Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain
Officers; Compensatory Arrangements of Certain Officers.
Pursuant to the Civitas Solutions, Inc. 2014 Omnibus Incentive Plan (the
Plan), Civitas Solutions, Inc. (the Company) may grant from time to time, among other things, restricted stock and performance-based awards to employees,
non-employee
directors and
consultants or independent contractors to the Company.
Equity Compensation Awards
On March 3, 2017, the Board of Directors of the Company (the Board) made equity compensation awards to certain employees of
the Company, including the named executive officers. The types of awards that were granted are: time-based restricted stock units and performance-based restricted stock units (expressed as the target number of shares subject to such awards).
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Name
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Time-Based Restricted
Stock Units
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Performance-Based
Restricted Stock Units
(Target Number of Shares)
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Bruce F. Nardella
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N/A
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18,105
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Denis M. Holler
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7,084
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3,542
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Brett I. Cohen
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11,492
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5,746
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David M. Petersen
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6,045
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3,023
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Special Award of Time-Based Restricted Stock Units
On March 3, 2017, the Board of Directors awarded time-based restricted stock units to certain employees of the Company, including the
Companys named executive officers, other than Mr. Nardella, the Chief Executive Officer. This special award was approved because the Board of Directors recognizes that retention of highly qualified leadership is critical to the
Companys financial performance and continued success. If we are unable to retain our highly qualified employees, we risk not being able to provide the operational and other expertise necessary to deliver the high quality services that, in
turn, help us to drive our organic growth. We have a proven management team that has demonstrated the ability and experience to ensure the delivery of high quality services to clients, pursue and integrate numerous acquisitions, manage critical
human resources, develop and maintain robust IT and financial systems, mitigate risk in the business and oversee our significant growth and expansion. With unemployment near or at historic lows, we face greater competition for these highly qualified
employees and recognize the significant cost and disruption that occurs as a result of unplanned attrition. As a result of these factors, the Board of Directors recently approved a
one-time
grant of restricted
stock units to our vice-presidents and certain of the named executive officers for the purpose of retaining employees that have delivered outstanding and consistent performance and who are expected to make important contributions in the future. The
restricted stock units are time based and 50% of the restricted stock units will vest on the second year anniversary of the grant date with the remaining 50% vesting on the third year anniversary of the grant date. The recipients must generally
remain employed until the time of vesting, but the awards will vest in full if the participants employment terminates as result of death or disability.
Performance-Based Restricted Stock Units
On March 3, 2017, the Committee adopted a new form of Performance-Based Restricted Stock Unit Agreement (the PRSU Agreement)
to grant performance-based restricted stock unit awards (PRSUs) under the Plan. The PRSUs will be earned and vested over a three-year performance period based upon (a) the Companys Incremental Return on Investment Capital
(Incremental ROIC) performance for the three-year performance period (i.e., the three fiscal years ending September 30, 2019 (the Performance Period)). Incremental ROIC will be calculated as set forth in the PRSU
Agreement The Board determined that Incremental ROIC was an important measure to incent the named executive officers to invest in programs, acquisitions and other assets that will drive the Companys growth.
Vested PRSUs will be settled in shares of the Companys common stock. The number of shares earned will range from 0% to 200% of the
target award. The percentage level at which the performance conditions are satisfied
will be determined by the Committee following the end of fiscal 2019. The preliminary percentage vested will be determined based on the achievement of Incremental ROIC for the Performance Period
as follows:
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Level of Incremental ROIC
Performance for the Performance Period
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Preliminary % vested based on
Adjusted EBITDA Performance
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Threshold (87% of Target)
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50
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%
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Target (100% of Target)
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100
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%
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Maximum (113% of Target)
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200
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%
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To the extent that Incremental ROIC is between the threshold and target levels or between the target and
maximum levels, the percentage at which the Incremental ROIC performance condition is satisfied will be determined on a pro rata basis using straight line interpolation.
If a participants employment is terminated voluntarily (other than for good reason or due to retirement) or for cause before
the end of the three-year Performance Period, all of the PRSUs will be forfeited. If a participants employment is terminated without cause or for good reason, the time-based vesting component of the PRSUs will vest based on the
number of full years of the performance period that have been completed at such time (i.e., 1/3 for one year, 2/3 for two years), but the total number of PRSUs that will be earned is subject to the achievement of the performance goal as described
above. If a participants employment is terminated due to death or disability, the entire PRSU award will vest and the participant will receive the target number of shares subject to the award. If a participants employment is terminated
due to retirement at more than 60 years of age (or such younger age with the consent of the Committee) following 10 years of service with the Company, or at more than 65 years of age (or such younger age with the consent of the Committee) following
five (5) years of service with the Company, then the time-based vesting component of the PRSU award will vest in its entirety, but the total number of PRSUs that will be earned is subject to the achievement of the performance goal as described
above. In connection with a Change of Control, as defined in the PRSU Agreement, the PRSUs do not automatically vest and the Committee will have the discretion to adjust PRSUs and certain performance conditions as provided in the Plan.
The form of time-based Restricted Stock Unit Agreement was filed as Exhibit 10.33 to Amendment No. 4 to the Companys Registration
Statement on Form
S-1
on September 3, 2014. The form of Performance-Based Restricted Stock Unit Agreement (ROIC) is filed as Exhibit 10.1 to this Current Report on Form
8-K.
This description of the performance-based restricted stock units set forth below is qualified in its entirety by reference to the full text of the form of Performance-Based Restricted Stock Unit
Agreement, which is incorporated herein by reference.
Item 5.07. Submission of Matters to a Vote of Security Holders.
On March 3, 2017, Civitas Solutions, Inc. (the Company) held its Annual Meeting of Stockholders (the 2017 Annual
Meeting). At the 2017 Annual Meeting, the Companys stockholders elected each of the Companys three nominees to serve on the Companys Board of Directors until the Companys 2020 annual meeting of stockholders, approved
the compensation of the Companys named executive officers on an advisory basis,
re-approved
performance measures for certain performance based awards under the Companys 2014 Omnibus Incentive Plan
and ratified the appointment of Deloitte & Touche LLP as the Companys independent registered public accounting firm.
The
results of the voting were as follows:
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Votes For
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Votes
Withheld
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Broker
Non-Votes
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Election of Directors
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James L. Elrod, Jr.
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31,908,027
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2,715,107
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1,687,725
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Pamela F. Lenehan
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33,842,044
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781,090
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1,687,725
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Mary Ann Tocio
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34,512,088
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111,046
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1,687,725
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Accordingly, the three nominees received the highest number of votes cast and therefore each of the three
nominees was elected to serve as a director.
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Votes For
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Votes Against
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Abstentions
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Broker
Non-Votes
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Advisory Vote on Named Executive Officer Compensation
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34,164,491
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258,538
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200,105
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1,687,725
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Accordingly, a majority of votes cast in the advisory vote on named executive officer compensation were
for the approval of executive compensation as disclosed in the Companys proxy statement.
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Votes For
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Votes Against
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Abstentions
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Broker
Non-Votes
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Re-approval
of performance measures for certain performance-based awards under the Omnibus Incentive Plan
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28,614,772
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6,000,751
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7,611
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1,687,725
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Accordingly, a majority of votes cast on the
re-approval
of
performance measures for certain performance-based awards under the Omnibus Incentive Plan were for the
re-approval
of such performance measures for certain performance-based awards as disclosed in
the Companys proxy statement.
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Votes For
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Votes Against
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Abstentions
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Ratification of Independent Registered Public Accounting Firm
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36,243,338
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67,516
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5
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Accordingly, a majority of votes cast on the ratification of auditors were in favor of the proposal and the
appointment of Deloitte & Touche LLP as the Companys independent registered public accounting firm was ratified.