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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

SCHEDULE 14A

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

 

 

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CSG Systems International, Inc.
9555 Maroon Circle
Englewood, Colorado 80112

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 17, 2011

        The annual meeting of stockholders of CSG Systems International, Inc. (the "Company") will be held at the office of CSG Systems, Inc., 2525 North 117th Avenue, Omaha, Nebraska, on Tuesday, May 17, 2011, at 8:00 a.m., for the following purposes:

1.

To elect four Class II Directors.



2.

To hold an advisory vote on executive compensation.



3.

To hold an advisory vote on the frequency of advisory votes on executive compensation.



4.

To approve the performance goals under the Performance Bonus Program.



5.

To approve the Amended and Restated 2005 Stock Incentive Plan.



6.

To approve the Second Amended and Restated 1996 Employee Stock Purchase Plan.



7.

To ratify the appointment of KPMG LLP as the Company's independent registered public accounting firm for 2011.



8.

To transact such other business as properly may come before the meeting or any adjournments thereof.

        The Board of Directors fixed the close of business on March 24, 2011, as the record date for determining the stockholders of the Company who are entitled to notice of and to vote at the meeting and any adjournment thereof.

        All stockholders are cordially invited to attend the meeting.

April 8, 2011

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IMPORTANT NOTICE REGARDING THE
AVAILABILITY OF PROXY MATERIALS
FOR THE STOCKHOLDER MEETING
TO BE HELD ON MAY 17, 2011

The proxy statement and the Company's Annual Report on Form 10-K are available at
www.edocumentview.com/csgs.

ALL STOCKHOLDERS ARE WELCOME TO ATTEND THE ANNUAL MEETING. HOWEVER, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ACCOMPANYING ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS REQUIRED IF THE ACCOMPANYING ENVELOPE IS MAILED IN THE UNITED STATES.

YOU ALSO MAY FILE YOUR PROXY BY TELEPHONE OR THE INTERNET IN ACCORDANCE WITH THE INSTRUCTIONS ACCOMPANYING THE PROXY.

IF YOU ATTEND THE MEETING AND ARE A STOCKHOLDER OF RECORD, YOU MAY VOTE IN PERSON. IF YOU WISH TO ATTEND AND VOTE AT THE MEETING AND YOUR SHARES ARE HELD IN "STREET NAME", YOU WILL NEED TO OBTAIN A PROXY FROM THE INSTITUTION THAT HOLDS YOUR SHARES AND SHOULD ADVISE SUCH INSTITUTION NOT TO VOTE YOUR SHARES. A PROXY WHICH YOU GIVE WILL NOT BE USED IF YOU ATTEND THE MEETING IN PERSON AND SO REQUEST.

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CSG Systems International, Inc.
9555 Maroon Circle
Englewood, Colorado 80112

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PROXY STATEMENT
ANNUAL MEETING OF STOCKHOLDERS

May 17, 2011

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QUESTIONS AND ANSWERS ABOUT THE PROXY MATERIALS
AND THE 2011 ANNUAL MEETING

Q:    Why am I receiving these materials?

A:

The Board of Directors (the "Board") of CSG Systems International, Inc. ("we" or the "Company") has delivered printed proxy materials to you, on or about April 8, 2011, in connection with the solicitation of proxies for use at our 2011 Annual Meeting of Stockholders (the "Annual Meeting"), or at any adjournments of the Annual Meeting. The Annual Meeting will take place at CSG Systems, Inc., 2525 North 117th Avenue, Omaha, Nebraska, on Tuesday, May 17, 2011, at 8:00 a.m. As a stockholder, you are invited to attend the Annual Meeting and are requested to vote on the items of business described in this proxy statement.

Q:    What information is contained in this proxy statement?

A:

The information in this proxy statement relates to the proposals to be voted on at the Annual Meeting, the voting process, the compensation of our directors and named executive officers, corporate governance and information on our Board, and certain other required information.

Q:    How do I get electronic access to the proxy materials?

A:

You may view our proxy materials at www.edocumentview.com/csgs.

Q:    What items of business will be voted on at the Annual Meeting?

A:

The items of business scheduled to be voted on at the Annual Meeting are:

•

Proposal 1—The election of four Class II Directors.

•

Proposal 2—An advisory vote on executive compensation.

•

Proposal 3—An advisory vote on the frequency of advisory votes on executive compensation.

•

Proposal 4—Approval of the performance goals under the Performance Bonus Program.

•

Proposal 5—Approval of the Amended and Restated 2005 Stock Incentive Plan.

•

Proposal 6—Approval of the Second Amended and Restated 1996 Employee Stock Purchase Plan.

•

Proposal 7—The ratification of KPMG LLP as our independent registered public accounting firm for fiscal 2011.

        We will also consider any other business that properly comes before the Annual Meeting.

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Q:    How does the Board recommend that I vote?

A:

Our Board recommends that you vote your shares:

Proposal 1—"FOR" each of the nominees to the Board.

Proposal 2—"FOR" the approval, on an advisory basis, of the compensation of our named executive officers.

Proposal 3—"FOR" the approval, on an advisory basis, of an advisory vote every three years on executive compensation.

Proposal 4—"FOR" the approval of the performance goals under the Performance Bonus Program.

Proposal 5—"FOR" the approval of the Amended and Restated 2005 Stock Incentive Plan.

Proposal 6—"FOR" the approval of the Second Amended and Restated 1996 Employee Stock Purchase Plan.

Proposal 7—"FOR" the ratification of the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2011.

Q:    What shares can I vote?

A:

You can vote all shares that you own or hold a valid proxy for as of the record date. The Board fixed the close of business on March 24, 2011, as the record date for determining the stockholders of the Company who are entitled to notice of and to vote at the Annual Meeting. At the close of business on the record date, there were outstanding and entitled to vote at the Annual Meeting 34,592,836 shares of common stock of the Company, par value $.01 per share ("common stock").

Q:    How many votes am I entitled to per share?

A:

Each holder of shares of common stock is entitled to one vote for each share of common stock held as of the record date.

Q:    Can I attend the Annual Meeting?

A:

You are entitled to attend the Annual Meeting only if you were a stockholder of the Company as of the record date or you hold a valid proxy for the Annual Meeting. However, you are not required to attend in order to vote your shares.

Q:    How can I vote my shares in person at the Annual Meeting?

A:

Shares held in your name as the stockholder of record may be voted by you in person at the Annual Meeting. Shares held beneficially in street name may be voted by you in person at the Annual Meeting only if you obtain a legal proxy from the broker, bank, trustee or nominee that holds your shares giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you also submit your proxy or voting instructions as described below so that your vote will be counted if you later decide not to attend the meeting.

Q:    How can I vote my shares without attending the Annual Meeting?

A:

Whether you hold shares directly as the stockholder of record or beneficially in street name, you may direct how your shares are voted without attending the Annual Meeting. If you are a stockholder of record, you may vote by proxy. All shareholders can vote by proxy over the Internet by following the instructions provided. You can also vote by mail or telephone pursuant to

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instructions provided on the proxy card or, if you hold shares beneficially in street name, by instructions provided by your broker, bank, trustee or nominee.

Q:    Can I change my vote?

A:

You may change your vote at any time prior to the taking of the vote at the Annual Meeting. If you are the stockholder of record, you may change your vote by (1) delivering a new proxy bearing a later date (which automatically revokes the earlier proxy) using any of the methods described above, (2) providing a written notice of revocation to our Secretary, prior to the vote, or (3) attending the Annual Meeting and voting in person. Attendance at the meeting will not cause your previously granted proxy to be revoked unless you specifically so request. For shares you hold beneficially in street name, you may change your vote by submitting new voting instructions to your broker, bank, trustee or nominee following the instructions they provided, or, if you have obtained a legal proxy from your broker, bank, trustee or nominee giving you the right to vote your shares, by attending the Annual Meeting and voting in person.

Q:    How many shares must be present or represented to conduct business at the Annual Meeting?

A:

The quorum requirement for holding the Annual Meeting and transacting business is that a majority of the issued and outstanding shares of common stock of the Company entitled to vote must be present in person or represented by proxy. Both abstentions and broker non-votes (described below) are counted for the purpose of determining the presence of a quorum.

Q:    What is the voting requirement to approve each of the proposals?

A:

In the election of directors, Proposal 1, the four persons receiving the highest number of affirmative "FOR" votes at the Annual Meeting will be elected. The affirmative "FOR" vote of a majority of the votes cast on Proposals 2, 4, 5, 6 and 7 is required for approval of each proposal. For Proposal 3, the frequency receiving the highest number of votes (every one, two or three years) will be considered the frequency recommended by stockholders.

If you hold shares beneficially in street name and do not provide your broker with voting instructions, your shares may constitute "broker non-votes." Generally, broker non-votes occur on a matter when a broker is not permitted to vote on that matter without instructions from the beneficial owner and instructions are not given. Brokers will not be permitted to vote without instructions on any Proposals this year except for the ratification of the appointment of KPMG LLP. In tabulating the voting result for any particular proposal, shares that constitute broker non-votes are not considered votes cast on that proposal. Thus, broker non-votes will not affect the outcome of any matter being voted on at the meeting, assuming that a quorum is obtained. Abstentions are considered votes cast and thus have the same effect as votes against the matter.

Q:    How are votes counted?

A:

Votes cast in person or by proxy at the Annual Meeting will be tabulated by the inspector appointed for the Annual Meeting. In the election of directors, you may vote "FOR" all or some of the nominees or your vote may be "WITHHELD" with respect to one or more of the nominees. For Proposal 3, you may vote for a frequency of "ONE YEAR," "TWO YEARS," "THREE YEARS" or "ABSTAIN" on the advisory vote on executive compensation. For all other proposals, you may vote "FOR," "AGAINST" or "ABSTAIN." If you elect to "ABSTAIN," the abstention has the same effect as a vote "AGAINST." If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If no instructions are indicated, the shares will be voted as recommended by the Board.

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Q:    Is cumulative voting permitted for the election of directors?

A:

No. You may not cumulate your votes for the election of directors.

Q:    What happens if additional matters are presented at the Annual Meeting?

A:

Other than the seven items of business described in this proxy statement, we are not aware of any other business to be acted upon at the Annual Meeting. If you grant a proxy, the persons named as proxy holders, Peter E. Kalan and Joseph T. Ruble, and each or either of them, will have the discretion to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason any of the nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated by the Board.

Q:    Who will bear the cost of soliciting votes for the Annual Meeting?

A:

We will pay the entire cost of preparing, assembling, printing, mailing and distributing these proxy materials and soliciting votes. If you choose to access the proxy materials and/or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. In addition to the solicitations by mail, the solicitation of proxies or votes may be made by our directors, officers and regular employees, without additional remuneration, and their appointed agents, in person, by telephone or by electronic communication. We will request banks, brokers, and other fiduciaries to forward proxy materials to the owners of stock held in their names and will reimburse such banks, brokers, and other fiduciaries for their reasonable out-of-pocket expenses incurred in connection with the distribution of proxy materials.

Q:    Where can I find the voting results of the Annual Meeting?

A:

We intend to announce voting results on a Current Report on Form 8-K filed with the Securities and Exchange Commission (the "SEC") no later than four business days after the Annual Meeting.

Q:    What is the deadline to propose actions for consideration at next year's Annual Meeting of stockholders or to nominate individuals to serve as directors?

A:

Under our bylaws, a stockholder who wishes to bring any business before the 2012 Annual Meeting of Stockholders of the Company must give advance written notice to us of such business and of any proposal which such stockholder wishes to have included in our proxy statement and on the proxy card for such annual meeting. The notice must be sent to our Secretary at our principal executive office, be received by our Secretary not later than December 9, 2011, and contain certain information required by our bylaws. Such advance notice requirement applies to all matters even if a stockholder does not seek to include in our proxy statement a proposal with respect to a particular matter. Such proposals also must comply with SEC regulations under Rule 14a-8 regarding the inclusion of stockholder proposals in company-sponsored proxy materials.

Our bylaws also provide that stockholder nominations of persons for election to the Board are subject to certain advance notice and informational requirements. Copies of our bylaws are available to stockholders upon request made to our Secretary at the address set forth on the first page of this proxy statement.

The bylaw requirements referred to above do not supersede the conditions and requirements established by the SEC for stockholder proposals to be included in our proxy materials for a meeting of stockholders, and in that regard stockholders also must comply with the applicable requirements of Rule 14a-8 under the Securities Exchange Act of 1934.

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Q:    I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?

A:

We have adopted a procedure called "householding," which is permitted by the SEC. Under this procedure, we deliver a single copy of the proxy materials and the Form 10-K to stockholders who share the same address unless we received contrary instructions from one or more of the stockholders. This procedure reduces our printing costs, mailing costs and fees. Upon written or oral request, we will deliver promptly a separate copy of the proxy materials and the Form 10-K to any stockholder at a shared address to which we delivered a single copy of any of these documents. To request a separate delivery of such documents now or in the future, a stockholder may submit a written request to our Investor Relations Department at the following address:

CSG Systems International, Inc.
9555 Maroon Circle
Englewood, Colorado 80112
Attn: Investor Relations Department

You may also submit an oral request to such department at (303) 200-2000. Stockholders sharing an address who currently receive multiple copies of the proxy statements or Forms 10-K and who would rather receive only a single copy of any of such documents may request such delivery change by writing or calling our Investor Relations Department in the manner described above.

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CORPORATE GOVERNANCE AND BOARD OF DIRECTOR MATTERS

        The Board has determined that Messrs. Cooper, Hughes, Nafus, Reed, Reznicek, Sica, Smith and Unruh and Ms. Obuchowski, who are non-employee directors of the Company, are "independent directors" as defined in the applicable rule of The Nasdaq Stock Market, Inc. ("NASDAQ").

        The Board has established a process for stockholders of the Company to send communications to the Board or to a specified individual member of the Board. Such communications should be in writing and sent to the Board or such individual director in care of the Secretary of the Company at the address shown on the first page of this proxy statement. Depending upon the subject matter of the communication, the Secretary of the Company will (i) forward the communication to all of the members of the Board or to the individual member of the Board to whom the communication is addressed, (ii) forward a communication relating to accounting, internal accounting controls or auditing matters to the chair of the Audit Committee of the Board, (iii) attempt to respond directly to an inquiry or request involving publicly available information about the Company or its stock or (iv) not forward the communication if it is primarily commercial in nature or relates to an improper or irrelevant topic. The Secretary of the Company will maintain a log of all communications addressed to the Board or an individual member of the Board which are not forwarded in accordance with this policy; directors of the Company may review such log at any time and request copies of any of such communications.

        Historically, very few stockholders of the Company have attended the Company's annual meetings of stockholders; almost all stockholders who vote do so by proxy. Accordingly, the Company's policy is that employee directors of the Company are expected to attend annual meetings of stockholders of the Company if their schedules permit and that non-employee members of the Board are not expected to attend annual meetings of stockholders but may if they so desire. All nine directors attended the 2010 Annual Meeting of the Company's stockholders. The Board has scheduled the 2011 Annual Meeting to coincide with a regular quarterly meeting of the Board so that all Board members present at such meeting of the Board also can attend the Annual Meeting.

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        During 2010, the Board held seven meetings, and all directors of the Company attended at least 75% of the aggregate number of meetings of the Board and of the committees on which they served.

Audit Committee

        The Board has established a separately-designated standing Audit Committee in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934, which is presently composed of Ms. Obuchowski, Mr. Reed and Mr. Reznicek (Chair). The Audit Committee's primary purposes, as set forth in its charter, are to oversee the accounting and financial reporting processes of the Company and the audits of the financial statements of the Company and provide oversight of our risk and compliance management programs. The Audit Committee Charter is available on the Company's web site under Investor Relations, Corporate Governance, at http://www.csgsystems.com. Information on the Company's web site is not incorporated by reference in this proxy statement. As required by the Audit Committee Charter, all of the members of the Audit Committee are "independent directors" as defined in the applicable NASDAQ marketplace rule and also satisfy the other requirements of the NASDAQ marketplace rules applicable to audit committee members. The Board has determined that Messrs. Reed and Reznicek are "audit committee financial experts" as defined by the SEC. The Audit Committee held four meetings during 2010.

        Moreover, the Audit Committee maintains oversight of the Company's risk management program as determined by the Board. To manage the Company's risk management program, the Company established a Business Risk Committee comprised of the Company's named executive officers (see Compensation Discussion and Analysis beginning on page 21) chaired by the Chief Financial Officer and coordinated by the Company's Internal Audit department. The Company's Internal Audit department has direct reporting responsibility to the Audit Committee. A quarterly report is presented to the Audit Committee by the Internal Audit department summarizing the material existing and emerging business risks for the Audit Committee's oversight. We also maintain a formal risk identification and risk mitigation program that is administered by our Chief Financial Officer. This program is reviewed periodically throughout the year by the executive officers of the Company, in conjunction with members of the internal audit function. This process is intended to: (i) identify those risks within the Company that are most likely to affect its operations, (ii) assign an executive responsible for monitoring and mitigating those risks, and (iii) provide a formal mechanism for the assigned responsible executive officer to report back periodically on the effect of mitigation efforts. We present the results of this process to the Audit Committee at each regularly scheduled meeting. In addition, beginning in 2011, the Company's Chief Compliance Officer reports to the Audit Committee on an annual basis and is authorized to personally communicate with the Audit Committee on all matters relating to the Company's compliance program.

Compensation Committee

        The Board has a standing Compensation Committee, presently composed of Messrs. Cooper, Hughes, Sica (Chair), Smith and Unruh. The Compensation Committee Charter provides, among other things, that the Committee is to review and recommend to the Board the Company's senior management compensation and benefits policies generally, evaluate the performance of the Company's executive officers and review and recommend to the Board or, when applicable, take independent actions with respect to the compensation of the Company's executive officers. The Compensation Committee also is responsible for the administration of and the granting of equity awards under the Company's 2001 Stock Incentive Plan, (no further awards may be granted under this Plan) and 2005 Stock Incentive Plan and for the administration of the Company's Performance Bonus Program for the Company's executive officers. The Compensation Committee Charter is available on the Company's web site under Investor Relations, Corporate Governance, at http://www.csgsystems.com. Information on the Company's web site is not incorporated by reference in this proxy statement. As required by the Compensation Committee Charter, all of the members of the Committee are

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"independent directors" as defined in the applicable NASDAQ rule and also are "outside directors" for purposes of Section 162(m) of the Internal Revenue Code of 1986. The Compensation Committee held four meetings during 2010.

        The Compensation Committee meets at least quarterly. To fulfill its responsibilities of reviewing and establishing or recommending to the Board the compensation of the Company's executive officers, the Compensation Committee uses the services of an independent compensation consulting firm selected by the Committee, consults with the Company's Chief Executive Officer and Senior Vice President of Human Resources and draws upon the extensive business experience of the Committee's members. The Compensation Committee directs the independent compensation consulting firm to provide to the Committee a comprehensive formal assessment of the competitiveness of the Company's executive officer compensation program, including a comparison of the principal components of the Company's executive officer compensation programs (base salaries, performance bonuses and equity awards) with those of a peer group of other publicly owned companies; and the Compensation Committee considers such assessment and other data provided by the consultant in arriving at the Committee's decisions or recommendations to the Board with respect to base salaries and performance bonuses for the Company's executive officers. The Compensation Committee also considers the information provided by the Committee's independent compensation consultant in determining equity awards to be made by the Committee to the executive officers of the Company and the terms of such awards. Additional information with respect to the matters discussed in this paragraph appears in the Compensation Discussion and Analysis later in this proxy statement.

        In making equity awards to non-employee directors of the Company, the Compensation Committee considers relevant information provided by the independent compensation consultant and the recommendations of the Nominating and Corporate Governance Committee and the Board with respect to such awards.

        While the Board makes the final decisions with respect to the base salaries of the executive officers of the Company, the Compensation Committee makes specific recommendations to the Board with respect to such salaries and, in arriving at those recommendations, also considers the recommendations of the Company's Chief Executive Officer as to the base salaries of executive officers other than himself.

Compensation Committee Interlocks and Insider Participation

        No member of the Compensation Committee was an officer or employee of the Company at any time during 2010 or on the date of this proxy statement. During 2010, the Compensation Committee was comprised of Messrs. Cooper, Sica, Smith, and Unruh. In 2010, no member of the Compensation Committee had any relationship or transaction with the Company that would require disclosure as a "related person transaction" under Item 404 of SEC Regulation S-K. During 2010, none of our executive officers served on the board of directors or compensation committee of any other entity whose executive officer(s) served as a member of our Board or Compensation Committee.

Nominating and Corporate Governance Committee

        The Board has a standing Nominating and Corporate Governance Committee, presently composed of Mr. Cooper (Chair), Mr. Hughes, Ms. Obuchowski, and Mr. Smith. The Nominating and Corporate Governance Committee Charter provides, among other things, that the Committee is to identify individuals qualified to become Board members, recommend to the Board nominees for election as directors, recommend directors for appointment to Board committees, evaluate the Board's performance, review and recommend to the Board the compensation of the Company's directors and develop and recommend to the Board the Company's Corporate Governance Guidelines and Code of Conduct. The Nominating and Corporate Governance Committee Charter is available on the Company's web site under Investor Relations, Corporate Governance, at http://www.csgsystems.com.

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Information on the Company's web site is not incorporated by reference in this proxy statement. As required by the Nominating and Corporate Governance Committee Charter, a majority of the members of the Committee are "independent directors" as defined in the applicable NASDAQ rule. All Committee members are independent. The Nominating and Corporate Governance Committee held four meetings during 2010.

        In recommending to the Board nominees for election as directors, the Nominating and Corporate Governance Committee reviews the present composition of the Board to determine the qualities, skills and areas of expertise (including but not limited to financial and accounting expertise) needed to enable the Board and its committees to properly discharge their responsibilities. The Nominating and Corporate Governance Committee historically has relied upon recommendations from its members and other members of the Board and from the Company's Chief Executive Officer with respect to potential candidates for service on the Board. The Nominating and Corporate Governance Committee considers it necessary for the Board to have at least one of its independent members qualify as an "audit committee financial expert" and takes that requirement into account in making its recommendations to the Board. While the Nominating and Corporate Governance Committee has not established other specific minimum requirements for service on the Board, when assessing and determining a candidate's qualifications, the Committee considers among other things the number and type of other boards on which the candidate serves; other business and professional commitments of the candidate and potential conflicts of interest; the ability and willingness of a candidate to devote the required amount of time to the candidate's responsibilities as a Board member and as a member of one or more committees of the Board; the age, background, reputation, independence, experience, skills and judgment of the candidate; and the diversity of the Board's membership. Directors, while relying on the honesty and integrity of the Company's senior management and its outside advisors and auditors, are expected to exercise their best business judgment when acting on behalf of the Company and its stockholders and to adhere to the applicable provisions of the Company's Code of Conduct.

        The Nominating and Corporate Governance Committee Charter expressly includes diversity as a consideration, and as mentioned above, our Nominating and Corporate Governance Committee considers diversity when nominating Board members. We interpret the term "diversity" in its broadest sense and believe that it encompasses many attributes, including age, background, experience, skills, substantive expertise, gender, ethnicity, geography, and education. Our Board is particularly interested in maintaining a collective group of individuals with experience in the following areas:

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Active or retired executive officers of public and private companies;



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Operations, finance, accounting, marketing, human resources, and sales;



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International business;



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Membership on boards of directors of publicly traded companies;



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Communication service provider and related industries; and



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Technology industry.

Our Board members also should display the personal attributes necessary to be an effective director: integrity, sound judgment, independence, ability to operate collaboratively, and a fiduciary commitment to the Company and our stockholders. We consider the members of our Board to have a diverse set of business and personal experiences, backgrounds and expertise, and they all share the personal attributes described above. In considering candidates for the Board, the Nominating and Corporate Governance Committee considers the entirety of each candidate's credentials in the context of these standards. The Nominating and Corporate Governance Committee will consider qualified nominees for election as directors recommended by the Company's stockholders. A stockholder who wishes to recommend a nominee for consideration by the Nominating and Corporate Governance Committee should submit the recommendation in writing to the Secretary of the Company at the address shown on the first page of

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this proxy statement, indicating the proposed nominee's qualifications and other relevant biographical information and providing written confirmation of the proposed nominee's consent to serve as a director if nominated and elected. The Secretary of the Company will forward legitimate recommendations from stockholders to the chair of the Nominating and Corporate Governance Committee for further review and consideration. The bylaws of the Company provide that stockholder nominations of persons for election to the Board (as distinguished from recommendations to the Nominating and Corporate Governance Committee) are subject to certain advance notice and informational requirements; stockholders may obtain a copy of the relevant bylaw provisions from the Secretary of the Company at the address shown on the first page of this proxy statement.

Other Committees

        During 2010, the Board formed two special committees: the Hiring Committee and the Pricing Committee. The Hiring Committee was established for the purpose of approving the compensation program for our new Executive Vice President, Sales and Marketing. The Board established the Pricing Committee for the purpose of determining the terms and conditions, including price, associated with the issuance of the Company's convertible debt securities in the first quarter of 2010. The Hiring Committee and Pricing Committee each held one meeting in 2010.

Board Leadership Structure

        We believe that no one structure is suitable for all companies and recognize that different board leadership structures may be appropriate for companies in different situations and may change from time-to-time. From inception until June 2005, our Board operated with our Chief Executive Officer and co-founder serving as our Chairman of the Board. In 2005, the Board reevaluated its leadership structure and determined that it would be preferable for one of the independent directors to serve as Chairman of the Board, and Mr. Reznicek was elected as the non-executive Chairman. In 2010, Mr. Reed was elected as non-executive Chairman of the Board as the successor to Mr. Reznicek. The election of Mr. Reed as non-executive Chairman was made in conjunction with the Board's governance practices to rotate key board positions periodically.

        Under our Corporate Governance Guidelines (the "Guidelines"), our Board has the flexibility to modify or continue our leadership structure in the future, as it deems appropriate, and our Chairman and Chief Executive Officer may be one person if the Board believes that allocation of responsibilities in this way would be in the best interest of the Company and its stockholders. In connection with recruitment and succession, the Board determines the appropriateness of its policies. In March 2011, the Board appointed John L. M. Hughes to serve on the Board. For more information regarding Mr. Hughes' biographical information, see Nominees for Election as Class II Directors With Terms Expiring in 2011 below.

        At this time, we believe our current Board leadership structure is beneficial for us because of the additional oversight responsibilities required of directors, and it permits the Chief Executive Officer to devote more time to that position. By separating the role of the Chairman position, we reduce duplication of efforts by the Chief Executive Officer and the Chairman. In addition, the Chairman of the Board and the Chief Executive Officer (if the Chief Executive Officer is not the Chairman of the Board) are free, as is the Board as a whole, to call upon any one or more directors to provide leadership in a given situation should a special need arise. Our Guidelines provide additional flexibility and the ability to select an appropriate leadership structure based on the then current needs of the Company.

        As previously mentioned, our Board has nine independent members and one employee director (our President and Chief Executive Officer). We believe that the number of independent, experienced directors that make up our board, along with the independent oversight of the Board by the non-executive Chairman, benefits our Company and our stockholders.

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Code of Conduct

        Upon the recommendation of the Nominating and Corporate Governance Committee, the Board has adopted a Code of Conduct applicable to all of the directors, officers and employees of the Company and its subsidiaries. The Company's Code of Conduct and the Company's Corporate Governance Guidelines are available on the Company's web site under Investor Relations, Corporate Governance, at http://www.csgsystems.com. Any future amendments to the Code of Conduct, or any future waiver of a provision of our Code of Conduct that applies to our principal executive officer, principal financial officer, principal accounting officer or controller or persons performing similar functions and relates to an element of the code of ethics definition enumerated in Item 406 of Regulation S-K, will be timely posted to our website upon their occurrence. Historically, we have had minimal changes to our Code of Conduct, and have had no waivers of a provision of our Code of Conduct for any of the aforementioned individuals within the applicable definition of code of ethics. Information on the Company's web site is not incorporated by reference in this proxy statement.

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COMPENSATION OF DIRECTORS

        During 2010, each non-employee director of the Company was entitled to receive from the Company an annual retainer fee of $75,000 payable in quarterly installments.

        As of December 31, 2010, the annual Chairperson retainers were as follows: Chair of the Board $50,000, Chair of the Audit Committee $16,000, Chair of the Nominating and Corporate Governance Committee $10,000 and Chair of the Compensation Committee $16,000, all payable in quarterly installments. During 2010, Mr. Cooper and Ms. Obuchowski each served as Chair of the Nominating and Corporate Governance Committee for a portion of the year.

        A director who is an officer or employee of the Company does not receive additional compensation for serving as a director or committee member. Mr. Kalan, President and Chief Executive Officer of the Company, is the only current officer or employee of the Company who serves as a director of the Company. No officers or employees of the Company currently serve on any committee of the Board.

2010 Director Compensation

        The following table contains information concerning the compensation of the Company's non-employee directors for 2010. All amounts have been rounded to the nearest dollar.

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PROPOSAL 1

ELECTION OF DIRECTORS

        The Board is divided into three classes presently consisting of three Class I Directors, four Class II Directors and three Class III Directors whose present terms continue until the annual meetings of stockholders of the Company to be held in 2013, 2011 and 2012, respectively, and until their respective successors are elected and qualified.

        Unless the proxy is marked otherwise, the person acting under the accompanying proxy will vote to elect Messrs. Cooper, Hughes, Reznicek and Smith as the Class II Directors to serve until 2014. The proxy may not be voted for more than four directors. If a nominee is unable to serve, then the person acting under the proxy may vote the proxy for the election of a substitute nominee. The Company does not presently contemplate that any of the four nominees will be unable to serve.

The Board recommends that stockholders vote FOR the election of
Messrs. Cooper, Hughes, Reznicek and Smith as Class II Directors.

        The following information relates to the Board's nominees for election at the Annual Meeting and to the other directors of the Company whose terms of office will continue after the Annual Meeting:

Nominees for Election as Class II Directors With Terms Expiring in 2011:

Ronald H. Cooper
President and Chief Executive Officer
Clear Channel Outdoor Americas, Inc.

        Mr. Cooper, 54, was elected to the Board in November 2006. Mr. Cooper is currently the President and Chief Executive Officer of Clear Channel Outdoor Americas, Inc. He previously spent nearly 25 years in the cable and telecommunications industry, most recently at Adelphia Communications where he served as President and Chief Operating Officer from 2003 to 2006. Prior to Adelphia, Mr. Cooper held a series of executive positions at AT&T Broadband, RELERA Data Centers & Solutions, and MediaOne and its predecessor Continental Cablevision, Inc. He has held various board and committee seats with the National Cable Television Association, California Cable & Telecommunications Association, Cable Television Association for Marketing and the New England Cable Television Association. In addition, Mr. Cooper is a director of the Outdoor Advertising Association of America, a trustee at the Denver Art Museum and a director for Colorado Public Radio.

        Mr. Cooper has over 30 years of corporate business experience including 23 years at the executive level. Mr. Cooper has significant experience in the cable and telecommunications industry and is able to provide the Company with strategic insight into its largest market. His current and previous experience as an executive level manager with a number of large corporations provides him with extensive skills in operational performance, financial management, risk assessment, leadership, investment knowledge and strategic business development. Mr. Cooper has considerable board experience from his current and previous director positions on numerous industry association and non-profit boards.

John L. M. Hughes
Chairman of the Boards for
Spectris plc, Telecity Group plc, and Sepura plc

        Mr. Hughes, 59, was appointed to the Board in March 2011. Mr. Hughes previously served as Chairman of the Board for Intec Telecom Systems plc for nearly six years until the company was

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acquired by CSG Systems International, Inc. in 2010. Mr. Hughes currently serves as Chairman of the Board for several corporations, including Spectris plc, Telecity Group plc and Sepura plc. Spectris plc is a U.K.-headquartered multinational leading supplier of precision productiviy-enhancing instrumentation and control systems and equipment, and Mr. Hughes has been Spectris's Non-Executive Director since 2008. Telecity Group plc is a FTSE-250 listed leading provider of premium network independent data centres with 24 locations in eight major European cities, providing co-location and managed services and he has served as Chairman since 2007. Sepura plc is a world-leading and LSE-listed supplier of Tetra terminals for mission-critical applications and he has served as Chairman since 2010. From 2009-2010, Mr. Hughes served as Chairman of the Board of AIRCOM International Limited, an independent global provider of network management tools and services specializing in the development and delivery of end-to-end planning and optimization tools for IP and cellular networks. From 2005 to 2007, Mr. Hughes also served as Chairman of the Board and then transitioned to Deputy Chairman until 2010 for Parity Group plc. Prior to his multiple board positions, Mr. Hughes served as Executive Vice President and Chief Operating Officer from 2000 to 2004 for Thales Group, the leading European provider of complex systems for the defence, aerospace and commercial markets. Prior to 2000, he served as President of GSM/UMTS Wireless Networks of Lucent Technologies, and as Director, Convex Global Field Operations and Vice President and Managing Director of Convex Europe, a division of Hewlett-Packard Company. Mr. Hughes holds a B.S. degree in Electrical and Electronic Engineering from the University of Hertfordshire.

        Through his role as chairman for several companies, Mr. Hughes has extensive knowledge of the governance function of the board in monitoring the performance of the CEO, approving annual budgets and compensation, and in being accountable to the stakeholders for the organization's performance. He also has experience in working providers of technology solutions in industries similar to the Company's, including customer care and billing, network management, IP and cellular networks, and data centers. Mr. Hughes also has an acute understanding of the primary industries that we serve, including cable, telecommunications and wireless. Through his board and executive management roles at various companies, Mr. Hughes has had a leadership role in making and integrating acquisitions, implementing restructuring programs, and enhancing shareholder value through effective sales growth strategies and operational excellence.

Bernard W. Reznicek
Consultant
The Premier Group

        Mr. Reznicek, 74, was elected to the Board in January 1997 and served as the Company's non-executive Chairman of the Board from 2005 until 2009. He currently provides consulting services as President of Premier Enterprises, and is Chairman of Erra, Inc., a startup clean technology company. Mr. Reznicek previously was an Executive with Central States Indemnity Company of Omaha, a Berkshire Hathaway company, from 1997 to 2003. He has 40 years of experience in the electric utility industry, having served as Chairman, President and Chief Executive Officer of Boston Edison Company, and President and Chief Executive Officer of Omaha Public Power District. Mr. Reznicek currently is a director of Pulte Homes, Inc. (NYSE). Mr. Reznicek has previously been a director of State Street Corporation, Stone and Webster, Guarantee Life, infoGROUP Inc. and Central States Indemnity.

        Mr. Reznicek has over 45 years of business experience, including 23 years at the executive management level. Mr. Reznicek has held senior executive positions in the electric utility industry, providing an acute understanding of business practices and special industry concerns in this emerging market for the Company. He has developed extensive compliance, risk assessment and financial analysis aptitude through his executive positions with Boston Edison, Omaha Public Power and Central States Indemnity Company of Omaha. He has held numerous executive management positions with a variety

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of organizations where he has developed extensive financial management, risk assessment, leadership, investment knowledge and strategic business development skills. Mr. Reznicek has significant corporate governance experience from his current and previous positions on numerous public company boards.

Donald V. Smith
Former Senior Managing Director
Houlihan Lokey Howard & Zukin, Inc.

        Mr. Smith, 68, was elected to the Board in January 2002. He is presently retired and providing financial consulting services through Donald V. Smith LLC. Previously he served as Senior Managing Director of Houlihan Lokey Howard & Zukin, Inc., an international investment banking firm with whom he has been associated from 1988 through 2009, and where he served on the board of directors of the firm. From 1978 to 1988, he served as Principal with Morgan Stanley & Co. Inc., where he headed their valuation and reorganization services. Mr. Smith is director of the Princeton (NJ) Health Care System Foundation and on the board of directors and executive committee of Business Executives for National Security. Mr. Smith holds a B.S. degree from the United States Naval Academy and a M.B.A. degree from the Wharton Graduate School of the University of Pennsylvania.

        Mr. Smith has over 39 years of expertise in financial, investment and valuation analysis as an executive professional dealing with corporate finance, mergers, acquisitions, financial restructurings and other financial activities such as public and private financings, repurchasing public stock and joint ventures. He has significant industry-specific advisory experience in markets directly related to the Company's core competency, namely business services, data processing, software and information technology. Mr. Smith's current and former director positions at other public and charitable entities provides him with a comprehensive understanding of corporate governance and business strategy.

Class III Directors With Terms Expiring in 2012:

Peter E. Kalan
Chief Executive Officer and President
CSG Systems International, Inc.

        Mr. Kalan, 51, joined the Company in January 1997, was appointed as Chief Financial Officer in October 2000, and named an Executive Vice President in 2004. In April 2006, he became Executive Vice President of Business and Corporate Development. In December 2007, Mr. Kalan was appointed Chief Executive Officer and President, and elected to the Board. Prior to joining the Company, he was Chief Financial Officer at Bank One, Chicago, and he also held various other financial management positions with Bank One in Texas and Illinois from 1985 through 1996. Mr. Kalan holds a B.A. degree in Business Administration from the University of Texas at Arlington. Mr. Kalan is a member of The Cable Center board of directors and is also a member of the Board of Pensions of the Presbyterian Church USA.

        Mr. Kalan is a skilled business executive with over 28 years of experience. He has been at the Company for over 14 years and has over eleven years of executive management experience. In his current responsibilities as Chief Executive Officer and President, Mr. Kalan brings executive level leadership, strategic thinking, business development and strong financial oversight skills to his position on the Board. In his previous position as Executive Vice President of Business and Corporate Development, Mr. Kalan developed expertise in corporate strategy, mergers and acquisitions, business valuation and capital markets. His experience as Chief Financial Officer provided experience in financial planning, corporate accounting, tax, budgeting, financial reporting, ethics, compliance and risk management. Mr. Kalan has extensive knowledge of the businesses and markets the Company serves, providing the Board with an acute understanding of business practices and special industry concerns.

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Frank V. Sica
Managing Partner
Tailwind Capital

        Mr. Sica, 60, has served as a director of the Company since its formation in 1994. He is currently a Managing Partner of Tailwind Capital. From 2004 to 2005, Mr. Sica was a Senior Advisor to Soros Private Funds Management. From 2000 until 2003, he was President of Soros Private Funds Management which oversaw the direct real estate and private equity investment activities of Soros. In 1998, he joined Soros Fund Management where he was a Managing Director responsible for Soros' private equity investments. Mr. Sica was previously Managing Director for Morgan Stanley Merchant Banking Division. Mr. Sica currently is a director of JetBlue Airways, Kohl's Corporation, Oceus Networks, and Safe Bulkers, Inc. Mr. Sica has previously been a director for NorthStar Realty Finance Corporation and Emmis Communications.

        Mr. Sica brings wide-ranging experience in venture capital, private equity, mergers and acquisitions, capital markets, management recruitment, executive compensation and strategic planning across a broad range of commercial industries from his work at Morgan Stanley, Soros and now at Tailwind Capital. He has been a director of the Company for over 16 years and has a comprehensive understanding of the Company's business and markets. Mr. Sica has significant skills in strategic planning, financial analysis, risk assessment and corporate governance acquired from his current and previous experience on other large public company boards.

James A. Unruh
Managing Principal
Alerion Capital Group, LLC

        Mr. Unruh, 70, was elected to the Board in June 2005. He became a founding principal of Alerion Capital Group, LLC (a private equity investment company) in 1998 and currently holds such position. Mr. Unruh was an executive with Unisys Corporation from 1987 to 1997 and served as its Chairman and Chief Executive Officer from 1990 to 1997. From 1982 to 1986, Mr. Unruh held various executive positions, including Senior Vice President—Finance and Chief Financial Officer, with Burroughs Corporation, a predecessor of Unisys Corporation. Mr. Unruh currently is a director of Prudential Financial, Inc., Tenet Healthcare Corporation and Qwest Communications International Inc. Mr. Unruh has also previously served as a director of LumenIQ, as well as non-executive Chairman of Apex Microtechnology and Tiros Corporation.

        Mr. Unruh has over 34 years of corporate business experience including 20 years at the executive management level. From his current position as a principal of Alerion Capital Group, he brings a broad-based understanding of investments and corporate development in pursing long term strategic business objectives. Mr. Unruh provides the Company with a unique combination of an in-depth competency of information technology with business and financial management experience through critical executive positions at leading multi-national technology firms. From his previous executive level management positions, Mr. Unruh brings extensive skills in strategic planning, operational performance, financial management, risk assessment, leadership and business development. Mr. Unruh, additionally, has considerable experience as a public company director with a solid understanding of corporate governance.

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Class I Directors With Terms Expiring in 2013:

Edward C. Nafus
Former Chief Executive Officer and President
CSG Systems International, Inc.

        Mr. Nafus, 70, was elected to the Board in March 2005. Mr. Nafus joined the Company in August 1998 as Executive Vice President and became the President of our Convergent Services and Solutions Division in January 2002. In April 2005, Mr. Nafus assumed the position of Chief Executive Officer and President of the Company and held that position until his retirement in December 2007. Prior to joining the Company, Mr. Nafus held numerous management positions within First Data Corporation from 1978 to 1998. From 1992 to 1998, he served as Executive Vice President of First Data Corporation; from 1989 to 1992, he served as President of First Data International; and Executive Vice President of First Data Resources from 1984 to 1989. From 1971 to 1978, Mr. Nafus worked in sales management, training and sales for Xerox Corporation. From 1966 to 1971, Mr. Nafus was a pilot and division officer in the United States Navy. Mr. Nafus holds a BS degree from Jamestown College. Mr. Nafus currently is a director of a privately held company, WageWorks, Inc.

        Mr. Nafus provides broad-based business experience, over 38 years, from his work at the Company and other large public companies. In his previous position as the Company's Chief Executive Officer and President, Mr. Nafus developed considerable skills in executive level leadership, strategic planning, business development, corporate governance and corporate financial management. Mr. Nafus also brings an extensive understanding of the corporation, its customers and business operations. He has significant global business skills acquired through his leadership in directing the domestic and international expansion of First Data Corporation's credit card processing division in Europe, Asia, Australia and Mexico. He also has experience in merger and acquisitions, financial management and sales training/consultancy.

Janice I. Obuchowski
President
Freedom Technologies, Inc.

        Ms. Obuchowski, 59, was elected to the Board in November 1997. She is the founder and has been President of Freedom Technologies, Inc., a business that provides public policy and strategic advice to a wide range of companies in the communications sector, to the United States Department of Defense, and to the international agencies of government, since 1992. In 2003, Ms. Obuchowski was appointed by President George W. Bush to serve as Ambassador and Head of the U.S. Delegation to the World Radio Communication Conference. She has served as Assistant Secretary for Communications and Information at the Department of Commerce and as Administrator for the National Telecommunications and Information Administration. Ms. Obuchowski currently is a director of Orbital Sciences Corporation and Inmarsat. Ms. Obuchowski was also a director of Stratos Global Corporation and Qualcomm. Ms. Obuchowski also serves on several non-profit boards, including as trustee of the Federal Communications Bar Association.

        Ms. Obuchowski has held a number of high-level positions in the public and private sectors which provides her with broad leadership, organizational and executive level management skills. From her positions and appointments in the public sector, she has developed an extensive understanding of public policy and government regulations directly related to the communications sector, the Company's largest market. From her work in the private sector, she has developed skills in strategic planning, business development, corporate governance and financial management. Ms. Obuchowski's experience on other public company boards also provides her with a solid understanding of corporate governance and business strategy.

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Donald B. Reed
Former Chief Executive Officer
Cable & Wireless Global

        Mr. Reed, 66, was elected to the Board in May 2005 and presently serves as the Company's non-executive Chairman of the Board. He currently is retired, having served as Chief Executive Officer of Cable & Wireless Global from May 2000 to January 2003. Cable & Wireless Global, Cable & Wireless plc's wholly owned operations in the United States, United Kingdom, Europe and Japan, is a provider of internet protocol (IP) and data services to business customers. From June 1998 until May 2000, Mr. Reed served Cable & Wireless in various other executive positions. Mr. Reed's career includes 30 years at NYNEX Corporation (now part of Verizon), a regional telephone operating company. From 1995 to 1997, Mr. Reed served NYNEX Corporation as President and Group Executive with responsibility for directing the company's regional, national and international government affairs, public policy initiatives, legislative and regulatory matters, and public relations. Mr. Reed currently is a director of Oceus Networks. Mr. Reed has also previously served as a director of Intervoice, Inc., Idearc Media (formerly Verizon Yellow Pages), Bell Atlantic, St. Lawrence Cement and Aggregate Industries in London, England.

        Mr. Reed has over 37 years of corporate business experience with approximately 20 years of executive level management experience. Mr. Reed brings more than 30 years experience in the telecommunications industry, including his most recent assignment as Chief Executive Officer for Cable & Wireless Global, and provides the Company with a comprehensive understanding of business practices and special industry concerns of its largest target market. Mr. Reed also has extensive experience and skills in government affairs, public policy and regulation from his executive-level positions at NYNEX. He has broad international experience in global business operations, government and legal requirements, strategic planning and business development. He has held executive management positions at several multi-billion dollar corporations where he developed expertise in financial management, risk assessment, leadership, investment knowledge and strategic business development. Mr. Reed brings considerable experience as a public company director providing the basis for a sound and broad-based understanding of corporate governance and business strategy.

Other Board Information

        There are no family relationships between any of the directors or executive officers of the Company. There are no arrangements between any director, nominee or executive officer of the Company and any other person pursuant to which such director, nominee or executive officer was selected for such position.

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BENEFICIAL OWNERSHIP OF COMMON STOCK

        The table below sets forth each stockholder known by the Company to own beneficially more than 5% of the outstanding common stock as of February 28, 2011.

Principal Stockholders

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Directors and Executive Officers

        The table below sets forth to the Company's knowledge the beneficial ownership of common stock by each director and each executive officer of the Company named in the 2010 Summary Compensation Table, individually, and by all directors and executive officers of the Company as a group as of February 28, 2011.

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        In 2007, the Board established stock ownership guidelines for the Company's directors and executive officers. Such guidelines provide that (i) each director of the Company should own at least 9,000 shares of common stock, (ii) the Chief Executive Officer of the Company should own at least that number of shares of common stock which is equal in value to three times his base salary and (iii) each other executive officer of the Company should own at least that number of shares of common stock which is equal in value to one time his base salary. The directors and executive officers of the Company have four years from the adoption of such guidelines to reach the applicable guideline level of common stock ownership.

Section 16(a) Beneficial Ownership Reporting Compliance

        Section 16(a) of the Securities Exchange Act of 1934 requires the Company's officers (as defined in the applicable regulations) and directors, and persons who beneficially own more than 10% of a class of the Company's equity securities registered under such Act, to file certain reports of ownership and changes of ownership of the Company's equity securities with the SEC. Officers, directors and more than 10% stockholders are required by SEC regulation to furnish to the Company copies of all Section 16(a) forms which they file.

        Based solely on its review of the copies of such forms submitted to it and written representations from certain reporting persons, the Company believes that all filing requirements applicable to its officers and directors were complied with for the year ended December 31, 2010, except that Mr. Kalan did not timely file a Form 4 for a transaction occurring on May 26, 2010; however, such transaction was subsequently reported on a Form 5 on February 1, 2011.

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EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

        This section explains our executive compensation program as it relates to the following named executive officers, or NEOs, whose compensation information is presented in the tables following this discussion:

Executive Summary

        We are a leading provider of business support systems to the global communications industry. Historically, we have serviced primarily the North American cable and satellite markets through a fully-integrated suite of customer care and billing solutions on an outsourced basis. On November 30, 2010, we acquired Intec Telecom Systems plc, or Intec, a U.K. based leader in providing wholesale billing, retail billing and mediation solutions in the communications industry through software delivery and managed services models.

Our Business Strategy

        Our business strategy is to grow our revenues and profitability, by focusing on the following:

•

Growing our core business within the communications industry;



•

Growing our relationships with providers in new vertical markets; and



•

Increasing our scale and efficiency to improve our profitability.

Our Compensation Principles

        Our executive compensation program is intended to create a strong link between pay and the Company's performance by focusing on three primary principles:

•

Aligning executive pay with stockholder return over the short and long term;



•

Recognizing and rewarding individual performance and contributions; and



•

Attracting and retaining qualified executives.

Each component of our executive compensation program is intended to be consistent with these principles.

        Both Company and individual executive performance are evaluated annually and are closely tied to the achievement of financial and personal performance objectives discussed below.

Our Overall 2010 Performance

        The Company achieved strong financial and operational performance for 2010 and we believe that our executive officers were instrumental in helping us achieve these results. Our acquisition of Intec

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was completed on November 30, 2010, and therefore, our 2010 performance results include one month of operating results from Intec. Key highlights of our 2010 performance include the following:

•

We grew our 2010 revenues by 10% over the previous year, with approximately six (6) percentage points of the growth attributed to organic growth, and approximately four (4) percentage points related to the one month of Intec's revenues



•

We expanded our earnings over the previous year as a result of our strong revenue performance and operational execution



•

We continued to generate strong cash flows from our operating activities, ending the year with over $215 million of cash, cash equivalents and short term investments, and with an overall strong balance sheet



•

With our acquisition of Intec: (i) we expanded our portfolio of products and services to include the addition of the leading wholesale billing and mediation platforms in the world; (ii) we expanded the markets and clients we serve, thereby reducing risk associated with geographic, market and customer concentration; and (iii) added over 400 new clients, and approximately 1,500 employees, providing us greater scale to grow our business and achieve economic benefits from operating a larger, more globally diverse business

Share Ownership Guidelines

        In order to more closely align the financial interests of our executive management and our Board with the interests of our stockholders, our Board has established share ownership guidelines. The guidelines were established in May 2007 and our executives and Board members have until May 2011, or four years from his or her date of appointment (or, in the case of Mr. Kalan, promotion to CEO) to achieve compliance. Below is a summary of the minimum share ownership levels:

Many of our Board members and executive officers maintain share ownership levels that exceed the minimums. Qualifying shares consist of common stock owned by the individual.

2010 Performance-Based Compensation

        Program Structure and Measures.    Our executive compensation programs are intended to create a strong link between pay and the Company's performance. For 2010, our executive compensation reflects the results of our strong financial and operational performance. Performance-based pay for our executives consists of an annual performance bonus opportunity tied to the achievement of individual performance objectives and the revenue and adjusted operating income targets for the year, and restricted stock awards that vest upon achievement of either an adjusted earnings per share ("EPS") target or a stock price target, each measured annually over a three-year period. The percentage of total compensation for our NEOs that was performance-based for 2010 ranged from 73% to 82%.

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        The results of the relevant measures for our 2010 annual performance bonus and performance-based vesting restricted stock awards, compared to the same measure for 2009, are as follows:

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(1)

Adjusted operating income ("Adjusted Operating Income") is calculated by excluding one or more unusual operating items that are not considered reflective of our recurring core business operating results, which may or may not exist in any given year, from our operating income prepared in accordance with generally accepted accounting principles (GAAP). For 2010 and 2009, the following items were excluded from our operating income prepared in accordance with GAAP in determining our Adjusted Operating Income:

•

data center transition expenses in both 2010 and 2009; and

•

Intec acquisition-related charges in 2010.

The Adjusted Operating Income used for our annual performance bonus is consistent with our non-GAAP operating income amounts disclosed in our February 8, 2011 press release announcing our financial results for the fourth quarters of 2010 and 2009, and full year results for 2010 and 2009.

(2)

Adjusted earnings per share ("Adjusted EPS") currently being used in our performance-based vesting restricted stock awards is calculated as follows:

•

First, we begin with income from continuing operations per diluted share calculated in accordance with GAAP. We then add back to this amount:

•

The after-tax, per diluted share impact (using the applicable effective income tax rate attributable to such items, and the weighted average diluted shares outstanding for the period) of the following items: (1) depreciation expense; (2) amortization of intangible assets; (3) stock-based compensation expense; (4) data center transition costs; (5) amortization of original issue discount on debt; (6) acquisition-related costs (e.g., in-process R&D costs, deal-related costs, change in fair value of contingent considerations (such as an earn-out), etc.); (7) impairment or write-off of intangible assets; (8) restructuring charges and other similar non-cash charges; (9) the difference between the book gain and the cash/economic gain on retirement of debt; and (10) any extraordinary, unusual, or non-recurring items of loss or expense. One or more of these may not exist in any given period.

For the 2010 Adjusted EPS measure, the add backs to continuing operations from the above list included: (1) depreciation expense; (2) amortization of intangible assets; (3) stock-based compensation expense; (4) data center transition costs; (5) amortization of original issue discount on debt; (6) acquisition-related costs (related to the Intec acquisition); and (7) an extraordinary, unusual, or non-recurring items of loss or expense (retirement of convertible debt instruments).

For the 2009 Adjusted EPS measure, the add backs to continuing operations from the above list included: (1) depreciation expense; (2) amortization of intangible assets; (3) stock-based compensation expense; (4) data center transition costs; (5) amortization of original issue discount on debt; (6) restructuring charges and other similar non-cash charges; and (7) the difference between the book gain and the cash/economic gain on retirement of debt.

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The Adjusted EPS used for performance-based vesting restricted stock awards differs from our non-GAAP EPS amounts disclosed in our February 8, 2011 press release announcing our financial results for the fourth quarters of 2010 and 2009, and full year results for 2010 and 2009, with the primary difference being the Adjusted EPS measures shown here includes additional add backs for the after tax, per diluted share impact of depreciation expense, and additional amortization expense.

(3)

The stock price measure represents the average closing market price of our common stock over the first 20 trading days after we publicly report our annual financial results (the "Stock Price Measure").

        Annual Performance Bonus.    Consistent with our business strategy to grow our revenues and profitability, annual performance bonus awards for 2010 for our executives were based primarily on achievement of pre-determined revenue and Adjusted Operating Income targets, which increased substantially from 2009. We exceeded both our 2010 revenue and our 2010 Adjusted Operating Income target measures as follows:

        As a result of the Intec acquisition, our 2010 targets were adjusted to account for one month of Intec's operations under our ownership. See Determining the Annual Performance Bonuses for 2010 below for additional information about our 2010 annual performance bonus awards.

        Performance-Based Share Awards.    To ensure that our executive compensation program is aligned with stockholder return over the short and long term, 50% of the restricted stock awards we grant to the NEOs vest only upon attainment of a Stock Price Measure or Adjusted EPS target. While stock price is an obvious measure of achieved stockholder value, the Adjusted EPS calculation is designed to measure our cash flow generating capabilities, which we believe is a metric often used by investors and financial analysts to evaluate our financial performance and assess our potential for increased stockholder value.

Our Compensation Practices

        In addition to providing a compensation program that focuses on performance, we believe that the following compensation practices reinforce our culture and values:

•

We further align the financial interests of our executives and our stockholders through equity grants and share ownership guidelines.  Our executive officers are expected to hold shares of our stock pursuant to the Company's Share Ownership Guidelines. For additional information see Share Ownership Guidelines above.



•

We have a policy prohibiting short sale and other speculative transactions in our stock.  Our executive officers and other insiders are prohibited from selling our stock short or entering into transactions in puts or calls that raise similar concerns regarding speculation of our stock.



•

We provide only limited perquisites and other benefits.  Our executive officers are eligible for limited perquisites and other benefits. For additional information see the Summary Compensation Table.



•

Our performance-based compensation is closely aligned to our business strategy and stockholder interests.  The key financial performance metrics for performance-based compensation

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are: revenue, Adjusted Operating Income, Adjusted EPS and Stock Price Measure. For additional information about our business strategy see Our Business Strategy above.

Our Compensation Process

Determining Executive Compensation

        Our Compensation Committee evaluates and recommends to the Board the base salary and annual incentive bonus amounts for each of our NEOs. The Committee has sole authority to grant equity awards. When making compensation decisions and recommendations, the Committee considers competitive peer group information and guidance provided by an independent compensation consultant, Company audited financial results, individual performance reviews provided by the Chief Executive Officer, Compensation Committee and Board evaluations of the Chief Executive Officer and the performance-based vesting criteria for previously granted restricted stock awards. The Compensation Committee and our Board also evaluate our executives based on direct observation of their performance.

Role of the Compensation Consultant and Management

        Our Compensation Committee selects an independent compensation consultant and determines the scope of the consultant's engagement. Our management assists the consultant with its analysis and recommendations by providing historical pay data and management's perspective on the Company's competitive environment for recruiting managerial talent. Our Chief Executive Officer provides performance evaluations and makes recommendations for the compensation of our other NEOs.

        The Compensation Committee engaged Towers Watson & Co., which we refer to as Towers Watson, as its compensation consultant to advise it on 2010 executive compensation matters. The Committee instructed Towers Watson to take a broad view of the competitive compensation landscape to assist the Committee in structuring a compensation program for our NEOs. The Committee requested that the program be designed to balance short and long term compensation, align NEO interests with stockholder return and encourage improved company and individual performance. We believe that this broader view of compensation practices has enabled us to attract and retain a highly talented executive team. Towers Watson reviews compensation data available from peer company proxy filings and published survey sources using position matches and data analyses that are selected as best representative of comparable positions in our industry. For additional information regarding peer group component companies and pay of our NEOs compared to the peer group see Peer Group and NEO Compensation below.

        The Compensation Committee periodically evaluates the qualifications of its independent compensation consultant. In addition to providing executive compensation services to the Committee, Towers Watson provides brokerage services for our health and welfare plans that we provide to our US-based employees. In 2010, Towers Watson received approximately $175,000 in commissions from plan providers for these brokerage services. Following a review of these services and fees, the Committee has elected to continue to engage Towers Watson for executive compensation matters during 2011.

Role of Benchmarking in Determining Compensation

        To assist the Compensation Committee in establishing 2010 compensation for our NEOs, Towers Watson provided a competitive assessment using peer group compensation information and industry survey data for the three primary elements of our NEO compensation packages:

•

Base Salary;



•

Target Total Cash Compensation (base salary plus target annual performance bonus); and

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•

Total Direct Compensation (target total cash compensation plus an annualized value of any long term incentives granted).

This process involved identification of a peer group for comparison purposes, analysis of the projected total cash compensation (base salary and annual performance bonus) of our NEOs for the prior year, and comparison with the equivalent peer group positions and industry survey data. The Compensation Committee recognizes that the peer group comparisons and the industry survey data may not be perfectly aligned because the executive titles and responsibilities at the peer group companies are unlikely to correspond exactly to the responsibilities of our NEOs with similar or equivalent titles. Despite these limitations, the Committee believes this information is helpful as one important data point for determining executive compensation. For information about our peer group and how our NEO compensation compares to the peer group, see Peer Group and NEO Compensation below.

Principle Components of our Executive Compensation Program

        Our Compensation Committee has established three core components of each NEO's compensation:

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(1)

These percentages are based on the ranges for 2010 for all NEOs other than Mr. Scott, who received all of his compensation for 2010 in the form of base salary and accrued severance and Mr. Henderson who was hired in July 2010. See the Summary Compensation Table and Grants of Plan-Based Awards Table for additional information.

        The following discusses the objectives of these three core components of executive compensation.

        Base Salary.    The objectives used for determining base salary include:

•

Competitiveness with base salaries paid to persons holding similar positions in our peer group.



•

The position and responsibilities of the NEO.

        For 2010, the Compensation Committee considered a base salary for an NEO to be competitive generally if it was near the median (or 50th percentile) of the peer group. As noted above, the Committee recognizes that these comparisons may not align perfectly because executive titles and responsibilities at peer group companies frequently do not correspond entirely to responsibilities of our NEOs with similar titles.

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        Annual Performance Bonus.    The objectives for the annual performance bonuses are to:

•

Provide a cash bonus opportunity in an amount which would result in the NEO's total annual cash compensation for the year (base salary plus cash bonus) to be competitive with the peer group, taking into account the factors described above, and which fairly reflects the position and responsibilities of the NEO.



•

Structure the annual performance bonus program to promote achievement of annual financial objectives of meaningful increases in our revenue and Adjusted Operating Income, advance the Company's long term success and enhance stockholder value.

        The Compensation Committee considers the information and advice provided by Towers Watson before making its own assessment and then recommends to the Board base salaries for the NEOs. Together, the base salary and target annual performance bonus amounts are intended to bring the total annual cash compensation of each NEO generally between the 50^th and 75^th percentile of peer group compensation (assuming that performance bonuses are earned in an amount at or near 100% of target).

        Long Term Incentive Awards.    The objective for long term incentive awards is to align overall NEO compensation with long term stockholder return by providing an equity component that directly coincides with stockholder value. Currently, our equity component includes grants of restricted stock, 50% of which vest ratably over a four-year period and 50% of which vest only upon achievement of specific performance-based criteria over a three-year period. We believe this program design encourages retention and aligns the financial interests of our NEOs with those of the Company's stockholders.

        Equity grants to our NEOs are generally made annually concurrent with our individual performance reviews. Equity awards are considered in conjunction with the other elements of our NEO's compensation package taken as a whole. In determining the amount of restricted stock to award our NEOs, the Compensation Committee also seeks to be competitive with our peer group. Because the comparative data with respect to performance-based equity awards is limited, the Committee makes an independent assessment after consultation with Towers Watson (based on available data and the members' extensive business experience) as to the number of shares to grant to each NEO based on the value of the shares at the time of the grant in relation to (i) the NEO's cash compensation; (ii) the performance targets for the performance-based grants and the potential difficulty in their achievement; and (iii) the corporate position and responsibilities of each NEO.

2010 Compensation

Determining Annual Base Salaries for 2010

        Base salary decisions require several considerations such as competitive peer group information, scope of each NEO's role, tenure and experience, as well as individual performance. After considering the competitive information provided by Towers Watson, recommendations from the Chief Executive Officer with respect to the other NEOs and its own evaluation of NEO performance, the

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Compensation Committee recommended to the Board (and the Board approved) 4% salary increases for five of the NEOs in 2010.

Determining Annual Performance Bonuses for 2010

        Annual performance bonuses are awarded under the terms of our Annual Performance Bonus Program, which was adopted by the Board and approved by our stockholders in 2007. Annual performance bonuses paid under the program are designed to qualify as performance-based compensation under section 162(m) of the Internal Revenue Code. Each year, the Compensation Committee establishes pre-determined objectives for the Company and for each NEO.

        The Annual Performance Bonus for each NEO is determined as shown below. The base salary is multiplied by the target bonus percentage for each NEO. This result is then multiplied by (1) the percentage of the Company target achieved (which is the same for all NEOs) and (2) the percentage of the individual performance target achieved by the NEO.

        NEO Target Bonus Percentage.    For 2010, the bonus targets expressed as a percentage of base salary for each NEO designated by the Compensation Committee were as follows:

        2010 Company Performance.    The table below shows performance against the 2010 financial performance measures which consist of targets for revenue and Adjusted Operating Income. If the

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Company achieves the target levels of performance for revenue and Adjusted Operating Income, the Company target bonus percentage is 100%.

        The 100% targets were initially established based upon the Company's internal targets for 2010 revenue and Adjusted Operating Income. As a result of the Intec acquisition, the Company adjusted both targets to account for the one month of Intec operating results under our ownership and therefore the minimum criteria established by the Compensation Committee necessary for the NEOs to receive any performance bonus were at least $537.7 million in total revenue and at least $95.1 million of Adjusted Operating Income in 2010.

        Based on the actual 2010 Company financial performance as shown in the table above, the percent attainment of the 2010 bonus based on the predetermined financial objectives was 142.7%. For purposes of the Bonus Program, total revenue and Adjusted Operating Income amounts are derived from the 2010 audited Consolidated Statement of Income of the Company. The Compensation Committee, as required by Section 162(m), has certified the attainment of our financial performance goals for purposes of the 2010 Performance Bonus Plan, and the Company made such performance bonus payments in March 2011.

        2010 Individual NEO Personal Performance Objectives.    The final element of the annual performance bonus is a determination by the Compensation Committee of each NEOs achievement of his personal performance objectives.

        Under the 2010 Performance Bonus Plan, an NEO's bonus cannot exceed 200% of his base pay. The Compensation Committee may not rate an NEO as achieving more than 100% of his personal performance goals.

        When the Compensation Committee met in February 2011 to consider the 2010 performance of the NEOs as compared with their individual objectives, Mr. Kalan as the Company's Chief Executive Officer, presented to the Committee a review of the 2010 performances of the other NEOs and noted that the aspects of the respective performance objectives had been fulfilled. Mr. Kalan recommended to the Committee an overall percentage attainment for each of the NEOs. Outside of Mr. Kalan's presence, Mr. Reed discussed with the Committee Mr. Kalan's performance during 2010.

        The Compensation Committee relied both on Mr. Kalan's evaluations of the other NEOs and the Committee members' own direct observations in determining the percentages of achievement of such personal objectives for purposes of performance bonus awards made for 2010. The Committee made its determination of Mr. Kalan's achievement of his personal objectives based upon Mr. Reed's recommendations and its direct observation of Mr. Kalan's performance against Company and personal objectives.

        The personal performance objectives for the NEOs for 2010 were based upon two criteria; business strategy and the context of the NEOs particular area of responsibility. Personal objectives were provided to the Compensation Committee in written form at the time the individual NEO performance bonus targets for 2010 were established. Individual performance objectives for the NEOs were comprised of both common and unique objectives, see below.

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        The table below shows the percentage of achievement for each NEO against his personal performance objectives as determined by the Compensation Committee.

        The 2010 personal objectives percentage was based upon the level of achievement of each individual's personal performance objectives for 2010, as determined by the Committee.

        Common Objectives.    Common elements of NEO objectives included:

•

Operational and Functional Responsibilities.  Each of the NEOs had as a personal objective to manage his assigned areas of accountability. This objective may vary by NEO depending upon whether the NEO's responsibilities focused more on profit or loss in a particular area of our business, or meeting budgetary objectives.

        Unique Objectives.    The following are examples of categories of personal objectives that were unique to one or more NEOs based on his area of responsibility within the Company:

•

Deliver on Key Development Initiatives.  As a technology company, we have a technology product road map requiring significant software development investments aimed at achieving specified feature and functional milestones.



•

Key Client Relationships.  A significant portion or our revenue is derived from a small number of key clients, and a key objective is to ensure that these relationships remain healthy and, when applicable, key contracts are renewed under terms satisfactory to both parties.



•

Staff Development.  Succession planning and development of key staff is an important Company-wide objective, including transitioning identified tasks and functions from outgoing personnel to new personnel, where applicable.



•

Growth Initiatives.  Execution of the Company's long term strategic plan, including the Company's merger, acquisition and partnership strategies, with a view to enhancing stockholder value.



•

Increasing Cost Efficiency.  Identifying and implementing potential cost savings and process efficiencies in identified areas of the Company.

Determining Long Term Incentive Awards for 2010

        In 2010, the Compensation Committee continued the approach it implemented in 2007, and made restricted stock awards to our NEOs in two forms: 50% of the shares granted vest in equal increments over a four-year period beginning on the first anniversary of the grant date, and 50% of the shares granted are performance-based awards which vest over a three-year period if certain performance thresholds are met.

        In determining the number of shares of restricted stock to be granted and the balance between performance-based and time-based vesting provisions, the Compensation Committee considered information and advice received from Towers Watson, as well as the views of the Company's senior management concerning the use of performance-based vesting for restricted stock.

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        The 2010 performance-based restricted stock awards vest in three equal annual increments if the Company attains either of the specified performance goals for 2010, 2011 and 2012. Each year's performance targets reflect a meaningful growth rate over the previous year's measures. If the Company does not attain either of the performance goals for a particular year, but does attain one of the performance targets for a subsequent year, then the unvested shares for the earlier year will vest in addition to the shares scheduled to vest in the current year. In other words, if a particular year's performance target is missed, those shares can still vest in a subsequent year if the cumulative performance target is met.

        The Grants of Plan-Based Awards table appearing later in this Proxy Statement contains the details of the 2010 restricted stock awards to our NEOs.

        Additionally, based upon our 2010 results of operations, the Compensation Committee determined and, as required by Section 162(m), certified that the following performance-based restricted stock awards, related to the 2010, 2009 and 2008 grants, became vested:

        As reflected in the table above, the Company attained the specified 2010 Adjusted EPS target and therefore triggered the vesting of the 2010 performance-based restricted stock awards. In 2009 and 2008, the Company achieved both the specified Company Stock Price Measure and specified Adjusted EPS target.

Peer Group and NEO Compensation

Peer Group Used for Benchmarking

        For 2010, Towers Watson reviewed two groups of comparable companies with a similar range of annual revenues—our historical peer group comprised of system and applications software companies, and a services peer group comprised of data processing and outsourced services companies. There were few marked differences between compensation levels in the historical peer group and the services peer group and therefore the Committee relied upon the historical peer group of companies listed below when conducting its analysis. The peer group is reviewed annually to ensure that its composition and characteristics remain consistent with our objectives. The written materials provided to the Committee by Towers Watson are supplemented by dialogue with the consultant concerning the information provided, as well as information with respect to the Towers Watson's experiences and observations regarding the compensation practices and philosophies of other companies.

        The historical peer group of companies used for benchmarking and listed below were selected based on companies with similar industry and business models, and with annual revenues within a reasonable range of the Company's expected annual revenue. For 2010, our historical peer group of companies in the systems and application software industry was comprised of the following companies:

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(1)

Each of the executive officers of the Company named in this table has a written employment agreement with the Company. The material terms of each employment agreement are summarized in the Employment Agreements section below.

(2)

Mr. Henderson was appointed Executive Vice President, Sales and Marketing on July 19, 2010.

(3)

Mr. Scott's employment with the Company terminated effective June 30, 2010.

(4)

This column reflects the aggregate grant date fair value of stock awards granted during the year computed in accordance with the accounting rules, FASB ASC Topic 718. The assumptions used in determining the amounts are set forth in Note 11 of our Form 10-K for fiscal 2010. The aggregate grant date fair value is calculated using the closing price of our common stock on the date of grant and excludes the impact of estimated forfeitures. The grant date fair value of performance-based stock awards is the maximum amount than can be earned under the award.

(5)

This column reflects annual performance bonus amounts earned by the persons named in this table for services performed during 2010, 2009 and 2008. Such amounts were paid during the first quarter of the following year, and for 2010, were calculated as follows:

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(a)

The employment agreements for each executive include the opportunity to earn, as annual incentive bonuses, specified minimum percentages of each executive's base salary as follows: Mr. Kalan 50%; Mr. Wiese 65%; Mr. Ruble 40%; Mr. Griess 65%; Mr. Henderson 65%; and Mr. Scott 75%. However, Mr. Henderson's bonus opportunity is prorated above for 2010 based upon his date of hire with the Company to reflect his actual bonus for 2010. For additional information regarding the 2010 annual performance bonus amounts see Compensation Discussion and Analysis—Determining Annual Performance Bonuses for 2010.

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(1)

The actual amounts earned for 2010 are reported in the Summary Compensation Table in the column titled "Non-Equity Incentive Plan Compensation". The award amounts assume the executive officers had achieved 100% of their personal performance objectives (see Footnote (5) to the Summary Compensation Table). In February 2011, the Compensation Committee certified the 2010 Performance Bonus Plan Goal at 142.7%.

(2)

All restricted stock awards considered "equity incentive plan awards" are performance-based awards granted under the Company's 2005 Stock Incentive Plan. To vest in awards, the executives must attain objective performance goals. The performance-based restricted stock awards granted in 2010 vest, if at all, in three approximately equal installments over a three-year period consisting of 2011, 2012 and 2013, and the objective performance goals are based upon either (i) a specified Adjusted EPS target or (ii) a specified Company Stock Price Measure.

(3)

All restricted stock awards considered "all other stock awards" are non-performance-based awards granted under the Company's 2005 Stock Incentive Plan. These restricted stock awards vest in four equal annual installments commencing on the first anniversary of the grant date.

(4)

This amount reflects the aggregate grant date fair value for both performance-based and non-performance-based restricted stock awards granted in 2010.

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(1)

These columns reflect the market value of restricted stock awards that have not vested as of December 31, 2010. The market value was computed by multiplying the number of shares of restricted stock that have not vested as of December 31, 2010, by the closing price of the Company's common stock on December 31, 2010 of $18.94.

(2)

As of December 31, 2010, Mr. Scott did not hold any unvested restricted stock and therefore he is not listed in the below footnotes of this table.

(3)

Detailed information relating to the non-performance-based unvested restricted stock awards as of December 31, 2010 (all unvested restricted stock awards were granted under the Company's 2005 Stock Incentive Plan) is as follows: