
`
`
`
`
`
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`The American College, Bryn Mawr, PA.
`
`Life Office Management Association, Atlanta, GA.
`
`University of Phoenix, Phoenix, AZ.
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`Ex. 1011 14/14
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