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SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of

the Securities Exchange Act of 1934

Filed by the Registrant    x

Filed by a Party other than the Registrant    ¨

Check the appropriate box:

Edgewater Technology, Inc.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (check the appropriate box):

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EDGEWATER TECHNOLOGY, INC.

ANNUAL MEETING OF STOCKHOLDERS

June 8, 2011

NOTICE AND PROXY STATEMENT

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April 25, 2011

Dear Edgewater Technology, Inc. Stockholder:

On behalf of the Board of Directors, I am pleased to invite you to attend the Edgewater Technology, Inc. (“Edgewater” or the “Company”) 2011 Annual Meeting of Stockholders. The meeting will be held at 10:00 a.m., local time, on June 8, 2011, at the Sheraton Colonial Boston North Hotel & Conference Center, One Audubon Road, Wakefield, Massachusetts 01880.

At the meeting, you and the other stockholders will be asked to vote upon the following:

As of April 11, 2011, the Company had 12,457,978 shares of common stock outstanding. Only shareholders of record as of the close of business on April 11, 2011 are entitled to receive notice of, to attend, and to vote at, the Annual Meeting.

The Company is pleased to continue to take advantage of the Securities and Exchange Commission rules that allow issuers to furnish proxy materials to their shareholders on the Internet. The Company believes these rules allow it to provide you with the information you need while lowering the costs of delivery and reducing the environmental impact of the Annual Meeting.

Whether or not you can attend the meeting, please read the enclosed Proxy Statement. When you have done so, please mark your vote on the enclosed proxy, sign and date the proxy, and return it to us in the enclosed pre-addressed, postage paid envelope. Alternatively, you may cast your vote by telephone, or through the Internet. Instructions for voting by telephone or through the Internet are included with your proxy. Your vote is important. Please act promptly by voting your shares by telephone, via the Internet, or by signing, dating and returning the enclosed proxy card.

Thank you for your continued interest in Edgewater. We look forward to seeing you at the meeting.

Sincerely,

Shirley Singleton

Chairman, President and Chief Executive Officer

20 Harvard Mill Square • Wakefield, MA 01880 • Tel: 781-246-3343 • Fax: 781-246-5903

ir@edgewater.com • www.edgewater.com

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EDGEWATER TECHNOLOGY, INC.

20 Harvard Mill Square

Wakefield, Massachusetts 01880

NOTICE OF ANNUAL MEETING OF STOCKHOLDERS

To Be Held June 8, 2011

To the Stockholders:

Edgewater Technology, Inc. (“Edgewater”) will hold its Annual Meeting of Stockholders at the Sheraton Colonial Boston North Hotel & Conference Center, One Audubon Road, Wakefield, Massachusetts 01880, on June 8, 2011 at 10:00 a.m., Eastern Time.

We are holding this meeting for the following purposes:

The Board of Directors selected April 11, 2011 as the record date for determining stockholders entitled to vote at the Annual Meeting. As of April 11, 2011, Edgewater had 12,457,978 shares of common stock outstanding. A list of stockholders on that date will be available for inspection at Edgewater’s corporate headquarters, 20 Harvard Mill Square, Wakefield, Massachusetts, during normal business hours for the ten-day period prior to the Annual Meeting. Only holders of our common stock as of the close of business on April 11, 2011 are entitled to vote at the Annual Meeting or any adjournment thereof.

This Proxy Statement, Proxy and Edgewater’s 2010 Annual Report on Form 10-K are being distributed, or made available to stockholders, on or about April 25, 2011.

Wakefield, Massachusetts

April 25, 2011

Important Notice Regarding Availability of Proxy Materials for the Stockholders Meeting to be Held on June 8, 2011: This Proxy Statement and our 2010 Annual Report on Form 10-K are available at www.envisionreports.com/EDGW (for registered stockholders) or www.edocumentview.com/EDGW (for beneficial stockholders).

20 Harvard Mill Square • Wakefield, MA 01880 • Tel: 781-246-3343 • Fax: 781-246-5903

ir@edgewater.com • www.edgewater.com

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IMPORTANT

Whether or not you expect to attend in person, we urge you to vote your shares at your earliest convenience. This will ensure the presence of a quorum at the meeting. Promptly voting your shares by telephone, via the Internet, or by signing, dating, and returning the enclosed proxy card will save the Company the expense and extra work of additional solicitation. An addressed envelope, for which no postage is required if mailed in the United States, is enclosed if you wish to vote by mail. Submitting your proxy now will not prevent you from voting your shares at the meeting if you desire to do so, as your proxy is revocable at your option.

EDGEWATER TECHNOLOGY, INC.

PROXY STATEMENT

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GENERAL INFORMATION

Annual Meeting Information

This Proxy Statement contains information related to the Annual Meeting of Stockholders of Edgewater Technology, Inc. (the “Company,” “Edgewater” or “Edgewater Technology”) to be held on June 8, 2011, beginning at 10:00 a.m., Eastern Daylight Time, at the Sheraton Colonial Boston North Hotel & Conference Center, One Audubon Road, Wakefield, Massachusetts 01880, and any postponements or adjournments thereof (the “Annual Meeting”). This Proxy Statement was prepared at the direction of our Board of Directors to solicit your proxy for use at the Annual Meeting. It will be mailed to stockholders on or about April 25, 2011.

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If you return your proxy but do not mark your voting preference, the individuals named as proxies will vote your shares “FOR” the election of the nominees for director, “FOR” the proposed amendment to the 2008 ESPP, “FOR” the proposal regarding the advisory vote on executive compensation, “1 YEAR” for the proposal regarding an advisory vote on the frequency of the advisory vote on executive compensation and “FOR” the ratification and approval of the Auditor Appointment. Giving a proxy will not affect your right to vote your shares at the Annual Meeting. If you attend the Annual Meeting, you may revoke your proxy and vote in person if you wish.

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ITEM 1—ELECTION OF DIRECTORS

Our Board of Directors (which is sometimes referred to in this Proxy Statement as our “Board”) currently consists of seven persons each of whose term expires at the Annual Meeting. Each of our directors began serving his or her current term at last year’s Annual Meeting on June 16, 2010.

You and the other stockholders are requested to vote for the nominees set forth below to serve as directors until the 2012 Annual Meeting of Stockholders or until their successors are duly elected and qualified. The individuals named as proxies will vote the enclosed proxy for the election of all nominees listed below, unless you direct them to withhold your votes. If any nominee becomes unable to serve as a director before the Annual Meeting (or decides not to serve), the individuals named as proxies may vote for a substitute or we may reduce the number of members of the Board.

Vote Required

If a quorum is present, individual nominees will be elected by a plurality of the votes of shares present in person or represented by proxy at the Annual Meeting. This means that the seven nominees will be elected if they receive more affirmative votes than any other nominees. If you are the beneficial owner of shares held in “street name” by a broker, then the broker, as the record holder of the shares, is required to vote those shares in accordance with your instructions. However, if you do not give instructions to the broker, then the broker will not be entitled to vote the shares with respect to the election of directors.

Recommendation of the Board

Our Board of Directors recommends that you vote “FOR” each of the following nominees.

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Below are the names and ages of the director nominees, the year they became directors, their principal occupations or employment for at least the past five years and certain of their other directorships.

Nominees for Election

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CORPORATE GOVERNANCE

Board and Board Committee Matters

The Board consists of seven directors, six of whom are “Independent” directors as defined under the NASDAQ listing standards. As required by the NASDAQ listing standards and our Company’s Corporate Governance Guidelines, the Board must be comprised of a majority of Independent directors. The Corporate Governance Guidelines and committee charters are reviewed annually and updated as necessary to reflect changes in regulatory requirements and evolving oversight practices. Mr. Wilson serves as the Company’s lead independent director. The lead independent director is responsible for coordinating the activities of the non-management directors, coordinating with the Chairman to set the agenda for Board meetings, chairing meetings of the non-management directors, and leading the Board’s review of the Chief Executive Officer (“CEO”).

The Board currently has three standing committees consisting of: the Governance and Nominating Committee, the Compensation Committee and the Audit Committee. No member of the Audit, Compensation or Governance and Nominating Committee is an employee of the Company or its subsidiaries, and all are independent as defined by the NASDAQ listing standards. Each of the Audit, Compensation and Governance and Nominating Committees has a written charter approved by the Board of Directors. The Board has also adopted Corporate Governance Guidelines, which along with the committee charters provide the framework for the governance of the Company. The committee charters and the Guidelines as well as the Company’s Code of Conduct and Ethics, which applies to all directors, officers and employees, are available under “Corporate Governance” in the Investor Relations section of our Company’s website at www.edgewater.com.

The current members of the Committees are identified below:

Governance and Nominating Committee. The current members of the Governance and Nominating Committee are directors Guzzi, who chairs the committee, Loeb and Wilson. Each of these directors is Independent as defined under applicable NASDAQ listing requirements. This Committee’s responsibilities include the selection of potential candidates for the Board and the development and annual review of our Company’s Corporate Governance Guidelines.

Compensation Committee. The current members of the Compensation Committee are directors Wilson, who chairs the committee, Flynn, Leaming and O’Connell. Each of these directors is Independent as defined under applicable NASDAQ listing requirements. The Compensation Committee is responsible for discharging the responsibilities of the Board with respect to the compensation of our executive officers. The Compensation Committee sets performance goals and objectives for the Chief Executive Officer and the other executive officers, evaluates their performance with respect to those goals and sets their compensation based upon the evaluation of their performance. In evaluating executive officer pay, the Compensation Committee has retained the services of a compensation consultant and considers recommendations from the Chief Executive Officer with respect to goals and compensation of the other executive officers. The Compensation Committee assesses the information it receives in accordance with its business judgment. The Compensation Committee also periodically reviews director compensation. All decisions with respect to executive and director compensation are approved by the Compensation Committee and, in the case of director compensation, ratified by the Board.

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Audit Committee. The current members of the Audit Committee are directors Leaming, who chairs the committee, Flynn, O’Connell and Wilson. The Board of Directors has determined that all members of the Audit Committee satisfy the financial literacy requirements of the NASDAQ listing standards and are Independent as defined under the NASDAQ listing requirements and applicable SEC rules. In addition, our Board of Directors has determined that each Audit Committee member (other than Mr. O’Connell) qualifies as an “Audit Committee Financial Expert” as defined under SEC rules. The Audit Committee is primarily concerned with the accuracy and effectiveness of the audits of our Company’s financial statements by our independent registered public accountants. Its duties include, among other things: (1) selecting and retaining our independent registered public accounting firm; (2) reviewing the scope of the audit to be conducted by our independent accountants, as well as the results of their audit; (3) approving non-audit services provided to our Company by the independent accountants; and (4) appraising our financial reporting activities, including our Annual Report on Form 10-K and the accounting standards and principles followed. The Audit Committee’s procedures for the pre-approval of audit and permitted non-audit services are described in “Item 5: Ratification of the Auditor Appointment.” For more information on the Audit Committee, refer to the “Report of the Audit Committee” included elsewhere herein.

Number of Meetings of the Board of Directors and Attendance in 2010

During fiscal 2010, our Board and various Board Committees held the following number of meetings and took the following action by written consent: Board of Directors, six meetings (three of which were regular meetings, two were special meetings and one was the Annual Meeting) and no action by written consent; Audit Committee, eight meetings and no action by written consent; Compensation Committee, four meetings and one action by written consent; Governance and Nominating Committee, four meetings and no action by written consent. No director attended fewer than 89% of the aggregate Board meetings and Board Committee meetings on which that director served. In addition, the Board met four times during 2010 in executive session without Ms. Singleton or other members of management present.

Compensation Committee Interlocks and Insider Participation

During 2010, Messrs. Flynn, O’Connell and Wilson and Ms. Leaming served as members of the Compensation Committee. No member of the Compensation Committee is or has ever been one of our officers or an employee of the Company. None of our executive officers serves as a member of the board of directors or compensation committee of any entity that has one or more of its executive officers serving as a member of our Board of Directors or Compensation Committee.

Director Nomination Process

Our Board of Directors has adopted a Governance and Nominating Committee Charter and Corporate Governance Guidelines, each of which include director nomination policies and provisions that are intended to describe the process by which candidates for possible inclusion in the Company’s recommended slate of director nominees are selected. The nomination policies are administered by the Governance and Nominating Committee of the Board of Directors. The Corporate Governance Guidelines are posted on the Company’s website at www.edgewater.com.

The Board of Directors does not currently prescribe any minimum qualifications for director candidates. Consistent with the criteria for the selection of directors approved by the Board of Directors, the Governance and Nominating Committee will take into account our current needs and the expertise needed for board service, including experience and achievement in business, finance, technology or other areas relevant to our activities; reputation, ethical character and maturity of judgment; diversity of viewpoints, backgrounds and experiences; absence of conflicts of interest including competitive conflict that might impede the proper performance of the responsibilities of a director; independence under SEC and NASDAQ listing standards; service on other boards of directors; sufficient time to devote to Board matters; and ability to work effectively and collegially with other

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Board members. In the case of incumbent directors, the Governance and Nominating Committee will review such directors’ overall service during their term, including the number of meetings attended, level of participation, and quality of performance during their term. For those potential new director candidates who appear upon first consideration to meet the Board’s selection criteria, the Governance and Nominating Committee will conduct appropriate inquiries into their background and qualifications and, depending on the result of such inquiries, arrange for in-person meetings with the potential candidates. Although the Company does not maintain a separate policy regarding the diversity of the Board, during the director selection process the Governance and Nominating Committee does consider issues of diversity, such as occupation, gender, race and origin, when evaluating directors for nomination.

The Governance and Nominating Committee may use multiple sources for identifying director candidates, including its own contacts and referrals from other directors, members of management, the Company’s advisors, and executive search firms. The Governance and Nominating Committee will consider director candidates recommended by stockholders and will evaluate such director candidates in the same manner in which it evaluates candidates recommended by other sources. In making recommendations for director nominees for the Annual Meeting of Stockholders, the Governance and Nominating Committee will consider any written recommendations of director candidates by stockholders received by the Corporate Secretary of the Company in accordance with our Amended and Restated Bylaws not less than sixty (60) nor more than ninety (90) days prior to the anniversary of our previous year’s Annual Meeting of Stockholders. Recommendations must include the candidate’s name and contact information and a statement of the candidate’s background and qualifications, and must be mailed to Governance and Nominating Committee, Edgewater Technology, Inc., 20 Harvard Mill Square, Wakefield, MA 01880, Attn: Corporate Secretary.

The nomination policies are intended to provide a flexible set of guidelines for the effective functioning of our director nominations process. The Governance and Nominating Committee intends to review the nomination policies at least annually and anticipates that modifications may be necessary from time to time as our needs and circumstances evolve, and as applicable legal or listing standards change. The Governance and Nominating Committee may amend, with the approval of our Board of Directors, the nomination policies included in the Corporate Governance Guidelines at any time, in which case the most current version will be available on our website at www.edgewater.com.

Director Qualifications

The Governance and Nominating Committee reviews annually with the Board the composition of the Board as a whole and recommends, if necessary, measures to be taken so that the Board reflects the appropriate balance of knowledge, experience, skills, expertise and diversity required for the Board as a whole and contains at least the minimum number of independent directors required by applicable laws and regulations. The Governance and Nominating Committee is responsible for ensuring that the composition of the Board accurately reflects the needs of the Company’s business and, in furtherance of this goal, proposing the addition of members and the necessary resignation of members for purposes of achieving this goal. In connection with the director nominations for the 2011 Annual Meeting, the Committee also considered the nominees’ roles in assisting with development and implementation of the Company’s strategic plan.

The Board of Directors believes that each director nominee brings a strong and unique background and set of skills to the Board, giving the Board as a whole competence and experience in a wide variety of areas, including corporate governance and board service, executive management, private equity, finance, marketing and international business. Set forth below are the particular experiences, qualifications, attributes or skills, which led the Company’s Board of Directors to conclude that each director nominee should serve as a director of the Company.

Ms. Singleton, a director since 2001 and the Company’s President and Chief Executive Officer, is the co-founder of Edgewater and has extensive knowledge as to the Company’s business, personnel and strategic

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direction. Ms. Singleton’s long-standing history with, and knowledge of, the Company and more than 29 years of information technology industry experience, led the Governance and Nominating Committee to conclude that her skills and background continue to fit the needs of the Board of Directors and qualified her to continue to serve as a director of the Company.

Mr. Wilson, a director since 2003 and the Company’s Lead Independent Director, has an extensive background in public accounting and corporate governance matters. He was a partner in one of world’s largest accounting firms, has served on the boards of several public companies and as President of PC Connection, Inc. and has chaired several audit committees. He qualifies as an “audit committee financial expert” as defined under SEC rules. Mr. Wilson’s long-standing history with, and knowledge of, the Company, leadership abilities and substantial knowledge of the financial, corporate governance and other matters affecting public companies led the Governance and Nominating Committee to conclude that his skills and background continue to fit the needs of the Board of Directors and qualified him to continue to serve as a director of the Company.

Mr. Flynn, a director since 2005, has worked in the banking industry since 1974, most recently as Executive Vice President of Danversbank, the wholly-owned subsidiary of Danvers Bancorp, Inc., a publicly traded bank holding company. He also qualifies as an “audit committee financial expert” as defined under SEC rules. Mr. Flynn’s extensive banking background, understanding of financial matters and public company experience led the Governance and Nominating Committee to conclude that his skills and background fit the needs of the Board of Directors and qualified him to continue to serve as a director of the Company.

Mr. Guzzi, a director since 2004, has an extensive business background. Mr. Guzzi’s long-standing history with, and knowledge of, the Company, as well as his experience with other technology companies and extensive business network led the Governance and Nominating Committee to conclude that his skills and background fit the needs of the Board of Directors and qualified him to continue to serve as a director of the Company.

Ms. Leaming, a director since 2005, has extensive management and leadership experience, having served as an executive officer of various companies and on the boards of other public companies. She also qualifies as an “audit committee financial expert” as defined under SEC rules. Mr. Leaming’s extensive management experience, understanding of financial issues and knowledge of matters affecting public companies led the Governance and Nominating Committee to conclude that her skills fit with the needs of the Board of Directors and qualified her to continue to serve as a director of the Company.

Mr. Loeb, a director since 2000, has extensive management and leadership experience in early-stage companies. Mr. Loeb’s management experience and considerable experience in successfully developing early-stage companies led the Governance and Nominating Committee to conclude that his skills and background fit the needs of the Board of Directors and qualified him to continue to serve as a director of the Company.

Mr. O’Connell, a director since 2009, is an attorney and has substantial experience in real estate development, government relations and international business. Mr. O’Connell’s legal background, experience in federal and state government and knowledge of international business led the Governance and Nominating Committee to conclude that his skills and background fit the needs of the Board of Directors and qualified him to continue to serve as a director of the Company.

Leadership Structure

Combining Chairman and Chief Executive Officer Roles. Our Board of Directors is committed to the principle of independence from management and to the highest standards of corporate governance. None of our directors is a current or former employee of Edgewater except our Chairman, Ms. Singleton. Our Governance and Nominating, Audit and Compensation Committees are composed entirely of independent directors. Our Corporate Governance Guidelines further reflect our strong commitment to independence. In these Guidelines, our Board of Directors has adopted a flexible policy regarding the issue of whether the positions of Chairman and

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Chief Executive Officer should be separate or combined. This policy allows the Board to evaluate regularly whether the Company is best served at any particular time by having our Chief Executive Officer or another director hold the position of Chairman. If the position of Chairman is not held by an independent director, an independent lead director is elected with powers virtually identical to those of an independent Chairman.

When the Board selected Ms. Singleton as Chairman, it also reaffirmed the strong role of the lead director, whose specific duties are described in the “Corporate Governance” section of this Proxy Statement. The powers and duties of Chairman and lead director differ only in that the Chairman presides over the normal business portion of the meetings of the Board. Since the lead director may call for an executive session of independent directors at any time, and has joint control over the agenda and the information provided to directors for Board meetings, the Board does not believe that the ability to preside over the normal Board meeting business sessions limits the ability of the Board to have open exchanges of views, and to address any issues the Board chooses, independently of the Chairman. In addition, much of the work of the Board is conducted through its committees, none of which is chaired by the Chairman of the Board.

At this time, the Board believes there are a number of important advantages to combining the positions of Chairman and Chief Executive Officer. The Chief Executive Officer is the director most familiar with our business and industry and is most capable of effectively identifying strategic priorities and leading the discussion and execution of strategy. The Company’s independent directors bring experience, oversight and expertise from outside the Company and industry, while the Chief Executive Officer brings Company-specific experience and expertise. Combining the Chief Executive Officer and Chairman positions creates a firm link between management and the Board, promotes the development and implementation of corporate strategy and facilitates information flow between management and the Board, which are essential to effective governance. The Board currently believes that combining the roles of Chairman and Chief Executive Officer contributes to a more efficient and effective Board, does not undermine the independence of the Board and certainly has no bearing on the ethical integrity of the directors.

Board of Directors’ Oversight of Risk

Our management bears responsibility for the management and assessment of risk at the Company on a daily basis. Management is also responsible for communicating the most material risks to the Board and its committees, who provide oversight of the risk management practices implemented by management. Our full Board provides oversight for risk management, except for the oversight of risks that have been specifically delegated to a committee. Even when the oversight of a specific area of risk has been delegated to a committee, the full Board may maintain oversight over such risks through the receipt of reports from the committee. In addition, the full Board may assume oversight over a particular risk, even if the risk was initially overseen by a committee, when the Board deems it appropriate. The Board and committee reviews occur principally through the receipt of regular reports from Company management on these areas of risk and discussions with management regarding risk assessment and risk management.

Committees. The Audit Committee maintains initial oversight over risks related to the integrity of the Company’s financial statements, internal control over financial reporting and disclosure controls, the performance of the Company’s independent auditor and the operation of the Company’s ethics program. The Company’s Compensation Committee maintains initial oversight of risks related to the Company’s compensation practices, including practices related to equity programs, other executive or Company-wide incentive programs and hiring and retention. The Governance and Nominating Committee assists the Board of Directors in fulfilling its oversight responsibilities with respect to independence of Board members and compliance with SEC rules and NASDAQ listing standards with respect to Board and committee composition.

Full Board. At its regularly scheduled meetings, the Board generally receives a number of reports which include information relating to specific risks faced by the Company. As appropriate, the Company’s Chief Executive Officer or other members of senior management provide operational reports, which include risks

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relating to the Company’s business. At each regularly scheduled Board meeting, the full Board also receives reports from committee chairpersons, which may include a discussion of risks initially overseen by the committees for discussion and input from the full Board. As noted above, in addition to these regular reports, the Board receives reports on specific areas of risk from time-to-time, such as cyclical or other risks that are not covered in the regular reports given to the Board.

Compensation of Outside Directors

Annual Cash Compensation. Each of the Company’s non-employee directors receives an annual cash retainer of $20,000, payable in four quarterly installments. Each Board member is eligible to receive an additional $1,500 meeting fee for attendance at each meeting above six (6) Board meetings per year. In addition, the following Committee retainer amounts are payable to Committee members other than the Lead Independent Director, who shall be compensated separately as described below.

The Audit Committee Chair receives an annual retainer of $30,000 per year, while Audit Committee Members are entitled to receive an annual retainer of $12,500. Each Audit Committee Member (other than the Lead Independent Director) is eligible to receive an additional $1,000 meeting fee for attendance at each meeting above eight (8) Audit Committee meetings per year. The annual retainers are paid in four quarterly installments and are in addition to the annual cash retainer for non-employee directors described above.

The Compensation Committee Chair receives an annual retainer of $25,000 per year, while Compensation Committee Members are entitled to receive an annual retainer of $12,500. Each Compensation Committee Member (other than the Lead Independent Director), is eligible to receive an additional $1,000 meeting fee for attendance at each meeting above six (6) Compensation Committee meetings per year. The annual retainers are paid in four quarterly installments and are in addition to the annual cash retainer for non-employee directors described above.

The Governance and Nominating Committee Chair receives an annual retainer of $20,000 per year, while Governance and Nominating Committee Members are entitled to receive an annual retainer of $7,500. Each Governance and Nominating Committee Member (other than the Lead Independent Director) are eligible to receive an additional $1,000 meeting fee for attendance at each meeting above the estimated four (4) Governance and Nominating Committee meetings per year. The annual retainers are paid in four quarterly installments and are in addition to the annual cash retainer for non-employee directors described above.

The Board’s Lead Independent Director receives a cash retainer of $55,000, payable in four quarterly installments, in addition to the annual cash retainer for non-employee directors described above; however, the Lead Independent Director is not entitled to receive any separate Committee fees, as described above.

Stock Options. Following initial election to the Company’s Board of Directors, non-employee directors are eligible to receive a nonqualified stock option to purchase shares representing a fair value, as determined in accordance with a Black-Scholes option pricing model, of $40,000. Following initial election, on the date of each annual Stockholders’ Meeting thereafter, each outside director that is reelected is eligible to receive an additional nonqualified stock option to purchase shares representing a fair value, as described above, of $30,000.

The Board compensation guidelines described above are designed to (a) compensate Committee members through Committee cash retainers in order to provide compensation commensurate with relevant service level commitments for Committee service and (b) set overall Board compensation at a level that is competitive with market norms and peer group median levels, in order to enable the Company to attract potential new directors and provide market based remuneration for existing directors.

In light of a lower stock price, a limited pool of stock options for long-term incentives and a challenging economic environment, in March of 2011, as has been the case since 2009, the Compensation Committee

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recommended, and the Board approved, limiting the number of options to be received by Board members in June 2011 to the lesser of (i) the award determined using the Black-Scholes pricing model or (ii) 20,000 shares in each such year. The limitation was supported by the Company’s compensation consultant. This limitation represented an approximate 28% reduction in fair value of the June 2010 options received by directors.

Non-Equity Incentive Plan Compensation. We do not provide Non-Equity Incentive Compensation to our Directors.

Pension Benefits. We do not have a pension plan and therefore, do not offer any such pension arrangements to our Directors.

Outside Directors Compensation Table for 2010

The following table provides compensation information for the year ending December 31, 2010 for each non-employee member of our Board of Directors:

Stockholder Communications with the Board; Annual Meeting Attendance

The Board of Directors welcomes communications from our stockholders and has adopted a procedure for receiving and addressing those communications. Stockholders may send written communications to either the full Board of Directors or the non-employee directors as a group by writing to the Board of Directors, or the non-employee directors, at the following address: Board of Directors/Non-Employee Directors, Edgewater Technology, Inc., 20 Harvard Mill Square, Wakefield, MA 01880, Attn: Corporate Secretary. Communications by e-mail should be addressed to board@edgewater.com and marked “Attention: Corporate Secretary” in the “Subject” field. The Corporate Secretary will review and forward all stockholder communications to the intended recipient, except for those stockholder communications that are outside the scope of Board matters or duplicative of other communications by the applicable stockholder and previously forwarded to the intended recipient. Directors are required, absent compelling circumstances, to attend our Annual Meeting of Stockholders. All Directors attended our 2010 Annual Meeting of Stockholders.

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Code of Ethics

The Company has adopted a code of ethics that applies to our directors, officers and employees. This code of ethics (which we refer to as a “code of conduct”) may be accessed and reviewed through the Company’s website at www.edgewater.com. Any amendments to, or waivers from, any provisions of the code of conduct which apply to our principal executive officer, principal financial officer, principal accounting officer or controller, or any person performing similar functions, will be disclosed on our website promptly following the date of any such amendment or waiver.

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ITEM 2—APPROVAL OF THE PROPOSED AMENDMENT TO THE 2008 ESPP

General

Our shareholders originally approved the 2008 ESPP in June 2008. As of April 25, 2011, there were 16,371 shares available for purchase under the 2008 ESPP. On April 22 2011, the Board of Directors approved an amendment to the 2008 ESPP to increase the authorized number of shares of common stock available for sale thereunder by 700,000 shares and to reserve the additional shares for issuance thereunder, bringing the total number of shares of common stock subject to the 2008 ESPP to 1,200,000 (the “Amended 2008 ESPP”). This amendment, which is subject to the approval of our shareholders, would have the effect of increasing the current remaining available shares from 500,000 to 1,200,000.

The following description of the Amended 2008 ESPP is not intended to be complete and is qualified in its entirety by the complete text of the Amended 2008 ESPP (as proposed to be amended), which is attached to this Proxy Statement as Appendix A.

Summary of Amended 2008 ESPP

Purpose of the Amended 2008 ESPP

The purpose of the Amended 2008 ESPP is to provide eligible employees of the Company and its subsidiaries, who wish to become stockholders, an opportunity to purchase common stock of the Company. The Board of Directors of the Company believes that employee participation in stock ownership will be to the mutual benefit of the employees and the Company.

Administration

The Board of Directors has appointed a committee (the “ESPP Committee”), which has been granted the authority and power to administer the Amended 2008 ESPP and to make, adopt, construe, and enforce rules and regulations not inconsistent with the provisions of the Amended 2008 ESPP. The ESPP Committee is authorized to adopt and prescribe the contents of all forms required in connection with the administration of the Amended 2008 ESPP, including, but not limited to, the purchase agreement (the “Purchase Agreement”), payroll withholding authorizations, withdrawal documents, and all other notices required hereunder. The ESPP Committee has the fullest discretion permissible under law in the discharge of its duties. The ESPP Committee’s interpretations and decisions in respect of the 2008 ESPP, the rules and regulations pursuant to which it is operated, and the rights of participants thereunder are final and conclusive. The Company pays all administrative expenses associated with the operation of the Amended 2008 ESPP.

Eligibility; Participation

Any person employed as an employee of the Company (or a subsidiary designated as an employer under the Amended 2008 ESPP) who does not own five percent or more of the total combined voting power or value of all classes of stock of the Company or any Subsidiary will be eligible to participate in the Amended 2008 ESPP (an “Eligible Employee”). Any Eligible Employee may elect to participate in the Amended 2008 ESPP and may become a Participant by executing and filing with the ESPP Committee a Purchase Agreement at such time in advance of the effective date of the election as the ESPP Committee shall prescribe. An Eligible Employee’s initial election to participate in the Amended 2008 ESPP may be made at any time after he or she first becomes eligible to participate in the Amended 2008 ESPP and shall be effective as soon as practicable after the Eligible Employee submits the necessary documentation to the ESPP Committee. A Participant’s Purchase Agreement shall remain in effect until modified or canceled in accordance with the further terms of this 2008 ESPP, as hereinafter set forth. As of April 25, 2011, approximately 372 persons were eligible to participate in the Amended 2008 ESPP.

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Reservation of Shares

The maximum number of shares of common stock which may be purchased under the Amended 2008 ESPP, as amended hereby, will be 1,200,000 shares, subject to adjustment in accordance with the anti-dilution provisions hereinafter set forth. Except for anti-dilution adjustments, the aggregate number of shares of common stock that may be purchased under the Amended 2008 ESPP shall not exceed the number of shares of common stock reserved for under the Amended 2008 ESPP.

Offering Periods

The Amended 2008 ESPP will be implemented during offering periods beginning every three months during the term of the Amended 2008 ESPP, commencing January 1^st, April 1^st, July 1^st and October 1^st of each year.

Purchase Price

Generally, the Purchase Price per share of the common stock sold to Participants pursuant to any offering hereunder shall be the lower of (i) 85% of the Market Value (defined below) per share on the first day of the three-month Offering Period or (ii) 85% of the Market Value per share on the last day of the three month Offering Period (the “Purchase Date”). Notwithstanding the foregoing, the Board of Directors may determine that the Purchase Price shall be the Market Value, or a percentage of the Market Value on either of such dates or the lower of such dates, so long as such percentage shall not be lower than 85% of such Market Value. “Market Value” generally means the fair market value of a share of our common stock on a given date, as determined generally by reference to the closing sales price as reported on the NASDAQ Stock Market for such date.

Payment of Purchase Price; Payroll Deductions

The Purchase Price for all shares of common stock purchased by a Participant under the Amended 2008 ESPP shall be paid out of the Participant’s authorized payroll deductions. All payroll deductions received or held by the Company may be used for any corporate purpose.

A Participant may voluntarily cease his or her participation in the Amended 2008 ESPP and stop payroll deductions at any time by filing a notice of cessation of participation on such form and at such time in advance of the effective date as the Committee shall prescribe. Notwithstanding anything in the Amended 2008 ESPP to the contrary, if a Participant ceases to be an Eligible Employee, his or her participation automatically shall cease and no further purchase of common stock shall be made for such Participant thereunder. Payroll deductions shall commence on the first payroll following the offering date, and shall continue at the same rate until the end of the offering period unless sooner terminated as provided in the Amended 2008 ESPP.

Exercise of Purchase Privilege

Each Participant shall be granted an option to purchase shares of common stock as of the first day of each Purchase Period at the Purchase Price. The option shall continue in effect through the Purchase Date for the Purchase Period. The Participant shall be automatically deemed to have exercised his or her option to purchase shares of common stock on the Purchase Date, unless he or she notifies the Committee, in such manner and at such time in advance of the Purchase Date as the Committee shall prescribe, of his or her desire not to make such purchase.

The maximum number of shares which a Participant may purchase during a Purchase Period is 4,000 shares or such other number as the Committee establishes before the beginning of the Purchase Period. There shall be purchased for the Participant on such Purchase Date at the Purchase Price for such Purchase Period the largest number of whole and fractional shares of common stock as can be purchased with the amounts withheld from the Participant’s compensation during the Purchase Period. Each such purchase shall be deemed to have occurred on the Purchase Date occurring at the close of the Purchase Period for which the purchase was made.

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Notwithstanding the foregoing, a Participant may not purchase shares of common stock having an aggregate Market Value of more than $25,000, determined at the beginning of each Purchase Period, for any calendar year in which one or more such offerings are outstanding at any time, and a Participant may not purchase a share of common stock under any offering after the expiration of the Purchase Period for such offering.

Discontinuance of Participation

A Participant may voluntarily cease his or her participation in the Amended 2008 ESPP and stop payroll deductions at any time by filing a notice of cessation of participation on such form and at such time in advance of the effective date as the ESPP Committee shall prescribe. Notwithstanding anything in the Amended 2008 ESPP to the contrary, if a Participant ceases to be an Eligible Employee, his or her participation automatically shall cease and no further purchase of common stock shall be made for such Participant under the Amended 2008 ESPP.

Certain Transactions

Subject to any required stockholder action, if the Company is the surviving or resulting corporation in any merger or consolidation, any offering shall apply to the shares of stock of the Company. In the event of a dissolution or liquidation of the Company, or a merger or consolidation in which the Company is not the surviving or resulting corporation, the Amended 2008 ESPP and any offering will terminate upon the effective date of such transaction and the balance of any amounts withheld from the Participant’s compensation not yet applied to the purchase of common stock will be returned to the Participant.

Anti-Dilution Provisions

The aggregate number of shares of common stock reserved for purchase under the Amended 2008 ESPP, as hereinabove provided, and the calculation of the Purchase Price per share may be appropriately adjusted to reflect any increase or decrease in the number of issued shares of common stock resulting from a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend, or other increase or decrease in such shares, if effected without receipt of consideration by the Company. Any such adjustment shall be made by the ESPP Committee acting with the consent of, and subject to the approval of, the Board of Directors.

Non-Alienation

The right to purchase shares of common stock under the Amended 2008 ESPP is personal to the Participant, is exercisable only by the Participant during the Participant’s lifetime except as hereinafter set forth, and may not be assigned or otherwise transferred by the Participant. Notwithstanding the foregoing, there shall be delivered to the executor, administrator or other personal representative of a deceased Participant such shares of common stock and such residual amounts as may remain to the Participant’s credit from amounts withheld from the Participant’s compensation as of the Purchase Date occurring at the close of the period in which the Participant’s death occurs, including shares of common stock purchased as of that date or prior thereto with moneys withheld from the Participant’s compensation.

Amendment of the Plan

The Board of Directors (or its delegate) may amend or terminate the Amended 2008 ESPP at any time; provided, however, that the Board of Directors (or its delegate) shall not amend the Amended 2008 ESPP without stockholder approval if such approval is required by section 423 of the Internal Revenue Code of 1986, as amended (the “Code”).

Expiration and Termination of the 2008 ESPP

The Amended 2008 ESPP will continue in effect for ten years from October 1, 2008, unless terminated prior thereto pursuant to the provisions of the Amended 2008 ESPP or pursuant to action by the Board of Directors,

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which will have the right to terminate the Amended 2008 ESPP at any time without prior notice to any Participant and without liability to any Participant. Upon the expiration or termination of the Amended 2008 ESPP, the balance, if any, then standing to the credit of each Participant from amounts withheld from the Participant’s compensation which had not, by such time, been applied to the purchase of common stock shall be refunded to the Participant.

Internal Revenue Code Considerations

The Amended 2008 ESPP is intended to constitute an “employee stock purchase plan” within the meaning of section 423 of the Code.

ERISA Considerations

The Amended 2008 ESPP is not intended and shall not be construed as constituting an “employee benefit plan,” within the meaning of section 3(3) of the Employee Retirement Income Security Act of 1974, as amended.

Withholding of Taxes

All acquisitions of common stock under the Amended 2008 ESPP shall be subject to applicable federal, state and local tax withholding requirements if the Internal Revenue Service or other taxing authority requires such withholding. The Company may require that Participants pay to the Company (or make other arrangements satisfactory to the Company for the payment of) the amount of any federal, state or local taxes that the Company is required to withhold with respect to the purchase of common stock or the sale of common stock acquired under the Amended 2008 ESPP, or the Company may deduct from the Participant’s wages or other compensation the amount of any withholding taxes dues with respect to the purchase of common stock or the sale of common stock acquired under the Amended 2008 ESPP.

Vote Required

If a quorum is present, the affirmative vote of a majority of the votes cast on the proposal will be required to approve the proposed amendment to the Amended 2008 ESPP. Abstentions and broker non-votes will have no effect on the outcome of the vote.

Recommendation of the Board

Our Board of Directors recommends that you vote “FOR” the proposed amendment to the 2008 ESPP.

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STOCK OWNERSHIP

Beneficial Ownership of Certain Stockholders, Directors and Executive Officers

The following table provides information, as of April 11, 2011, about the beneficial ownership of our Company’s common stock by: (1) the persons known to us to be beneficial owners of more than 5% of our Company’s outstanding common stock; (2) our Directors; (3) each Named Executive Officer (as defined under “Compensation of Named Executive Officers”); and (4) our Directors and Executive Officers as a group. To the best of our knowledge, each such person has sole voting and investment power over the shares shown in this table, except as otherwise indicated. As of April 11, 2011, there were 1,988 record holders and 12,457,978 outstanding shares of our Company’s common stock.

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Stock Ownership Guidelines

The Company’s Compensation Committee has established stock ownership guidelines for the Company’s Directors and Named Executive Officers, which are described in detail under “Compensation Discussion and Analysis—Stock Ownership Guidelines.”

Section 16(a) Beneficial Ownership Reporting Compliance

Under the U.S. securities laws, directors, executive officers and persons holding more than 10% of Edgewater Technology, Inc.’s common stock must report their initial ownership of the common stock and any changes in that ownership to the SEC. The SEC has designated specific due dates for these reports and we must identify in this Proxy Statement those persons who did not file these reports when due. Based solely on our review of copies of the reports filed with the SEC and written representations of the Company’s directors and executive officers, we believe all persons subject to beneficial ownership reporting filed the required reports on time in 2010.

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EQUITY COMPENSATION PLANS

Equity Compensation Plan Information

The Edgewater Technology, Inc. Amended and Restated 1996 Stock Option Plan (the “1996 Plan”) allowed for grants of incentive and non-qualified stock options covering up to fifteen percent (15%) of our outstanding common stock. The 1996 Plan expired on June 30, 2006; thus, no further grants may be awarded, but options awarded under the 1996 Plan remain outstanding, subject to the terms of the 1996 Plan and any related option agreements.

The Edgewater Technology, Inc. Amended and Restated Plan (the “2000 Plan”) allows for grants of non-qualified stock options of up to 4 million shares of our common stock. All employees and officers of our Company and its subsidiaries and directors of our Company, including outside directors, are eligible for grants of stock options under the 2000 Plan. Shares covering awards that are forfeited, expire, or canceled will again be available for issuance under the 2000 Plan. Since the 2000 Plan, as initially adopted, and as amended and restated in 2002, is a “Broad-Based Plan” under prior NASDAQ rules, stockholder approval was not required with respect to the 2000 Plan. However, if there is a material amendment to the 2000 Plan in the future, stockholder approval with respect to the material amendment would be required under current NASDAQ listing requirements.

The Edgewater Technology, Inc. 2003 Incentive Plan (the “2003 Plan”) allows for grants of non-qualified stock options and restricted share awards of up to 500,000 shares of our common stock. All employees and officers of our Company and its subsidiaries, but none of our Company’s outside directors, are eligible for the grant of non-qualified stock options or awards of restricted shares under the 2003 Plan. Since the 2003 Plan, as initially adopted, is a “Broad Based Plan” under prior NASDAQ rules, stockholder approval was not required with respect to the 2003 Plan. However, if there is a material amendment to the 2003 Plan in the future, stockholder approval with respect to the material amendment would be required under current NASDAQ listing requirements.

The Edgewater Technology, Inc. 2008 Omnibus Incentive Plan (the “2008 Plan”) allows for grants of non-qualified stock options and restricted share awards of up to 1.5 million shares of our common stock. All employees and officers of our Company and its subsidiaries and directors of our Company, including outside directors, are eligible for grants of stock options under the 2008 Plan. The 2008 Plan was approved by our stockholders on June 11, 2008.

The Edgewater Technology, Inc. 2008 Employee Stock Purchase Plan (the “2008 ESPP”) allows for employee stock purchases of our Company’s common stock at eighty-five percent (85%) of the lower of our common stock price as of the first or last trading day of each quarter. The 2008 ESPP currently authorizes purchases for up to 500,000 shares of our common stock by our employees and continues in effect until October 1, 2018, unless earlier terminated. The 2008 ESPP was approved by our stockholders on June 11, 2008.

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Equity Compensation Plan Table

The following table sets forth certain information as of December 31, 2010, for all of our Company’s equity compensation plans, which consist of: the 1996 Plan; the 2000 Plan; the 2003 Plan; the 2008 Plan; and the 2008 ESPP:

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EXECUTIVE OFFICERS

Provided below are the names, ages and principal occupation or employment, for at least the last five years, for all of the persons who are our executive officers, including our Named Executive Officers.

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REPORT OF THE COMPENSATION COMMITTEE ON EXECUTIVE COMPENSATION

The Compensation Committee of the Board of Directors oversees the Company’s compensation program on behalf of the Board. In fulfilling its oversight responsibilities, the Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis (the “CD&A”) for the year ended December 31, 2010 with management. In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors, and the Board has approved, that the CD&A be included in this Proxy Statement and in the Company’s Annual Report on Form 10-K for the year ended December 31, 2010.

The Compensation Committee:

Wayne Wilson, Chairman

Paul E. Flynn

Nancy L. Leaming

Daniel O’Connell

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COMPENSATION DISCUSSION AND ANALYSIS

The following Compensation Discussion and Analysis describes the material elements of compensation for the Edgewater Technology, Inc. executive officers identified in the Summary Compensation Table (the “Named Executive Officers”) presented under “Compensation of Named Executive Officers,” provides an overview and analysis of our compensation programs, the compensation decisions we have made under those programs, and the factors we considered in making those decisions with respect to the compensation earned by our Named Executive Officers. The Compensation Committee of the Board (the “Compensation Committee”) makes all decisions for the total direct compensation—that is, the annual base salaries and benefits; annual incentive compensation; and long-term incentives of the Company’s executive officers, including the Named Executive Officers.

Executive Summary

Edgewater’s historical operating strategy is based on the philosophy that success in its business sector is best measured by performance in a marathon, not a sprint. Our historical compensation policies and practices have mirrored this operating strategy, as past compensation incentives have been implemented as a direct extension of this operating strategy, and payouts have been made only when fundamental operating objectives, including satisfaction of revenue or EBITDA-based goals, had been achieved.

In recent years, the Company’s operating performance has varied considerably, primarily due to economic instability and volatile industry demand for information technology-related products and services. During 2009, management and the Board undertook a strategic review of Edgewater’s business for the purpose of developing a three-year strategic plan that would improve and broaden the Company’s scale of operations and drive consistent growth in revenue and EBITDA over the planning horizon.

The Company’s December 2009 acquisition of Fullscope, Inc. (“Fullscope”) was an important element of that strategic plan as it increased the scale of our business, extended our suite of Microsoft-related offerings and enhanced the Company’s overall revenue growth rate. Our May 2010 acquisition of Meridian Consulting International established Edgewater as a leading purveyor of strategic finance service offerings to the office of the chief financial officer for large, multi-national companies.

As part of our 2010 operating plan, the Company set, and subsequently achieved, several important goals envisioned in our three-year strategic plan, including: returning the Company to double-digit organic revenue growth, generating positive EBITDA, generating positive cash flow from operations, and developing our own intellectual property assets.

During 2009, the Compensation Committee, with the assistance of our outside compensation consultant, also undertook an extensive review of our executive compensation programs in order to assure that overall compensation was competitive and that incentive compensation, with particular emphasis on long-term incentives, was properly aligned with our strategic plan. A particular focus of the Compensation Committee was the development of a long-term incentive plan for Ms. Singleton and Mr. Clancey that would retain and appropriately reward them for successfully implementing the three-year strategic plan.

The Committee and its compensation consultant developed comprehensive tally sheets compiling and comparing the components and total compensation of our Named Executive Officers against companies in our peer group and companies of similar size; reviewed the pay practices and performance of companies within our peer group, as well as other companies in our industry and companies of similar size and profitability based on available survey data; and considered a range of plan designs including traditional equity plans and multi-year deferred compensation cash incentive programs.

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Based on the results of this review, the Compensation Committee determined to retain the focus of our annual cash incentive program on achieving targeted annual levels of service revenue and EBITDA, while making a number of improvements in the Company’s incentive programs for Ms. Singleton and Mr. Clancey including:

The Compensation Committee also determined in consultation with its compensation consultant that currently the most appropriate and efficient long-term equity vehicle for incentivizing our Named Executive Officers are time-based stock options expiring in seven years. Based on these considerations, the Compensation Committee approved the following grants of employee stock options to Ms. Singleton and Mr. Clancey:

The amounts and timing of these share grants were affected by the availability of shares for granting under the Company’s equity incentive plans, as well as the Company’s continuing progress in executing its three-year strategic plan. While the Compensation Committee believes that long-term incentive compensation equity grants for our Named Executive Officers should approximate the 50^th percentile of our peer group and market survey data, actual grants to Ms. Singleton and Mr. Clancey were set at lower levels based on the current limited availability of shares for granting under the Company’s equity incentive plans.

During 2010, the Compensation Committee also considered, based on its earlier strategic review, the competitive effectiveness of our compensation arrangements for Ms. Ranzal-Knowles and made several improvements including:

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At the beginning of 2010, Edgewater established service revenue and EBITDA goals for 2010, which took into account the anticipated improvements resulting from the December 2009 acquisition of Fullscope and the anticipated recovery and growth in the Company’s organic core service offerings. For 2010, the Compensation Committee established target bonus opportunities premised on specified service revenue and EBITDA levels tied to our budget and individual executive management objectives, as described in greater detail under “Individual Elements of Compensation; 2010 Compensation Decisions—Annual Incentive Compensation.”

Of the total 2010 bonus opportunities for Named Executive Officers, 70% were tied to service revenue and EBITDA performance against targets and 30% were tied to other specific Company and individual management performance objective goals.

The Company exceeded its revenue metric for 2010 but did not achieve the minimum threshold EBITDA to receive a payout for EBITDA. While the management team, excluding Ms. Ranzal-Knowles whose 2010 bonus opportunity is based upon divisional-based financial performance metrics, was entitled to receive a payout for the revenue achievement, the management team elected not to receive payment for that element due to the significantly off-plan performance on EBITDA. Despite missing plan EBITDA, the actual EBITDA achieved represented a significant improvement and turnaround from the Company’s performance in 2009.

The performance of our Named Executive Officers, excluding Ms. Ranzal-Knowles whose 2010 bonus opportunity performance is discussed below, against their specific Company and individual management performance objective elements was strong with the combination of the two equating to a 30% payout against their target bonuses, which the Compensation Committee approved for payment at its meeting on March 9, 2011.

Ms. Ranzal-Knowles’ Financial Performance Bonus Opportunity was established by the Committee based on the service revenues and EBITDA contribution of the Ranzal Division of our EPM business (“Ranzal”); employees of Ranzal generally have a bonus opportunity that is calculated utilizing Ranzal service revenue and EBITDA contribution. The Ranzal Division’s 2010 service revenue and EBITDA levels met the established Financial Performance Target (as described under “Elements of the 2010 Incentive Bonus Plan Opportunity”), qualifying Ms. Ranzal-Knowles for a payout under this component of her 2010 bonus program.

In recognition of their performance and contributions to our operating results in 2010, the Compensation Committee at its March 9, 2011, also approved the following compensation changes and equity awards to certain Named Executive Officers:

The amount of the option awards was based upon the Compensation Committee’s review and consideration of individual performance and ownership holdings specific to each of the above Named Executive Officers. While the Compensation Committee believes that long-term incentive compensation equity grants for our Named Executive Officers should approximate the 50^th percentile of our peer group and market survey data, actual grants were set at lower levels based on the current limited availability of shares for granting under the Company’s equity incentive plans.

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All of these actions, as described in more detail in the following sections, have been designed to provide our Named Executive Officers with competitive compensation while aligning their incentives with the achievement of substantial improvement in value for our shareholders.

Compensation Philosophy

Our compensation programs are designed to attract, retain and compensate Edgewater’s executive employees, while motivating them to achieve superior performance. Different programs are geared to short- and longer-term performance with the goal of increasing stockholder value over the long term. Executive compensation programs impact all employees by setting general levels of compensation and helping to create an environment of goals, expectations and rewards. Because we believe the performance of every employee is important to our success, we are mindful of the effect executive compensation and incentive programs have on all of our employees.

We believe that the compensation of our executives primarily should reflect their success as a management team, in attaining key operating objectives, such as growth in revenue and growth in earnings before interest, taxes, depreciation and amortization (“EBITDA”), the development of long-term competitive advantage, and, to a lesser extent, individual performance goals and objectives. We believe that the performance of the executives in managing our Company, considered in light of general economic and specific company, industry and competitive conditions, should be the basis for determining their overall compensation. We also believe that their compensation should not be based on the short-term performance of our stock, whether favorable or unfavorable, but rather that the price of our stock will, in the long-term, reflect our operating performance, and ultimately, the management of the Company by our executives. We seek to have the long-term performance of our stock reflected in executive compensation through our stock option and other equity incentive programs.

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Overview of Executive Compensation Components

The Company’s executive compensation program consists of several components, the most important elements of which are set forth in the table below.

For more detail regarding these components, see “Individual Elements of Compensation; 2010 Compensation Decisions” included elsewhere herein.

Compensation Consultants

Since 2007, the Compensation Committee has engaged DolmatConnell & Partners Inc. (the “Compensation Consultant”), an independent compensation consultant, to assist the Committee in the discharge of its duties. The Compensation Consultant does not perform any services for us other than for the Compensation Committee, and the Compensation Committee retains the right to terminate or replace the Compensation Consultant at any time.

In 2009, the Compensation Committee engaged the Compensation Consultant to assist in its review of our executive compensation programs, with particular attention to our long-term incentives. During 2009 and 2010, the Compensation Consultant provided the Compensation Committee with:

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In preparing its compensation analyses, the Compensation Consultant analyzed compensation data from the published compensation surveys of technology industry firms with revenues between $50 million and $200 million as well as a list of peer companies consisting of firms comparable in size and industry to Edgewater. The following is a list of all the companies in our peer group: Analysts International Corp., Bridgeline Digital Inc., CSP, Inc., EasyLink Services International Corp., eLoyalty Corp, Innodata Isogen, Inc. Keynote Systems, Inc., NetSol Technologies, Inc., Perficient, Inc., Rainmaker Systems, Inc., The Hackett Group, Inc., The Management Network Group, Inc., Tier Technologies, Inc., Widepoint Corp., XETA Technologies, Inc. and Zanett, Inc. The 2010 peer group was developed by management in conjunction with the Compensation Consultant and was formally reviewed with and approved by the Compensation Committee on September 15, 2010. The Compensation Consultant’s recommendations with respect to base salary, bonus and equity incentive compensation were based on a combination of the broader survey information and available published data for the companies in the peer group.

The Compensation Committee generally seeks to target all elements of direct compensation at or near the 50^th percentile of the peer group data and between the 25^th and 50^th percentile of the industry survey data. Base salaries for Mr. Clancey and Ms. Ranzal-Knowles in 2010 were targeted slightly above the 75^th percentile compared to available peer group and market survey data based on their roles in our Company. Actual long-term equity incentive compensation awards were set at lower levels based on the current limited availability of shares for granting under the Company’s equity incentive plans.

Role of the Chief Executive Officer in the Compensation Process

As described elsewhere in this Proxy Statement, the Compensation Committee makes all decisions for the total direct compensation—that is, the annual base salaries and benefits; annual incentive compensation; and long-term incentives of the Company’s executive officers, including the Named Executive Officers, which includes Ms. Singleton, the Company’s President and Chief Executive Officer. As it relates to compensation matters for the Company’s other Named Executive Officers (excluding Ms. Singleton), the Compensation Committee solicits recommendations from Ms. Singleton with regards to information that may be considered by the Compensation Committee in either the development of compensation programs or the awarding of objective and/or discretionary bonus amounts. The Compensation Committee, however, makes the final decision with respect to executive officer compensation.

Overall Compensation Goals

The goals of our executive compensation program are to:

The Compensation Committee seeks to achieve these goals by setting base salaries for our executives that are competitive with those of our peers and providing incentives that enable total compensation to be in line with

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peer total compensation levels. Further, we place an important emphasis on “pay for performance,” as we believe that meaningful portions of a total compensation opportunity should be at risk. In addition, Edgewater believes that total compensation should reflect and properly reward outstanding performance, including performance above targeted levels.

We believe the mix of base salary, bonuses, stock option grants and restricted stock awards described below furthers our objectives, is consistent with our philosophy described previously and effectively links executive compensation to our Company’s operational performance.

Consideration Given to Individual Elements of Compensation

The Company’s compensation program for its Named Executive Officers is based upon various individual compensation elements such as base salary, annual incentive compensation and long-term stock awards. When reviewing compensation programs, the Compensation Committee views each of the compensation elements independently, as well as collectively as total direct compensation.

The Compensation Committee annually determines the compensation levels for our Named Executive Officers by considering several factors, including each executive officer’s roles and responsibilities, how the executive officer is performing those responsibilities, our historical and anticipated future financial performance and the compensation practices of companies in our peer group and where appropriate, survey data from a broader index of comparable public companies. The Compensation Committee does not maintain a specific policy or formula when establishing the allocation of total compensation among the various compensation elements (i.e., cash and non-cash compensation). The overall goal of the Compensation Committee is to establish individual compensation elements for its Named Executive Officers that align with the goals described under “Overall Compensation Goals” above, and align the interests of our Named Executive Officers with the interests of our stockholders.

Individual Elements of Compensation; 2010 Compensation Decisions

The current compensation program for the Named Executive Officers is composed of three primary elements: annual base salaries and benefits; annual incentive compensation, in the form of cash bonus awards made under the incentive bonus plan; and long-term incentives, consisting of stock options and restricted stock grants.

Annual Base Salaries and Benefits

Annual compensation consists of base salaries and benefits. These elements of Edgewater’s compensation program are intended to provide a degree of compensation certainty to executives by providing a reasonable amount of compensation that is not at-risk for performance.

Base Salaries. In June 2007, the Company entered into employment agreements with Ms. Singleton and Mr. Clancey which set the executives’ minimum annual base salaries at $325,000 for Ms. Singleton and $275,000 for Mr. Clancey (the “2007 Employment Agreements”).

In June 2010, the Compensation Committee increased the base salaries of Mr. Clancey to $300,000 (from $275,000) and Ms. Ranzal-Knowles to $300,000 (from $275,000). Base salaries for Mr. Clancey and Ms. Ranzal-Knowles in 2010 were targeted slightly above the 75^th percentile compared to available peer group and market survey data based on their significant roles in our Company.

On December 17, 2010, the Company entered into a First Amendment to 2007 Employment Agreements with Ms. Singleton and Mr. Clancey (the “Amendments”). The Amendments amended the term, salary and severance provisions in the 2007 Employment Agreements. The Amendments extend the term of the respective

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2007 Employment Agreements for an additional term commencing on January 1, 2011 and continuing until December 31, 2013, unless terminated sooner in accordance with the termination provisions of the applicable Employment Agreement. Prior to the Amendments, the terms of the 2007 Employment Agreements would have expired as of December 31, 2010.

The Amendments also establish the following minimum annual base salary levels, subject to potential future increases based upon the review and determination of the Company’s Compensation Committee: Ms. Singleton, $350,000 and Mr. Clancey, $300,000. Ms. Singleton’s revised base salary was set slightly below the 50^th percentile compared to our peer group and market survey data. We do not have employment agreements establishing minimum base salaries with any other Named Executive Officer.

Our executive compensation strategy generally is for executives to receive a salary in line with the market, while being eligible for bonuses, stock option grants or restricted stock awards that generally generate value based on Company and individual performance. We believe that competitive base salary levels in combination with performance and stock-based incentives provide our executives with the potential to earn competitive industry total executive compensation levels, if corporate financial performance goals and individual performance goals are achieved.

Base salaries are designed to help attract and retain management talent. To ensure that salary ranges are competitive in the overall marketplace, salary ranges are periodically compared to the salaries paid for comparable positions within companies that compete with our Company for executive talent, including industry competitors, companies of comparable size in our key geographic markets, competitive industry practices, and companies with comparable revenues or profitability in other industries. Our compensation assessment efforts have been assisted by our Compensation Consultant, which, in 2009 and 2010 conducted benchmark reviews of our Company to a peer group of companies as well as a broader survey of technology industry firms with revenues between $50 million and $200 million. These analyses compared the individual compensation elements, as well as total direct compensation, for each of our Named Executive Officers with peer group and market survey data at the market 25^th, 50^th and 75^th percentiles.

The Compensation Committee generally reviews salaries of the Named Executive Officers in the first calendar quarter of each year to determine if any adjustment is appropriate. In reviewing and establishing salaries for the Named Executive Officers, the Committee considers the Company’s past performance, individual performance and experience and, with respect to the Named Executive Officers other than the Chief Executive Officer, recommendations made by Ms. Singleton. Additional factors considered in setting salary levels are the Committee members’ business judgment about the appropriate level of salary to retain, motivate and reward individual executives and to a certain extent, recommendations by our Compensation Consultant. Baseline amounts under employment agreements also influence base salary compensation levels.

In March 2011, the Compensation Committee authorized an increase in base salary for Mr. Oakes, effective January 1, 2011, from $200,000 to $250,000. Mr. Oakes revised base salary was set at a level in line with the 50^th percentile for both peer group and market survey data for similar executive roles. The Compensation Committee elected to maintain the annual base salaries for Ms. Singleton ($350,000); Mr. Clancey ($300,000); Ms. Ranzal-Knowles ($300,000) and Ms. Zaepfel ($160,000) at their currently established levels.

Benefits. The Company’s Named Executive Officers receive limited benefits that would be considered executive benefits. Most benefits are consistent with those offered generally to employees, which consist of life insurance, travel accident insurance, health insurance, dental insurance, flexible spending accounts, short-term and long-term disability, fitness club reimbursement, and opportunities to participate in Edgewater’s employee stock purchase program and 401(k) plan. Benefits and perquisites include a monthly automobile allowance that is provided to each of our Named Executive Officers (other than Ms. Zaepfel). In general, we believe the benefits described above are competitive with the marketplace. Please refer to “Compensation of Named Executive Officers—Summary Compensation Table” and the related footnotes for additional information about benefits.

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Annual Incentive Compensation

Incentive compensation consists of cash bonuses and awards made under the incentive bonus plan, and its objective is to motivate executives annually, and to promote long-term growth. We refer to these opportunities as “bonus” opportunities consistent with historical practice. However, for “Summary Compensation Table” purposes, awards and payouts appear under the column “Non-Equity Incentive Plan Compensation” and not under the “Bonus” column, consistent with SEC rules.

Executive Incentive Bonuses. Future cash bonus payments will be made in accordance with our incentive bonus plan, under which we set annual incentive goals at meetings of the Compensation Committee in conjunction with the release of our prior year financial results. Our incentive bonus plan represents an important element of our compensation strategy, since achieving performance targets enables our executives to attain total current compensation in line with peer pay levels. In contrast, failure to achieve performance targets may result in total current compensation for our executives falling below, possibly substantially below, peer compensation levels.

Elements of the 2010 Incentive Bonus Plan Opportunity. For the 2010 fiscal year, the Committee established the following cash bonus opportunities and objectives for the Named Executive Officers:

in furtherance of this objective goal, the Committee established specified performance target levels for service revenue and for EBITDA, which we refer to collectively as “Financial Performance Targets” and individual as the “Financial Performance Target.”

Service revenue and EBITDA Thresholds for Named Executive Officers, Excluding Ms. Ranzal-Knowles:

In fiscal year 2009, our service revenue was $46.1 million. The minimum performance threshold related to service revenue in our 2010 Financial Performance Bonus Opportunity represented an increase of approximately 26%, while the maximum performance threshold for our 2010 Financial Performance Bonus Opportunity represented an increase in service revenue of approximately 40%.

Similarly, in fiscal year 2009, our EBITDA was $(2.3) million. The minimum performance threshold related to EBITDA in our 2010 Financial Performance Bonus Opportunity represented an increase of approximately 278%, while the maximum performance threshold for our 2010 Financial Performance Bonus Opportunity represented an increase in EBITDA of approximately 348%.

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Service revenue and EBITDA Thresholds for Ms. Ranzal-Knowles:

The performance of Ms. Ranzal-Knowles with respect to divisional revenues and EBITDA performance was measured against targets established by the Compensation Committee. Ms. Ranzal-Knowles’ divisional revenue target applicable to the Company’s Ranzal Division was $27.2 million. Ms. Ranzal-Knowles’ divisional EBITDA target applicable to the Company’s Ranzal Division was $2.4 million.

2010 Financial Performance Bonus Opportunity. The 2010 Financial Performance Bonus Opportunity was established to reward executives for achieving certain goals for (1) service revenue (targeted at $61.2 million) and (2) EBITDA (targeted at $4.9 million). Both the service revenue and EBITDA target amounts exclude incremental contributions related to our SAP service offerings and our 2010 acquisition of Meridian Consulting International, Inc. In accordance with the bonus plan, the established goals could be achieved independently, such that a payout could be made for exceeding the minimum service revenue goal, but not the minimum EBITDA goal. Conversely, a payout could be made for exceeding the minimum EBITDA goal, but not the minimum service revenue goal. The bonus plan was also designed to provide additional incentives for overachievement beyond target goals, so that more than 100% of each target goal could be paid out if overachievement occurred.

2010 SAP-Related Bonus Opportunity. The 2010 SAP-Related Bonus Opportunity was established on an individual basis for each Named Executive Officer based upon the expected professional contribution of each functional executive position and the impact of such contribution on the overall strategic evaluation and assessment of the operational functions associated with our SAP-related service offerings. This constituted 10% of the aggregate total eligible bonus opportunity of each of our Named Executive Officers.

2010 Individual Performance Bonus Opportunity. The 2010 Individual Performance Bonus Opportunity was established on an individual basis for each Named Executive Officer based upon the expected professional

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contribution of each functional executive position and the impact of such contribution on the overall strategic and operational goals of the Company. This constituted 20% of the aggregate total eligible bonus opportunity of each of our Named Executive Officers.

Total Eligible Bonus Opportunity. The aggregate total eligible bonus opportunity for each of the Named Executive Officers was determined in relation to a percentage of base salary.

For 2010, the total eligible bonus opportunity for the Named Executive Officers was as follows:

These bonus opportunity levels were approved by the Compensation Committee at its regular meeting in March 2010.

2010 Bonus Award Payments. In March 2011, the Compensation Committee evaluated the extent to which individual elements of the 2010 Incentive Bonus Plan Opportunity had been earned and determined the amount of bonuses payable. In 2010, Financial Performance Bonus Opportunities were focused on the attainment of service revenue and EBITDA targets; for these purposes, EBITDA includes all applicable incentive bonus plan expense accruals. The Compensation Committee’s review was based on its knowledge of the Company, its contact with the executives throughout the year and reviews of Company and individual executive officer performance. An executive officer must be employed by the Company as of the date any bonus is paid, in order to be eligible to receive it.

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For 2010, the Compensation Committee, after considering management’s recommendation, determined that the Company’s Named Executive Officers, with the exception of Ms. Ranzal-Knowles, would not receive a 2010 bonus payout related to Financial Performance Bonus Opportunities, despite the fact that the Named Executive Officers did qualify for a Financial Performance Bonus Opportunity payout. Named Executive Officers, excluding Ms. Ranzal-Knowles, qualified for an Financial Performance Bonus Opportunity bonus payment as a result of 2010 service revenue exceeding the established Financial Performance Target. The Named Executive Officers did not qualify for a bonus payment under the EBITDA component of the bonus program. As a result of the Company not meeting its profitability-based bonus metric, the Named Executive Officers, excluding Ms. Ranzal-Knowles, elected to forgo any bonus amounts earned under this component of their 2010 bonus program.

Ms. Ranzal-Knowles’ Financial Performance Bonus Opportunity was established by the Committee based on the service revenues and EBITDA contribution by the Ranzal Division of our EPM business (“Ranzal”); employees of Ranzal generally have a bonus opportunity that is calculated utilizing Ranzal service revenue and EBITDA contribution. Ranzal’s 2010 service revenue and EBITDA levels met the established Financial Performance Targets, qualifying Ms. Ranzal-Knowles for a payout under this component of her 2010 bonus program.

Each of the Named Executive Officers, including Ms. Ranzal-Knowles, qualified for a bonus payment under the SAP-Related Bonus Opportunity component of the 2010 bonus program. The Compensation Committee authorized the bonus amounts based upon consideration of input from Ms. Singleton. Similarly, the Compensation Committee, based on its knowledge of the Company, its contact with the executives throughout the year and a review of each individual Named Executive Officer’s performance, determined each individual Named Executive Officer qualified for a bonus payment in connection with the satisfactory achievement of each officer’s individual management objectives.

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2011 Bonus Authorization. On March 9, 2011, the Compensation Committee established aggregate total eligible target bonus opportunities for the Named Executive Officers at the following amounts: Ms. Singleton, $350,000; Mr. Clancey, $300,000; Ms. Ranzal-Knowles, $300,000; Mr. Oakes, $187,500; and Ms. Zaepfel, $64,000. These authorizations were made after due consideration of management’s assessment of market conditions and the Company’s prospects and business plans for 2011. Financial Performance Bonus Opportunities and Individual Performance Bonus Opportunities for 2011 will be weighted in a fashion similar to that described above (for 2010) under “—Elements of the 2010 Incentive Bonus Plan Opportunity.” However, the Company’s 2011 Financial Performance Bonus Opportunities and Individual Performance Bonus Opportunities for our Named Executive Officers have a greater emphasis on EBITDA, as compared to service revenue growth. Payouts, if any, under the 2011 Incentive Bonus Plan will require year-over-year growth in both service revenue and EBITDA.

For 2011, the total eligible bonus opportunity for the Named Executive Officers will be as follows:

Long-Term Stock Awards

We have granted in the past, and we intend to grant or award in the future, to our executives and other key employees, stock options and restricted stock awards. Options have been, and will be, granted at an exercise price equal to the closing sales price of our common stock, as reported on NASDAQ, on the date of grant, and on such dates consistent with the policy described under “—Timing Stock-Based Incentive Awards.” Options have no monetary value to the executives unless the market price of our common stock increases above the exercise price. Restricted stock awards, although having immediate value upon the date of the award, are subject to time vesting provisions, which generally require an executive to remain with our Company during the time vesting period, before being able to access the value of any such awards. Although we have not done so in the past, we may base vesting of future option grants or restricted stock awards on an objective analysis of various performance criteria. Restricted stock awards have historically been awarded at the par value of our Company’s common stock, which is $0.01 per share.

The value of long-term stock awards is primarily based on the performance of Edgewater common stock and therefore is designed to align the executives’ interests with those of the Company’s stockholders. A stock option is the right to purchase shares of common stock of the Company generally within seven to ten years after the date of grant.

In general, the Company’s long-term stock awards are based upon each executive’s historical contributions, experience and tenure with the Company, past and expected future contributions to the Company, and in part after examining the competitive marketplace.

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As part of its review of senior executive compensation, the Compensation Committee reviewed tally sheets, prepared by the Compensation Consultant, showing total 2009 compensation, market comparisons, the estimated value of equity awards at their grant date and the realized value from equity awards and severance benefits in connection with termination of the executive’s employment under various scenarios. As part of this review, the Compensation Committee considered the potential value of outstanding equity awards over a range of stock prices and the value of retirement benefits. This review indicated that previous equity grants awarded to Ms. Singleton and Mr. Clancey would not likely deliver the value we initially expected. In addition, significant portions of Ms. Singleton’s and Mr. Clancey’s previous equity compensation awards expired without value during 2010, and therefore lacked any future incentive potential. As a result, the Compensation Committee determined that the previously granted options to Ms. Singleton and Mr. Clancey were no longer effective in providing long-term incentives for future performance or in helping to retain our employees. In addition, the benchmark data provided by our Compensation Consultant indicated that the long-term equity component of our executive compensation program was significantly less than the value of long-term incentives provided to peer group executives.

On December 10, 2009, the Compensation Committee awarded each of Ms. Singleton and Mr. Clancey options to acquire 185,000 shares of our common stock, and on June 10, 2010, the Compensation Committee awarded each of Ms. Singleton and Mr. Clancey additional options to acquire 75,000 shares of our common stock. The amounts and timing of these share grants were affected by the availability of shares for granting under the Company’s equity incentive plans, as well as the Company’s continuing progress in executing its three-year strategic plan.

Additionally, on June 16, 2010, the Compensation Committee also awarded Ms. Ranzal-Knowles options to acquire 15,000 shares of our common stock in connection with her 2010 Incentive Bonus Program Opportunity, which is described under “Individual Elements of Compensation; 2010 Compensation Decisions.” All options granted to Ms. Singleton, Mr. Clancey and Ms. Ranzal-Knowles was granted with exercise prices equal to the market value of our common stock on the date of grant.

The Compensation Committee anticipates making additional awards to each of Ms. Singleton, Mr. Clancey and other Named Executive Officers in order to bring their long-term compensation in line with market benchmarks and to further align their interests with our stockholders’ interests. In general, the Compensation Committee anticipates that future equity awards to Named Executive Officers will be made annually in March in conjunction with establishing annual performance goals for cash and equity incentive programs.

Please refer to the “Grants of Plan-Based Awards” and “Outstanding Equity Awards at Fiscal Year-End” tables and the related footnotes for additional information about long-term stock awards.

Consideration Given to Annual and Long-Term Incentive Awards

After reviewing the Company’s prior year-end financial results, the Committee decides whether to grant individual cash bonuses and long-term stock awards, and determines the amount of these bonuses and awards, based on the factors previously discussed. The Committee’s review of total compensation opportunities is based on its knowledge of the Company, its contact with the executives throughout the year and a review of performance, with a primary focus on overall Company performance and a secondary focus on individual performance, as well as market and competitive factors.

The Committee also compares the Company’s performance to that of its peer competitors. Additionally, companies with comparable revenues in our industry, as well as similar industries, are also surveyed to ensure that executive compensation is competitive in the overall marketplace. The Compensation Committee believes that the Company should provide total compensation to its executives that is competitive among its peers in order to continue attracting and retaining the most talented people. The Compensation Committee considers foregoing performance factors in making individual compensation decisions. The Committee also applies its own business judgment in light of these factors (and in certain circumstances, the recommendations made by its Compensation Consultants) in making final incentive award determinations.

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Tax Considerations

The Compensation Committee has structured, and intends to continue to structure, performance-based compensation, including grants of equity and annual bonuses, to executive officers who may be subject to Section 162(m) in a manner that satisfies those requirements. Section 162(m) of the Internal Revenue Code generally disallows a tax deduction to public corporations for compensation over $1.0 million paid to certain of the Company’s Named Executive Officers for any fiscal year. However, Section 162(m) exempts qualifying performance-based compensation from the deduction limit if specified requirements are met. The 1996 Plan and 2008 Plan were approved by our stockholders at our May 8, 1998 and June 11, 2008 Annual Stockholders’ Meetings, respectively, and were designed to meet the requirements of Section 162(m) with respect to stock option awards. The 2000 Plan and the 2003 Plan have not been approved by our Company’s stockholders, such that any compensation related to stock option grants or restricted stock awards to executive officers or directors under these plans that would cause an executive’s compensation to exceed $1.0 million may not be deductible under Section 162(m) of the Internal Revenue Code. The Committee reserves the authority to award non-deductible compensation in certain circumstances as it deems appropriate. Further, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued there under, no assurance can be given, notwithstanding our efforts, that compensation intended by the Company to satisfy the requirements for deductibility under Section 162(m) does in fact do so. For 2010, compensation paid to our employees was fully deductible under Section 162(m). However, because option grants made in December 2009 to Ms. Singleton and Mr. Clancey were from the 2000 Plan, any compensation expense arising upon the exercise of such options may not be deductible to the Company to the extent the executive’s compensation, at the time of exercise, exceeds $1.0 million.

Accounting Considerations

The Compensation Committee also considers the effects certain types of equity awards have on the financial statements of the Company. The Company reports share-based compensation expense related to all equity awards in accordance with the fair value recognition provisions of ASC Topic 718.

Risk Assessment

The Compensation Committee evaluates whether our executive and broad-based compensation programs contribute to unnecessary risk-taking and has concluded that our compensation programs do not motivate imprudent risk taking and the risks arising from these programs are not reasonably likely to have a material adverse effect on Edgewater.

Timing of Stock-Based Incentive Awards

The Company historically has not formalized a set program, plan or practice to time equity awards, including option grants, to its Named Executive Officers or directors in coordination with the release of material non-public information. Commencement of Service Awards are typically timed to coincide within 90 days of the start date of such new employee or director or promoted employee. Aside from Commencement of Service Awards, the grant date of option awards to a Named Executive Officer typically occurs after the public release of prior year-end financial results and within one month of the filing of our Annual Report on Form 10-K with the SEC reflecting such financial results. However, due to the timing of the Compensation Committee’s extensive review of the Company’s long-term equity incentive programs during 2009, certain awards of stock options to Ms. Singleton and Mr. Clancey were granted in December 2009. In addition, Directors receive automatic grants of options at each Annual Meeting of Stockholders at which they are re-elected to the Board by stockholders.

Restricted stock awards have been made at the discretion of the Compensation Committee; they have been awarded in tandem with the grant of options in 2007 and 2006. In general, future equity awards to Named Executive Officers are expected to be authorized in a given fiscal year during the first quarter, after the release of prior year financial results and at the regularly scheduled March meeting of the Board of Directors and Compensation Committee.

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Stock Ownership Guidelines

In March 2005, the Company’s Compensation Committee established stock ownership guidelines, as ratified by the Company’s Board, for the Company’s Directors and Named Executive Officers (the “Management Group”). The objective of the stock ownership guidelines was to increase the Management Group’s equity stake in the Company and more closely align their interests with those of our stockholders.

For Named Executive Officers, the guidelines required, within a three-year period, each Named Executive Officer, excluding the Company’s Chief Executive Officer (or CEO), to attain an investment position representative of a weighted combination of directly owned shares, vested “in-the-money” stock options and/or restricted stock awards, in Edgewater stock equal to the sum of their annual base salary. The guidelines further required, within the same three-year period, the Company’s CEO attain an investment position equal to three times her annual base salary. Once attained, an executive’s guideline does not change as a result of changes in his or her base salary or fluctuations in the Company’s common stock price.

For Directors, the guidelines provide that existing Directors will be required to own 5,000 shares of the Company’s stock. Each existing Director had twelve months to comply with the guidelines. Each new Director elected to the Company’s Board has two years from the effective date of their appointment to directly own 5,000 shares of the Company’s stock. Apart from the above, we have created no incentives, disincentives or facilitative programs in connection with the stock ownership guidelines.

Each Director and Named Executive Officer currently required to be compliant with the ownership guidelines has attained compliance with applicable stock ownership guidelines within the applicable time period and no other actions are required now or in the future. As noted Mr. O’Connell, who joined the Board in August 2009, will have until August 2011 to comply and Mr. Oakes, who became a Named Executive Officer in 2009, will have until 2012 to meet the requirement.

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COMPENSATION OF NAMED EXECUTIVE OFFICERS

This section describes the compensation paid, or payable, for the last three fiscal years to our President and Chief Executive Officer (“CEO”), our Chief Financial Officer (“CFO”) and each of our three most highly compensated executive officers (other than our CEO and CFO) serving in such positions on December 31, 2010.

Summary Compensation Table