UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
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DHI Group, Inc. |
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(Name of Person(s) Filing Proxy Statement, if other than the Registrant) |
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March 23, 2017
Dear Fellow Stockholder,
I am pleased to invite you to our 2017 Annual Meeting of Stockholders (the “Annual Meeting”), which will be held on Friday, April 28, 2017, at 9:00 a.m., local time, at the Marriott Residence Inn Times Square, 1033 Avenue of the Americas, New York, New York 10018.
At the meeting, we will be electing one class of directors, considering the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017, considering the approval, on an advisory basis, of the compensation of our named executive officers, considering the approval of an amendment to the Dice Holdings, Inc. 2012 Omnibus Equity Award Plan, which we refer to as the “2012 Equity Plan,” and reapproval of the performance goals under the 2012 Equity Plan, considering the approval, on an advisory basis, of the frequency of the advisory vote on the compensation of our named executive officers, and transacting such other business that may properly come before the Annual Meeting. The Board of Directors recommends a vote FOR (i) the election of our director nominees, (ii) the ratification of the selection of Deloitte & Touche LLP as our independent registered public accounting firm, (iii) the approval, on an advisory basis, of the compensation of our named executive officers, (iv) the approval of an amendment to the 2012 Equity Plan and reapproval of the performance goals under the 2012 Equity Plan, and (v) the approval, on an advisory basis, of the option of “every year” for holding a future advisory vote on the compensation of our named executive officers.
You may vote your shares using the Internet or the telephone by following the instructions on the enclosed proxy card. Of course, you may also vote by returning the enclosed proxy card.
Only DHI Group, Inc. stockholders may attend the Annual Meeting. If you wish to attend the meeting in person, you will need to request an admission ticket in advance. You can request a ticket by following the instructions set forth in the proxy statement.
Thank you very much for your support of DHI Group, Inc.
Sincerely,
Michael P. Durney
President and Chief Executive Officer
DHI GROUP, INC.
1040 Avenue of the Americas, 8th Floor
New York, New York 10018
March 23, 2017
NOTICE OF ANNUAL MEETING
DHI Group, Inc., a Delaware corporation (the “Company”), will hold its 2017 Annual Meeting of Stockholders (the “Annual Meeting”) at the Marriott Residence Inn Times Square, 1033 Avenue of the Americas, New York, New York 10018, on Friday, April 28, 2017, at 9:00 a.m., local time, to:
1. | Elect two Class I directors, for a term of three years, or until their successors are duly elected and qualified; |
2. | Ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017; |
3. | Hold an advisory vote on the compensation of our named executive officers as described in the proxy statement; |
4. | Approve an amendment to the 2012 Equity Plan to increase the number of shares of Common Stock available for issuance under the plan, impose annual limits on the value of awards that may be issued to non-employee directors under the 2012 Equity Plan and approve the material terms of the 2012 Equity Plan in accordance with Section 162(m) of the Internal Revenue Code of 1986, as amended; |
5. | Hold an advisory vote on the frequency of holding a future advisory vote on the compensation of our named executive officers; and |
6. | Transact any other business that may properly come before the Annual Meeting and any adjournments or postponements thereof. |
Stockholders of record of DHI Group, Inc. (NYSE: DHX) as of the close of business on March 20, 2017, are entitled to vote at the Annual Meeting and any adjournments or postponements thereof. A list of these stockholders will be available at the offices of the Company in New York, New York.
YOUR VOTE IS IMPORTANT
Whether or not you plan to attend the Annual Meeting in person, you are strongly encouraged to sign and date the enclosed proxy card and return it promptly, or submit your proxy by telephone or the Internet. Any stockholder of record who is present at the Annual Meeting may vote in person instead of by proxy, thereby revoking any previous proxy.
Brian P. Campbell
Vice President, Business and Legal Affairs,
General Counsel and Corporate Secretary
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Important Notice Regarding the Availability of
Proxy Materials for the Annual Meeting of Stockholders
to be Held on April 28, 2017
The proxy statement and Annual Report on Form 10-K are available at www.dhigroupinc.com/investors. The means to vote is available by Internet at www.investorvote.com/dhx or by calling 1-800-652-VOTE (8683).
Your Vote is Important
Please vote as promptly as possible
by using the Internet or telephone or
by signing, dating and returning the enclosed proxy card.
If you plan to attend the meeting, you must request an admission ticket in advance of the meeting. Tickets will be issued to registered and beneficial owners and to one guest accompanying each registered or beneficial owner.
Please note that if you hold your shares in “street name” (through a broker or other nominee), you will need to send a written request for a ticket, along with proof of share ownership, such as a copy of the portion of your voting instruction form showing your name and address, a bank or brokerage firm account statement or a letter from the broker, trustee, bank or nominee holding your shares, confirming ownership.
Requests for admission should be addressed to the Corporate Secretary, DHI Group, Inc., 1040 Avenue of the Americas, 8th Floor, New York, New York 10018 or by calling (212) 448-4181, and will be processed in the order in which they are received and must be requested no later than April 24, 2017. Please note that seating is limited and requests for tickets will be accepted on a first-come, first-served basis. On the day of the Annual Meeting, each stockholder will be required to present a valid picture identification such as a driver’s license or passport with his or her admission ticket. Seating will begin at 8:30 a.m. and the meeting will begin promptly at 9:00 a.m., local time. Cameras (including cell phones with photographic capabilities), recording devices and other electronic devices will not be permitted at the Annual Meeting.
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TABLE OF CONTENTS
Page | |
Proposal 1: Election of Directors | |
Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm | |
Proposal 3: Advisory Vote With Respect to the Compensation of our Named Executive Officers | |
Proposal 4: Approval of an Amendment to the 2012 Equity Plan and Reapproval of the Performance Goals Under the 2012 Equity Plan | |
Proposal 5: Advisory Vote on the Frequency of Holding an Advisory Vote on the Compensation of our Named Executive Officers | |
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PROXY STATEMENT
FOR ANNUAL MEETING OF STOCKHOLDERS
To be Held on April 28, 2017
PROXY STATEMENT SUMMARY
This summary highlights information described in more detail elsewhere in this Proxy Statement. It does not contain all of the information that you should consider, and you should read the entire Proxy Statement carefully before voting. Page references are provided to help you find further information. For ease of reading, in these materials “DHI,” “we,” “us,” or the “Company” refers to DHI Group, Inc., “Board” refers to our Board of Directors, “CEO” refers to our Chief Executive Officer, and “NEOs” refers to our Named Executive Officers.
2017 Annual Meeting of Stockholders
Date: Friday, April 28, 2017
Time: 9:00 a.m., local time
Place: Marriott Residence Inn Times Square, 1033 Avenue of the Americas, New York, New York 10018
Eligibility to Vote
You may vote if you were a stockholder of record at the close of business on March 20, 2017.
How to Cast Your Vote
If you are eligible to vote, you can vote by:
Internet: | www.investorvote.com/dhx |
Telephone: | 1-800-652-VOTE (8683) (within USA, US territories and Canada on a touch tone phone) |
The deadline for voting via the Internet or telephone is 11:59 P.M., Eastern Daylight Time, on April 27, 2017.
Mail: | If you received written material, complete, sign and return your Annual Meeting Proxy Card by April 27, 2017. |
In Person: | You may vote your shares at the Annual Meeting. If your shares are held in the name of a broker, nominee, you will need to send a written request for a ticket, along with proof of share ownership, such as a copy of the portion of your voting instruction form showing your name and address, a bank or brokerage firm account statement or a letter from the broker, trustee, bank or nominee holding your shares, confirming ownership. |
If you have any questions or require any assistance with voting your shares, please contact our proxy solicitor, Innisfree M&A Incorporated (“Innisfree”), at:
Innisfree M&A Incorporated
501 Madison Avenue
New York, NY 10022
Stockholders call toll-free: (888) 750-5834
Banks and brokers call collect: (212) 750-5833
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Items for Vote (page 16)
Board Vote Recommendation | Page Reference (for further detail) | |
1. Election of Directors | FOR EACH NOMINEE | 16 |
2. Ratification of Selection of Independent Registered Public Accounting Firm | FOR | 16 |
3. Advisory Vote with Respect to the Compensation of our Named Executive Officers | FOR | 17 |
4. Approval of an Amendment to the 2012 Equity Plan and Reapproval of the Performance Goals Under the 2012 Equity Plan | FOR | 17 |
5. Advisory Vote on the Frequency of Holding an Advisory Vote on the Compensation of our Named Executive Officers | EVERY YEAR | 25 |
Board Nominees (page 7)
Committee Membership | |||||||
Name of Nominee | Age | Director Since | Positions with DHI | Independent | AC | CC | N&CG |
Carol Carpenter | 49 | 2014 | Director | Yes | ü | ||
Jennifer Deason | 41 | 2016 | Director | Yes | ü | ||
AC - Audit Committee
CC - Compensation Committee
N&CG - Nominating and Corporate Governance Committee
Alignment with Stockholders:
We have implemented compensation practices that we believe align the interests of our executive officers with our stockholders by tying a significant portion of their compensation to the Company’s financial performance:
Pay for Performance and Variable Compensation |
We utilize an independent compensation consultant to help assess our compensation arrangements. Since 2015, the Compensation Committee has engaged Compensia, an independent compensation consultant with significant experience in our sector. |
We generally do not provide perquisites to our NEOs beyond those provided to all employees. |
For 2016, approximately 79% of total compensation for our CEO and 70% of total compensation for our NEOs (64% for our NEOs excluding our CEO) was variable and dependent on performance. |
In 2015, we designed and adopted a new long-term equity incentive program which features a performance-based component that we believe improves the alignment of our executive compensation with Company performance. |
In 2014, we adopted a policy under which tax gross-up provisions were no longer 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. |
In 2015, we eliminated the 30% automatic funding floor in our Senior Bonus Plan and amended the plan to incorporate business unit and/or Company performance for all executives. |
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We have implemented corporate governance practices that further align the interests of our executive officers with our stockholders and mitigate risk:
Corporate Governance |
Eight of our ten directors are independent. The Board meets regularly in executive session without the CEO present. |
The roles of the CEO and Chairman of the Board are separate. |
Only independent directors serve as Board committee members. |
We hold an annual “Say-on-Pay” advisory vote to solicit the views of our stockholders regarding NEO compensation. |
In 2015, we adopted equity ownership guidelines for our directors and executive officers. |
Under our Securities Trading Policy, our directors, officers and employees and their related parties are prohibited from purchasing Company stock on margin, entering into short sales and buying or selling puts, calls, options or other derivatives in respect of securities of the Company. |
In 2015, we designed and adopted a “claw-back” policy pursuant to which the Company may, under certain circumstances as specified in the policy, seek reimbursement of annual, performance-based cash and equity compensation made to covered officers. |
Since the beginning of 2014, we have added five Board members with relevant industry experience. |
In 2016, the Company adopted majority voting for uncontested director elections. |
For additional information on our Executive Compensation, please see “Compensation Discussion and Analysis” starting on page 26.
2016 Executive Compensation— Pay-For-Performance (page 26)
Consistent with our pay-for-performance philosophy, the primary elements of compensation for our executives in 2016 included: base salary, annual performance-based cash bonus, and long-term equity incentives consisting of time-based restricted stock and performance-based restricted stock units (PSUs). Of these elements, base salary and benefits were fixed, with the remaining compensation elements dependent on both individual and/or corporate performance. 
Note: 2016 excludes separation payment of $337,500 made to Mr. Roberts, former CFO.
After review of the applicable performance metrics, our Compensation Committee determined that our NEO participants in our Senior Bonus Plan were entitled to receive between 32% and 45% of their respective corporate or business unit target bonus pools, based on revenue and Adjusted EBITDA performance. The Compensation Committee also determined that our
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NEOs were entitled to receive time-based restricted stock and PSUs. See Compensation Discussion & Analysis—Elements of Executive Compensation and Grants of Plan-Based Awards for Fiscal Year 2016.
Compensation Policies
In connection with our ongoing review of corporate governance and compensation practices and policies, and taking into consideration best practices, our desire to mitigate risk for our stockholders and feedback received from our stockholders, as described more fully below under Compensation Discussion & Analysis—Compensation and Corporate Governance Philosophy, in 2015 we implemented four changes to our corporate governance practices:
Equity Incentive Compensation. We designed and adopted a new long-term equity incentive program under our 2012 Equity Plan that provides a combination of: (1) one-half performance-based restricted stock units (“PSUs”); and (2) one-half restricted stock, the combination of which constitutes the majority of total compensation for most executives.
Equity Ownership Guidelines. To further align the interests of our executives and directors with those of our stockholders, our Board has adopted equity ownership guidelines for our executive officers and directors. These new guidelines require these executive 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:
Position | Multiple of Base Salary (as of December 31 of immediately preceding calendar year) or Retainer |
Chief Executive Officer | 3.0x base salary |
Other Executive Officers | 1.0x base salary |
Members of our Board | 3.0x retainer |
Elimination of the 30% Floor on Our Senior Bonus Plan. Since 2015, we have 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 aligns funding with our pay-for-performance philosophy.
“Claw-back” Policy. Our Board also has adopted a “claw-back” policy. Under, and subject to, our “claw-back” policy, the Company may generally seek reimbursement of annual, performance-based cash bonuses made to covered executives, including our NEOs, which were based on achieving certain financial results, if the covered officer 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 those restated financial results. More specifically, compensation subject to the “claw-back” policy is any cash incentive payments made within the three-year period preceding the accounting restatement.
Other Corporate Governance Developments
Adoption of Majority Voting in Uncontested Director Elections. Consistent with our commitment to strong corporate governance, and after consideration of market practice and input from our stockholders, in 2016, our Board amended and restated our by-laws, to provide that, in the case of uncontested director elections, a director must be elected by a majority of the votes cast with respect to the election of such director. For purposes of this standard, a “majority of the votes cast” means that the number of shares voted “FOR” a director must exceed the number of shares voted “AGAINST” that director and abstentions and broker non-votes are not counted as “votes cast.” In the case of contested elections (where, if as of a date that is 14 days in advance of the date the Company files its definitive proxy statement (regardless of whether or not thereafter revised or supplemented) with the Securities and Exchange Commission, the number of nominees exceeds the number of directors to be elected), the required voting standard to be elected as a director continues to be by plurality vote.
If an incumbent director fails to receive the required majority vote for reelection, the director shall offer to tender his or her resignation to the Board. The Board may consider any factors they deem relevant (including, but not limited to, recommendations the Board may request from a designated committee) in deciding whether to accept or reject a director’s resignation or whether other action should be taken. Any director tendering such resignation will not be permitted to participate in the deliberations regarding whether to accept or reject such resignation. Within 90 days from the date the election results are certified, the Company will be required to publicly disclose the Board’s decision and the rationale behind such decision.
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Agreement with Barington Capital Group. On February 25, 2016, we entered into an agreement with an investor group led by Barington Capital Group, L.P. (“Barington”). Under the terms of the agreement and subject to the conditions set forth therein, Barington withdrew the two nominees that it had proposed for election to the Board at the Company’s 2016 Annual Meeting and agreed to vote its shares in support of all four of our director nominees that had been up for reelection. Further, subject to the terms of the agreement, we agreed to add a new Board member mutually acceptable to the Company and Barington to fill the vacancy created by the resignation of long-time Board member Mr. Peter Ezersky. On July 7, 2016, Jennifer Deason was appointed to the Board as part of the agreement.
INFORMATION CONCERNING SOLICITATION AND VOTING
This proxy statement is furnished to the stockholders of record of DHI Group, Inc., a Delaware corporation, in connection with the solicitation by the Company’s Board of Directors of proxies for the 2017 Annual Meeting of Stockholders of the Company (the “Annual Meeting”) to be held at the Marriott Residence Inn Times Square, 1033 Avenue of the Americas, New York, New York 10018 on Friday April 28, 2017, at 9:00 a.m., local time, and at any adjournments or postponements thereof, for the purpose of considering and acting upon the matters set forth in the accompanying Notice of Annual Meeting of Stockholders. In this proxy statement, we refer to DHI Group, Inc. as the “Company,” “we” or “us.”
This proxy statement and accompanying proxy and voting instructions are first being mailed on or about March 23, 2017 to holders of the Company’s Common Stock, par value $0.01 (the “Common Stock”), entitled to vote at the Annual Meeting. The presence in person or by proxy of the holders of a majority of the total number of shares of Common Stock outstanding and entitled to vote at the Annual Meeting shall constitute a quorum for the transaction of any business at the Annual Meeting. Each owner of record of the Common Stock on the record date is entitled to one vote for each share. At the close of business on March 20, 2017, the record date for determining the stockholders entitled to notice of, and to vote at, the Annual Meeting, there were outstanding and entitled to vote 50,403,101 shares of the Common Stock, including 2,556,125 shares of unvested restricted Common Stock. The shares of Common Stock are publicly traded on the New York Stock Exchange (the “NYSE”) under the symbol “DHX.”
At the Annual Meeting, director nominees up for election in Proposal 1 will each be elected by a majority of the votes cast in person or by proxy. The ratification of the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm (Proposal 2) and the advisory approval of executive compensation (Proposal 3) will require the affirmative vote of a majority in voting power of shares of Common Stock present in person or by proxy and entitled to vote at the Annual Meeting. Under the NYSE rules, the approval of an amendment to the 2012 Equity Plan and reapproval of the material terms of the performance goals under the 2012 Equity Plan (Proposal 4) will require the affirmative vote of a majority of votes cast at the Annual Meeting. The option available under the advisory vote on the frequency of the advisory vote on executive compensation of every one year, two years or three years (Proposal 5) that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder vote to approve, on an advisory basis, the compensation of the named executive officers.
Broker non-votes and abstentions are included in determining whether a quorum is present. Broker non-votes and abstentions are not deemed to be “votes cast” with respect to the election of directors. Broker non-votes and abstentions will have no legal effect on Proposals 1, 4 and 5, and an abstention, but not a broker non-vote, will have the same legal effect as a vote “AGAINST” Proposals 2 and 3.
A broker non-vote occurs when a nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power on that item and has not received instructions from the beneficial owner. Under NYSE rules, a proposal to approve the appointment of our independent registered public accounting firm is considered a discretionary item, which means that brokerage firms may vote in their discretion on this matter on behalf of clients who have not furnished voting instructions.
All shares entitled to vote and represented by properly executed proxies received prior to the Annual Meeting, and not revoked, will be voted as instructed on those proxies. If no instructions are indicated, the shares will be voted as recommended by the Board. If any other matters are properly presented at the Annual Meeting for consideration, the persons named in the enclosed form of proxy will have discretion to vote on those matters in accordance with their own judgment to the same extent as the person signing the proxy would be entitled to vote.
Stockholders will have the option to submit their proxies or voting instructions electronically through the Internet, by telephone or by using a traditional proxy card. Stockholders should check their proxy card or voting instructions forwarded by their broker, bank or other holder of record to see which options are available. The deadline for voting via the Internet or by telephone is 11:59 P.M., Eastern Daylight Time, on April 27, 2017. Stockholders submitting proxies or voting instructions via
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the Internet should understand that there may be costs associated with electronic access, such as usage charges from Internet access providers and telephone companies that would be borne by the stockholder.
Any stockholder of record may revoke a proxy at any time before it is voted by filing with the Corporate Secretary, at or before the taking of the vote at the Annual Meeting, a written notice of revocation or duly executed proxy, in either case dated later than the prior proxy relating to the same shares, or by attending the Annual Meeting and voting in person (although attendance at the Annual Meeting will not by itself revoke a proxy).
Any written notice of revocation or subsequent proxy should be delivered to DHI Group, Inc., 1040 Avenue of the Americas, 8th Floor, New York, NY 10018 Attention: Corporate Secretary, or hand delivered to the Corporate Secretary, before the taking of the vote at the Annual Meeting. To revoke a proxy previously submitted via the Internet or by telephone, a stockholder may simply submit a new proxy (including by means of the Internet or by telephone) at a later date before the taking of the vote at the Annual Meeting, in which case, the later submitted proxy will be recorded and the earlier proxy will be revoked.
We have retained Innisfree to perform proxy solicitation services for us, involving conducting a bank/broker search, distributing proxy solicitation materials to stockholders, providing information to stockholders from the materials, and soliciting proxies by mail, courier, telephone, facsimile and e-mail. In connection with its retention, Innisfree has agreed to provide consulting and analytic services upon request. We will pay a fee not to exceed $15,000 to Innisfree, plus out-of-pocket expenses for these services.
If you have any questions or require any assistance with voting your shares, please contact Innisfree at:
Innisfree M&A Incorporated
501 Madison Avenue
New York, NY 10022
Stockholders call toll-free: (888) 750-5834
Banks and brokers call collect: (212) 750-5833
DIRECTORS AND CORPORATE GOVERNANCE
Board Structure
Composition of our Board of Directors
Prior to September 2013, our Board consisted of seven directors, and it is currently comprised of ten directors. Mr. Durney joined the Board of Directors in September 2013, upon his appointment to President and Chief Executive Officer. Since the beginning of 2014, we have added the following directors:
Name | Title | Company | Director Since |
Brian Schipper | Chief People Officer | Yext | February 2014 |
Carol Carpenter | Vice President of Product Marketing | Google Cloud | May 2014 |
Burton M. Goldfield | President and Chief Executive Officer | TriNet | December 2014 |
Jim Friedlich | Executive Director and CEO | The Lenfest Institute for Journalism | January 2015 |
Jennifer Deason | Executive Vice President, Global Strategy and Corporate Development | Sotheby’s | July 2016 |
On January 31, 2016, Peter Ezersky, our Board Chairman, resigned from the Board. On February 1, 2016, Mr. Barter became Chairman of the Board.
The Board met ten times during fiscal 2016. Each director attended at least 75% of all of the meetings of the Board and committees on which he or she served. Under the Company’s Corporate Governance Guidelines, each director is expected to dedicate sufficient time, energy and attention to ensure the diligent performance of his or her duties, including by attending annual and special meetings of the stockholders of the Company and meetings of the Board and committees of which he or she is a member. Seven of the Company’s directors attended the Company’s 2016 Annual Meeting of Stockholders.
Our by-laws provide that our Board will consist of no less than five and no more than 20 persons. The exact number of members on our Board of Directors will be determined from time to time by resolution of a majority of our full Board.
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Our Board is divided into three classes, with each class serving a three-year term and one class being elected at each year’s annual meeting of stockholders. Mr. Gordon and Mses. Carpenter and Deason are currently serving as Class I directors (with a term expiring at the 2017 Annual Meeting). Messrs. Durney and Friedlich and Ms. Sheikholeslami are currently serving as Class II directors (with a term expiring at the 2018 Annual Meeting). Messrs. Barter, Melland, Schipper and Goldfield are currently serving as Class III directors (with a term expiring at the 2019 Annual Meeting).
Set forth below is information relating to the Company’s directors, including the Class I Directors who are nominated for election at the Annual Meeting.
Committee Membership | |||||||
Name | Age | Director Since | Position | Standing for Election | AC | CC | N&CG |
Michael P. Durney | 54 | 2013 | Director, President and Chief Executive Officer | ||||
John W. Barter(1)(2)(3) | 70 | 2007 | Director, Chairman | X | |||
Scot W. Melland | 54 | 2001 | Director | ||||
David S. Gordon(4) | 75 | 2006 | Director | X | |||
Golnar Sheikholeslami | 49 | 2012 | Director | X | X | ||
Brian Schipper(5) | 56 | 2014 | Director | X | |||
Carol Carpenter | 49 | 2014 | Director | X | X | ||
Burton M. Goldfield | 61 | 2014 | Director | X | |||
Jim Friedlich | 60 | 2015 | Director | X | |||
Jennifer Deason(6) | 41 | 2016 | Director | X | X | ||
AC - Audit Committee
CC - Compensation Committee
N&CG - Nominating and Corporate Governance Committee
(1) | Class III Director who became Chairman effective February 1, 2016. Mr. Ezersky (the former Chairman) resigned from the Board effective January 31, 2016. |
(2) | Chairman of the Nominating and Corporate Governance Committee effective February 1, 2016. Mr. Ezersky (the former Chairman) resigned from the Board effective January 31, 2016. |
(3) | Chairman of the Audit Committee until October 26, 2016 and member of the Audit Committee until December 31, 2016. |
(4) | Mr. Gordon is a Class I Director who will not stand for election at the 2017 Annual Meeting. |
(5) | Chairman of the Compensation Committee. |
(6) | Chairperson of the Audit Committee effective October 27, 2016. Mr. Barter served as the Chairman of the Audit Committee until October 26, 2016. |
Michael P. Durney has been President and Chief Executive Officer, as well as a director of the Company, since September 2013. Mr. Durney joined our predecessor, Dice Inc., in May 2000 as the Company’s Chief Financial Officer and held that position, as well as other operating roles, until he became President and CEO. Previously, Mr. Durney had strategic and operational leadership responsibility for all of our industry-focused services, including eFinancialCareers, Health Callings and Rigzone, the latter he led since the acquisition in 2010. Prior to joining the Company, he held the position of Vice President and Controller of USA Networks, Inc. (now known as IAC/InterActiveCorp.) from 1998 to 2000. Mr. Durney’s previous experience includes being the Chief Financial Officer of Newport Media, Inc. from 1996 to 1998, Executive Vice President, Finance of Hallmark Entertainment, Inc. from 1994 to 1996, and Vice President, Controller of Univision Television Group, Inc. from 1989 to 1994. Mr. Durney started his finance career at the accounting firm of Arthur Young & Company in 1983 and is a licensed Certified Public Accountant in the state of New York. Mr. Durney holds a B.S. degree in accounting from the State University of New York in Oswego, where he is the Chair of the Advisory Council of the School of Business and Chair of the board of directors of the Oswego College Foundation. Mr. Durney was appointed to serve on the Board of Directors because his day to day leadership as our President and Chief Executive Officer provides him with intimate knowledge of the Company’s business, business strategy and its industry.
John W. Barter has been Chairman of the Board of Directors and Chairman of the Nominating and Corporate Governance Committee since February 1, 2016, having served as a director since April 2007. From 1988 to 1994, he was Senior Vice President and Chief Financial Officer of AlliedSignal, Inc., now known as Honeywell International, Inc., an advanced technology and manufacturing company. From October 1994 until his retirement in December 1997, Mr. Barter was Executive Vice President of AlliedSignal, Inc. and President of AlliedSignal Automotive. After retiring from AlliedSignal, Inc.,
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Mr. Barter served briefly as Chief Financial Officer of Kestrel Solutions, Inc., a privately-owned early stage company established to develop and bring to market a new product in the telecommunications industry, from January 2000 to May 2001. Mr. Barter also serves on the boards of directors of Quality Tech, L.P. and Engility Holdings, Inc. Mr. Barter was appointed to serve as our Chairman based on the leadership he has demonstrated on our Board and was appointed to serve on our Board based on his broad and extensive experience serving in management roles at other companies and his service on the board of directors of other public companies, both of which we believe enable him to provide effective oversight to our Board.
Scot W. Melland has been a director of DHI Group, Inc., since 2005. Mr. Melland currently serves as an Industry Advisor in the Technology/Media/Telecom Group of Warburg Pincus LLC, a global private equity firm. From April 2001 through September 2013, Mr. Melland was President and Chief Executive Officer and a Director of DHI Group, Inc. and its predecessor, Dice Inc. He also served as Chairman of the Board from July 2007 through September 2013. Prior to joining the Company, Mr. Melland was President and Chief Executive Officer of Vcommerce Corporation, an ecommerce software company (now Channel Intelligence/Google) from 1999 to 2001. From 1996 to 1999, he was Senior Vice President-Interactive Services for Cendant Corporation (now Affinion Group). From 1993 to 1996, Mr. Melland served as Vice President, Investments and Alliances for Ameritech (now AT&T). Mr. Melland began his career as a consultant, joining McKinsey & Company in 1985. He is a member of the board of directors of MultiView, Inc., a B2B digital marketing company, and is a Social Venture Partner in Connecticut. He holds a B.S. in Economics from the University of Pennsylvania and an M.B.A. from Harvard Business School. Mr. Melland’s extensive experience in online recruiting, digital marketing and software brings a unique and valuable perspective to the Board of Directors.
David S. Gordon has been a director since December 2006 and is Principal of Gordon Advisory, LLC, a strategy consultancy. He was the Chief Executive Officer and a director of the Milwaukee Art Museum from October 2002 until February 2008. Before that, he was the Secretary (Director) of the Royal Academy of Arts in London for six years. He also spent 12 years as the Chief Executive Officer of The Economist Newspaper Ltd. He was associated with eFinancialNews for 10 years, first as a consultant and then as non-executive chairman and oversaw the sale of eFinancialCareers to the Company in 2006. Mr. Gordon also serves on the board of directors of Profile Books Ltd., and is a trustee and Treasurer of the American Folk Art Museum and a trustee of the Wende Museum of the Cold War, and the Vice President of the Sierre Madre Playhouse. Mr. Gordon was appointed to serve on our Board based on his prior association with and intimate knowledge of eFinancialCareers and his experience as a chief executive officer.
Golnar Sheikholeslami has been a director since September 2012. Since May 2014, Ms. Sheikholeslami has served as the Chief Executive Officer and President of Chicago Public Media. Ms. Sheikholeslami was the Executive Vice President and Chief Product Officer of Everyday Health, Inc., a new media health company, from July 2010 through March 2013. Prior to joining Everyday Health, she worked for The Washington Post from 2002 to 2010 where Ms. Sheikholeslami held several positions of increasing authority culminating as Vice President and General Manager of digital operations. In that role, she was responsible for the overall strategic direction, product development, innovation, technology and day-to-day operations for the company’s digital properties. Previously, Ms. Sheikholeslami led Condé Nast’s Style.com as Senior Vice President and Managing Director from 2000 to 2002, after joining the company in 1997. Ms. Sheikholeslami holds an MBA from the Darden School of Business at the University of Virginia and a B.S. from Georgetown University. Ms. Sheikholeslami also serves on the board of directors of National Public Radio, Inc. Ms. Sheikholeslami’s significant experience in advertising supported businesses, online content businesses and leading digital businesses provides helpful and unique expertise to the Company.
Brian (Skip) Schipper has been a director since February 2014. Since May 2016, Mr. Schipper has served as the Chief People Officer for Yext, Inc. From January 2014 to March 2016, Mr. Schipper led Human Resources at Twitter. Prior to joining Twitter, Mr. Schipper was the Chief Human Resources Officer at Groupon from June 2011 to January 2014, where he oversaw the HR and administrative organization globally and was integral in building the infrastructure to support its global expansion efforts. Mr. Schipper was the Chief Human Resources Officer at Cisco Systems from October 2006 to June 2011. He has held executive level human resources and administrative roles at Microsoft, DoubleClick, Pepsico, Compaq and Harris Corporation. Mr. Schipper holds an MBA from Michigan State University and a B.A. from Hope College. Mr. Schipper’s extensive industry experience and his human resources expertise is a great combination to help our Board guide our strategy.
Carol Carpenter has been a director since May 2014. Ms. Carpenter serves as the Vice President of Product Marketing for Google Cloud, leading the strategic and operational go-to-market for its business-oriented product. From 2015 to 2016, Ms. Carpenter served as the Chief Executive Officer of ElasticBox Inc., which develops and offers solutions that enable organizations to deploy and manage agile applications for any cloud infrastructure. From 2013 to 2014, she led all marketing initiatives at ClearSlide, a high-growth business-to-business sales platform, and from 2006 to 2012, Ms. Carpenter was General Manager of the Consumer and Small Business Units for Trend Micro, a global security company. A technology industry veteran, Ms. Carpenter has held previous marketing leadership roles at both startups and public companies, including Keynote Systems, Enviz, Tumbleweed and Apple. Ms. Carpenter earned a bachelor’s degree at Stanford University and her Masters
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Degree from the Harvard Business School. Ms. Carpenter serves as a mentor for the HBS Women in Technology group, as a board member of Monte Jade, and also advises a few startups in both the consumer and business-to-business segments. Ms. Carpenter’s significant marketing experience in technology businesses provides helpful and unique expertise to our Board.
Burton M. Goldfield has been a director since December 2014. Since March 2008, Mr. Goldfield has served as President and Chief Executive Officer at TriNet (NYSE: TNET), which provides employers with HR solutions, including bundled HR products, additional cloud products and strategic services. Mr. Goldfield has extensive experience in sales, operational, and technology leadership positions and is known for driving product innovation and business growth. Prior to TriNet, Mr. Goldfield was the Chief Executive Officer of Ketera Technologies. Previously, he held executive level roles at Hyperion Solutions Corporation and IBM Corporation’s Rational Software division. Mr. Goldfield holds a Bachelor of Science degree from Syracuse University and an MBA from Villanova University. Mr. Goldfield’s significant experience in operational, sales, and technology leadership positions provides helpful perspective to our Board.
Jim Friedlich has been a director since January 2015. Since September 2016, Mr. Friedlich has served as the Chief Executive Officer and Executive Director of The Lenfest Institute of Journalism. Mr. Friedlich co-founded Empirical Media Advisors in 2011 and served as its Chief Executive Officer since 2014. In 2001, he co-founded the private equity firm of ZelnickMedia and was a general partner there until 2011, specializing in equity-backed turnarounds and restructuring media companies. Earlier in his career, Mr. Friedlich served as VP of Business Development - Digital Publishing and Vice President of International Sales, Marketing and Business Development at Dow Jones & Company/The Wall Street Journal. Mr. Friedlich attended Dartmouth College, earned an MBA from the Stanford University School of Business and a B.A. from Wesleyan University. Mr. Friedlich brings insight to our Board based on his experience in the private equity field and his focus on media.
Jennifer Deason has been a director since July 2016. Ms. Deason serves as Executive Vice President, Head of Corporate Development and Strategy with Sotheby’s. She was previously an Executive Vice President at Bain Capital, where she partnered with CEOs and other senior level executives to improve company performance and drive transformations through strategic initiatives and performance management. While at Bain, Ms. Deason served in several interim operating roles such as President, Chief Marketing Officer and Chief Financial Officer and was a board member of several portfolio companies. She served as Interim Chief Financial Officer at the Weather Channel, where she worked to reposition the organization from a more traditional TV media company towards a data-focused, mobile-first advertising platform, prior to the sale of the digital and B2B businesses to IBM. Ms. Deason holds an MBA from Stanford University and a B.A. from Yale University, and is closely involved in both schools. She is also on the Board of Trustees at the Massachusetts Museum of Contemporary Art. Ms. Deason’s significant experience in financial and other operating roles, as well as her experience in the private equity field, provide helpful perspective to our Board. The Board has also considered Ms. Deason’s prior financial experience, including her work as an interim Chief Financial Officer, which was instrumental in her being selected to serve as Chairperson of the Audit Committee.
Director Independence
We have determined that Mses. Sheikholeslami, Carpenter and Deason and Messrs. Barter, Gordon, Schipper, Goldfield, and Friedlich are independent as such term is defined by the applicable rules and regulations of the NYSE for purposes of serving on our Board. Additionally, each of these directors meets the categorical standards for independence established by our Board, as set forth in our Corporate Governance Guidelines, which are posted on our website.
Board Leadership Structure
Mr. Durney became President and Chief Executive Officer and a director of the Company on September 30, 2013, and Mr. Barter became Chairman of the Board on February 1, 2016. The Board has determined that having an independent director serve as Chairman is in the best interest of the Company’s stockholders at this time. This structure ensures a greater role for the independent directors in the oversight of the Company and active participation of the independent directors in setting agendas and establishing Board priorities and procedures. Further, this structure permits the Chief Executive Officer to focus on strategic matters and the management of the Company’s day-to-day operations.
We have independent Board members who bring experience, oversight and expertise from outside the Company and our industry. The Board meets as necessary in executive sessions of the non-management directors. At any such executive sessions, the non-management directors take turns serving as the presiding director as provided in the Company’s Corporate Governance Guidelines.
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Corporate Governance
Required Certifications
The Company has filed with the Securities and Exchange Commission (the “Commission”), as exhibits to its Annual Report on Form 10-K, the certifications required by its Chief Executive Officer and Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002. The Company has also timely submitted to the NYSE the Section 303A Annual CEO Certification for 2016, and such certification was submitted without any qualifications.
Committees of the Board
Our Board has a standing Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee. The following is a brief description of these committees.
Audit Committee
The members of the Audit Committee are:
Jennifer Deason (Chairperson)
Golnar Sheikholeslami
Burton M. Goldfield
In addition to the current members of the Audit Committee listed above, Mr. Barter served on the Audit Committee during 2016, but stepped down from the committee effective December 31, 2016. The Audit Committee met seven times during fiscal 2016. Our Audit Committee assists the Board in monitoring the audit of our financial statements, our independent registered public accounting firm’s qualifications and independence, the performance of our audit function and independent registered public accounting firm, our oversight of Company risk, and our compliance with legal and regulatory requirements. The Audit Committee has direct responsibility for the appointment, compensation, retention (including termination) and oversight of our independent registered public accounting firm, and our independent registered public accounting firm reports directly to the Audit Committee. The Audit Committee also reviews and approves related-party transactions as required by the rules of the NYSE. The authority and responsibility of the Audit Committee is further set forth in its charter, which is available under the Investors section of our website and in print to any stockholder who requests a copy from the Corporate Secretary.
Ms. Deason qualifies as an “audit committee financial expert” under the rules of the Commission implementing Section 407 of the Sarbanes-Oxley Act of 2002. Mses. Deason and Sheikholeslami and Mr. Goldfield meet the independence and the experience requirements of the NYSE and the federal securities laws.
Audit Committee Report
The charter of the Audit Committee, which is available under the Investors section of our website, specifies that the purpose of the Audit Committee is to assist the Board in its oversight of:
• | the accounting and financial reporting processes of the Company, including the integrity of the financial statements and other financial information provided by the Company to its stockholders, the public, any stock exchange and others; |
• | the Company’s compliance with legal and regulatory requirements; |
• | the Company’s independent registered public accounting firm’s qualifications and independence; |
• | the audit of the Company’s financial statements; and |
• | the performance of the Company’s internal audit function and independent registered public accounting firm, and such other matters as shall be mandated under applicable laws, rules and regulations as well as listing standards of the NYSE. |
In carrying out these responsibilities, the Audit Committee, among other things:
• | monitors preparation of quarterly and annual financial reports by the Company’s management; |
• | supervises the relationship between the Company and its independent registered public accounting firm, including having direct responsibility for their appointment, compensation and retention; reviewing the scope of their audit services; approving audit and non-audit services; and confirming the independence of the independent registered public accounting firm; and |
• | oversees management’s implementation and maintenance of effective systems of internal and disclosure controls, including review of the Company’s policies relating to legal and regulatory compliance, ethics and conflicts of interest and review of the Company’s internal auditing program. |
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The Audit Committee schedules its meetings with a view to ensuring that it devotes appropriate attention to all of its tasks. The Audit Committee’s meetings include, whenever appropriate, executive sessions in which the Audit Committee meets separately with the Company’s independent registered public accounting firm, the Company’s internal auditors, the Company’s Chief Financial Officer and the Company’s General Counsel.
The Audit Committee periodically reviews the performance of the Company’s independent registered public accounting firm to determine if the current firm should be retained.
Management is responsible for the Company’s financial reporting process, including the Company’s internal control over financial reporting, and for the preparation of the Company’s consolidated financial statements in accordance with generally accepted accounting principles. Deloitte & Touche LLP, as the Company’s independent registered public accounting firm, is responsible for auditing those financial statements and expressing its opinion as to the fairness of the financial statement presentation in accordance with generally accepted accounting principles. The Audit Committee’s responsibility is to oversee and review this process. The Audit Committee is not, however, professionally engaged in the practice of accounting or auditing and does not provide any expert or other special assurance as to such financial statements concerning compliance with laws, regulations or generally accepted accounting principles or as to auditor independence. The Audit Committee relies, without independent verification, on the information provided to the Audit Committee and on the representations made by management and the independent registered public accounting firm.
As part of its oversight of the preparation of the Company’s financial statements, the Audit Committee reviews and discusses with both management and the Company’s independent registered public accounting firm all annual and quarterly financial statements prior to their issuance. During fiscal 2016, management advised the Audit Committee that each set of financial statements reviewed had been prepared in accordance with generally accepted accounting principles, and reviewed significant accounting and disclosure issues with the Audit Committee. These reviews included discussion with the independent registered public accounting firm of matters required to be discussed pursuant to Statement on Auditing Standards No. 114 (The Auditor’s Communication With Those Charged With Governance), (which supersedes Statement on Auditing Standards No. 61), including the quality of the Company’s accounting principles, the reasonableness of significant judgments and the clarity of disclosures in the financial statements. The Committee also discussed with Deloitte & Touche LLP matters relating to its independence, including a review of audit and non-audit fees and the written disclosures and letter from Deloitte & Touche LLP to the Audit Committee required by applicable requirements of the Public Company Accounting Oversight Board.
In addition, the Audit Committee reviewed key initiatives and programs aimed at maintaining the effectiveness of the Company’s internal and disclosure control structure. As part of this process, the Audit Committee continued to monitor the scope and adequacy of the Company’s internal auditing program, reviewing internal audit department staffing levels and steps taken to maintain the effectiveness of internal procedures and controls.
Taking all of these reviews and discussions into account, the undersigned Audit Committee members recommended to the Board that the Board approve the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2016, for filing with the Commission.
The members of the Audit Committee submitting this report include:
Jennifer Deason (Chairperson)
Golnar Sheikholeslami
Burton M. Goldfield
Nominating and Corporate Governance Committee
The members of the Nominating and Corporate Governance Committee are:
John W. Barter (Chairman)
David S. Gordon
Carol Carpenter
The Nominating and Corporate Governance Committee met five times in 2016. The Nominating and Corporate Governance Committee selects, or recommends that the Board select, candidates for election to our Board, develops and recommends to the Board corporate governance guidelines that are applicable to us and oversees director and management evaluations. The Nominating and Corporate Governance Committee is charged with setting the agenda for each Board meeting. The Nominating and Corporate Governance Committee also is responsible for working with the CEO to coordinate succession planning for key management positions at the Company, including the CEO position. The authority and responsibility of the Nominating and Corporate Governance Committee is further set forth in its charter, which is available under the Investors section of our website and in print to any stockholder who requests a copy from the Corporate Secretary.
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With respect to director nominees, the Nominating and Corporate Governance Committee, currently chaired by Mr. Barter, (i) identifies individuals qualified to become members of the Board (consistent with criteria approved by the Board), (ii) reviews the qualifications of any such person submitted to be considered as a member of the Board by any stockholder or otherwise, (iii) conducts background checks of individuals the Nominating and Corporate Governance Committee intends to recommend to the Board as director nominees, and (iv) selects, or recommends that the Board select, the director nominees for the next annual meeting of stockholders or to fill in vacancies on the Board. The Nominating and Corporate Governance Committee considers stockholder recommendations of qualified nominees when such recommendations are submitted in accordance with the procedures described in the Company’s by-laws. In identifying and reviewing qualifications of candidates for membership on the Board, the Nominating and Corporate Governance Committee evaluates all factors which it deems appropriate, including the requirements of the Company’s Corporate Governance Guidelines and the other criteria approved by the Board.
Pursuant to the Company’s Corporate Governance Guidelines, the Nominating and Corporate Governance Committee will seek members from diverse professional and personal backgrounds who combine a broad spectrum of experience and expertise with a reputation for integrity. The assessment of candidates for the Board includes an individual’s independence, as well as consideration of diversity, age, skills and experience in the context of the needs of the Board. The Nominating and Corporate Governance Committee assesses the effectiveness of its diversity policy set forth in the Corporate Governance Guidelines annually in connection with the nomination of directors for election at the annual meeting of stockholders.
In 2014, we amended our Corporate Governance Guidelines to provide that no person will be nominated by the Board to serve as a director after he or she has passed his or her 72nd birthday, unless the Nominating and Corporate Governance Committee has recommended to the Board, and the Board has voted, on an annual basis, to waive, or continue to waive, the retirement age of such person as a director as a result of the Committee’s and the Board’s affirmative determination that he or she provides an important and distinctive value in his or her role as a director. The composition of the current Board reflects diversity in business and professional experience, skills, gender, and age.
The Nominating and Corporate Governance Committee undertook a process beginning in 2013 to identify and retain new Board members who would enhance the composition of the Board. As a result of this process, Mr. Schipper joined the Board in February 2014, Ms. Carpenter joined the Board in May 2014, Mr. Goldfield joined the Board in December 2014, Mr. Friedlich joined the Board in January 2015, and Ms. Deason joined the Board in July 2016.
Compensation Committee
The members of the Compensation Committee are:
Brian (Skip) Schipper (Chairman)
Jim Friedlich
Golnar Sheikholeslami
The Compensation Committee met five times in 2016. The Compensation Committee reviews and recommends policies relating to compensation and benefits of our directors and employees and is responsible for approving the compensation of our Chief Executive Officer and other executive officers. Our Compensation Committee also administers the issuance of awards under our equity incentive plans. The authority and responsibility of the Compensation Committee is further set forth in its charter, which is available under the Investors section of our website and in print to any stockholder who requests a copy from the Corporate Secretary. For further information on the Compensation Committee’s engagement of a compensation consultant and the role of our executive officers in determining or recommending the amount or form of executive and director compensation, please see the “Compensation Discussion & Analysis—Benchmarking” and “Compensation Discussion & Analysis—Management’s Role in the Compensation-Setting Process” sections below.
Compensation Risks
The Compensation Committee has reviewed the Company’s compensation policies and practices for all employees, including our executive officers, as they relate to risk management practices and risk-taking incentives and has determined that there are no risks arising from these policies and practices that are reasonably likely to have a material adverse effect on the Company. The Compensation Committee considers that our compensation programs incorporate several features which promote the creation of long-term value and reduce the likelihood of excessive risk-taking by our employees. These features include: (i) a balanced mix of cash and equity, annual and longer-term incentives, and types of performance metrics, (ii) the ability of the Compensation Committee to exercise negative discretion over all incentive program payouts, (iii) performance targets for incentive compensation that include both objective Company performance targets (such as revenue and Adjusted EBITDA targets) and individual performance goals, (iv) time-based vesting of equity awards that encourages long-term retention, (v) a bonus pool for the majority of non-executive employees that is capped at an amount equal to a small percentage of each employee’s annual base salary, and (vi) internal controls on commissions paid to employees in the sales division.
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It is also our policy that the Compensation Committee will, to the extent permitted by governing law, have the sole and absolute authority to make retroactive adjustments to any cash or equity based incentive compensation paid to executive officers and certain other officers where the payment was predicated upon the achievement of certain financial results that were subsequently the subject of a restatement. Where applicable, we will seek to recover any amount determined to have been inappropriately received by the individual executive.
Compensation Committee lnterlocks and Insider Participation
None of the members of the Compensation Committee have ever served as an officer or employee of the Company. During 2016, none of the members of the Compensation Committee had any relationship with the Company requiring disclosure under Item 404 of Regulation S-K. None of our executive officers served as a member of the board or compensation committee, or similar committee, of any other company whose executive officer(s) served as a member of our Board or our Compensation Committee.
Corporate Governance Guidelines and Code of Conduct and Ethics
The Board has adopted Corporate Governance Guidelines, which set forth a flexible framework within which the Board, assisted by its committees, directs the affairs of the Company. The Corporate Governance Guidelines address, among other things, the composition and functions of the Board, director independence, stock ownership by directors and compensation of directors, management succession and review, Board committees and selection of new directors. A copy of the Company’s Corporate Governance Guidelines is available under the Investors section of our website and in print to any stockholder who requests a copy from the Corporate Secretary.
The Company has also adopted a Code of Conduct and Ethics, which is applicable to all directors, officers and employees of the Company, including the principal executive officer, the principal financial officer and the principal accounting officer. A copy of the Company’s Code of Conduct and Ethics is available under the Investors section of our website and in print to any stockholder who requests a copy from the Corporate Secretary. If the Company amends or waives the Code of Conduct and Ethics with respect to the directors, Chief Executive Officer, Chief Financial Officer or principal accounting officer, it will post the amendment or waiver at the same location on its website.
Risk Management
The Board has an active role in overseeing the Company’s risk management. The Board regularly reviews information presented by management regarding the Company’s business and operational risks, including relating to security, privacy, credit and liquidity. The Board committees also play an active role in managing the Company’s risk. The Audit Committee reviews and discusses with management the Company’s major financial risk exposures and the steps management has taken to monitor, control and manage such exposures. The Audit Committee reviews and discusses at least annually the Company’s code of ethics and procedures in place to enforce the code of ethics and, if there were any amendment or waiver requests relating to the Company’s code of ethics for the chief executive officer or senior financial officers, would review and make a determination on such requests. In addition, the Audit Committee reviews related party transactions and potential conflicts of interest related thereto. The Compensation Committee reviews the Company’s overall compensation program and its effectiveness at linking executive pay to performance and aligning the interests of our executives and our stockholders. The Nominating and Corporate Governance Committee manages risks associated with director independence. While each committee is responsible for evaluating certain risks and overseeing the management of such risks, the entire Board is regularly informed through committee reports about such risks.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
The Company has adopted a written Related Person Transaction Policy (the “policy”), which sets forth our policy with respect to the review, approval, ratification and disclosure of all related person transactions by our Audit Committee. In accordance with the policy, our Audit Committee has overall responsibility for the implementation and compliance with this policy.
For the purposes of the policy, a “related person transaction” is a transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and in which any related person (as defined in the policy) had, has or will have a direct or indirect material interest. A “related person transaction” does not include any employment relationship or transaction involving an executive officer and any related compensation resulting solely from that employment relationship which has been reviewed and approved by our Board of Directors or Compensation Committee.
Our policy requires that notice of a proposed related person transaction be provided to our legal department prior to entering into such transaction. If our legal department determines that such transaction is a related person transaction, the proposed transaction will be submitted to our Audit Committee for consideration at its next meeting. Under the policy, our
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Audit Committee may only approve those related person transactions that are in, or not inconsistent with, our best interests. In the event we become aware of a related person transaction that has not been previously reviewed, approved or ratified under our policy and that is ongoing or is completed, the transaction will be submitted to the Audit Committee so that it may determine whether to ratify, rescind or terminate the related person transaction.
Our policy also provides that the Audit Committee review certain previously approved or ratified related person transactions that are ongoing to determine whether the related person transaction remains in our best interests and the best interests of our stockholders. Additionally, we will also make periodic inquiries of directors and executive officers with respect to any potential related person transaction of which they may be a party or of which they may be aware.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The table below sets forth, as of March 10, 2017, information with respect to the beneficial ownership of our Common Stock by:
• | each of our directors and each of the executive officers named in the Summary Compensation Table under “Executive Compensation”; |
• | each person or group who is known to be the beneficial owner of more than 5% of any class or series of our capital stock; and |
• | all of our directors and executive officers as a group. |
The amounts and percentages of Common Stock beneficially owned are reported on the basis of the regulations of the Commission governing the determination of beneficial ownership of securities. Under these rules, a person is deemed to be a beneficial owner of a security if that person has or shares voting power, which includes the power to vote or to direct the voting of such security, or investment power, which includes the power to dispose of or to direct the disposition of such security. A person is also deemed to be a beneficial owner of any securities of which that person has a right to acquire beneficial ownership within 60 days. Under these rules, more than one person may be deemed to be a beneficial owner of the same securities.
Name and Address of Beneficial Owners | Shares of Common Stock Beneficially Owned | |||||||||||||
Outright Ownership | Common Stock underlying vested and exercisable options or options becoming vested and exercisable within 60 days | Unvested Restricted Shares | Total Number of Shares | Percentage of Class | ||||||||||
5% Stockholders | ||||||||||||||
BlackRock, Inc.(1) | 5,624,179 | n.a. | n.a. | 5,624,179 | 11.8 | % | ||||||||
Sterling Capital Management LLC(2) | 4,770,844 | n.a. | n.a. | 4,770,844 | 10.0 | % | ||||||||
The Vanguard Group(3) | 4,339,906 | n.a. | n.a. | 4,339,906 | 9.1 | % | ||||||||
Dimensional Fund Advisors LP(4) | 3,365,592 | n.a. | n.a. | 3,365,592 | 7.0 | % | ||||||||
Directors and Executive Officers | ||||||||||||||
Michael P. Durney(5)(6) | 597,334 | 451,875 | 300,000 | 1,349,209 | 2.8 | % | ||||||||
Luc Grégoire(5)(7) | — | — | 80,175 | 80,175 | * | |||||||||
Shravan Goli(5)(8) | 64,839 | 122,500 | 108,750 | 296,089 | * | |||||||||
Pamela Bilash(5)(9) | 21,800 | 22,500 | 54,375 | 98,675 | * | |||||||||
James E. Bennett(5)(10) | 80,007 | 130,000 | 68,750 | 278,757 | * | |||||||||
John J. Roberts(7) | — | — | — | — | * | |||||||||
Scot W. Melland(5) | 284,852 | — | 16,000 | 300,852 | * | |||||||||
John W. Barter(5) | 73,300 | 42,094 | 16,000 | 131,394 | * | |||||||||
David S. Gordon(5) | 214,342 | — | 16,000 | 230,342 | * | |||||||||
Brian Schipper(5) | 25,700 | — | 16,000 | 41,700 | * | |||||||||
Golnar Sheikholeslami(5) | 23,200 | — | 16,000 | 39,200 | * | |||||||||
Carol Carpenter(5) | 7,466 | — | 16,000 | 23,466 | * | |||||||||
Burton M. Goldfield(5) | 15,200 | — | 16,000 | 31,200 | * | |||||||||
Jennifer Deason(5) | — | — | 12,700 | 12,700 | * | |||||||||
Jim Friedlich(5) | 14,700 | — | 16,000 | 30,700 | * | |||||||||
All current directors and executive officers as a group (18 persons) | 1,701,452 | 925,219 | 879,625 | 3,506,296 | 7.2 | % | ||||||||
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* | Less than 1% |
(1) | Based solely on a Schedule 13G filed with the SEC on January 12, 2017. BlackRock, Inc. is the beneficial owner of 5,624,179 shares of the Common Stock. The business address for BlackRock, Inc. is 55 East 52nd Street, New York, NY 10055. |
(2) | Based solely on a Schedule 13G filed with the SEC on January 26, 2017. Sterling Capital Management LLC (“Sterling”), an investment adviser registered under Section 203 of the Investment Advisers Act of 1940, is the beneficial owner of 4,770,844 shares of the Common Stock. The business address for Sterling is 4350 Congress Street, Suite 1000, Charlotte, NC 28209. |
(3) | Based solely on a Schedule 13G filed with the SEC on February 9, 2017. The Vanguard Group (“Vanguard”), 100 |
Vanguard Blvd., Malvern, Pennsylvania 19355, is the beneficial owner of 4,239,034 shares of the Common Stock.
Vanguard Fiduciary Trust Company (“VFTC”), a wholly-owned subsidiary of The Vanguard Group, Inc., is the
beneficial owner of 95,272 shares or .19% of the Common Stock outstanding of the Company as a result of its
serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd. (“VIA”), a wholly owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 5,600 shares or .01% of the Common
Stock outstanding of the Company as a result of its serving as investment manager of Australian investment
offerings.
(4) | Based solely on a Schedule 13G filed with the SEC on February 9, 2017. Dimensional Fund Advisors LP (“Dimensional”) is the beneficial owner of 3,365,592 shares of the Common Stock. The business address for Dimensional is Building One, 6300 Bee Cave Rode, Austin, TX 78746. Dimensional serves as investment manager or sub-adviser to certain other commingled funds, group trust and separate accounts (“Funds”). All securities reported in this schedule are owned by the Funds. Dimensional disclaims beneficial ownership of such securities. |
(5) | Such person’s business address is c/o DHI Group, Inc., 1040 Avenue of the Americas, 8th floor, New York, NY 10018. |
(6) | The total amount excludes shares underlying 333,334 unvested PSUs. |
(7) | Mr. Grégoire became the Chief Financial Officer when he joined the Company in November 2016. Mr. Roberts served as Chief Financial Officer through August 2016. |
(8) | The total amount excludes shares underlying 86,667 unvested PSUs. |
(9) | The total amount excludes shares underlying 60,000 unvested PSUs. |
(10) | The total amount excludes shares underlying 75,000 unvested PSUs. |
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information required by this item as of December 31, 2016 regarding compensation plans under which the Company’s equity securities are authorized for issuance:
(a) | (b) | (c) | |||||||
Number of Securities to be Issued upon Exercise of Outstanding Options, Warrants and Rights | Weighted- Average Exercise Price of Outstanding Options, Warrants and Rights ($) | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in Column (a)) | |||||||
Plan Category | |||||||||
Equity compensation plans approved by security holders | 1,779,613 | $ | 8.46 | 2,329,895 | |||||
Equity compensation plans not approved by security holders | n/a | n/a | n/a | ||||||
Total | 1,779,613 | $ | 8.46 | 2,329,895 | |||||
Section 16(a) Beneficial Ownership Reporting Compliance
Based upon a review of filings with the Commission and written representations that no other reports were required, we believe that all of our directors, executive officers and beneficial owners of more than 10% of our Common Stock complied during fiscal year 2016 with the reporting requirements of Section 16(a) of the Exchange Act, with the exception of the
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following individuals, who, due to administrative error, each filed one late report relating to one transaction: Pamela Bilash and Klavs Miller.
ITEMS TO BE VOTED ON
Proposal 1: Election of Directors
The current term of office of the Company’s Class I Directors expires at the 2017 Annual Meeting. The Board proposes that the following nominees, both of whom are currently serving as directors, be elected for a new term of three years or until their successors are duly elected and qualified. Both of the nominees have consented to serve if elected. If either of them becomes unavailable to serve as a director before the Annual Meeting, the Board may designate a substitute nominee. In that case, the persons named as proxies will vote for the substitute nominee designated by the Board. See “Directors and Corporate Governance—Board Structure—Composition of our Board of Directors,” for a full biography of each nominee.
Carol Carpenter
Jennifer Deason
Directors are elected by a majority of the votes cast with respect to a director nominee. For more information regarding voting in director elections, see the sections of the proxy statement entitled “Proxy Statement Summary” and “Information Concerning Solicitation and Voting.”
THE BOARD RECOMMENDS A VOTE “FOR” EACH OF THE PERSONS NOMINATED BY THE BOARD.
Proposal 2: Ratification of Selection of Independent Registered Public Accounting Firm
The Audit Committee has selected Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017. Services provided to the Company and its subsidiaries by Deloitte & Touche LLP in fiscal 2016 are described below under “Principal Accounting Fees and Services.”
Deloitte & Touche LLP, an independent registered public accounting firm, has served as the Company’s auditors since the Company’s incorporation in 2005. Representatives of Deloitte & Touche LLP will be present at the Annual Meeting and will be given the opportunity to make a statement if they desire to do so and to respond to appropriate questions from stockholders.
Stockholder approval is not required for the selection of Deloitte & Touche LLP since the Audit Committee has the responsibility for the selection of auditors. However, the selection is being submitted for approval at the Annual Meeting. In the event the stockholders do not ratify the selection of Deloitte & Touche LLP as the independent registered public accounting firm for fiscal 2017, the selection will be reconsidered by the Audit Committee and the Board. Even if the selection of Deloitte & Touche LLP is ratified by our stockholders, the Audit Committee, in its discretion, may select a different registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and our stockholders.
The affirmative vote of a majority in voting power of shares of Common Stock present in person or represented by proxy and entitled to vote is needed to ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm.
THE BOARD RECOMMENDS A VOTE “FOR” THE RATIFICATION OF THE SELECTION OF DELOITTE & TOUCHE LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2017.
Policy for Approval of Audit and Permitted Non-Audit Services
The Audit Committee has adopted a policy governing the pre-approval by the Audit Committee of all services, audit and non-audit, to be provided to the Company by its independent registered public accounting firm. Under the policy, the Audit Committee has the sole authority to review in advance and grant pre-approvals of (i) all auditing services to be provided by the Company’s independent registered public accounting firm and (ii) all non-audit services to be provided by such firm. The Audit Committee also has the authority to approve all fees and other terms of engagement and the ability to set a cap on fees for the requisite period. The Audit Committee may delegate its authority to pre-approve services to a designated member of the Audit Committee, so long as the decisions made by such member are ratified by the Audit Committee at a subsequent meeting. Under the policy, the Audit Committee has generally pre-approved the provision by the Company’s independent registered public
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accounting firm of specific audit, audit related, tax and other non-audit services, subject to the fee limits established from time to time by the Audit Committee, as being consistent with auditor independence.
Principal Accounting Fees and Services
The firm of Deloitte & Touche LLP and the member firms of Deloitte Touche Tohmatsu, and their respective affiliates (collectively, the “Deloitte Entities”) conducted the 2016 and 2015 audits of the Company’s financial statements. Fees billed by the Deloitte Entities to the Company for services provided during the 2016 and 2015 fiscal years were as follows:
Fiscal 2016 | Fiscal 2015 | |||||||
Audit fees(1) | $ | 530,000 | $ | 505,000 | ||||
Audit-related fees(2) | 10,000 | 65,000 | ||||||
Tax fees | — | — | ||||||
All Other fees | — | — | ||||||
Total fees for services provided | $ | 540,000 | $ | 570,000 | ||||
(1) | Audit fees are fees billed by the Deloitte Entities for professional services for the audit of the Company’s annual financial statements and the audit of internal control over financial reporting. Audit fees also include fees billed for professional services for the review of financial statements included in the Company’s quarterly reports on Form 10-Q and for services that are normally provided by the Deloitte Entities in connection with statutory and regulatory filings or engagements. |
(2) | Audit-related fees are fees billed by the Deloitte Entities for assurance and related services that are related to the performance of the audit or review of the Company’s financial statements and are not reported as audit fees in (1) above. These services include in 2016, fees related to securities matters, and in 2015, a portion of the transactional fees related to the Quadrangle Block Sale. |
Proposal 3: Advisory Vote with Respect to the Compensation of our Named Executive Officers
We are committed to strong corporate governance. As part of this commitment, we provide our stockholders with the opportunity to cast an annual “Say-on-Pay” advisory vote on our named executive officer (“NEO”) compensation. In compliance with Section 14A of the Exchange Act (which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”)) and the related rules of the SEC, we are submitting to our stockholders for approval a non-binding resolution to ratify NEO compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding NEO compensation (together with the accompanying narrative disclosure) in this Proxy Statement.
We believe that both we and our stockholders benefit from responsive corporate governance policies and constructive and consistent dialogue. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies and practices described in this Proxy Statement. This proposal gives our stockholders the opportunity to endorse or not endorse our executive pay program and policies through the following resolution:
“RESOLVED, that the stockholders approve, on an advisory basis, the Company’s named executive officer compensation, as described in the Compensation Discussion and Analysis and the tabular disclosure regarding named executive officer compensation (together with the accompanying narrative disclosure) in the Proxy Statement for this meeting.”
In considering your vote, you are encouraged to read “Executive Compensation,” the accompanying compensation tables, and the related narrative disclosure. Because your vote is advisory, it will not be binding on the Board. However, the Board and the Compensation Committee expect to take into account the outcome of the vote when considering future executive compensation decisions to the extent they can determine the cause or causes of any significant negative voting results.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THIS PROPOSAL.
Proposal 4: Approval of an Amendment to the Dice Holdings, Inc. 2012 Omnibus Equity Award Plan (the “2012 Equity Plan”) and Reapproval of the Performance Goals Under the 2012 Equity Plan
The Board of Directors has previously adopted and our stockholders have previously approved the Dice Holdings, Inc. 2012 Omnibus Equity Award Plan (the “2012 Equity Plan”). Subject to the approval of our stockholders, the Compensation
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Committee on March 10, 2017 adopted an amendment (the “Amendment”) to the 2012 Equity Plan to: (i) update the name of the 2012 Equity Plan to the DHI Group, Inc. 2012 Omnibus Equity Award Plan; (ii) increase the number of shares of Common Stock available for issuance under the 2012 Equity Plan; (iii) impose annual limits on the value of awards that can be issued to non-employee directors under the 2012 Equity Plan for service on our Board; and (iv) permit withholding up to the maximum statutory amount. In this proposal, we are asking our stockholders to approve the 2012 Equity Plan, as proposed to be amended by the Amendment, and to reapprove the material terms of the performance goals for performance-based awards under the 2012 Equity Plan pursuant to Section 162(m) of the Internal Revenue Code.
Highlights of the Amendment
In addition to updating the name of the 2012 Equity Plan, the Amendment makes three changes to the 2012 Equity Plan:
Addition of 3,000,000 Shares to Fund the 2012 Equity Plan. The 2012 Equity Plan currently provides that the total number of shares of Common Stock that may be issued thereunder may not exceed 4,000,000 in the aggregate. Additionally, 2,239,044 shares were transferred from the Dice Holdings, Inc. 2007 Equity Award Plan and the Dice Holdings, Inc. 2005 Omnibus Stock Plan (the “Prior Plans”) bringing the total shares available at the 2012 Equity Plan’s inception to 6,239,044. As of March 10, 2017, under the 2012 Equity Plan there were a total of 1,531,577 shares available for future issuance and 5,779,039 shares granted, net of forfeitures. In addition, 1,071,572 shares withheld for tax were added back to the 2012 Equity Plan. As of March 10, 2017, the 2012 Equity Plan included 3,562,754 shares of unvested restricted stock and PSUs and 1,357,616 of unexercised stock options. On March 10, 2017, our Compensation Committee unanimously approved and recommended that our Board approve an amendment to the 2012 Equity Plan to increase by 3,000,000 the number of shares of Common Stock available for future issuance. We expect the 3,000,000 additional shares to be sufficient funding under the 2012 Equity Plan for approximately 3 years. On March 15, 2017, our Board considered our Compensation Committee’s unanimous recommendation in favor of such amendment and the factors considered by our Compensation Committee, and based on the foregoing, our Board approved the amendment to the 2012 Equity Plan, subject to stockholder approval. Our Compensation Committee and our Board believe that equity compensation plays an important role in our compensation program by aligning the interests of the participants in our compensation programs with those of our stockholders, and therefore, it is essential for our Company to have a sufficient number of reserved shares available for issuance under our equity compensation plans.
If this Proposal 4 is approved by our stockholders, there will be a total of 7,000,000 shares of Common Stock authorized for issuance under the 2012 Equity Plan, of which, as of March 10, 2017, there would be 4,531,577 shares of Common Stock available for future issuance. Our Compensation Committee and our Board believe that the proposed increase will provide a sufficient number of available shares of Common Stock for future granting needs to help our Company achieve the purposes of the 2012 Equity Plan. Our Compensation Committee reviewed our historical and prospective usage of equity to determine the number of shares we will most likely require for future compensation purposes for the next three years. This review took into account shares remaining in the 2012 Equity Plan, potential shares that may become issuable in the future based on performance, including year-to-date accruals under our current programs, and the effect of new hires as our Company continues to grow. Our Compensation Committee also considered our prospective equity usage relative to our peers.
Limitation on awards granted to non-employee directors for service on the Board. We are proposing to add a limit so that the aggregate amount of awards that a non-employee director may be granted under the 2012 Equity Plan for a single fiscal year, solely with respect to his or her service on our Board, may not exceed $750,000. The $750,000 limit will be based on (i) the aggregate value of all awards denominated in cash and (ii) the fair market value of all awards denominated in Common Stock, in each case determined on the date of grant. If a non-employee director elects to receive fees otherwise payable in cash in an award or awards denominated in Common Stock, then such fees and the award or awards received in lieu thereof shall not count against the $750,000 limit.
Permit maximum statutory withholding. We are proposing to amend the 2012 Equity Plan to provide that the Company may withhold up to the maximum statutory withholding amount that would not result in adverse accounting treatment. This change is based on a change in the applicable withholding law.
Section 162(m) Reapproval
Approval of this proposal will also constitute reapproval of the material terms of the performance goals under the 2012 Equity Plan for purposes of Section 162(m) of the Internal Revenue Code. This will have the effect of extending the period (which would otherwise expire at the Annual Meeting) during which the Company may grant awards intended to qualify as “performance-based compensation” for purposes of Section 162(m) of the Internal Revenue Code to April 28, 2022, the fifth anniversary of the date of the Annual Meeting. Section 162(m) of the Internal Revenue Code generally does not allow a publicly held company to obtain tax deductions for compensation of more than $1,000,000 paid in any year to its chief executive officer, or any of its other three most highly compensated executive officers (other than its chief financial officer), unless such payments are “performance-based” in accordance with conditions specified under Section 162(m). We have in the
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past and we specifically reserve our right in the future to pay compensation that is not deductible under Section 162(m) of the Internal Revenue Code.
Our executive officers and directors (including our director nominees) have an interest in this proposal as they would be eligible to receive awards under the 2012 Equity Plan.
Summary of Sound Governance Features of the 2012 Equity Plan
The Board of Directors and the Compensation Committee believe the 2012 Equity Plan contains several features that are consistent with the interests of our stockholders and sound corporate governance practices, including the following:
• | No “evergreen” provision. The number of shares of Common Stock available for issuance under the 2012 Equity Plan is fixed and will not adjust based upon the number of shares of Common Stock outstanding. |
• | Stock option exercise prices and SAR grant prices may not be lower than the fair market value on the date of grant. The 2012 Equity Plan prohibits granting stock options with exercise prices and SARs with grant prices lower than the fair market value of a share of Common Stock on the date of grant, except in connection with the issuance or assumption of awards in connection with certain mergers, consolidations, acquisitions of property or stock or reorganizations. |
• | No repricing or exchange without stockholder approval. The 2012 Equity Plan prohibits the repricing of outstanding stock options or SARs without stockholder approval, except in connection with certain corporate transactions involving the Company. |
• | “Clawback” provisions. The 2012 Equity Plan contains “clawback” provisions, which provide that the Compensation Committee may include in an award, that if a participant is determined by the Compensation Committee to have violated a non-compete, non-solicit, non-disclosure or other agreement or otherwise engaged in activity that is in conflict with or adverse to the interest of the Company, all rights of the participant under the plan and any agreements evidencing an award then held by the participant will terminate and be forfeited and the Compensation Committee may require the participant to surrender and return to the Company any shares received, and/or to repay any profits or any other economic value made or realized. |
A copy of the Amendment and a full text of the 2012 Equity Plan is attached as Annex A to this Proxy Statement. Except for the changes outlined above, there are no other changes to the terms and provisions of the 2012 Equity Plan. The 2012 Equity Plan was amended by our Board on March 15, 2017 and is subject to the approval of our stockholders at the Annual Meeting. The Amendment to the 2012 Equity Plan was approved by our Board following its approval and recommendation by our Compensation Committee, which was advised by Compensia, our compensation consultant.
Summary of the 2012 Equity Plan Features
The following is a summary of the material terms and conditions of the 2012 Equity Plan assuming that the proposed amendment to change the name of the plan, increase the shares under the 2012 Equity Plan, include a limit on awards to non-employee directors and permit maximum statutory withholding is approved by stockholders at the Annual Meeting. Except for the foregoing, there are no other changes to the terms and provisions of the 2012 Equity Plan. This summary is qualified in its entirety by reference to the 2012 Equity Plan and the Amendment attached as Annex A to this proxy statement/prospectus. You are encouraged to read the 2012 Equity Plan and the Amendment in its entirety.
Administration. The Compensation Committee (or subcommittee thereof, if necessary for Section 162(m) of the Code) administers the 2012 Equity Plan. The Compensation Committee has the authority to determine the terms and conditions of any agreements evidencing any awards granted under the 2012 Equity Plan and to adopt, alter and repeal rules, guidelines and practices relating to the 2012 Equity Plan. The Compensation Committee has full discretion to administer and interpret the 2012 Equity Plan and to adopt such rules, regulations and procedures as it deems necessary or advisable and to determine, among other things, the time or times at which the awards may be exercised and whether and under what circumstances an award may be exercised.
Eligibility. Any current or prospective employees, directors, officers, consultants or advisors of the Company or its affiliates who are selected by the Compensation Committee are eligible for awards under the 2012 Equity Plan. The Compensation Committee has the sole and complete authority to determine who will be granted an award under the 2012 Equity Plan.
Number of Shares Authorized. An aggregate of 7,000,000 shares of our Common Stock will be authorized for issuance under the 2012 Equity Plan. The 2012 Equity Plan provides for an aggregate of 7,000,000 shares of our Common Stock plus
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any shares of our Common Stock that were available for issuance under the Prior Plans as of the date that the 2012 Equity Plan was approved by our stockholders, April 20, 2012, or that become available after that date upon cancellation or expiration of awards granted under the Prior Plans to the extent not exercised or settled to be available for awards under the 2012 Equity Plan. The following sub-limits also apply under the 2012 Plan: No more than 3,000,000 shares of our Common Stock may be issued with respect to incentive stock options under the 2012 Equity Plan. No participant may be granted awards of options and stock appreciation rights with respect to more than 2,000,000 shares of our Common Stock in any 12-month period. No more than 1,000,000 shares of our Common Stock may be granted under the 2012 Equity Plan to any participant during a performance period (or with respect to each year if the performance period is more than one year). The maximum amount payable for an individual employee or officer under the 2012 Equity Plan for any single year during a performance period is $5,000,000 (with respect to each year if the performance period is more than one year). The maximum amount payable for a non-employee director under the 2012 Equity Plan for any single fiscal year in respect of performance for such year is $750,000. Shares of our Common Stock subject to awards are generally unavailable for future grant. If any award granted under the 2012 Equity Plan expires, terminates, is canceled or forfeited without being settled or exercised, or if a stock appreciation right is settled in cash or otherwise without the issuance of shares, shares of our Common Stock subject to such award will again be made available for future grant. In addition, if any shares are surrendered or tendered to pay the exercise price of an award or to satisfy withholding taxes owed, such shares will again be available for grant under the 2012 Equity Plan; provided, in no event shall such shares increase the number of shares of our Common Stock that may be delivered pursuant to incentive stock options granted under the 2012 Equity Plan. If there is any change in our corporate capitalization, the Compensation Committee in its sole discretion may make substitutions or adjustments to the number of shares reserved for issuance under the 2012 Equity Plan, the number of shares covered by awards then outstanding under the 2012 Equity Plan, the limitations on awards under the 2012 Equity Plan, the exercise price of outstanding options and such other equitable substitution or adjustments as it may determine appropriate.
Change in Capitalization. If there is a change in the Company’s corporate capitalization in the event of a stock or extraordinary cash dividend, recapitalization, stock split, reverse stock split, reorganization, merger, consolidation, split-up, split-off, spin-off, combination, repurchase or exchange of shares of our Common Stock or other relevant change in capitalization or applicable law or circumstances, such that the Compensation Committee determines that an adjustment is necessary or appropriate, then the Compensation Committee can make adjustments in a manner that it deems equitable.
Awards Available for Grant. The Compensation Committee may grant awards of non-qualified stock options, incentive (qualified) stock options, SARs, restricted stock awards, restricted stock units, other stock-based awards, performance compensation awards (including cash bonus awards), other cash-based awards or any combination of the foregoing. Awards may be granted under the 2012 Equity Plan in assumption of, or in substitution for, outstanding awards previously granted by an entity acquired by the Company or with which the Company combines (which are referred to herein as Substitute Awards).
Stock Options. The Compensation Committee is authorized to grant options to purchase shares of our Common Stock that are either “qualified,” meaning they are intended to satisfy the requirements of Section 422 of the Code for incentive stock options, or “non-qualified,” meaning they are not intended to satisfy the requirements of Section 422 of the Code. All options granted under the 2012 Equity Plan are non-qualified unless the applicable award agreement expressly states that the option is intended to be an “incentive stock option.” Options granted under the 2012 Equity Plan are subject to the terms and conditions established by the Compensation Committee. Unless otherwise provided by the Compensation Committee in an award agreement, an option will vest and become exercisable with respect to 25% of the shares of our Common Stock subject to such option on the first anniversary of the vesting commencement date and with respect to an additional 6.25% on the last day of each three-month period following thereafter. Further, unless otherwise provided by the Compensation Committee in an award agreement, the unvested portion of an option expires upon termination of employment or service of the participant granted the option with the Company and its affiliates, and the vested portion of such option will remain exercisable for (i) one year following termination of employment or service with the Company and its affiliates by reason of such participant’s death or disability, but not later than the expiration of the option period, or (ii) 90 days following termination of employment or service with the Company and its affiliates for any reason other than such participant’s death or disability, and other than such participant’s termination of employment or service with the Company and its affiliates for cause, but not later than the expiration of the option period, and both the unvested and the vested portion of an option will expire upon the termination of the participant’s employment or service with the Company and its affiliates by the Company for cause. Under the terms of the 2012 Equity Plan, the exercise price of the options may not be less than the fair market value of our Common Stock at the time of grant (except with respect to substitute awards). Options granted under the 2012 Equity Plan are subject to such terms, including the exercise price and the conditions and timing of exercise, as may be determined by the Compensation Committee and specified in the applicable award agreement. The maximum term of an option granted under the 2012 Equity Plan is ten years from the date of grant (or five years in the case of a qualified option granted to a 10% stockholder), provided, that, if the term of a non-qualified option would expire at a time when trading in the shares of our Common Stock is prohibited by the Company’s insider trading policy, the option’s term is automatically extended until the 30th day following the expiration of
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such prohibition. Payment in respect of the exercise of an option may be made in cash, by check, by cash equivalent and/or shares of our Common Stock valued at the fair market value at the time the option is exercised (provided that such shares are not subject to any pledge or other security interest), or by such other method as the Compensation Committee permits in its sole discretion, including: (i) in other property having a fair market value equal to the exercise price and all applicable required withholding taxes, (ii) if there is a public market for the shares of our Common Stock at such time, by means of a broker-assisted cashless exercise mechanism or (iii) by means of a “net exercise” procedure effected by withholding the minimum number of shares otherwise deliverable in respect of an option that are needed to pay the exercise price and all applicable required withholding taxes. The Compensation Committee may, in its sole discretion, at any time buy out for a payment in cash, or the delivery of shares of our Common Stock, or other property, an option previously granted to a participant.
Stock Appreciation Rights. The Compensation Committee is authorized to award SARs under the 2012 Equity Plan. SARs are subject to the terms and conditions established by the Compensation Committee. A SAR is a contractual right that allows a participant to receive, either in the form of cash, shares or any combination of cash and shares, the appreciation, if any, in the value of a share over a certain period of time. An option granted under the 2012 Equity Plan may include SARs and SARs may also be awarded to a participant independent of the grant of an option. SARs granted in connection with an option are subject to terms similar to the option corresponding to such SARs, including with respect to vesting and expiration. Unless otherwise specified by the Compensation Committee in an award agreement, a SAR award is subject to the same default vesting provisions as described above under “Stock Options.” Except as otherwise provided by the Compensation Committee (in the case of substitute awards or SARs granted in tandem with previously granted options), the strike price per share of our Common Stock for each SAR may not be less than 100% of the fair market value of such share, determined as of the date of grant. A SAR granted independent of an option has a maximum term of ten years from the date of grant. The remaining terms of the SARs are established by the Compensation Committee and reflected in the award agreement.
Restricted Stock and Restricted Stock Unit Awards. The Compensation Committee is authorized to grant restricted stock under the 2012 Equity Plan. Awards of restricted stock are subject to the terms and conditions established by the Compensation Committee. Restricted stock is Common Stock that generally is non-transferable and is subject to other restrictions determined by the Compensation Committee for a specified period.
The Compensation Committee is authorized to award restricted stock unit awards. Restricted stock unit awards are subject to the terms and conditions established by the Compensation Committee. Unless the Compensation Committee determines otherwise, or specifies otherwise in an award agreement, if the participant terminates employment or services during the period of time over which all or a portion of the units are to be earned, then any unvested units will be forfeited. At the election of the Compensation Committee, the participant will receive a number of shares of Common Stock equal to the number of units earned or an amount in cash equal to the fair market value of that number of shares at the expiration of the period over which the units are to be earned or at a later date selected by the Compensation Committee, less an amount equal to any taxes required to be withheld. To the extent provided in an award agreement, the holder of outstanding restricted stock units shall be entitled to be credited with dividend equivalent payments upon the payment by the Company of dividends on shares of our Common Stock, either in cash or (at the sole discretion of the Compensation Committee) in shares of our Common Stock having a fair market value equal to the amount of such dividends, and interest may, at the sole discretion of the Compensation Committee, be credited on the amount of cash dividend equivalents at a rate and subject to such terms as determined by the Compensation Committee, which accumulated dividend equivalents (and interest thereon, if applicable) shall be payable at the same time as the underlying restricted stock units are settled.
Unless otherwise provided by the Compensation Committee in an award agreement, the restricted period applicable to any restricted stock or restricted stock unit award will lapse with respect to 25% of the award on the first anniversary of the vesting commencement date and with respect to an additional 6.25% on the last day of each three-month period thereafter.
Further, unless otherwise provided by the Compensation Committee in an award agreement, the unvested portion of restricted stock and restricted stock unit awards will terminate and be forfeited upon termination of employment or service of the participant granted the applicable award. The Committee may in its sole discretion accelerate the lapse of any or all of the restrictions on the restricted stock and restricted stock units which acceleration shall not affect any other terms and conditions of such awards.
Other Stock-Based Awards. The Compensation Committee is authorized to grant awards of unrestricted shares of our Common Stock, rights to receive grants of awards at a future date, or other awards denominated in shares of our Common Stock under such terms and conditions as the Compensation Committee may determine and as set forth in the applicable award agreement.
Performance Compensation Awards. The Compensation Committee may grant any award under the 2012 Equity Plan in
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the form of a “Performance Compensation Award” by conditioning the number of shares earned or vested under the award on the satisfaction of certain “Performance Goals.” The Compensation Committee may establish these Performance Goals with reference to one or more of the following:
• | net earnings or net income (before or after taxes); |
• | basic or diluted earnings per share (before or after taxes); |
• | net revenue or net revenue growth; |
• | gross revenue or gross revenue growth, gross profit or gross profit growth; net operating profit (before or after taxes); |
• | return measures (including, but not limited to, return on investment, assets, capital, gross revenue or gross revenue growth, invested capital, equity or sales); |
• | cash flow measures (including, but not limited to, operating cash flow, free cash flow and cash flow return on capital), which may but are not required to be measured on a per-share basis; |
• | earnings before or after taxes, interest, depreciation, and amortization (including EBIT and EBITDA); |
• | gross or net operating margins; |
• | productivity ratios; |
• | share price (including, but not limited to, growth measures and total stockholder return; expense targets or cost reduction goals, general and administrative expense savings; and operating efficiency); |
• | objective measures of customer satisfaction; |
• | working capital targets; |
• | measures of economic value added or other “value creation” metrics; |
• | inventory control; |
• | enterprise value; |
• | sales; |
• | stockholder return; |
• | client retention; |
• | competitive market metrics; |
• | employee retention; |
• | timely completion of new product rollouts; |
• | timely launch of new facilities; |
• | objective measures of personal targets, goals or completion of projects (including but not limited to succession and hiring projects, completion of specific acquisitions, reorganizations or other corporate transactions or capital-raising transactions, expansions of specific business operations and meeting divisional or project budgets); |
• | system-wide revenues; |
• | royalty income; |
• | cost of capital, debt leverage year-end cash position or book value; |
• | strategic objectives, development of new product lines and related revenue, sales and margin targets, or international operations; or |
• | any combination of the foregoing |
Any of the above Performance Goal elements can be stated as a percentage of another Performance Goal or used on an absolute, relative or adjusted basis to measure the performance of the Company and/or its affiliates or any divisions, operation, or business units, product lines, brands, business segment, administrative departments or combination thereof, as the Compensation Committee deems appropriate. Performance Goals may be compared to the performance of a group of comparator companies or a published or special index that the Compensation Committee deems appropriate or, stock market indices. The Compensation Committee also may provide for accelerated vesting of any award based on the achievement of Performance Goals. Any award that is intended to qualify as “performance-based compensation” under Section 162(m) of the Code is granted, and Performance Goals for such an award are established, by the Compensation Committee in writing not later than 90 days after the commencement of the performance period to which the Performance Goals relate, or such other period required under Section 162(m) of the Code; provided that the outcome is substantially uncertain at the time the Compensation Committee establishes the Performance Goal; and provided further that in no event is a Performance Goal considered to be pre-established if it is established after 25% of the performance period (as scheduled in good faith at the time the Performance Goal is established) has elapsed. Before any payment is made in connection with any award intended to qualify as performance-based compensation under Section 162(m) of the Code, the Compensation Committee must certify in writing that the Performance Goals established with respect to such award have been achieved. In determining the actual amount of an individual participant’s Performance Compensation Award for a performance period, the Compensation Committee may reduce or eliminate the amount of the Performance Compensation Award earned through the use of negative discretion consistent with Section 162(m) of the Code, if, in its sole judgment, such reduction or elimination is appropriate.
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The Compensation Committee may also specify adjustments or modifications (to the extent it would not result in adverse results under Section 162(m) of the Code) to be made to the calculation of a Performance Goal for such performance period, based on and in order to appropriately reflect the following events: (i) asset write-downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles, or other laws or regulatory rules affecting reported results; (iv) any reorganization and restructuring programs; (v) extraordinary nonrecurring items and/or in management's discussion and analysis of financial condition and results of operations appearing in the Company’s annual report to stockholders for the applicable year; (vi) acquisitions or divestitures; (vii) any other specific, unusual or nonrecurring events, or objectively determinable category thereof; (viii) foreign exchange gains and losses; (ix) discontinued operations and nonrecurring charges; and (x) a change in the Company’s fiscal year.
Unless otherwise provided in the applicable award agreement, a participant is eligible to receive payment in respect of a performance compensation award only to the extent that (I) the Performance Goals for such period are achieved; and (II) all or some of the portion of such participant’s performance compensation award has been earned for the performance period based on the application of the “Performance Formula” (as defined in the 2012 Equity Plan) to such Performance Goals.
Effect of a Change in Control. Unless otherwise provided in an award agreement, or any applicable employment, consulting, change in control, severance or other agreement between a participant and the Company, in the event of a change of control, if a participant’s employment or service is terminated by the Company other than for cause (and other than due to death or disability) within the 12-month period following a change in control, then (i) all then-outstanding options and SARs will become immediately exercisable as of such participant’s date of termination with respect to all of the shares subject to such option or SAR; (ii) the restricted period shall expire as of such participant’s date of termination with respect to all of the then-outstanding shares of restricted stock or restricted stock units (including without limitation a waiver of any applicable Performance Goals); and (iii) awards previously deferred will be settled in full as soon as practicable following such participant's date of termination. All incomplete performance periods in effect on the date the change in control occurs will end on such date, and the Compensation Committee may (i) determine the extent to which Performance Goals with respect to each such performance period have been met based upon such audited or unaudited financial information or other information then available as it deems relevant and (ii) cause the participant to receive partial or full payment of Awards for each such performance period based upon the Compensation Committee’s determination of the degree of attainment of Performance Goals, or assuming that the applicable “target” levels of performance have been attained or on such other basis determined by the Compensation Committee. In addition, the Compensation Committee may in its discretion and upon at least five days’ notice to the affected persons, cancel any outstanding award and pay the holders, in cash, securities or other property (including of the acquiring or successor company), or any combination thereof, the value of such awards based upon the price per share of the Company’s Common Stock received or to be received by other stockholders of the Company in the event. Notwithstanding the above, the Compensation Committee shall exercise such discretion over any award subject to Section 409A of the Code at the time such award is granted.
Nontransferability. Each award may be exercised during the participant’s lifetime by the participant or, if permissible under applicable law, by the participant’s guardian or legal representative. No Award may be assigned, alienated, pledged, attached, sold or otherwise transferred or encumbered by a participant other than by will or by the laws of descent and distribution unless the Compensation Committee permits the award to be transferred to a permitted transferee (as defined in the 2012 Equity Plan).
Amendment. The 2012 Equity Plan has a term of ten years. The Board may amend, suspend or terminate the 2012 Equity Plan at any time; however, stockholder approval to amend the 2012 Equity Plan may be necessary if the law or NYSE rules so require. No amendment, suspension or termination will impair the rights of any participant or recipient of any award without the consent of the participant or recipient.
The Compensation Committee may, to the extent consistent with the terms of any applicable award agreement, waive any conditions or rights under, amend any terms of, or alter, suspend, discontinue, cancel or terminate, any award theretofore granted or the associated award agreement, prospectively or retroactively; provided that any such waiver, amendment, alteration, suspension, discontinuance, cancellation or termination that would materially and adversely affect the rights of any participant or any holder or beneficiary of any option theretofore granted shall not to that extent be effective without the consent of the affected participant, holder or beneficiary; and provided further that, without stockholder approval, (i) no amendment or modification may reduce the option price of any option or the strike price of any SAR, (ii) the Compensation Committee may not cancel any outstanding option and replace it with a new option (with a lower option price) or cancel any SAR and replace it with a new SAR (with a lower strike price), and (iii) no option or SAR may be exchanged for cash or another award. However, stockholder approval is not required with respect to clauses (i), (ii), and (iii) above for any action specifically permitted by Section 12 (Changes in Capital Structure and Similar Events) of the 2012 Equity Plan. In addition, none of the requirements described in the preceding clauses (i), (ii), and (iii) can be amended without the approval of our stockholders.
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U.S. Federal Income Tax Consequences
The following is a general summary of the material U.S. federal income tax consequences of the grant and exercise and vesting of awards under the 2012 Equity Plan and the disposition of shares acquired pursuant to the exercise or settlement of such awards and is intended to reflect the current provisions of the Code and the regulations thereunder. This summary is not intended to be a complete statement of applicable law, nor does it address foreign, state, local and payroll tax considerations. Moreover, the U.S. federal income tax consequences to any particular participant may differ from those described herein by reason of, among other things, the particular circumstances of such participant.
Stock Options. The Code requires that, for treatment of an option as an incentive stock option, shares of our Common Stock acquired through the exercise of an incentive stock option cannot be disposed of before the later of (i) two years from the date of grant of the option, or (ii) one year from the date of exercise. Holders of incentive stock options will generally incur no federal income tax liability at the time of grant or upon exercise of those options. However, the spread at exercise will be an “item of tax preference,” which may give rise to “alternative minimum tax” liability for the taxable year in which the exercise occurs. If the holder does not dispose of the shares before two years following the date of grant and one year following the date of exercise, the difference between the exercise price and the amount realized upon disposition of the shares will constitute long-term capital gain or loss, as the case may be. Assuming both holding periods are satisfied, no deduction will be allowed to us for federal income tax purposes in connection with the grant or exercise of the incentive stock option. If, within two years following the date of grant or within one year following the date of exercise, the holder of shares acquired through the exercise of an incentive stock option disposes of those shares, the participant will generally realize taxable compensation at the time of such disposition equal to the difference between the exercise price and the lesser of the fair market value of the share on the date of exercise or the amount realized on the subsequent disposition of the shares, and that amount will generally be deductible by us for federal income tax purposes, subject to the possible limitations on deductibility under Sections 280G and 162(m) of the Code for compensation paid to executives designated in those Sections. Finally, if an incentive stock option becomes first exercisable in any one year for shares having an aggregate value in excess of $100,000 (based on the grant date value), the portion of the incentive stock option in respect of those excess shares will be treated as a non-qualified stock option for federal income tax purposes. No income will be realized by a participant upon grant of an option that does not qualify as an incentive stock option (“a non-qualified stock option”). Upon the exercise of a non-qualified stock option, the participant will recognize ordinary compensation income in an amount equal to the excess, if any, of the fair market value of the underlying exercised shares over the option exercise price paid at the time of exercise and the participant's tax basis will equal the sum of the compensation income recognized and the exercise price. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections. In the event of a sale of shares received upon the exercise of a non-qualified stock option, any appreciation or depreciation after the exercise date generally will be taxed as capital gain or loss and will be long-term gain or loss if the holding period for such shares is more than one year.
SARs. No income will be realized by a participant upon grant of a SAR. Upon the exercise of a SAR, the participant will recognize ordinary compensation income in an amount equal to the fair market value of the payment received in respect of the SAR. The Company will be able to deduct this same amount for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock. A participant will not be subject to tax upon the grant of an award of restricted stock unless the participant otherwise elects to be taxed at the time of grant pursuant to Section 83(b) of the Code. On the date an award of restricted stock becomes transferable or is no longer subject to a substantial risk of forfeiture, the participant will have taxable compensation equal to the difference between the fair market value of the shares on that date over the amount the participant paid for such shares, if any, unless the participant made an election under Section 83(b) of the Code to be taxed at the time of grant. If the participant made an election under Section 83(b), the participant will have taxable compensation at the time of grant equal to the difference between the fair market value of the shares on the date of grant over the amount the participant paid for such shares, if any. If the election is made, the participant will not be allowed a deduction for amounts subsequently required to be returned to the Company. (Special rules apply to the receipt and disposition of restricted shares received by officers and directors who are subject to Section 16(b) of the Securities Exchange Act of 1934, as amended). The Company will be able to deduct, at the same time as it is recognized by the participant, the amount of taxable compensation to the participant for U.S. federal income tax purposes, but such deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Restricted Stock Units. A participant will not be subject to tax upon the grant of a restricted stock unit award. Rather, upon the delivery of shares or cash pursuant to a restricted stock unit award, the participant will have taxable compensation equal to the fair market value of the number of shares (or the amount of cash) the participant actually receives with respect to the award.
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The Company will be able to deduct the amount of taxable compensation to the participant for U.S. federal income tax purposes, but the deduction may be limited under Sections 280G and 162(m) of the Code for compensation paid to certain executives designated in those Sections.
Section 162(m). In general, Section 162(m) of the Code denies a publicly held corporation a deduction for U.S. federal income tax purposes for compensation in excess of $1,000,000 per year per person to its chief executive officer and the three other officers whose compensation is required to be disclosed in its proxy statement (excluding the chief financial officer), subject to certain exceptions. The 2012 Equity Plan is intended to satisfy an exception with respect to grants of options and SARs to covered employees. In addition, the 2012 Equity Plan is designed to permit certain awards of restricted stock, restricted stock units and other awards (including cash bonus awards) to be awarded as performance compensation awards intended to qualify under the “performance-based compensation” exception to Section 162(m) of the Code.
New Plan Benefits
Awards under the 2012 Equity Plan are granted in the discretion of the Compensation Committee (or subcommittee, if necessary for compliance with Section 162(m) of the Internal Revenue Code). As such, it is not possible at this time to determine the type, number, recipients or other terms of awards to be granted in the future.
In accordance with SEC rules, the table below indicates the aggregate number of stock options granted under the 2012 Equity Plan since its adoption on April 20, 2012 to each named executive officer, all current executive officers as a group, all current directors (other than executive officers) as a group, and all current employees (other than executive officers) as a group. No stock options have been granted since 2014. As of March 10, 2017, there were 1,357,616 shares subject to stock options outstanding under the 2012 Equity Plan, with a weighted average exercise price of $9.17 and a weighted average remaining term of 3.0 years. As of March 10, 2017, the closing price of our Common Stock was $4.60 per share.
Name | Title | Stock Options | |
Named Executive Officers: | |||
Michael P. Durney | President and Chief Executive Officer | 425,000 | |
Luc Grégoire | Chief Financial Officer | — | |
Shravan Goli | President, Brightmatter Group | 190,000 | |
Pamela Bilash | Senior Vice President, Human Resources | 30,000 | |
James E. Bennett | Managing Director, Global Industry Brands | 80,000 | |
All executive officers as a group (8 persons) | 830,000 | ||
All directors (other than executive officers) as a group (9 persons) | 200,000 | ||
All employees (other than executive officers) as a group (13 persons) | 233,000 | ||
Vote Required
Under relevant NYSE Rules relating to approval of equity compensation plans, the affirmative vote of a majority of the votes cast is required to approve the amendment to the 2012 Equity Plan and reapproval of the material terms of the performance goals under the 2012 Equity Plan.
THE BOARD RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE APPROVAL OF THE AMENDMENT TO THE 2012 EQUITY PLAN AND THE REAPPROVAL OF THE MATERIAL TERMS OF THE PERFORMANCE GOALS UNDER THE 2012 EQUITY PLAN.
Proposal 5: Advisory Vote on the Frequency of Holding an Advisory Vote on the Compensation of our Named Executive Officers
In accordance with the requirements of the Dodd-Frank Act, we included in our 2011 proxy statement a proposal for a non-binding advisory vote with respect to the frequency of future advisory votes regarding the compensation of our named executive officers (commonly referred to as “Say-on-Pay”). At our 2011 Annual Meeting, held on April 15, 2011, our stockholders recommended an annual Say-on-Pay vote and our Board subsequently adopted that recommendation. Since that vote occurred six years ago, the Dodd-Frank Act requires that we include in this proxy statement another non-binding advisory stockholder vote regarding the frequency with which the Company’s stockholders will have a future advisory vote with respect to the compensation of our NEOs. We are therefore asking our stockholders to vote on the following resolution:
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“RESOLVED, that the stockholders determine, on an advisory basis, that the frequency with which the stockholders of the Company shall have a future vote with respect to the compensation of the Company’s named executive officers set forth in the Company’s proxy statement is:
Choice 1 - every year;
Choice 2 - every two years;
Choice 3 - every three years; or
Choice 4 - abstain from voting.”
After careful consideration, the Board believes that a frequency of “every year” for the advisory vote on executive compensation is the optimal interval for conducting and responding to a “say on pay” vote, so that stockholders may annually express their views on our executive compensation program. The Compensation Committee, which administers our executive compensation program, values the opinions expressed by the stockholders in these votes and will consider the outcome of these votes in making its decisions on executive compensation.
You may cast your vote on your preferred voting frequency by choosing the option of every one year, two years or three years, or abstain from voting. The option that receives the highest number of votes cast for this resolution will be determined to be the preferred frequency with which the Company is to hold a stockholder vote to approve, on an advisory basis, the compensation of the named executive officers.
THE BOARD RECOMMENDS A VOTE TO HOLD A SAY-ON-PAY VOTE EVERY YEAR (AS OPPOSED TO EVERY TWO YEARS OR EVERY THREE YEARS).
Other Matters
As of the mailing date of this proxy statement, the Board is not aware of any matters other than those referred to in the accompanying Notice of Annual Meeting of Stockholders that may properly be presented at the Annual Meeting. However, if any other matter is properly presented at the Annual Meeting, the proxy holders will vote as recommended by the Board or, if no recommendation is given, in their own discretion.
EXECUTIVE COMPENSATION
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 2016 compensation for our named executive officers (“NEOs”).
In fiscal 2016, our NEOs were:
Name | Title | |
Michael P. Durney | President and Chief Executive Officer | |
Luc Grégoire | Chief Financial Officer | |
Shravan Goli | President, Brightmatter Group | |
Pamela Bilash | Senior Vice President, Human Resources | |
James E. Bennett | Managing Director, Global Industry Brands | |
John J. Roberts (1) | Former Chief Financial Officer | |
(1) Mr. Roberts served as Chief Financial Officer through August 2016.
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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, 2016, filed with the SEC on February 9, 2017.
Executive Summary of Our 2016 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:
• | mitigate risk and align the interests of our executive officers with the creation of value for our stockholders; |
• | provide competitive compensation to attract, retain, motivate and reward highly-qualified executive officers; |
• | 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 |
• | ensure a reasonable overall cost of our executive compensation program. |
The three primary elements of our 2016 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 2016, we demonstrated our ability to invest in the growth and innovation of the business. For example:
• | continued adoption of Open Web at Dice, with Dice’s Open Web annual customer count in the U.S. increasing from year-end 2015; |
• | we launched our tech-first strategy; |
• | we released the next version of getTalent with new feature sets; |
• | we are exploring strategic alternatives to help achieve our growth agenda; and |
• | we generated cash flow from operations of $44.6 million while investing for growth. |
The following table illustrates the Company’s performance during the year ended December 31, 2016 in terms of Revenues and Adjusted EBITDA relative to performance during the same period of 2015. Revenues in 2016 decreased 12.6% year over year, reflecting a $14.1 million or 95.0% decline for Slashdot Media, which was sold in January 2016, and a $11.6 million or 55.0% decline for the Rigzone brand. Adjusted EBITDA in 2016 decreased 22.7% year over year, reflecting a $1.9 million decline for Slashdot Media.
2016 | 2015 | Change % | |||||||||
($ in thousands) | |||||||||||
Revenues | $ | 226,970 | $ | 259,769 | (12.6 | )% | |||||
Adjusted EBITDA | $ | 57,663 | $ | 74,550 | (22.7 | )% | |||||
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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 has 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:
• | link targeted compensation to relative stock price performance versus the Russell 2000 index; |
• | typically have a better retentive impact than stock options; |
• | capture investor opportunity cost of investing in DHI relative to the broader sector/market; and |
• | provide a direct link to stockholder value creation/preservation. |
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:
Position | Multiple of Base Salary (as of December 31 of immediately preceding year) or Retainer |
Chief Executive Officer | 3.0x base salary |
Other Executive Officers | 1.0x base salary |
Members of our Board | 3.0x retainer |
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 2016 annual meeting, our compensation program for our named executive officers was approved by the holders of approximately 94% 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 |
We maintain a completely independent Compensation Committee with an ongoing review process of our compensation philosophy and practices. |
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. |
We split the Chairman and CEO roles. Our Chairman of the Board is an independent director and not an employee. |
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. |
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. |
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. |
What We Don’t Do |
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. |
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. |
We do not make loans to executive officers of the Company. |
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. |
We do not pay cash dividends on unearned and unvested equity awards held by NEOs. |
Key 2016 Compensation Decisions
During 2016, 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 21% of our CEO’s total target compensation in 2016, while variable pay, consisting of equity incentives and an annual performance-based cash bonus, made up 79% 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 2015 and 2016:
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Note: 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 18, 2016. The Compensation Committee reviewed 2016 performance Company-wide and for individual members of senior management and awarded bonuses as more fully described below.
For 2016, the Compensation Committee made the following key compensation-related decisions for the Company’s NEOs:
Name | Title | 2016 Base Salary Increase from 2015 | 2016 Bonus Pool Funded | Individual Performance Bonus Adjustment | 2016 Executive Bonus as a Percentage of Target Bonus | 2016 Restricted Stock Awards (#) | 2016 PSU Awards (#) | ||||||
Michael P. Durney | President and Chief Executive Officer | none | 35 | % | 82 | % | 29 | % | 120,000 | 120,000 | |||
Luc Grégoire (1) | Chief Financial Officer | n.a. | 35 | % | n.a. | 35 | % | 70,175 | — | ||||
Shravan Goli | President, Brightmatter Group | none | 45 | % | 90 | % | 41 | % | 30,000 | 30,000 | |||
Pamela Bilash | Senior Vice President, Human Resources | 3 | % | 35 | % | 100 | % | 35 | % | 22,500 | 22,500 | ||
James E. Bennett (2) | Managing Director, Global Industry Brands | (9 | )% | 32 | % | 129 | % | 41 | % | 30,000 | 30,000 | ||
John J. Roberts (3) | Former Chief Financial Officer | 3 | % | — | % | — | % | — | % | 37,500 | 37,500 | ||
(1) Mr. Grégoire was guaranteed a minimum bonus of $50,000 under his employment agreement. Mr. Grégoire joined the Company in November 2016.
(2) Mr. Bennett’s individual performance bonus was increased to reflect his additional responsibilities. Mr. Bennett’s salary, denominated in British Pounds, increased 2% from 2015 to 2016. As reflected in the chart above, the decrease in U.S. dollars was due to fluctuation in exchange rates between U.S. dollars and British Pounds.
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(3) Mr. Roberts served as Chief Financial Officer through August 2016.
The Process of Setting Executive Compensation
The Compensation Committee reviews our executive compensation program throughout the year to:
•evaluate the performance of our NEOs;
•determine annual, performance-based cash bonuses for our NEOs for the prior fiscal year;
•establish the individual and corporate performance objectives for each NEO for the current fiscal year;
•set base salaries for our NEOs for the next fiscal year;
•determine the portion of total compensation that will be contingent, performance-based pay; and
•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.
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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 2016 to assist in establishing the 2016 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 2016, 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:
Compensation Element | What the Element Rewards | Purpose and Key Features |
Base Salary | Qualifications, experience and industry knowledge, quality and effectiveness of leadership, scope of responsibilities, individual goals and objectives and past performance. | Provides competitive level of fixed compensation, with actual salaries determined based on the facts and circumstances of each NEO and competitive market practices. |
Annual, Performance-Based Cash Bonuses | Achievement of specified performance objectives with a time horizon of one year or less (for 2016, focused on revenue and Adjusted EBITDA) and individual performance. | 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. |
Long-Term Equity Incentives | 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. | 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 2016 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 2016, the Compensation Committee determined to keep salaries for certain executives the same, while providing modest increases for other executives.
The following table sets forth the base salaries for our NEOs in 2016 and 2015:
Name | Title | Base Salary for 2016($) | Base Salary for 2015($) | % Change | |||
Michael P. Durney | President and Chief Executive Officer | 515,000 | 515,000 | none | |||
Luc Grégoire | Chief Financial Officer | 340,000 | n.a. | n.a. | |||
Shravan Goli | President, Brightmatter Group | 455,000 | 455,000 | none | |||
Pamela Bilash | Senior Vice President, Human Resources | 300,000 | 290,000 | 3 | % | ||
James E. Bennett* | Managing Director, Global Industry Brands | 292,400 | 321,300 | (9 | )% | ||
John J. Roberts | Former Chief Financial Officer | 345,000 | 335,000 | 3 | % | ||
* 2016 salary reflects £215,000 converted at US$1.36 for each £1 and 2015 salary reflects £210,000 converted at US$1.53 for each £1. Mr. Bennett’s salary increase was 2% from 2015 to 2016 in British Pounds. The lower percentage change in U.S. dollars was due to fluctuation in exchange rates between U.S. dollars and British Pounds.
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 pool for our NEOs for 2016, the Compensation Committee established a target for revenue and Adjusted EBITDA for the six pools of the bonus plan. 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 acquisitions 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 2016, the target contribution percentage for our NEOs was:
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Name | Title | Target Contribution % |
Michael P. Durney | President and Chief Executive Officer | 100% |
Luc Grégoire (1) | Chief Financial Officer | 50% |
Shravan Goli | President, Brightmatter Group | 100% |
Pamela Bilash | Senior Vice President, Human Resources | 40% |
James E. Bennett | Managing Director, Global Industry Brands | 50% |
(1) | Mr. Grégoire was guaranteed a minimum bonus of $50,000 for 2016 under his employment agreement. |
For 2016, the total bonus pool available for the NEOs and other senior executives designated by the Compensation Committee was funded in the following way:
• | 50% of the total bonus pool was funded according to the percentage of the revenue target achieved; and |
•50% was funded according to the percentage of Adjusted EBITDA target achieved.
For 2016, if our actual results were lower than 85% of the revenue target or the Adjusted EBITDA target, the 50% of the bonus pool to be funded upon achieving the applicable target was not funded. If 85% of the applicable target was achieved, 50% of the 50% to be funded with respect to the applicable target was funded. If our actual revenue or Adjusted EBITDA fell between 85% and 100% of the applicable target, the amount to be funded for each target to the bonus pool increased from 50% to 100% of the applicable 50% portion of the bonus pool on a pro-rata basis. Further, for 2016, the size of our bonus pool would increase by 10% for each 1% that our actual revenue exceeds our revenue target (the “revenue multiplier”), provided that actual Adjusted EBITDA is also equal to or greater than the sum of (1) the Adjusted EBITDA target plus (2) 50% of the amount by which actual revenue exceeds our revenue target. (If actual Adjusted EBITDA exceeds our Adjusted EBITDA target but actual revenue does not exceed our revenue target, the bonus pool does not increase.)
The 2016 Senior Bonus Plan consisted of six pools which cover participants beyond our NEOs. Our actual and targets for revenue and Adjusted EBITDA for the pools that included our NEOs were:
Actual 2016 Revenue($) | Target 2016 Revenue($) | Actual 2016 Adjusted EBITDA($) | Target 2016 Adjusted EBITDA($) | 2016 Bonus Pool Funded($)(4) | 2016 Bonus Pool Funded(%) | |||||||
(in millions) | ||||||||||||
Corp Pool(1) | 227.7 | 249.5 | 61.3 | 77.3 | 0.6 | 35 | % | |||||
Global Industry Group Pool(2) | 64.7 | 73.6 | 14.2 | 19.9 | 0.2 | 32 | % | |||||
Brightmatter Pool(3) | 0.1 | 0.8 | (7.1 | ) | (9.1 | ) | 0.3 | 45 | % | |||
(1) | Messrs. Durney and Grégoire and Ms. Bilash participate in the Corp Pool. |
(2) | Mr. Bennett participates in the Global Industry Group Pool. |
(3) | Mr. Goli participates in the Brightmatter Pool. |
(4) | Represents total pool funding, including NEOs. |
Because our actual revenues and Adjusted EBITDA for bonus pool purposes were below our targets for each pool, the bonus pool funding was decreased by 65% for the Corp Pool, 68% for the Global Industry Group Pool and 55% for the Brightmatter Pool. Accordingly, we multiplied each executive officer’s targeted base compensation contribution amount by 35% for those in the Corp Pool, 32% for those in the Global Industry Group Pool and 45% for those in the Brightmatter Pool to determine how much would be contributed to the bonus pool. As a result, the total bonus pool for the Senior Bonus Plan for 2016 (comprised of the six pools) was $1.4 million. The five NEOs plus 39 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.
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The 2016 performance goals and objectives for Mr. Durney consist of:
• | Achieve 2016 Company billings and revenue goals and EBITDA targets; |
• | Identify a strategy to return the business to growth; |
• | Improve the use of data and analytics across the Company’s business units; |
• | Continue to create products from the Work Digital business; |
• | Increase innovation throughout the Company; and |
• | Create a culture of high performance. |
The 2016 performance goals and objectives for Mr. Grégoire consist of:
• | Ensure timely, accurate and informative financial reporting; |
• | Manage external reporting and public stockholder requirements; |
• | Review finance organizational structure and implement changes where appropriate; |
• | Lead corporate development, acquisition and financing activities; and |
• | Analyze optimal capital structure. |
The 2016 performance goals and objectives for Mr. Goli consist of:
• | Innovate and accelerate go-to-market as part of the tech-first strategy; |
• | Innovate Fresh Up platform for getTalent; |
• | Focus on data acquisition to support Tech First, Lengo and Fresh Up products; |
• | Continue product innovation and validation, achieve critical mass customer traction and setup for scale for getTalent; and |
• | Innovate and refine the recruitment marketing solution, grow the customer base for employer branding, and go-to-market with social job ads to validate the value proposition and setup for scale for the Lengo brand. |
The 2016 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; |
• | Implement a talent management program to identify and develop the high potential leadership talent; |
• | Implement employee recognition programs 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 2016 performance goals and objectives for Mr. Bennett consist of:
• | Successfully execute the formation of the Global Industry Group (GIG), bringing eFinancialCareers, Rigzone, BioSpace, and Hcareers together into one organizational structure; |
• | Build leadership and organizational structure to allow the GIG brands to operate efficiently and effectively; |
• | Right size and stabilize the Rigzone business in light of current market conditions; |
• | Evaluate global opportunities for Hcareers business; and |
• | Develop and execute a single product development roadmap. |
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 2016, the Compensation Committee made adjustments to the bonus pool allocations as a result of individual performance. This resulted in awards as follows: Messrs. Durney (82%), Grégoire (n.a., subject to employment agreement commitment), Goli (90%), Bennett (129%) and Ms. Bilash (100%). Mr. Durney recommended to the Compensation Committee, and the Compensation Committee accepted his recommendation, that Mr.
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Durney’s 2016 bonus be reduced to $150,000, with the additional amount being contributed back into the pool to supplement the annual bonus amounts for members of senior management who are not NEOs.
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 2016, 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 2016, 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 2016, 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.
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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 2016, and in the case of Mr. Grégoire, November 2016, the Compensation Committee approved restricted stock and/or PSU grants to key members of our management team, including our NEOs:
Name | Title | Grant Date | 2016 Stock Awards (#) | 2016 PSU Awards (#) | ||
Michael P. Durney | President and Chief Executive Officer | 2/18/2016 | 120,000 | 120,000 | ||
Luc Grégoire (1) | Chief Financial Officer | 11/1/2016 | 70,175 | — | ||
Shravan Goli | President, Brightmatter Group | 2/18/2016 | 30,000 | 30,000 | ||
Pamela Bilash | Senior Vice President, Human Resources | 2/18/2016 | 22,500 | 22,500 | ||
James E. Bennett | Managing Director, Global Industry Brands | 2/18/2016 | 30,000 | 30,000 | ||
John J. Roberts | Former Chief Financial Officer | 2/18/2016 | 37,500 | 37,500 | ||
(1) Mr. Grégoire received a grant of restricted stock (and no PSUs) upon joining the Company in November 2016, but he is entitled to grants of restricted stock and PSUs during 2017 pursuant to the terms of his employment agreement.
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).
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Role of Compensation Consultant
The Compensation Committee engaged Compensia to advise and assist it in connection with 2016 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 2016, 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 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 2016, for which we paid approximately $48,000.
Our Peer Companies
The Compensation Committee, taking into account the advice of Compensia, identified the following peer group of companies in 2016 based on size and business focus for comparison purposes in determining compensation:
Actua | GTT Communications |
Angie’s List | Intralinks |
Bankrate | Limelight Networks |
Bazaarvoice | Liquidity Services |
Blucora | LivePerson |
Care.com | RetailMeNot |
comScore | Travelzoo |
Everyday Health | Truecar |
Global Eagle Entertainment | 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.
For 2016, the Compensation Committee removed Constant Contact, Monster Worldwide, and Xoom because they had been acquired and Demand Media, Envestnet, QuinStreet and Stamps.com because their market capitalization fell outside the desired range.
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)
Jim Friedlich
Golnar Sheikholeslami
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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 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 2016
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, 2014, December 31, 2015, and December 31, 2016.
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(4) | 2016 | 515,000 | — | 1,776,000 | — | 150,000 | 9,275 | 2,450,275 | |||||||||||||||
President & Chief | 2015 | 515,000 | — | 2,531,200 | — | 329,191 | 9,275 | 3,384,666 | |||||||||||||||
Executive Officer | 2014 | 500,000 | — | — | 257,282 | 473,723 | 9,100 | 1,240,105 | |||||||||||||||
Luc Grégoire(5) | 2016 | 52,308 | — | 399,998 | — | 50,032 | — | 502,338 | |||||||||||||||
Chief Financial Officer | |||||||||||||||||||||||
Shravan Goli(6) | 2016 | 455,000 | — | 444,000 | — | 185,367 | 9,275 | 1,093,642 | |||||||||||||||
President, Brightmatter | 2015 | 455,000 | — | 723,200 | — | 305,478 | 9,275 | 1,492,953 | |||||||||||||||
Group | 2014 | 433,077 | 100,000 | 320,850 | 231,554 | 429,278 | 9,100 | 1,523,859 | |||||||||||||||
Pamela Bilash | 2016 | 300,000 | — | 333,000 | — | 42,467 | 9,275 | 684,742 | |||||||||||||||
Senior Vice President, | 2015 | 290,000 | — | 406,800 | — | 78,267 | 9,275 | 784,342 | |||||||||||||||
Human Resources | 2014 | 273,237 | — | 113,400 | 84,913 | 104,219 | 9,100 | 584,869 | |||||||||||||||
James E. Bennett(7) | 2016 | 303,616 | — | 444,000 | — | 59,700 | 2,907 | 810,223 | |||||||||||||||
Managing Director, | 2015 | 290,057 | — | 406,800 | — | 162,161 | 16,504 | 875,522 | |||||||||||||||
Global Industry Brands | 2014 | 306,240 | — | 142,600 | 102,913 | 118,668 | — | 670,421 | |||||||||||||||
John J. Roberts(8) | 2016 | 253,870 | — | 555,000 | — | — | 354,863 | (9) | 1,163,733 | ||||||||||||||
Former Chief | 2015 | 335,000 | — | 678,000 | — | 107,067 | 9,275 | 1,129,342 | |||||||||||||||
Financial Officer | 2014 | 325,000 | — | — | 64,321 | 146,262 | 9,100 | 544,683 | |||||||||||||||
(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 13 to our consolidated financial statements and |
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“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 2016 is: $1,303,200, $325,800, $244,350, $325,800 and $407,250 for Mr. Durney, Mr. Goli, Ms. Bilash, Mr. Bennett, and Mr. Roberts, respectively.
(2) | Represents awards made pursuant to the Senior Bonus Pool Corp Pool (or Brightmatter Pool, in the case of Mr. Goli and Global Industry Group Pool, in the case of Mr. Bennett) 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 or other savings plans for employees outside the United States. |
(4) | Mr. Durney was eligible to receive a bonus of $182,346. Based on Mr. Durney’s recommendation to the Compensation Committee, and the Compensation Committee’s acceptance of his recommendation, Mr. Durney’s bonus was reduced to $150,000 with the additional amount contributed back into the pool to supplement the annual bonus amounts for members of senior management who are not NEOs. |
(5) | Mr. Grégoire joined the Company in November 2016. His annual salary is $340,000. Mr. Grégoire was eligible to receive a bonus of $10,032 based on the Senior Bonus Plan but received an additional $40,000 as he was guaranteed a bonus of $50,000 in 2016 pursuant to the terms of his employment agreement. |
(6) | Mr. Goli received a sign-on bonus of $100,000 that was paid in March 2014, the one year anniversary of employment. |
(7) | All compensation amounts for Mr. Bennett have been converted from British Pounds to U.S. dollars at an exchange rate of US$1.36 for each £1 in 2016, US$1.53 for each £1 in 2015 and US$1.65 for each £1 in 2014. Mr. Bennett made an election in 2016 and 2015 which resulted in an employer contribution to his savings plan. Mr. Bennett did not make a similar election in 2014. |
(8) | Mr. Roberts served as Chief Financial Officer of the Company through August 2016. |
(9) | For Mr. Roberts, this amount for 2016 includes a separation payment of $337,500, reimbursement for the cost of health insurance continuation coverage under COBRA of $8,088, and employer contribution to our 401(k) plan of $9,275. |
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Grants of Plan-Based Awards for Fiscal Year 2016
The following table details grants of plan-based awards to our NEOs during 2016:
Grant Date | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | All Other Stock Awards: Number of Shares of Stock(#)(3) | Grant Date Fair Value of Stock Awards($)(4) | |||||||||||||||
Target ($) | Maximum ($) | Target (#) | Maximum (#) | ||||||||||||||||
Michael P. Durney | 2/18/2016 | 120,000 | 907,200 | ||||||||||||||||
President & Chief Executive | 2/18/2016 | 120,000 | 180,000 | 907,200 | |||||||||||||||
Officer | 515,000 | 1,030,000 | |||||||||||||||||
Luc Grégoire | 11/1/2016 | 70,175 | 399,998 | ||||||||||||||||
Chief Financial Officer | 170,000 | 340,000 | |||||||||||||||||
Shravan Goli | 2/18/2016 | 30,000 | 226,800 | ||||||||||||||||
President, Brightmatter Group | 2/18/2016 | 30,000 | 45,000 | 226,800 | |||||||||||||||
455,000 | 910,000 | ||||||||||||||||||
Pamela Bilash | 2/18/2016 | 22,500 | 170,100 | ||||||||||||||||
Senior Vice President, | 2/18/2016 | 22,500 | 33,750 | 170,100 | |||||||||||||||
Human Resources | 120,000 | 240,000 | |||||||||||||||||
James E. Bennett | 2/18/2016 | 30,000 | 226,800 | ||||||||||||||||
Managing Director, | 2/18/2016 | 30,000 | 45,000 | 226,800 | |||||||||||||||
Global Industry Brands | 146,200(5) | 292,400(5) | |||||||||||||||||
John J. Roberts | 2/18/2016 | 37,500 | 283,500 | ||||||||||||||||
Former Chief Financial Officer | 2/18/2016 | 37,500 | 56,250 | 283,500 | |||||||||||||||
— | — | ||||||||||||||||||
(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$1.36 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.
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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 five weeks of vacation 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 four weeks of vacation per year.
Shravan Goli
Mr. Goli’s employment agreement provides that Mr. Goli will continue to serve as our President, Brightmatter Group until his employment is terminated by us or by Mr. Goli, 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 solicit employees during the term of his employment and for a period of 12 months thereafter.
Mr. Goli is 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, is eligible for an annual discretionary target bonus of 100% of his base salary. Mr. Goli participates in our long-term incentive plan and all employee benefit plans including a 401(k) plan. Mr. Goli is entitled to four weeks of vacation per year.
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 four weeks of vacation per year.
James E. Bennett
The employment agreement for Mr. Bennett, our Managing Director, Global Industry Brands, 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 is entitled to receive an annual base salary of $292,400 (as converted from British Pounds to U.S. dollars at an exchange rate of US$1.36 for each £1), 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. Mr. Bennett participates in our long-term incentive plan, and all employee benefit plans. Mr. Bennett is entitled to five weeks of vacation per year.
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John J. Roberts
Mr. Robert’s employment as Chief Financial Officer was terminated effective August 31, 2016. Pursuant to his employment agreement, Mr. Roberts continued to serve as our Chief Financial Officer until his employment terminated. The agreement contained 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 9 months thereafter.
Mr. Roberts was entitled to receive an annual base salary of $345,000, 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 50% of his base salary. Mr. Roberts participated in our long-term incentive plan, and all employee benefit plans including a 401(k) plan. Mr. Roberts was entitled to four weeks of vacation per year.
In connection with Mr. Roberts’ separation from the Company on August 31, 2016, the Company entered into a separation agreement with Mr. Roberts and made a separation payment to Mr. Roberts in the amount of $337,500, accelerated vesting of certain equity awards, and reimbursed him for the cost of health insurance continuation coverage under COBRA of $8,088 in exchange for a release and certain covenants.
Outstanding Equity Awards at Fiscal Year-End 2016
Vesting Commencement Date | Option Awards | Stock Awards | Equity Incentive Plan Awards | ||||||||||||||||||||||
Number of Securities Underlying Unexercised Options | Option Exercise Price ($) | 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. | 1/31/07 | 105,108 | — | 6.49 | 1/31/17 | ||||||||||||||||||||
Durney | 2/10/10 | 140,000 | — | 6.08 | 2/10/17 | ||||||||||||||||||||
3/3/11 | 35,000 | — | 14.50 | 3/3/18 | |||||||||||||||||||||
2/27/12 | 45,000 | — | 8.97 | 2/27/19 | |||||||||||||||||||||
2/20/13 | 93,750 | 6,250 | 9.82 | 2/20/20 | 12,500 | 78,125 | |||||||||||||||||||
7/24/13 | 182,812 | 42,188 | 9.27 | 7/24/20 | 20,000 | 125,000 | |||||||||||||||||||
2/19/14 | 68,750 | 31,250 | 7.13 | 2/19/21 | |||||||||||||||||||||
3/3/15 | 105,000 | 656,250 | 93 | 583 | |||||||||||||||||||||
2/18/16 | 120,000 | 750,000 | 120 | 750 | |||||||||||||||||||||
Luc | 11/1/16 | 70,175 | 438,594 | ||||||||||||||||||||||
Grégoire | |||||||||||||||||||||||||
Shravan | 3/18/13 | 93,750 | 6,250 | 10.03 | 3/18/20 | 25,000 | 156,250 | (4) | |||||||||||||||||
Goli | 2/19/14 | 16,875 | 28,125 | 7.13 | 2/19/21 | 22,500 | 140,625 | ||||||||||||||||||
3/3/15 | 30,000 | 187,500 | 27 | 167 | |||||||||||||||||||||
2/18/16 | 30,000 | 187,500 | 30 | 188 | |||||||||||||||||||||
Pamela | 1/22/14 | 20,625 | 9,375 | 7.56 | 1/22/21 | 7,500 | 46,875 | ||||||||||||||||||
Bilash | 3/3/15 | 16,875 | 105,469 | 15 | 94 | ||||||||||||||||||||
2/18/16 | 22,500 | 140,625 | 23 | 141 | |||||||||||||||||||||
James E. | 2/10/10 | 56,000 | — | 6.08 | 2/10/17 | ||||||||||||||||||||
Bennett | 3/3/11 | 20,000 | — | 14.50 | 3/3/18 | ||||||||||||||||||||
2/27/12 | 40,000 | — | 8.97 | 2/27/19 | |||||||||||||||||||||
2/20/13 | 37,500 | 2,500 | 9.82 | 2/20/20 | 5,000 | 31,250 | |||||||||||||||||||
2/19/14 | 27,500 | 12,500 | 7.13 | 2/19/21 | 10,000 | 62,500 | |||||||||||||||||||
3/3/15 | 16,875 | 105,469 | 15 | ||||||||||||||||||||||