Compensation Discussion and Analysis
This Compensation Discussion and Analysis describes the material elements of our executive compensation programs and policies, discusses the principles and objectives of our decisions with respect to
2017
compensation for our named executive officers (“NEOs”).
In fiscal
2017
, our NEOs were:
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Name
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Title
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Michael P. Durney(1)
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Former President and Chief Executive Officer
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Luc Grégoire
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Chief Financial Officer
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James E. Bennett(2)
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Former Managing Director
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Pamela Bilash
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Senior Vice President, Human Resources
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Brian Campbell
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Vice President, Business & Legal Affairs, General Counsel and Secretary
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Shravan Goli(3)
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Former President, Brightmatter Group
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(1) Mr. Durney served as our President and Chief Executive Officer until April 10, 2018.
(2) Mr. Bennett served as Managing Director, Global Industry Group until February 2018.
(3) Mr. Shravan Goli served as President, Brightmatter Group through May 2017.
NOTE REGARDING THE USE OF NON-GAAP FINANCIAL MEASURES
This Compensation Discussion and Analysis contains the use of adjusted earnings before interest, taxes, depreciation, amortization, non-cash stock-based compensation expense, and other non-recurring income or expense (“Adjusted EBITDA”). These financial measures are not prepared in accordance with, nor are they an alternative for, generally accepted accounting principles in the United States (“U.S. GAAP”) and may be different from similarly titled non-GAAP measures reported by other companies. The Company believes that its presentation of non-GAAP measures provides useful information to management and
investors regarding certain financial and business trends relating to its financial condition and results of operations. The Company has provided the required reconciliations to the most comparable U.S. GAAP measures and other required information regarding these measures on pages 46-49 of the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 12, 2018.
Executive Summary of Our
2017
Executive Compensation Program
Our executive compensation program is administered by our Compensation Committee, which consists of three independent directors. The Compensation Committee is advised by an independent compensation consultant, as described more fully below. Our primary objectives with respect to executive compensation are to:
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•
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mitigate risk and align the interests of our executive officers with the creation of value for our stockholders;
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•
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provide competitive compensation to attract, retain, motivate and reward highly-qualified executive officers;
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create a pay-for-performance culture such that a significant portion of each executive officer’s compensation is contingent on individual and Company performance; and
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•
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ensure a reasonable overall cost of our executive compensation program.
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The three primary elements of our
2017
executive compensation program are: (1) base salary, (2) annual performance-based cash bonus, and (3) long-term equity incentives.
With respect to equity compensation, whereas in 2014 and earlier we used a blend of stock options and restricted stock which both vested solely on a time-based schedule, since 2015 we provide long-term equity incentives through a combination of one-half PSUs (which vest based on our stock price performance relative to the Russell 2000 index) and one-half restricted stock, a combination that we believe will further align the interests of our executive officers with our stockholders, as well as increase executive retention and motivation.
Business Summary
In
2017
, we concluded our strategic alternatives evaluation, determining shareholder interests were best served by remaining an independent tech-focused company and made significant progress toward our tech-focused strategy, including:
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•
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we finalized the realignment of the DHI organization into a more simplified and efficient tech-focused operating structure, and implemented a CEO transition plan to further execute on our tech-focused strategy;
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•
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we conducted a divestiture process of our four non-core businesses, having divested three thus far and currently in active negotiations for the sale of our hospitality business;
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we completed a Company-wide migration to a cloud-based platform, which will drive cost savings, improve SEO, result in faster response time, and accelerate product development and experimentation; and
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we generated cash flows from operating activities of $34.4 million while investing for growth.
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The following table illustrates the Company’s performance during the year ended
December 31, 2017
in terms of Revenues and Adjusted EBITDA relative to performance during the same period of
2016
. Revenues in 2017 decreased
8.4%
year over year, reflecting a $12.2 million or 7.2% decline in Tech-focused segment revenue, $4.1 million or 14% decline in Corporate & Other segment and $2.7 million or 10.0% decline for Health eCareers (Healthcare segment), which was sold in December 2017. Adjusted EBITDA in 2017 decreased
28.2%
year over year.
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2017
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2016
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Change %
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($ in thousands)
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Revenues
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$
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207,950
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$
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226,970
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(8.4
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)%
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Adjusted EBITDA
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$
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41,413
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$
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57,663
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(28.2
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)%
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Compensation and Corporate Governance Philosophy
We actively engage with our stockholders to solicit their views on our executive compensation programs. Our Board and Compensation Committee have taken actions to improve our corporate governance as it relates to our executive compensation program, mitigate risk, align the interests of our executives with our stockholders and better align the compensation of our executives with Company performance. These changes include the following:
Long-Term Equity Incentive Program.
We provide long-term equity incentives through a combination of one-half PSUs and one-half restricted stock. We believe PSUs will improve our long-term equity incentive compensation program because they:
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link targeted compensation to relative stock price performance versus the Russell 2000 index;
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typically have a better retentive impact than stock options;
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•
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capture investor opportunity cost of investing in DHI relative to the broader sector/market; and
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•
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provide a direct link to stockholder value creation/preservation.
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Equity Ownership Guidelines
. Our Board has adopted equity ownership guidelines applicable to our CEO, our other NEOs, and the members of our Board. These new guidelines require these officers and directors to achieve target ownership levels under the terms of the guidelines, within the later of five years from
March 3, 2015
or the commencement by that person of a position set forth below:
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Position
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Multiple of Base Salary (as of December 31 of immediately preceding year) or Retainer
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Chief Executive Officer
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3.0x base salary
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Other Executive Officers
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1.0x base salary
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Members of our Board
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3.0x retainer
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Senior Bonus Plan.
In 2015, we eliminated the automatic funding floor of 30% on our senior bonus plan. Starting in 2015, 50% of the total bonus pool available for NEOs and other senior executives designated by the Compensation Committee was funded according to the percentage of the revenue target achieved, and 50% was funded according to the percentage of Adjusted EBITDA target achieved, which we believe more appropriately aligns funding with our pay-for-performance philosophy.
“Claw-back” Policy.
Our Board has adopted a “claw-back” policy. Under and subject to the “claw-back” policy, the Company may seek reimbursement of annual, performance-based cash bonuses made to covered executives, including our NEOs, that were based on achieving certain financial results if the covered executive intentionally and knowingly engaged in fraud or misconduct that caused the need for a substantial and material restatement of our financial results for the applicable period if a lower cash incentive payment would have been made to the covered officer based upon the restated financial results. Specifically, compensation subject to the “claw-back” policy is any cash incentive payment made within the three-year period preceding the accounting restatement.
At our
2017
annual meeting, our compensation program for our named executive officers was approved by the holders of approximately 96% of the outstanding shares entitled to vote at the meeting. The Compensation Committee believes that the results of this “say-on-pay” vote supports its view that the changes that it announced last year to the executive compensation program were appropriate, and the Compensation Committee determined not to make any further changes to its design.
Advancing Our Compensation Philosophy through Corporate Governance
We have adopted corporate governance practices and policies including those described in
“Compensation and Corporate Governance Philosophy,”
that our Board believes help to advance our compensation goals, including:
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What We Do
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We maintain a completely independent Compensation Committee with an ongoing review process of our compensation philosophy and practices.
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We adhere to a pay-for-performance philosophy and compensation model. A substantial part of our executive compensation is contingent on, and variable with, achievement of objective corporate and individual performance goals and other objective measures of success.
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We split the Chairman and CEO roles. Our Chairman of the Board is an independent director and not an employee.
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We retain an independent compensation advisor reporting to the Compensation Committee. Since 2014, we have engaged Compensia as our independent compensation consultant as an advisor to provide analysis, advice and guidance on executive compensation.
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We consider stockholder advisory votes and views. Our Compensation Committee considers the voting results of our advisory vote on executive compensation at each annual meeting and also separately seeks to engage our stockholders on corporate governance matters.
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We annually assess our compensation program and have determined that the risks associated with our compensation policies and practices are not reasonably likely to result in a material adverse effect on the Company and our subsidiaries taken as a whole.
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What We Don’t Do
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We have adopted a policy under which tax gross-up provisions will no longer be included in employment agreements with new employees, or added to existing employment agreements with current employees which do not already contain a tax gross-up provision.
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Generally, we do not provide special benefits to our NEOs such as medical and other types of insurance. However, our NEOs, along with other company executives, are entitled to participate in a Supplemental Disability Plan, and certain separation and change of control-related benefits.
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We do not make loans to executive officers of the Company.
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We do not allow our directors, officers or employees or their related parties to purchase the stock of the Company on margin, enter into short sales or buy or sell derivatives in respect of securities of the Company.
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We do not pay cash dividends on unearned and unvested equity awards held by NEOs.
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Key
2017
Compensation Decisions
During
2017
, along with conducting its normal oversight responsibilities, the Compensation Committee again reviewed the Company’s compensation practices in light of the Company’s performance and stock market valuation. Using the peer group information and recommendations from its compensation consultant, Compensia (as described in more detail below), the Compensation Committee reviewed and confirmed, with minor adjustments, its policies governing compensation, including plans for base salaries, annual performance-based cash bonuses and long-term equity incentives.
Consistent with our pay-for-performance philosophy, the Company’s compensation program emphasizes variable pay over fixed pay and seeks to balance short- and long-term incentives. The majority of CEO compensation consists of variable pay, including cash awarded under our Senior Bonus Plan and equity incentives.
Fixed pay, primarily consisting of base salary, made up 24% of our CEO’s total target compensation in
2017
, while variable pay, consisting of equity incentives and an annual performance-based cash bonus, made up 76% of our CEO’s total target compensation. Variable pay also reflects a significant component of total target compensation for our other NEOs. The chart below shows the percentages of variable target compensation versus fixed target compensation for our CEO and our other NEOs in
2016
and
2017
:
Note: 2017 excludes severance payment of $455,000 made to Mr. Goli, Former President of Brightmatter Group. 2016 excludes separation payment of $337,500 made to Mr. Roberts, former CFO.
We balance short- and long-term incentives by providing our NEOs with a mix of base salary and annual cash bonus opportunities, which are short-term in nature, and equity incentives, which are long-term in nature. The grant date value of an equity award may not be indicative of its value when it is credited to an NEO upon achievement of future performance metrics, when it is actually released to such NEO, or when it may be sold by such NEO.
The Compensation Committee reviewed the parameters for annual long-term equity incentives and approved annual restricted stock and PSU grants effective February 27, 2017. The Compensation Committee reviewed
2017
performance Company-wide and for individual members of senior management and awarded bonuses as more fully described below.
For
2017
, the Compensation Committee made the following key compensation-related decisions for the Company’s NEOs:
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Name
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Title
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2017 Base Salary Increase from 2016
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2017 Bonus Pool Funded
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Individual Performance Bonus Adjustment
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2017 Executive Bonus as a Percentage of Target Bonus
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2017 Restricted Stock Awards (#)
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2017 PSU Awards (#)
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Michael P. Durney
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Former President and Chief Executive Officer
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none
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80
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%
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100
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%
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80
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%
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120,000
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120,000
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Luc Grégoire (1)
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Chief Financial Officer
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none
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80
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%
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100
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%
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80
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%
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10,000
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40,000
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James E. Bennett
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Former Managing Director
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none
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92
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%
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101
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%
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93
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%
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30,000
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30,000
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Pamela Bilash
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Senior Vice President, Human Resources
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none
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80
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%
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100
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%
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80
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%
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22,500
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22,500
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Brian Campbell
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Vice President, Business & Legal Affairs, General Counsel and Secretary
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none
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80
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%
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100
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%
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80
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%
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17,500
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17,500
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Shravan Goli (2)
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Former President, Brightmatter Group
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none
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n/a
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n/a
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n/a
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30,000
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30,000
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(1) Mr. Grégoire joined the Company in November 2016 and received a restricted stock award of 70,175 shares in 2016.
(2) Mr. Goli served as President of Brightmatter Group through May 2017. During 2017, Mr. Goli did not receive a salary increase and received a $65,000 pro-rated bonus as stipulated in the separation agreement.
The Process of Setting Executive Compensation
The Compensation Committee reviews our executive compensation program throughout the year to:
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evaluate the performance of our NEOs;
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determine annual, performance-based cash bonuses for our NEOs for the prior fiscal year;
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establish the individual and corporate performance objectives for each NEO for the current fiscal year;
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set base salaries for our NEOs for the next fiscal year;
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determine the portion of total compensation that will be contingent, performance-based pay; and
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consider and approve any grants of equity incentive compensation.
Our Compensation Committee also reviews the appropriateness of the financial measures used in incentive plans and the degree of difficulty in achieving specific performance targets. Our Compensation Committee engages in an active dialogue with our CEO concerning strategic objectives and performance targets.
Individual performance for all NEOs other than the CEO is assessed by our CEO who then makes recommendations to the Compensation Committee. Irrespective of those recommendations, the Compensation Committee retains full discretion to approve or modify any of the NEO recommendations made by our CEO. The Compensation Committee alone assesses the individual performance of our CEO.
Our Compensation Committee establishes, together with the performance objectives, targeted annual cash compensation levels (and maximum achievable compensation) for each NEO by determining each NEO’s base salary and amount of cash bonus compensation contingent upon achievement of performance targets. In preparing the target amounts, the size of one individual element of compensation does, in some respects, affect the Compensation Committee’s determination of what the targeted amount of other components of compensation should be. For example, each executive’s base pay is used as a basis for calculating a target contribution percentage for purposes of establishing the bonus pool. As a general proposition, the Compensation Committee attempts to determine the overall best mix of fixed and variable compensation. In making this determination, the Compensation Committee is guided by the compensation philosophy described above. The Compensation Committee also considers historical compensation levels, the relative compensation levels among our senior executive officers, the competitive pay practices at our peer companies (as described in more detail below) and the competitive pay practices at other companies using third-party compensation studies and surveys performed by independent organizations. We use these third-party compensation studies as a basis for comparing and setting individual elements of, as well as total, executive compensation for the NEOs because they provide compensation information for companies in our industry and also provide comprehensive compensation information not obtainable from public sources. The Compensation Committee also considers industry conditions, corporate performance versus a peer group of companies and the overall effectiveness of our compensation program in achieving desired performance levels. See “
Our Peer Companies.”
We believe that internal pay equity is an important factor to be considered in establishing compensation for our NEOs. The Compensation Committee has not established a policy regarding the ratio of total compensation of the CEO to that of the other officers, but it does review compensation levels to ensure that appropriate pay equity exists, which is determined in the Compensation Committee’s discretion based on our Compensation Committee members’ experience with, and knowledge of, other companies’ practices and the relative performance and criticality of our executives. The Compensation Committee intends to continue to review internal compensation equity and may adopt a formal policy in the future if we deem such a policy to be appropriate.
It is a key objective to ensure that compensation provided to NEOs remains reasonable and responsible yet competitive relative to the compensation paid to similarly-situated executives at comparable companies. It is essential that our overall compensation levels be sufficiently competitive to attract talented leaders and motivate those leaders to achieve superior results. At the same time, our executive compensation programs are intended to be consistent with our focus on controlling costs.
In addition to rewarding corporate and individual performance, our compensation program is designed to reward the level of responsibility of, and the position undertaken by, each NEO. Total compensation should generally increase with position and responsibility. As a result, total compensation is higher for individuals with greater responsibility and ability to influence our achievement of targeted results and strategic initiatives. Additionally, as position and responsibility increase, a greater portion of the executive officer’s total compensation is performance-based pay contingent on the achievement of performance-based
objectives. In the same way, equity-based compensation is higher for persons with higher levels of responsibility, making a significant portion of their total compensation dependent on long-term stock appreciation.
Benchmarking
The Compensation Committee does not believe that it is appropriate to establish compensation levels primarily based on benchmarking. While we recognize that our compensation practices must be competitive in the marketplace, such marketplace information is one of the many factors that we consider in assessing the reasonableness of compensation. When the Compensation Committee determines whether an NEO should receive an increase in salary, the Compensation Committee sometimes reviews independent compensation studies in order to compare the compensation received by comparable executives in similar-sized companies to ensure that the compensation we award is competitive in the marketplace, as detailed in the section
“The Process of Setting Executive Compensation”
above. Our compensation consultant conducted a comprehensive review of our compensation programs for executive officers in
2017
to assist in establishing the
2017
executive compensation program. The purpose of these reviews was to assess the design and competitive positioning of our compensation programs and to make recommendations for change, if appropriate, to be implemented as part of our compensation program going forward. For
2017
, the Compensation Committee took into account the compensation consultant’s analysis to evaluate and determine the compensation for our NEOs.
Management’s Role in the Compensation-Setting Process
Our CEO plays a significant role in the compensation-setting process. Our CEO evaluates the performance of the other NEOs, recommends business performance targets and objectives for the other NEOs and recommends base salary, bonus levels and stock awards for other executive officers. All recommendations of our CEO are subject to Compensation Committee approval. The Compensation Committee discusses the recommendations with our CEO and then makes its decisions in its sole discretion. Similarly, our CEO’s compensation, performance targets and objectives are discussed among the members of the Compensation Committee, and the Compensation Committee sets our CEO’s compensation.
Our CEO helps the Compensation Committee set its agenda for meetings and participates in committee meetings at the Compensation Committee’s request. Other NEOs also prepare information for each Compensation Committee meeting.
Elements of Executive Compensation
The three primary elements of our executive compensation programs are: (1) base salary, (2) annual performance-based cash bonus, and (3) long-term equity incentives:
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Compensation Element
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What the Element Rewards
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Purpose and Key Features
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Base Salary
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Qualifications, experience and industry knowledge, quality and effectiveness of leadership, scope of responsibilities, individual goals and objectives and past performance.
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Provides competitive level of fixed compensation, with actual salaries determined based on the facts and circumstances of each NEO and competitive market practices.
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Annual Performance-Based Cash Bonuses
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Achievement of specified performance objectives with a time horizon of one year or less (for 2017, focused on revenue and Adjusted EBITDA) and individual performance.
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Motivate participants to achieve (i) corporate financial performance objectives during the year, and (ii) individual management objectives reviewed and approved by the Compensation Committee.
Performance levels are generally established to incentivize our management to achieve or exceed performance objectives.
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Long-Term Equity Incentives
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Achievement of objectives designed to enhance long-term stockholder interests and attract, retain, motivate and reward employees over extended periods.
Vesting requirements promote retention of highly-valued members of management, including our NEOs.
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Annual awards of restricted stock and PSUs that vest over a period of time and provide an at-risk, variable pay opportunity. Because the ultimate value of these equity awards is directly related to the price of the Company’s Common Stock, and the awards are only saleable over an extended period of time subject to vesting, they serve to focus management on the creation and maintenance of long-term stockholder value.
Long-term equity incentives under our executive compensation plans help align management performance with the interests of our stockholders. Our 2017 program focuses on a mix of one-half PSUs and one-half restricted stock, which we believe appropriately aligns our executive compensation with Company performance.
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Base Salary
Base salary provides executives with a base level of regular income. In determining an NEO’s base salary, we consider the executive’s qualifications, experience and industry knowledge, the quality and effectiveness of their leadership at the Company, the scope of their responsibilities and future potential, the goals and objectives established for the executive, the executive’s past performance, the base salary paid to officers in comparable positions at companies who are reflected in independent studies, internal pay equity and other factors as deemed appropriate. In addition, we consider the other components of executive compensation and the mix of performance pay to total compensation. The Compensation Committee does not apply any specific weighting to these factors.
Annually, the Compensation Committee reviews each executive’s past salary and performance, and general economic conditions in our industry, and decides whether or not to adjust the salary. Adjustments, if any, are implemented effective as of January. Subject to the limitations found in each executive’s employment agreement, the Compensation Committee can increase or decrease an executive’s base salary at its discretion. For 2017, the Compensation Committee determined to keep salaries for NEOs the same.
The following table sets forth the base salaries for our NEOs in
2017
and
2016
:
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Name
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Title
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Base Salary for 2017($)
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Base Salary for 2016($)
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% Change
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Michael P. Durney
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Former President and Chief Executive Officer
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515,000
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515,000
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|
none
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Luc Grégoire
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Chief Financial Officer
|
340,000
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340,000
|
|
none
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James E. Bennett(1)
|
Former Managing Director
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277,124
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292,400
|
|
none
|
Pamela Bilash
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Senior Vice President, Human Resources
|
300,000
|
|
300,000
|
|
none
|
Brian Campbell
|
Vice President, Business & Legal Affairs, General Counsel and Secretary
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315,000
|
|
315,000
|
|
none
|
Shravan Goli(2)
|
Former President, Brightmatter Group
|
455,000
|
|
455,000
|
|
none
|
(1) 2017 salary reflects £215,000 converted at
US$1.29
for each £1 and 2016 salary reflects £215,000 converted at US$1.36 for each £1. The lower percentage change in U.S. dollars was due to fluctuation in exchange rates between U.S. dollars and British Pounds.
(2) Mr. Goli served as President, Brightmatter Group through May 2017.
Senior Bonus Plan
Our bonus program is intended to motivate and reward performance by providing annual, performance-based cash bonuses based upon meeting and exceeding performance goals. We award annual cash bonuses under our Senior Bonus Plan for achievement of specified performance objectives with a time horizon of one year or less. We make awards from an established bonus pool. The Compensation Committee determines the total size of our bonus pool by taking into account our qualitative and financial performance. Within the parameters of the overall pool, there are separate sub-pools allocated to the performance of the individual operating units. The Compensation Committee determines the size of an award that we make to a particular executive by considering his or her individual performance as measured against pre-set performance targets and objectives and his or her individual impact on our overall performance. We believe this pool-based bonus system helps to foster teamwork and ensures that all executives work together as one in the interest of our performance.
The revenue target and the Adjusted EBITDA target for bonus pool purposes are set on an annual basis. Each of these components is selected because they are best reflective of business performance, and they are equally weighted because they are both critical in assessing the success of the business. For purposes of funding the senior bonus pools for our NEOs for
2017
, the Compensation Committee established a target for revenue and Adjusted EBITDA for
five
pools of the bonus plan. As a result of the Tech-focused reorganization on July 1, 2017, the pools were modified accordingly to reflect the new operating structure. The plan consisted of the Corp pool and Healthcare pool as of July 1, 2017. The Healthcare pool was dissolved as a result of the sale of Health eCareers on December 4, 2017. At the time of sale, the Healthcare pool target achieved was 76% and the resulting total bonuses paid was $104,000. Due to the sale of Health eCareers, there was a single senior bonus pool at December 31, 2017. The revenue target for purposes of the Senior Bonus Plan is not intended to be in accordance with U.S. GAAP and includes various adjustments such as removing the impact of the change in foreign currency exchange rates that cause the measurement amount to differ from our actual results. Likewise, the Adjusted EBITDA target includes various adjustments, such as the exclusion of stock-based compensation and the exclusion of the accrual for the senior bonus.
Actual revenue and Adjusted EBITDA do not include the impact of any acquisitions or dispositions during the year. Additionally, the actual revenue and Adjusted EBITDA results are adjusted to use foreign exchange rates that were assumed when the target amounts were determined, therefore eliminating the impact of changes in exchange rates. We calculate our total target bonus pool by taking a percentage of each executive’s base salary and contributing that amount (adjusted for our revenue and Adjusted EBITDA performance) to the total bonus pool for our executives. The maximum potential bonus pool cannot exceed 200% of target. In
2017
, the target contribution percentage for our NEOs was:
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Name
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Title
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Target Contribution %
|
Target Bonus for 2017 ($)
|
Michael P. Durney
|
Former President and Chief Executive Officer
|
100%
|
$515,000
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Luc Grégoire
|
Chief Financial Officer
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50%
|
$170,000
|
James E. Bennett (1)
|
Former Managing Director
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50%
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$138,675
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Pamela Bilash
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Senior Vice President, Human Resources
|
40%
|
$120,000
|
Brian Campbell
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Vice President, Business & Legal Affairs, General Counsel and Secretary
|
35%
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$110,250
|
(1) 2017 Target Bonus reflects £107,500 converted at US$1.29 for each £1.
For
2017
, the total bonus pool available for the NEOs and other senior executives designated by the Compensation Committee was funded in the following way:
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|
•
|
50% of the total bonus pool was funded according to the percentage of the revenue target achieved; and
|
•
50% was funded according to the percentage of Adjusted EBITDA target achieved.
For
2017
, if our actual results were lower than 85% of the revenue target or the Adjusted EBITDA target, the 50% of the bonus pool to be funded upon achieving the applicable target was not funded. If 85% of the applicable target was achieved, 50% of the 50% to be funded with respect to the applicable target was funded. If our actual revenue or Adjusted EBITDA fell between 85% and 100% of the applicable target, the amount to be funded for each target to the bonus pool increased from 50% to 100% of the applicable 50% portion of the bonus pool on a pro-rata basis. Further, for
2017
, the size of our bonus pool would increase by 10% for each 1% that our actual revenue exceeds our revenue target (the “revenue multiplier”), provided that actual Adjusted EBITDA is also equal to or greater than the sum of (1) the Adjusted EBITDA target plus (2) 50% of the amount by which actual revenue exceeds our revenue target. (If actual Adjusted EBITDA exceeds our Adjusted EBITDA target but actual revenue does not exceed our revenue target, the bonus pool does not increase.)
The
2017
Senior Bonus Plan at December 31, 2017 consisted of one pool, which covers participants beyond our NEOs. Our actual and targets for revenue and Adjusted EBITDA for the pool that included our NEOs was:
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|
|
|
|
|
|
Actual 2017 Revenue($)
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Target 2017 Revenue($)
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Actual 2017 Adjusted EBITDA($)
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Target 2017 Adjusted EBITDA($)
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2017 Bonus Pool Funded($)(1)
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2017 Bonus Pool Funded(%)
|
|
(in millions)
|
Corp Pool
|
206.1
|
|
216.9
|
|
44.3
|
|
47.5
|
|
2.2
|
|
80
|
%
|
|
|
(1)
|
Represents total pool funding, including NEOs.
|
Because our actual revenues and Adjusted EBITDA for bonus pool purposes were below our targets for the Corp Pool, the bonus pool funding was decreased by 20% for the Corp Pool. Accordingly, we multiplied each executive officer’s targeted base compensation contribution amount by
80%
for those who were in the Corp Pool the entire year. As a result, the total bonus pool for the Senior Bonus Plan for
2017
(comprised of the one pool) was $2.2 million. Excluding Mr. Goli, the five NEOs, plus 27 other members of senior management participated in the Senior Bonus Plan and were eligible for bonuses out of the total bonus pool.
The Compensation Committee then reviews each executive’s performance against his or her individual performance objectives (set forth below) and determines whether to further increase or decrease the percentage for any particular executive if that executive has had a significant impact (positive or negative) on Company performance. We believe this ensures that executives whose performance is outstanding receive proportionately larger bonuses as a reward. It is possible that any single participant may be allocated a bonus from the bonus pool that may be more than his or her targeted base compensation contribution to the bonus pool if his or her performance warrants such a payout based on the Compensation Committee’s qualitative assessment of the executive’s performance against his or her goals and objectives. The maximum amount any participant may be awarded is two times his or her contribution, subject to the amount by which the overall pool may expand. It is also possible that any single participant may be allocated less than his or her targeted base compensation contribution to the bonus pool, based on his or her performance against his or her goals and objectives.
The 2017 performance goals and objectives for Mr. Durney consist of:
|
|
•
|
Achieve 2017 Company billings and revenue goals and EBITDA targets;
|
|
|
•
|
Execute tech first strategy to return the business to growth;
|
|
|
•
|
Improve the use of data and analytics across the Company’s business units;
|
|
|
•
|
Increase innovation throughout the Company; and
|
|
|
•
|
Create a culture of high performance.
|
The 2017 performance goals and objectives for Mr. Grégoire consist of:
|
|
•
|
Ensure timely, accurate and informative financial reporting;
|
|
|
•
|
Manage external reporting and public stockholder requirements;
|
|
|
•
|
Lead corporate development, acquisition and financing activities; and
|
|
|
•
|
Analyze optimal capital structure.
|
The 2017 performance goals and objectives for Mr. Campbell consist of:
|
|
•
|
Maintain our legal files and endeavor to ensure compliance with applicable global laws and regulations;
|
|
|
•
|
Support strategic expansion initiatives, including managing the legal issues surrounding acquisitions, dispositions, joint ventures and related transactions;
|
|
|
•
|
Provide legal support to our efforts to provide adequate financing for the Company, and to the sales teams in their negotiation and closing of deals;
|
|
|
•
|
Work on the Company’s analysis and execution of international organizational structure;
|
|
|
•
|
Manage the Company’s litigation matters and our arrangements with outside counsel; and
|
|
|
•
|
Manage the legal aspects of SEC filings, including the proxy process and annual meeting preparation, and Board and committee legal issues.
|
The 2017 performance goals and objectives for Ms. Bilash consist of:
|
|
•
|
Drive employee engagement by using survey, interviews and action plans to assess and address the retention of talent;
|
|
|
•
|
Execute on our talent management program to identify and develop high potential leadership talent;
|
|
|
•
|
Ensure employee recognition programs are tied to outstanding performance of core principles and delivery of results;
|
|
|
•
|
Align overall compensation programs across the Company;
|
|
|
•
|
Ensure alignment of HR programs, team and support with business needs; and
|
|
|
•
|
Deliver data and metrics to business leaders to help inform talent decisions.
|
The 2017 performance goals and objectives for Mr. Bennett consist of:
|
|
•
|
Build leadership and organizational structure to allow Hcareers, Rigzone, and BioSpace to operate efficiently and effectively;
|
|
|
•
|
Right size and stabilize the Rigzone business in light of current market conditions; and
|
|
|
•
|
Lead the efforts around divesting businesses not aligned to tech first strategy.
|
Based on input received from Mr. Durney, the Compensation Committee determines in its sole discretion the extent to which such individuals’ goals and objectives are achieved. For
2017
, the Compensation Committee made adjustments to the bonus pool allocations as a result of individual performance. This resulted in awards as follows: Messrs. Durney (
100%
), Grégoire (
100%
), Bennett (
101%
), Campbell (
100%
), and Ms. Bilash (
100%
).
Long-Term Equity Incentives
We believe that equity compensation is the most effective means of creating a long-term link between the compensation provided to executives and gains realized by our stockholders, as the value of stock-based compensation is dependent upon long-term appreciation in stock price. Accordingly, we believe long-term equity incentives should be a significant part of the total mix of executive compensation. For
2017
, the mix was one-half restricted stock and one-half PSUs for senior executives. Under our 2005 Omnibus Stock Plan, our 2007 Equity Award Plan and our 2012 Equity Plan, all restricted stock grants typically vest over four years, with 25% vesting occurring on each anniversary date of the applicable vesting commencement date. The PSUs will generally vest on the dates the Compensation Committee certifies the Company’s achievement of stock price performance relative to the Russell 2000 Index, provided that the executive remains employed through such date. Performance will be measured over three separate performance periods: a one-year performance period, a two-year performance period and a three-year performance period. The number of PSUs that will vest will vary based on the level of achievement: ranging from 0% if the Company’s stock price performance is 34 or more percentage points worse than the performance of the Russell 2000 Index, to 100% (target) if the Company’s stock price performance is the same as the performance of the Russell 2000 Index, and up to a maximum of 150% if the Company’s stock price performance is 25 or more percentage points better than the performance of the Russell 2000 Index; provided, that the ability to earn more than the target number of PSUs is tied solely to relative performance for the full three-year performance period. Stock price performance is determined by the average adjusted closing stock price for the Company and the Russell 2000 Index for the 30 trading days prior to the grant date and the average adjusted closing stock prices for the 30 trading days prior to the end of the applicable performance period.
For
2017
, we used restricted stock and PSUs as long-term incentive vehicles because:
|
|
•
|
restricted stock and PSUs align the interests of executives with those of the stockholders, support a pay-for-performance culture, foster employee stock ownership, and focus the management team on increasing value for our stockholders;
|
|
|
•
|
restricted stock grants encourage our executives to hold shares of our Common Stock and incentivize our executives to increase the value of shares of our Common Stock through contributions to long-term performance;
|
|
|
•
|
PSUs link targeted compensation to relative stock price performance versus the Russell 2000 index;
|
|
|
•
|
restricted stock and PSUs help to provide a balance to the overall compensation program: while cash bonuses focus on the achievement of annual performance targets, the structure and vesting of restricted stock awards and PSUs create incentive for increases in stockholder value over a longer term; and
|
|
|
•
|
vesting periods encourage executive retention and the preservation of stockholder value.
|
In determining the number of restricted stock and/or PSUs to be granted to each NEO for
2017
, the Compensation Committee took into account (1) the individual’s position, scope of responsibility, and ability to affect Company performance and stockholder value; (2) the Compensation Committee’s evaluation of the NEO’s performance in preceding fiscal years; (3) the extent to which the long-term equity award grant value is competitive with our peer group companies for long-term equity award grants for comparable positions in the Company’s industry; (4) any extraordinary changes that have occurred (such as a significant change in responsibilities or a promotion); and (5) the value and potential value for the executive of the other elements of the Company’s compensation program and the value of restricted stock and PSUs in relation to such other elements of total compensation.
In addition, the Compensation Committee considered the following material factors that have particular relevance to long-term equity grants: (1) the Company-wide equity budget (which is the aggregate grant values of all long-term equity awards available for grant to Company employees, expressed as a percentage of the Company’s market capitalization), which is taken into account in determining the relative size of awards granted to the NEOs to ensure there is sufficient value available for grants to the other eligible employees of the Company; and (2) the NEO’s unrealized value from previous grants, including the number of restricted stock, stock options and PSUs currently held by him or her and the level of restricted stock, stock options and PSUs granted in prior years (with an emphasis on the extent to which outstanding equity grants are still unvested and thus continue to represent substantial retentive value). As with the determinations with respect to other elements of compensation, the Compensation Committee considers all relevant factors taken as a whole in setting the applicable equity grant for the fiscal year. None of these factors were determinative in the Compensation Committee’s determinations, nor was the impact of any one factor determinable.
The Compensation Committee typically approves grants annually at its February meeting, but also makes grants from time-to-time in connection with new hires and promotions. In February 2017, the Compensation Committee approved restricted stock and/or PSU grants to key members of our management team, including our NEOs:
|
|
|
|
|
|
|
|
Name
|
Title
|
Grant Date
|
2017 Stock Awards (#)
|
2017 PSU Awards (#)
|
Michael P. Durney
|
Former President and Chief Executive Officer
|
2/27/2017
|
120,000
|
|
120,000
|
|
Luc Grégoire (1)
|
Chief Financial Officer
|
2/27/2017
|
10,000
|
|
40,000
|
|
James E. Bennett
|
Former Managing Director
|
2/27/2017
|
30,000
|
|
30,000
|
|
Pamela Bilash
|
Senior Vice President, Human Resources
|
2/27/2017
|
22,500
|
|
22,500
|
|
Brian Campbell
|
Vice President, Business & Legal Affairs, General Counsel and Secretary
|
2/27/2017
|
17,500
|
|
17,500
|
|
Shravan Goli
|
Former President, Brightmatter Group
|
2/27/2017
|
30,000
|
|
30,000
|
|
(1) Mr. Grégoire joined the Company in November 2016 and received a restricted stock award of 70,175 shares.
This was part of an annual grant of equity awards and part of our overall compensation program. In determining the size of the equity grants for our NEOs, the Compensation Committee took into account the material factors set forth above, in conjunction with the Compensia analysis.
Employee Benefits
The Company also supplements its primary compensation program by providing retirement benefits under a
401(k) plan with a Company matching contribution, or analogous benefit as typically provided in the country where our executive officers reside; and generally available benefit programs, such as life insurance and health care benefits. In addition, certain executive officers participate in a Supplemental Disability Plan. While these benefit programs are important in attracting and retaining our workforce in a competitive marketplace, the Compensation Committee considers these to be secondary elements of the Company’s executive compensation program because they typically comprise a small percentage of the total compensation of our executive officers, are generally set at levels such that they would not constitute a strong factor in rewarding financial or operational performance, and are not as heavily emphasized in attracting and retaining our executive officers.
Severance and Change-in-Control Arrangements
We believe that companies should provide reasonable severance benefits to executive officers due to the greater level of difficulty they face in finding comparable employment in a short period of time and greater risk of job loss or modification as a result of a change-in-control transaction than other employees. By reducing the risk of job loss or reduction in response, the
change-in-control provision helps ensure that our executive officers support potential change-in-control transactions that may be in the best interests of our stockholders, even though the transaction may create uncertainty in their personal employment situation, and are necessary to ensure that our total employment package for them remains market competitive. Each NEO is entitled to receive severance benefits under the terms of his or her individually negotiated employment agreement upon either termination by us without cause or, under certain circumstances for certain of our NEOs, resignation by the executive for good reason. For details on our severance and change-in-control arrangements, see
“Potential Post-Employment Payments Upon Termination or Change-in-Control.”
Tax Considerations
We generally seek to maximize the deductibility for tax purposes of all elements of compensation. For example, we have in the past issued nonqualified stock options that will result in a tax deduction to us upon exercise. Section 162(m) of the Internal Revenue Code (the “Code”) generally disallows a tax deduction to public corporations for compensation (other than qualified performance-based compensation) in excess of $1.0 million paid to our NEOs (other than our Chief Financial Officer) in any fiscal year. Our 2012 Equity Plan was approved by our stockholders and is designed to enable the Compensation Committee to award annual bonuses and equity grants which could qualify for exemption from the application of Section 162(m). The Compensation Committee reviews compensation plans in light of applicable tax provisions, including Section 162(m), and may revise compensation plans from time to time to maximize deductibility. However, the Compensation Committee may approve compensation that does not qualify for deductibility when we deem it to be in our best interests (including grants of time-based restricted stock and targeted use of discretion in our annual bonus arrangements). The exemption from Section 162(m)'s deduction limit for performance-based compensation has been repealed, effective for taxable years beginning after December 31, 2017, such that compensation paid to our covered executive officers in excess of $1 million will not be deductible unless it qualifies for transition relief applicable to certain arrangements in place as of November 2, 2017. Despite the Compensation Committee’s efforts to structure compensation in a manner intended to be exempt from Section 162(m) and therefore not subject to its deduction limits, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, including the uncertain scope of the transition relief under the legislation repealing 162(m)'s exemption from the deduction limit, no assurance can be given that compensation intended to satisfy the requirements for exemption from Section 162(m) will, in fact, satisfy the requirements.
Role of Compensation Consultant
The Compensation Committee engaged Compensia to advise and assist it in connection with 2017 compensation decisions. Compensia offered the Compensation Committee advice with respect to base salary, annual, performance-based cash bonus and long-term equity compensation of executive officers, performance-based plans (including the design and structure of the long-term equity program), the compensation-related terms of senior employment arrangements, and general information related to market trends and developments affecting compensation practices. Our Compensation Committee also sought Compensia’s advice regarding the relationship between our CEO’s compensation and the Company’s performance.
Compensia is an independent compensation advisor, with special expertise and extensive experience in our industry, and has no business other than advising boards and management teams on executive compensation issues. The Compensation Committee considered these and other factors required by the SEC and NYSE in selecting Compensia.
In
2017
, Compensia worked in collaboration with the Company’s management at the Compensation Committee’s direction to review management’s recommendations to the Compensation Committee and to provide information and guidance to management on the Compensation Committee’s behalf. As the Compensation Committee’s consultant, Compensia provided input directly to the Compensation Committee and attended portions of the Compensation Committee’s meetings, including its executive sessions at which management was not present, as required by the Compensation Committee, and in order to support the Compensation Committee’s independent decision-making. Compensia performed executive compensation services at the request of the Compensation Committee in
2017
, for which we paid approximately $46,000.
Our Peer Companies
The Compensation Committee, taking into account the advice of Compensia, identified the following peer group of companies in
2017
based on size and business focus for comparison purposes in determining compensation:
|
|
|
Actua
|
LivePerson
|
AutoWeb
|
QuinStreet
|
Bazaarvoice
|
RealNetworks
|
Brightcove
|
TechTarget
|
Care.com
|
Tintri
|
ChannelAdvisor
|
Travelzoo
|
Global Eagle Entertainment
|
Telaria
|
Liquidity Services
|
XO Group
|
The peer group of companies were selected on the basis of their similarity to the Company in size (as determined by revenue, market capitalization, net income, and number of employees), business focus, business strategy and industry. The Compensation Committee reviews the peer group of companies at least annually and makes adjustments to its composition, taking into account changes in both the Company’s business and the businesses of the core peer companies. The companies included in this group may change from year-to-year depending on various factors, including the acquisition of a referenced company or the identification of other companies that offer more valuable comparative information.
Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis with management and, based on such review and discussions, the Compensation Committee recommended to the Board that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in the Company’s Annual Report on Form 10-K.
Members of the Compensation Committee:
Brian (Skip) Schipper (Chairman)
Carol Carpenter
Jim Friedlich
Compensation Practices and Risks
The Compensation Committee has discussed the concept of risk as it relates to our compensation program, and the Compensation Committee does not believe our compensation program encourages excessive or inappropriate risk taking for the following reasons:
|
|
•
|
our use of different types of compensation vehicles provides a balance of long-term and short-term incentives with fixed and variable components;
|
|
|
•
|
we grant equity-based awards with time-based vesting, which encourage participants to look to long-term appreciation in equity values;
|
|
|
•
|
our system of internal control over financial reporting, standards of business conduct, and whistleblower program, among other things, reduce the likelihood of manipulation of our financial performance to enhance payments under the features of our 2012 Equity Plan;
|
|
|
•
|
our adoption of a “claw-back” policy in 2015, under which the Company may generally seek reimbursement of cash incentive payments made to covered officers; and
|
|
|
•
|
our adoption of stock ownership guidelines for our directors and officers in 2015, which requires these directors and officers to achieve target ownership levels under the terms of the guidelines.
|
The Company’s management reviews the primary elements of our compensation program on an annual basis and reviews the other elements from time-to-time to ensure that compensation levels remain competitive.
Summary Compensation Table for Fiscal Year
2017
The following table sets forth the total cash and non-cash compensation paid by us or incurred on our behalf to our NEOs during the years ended December 31, 2015, December 31, 2016, and December 31, 2017.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Bonus
($)
|
|
Stock
Awards
($)(1)
|
|
Option
Awards
($)(1)
|
|
Non-Equity
Incentive Plan
Compensation
($)(2)
|
|
All Other
Compensation
($)(3)
|
|
Total
($)
|
Michael P. Durney
|
|
2017
|
|
515,000
|
|
|
—
|
|
|
1,245,600
|
|
|
—
|
|
|
414,210
|
|
|
15,426
|
|
|
2,190,236
|
|
Former President &
|
|
2016
|
|
515,000
|
|
|
—
|
|
|
1,776,000
|
|
|
|
|
|
150,000
|
|
|
9,275
|
|
|
2,450,275
|
|
Chief Executive Officer
|
|
2015
|
|
515,000
|
|
|
—
|
|
|
2,531,200
|
|
|
—
|
|
|
329,191
|
|
|
9,275
|
|
|
3,384,666
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luc Grégoire (4)
|
|
2017
|
|
340,000
|
|
|
—
|
|
|
265,200
|
|
|
—
|
|
|
136,730
|
|
|
14,590
|
|
|
756,520
|
|
Chief Financial Officer
|
|
2016
|
|
52,308
|
|
|
—
|
|
|
399,998
|
|
|
—
|
|
|
50,032
|
|
|
—
|
|
|
502,338
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Bennett (5)
|
|
2017
|
|
277,124
|
|
|
—
|
|
|
311,400
|
|
|
—
|
|
|
128,895
|
|
|
13,856
|
|
|
731,275
|
|
Former Managing Director
|
|
2016
|
|
303,616
|
|
|
—
|
|
|
444,000
|
|
|
|
|
|
59,700
|
|
|
2,907
|
|
|
810,223
|
|
|
|
2015
|
|
290,057
|
|
|
—
|
|
|
406,800
|
|
|
—
|
|
|
162,161
|
|
|
16,504
|
|
|
875,522
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela Bilash
|
|
2017
|
|
300,000
|
|
|
—
|
|
|
233,550
|
|
|
—
|
|
|
96,515
|
|
|
16,167
|
|
|
646,232
|
|
Senior Vice President,
|
|
2016
|
|
300,000
|
|
|
—
|
|
|
333,000
|
|
|
|
|
|
42,467
|
|
|
9,275
|
|
|
684,742
|
|
Human Resources
|
|
2015
|
|
290,000
|
|
|
—
|
|
|
406,800
|
|
|
—
|
|
|
78,267
|
|
|
9,275
|
|
|
784,342
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Campbell (6)
|
|
2017
|
|
315,000
|
|
|
32,500
|
|
|
181,650
|
|
|
—
|
|
|
88,673
|
|
|
13,501
|
|
|
631,324
|
|
Vice President, Business
|
|
2016
|
|
315,000
|
|
|
—
|
|
|
259,000
|
|
|
—
|
|
|
49,025
|
|
|
8,607
|
|
|
631,632
|
|
& Legal Affairs, General
|
|
2015
|
|
309,000
|
|
|
—
|
|
|
226,000
|
|
|
—
|
|
|
76,811
|
|
|
9,275
|
|
|
621,086
|
|
Counsel and Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shravan Goli (7)(8)
|
|
2017
|
|
260,501
|
|
|
—
|
|
|
311,400
|
|
|
—
|
|
|
65,000
|
|
|
464,450
|
|
|
1,101,351
|
|
Former President,
|
|
2016
|
|
455,000
|
|
|
—
|
|
|
444,000
|
|
|
|
|
|
185,367
|
|
|
9,275
|
|
|
1,093,642
|
|
Brightmatter Group
|
|
2015
|
|
455,000
|
|
|
—
|
|
|
723,200
|
|
|
—
|
|
|
305,478
|
|
|
9,275
|
|
|
1,492,953
|
|
|
|
(1)
|
Represents the aggregate grant date fair value of restricted stock, stock options or PSUs granted during the year in accordance with the Financial Accounting Standards Board Accounting Standards Codification (“FASB ASC”) Topic 718, Stock Compensation (disregarding any forfeiture assumptions). These amounts do not correspond to the actual value that may be realized by our NEOs for these awards. See Note 12 to our consolidated financial statements and “
Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Critical Accounting Policies—Stock and Stock—Based Compensation”
included in our Annual Report on Form 10-K for the assumptions made in determining these values. Assuming achievement of the maximum level of performance and utilizing the closing price of the Company’s stock on the date of grant, the fair value of PSUs granted in fiscal year
2017
is: $968,400, $322,800, $181,575, $141,225, $242,100 and $242,100 for Mr. Durney, Mr. Grégoire, Ms. Bilash, Mr. Campbell, Mr. Bennett, and Mr. Goli, respectively. With respect to the PSU awards granted in 2015 and 2016, the PSU performance criteria were not met during 2017 and, accordingly, no compensation with respect to those grants was payable during 2017.
|
|
|
(2)
|
Represents awards made pursuant to the Senior Bonus Pool (or based on the amounts stipulated in the separation agreements for Mr. Bennett and Mr. Goli) and earned during the year indicated, although the awards were paid in the following year.
|
|
|
(3)
|
This amount represents employer contributions to our 401(k) plan, disability insurance premiums paid on behalf of the NEO, or other savings plans for employees outside the United States.
|
|
|
(4)
|
Mr. Grégoire joined the Company in November 2016 and received a restricted stock award of 70,175 shares in 2016.
|
|
|
(5)
|
All compensation amounts for Mr. Bennett have been converted from British Pounds to U.S. dollars at an exchange rate of
US$1.29
for each £1 in
2017
, US$1.36 for each £1 in 2016 and US$1.53 for each £1 in 2015. Mr. Bennett made an election in 2017, 2016, and 2015 which resulted in an employer contribution to his savings plan. Mr. Bennett's employment was terminated effective February 2018.
|
|
|
(6)
|
In February 2018, Mr. Campbell received a one time bonus of $32,500 related to a litigation matter, which is included in Bonus.
|
|
|
(7)
|
Mr. Goli served as President of Brightmatter Group through May 2017.
|
|
|
(8)
|
For Mr. Goli, the amount in the All Other Compensation column for 2017 includes a separation payment of $455,000 and employer contribution to our 401(k) plan of $9,450.
|
Grants of Plan-Based Awards for Fiscal Year
2017
The following table details grants of plan-based awards to our NEOs during
2017
:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Grant
Date
|
|
Estimated Future Payouts
Under Non-Equity
Incentive Plan Awards(1)
|
|
Estimated Future Payouts
Under Equity
Incentive Plan Awards(2)
|
|
All Other
Stock Awards:
Number of
Shares of Stock(#)(3)
|
|
Grant Date
Fair Value of
Stock
Awards($)(4)
|
Target ($)
|
|
Maximum ($)
|
|
Target (#)
|
|
Maximum (#)
|
|
Michael P. Durney
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
600,000
|
|
Former President &
|
2/27/2017
|
|
|
|
|
|
120,000
|
|
|
180,000
|
|
|
|
|
645,600
|
|
Chief Executive Officer
|
|
|
515,000
|
|
|
1,030,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luc Grégoire
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
50,000
|
|
Chief Financial Officer
|
2/27/2017
|
|
|
|
|
|
40,000
|
|
|
60,000
|
|
|
|
|
215,200
|
|
|
|
|
170,000
|
|
|
340,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E. Bennett
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
150,000
|
|
Former Managing Director,
|
2/27/2017
|
|
|
|
|
|
30,000
|
|
|
45,000
|
|
|
|
|
161,400
|
|
Global Industry Group
|
|
|
138,675(5)
|
|
277,350(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela Bilash
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
112,500
|
|
Senior Vice President,
|
2/27/2017
|
|
|
|
|
|
22,500
|
|
|
33,750
|
|
|
|
|
121,050
|
|
Human Resources
|
|
|
120,000
|
|
|
240,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian Campbell
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
87,500
|
|
Vice President, Business & Legal
|
2/27/2017
|
|
|
|
|
|
17,500
|
|
|
26,250
|
|
|
|
|
94,150
|
|
Affairs, General Counsel and
|
|
|
110,250
|
|
|
220,500
|
|
|
|
|
|
|
|
|
|
Secretary
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Shravan Goli
|
2/27/2017
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
150,000
|
|
Former President,
|
2/27/2017
|
|
|
|
|
|
30,000
|
|
|
45,000
|
|
|
|
|
161,400
|
|
Brightmatter Group
|
|
|
455,000
|
|
|
910,000
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
For a description of the material terms of these awards, please see the “
Compensation Discussion and Analysis—Elements of Executive Compensation—Senior Bonus Plan
.”
|
|
|
(2)
|
The PSUs vest in three installments corresponding to three performance periods ending on each of the first, second and third anniversaries of the grant on the dates the Compensation Committee certifies the Company’s achievement of stock price performance relative to the Russell 2000 Index for the applicable performance period, provided that the recipient remains employed through such date.
|
|
|
(3)
|
The restricted stock vests 25% on each of the first, second, third and fourth anniversaries of the applicable vesting commencement date.
|
|
|
(4)
|
We estimated the fair value of restricted stock using the closing price of the Company’s stock on the grant date in accordance with the FASB ASC Topic 718 Stock Compensation. We estimated the fair value of PSU awards using the closing price of the Company’s stock on the grant date in accordance with the FASB ASC Topic 718 Stock Compensation. See Note 13 to our consolidated financial statements and “
Management’s Discussion and Analysis of Financial Condition and
Results of Operations—Critical Accounting Policies—Stock and Stock—Based Compensation”
included in our Annual Report on Form 10-K for the assumptions made in determining these values.
|
|
|
(5)
|
Converted from British Pounds to U.S. dollars at an exchange rate of
US$1.29
for each £1.
|
Employment Agreements
We have entered into an employment agreement with each of our NEOs. Each agreement contains confidentiality provisions and a representation and warranty that performance of the executive’s employment obligations under the agreement will not cause him or her to breach any non-disclosure agreement by which he or she is bound.
Michael P. Durney
Effective September 30, 2013, Mr. Durney became President and Chief Executive Officer. The employment agreement for Mr. Durney provides that Mr. Durney will continue to serve until his employment is terminated by us or by Mr. Durney, which may be at any time, with or without cause, subject to the provisions of his employment agreement. The agreement contains a covenant not to engage in any business that competes with us or to solicit employees during the term of his employment and for a period of 12 months thereafter.
Mr. Durney is entitled to receive an annual base salary of $515,000, and in accordance with the terms of his employment agreement, the Senior Bonus Plan and our benefit policies, is eligible for an annual discretionary target bonus of 100% of his base salary. Mr. Durney participates in our long-term incentive plan, and all employee benefit plans including a 401(k) plan. Mr. Durney is entitled to six weeks of annual leave per year.
Luc Grégoire
The employment agreement for Mr. Grégoire, our Chief Financial Officer, provides that Mr. Grégoire will continue to serve until his employment is terminated by us or by Mr. Grégoire, which may be at any time, with or without cause, subject to the provisions of his employment agreement. The agreement contains a covenant not to engage in any business that competes with us or to solicit employees during the term of his employment and for a period of 12 months thereafter.
Mr. Grégoire is entitled to receive an annual base salary of $340,000, and in accordance with the terms of his employment agreement, the Senior Bonus Plan and our benefit policies, is eligible for an annual discretionary target bonus of 50% of his base salary (guaranteed to be at least $50,000 in respect of 2016). Mr. Grégoire participates in our long-term incentive plan, and all employee benefit plans including a 401(k) plan. Mr. Grégoire is entitled to five weeks of annual leave per year.
James E. Bennett
The employment agreement for Mr. Bennett, our Former Managing Director, Global Industry Group, provides that Mr. Bennett will continue to serve until his employment is terminated by us or by Mr. Bennett, which may be at any time, with or without cause, subject to the provisions of his employment agreement. The agreement contains a covenant not to engage in any business that competes with us or to solicit employees or customers during the term of his employment and for a period of 9 months thereafter.
Mr. Bennett was entitled to receive an annual base salary of
$277,124
(as converted from British Pounds to U.S. dollars at an exchange rate of
US$1.29
for each £1), and in accordance with the terms of his employment agreement, the Senior Bonus Plan and our benefit policies, was eligible for an annual discretionary target bonus of 50% of his base salary. Mr. Bennett participates in our long-term incentive plan, and all employee benefit plans. Mr. Bennett was entitled to five weeks of annual leave per year.
Mr. Bennett's employment was terminated effective February 2018. In connection with Mr. Bennett's separation from the Company, the Company entered into a separation agreement with Mr. Bennett and made a separation payment to him in the amount of $208,013 (as converted from British Pounds to U.S. dollars at an exchange rate of US$1.29 for each £1) in exchange for a release and certain covenants.
Pamela Bilash
The employment agreement for Ms. Bilash, our Senior Vice President of Human Resources, provides that Ms. Bilash will continue to serve until her employment is terminated by us or by Ms. Bilash, which may be at any time, with or without cause, subject to the provisions of her employment agreement. The agreement contains a covenant not to engage in any business that competes with us or to solicit employees during the term of her employment and for a period of 12 months thereafter.
Ms. Bilash is entitled to receive an annual base salary of $300,000, and in accordance with the terms of her employment agreement, the Senior Bonus Plan and our benefit policies, is eligible for an annual discretionary target bonus of 40% of her base salary. Ms. Bilash participates in our long-term incentive plan, and all employee benefit plans including a 401(k) plan. Ms. Bilash is entitled to five weeks of annual leave per year.
Brian Campbell
Mr. Campbell's employment agreement provides that Mr. Campbell will continue to serve as our Vice President, Business Affairs & General Counsel until his employment is terminated by us or by Mr. Campbell, which may be at any time, with or without cause, subject to the provisions of his employment agreement. The agreement contains a covenant not to engage in any business that competes with us during the term of his employment and for a period of nine months thereafter, and a covenant not to solicit employees during the term of his employment and for a period of 12 months thereafter.
Mr. Campbell is entitled to receive an annual base salary of $315,000, and in accordance with the terms of his employment agreement, the Senior Bonus Plan and our benefit policies, is eligible for an annual discretionary target bonus of 35% of his base salary. Mr. Campbell participates in our long-term incentive plan, and all employee benefit plans including a 401(k) plan. Mr. Campbell is entitled to five weeks of annual leave per year.
Shravan Goli
Mr. Goli’s employment as President, Brightmatter Group was terminated effective May 31, 2017. Pursuant to his employment agreement, Mr. Goli continued to serve as our President, Brightmatter Group until his employment was terminated.
Mr. Goli was entitled to receive an annual base salary of $455,000, and in accordance with the terms of his employment agreement, the Senior Bonus Plan, and our benefit policies, was eligible for an annual discretionary target bonus of 100% of his base salary. Mr. Goli participated in our long-term incentive plan and all employee benefit plans including a 401(k) plan. Mr. Goli was entitled to five weeks of annual leave per year.
In connection with Mr. Goli’s separation from the Company on May 31, 2017, the Company entered into a separation agreement with Mr. Goli and made a separation payment to Mr. Goli in the amount of $455,000 and reimbursed him for the cost of health insurance continuation coverage under COBRA of $13,834 in exchange for a release and certain covenants. In addition, the Company paid Mr. Goli a pro rata bonus of $65,000 in February 2018.
Outstanding Equity Awards at Fiscal Year-End
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Vesting Commencement Date
|
|
Option Awards
|
|
Stock Awards
|
|
Equity Incentive Plan Awards
|
Number of Securities
Underlying Unexercised
Options
|
|
Option
Exercise
Price ($)
|
|
Option
Expiration
Date
|
|
Number of Shares of Stock That Have Not Vested(#)
|
|
Market Value of Shares of Stock That Have Not Vested ($)(2)
|
|
Number of Unearned Units that Have Not Vested (#)
|
|
Market or Payout Value of Unearned Units that Have Not Vested ($)(3)
|
Name
|
|
|
Exercisable
(#)(1)
|
|
Unexercisable
(#)
|
|
|
|
|
Michael P.
|
|
3/3/11
|
|
35,000
|
|
|
—
|
|
|
14.50
|
|
|
3/3/18
|
|
|
|
|
|
|
|
|
Durney
|
|
2/27/12
|
|
45,000
|
|
|
—
|
|
|
8.97
|
|
|
2/27/19
|
|
|
|
|
|
|
|
|
|
|
2/20/13
|
|
100,000
|
|
|
—
|
|
|
9.82
|
|
|
2/20/20
|
|
|
|
|
|
|
|
|
|
|
|
7/24/13
|
|
225,000
|
|
|
—
|
|
|
9.27
|
|
|
7/24/20
|
|
|
|
|
|
|
|
|
|
|
|
2/19/14
|
|
93,750
|
|
|
6,250
|
|
|
7.13
|
|
|
2/19/21
|
|
|
|
|
|
|
|
|
|
|
|
3/3/15
|
|
|
|
|
|
|
|
|
|
70,000
|
|
|
133,000
|
|
|
—
|
|
|
—
|
|
|
|
2/18/16
|
|
|
|
|
|
|
|
|
|
90,000
|
|
|
171,000
|
|
|
120
|
|
|
228
|
|
|
|
2/27/17
|
|
|
|
|
|
|
|
|
|
120,000
|
|
|
228,000
|
|
|
120
|
|
|
228
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Luc
|
|
11/1/16
|
|
|
|
|
|
|
|
|
|
52,632
|
|
|
100,001
|
|
|
|
|
|
Grégoire
|
|
2/27/17
|
|
|
|
|
|
|
|
|
|
10,000
|
|
|
19,000
|
|
|
40
|
|
|
76
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
James E.
|
|
3/3/11
|
|
20,000
|
|
|
—
|
|
|
14.50
|
|
|
3/3/18
|
|
|
|
|
|
|
|
|
Bennett (4)
|
|
2/27/12
|
|
40,000
|
|
|
—
|
|
|
8.97
|
|
|
2/27/19
|
|
|
|
|
|
|
|
|
|
|
|
2/20/13
|
|
40,000
|
|
|
—
|
|
|
9.82
|
|
|
2/20/20
|
|
|
|
|
|
|
|
|
|
|
|
2/19/14
|
|
37,500
|
|
|
2,500
|
|
|
7.13
|
|
|
2/19/21
|
|
|
|
|
|
|
|
|
|
|
|
2/19/14
|
|
|
|
|
|
|
|
|
|
5,000
|
|
|
9,500
|
|
|
|
|
|
|
|
3/3/15
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
21,375
|
|
|
—
|
|
|
—
|
|
|
|
2/18/16
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
42,750
|
|
|
30
|
|
|
57
|
|
|
|
2/27/17
|
|
|
|
|
|
|
|
|
|
30,000
|
|
|
57,000
|
|
|
30
|
|
|
57
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Pamela
|
|
1/22/14
|
|
28,125
|
|
|
1,875
|
|
|
7.56
|
|
|
1/22/21
|
|
|
|
|
|
|
|
|
Bilash
|
|
1/22/14
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
7,125
|
|
|
|
|
|
|
|
3/3/15
|
|
|
|
|
|
|
|
|
|
11,250
|
|
|
21,375
|
|
|
—
|
|
|
—
|
|
|
|
2/18/16
|
|
|
|
|
|
|
|
|
|
16,875
|
|
|
32,063
|
|
|
23
|
|
|
43
|
|
|
|
2/27/17
|
|
|
|
|
|
|
|
|
|
22,500
|
|
|
42,750
|
|
|
23
|
|
|
43
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Brian
|
|
3/3/11
|
|
15,000
|
|
|
—
|
|
|
14.50
|
|
|
3/3/18
|
|
|
|
|
|
|
|
|
Campbell
|
|
2/27/12
|
|
20,000
|
|
|
—
|
|
|
8.97
|
|
|
2/27/19
|
|
|
|
|
|
|
|
|
|
|
2/20/13
|
|
30,000
|
|
|
—
|
|
|
9.82
|
|
|
2/20/20
|
|
|
|
|
|
|
|
|
|
|
2/19/14
|
|
28,125
|
|
|
1,875
|
|
|
7.13
|
|
|
2/19/21
|
|
|
|
|
|
|
|
|
|
|
2/19/14
|
|
|
|
|
|
|
|
|
|
3,750
|
|
|
7,125
|
|
|
|
|
|
|
|
3/3/15
|
|
|
|
|
|
|
|
|
|
6,250
|
|
|
11,875
|
|
|
—
|
|
|
—
|
|
|
|
2/18/16
|
|
|
|
|
|
|
|
|
|
13,125
|
|
|
24,938
|
|
|
18
|
|
|
33
|
|
|
|
2/27/17
|
|
|
|
|
|
|
|
|
|
17,500
|
|
|
33,250
|
|
|
18
|
|
|
33
|
|
|
|
(1)
|
25% of the options vest on the first anniversary of the applicable vesting commencement date and 6.25% vest quarterly thereafter.
|
|
|
(2)
|
Restricted stock vests 25% on each of the first, second, third, and fourth anniversaries of the applicable vesting commencement date. We estimated the market value of stock awards using the closing price of the Company’s stock on
December 31, 2017
.
|
|
|
(3)
|
The PSUs vest in three installments corresponding to three performance periods ending on each of the first, second and third anniversaries of the grant on the dates the Compensation Committee certifies the Company’s achievement of stock price performance relative to the Russell 2000 Index for the applicable performance period, provided that the recipient remains employed through such date. In accordance with applicable SEC disclosure rules, we have shown the
|
outstanding number of PSUs that would be earned as of
December 31, 2017
if the performance from the date of grant through the end of the
2017
fiscal year was achieved at the minimum threshold performance (0.1%). Actual performance through such date was zero. We estimated the market value of such PSUs using the closing price of the Company’s stock on
December 31, 2017
.
|
|
(4)
|
In connection with his termination of employment, Mr. Bennett's options issued in 2012, 2013, and 2014 will expire 90 days after his separation date.
|
Option Exercises and Stock Vested During Fiscal Year-End
2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Stock Awards
|
Name
|
|
Number of Shares Acquired on Exercise (#)
|
|
Value Realized on Exercise ($)
|
|
Number of Shares Acquired on Vesting (#)
|
|
Value Realized on Vesting ($)
|
Michael P. Durney
|
|
—
|
|
|
—
|
|
|
97,500
|
|
|
461,000
|
|
Luc Grégoire
|
|
—
|
|
|
—
|
|
|
17,543
|
|
|
39,472
|
|
James E. Bennett
|
|
32,707
|
|
|
6,389
|
|
|
23,125
|
|
|
123,188
|
|
Pamela Bilash
|
|
—
|
|
|
—
|
|
|
15,000
|
|
|
80,625
|
|
Brian Campbell
|
|
33,481
|
|
|
6,432
|
|
|
15,000
|
|
|
80,063
|
|
Shravan Goli
|
|
—
|
|
|
—
|
|
|
53,750
|
|
|
268,500
|
|
CEO Pay Ratio
Pursuant to Item 402(u) of Regulation S-K, we have prepared a comparison of the annual total compensation of Mr. Michael P. Durney, our President and Chief Executive Officer for fiscal year 2017, to the median of annual total compensation of all other Company employees for the same period.
We identified the median employee for this review by examining the 2017 total cash compensation for all employees, excluding Mr. Durney, who were employed by us on December 31, 2017. We included all full-time, part-time, and temporary employees and did not make any assumptions, adjustments, or estimates with respect to annual total compensation, and we did not annualize the compensation for any permanent employees who were not employed by us for all of 2017. We determined the total cash compensation of our median employee by taking: (i) salary received in 2017, including over-time and paid time-off, (ii) 2017 incentive compensation, whether commissions paid, or actual bonus earned, and (iii) converting all non-US compensation details using the 2017 average exchange rates. The Company believes this process yielded an equitable result as it was applied on a consistent basis for each employee. We then ranked the annual total cash compensation of all employees, excluding the CEO, from lowest to highest to determine the median employee.
Following our review, we determined that for 2017:
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•
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the median employee total compensation: $88,045
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•
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Mr. Durney, CEO, total compensation: $2,190,236
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•
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Ratio of CEO to Median Employee compensation: 25:1
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Based on this information, for 2017, the ratio of the annual total compensation of Mr. Durney, CEO and President, to the median employee was 25 to 1. This ratio is a reasonable estimate calculated in a manner consistent with SEC rules and methods for disclosure.
Potential Post-Employment Payments Upon Termination or Change-in-Control
Equity Award Provisions
According to the terms of our 2005 Omnibus Stock Plan, our 2007 Equity Award Plan and our 2012 Equity Plan (collectively, the “Equity Plans”), if an NEO’s employment is terminated due to death or disability or for any other reason except by us for cause, the unvested portion of their equity awards will expire on the date they are terminated. The vested portion of stock option awards will remain exercisable until the earlier of either the expiration of the option period or 12 months after such termination in the case of termination due to death or disability, or 90 days after any other termination other than termination by us for cause.
If we terminate any NEO’s employment for cause, both the unvested equity awards and vested portions of the stock options will terminate on the same date such NEO’s employment is terminated.
In the event of a change in control, the PSU performance periods will be truncated and end on the date of the change in control. The Company will determine the amount of PSUs deemed earned based on performance through the end of the truncated performance period (the “earned CIC PSUs”), and the executive will vest in a prorated portion of the earned CIC PSUs based on the portion of the three-year performance period that has elapsed, provided that the executive remains employed through the completion of the change in control. The remaining earned CIC PSUs will convert into service-based restricted stock units which will vest, without regard to performance, ratably on a monthly basis through the end of the scheduled three-year performance period, provided that the executive remains employed through each such date. Any PSUs in excess of the earned CIC PSUs will be forfeited.
According to the terms of the Equity Plans, if an NEO’s employment is terminated by the Company other than for cause (and other than due to death or disability) within 12 months following a change in control, all outstanding equity awards will immediately become vested, and if applicable, exercisable.
Employment Agreements
The employment of each NEO may be terminated by us or by the NEO at any time, with or without cause, subject to the provisions of his or her employment agreement. The termination provisions applicable to each NEO are summarized below:
Michael P. Durney
In connection with Mr. Durney’s departure, the Company entered into a separation agreement with Mr. Durney on November 1, 2017. Subject to his continued compliance with the separation agreement and his execution and non-revocation of a release of claims, Mr. Durney will be entitled to (i) continued payment of Mr. Durney’s current base salary for twelve months following his termination date, payable in equal installments in accordance with the Company’s payroll practices; (ii) continued medical and dental benefits for the twelve-month period following the termination date on the same basis as provided to active employees of the Company; (iii) accelerated vesting of certain outstanding unvested equity-based awards; (iv) the continued ability of certain outstanding performance stock units to vest in accordance with their terms as if Mr. Durney had remained employed through the applicable vesting date; (v) a bonus in respect of 2017 in accordance with the bonus plan in effect; and (vi) with respect to 2018, a pro rata target bonus based on the portion of the calendar year through his termination date.
If Mr. Durney’s employment is terminated by us without cause prior to a change of control, or more than 12 months following a change in control, we will provide him with a severance payment in an amount equal to his then current annual salary, provided he executes and delivers a release in a form prepared by us. In the event of such termination, all of Mr. Durney’s outstanding equity awards will immediately become vested and if applicable, exercisable.
If Mr. Durney’s employment is terminated either by us without cause or by him for good reason within 12 months following a change of control, he will be entitled to a lump sum severance payment of one times the sum of his then current annual salary plus his then current target bonus (or, if higher, the amount of bonus attributable to a calendar year’s service paid to the executive immediately prior to the change of control), and all outstanding equity awards will immediately become vested and, if applicable, exercisable.
Luc Grégoire
If Mr. Grégoire’s employment is terminated by us without cause (or by him due to a relocation without his consent to an office more than 40 miles from the principal office at which he is then employed) prior to a change of control, Mr. Grégoire is entitled to receive a lump sum severance payment equal to one times the sum of his then current annual salary and a pro-rata bonus in an amount equal to the product of (1) his then current full-year bonus target, multiplied by (2) the Achieved Percentage (as defined below), multiplied further by (3) a fraction, the numerator of which is the number of days elapsed from the commencement of the year of termination through the date of termination, and the denominator of which is 365. In the event of a termination by us without cause prior to a change in control (or by him due to a relocation without his consent, to an office more than 40 miles from the principal office at which he is then employed), Mr. Grégoire is entitled to accelerated vesting, with respect to 25% of the shares of Company Common Stock underlying Mr. Grégoire’s then unvested equity awards (including 25% of the then-unvested portion of the performance stock units based on the then-current target number of PSUs). The “Achieved Percentage” means the percentage of the full-year bonus target deemed to be earned under the bonus plan based on actual performance through the end of the month in which the termination occurs as compared to target performance through the end of the month in which the termination occurs.
If Mr. Grégoire’s employment is terminated either by us without cause or by him for good reason, in each case, within 12 months following a change of control, he will be entitled to a lump sum severance payment of one times the sum of his then current annual salary plus his then current target bonus, and all outstanding equity awards will immediately become vested and, if applicable, exercisable.
Any severance payments are conditioned on Mr. Grégoire’s execution and delivery of a release in a form prepared by us.
James E. Bennett
The employment of Mr. Bennett may be terminated by the Company or Mr. Bennett at any time with or without cause, subject to the provisions of his employment agreement (which generally requires six months advance notice of termination). However the Company may terminate Mr. Bennett’s employment at any time if he has been unable to perform his duties by reason of ill health or injury for 30 days in any period of 52 consecutive weeks; if he becomes of unsound mind or a patient for the purpose of any mental health statute, or bankrupt; if he is convicted of a crime other than one that in the opinion of the Board of Directors of the Company does not affect his position as an employee of the Company; or if he is guilty of any serious default or misconduct in connection with or affecting the business of the Company, commits any serious or repeated breach of his obligations under his employment, is guilty of serious neglect or negligence in the performance of his duties or behaves in a manner which is likely to bring the Company into disrepute or which seriously impairs his ability to perform his duties.
If Mr. Bennett’s employment is terminated either by us without cause or by him for good reason within twelve months following a change of control, he will be entitled to a lump sum severance payment of one times the sum of his then current annual salary plus his then current target bonus, and all outstanding equity awards will immediately become vested.
Mr. Bennett entered into a separation agreement on February 9, 2018. Mr. Bennett served as Managing Director through February 2018, when his employment was terminated. Mr. Bennett entered into a separation agreement with the Company on February 9, 2018, which included a release of claims against the Company. Mr. Bennett was entitled to receive certain payments and benefits, including payments of (i) his 2017 bonus in an amount equal to £100,000, (ii) £107,500 as pay in lieu of providing six months notice of termination, (iii) £53,750 for redundancy pay, and (iv) and accelerated vesting of previous equity grants that were otherwise due to vest during 2018 and 2019.
Pamela Bilash
If Ms. Bilash’s employment is terminated by us without cause, Ms. Bilash is entitled to receive a lump sum severance payment equal to 50% of her then current annual salary, provided she executes and delivers a release in a form prepared by us.
Brian Campbell
If Mr. Campbell's employment is terminated by us without cause before a change of control, or more than 12 months following a change of control, he will be entitled to a lump sum severance payment of 75% of his then current annual salary.
If Mr. Campbell's employment is terminated either by us without cause or by him for a good reason within 12 months following a change of control, he will be entitled to receive a lump sum severance payment equal to one times his then current annual salary plus the amount of his most recently paid regular annual bonus, excluding special bonuses (or, if higher, the amount of bonus attributable to a calendar year's service paid to him immediately prior to the change of control), and all outstanding stock awards will immediately become vested and exercisable. In the event of a change of control (defined for this purpose as (i) a sale of all or substantially all of the assets of the Company or (ii) merger with or acquisition of another company resulting in which the Company is not the surviving company) he is entitled to additional vesting of 15% of prevailing granted stock options.
Shravan Goli
Mr. Goli entered into a separation agreement with us, effective June 16, 2017, which included a release of claims against the Company. Mr. Goli was entitled to certain payments and benefits, including the following: (i) a lump sum payment equal to $455,000; (ii) pro rata bonus for 2017 through the termination date of $65,000; and (iii) reimbursement for the cost of health insurance continuation coverage under the Consolidated Omnibus Budget Reconciliation Act of 1985 premiums for 12 months, in excess of the cost of such benefits that active employees are required to pay. Mr. Goli is subject to non-compete and non-solicit restrictions for 12 months following the separation date.
Applicable Definitions.
For purposes of the employment agreements with our NEOs:
A termination for “cause” in the absence of a change in control under employment agreements for Messrs. Durney and Campbell includes any of the following actions by the executive: embezzlement; misappropriation of funds; conviction of a felony; any acts of dishonesty, fraud or deceit; breach of a material provision of the executive’s employment agreement; habitual or willful neglect of duties; commission of any act that would rise to the level of felony breach of fiduciary duty to us involving personal profit; or significant or material violation of our policies or other contractual, statutory or common law duties to us.
A termination for “cause” under the employment agreements for Messrs. Bennett and Grégoire and Ms. Bilash, and for a termination in connection with a change in control, the employment agreement for Messrs. Durney and Campbell, includes
embezzlement; misappropriation of funds of the Company; conviction of a felony; commission of any other act of dishonesty which causes material economic harm to the Company; acts of fraud or deceit which causes material economic harm to the Company; material breach of any provision of an employment agreement; willful failure to substantially perform duties; willful breach of fiduciary duty to the Company involving personal profit; or significant violation of Company policy of which such executive is made aware (or should reasonably be expected to be aware) or other contractual, statutory or common law duties to the Company.
A termination for “good reason” (under employment agreements with those NEOs for whom this applicable) includes any of the following Company actions:
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a diminution in the NEO’s responsibilities, title, duties and reporting lines (excluding Mr. Grégoire for reporting lines) compared to those existing immediately prior to a change of control (Mr. Grégoire does not have good reason if he is the chief financial officer of the Company's business or business division following a change of control or if he continues to have the responsibilities, title and duties consistent with those of a private chief financial officer);
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•
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a reduction in the NEO’s salary, incentive compensation and other employee benefits compared to those existing immediately prior to a change of control;
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•
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relocation of the NEO to an office more than 40 miles from the NEO’s principal office immediately prior to a change of control;
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•
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breach by us of the NEO’s employment agreement; or
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•
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failure of any successor to assume, in writing, all obligations under the NEO’s employment agreement.
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A “change of control” for these purposes consists of any of the following:
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•
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an acquisition of more than 50% of our voting securities (other than acquisitions from or by us);
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•
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any stockholder-approved transfer or disposition of all or substantially all of our assets;
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•
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any plan of liquidation providing for the distribution of all or substantially all of our assets;
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the consummation of a reorganization, merger or consolidation or sale or disposition of all or substantially all our assets or the acquisition of assets or stock of another corporation or other business combination, unless following such business combination (1) all or substantially all of the beneficial owners of our securities before the business combination beneficially own more than 60% of the voting securities of the resulting corporation in substantially the same proportions as their ownership before the transaction; (2) no person owns 20% or more of the voting securities of the resulting corporation except to the extent that such ownership existed before the business combination; and (3) the members of our Board of Directors prior to such business combination constitute at least a majority of the Board of Directors of the resulting corporation; or
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•
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a change in the composition of our Board over a period of 36 months or less such that a majority of the Board members cease to be continuing directors.
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As noted above, certain NEOs may become entitled to certain severance payments upon termination of employment without cause or by the employee for good reason after a change in control. These severance payments are described more specifically below, but generally include a lump sum payment tied to salary and bonus level and accelerated vesting of equity. For Messrs. Durney and Campbell and Ms. Bilash only, in the event that any severance payments would be subject to the excise tax imposed by Section 4999 of the Code, we will “gross up,” on an after-tax basis, such NEO’s compensation so as to put the NEO in the same after-tax position that the executive would have enjoyed had the Section 4999 excise tax not applied to the severance payments. These make-whole provisions include certain computational assumptions and conventions, for example: (1) any other payments or benefits received in connection with a change in ownership or control will be treated as parachute payments, and all excess parachute payments are treated as subject to the excise tax, both as defined by Section 280G of the Code, and (2) the amount of the severance payments which will be treated as subject to the excise tax will be the lesser of the total amount of the severance payments or the amount of the excess parachute payments.
Any NEO who voluntarily resigns for any reason other than good reason following a change of control will not be entitled to any severance payment or acceleration of the vesting of any unvested stock options.
Upon any termination by the Company without cause or by the NEO for good reason, each NEO, his or her spouse and eligible dependents will be entitled to continued medical and dental benefits at active-employee rates for a period of 12 months following termination.
Termination Payments
The following table sets forth the payments each of our NEOs would have received if their employment had been terminated by us without cause on
December 31, 2017
and there was no change of control.
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Name
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Benefit
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Amount Payable for Termination
Without Cause
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Michael P. Durney
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Cash Severance
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$
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515,000
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Medical and Dental Benefits
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9,945
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*Option Acceleration Value
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—
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**Restricted Stock Acceleration Value
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532,000
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***PSU Stock Acceleration Value
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—
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Luc Grégoire(1)
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Cash Severance
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510,000
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Medical and Dental Benefits
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13,436
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**Restricted Stock Acceleration Value
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29,750
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***PSU Stock Acceleration Value
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19,000
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James E. Bennett(2)
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Cash Severance
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277,124
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Medical and Dental Benefits
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2,774
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Pamela Bilash
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Cash Severance
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150,000
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Medical and Dental Benefits
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13,436
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Brian Campbell
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Cash Severance
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236,250
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Medical and Dental Benefits
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14,511
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*
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Option acceleration values reflect the cash-out value of the non-vested options equal to their spread (fair value of the underlying stock as of
December 31, 2017
($1.90) less the exercise price as determined under the applicable equity plan) at the assumed payment date, which is
December 31, 2017
.
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**
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Restricted stock acceleration values reflect the value of the non-vested shares equal to the fair value of the underlying stock as of
December 31, 2017
.
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***
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The PSU award agreements do not provide for any acceleration in the event of a termination of an NEO’s employment. However, as noted above, certain NEO’s employment agreements provide for accelerated vesting of specified percentages of outstanding equity awards upon certain terminations of employment. The amounts shown above assume that (i) each such NEO shall be entitled to vest in such specified percentage of the number of PSUs that are ultimately earned based on actual performance at the end of the performance period and (ii) the actual performance for such performance period is equal to the actual performance through
December 31, 2017
, which, based on the closing price of the Company’s stock on
December 31, 2017
, is worth $0 for Mr. Durney. For Mr. Grégoire, this amount represents 25% of his target number of PSUs.
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(1)
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Mr. Grégoire’s cash severance of
$510,000
is the maximum that can be achieved and includes one times his annual base salary plus his full-year bonus target of 50% times his annual base salary, which may be reduced by his actual performance achieved versus his target performance through the month of his termination and the ratio of days elapsed from the commencement of the year of termination through the date of termination. In the event of termination, the actual severance paid will be between $340,000 and $510,000 as defined in his employment agreement.
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(2)
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All amounts for Mr. Bennett have been converted from British Pounds to U.S. dollars at an exchange rate of
US$1.29
for each £1.
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Change of Control Termination
The following table sets forth the payments each of our NEOs would have received if, following a change of control, their employment had been terminated by us without cause, or, if applicable, by them for good reason on
December 31, 2017
.
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Name
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Benefit
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Amount Payable for Termination
Without Cause or for Good Reason
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Michael P. Durney
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Cash Severance
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$
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1,030,000
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Medical and Dental Benefits
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9,945
|
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*Option Acceleration Value
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—
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**Restricted Stock Acceleration Value
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532,000
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***PSU Acceleration Value
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—
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Luc Grégoire
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Cash Severance
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510,000
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Medical and Dental Benefits
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13,436
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|
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**Restricted Stock Acceleration Value
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119,001
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***PSU Acceleration Value
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—
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James E. Bennett(1)
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Cash Severance
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415,686
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Medical and Dental Benefits
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2,774
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*Option Acceleration Value
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—
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**Restricted Stock Acceleration Value
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130,625
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***PSU Acceleration Value
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—
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Pamela Bilash
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Cash Severance
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150,000
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Medical and Dental Benefits
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13,436
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*Option Acceleration Value
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—
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**Restricted Stock Acceleration Value
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103,313
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***PSU Acceleration Value
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—
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Brian Campbell
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Cash Severance
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436,173
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Medical and Dental Benefits
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14,511
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*Option Acceleration Value
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—
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**Restricted Stock Acceleration Value
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77,188
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***PSU Acceleration Value
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|
—
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*
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Option acceleration values reflect the cash-out value of the non-vested options equal to their spread (fair value of the underlying stock as of
December 31, 2017
($1.90) less the exercise price as determined under the applicable equity plan) at the assumed payment date, which is
December 31, 2017
.
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**
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Restricted stock acceleration values reflect the value of the non-vested shares equal to the fair value of the underlying stock as of
December 31, 2017
.
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***
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As noted above under “Equity Award Provisions”, in the event of a change of control (and without regard to whether there is a termination of employment), our NEOs would vest in a prorated portion of their earned CIC PSUs, which, based on the closing price of the Company’s stock on
December 31, 2017
, is worth $0 for Messrs. Durney, Grégoire, Bennett, and Campbell and Ms. Bilash.
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(1)
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All amounts for Mr. Bennett have been converted from British Pounds to U.S. dollars at an exchange rate of
US$1.29
for each £1.
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Board Compensation
Under the Company’s Corporate Governance Guidelines, non-employee director compensation is determined by the Compensation Committee in accordance with the policies and principles set forth in its charter. Directors who are also employees of the Company receive no additional compensation for service as a director.
Effective July 2015, the Company pays its independent directors an annual fee of $35,000 for service on the Board. The Chairman of the Board, who is also Chairman of the Nominating and Corporate Governance Committee, is paid an additional $25,000 per year. The Chairperson of the Audit Committee is paid an additional $15,000 per year, while a member of the Audit
Committee is paid an additional $7,500 per year. The chairman of the Compensation Committee is paid an additional $10,000 per year, while a member of the Compensation Committee is paid an additional $5,000 per year. A member of the Nominating and Corporate Governance Committee is paid an additional $2,500 per year.
Restricted stock grants of
28,500
shares each were issued to Messrs. Melland (a former director), Barter, Schipper, Friedlich and Goldfield and Mses. Sheikholeslami, Carpenter, and Deason in April
2017
for their service on the Board. The restriction is lifted one year after issuance of the stock if they are still serving on the Board. We estimated the fair value of the award on the grant date using the value of the Company’s stock on the date of the grant.
The following table provides information concerning the compensation paid by us to each of our non-employee directors for fiscal
2017
. Mr. Durney did not receive additional compensation for his services as a director.
Director Compensation Table for Fiscal
2017
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Name
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Fees Earned
or Paid in
Cash ($)
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Stock
Awards
($)(1)
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Total
($)
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John W. Barter
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|
$
|
67,500
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|
|
$
|
109,725
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|
|
$
|
177,225
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|
Jim Friedlich
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|
40,000
|
|
|
109,725
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|
|
149,725
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|
Golnar Sheikholeslami
|
|
47,500
|
|
|
109,725
|
|
|
157,225
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|
Brian (Skip) Schipper
|
|
45,000
|
|
|
109,725
|
|
|
154,725
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|
Carol Carpenter
|
|
37,500
|
|
|
109,725
|
|
|
147,225
|
|
Burton M. Goldfield
|
|
42,500
|
|
|
109,725
|
|
|
152,225
|
|
Jennifer Deason
|
|
52,500
|
|
|
109,725
|
|
|
162,225
|
|
Michael P. Durney(2)
|
|
—
|
|
|
—
|
|
|
—
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|
Scot W. Melland(3)
|
|
16,042
|
|
|
109,725
|
|
|
125,767
|
|
David S. Gordon(4)
|
|
12,500
|
|
|
—
|
|
|
12,500
|
|
|
|
(1)
|
Represents the aggregate grant date fair value of restricted stock granted during the year in accordance with the FASB ASC Topic 718, Stock Compensation. See Note 13 to our consolidated financial statements and “
Management’s Discussion and Analysis of Financial Condition and Results of Operations—Critical Accounting Policies—Stock and Stock-Based Compensation
” in our Annual Report on Form 10-K for the assumption made in determining these values. On
December 31, 2017
, each of Messrs. Melland, Barter, Friedlich, Schipper and Goldfield and Mses. Sheikholeslami, Carpenter, and Deason had
28,500
shares of restricted stock outstanding. No other non-employee director had any shares of restricted stock outstanding and no other non-employee director had any outstanding stock options.
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(2)
|
Mr. Durney is also an executive officer of the Company. He did not receive additional compensation for his services as a Board member.
|
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(3)
|
Mr. Melland served on the board through June 15, 2017.
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(4)
|
Mr. Gordon served on the board through April 27, 2017.
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OTHER PROCEDURAL MATTERS
Electronic Delivery of Proxy Materials and Annual Report
This proxy statement and the Company’s Annual Report on Form 10-K are available on the Investors section of the Company’s website at www.dhigroupinc.com/investors. You can save the Company the cost of producing and mailing documents to you, reduce the amount of mail you receive and help preserve environmental resources by consenting to access these documents over the Internet. If you consent, you will receive notice next year when these documents are available with instructions on how to view them and submit voting instructions. If you are a stockholder of record, you may sign up for this service by utilizing the contact information on the accompanying proxy card. If you hold your shares through a bank, broker or other holder of record, contact the record holder for information regarding electronic access of materials. Your consent to electronic access will remain in effect until you revoke it. If you choose electronic access, you may incur costs, such as telephone and Internet access charges, for which you will be responsible.
Reduce Duplicate Mailings—Householding
In accordance with notices to many stockholders who hold their shares through a bank, broker or other holder of record (a “street name stockholder”) and share a single address, only one annual report and proxy statement is being delivered to that address unless contrary instructions from any stockholder at that address were received. This practice, known as “householding,” is intended to reduce the Company’s printing and postage costs. However, any such street name stockholder residing at the same address who wishes to receive a separate copy of this proxy statement or accompanying annual report may request a copy by contacting the bank, broker or other holder of record or the Company at: DHI Group, Inc., 1040 Avenue of the Americas, 8th Floor, New York, New York 10018, Attention: Investor Relations, or by calling Investor Relations at (212) 448-4181. Stockholders of record sharing an address who receive multiple copies of proxy materials and wish to receive a single copy of such materials in the future should submit their request to us in the same manner.
Proxy Solicitation Costs
The proxies being solicited under this proxy statement are being solicited by the Board of Directors of the Company. All expenses of this solicitation will be borne by the Company.
Directors, officers and other employees of the Company may, but without compensation other than their regular compensation and reimbursement of reasonable out-of-pocket expenses, solicit proxies by further mailing or personal conversations, or by telephone, telex, facsimile or electronic means. We will, upon request, reimburse brokers, fiduciaries, custodians and other nominees for their reasonable expenses in forwarding solicitation material to the beneficial owners of our Common Stock held in their names.
Stockholder Communications
Stockholders and interested parties may contact any of the Company’s directors, including the Chairman, the non-management directors as a group, the chairs of any committee of the Board of Directors or any committee of the Board of Directors by writing them as follows:
[Name(s)/Title(s)]
c/o Corporate Secretary
DHI Group, Inc.
1040 Avenue of the Americas, 8th Floor
New York, NY 10018
Concerns relating to accounting, internal controls or auditing matters should be communicated to the Company through the Corporate Secretary and will be handled in accordance with procedures established by the Audit Committee with respect to such matters.
Stockholder Proposals for Inclusion in
2019
Proxy Statement
Pursuant to Rule 14a-8 under the Exchange Act, stockholders may present proper proposals for inclusion in the Company’s proxy statement and for consideration at the next annual meeting of its stockholders by submitting their proposals to the Company’s Corporate Secretary at its principal executive office in a timely manner. In order to be included in the Company’s proxy statement for the
2019
Annual Meeting, stockholder proposals must be received by the Company in accordance with the timing and other requirements of Rule 14a-8. Therefore, in order to be included in the Company’s proxy statement for the
2019
Annual Meeting, stockholder proposals must be received at our principal executive offices no later than December 13, 2018.