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TABLE OF CONTENTS
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934 (Amendment No. )
| Filed by the Registrantý | ||
Filed by a Party other than the Registranto | ||
Check the appropriate box: | ||
o | Preliminary Proxy Statement | |
o | Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2)) | |
ý | Definitive Proxy Statement | |
o | Definitive Additional Materials | |
o | Soliciting Material Pursuant to §240.14a-12 | |
| HILL INTERNATIONAL, INC. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
Payment of Filing Fee (Check the appropriate box): | ||||
ý | No fee required. | |||
o | Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11. | |||
(1) | Title of each class of securities to which transaction applies: | |||
(2) | Aggregate number of securities to which transaction applies: | |||
(3) | Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and state how it was determined): | |||
(4) | Proposed maximum aggregate value of transaction: | |||
(5) | Total fee paid: | |||
o | Fee paid previously with preliminary materials. | |||
o | Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing. | |||
(1) | Amount Previously Paid: | |||
| (2) | Form, Schedule or Registration Statement No.: | |||
| (3) | Filing Party: | |||
| (4) | Date Filed: | |||
Hill International, Inc.
One Commerce Square
2005 Market Street, 17th Floor
Philadelphia, Pennsylvania 19103
April 30, 20152019
Dear Fellow Stockholder:
You are cordially invited to attend the 20152019 Annual Meeting of Stockholders (the "Annual Meeting") of Hill International, Inc. (the "Company"). The meeting will be held at TwoOne Commerce Square, 20012005 Market Street, 2nd1st Floor, Philadelphia, Pennsylvania on Tuesday, June 9, 2015,11, 2019 at 9:11:00 a.m. Eastern Time.
DetailsThe Board of Directors is recommending a highly qualified and experienced slate of director nominees for election to the business to be conductedBoard of Directors at the Annual Meeting. At the Annual Meeting, are given inwe will ask you to: (1) elect four directors; (2) provide an advisory vote to approve the attachedCompany's named executive officer compensation; and (3) take action upon any other business as may properly come before the Annual Meeting.
The accompanying materials include the Notice of 2015 Annual Meeting of Stockholders and Proxy Statement.
Whether or not you plan to attend The Proxy Statement describes the business that we will conduct at the Annual Meeting, it is importantMeeting. It also provides information about us that you should consider when you vote your shares be represented and voted at the meeting. Therefore, I urge you to submit your proxy by completing, signing, dating and returning the enclosed proxy card in the enclosed envelope. If you decide to attend the Annual Meeting, you will be able to vote in person, even if you have previously submitted your proxy.shares.
On behalf of the Board of Directors, Iwe would like to express our appreciation for your continued interest in the affairs of theour Company. I look forward to greeting as many of our fellow stockholders attending the Annual Meeting as possible.
Sincerely,
David L. RichterRaouf S. Ghali,President and Chief Executive Officer
Hill International, Inc.
One Commerce Square
2005 Market Street, 17th Floor
Philadelphia, Pennsylvania 19103
NOTICE OF 20152019 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD JUNE 9, 201511, 2019
To our Stockholders:
Hill International, Inc. (the "Company") will hold its 20152019 Annual Meeting of Stockholders (the "Annual Meeting") at TwoOne Commerce Square, 2001 Market Street, 2nd1st Floor, Philadelphia, Pennsylvania 19103 on Tuesday, June 9, 2015,11, 2019, at 9:11:00 a.m. Eastern Time, to address matters that may properly come before the meeting. We are holding the Annual Meeting for the following purposes:
The Board of Directors has fixed the close of business on April 15, 2015 as the record date for the Annual Meeting. Only holders of record of common stock of the Company at the close of business on April 15, 20152019 are entitled to notice of and to vote at the annual meetingAnnual Meeting and any adjournment or postponement thereof.
It is important that your shares be represented and voted at the meeting. If you are a stockholder of record and do not plan to attend the meeting, please mark, sign, date and promptly mail yourthe enclosed proxy card in the enclosed postage-paid envelope. You may revoke your proxy at any time before its exercise at the meeting. If you do not hold your shares of record and you do not plan to attend the meeting, please follow the instructions provided by your broker, bank or other nominee to ensure that your shares are voted.
By orderOrder of the Board of Directors,
William H. Dengler, Jr.
, Corporate Secretary
April 30, 2019
Philadelphia, PennsylvaniaApril 30, 2015
Important Notice Regarding the AvailabilityTable of Proxy Materials for Our Annual Meeting of Stockholders to Be Held on June 9, 2015Contents
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY
MATERIALS FOR OUR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD
ON JUNE 11, 2019
The accompanying Proxy Statement and our 20142018 Annual Report to stockholders are available at
our website at www.hillintl.com, in the "Investor Relations""Investors" section.
2019 PROXY STATEMENT | 1 | |||
VOTING | 1 | |||
PROPOSAL | ||||
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CORPORATE GOVERNANCE | ||||
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PROPOSAL 2 — ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION | 13 | |||
EXECUTIVE COMPENSATION (IN DOLLARS) | ||||
DIRECTOR COMPENSATION | 39 | |||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS (IN DOLLARS) | ||||
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This 2019 Proxy Statement (the "Proxy Statement") is furnished in connection with the solicitation of proxies by Hill International, Inc. ("Hill" or the "Company") on behalf of the Board of Directors (the "Board") for the 20152019 Annual Meeting of Stockholders (the "Annual Meeting"), to be held on Tuesday, June 9, 2015,11, 2019, and at any meeting following adjournment or postponement of the Annual Meeting.annual meeting. We are first mailing this proxy statementProxy Statement and proxy card (including voting instructions) on or about April 30, 2015,May 2, 2019, to persons who were stockholders at the close of business on April 15, 2015,2019, the record date for the meeting. Also, this Proxy Statement contains certain information that the Securities and Exchange Commission (the "SEC") and the New York Stock Exchange (the "NYSE") require Hill to provide annually to stockholders.
The 2015 Annual Meeting of Stockholders is scheduled to begin at 9:11:00 a.m. Eastern Time on June 9, 201511, 2019 at TwoOne Commerce Square, 2001 Market Street, 2nd1st Floor, Philadelphia, Pennsylvania 19103. Stockholders will be admitted beginning at 8:10:30 a.m. Eastern Time. The Board has designated Raouf S. Ghali and William H. Dengler to vote the shares represented by proxies at the Annual Meeting in the matter indicated by the proxies.
VOTING |
Who Can Vote?Vote
You are entitled to vote at the annual meeting all shares of the Company's common stock that you held as of the close of business on April 15, 2019, the record date. Each share of common stock is entitled to one vote with respect to each matter properly brought beforedate for voting at the meeting.
Annual Meeting. On April 15, 2015,2019, there were 50,373,82255,659,788 shares of common stock outstanding.
In accordance with Delaware law, a list of stockholders entitled to vote at the meeting will be available at the meeting.
Who IsDetermining the Record Holder?Number of Votes You Have
You may ownThe enclosed proxy card indicates the number of shares of common stock either (1) directly in your name, in which casethat you areown. Each share of common stock is entitled to one vote with respect to each matter properly brought before the record holder of such shares, or (2) indirectly through a broker, bank or other nominee, in which case such nominee is the record holder.
If your shares are registered directly in your name, we are sending these proxy materials directly to you. If the record holder of your shares is a nominee, you will receive proxy materials from such record holder.meeting.
How Do I Vote?to Vote If You Are a Stockholder of Record
If you areBy Mail — Stockholders may vote their shares by signing and dating the record holder:
At the Annual Meeting
If your stock is held by brokers, banks or other financial institutions:
You will need to bring picture identification to the meeting. If you own shares in street name (i.e., your shares are held in street name through a beneficial owner is notbroker, bank, trustee or other nominee), you must also bring your most recent brokerage statement to the meeting. We will use your brokerage statement to verify your ownership of common stock and admit you to the meeting. Shares held in your name as the stockholder of record you may not vote your sharesbe voted by you in person at the annual meeting unlessAnnual Meeting. Shares held beneficially in street name may be voted by you in person at the Annual Meeting only if you obtain a "legal proxy"legal proxy from the broker bank or nomineeother agent that holds your shares giving you the right to vote the shares
Meeting, you do not need to vote again at the meeting. Your broker, bankAnnual Meeting unless you wish to change your vote. Even if you plan to attend the Annual Meeting, we strongly urge you to vote in advance by proxy by signing and dating the enclosed proxy card and returning it in the postage-paid envelope provided.
For the election of directors, you can specify whether your shares should be voted for all, some or other nominee can provide you information on how to obtain a "legal proxy." Your broker, bank or other nominee has enclosed or provided voting instructionsnone of the nominees for director listed. Our Board urges you to use the enclosed proxy card to vote based on its recommendations, including FOR ALL of the nominees for director listed and FOR the advisory vote to approve the Company's named executive officer compensation.
If you submit a proxy to us without indicating instructions with respect to specific proposals, we will vote your shares consistent with the recommendations of our Board of Directors as stated in directingthis Proxy Statement, specifically for all our nominees for director and for the broker,advisory approval of the Company's named executive officer compensation. If any other matters are properly presented at the Annual Meeting for consideration, then the persons named on your proxy will have discretion to vote for you on those matters. As of the date of the Notice of 2019 Annual Meeting of Stockholders, we knew of no other matters to be presented at the Annual Meeting.
How to Vote If Your Shares Are Held in Street Name
If your brokerage firm, bank, broker-dealer or other nominee howsimilar organization is the holder of record of your shares (i.e., your shares are held in "street name"), you will receive voting instructions from the holder of record. You must follow these instructions in order for your shares to be voted. Your broker is required to vote those shares in accordance with your instructions. If you do not give instructions to your broker, your broker will not be able to vote your shares.
The New York Stock Exchange ("NYSE") does not considershares with respect to the election of directors (Proposal 1) or the re-approvaladvisory approval of our 2010 Senior Executive Bonus Planthe Company's named executive officer compensation (Proposal 2). Brokerage firms do, however, have the authority under applicable rules to vote shares on certain matters when their customers do not provide voting instructions; however, no such matters are to be a "routine matter." Therefore, for your votevoted upon at this year's Annual Meeting. We urge you to be counted, you need to communicate your voting decisions toinstruct your broker bank or other financial institution before the datenominee how to vote your shares by following those instructions.
Voting by Employees Participating in 401(k) Plan
If you are an employee of the Annual Meeting.
The method by which you vote will in no way limit your right to vote at the annual meeting if you later decide to attend in person.
If your stock is heldCompany and participate in the Hill International Inc. 401(k) Retirement Savings Plan:
Plan (the "Plan"), the enclosed voting instruction form indicates the aggregate number of shares of common stock credited to your account as of April 15, 2019, the record date for voting at the Annual Meeting. If you are or were an employee of the Company and hold shares in the 401(k) Plan, the proxy that youtimely submit will provide your voting instructions to the Plan Trustee. However,Plan's trustee (the "Trustee") by following the instructions on the enclosed voting instruction form, your shares will be voted as you cannot vote your savings plan shares in person at the annual meeting.have directed. If you do not submit a proxy,provide the PlanTrustee with voting instructions, the Trustee will vote your savings planPlan shares in the same proportion as the shares for which the Trustee receives voting instructions from other participants in the Plan.
How Many Votes Are Required?
A quorum is required to transact business The Trustee must receive your voting instructions no later than June 7, 2019. Please note that Plan participants may vote their shares through the Trustee only and accordingly may not vote their Plan shares in person at the annual meeting. We will have a quorumAnnual Meeting.
Receipt of Multiple Proxy Cards
Many of our stockholders hold their shares in more than one account and be able to conduct the businessmay receive separate proxy cards or voting instruction forms for each of the annual meeting if the holdersthose accounts. To ensure that all of a majority of theyour shares entitled to vote are present at the meeting, either in person or by proxy.
If a quorum is present, a plurality of votes cast is required to elect directors. Thus, a director may be elected even if the director receives less than a majority of the shares represented at the meeting. Proxies cannot be voted for a greater number of nominees than are named in this Proxy Statement.
All other matters to come before the annual meeting require the approval of a majority of the shares of common stock present, in person or by proxy, at the annual meeting and entitled to vote.
How Are Votes Counted?
All sharesAnnual Meeting, we recommend that have been properly voted, and not revoked, will be voted at the annual meeting in accordance with the instructions given. If you sign and return yourvote every proxy card but do not specify how you wish your shares to be voted, your shares represented by that proxy will be voted as recommended by the Boardreceive.
Proxies marked as abstaining, and any proxies returned by brokers as "non-votes" on behalf of shares held in street name because beneficial owners' discretion has been withheld as to one or more matters to be acted upon at the annual meeting, will be treated as present for purposes of determining whether a quorum is present at the annual meeting. However, any shares not voted as a result of a marked abstention or a broker non-vote will not be counted as votes cast for or against a particular matter.Contents
How Can I Revoke My Proxy or Change My Vote?Revocation of Proxies
You can change your vote or revoke your proxy at any time before it is exercised at the Annual Meeting by timely deliverydoing any of the following: (1) you can submit a properly executed, later-datedvalid proxy with a later date; (2) you can notify our Secretary in writing at Secretary, Hill International, Inc., One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, Pennsylvania 19103 that you have revoked your proxy; or by voting(3) you can vote in person by written ballot at the meeting. ForAnnual Meeting.
Required Vote
Proposal 1: Election of Directors. Our Board of Directors has determined that this year's election will be considered uncontested, so majority voting will apply to the election of directors at the Annual Meeting. Nominees receiving a majority of votes cast "for" their election will be elected as a director; the votes cast "for" a nominee must exceed the votes cast "withheld" for such nominee.
If you do not vote for a particular nominee, or if you indicate on your proxy card that you want to withhold authority to vote for a particular nominee, then your shares will not be voted for that nominee. If stockholders do not elect a nominee who is already serving as a director, Delaware law provides that the director would continue to serve on the Board as a "holdover director," rather than causing a vacancy, until a successor is duly elected or until the director resigns. In addition, if you hold beneficially in street name,shares of common stock through a broker-dealer, bank nominee, custodian or other securities intermediary, the intermediary will not vote those shares for the election of any nominee for director unless you may change your vote by submitting newgive the intermediary specific voting instructions on a timely basis directing the intermediary to vote for such nominee. Abstentions and broker non-votes do not constitute a vote "for" or "withheld" as to a director.
Pursuant to our Amended and Restated Bylaws, written notice by stockholders of qualifying nominations for election to our Board of Directors must have been received by our Secretary by March 23, 2019. We did not receive any such nominations, and no other nominations for election to our Board may be made by stockholders at the Annual Meeting.
If for some reason any of the Board's director nominees are unable to serve, the persons named as proxies may vote for a substitute nominee recommended by the Board and, unless you indicate otherwise on the proxy card, your shares will be voted in favor of the Board's remaining nominees. As of the date of the Notice of 2019 Annual Meeting of Stockholders, we knew of no reason why any of the Board's nominees would be unable or for good cause unwilling to serve as a director if elected.
Proposal 2: Advisory vote on the approval of the Company's named executive officer compensation. The votes cast "for" this proposal must exceed the votes cast "against" such proposal for this proposal to pass. In addition, if you hold shares of common stock through a broker-dealer, bank nominee, custodian or other securities intermediary, the intermediary will not vote those shares either "for" or "against" the approval of the Company's named executive officer compensation unless you give the intermediary specific voting instructions on a timely basis directing the intermediary to vote. Abstentions and broker non-votes do not constitute a vote "for" or "against" this proposal and will be disregarded in the calculation of "votes cast."
Broker non-votes
A broker non-vote occurs when a beneficial owner of shares held by a broker, bank or other nominee followingfails to provide the instruction it has provided, or, if you have obtained a legal proxy from your broker or nominee giving you the rightrecord holder with specific instructions concerning how to vote your shares, by attendingon any "non-routine" matters brought to a vote at a stockholders meeting. Under the meeting and voting in person.NYSE rules,
Who Will Pay"non-routine" matters include the Expenseselection of Proxy Distribution?
The Company will paydirectors (Proposal 1) and the expensesvote, on an advisory basis, on the approval of the preparationCompany's named executive officer's compensation (Proposal 2). Under applicable rules, a brokerage firm has the authority to vote shares on certain matters when their customers do not provide voting instructions; however, no such matters are to be voted upon at this year' Annual Meeting.
If you hold your shares in street name, it is critical that you cast your vote by instructing your bank, broker or other nominee on how to vote if you want your vote to be counted at the Annual Meeting for Proposals 1 and 2. Otherwise, your bank, broker or other nominee will not be able to vote your shares on these "non-routine" matters.
How to Attend the Annual Meeting
Registered stockholders may be admitted to the meeting upon providing picture identification. If you own shares in street name (i.e., your shares are held in street name through a broker, bank, trustee or other nominee), you must also bring your most recent brokerage statement, along with picture identification, to the meeting. We will use your brokerage statement to verify your ownership of common stock and admit you to the meeting.
Please note that cameras, sound or video recording equipment, or other similar equipment, electronic devices, large bags or packages will not be permitted in the Annual Meeting.
Quorum
A quorum of stockholders is necessary to transact business at the 2019 Annual Meeting. A quorum exists if the holders of at least a majority of the proxy materials and the solicitationshares of proxies. Proxies may be solicited on behalf of the Company by directors, officers or employees of the Company, who will receive no additional compensation for soliciting,common stock entitled to vote are present either in person or by telephone, e-mailproxy at the meeting. Abstentions and broker non-votes will be counted in determining whether a quorum exists.
2020 Stockholder Proposals
At each annual meeting, stockholders are asked to elect directors to serve on the Board. The Board or facsimilestockholders may submit other proposals to be included in the proxy statement. To be considered for inclusion in the 2020 Annual Meeting Proxy Statement, stockholder proposals must meet the requirements of SEC Rule 14a-8 and must be received no later than December 31, 2019. After such date, any shareholder proposal will be considered untimely and may be excluded from consideration at the meeting. Our Amended and Restated Bylaws provide that a stockholder may otherwise propose business for consideration or nominate persons for election to the Board, in compliance with federal proxy rules, applicable state law and other electronic means. In accordance withlegal requirements and without seeking to have the proposal or nomination included in our proxy statement. If our 2020 Annual Meeting is held no more than 30 days prior to and no later than 70 days after the anniversary date of our 2019 Annual Meeting, our Amended and Restated Bylaws currently require that notice of such proposals or nominations for our 2020 Annual Meeting be received by us during the period from February 12, 2020 to March 13, 2020. Any such notice must satisfy the other requirements in our Amended and Restated Bylaws applicable to such proposals and nominations.
Householding Information
SEC regulations permit the Company to send a single set of proxy materials, which includes this Proxy Statement, the Securities and Exchange Commission ("SEC")Annual Report to Stockholders and the NYSE, weNotice of Internet Availability of Proxy Materials, to two or more stockholders that share the same address. Each stockholder will reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in sending proxies andcontinue to
receive his or her own separate proxy card. Upon written or oral request, the Company will promptly deliver a separate set of proxy materials to beneficial ownersa stockholder at a shared address that only received a single set of proxy materials for this year. If a stockholder would prefer to receive his or her own copy, please contact William H. Dengler, Jr., Corporate Secretary, at the Company's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, PA 19103; or by email addressed to hil@openboard.info. Similarly, if a stockholder would like to receive his or her own set of the Company's stock.proxy materials in future years or if a stockholder shares an address with another stockholder and both would like to receive only a single set of the Company's proxy materials in future years, please contact Mr. Dengler.
What am I being asked to vote on and what are the Board of Directors' recommendations?
The following table lists the proposals scheduled to be voted on, the vote required for approval of each proposal and the effect of abstentions and broker non-votes:
| Proposal | | Board Recommendation | | Vote Required | | Abstentions | | Broker Non-Votes | | Unmarked Proxy Cards |
|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | |
| Election of Directors (Proposal One) | | FOR | | Majority of votes cast | | No effect | | No effect | | Voted "FOR" |
| | | | | | | | | | | |
| Advisory Vote on Compensation of Named Executive Officers (Proposal Two) | | FOR | | Majority of votes cast | | No effect | | No effect | | Voted "FOR" |
| | | | | | | | | | | |
NO PERSON IS AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION OTHER THAN THOSE CONTAINED IN THIS PROXY STATEMENT, AND, IF GIVEN OR MADE, SUCH INFORMATION MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED. UNDER NO CIRCUMSTANCES DOES THE DELIVERY OF THIS PROXY STATEMENT CREATE ANY IMPLICATION THAT THERE HAS BEEN NO CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROXY STATEMENT.
PROPOSAL 1—ELECTION OF DIRECTORS
PROPOSAL 1 — ELECTION OF DIRECTORS |
The Board of Directors (the "Board") is divided into three classes. One class is typically elected each year for a term of three years. This year, our Board seeks to rebalance the classes so that the classes are more evenly distributed.
TwoFour directors will be elected at this Annual Meeting toMeeting; three directors will serve for a three-year term expiring at our annual meeting in 2018.2022 and one director will serve for a one-year term expiring at our annual meeting 2020. Upon the recommendation of the Governance and Nominating Committee, the Board has renominated Camille S. Andrewsnominated David Sgro, Grant G. McCullagh and Brian W. ClymerSue Steele to serve for terms expiring in 2018.2022 and Paul J. Evans to serve for a term expiring in 2020.
The persons named in the proxy card will vote such proxy "for" the election of each of Mr. Sgro, Mr. McCullagh, Ms. AndrewsSteele and Mr. ClymerEvans unless you indicate that your vote should be withheld. If elected, each of Mr. Evans, Mr. McCullagh, Ms. AndrewsSteele and Mr. ClymerSgro will continue in office until her/his or her successor has been duly elected and qualified, or until the earliest of her/his or her death, resignation, retirement or removal. Each of Mr. Sgro, Mr. McCullagh, Ms. AndrewsSteele and Mr. ClymerEvans have indicated to the Company that they will serve if elected.elected and have consented to be named in this proxy. We do not anticipate that Mr. Sgro, Mr. McCullagh, Ms. AndrewsSteele and Mr. ClymerEvans will be unable to stand for
election, but, if that happens, your proxy will be voted in favor of another person nominated by the Board upon the recommendation of the Governance and Nominating Committee.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR STOCKHOLDERS VOTE "FOR""FOR ALL" THE ELECTION OF MR. EVANS, MR. McCULLAGH, MS. ANDREWSSTEELE AND MR. CLYMERSGRO AS DIRECTORS.
DAVID SGRO has been our Chairman since October 2018 and a director since August 2016. Mr. Sgro is a Senior Managing Director of Crescendo Partners, L.P. and has held various positions at Crescendo Partners since May 2005. He is also a Managing Member and Head of Research for Director—Term Expiring in 2018
CAMILLE S. ANDREWSJamarant Capital, a private investment fund. Mr. Sgro also serves as an officer and the Chairman of Allegro Merger Corp. (NASDAQ:ALGRU). Mr. Sgro has been a director and a former chairman of the audit committee of and Pangaea Logistics Solutions Ltd. (NASDAQ:PANL), since October 2014, and a director and chairman of the audit committee of BSM Technologies Inc., since June 2009. Since 1998, Ms. Andrews2016. He was previously a director of NextDecade Corporation and Imvescor Restaurant Group Inc., a director, and chairman of the audit committee, of ComDev International, a director, and chairman of the audit committee of SAExploration Holdings, Inc. (NASDAQ:SAEX), a director of Bridgewater Systems, Inc., and a director of Primoris Services Corporation (NASDAQ:PRIM). Mr. Sgro also served as an officer and director of Harmony Merger Corp., from March 2015 until its merger with NextDecade in July 2017; Quartet Merger Corp., from October 2013 until its merger with Pangaea Logistics Solutions Ltd. in October 2014; and as an officer and director of Trio Merger Corp., from March 2011 until its merger with SAExploration Holdings in June 2013. Prior to joining Crescendo Partners, Mr. Sgro held analyst positions with Management Planning, Inc. and MPI Securities, Inc. Mr. Sgro is a Chartered Financial Analyst (CFA) Charterholder and holds a B.S. in Finance from The College of New Jersey and an M.B.A. from Columbia Business School. Age: 42
GRANT G. McCULLAGH has beenserved as the Executive Chairman of BEK Building Group since 2015, an Associate Dean,Executive Vice President of Pernix Group, Inc. since 2014 and as Managing Director of TTWiiN, LLC since 1996 she has been2018. Mr. McCullagh served as a member of the faculty,Board of Rutgers University SchoolDirectors of Law at Camden. Since 2007, Ms. Andrews has also served as CounselWSP Global Inc. from May 2011 to Context Capital Partners, a private equity firm. Between 1986 and 1996, Ms. Andrews was a Partner with the law firm of Dilworth Paxson LLP, and between 2006 and 2008, she was Of Counsel to that firm, with expertise in antitrust, securities, class actions, derivative and shareholder suits, and other complex litigation matters. Ms. Andrews earned a B.A.magna cum laude in rhetoric and communication from the University of Pittsburgh and a J.D.with honors from Rutgers University School of Law at Camden, where she served on the Law Review. SheMay 2015. Mr. McCullagh has served on a numberin numerous management roles within the engineering and construction industry including as Chairman and CEO of charitable boards, including the Walnut Street Theatre, ACYO Foundation, New Jersey Child Cares, and the Philadelphia Zoo Chairman's Council. She has also served on the New Jersey Supreme Court Committee on Judicial Education. Ms. Andrews is admittedLTC Corporation from 2012 to practice law in New Jersey, Pennsylvania and before the U.S. Supreme Court. Ms. Andrews offers a wealth of legal expertise in commercial matters and her service on the boards of other organizations provides cross-board experience. Age: 55. Other Public Company Board Service: None.
BRIAN W. CLYMER has been a director since June 2006. Mr. Clymer retired from Prudential Financial, Inc. where he was Senior Vice President of External Affairs from July 1997 to January 2013. Prior to Prudential, he served as New Jersey State Treasurer under Governor Christine Todd Whitman from 1994 to 1997. Prior to that, Mr. Clymer was President2014, former Chairman and Chief Executive Officer of RailwayGlobal Integrated Business Solutions, LLC from 2005 to 2012, and previously co-founding McClier Corporation and serving as its CEO and Chairman. McClier was acquired by AECOM in 1996, where Mr. McCullagh served as an Executive Vice President and later Vice Chairman until 2004. Mr. McCullagh has a Master of Business Administration from the University of Chicago, a Master of Architecture from the University of Pennsylvania, and a Bachelor of Science in Architecture from the University of Illinois at Champaign-Urbana. Age: 68
SUE STEELE has served as the Chief Executive Officer of JMJ Associates since April 2017. From May 2010 to April 2017, Ms. Steele served as Senior Vice President Global Supply Management of Jacobs Engineering Group, Inc. Previously, she worked with several other major engineering and construction firms including CH2MHill as Vice President Operations and BE&K as Vice President-Industrial Services (which is now part of Pernix). Ms. Steele began her career at Florida Power & Light, after receiving her MBA from the University of Miami and BS from Auburn University. Age: 67
NOMINEE FOR DIRECTOR — TERM EXPIRING IN 2020 |
PAUL J. EVANS has been a director since August 2016 and served as our Interim Chief Executive Officer from May 2017 to September 2018. From 2012-2015 Mr. Evans served as Vice President, Chief Financial Officer and Treasurer of its parentMYR Group, and President of MYR Real Estate Company. From 2010-2011, Mr. Evans was Chief Executive Officer of Conex Energy Corporation, a privately-held company Gannett Fleming, Inc., an engineering design firm, from 1993 to 1994.that developed renewable energy projects. From 1989 to 1993,2002-2009 he served under President George H.W. Bush as AdministratorTreasurer and Corporate Officer of the U.S. Federal Transit Administration.NorthWestern Energy, a multi-state utility that provides electricity and natural gas. Prior to NorthWestern Energy, Mr. Clymer has served on numerous Boards of Directors, including the New Jersey SportsEvans held corporate operational finance positions at Duke Energy North America, NRG Energy, and Exposition Authority, the New Jersey Casino Reinvestment Development Authority, the New Jersey Performing Arts Center, the Southeastern Pennsylvania Transportation Authority, the American Public Transit Association, Security First Bank, and Motor Coach Industries International,McLane Company, Inc., then a New York Stock Exchange-listed designer and manufacturer of buses and coaches. He currently serves on the Board of Directors of the New Jersey Alliance for Action and is the immediate past Chairman of the Board of the Independent College Fund of New Jersey. Mr. Clymer earned his B.S. in business and economics from Lehigh University. HeEvans is a Certified Public Accountant and holds a B.B.A. in the CommonwealthAccounting from Stephen F. Austin State University and Masters of Pennsylvania. Mr. Clymer has spent almost 20 years in the fieldInternational Management from Thunderbird School of public accounting and brings extensive experience as an executive and board member of various publicly and non-publicly held entities and offers deep knowledge of financial, economic and accounting matters.Global Management. Age: 68. Other Public Company Board Service: Longport, Inc. (2001 to 2010), Motor Coach Industries (1993 to 1994) and Security First Bank (1987 to 1989).50.
Continuing Directors—Term Expiring in 2017
DAVID L. RICHTER has been our President and Chief Executive Officer since December 2014 and heJAMES CHADWICK has been a memberdirector since October 2018. Mr. Chadwick has served as a Director of our BoardAlternative Investments with Ancora Advisors, LLC since 2014. He has served on the board of Directors since 1998. Prior to his current position, he was our President and Chief Operating Officer from March 2004 to December 2014. Before that, Mr. Richter was President of our Project Management Group from 2001 to 2004, Senior Vice President and General Counsel from 1999 to 2001 and Vice President and General Counsel from 1995 to 1999.seven public companies. Prior to joining us, heAncora, Mr. Chadwick was an attorney with the New York City law firm of Weil, Gotshal & Manges LLP from 1992 to 1995. Mr. Richter is a FellowManaging Director of the Construction Management Association of America ("CMAA")private equity firm Harlingwood Equity Partners, LLC. Before joining Harlingwood, Mr. Chadwick founded and managed two hedge funds, PCI Partners LLC and Monarch Activist Partners LP. Mr. Chadwick earned a member of the World Presidents' Organization, the Construction Industry Round Table and the American Society of Civil Engineers. He is a former member of the Board of Trustees of the Southern New Jersey Development Council and the Board of Directors of the CMAA. Mr. Richter earned his B.S. in management, his B.S.E. in civil engineering and his J.D.BA from the University of Pennsylvania, and he is currently pursuing his M.Sc. in major program management from the University of Oxford. Mr. Richter is a son of Irvin E. Richter. Mr. Richter has more than two decades of executive leadership with the Company and has developed great expertise in the construction management industry.California Los Angeles. Age: 48. Other Public Company Board Service: None.45.
ALAN S. FELLHEIMER has been a director since June 2006. He has been Chairman of the Philadelphia law firm of Fellheimer & Eichen LLP since January 2006. He was Chairman of the Board of the Pennsylvania Business Bank, a state-chartered bank, from 1998, when he founded the bank, until 2008 when the bank was sold. He also served as the bank's President and Chief Executive Officer from 1998 until 2006. From 1991 to 1998, Mr. Fellheimer was a Partner in the Philadelphia law firm of Fellheimer Eichen Braverman & Kaskey. During 1990, he was a Partner with the Philadelphia law firm of Spector Gadon & Rosen, P.C. From 1985 to 1990, Mr. Fellheimer was Chairman and Chief Executive Officer of Equimark Corp., then a New York Stock Exchange-listed bank holding company. He currently serves as a member of the Board of Trustees and Executive Committee of Gratz College, aan emeritus member of the Board of Trustees of the Pennsylvania Ballet, a member of the President's Advisory Board of Temple University and a member of the Dean's Advisory Board of the School of Social Policy & Practice of the University of Pennsylvania. Mr. Fellheimer is a Trustee of the Law Foundation of Temple University and a Past Master, Past High Priest and Trustee of the Grand Lodge of Pennsylvania, AYFAF&AM. Mr. Fellheimer earned his A.B. in liberal arts and his J.D.summa cum laude from Temple University. He is a member of the New Jersey, New York and Pennsylvania bars. Mr. Fellheimer has significant banking expertise and brings to the Company experience in leadership positions with public and non-public entities. Age: 71. Other Public Company75.
ARNAUD AJDLER has been a director since October 2018. Mr. Ajdler has served as the managing partner for Engine Capital L.P., a value-oriented investment firm, since 2013. Mr. Ajdler, who was a member of Hill's Board Service: None.from June 2006 to June 2009, currently sits on the boards of Stewart Information Services Corporation (NYSE:STC) and StarTek, Inc. (NYSE:SRT). He earned a BS in Mechanical Engineering from the Free University of Brussels, Belgium, an MS in Aeronautics from the Massachusetts Institute of Technology (MIT), and an MBA from Harvard Business School. Age: 42.
Continuing Directors—Term Expiring in 2016
IRVIN E. RICHTERRAOUF S. GHALI has been Chairman of our Board of DirectorsChief Executive Officer since 1985October 2018 and he has been a member of our Board of Directorsboard since August 2016. Prior to that, he founded the company in 1976. He previously served aswas our President from August 2016 to October 2018, Chief ExecutiveOperating Officer from 1976January 2015 to 2014. Mr. Richter is a FellowOctober 2018, President of the Constructionour Project Management Association of America ("CMAA") and a member of the World Presidents' Organization. He is the author of several books includingHandbook of Construction Law & Claims andInternational Construction Claims: Avoiding and Resolving Disputes. He serves or has served on a number of Boards of Directors, including Rutgers University, Temple University Hospital and the CMAA. Mr. Richter holds a B.A.Group (International) from January 2005 to January 2015, Senior Vice President in government from Wesleyan University and a J.D. from Rutgers University School of Law at Camden, and he has been named a Distinguished Alumnus at both schools. Effective December 31, 2014, Mr. Richter relinquished the role of Chief Executive Officer of the Company. Mr. Richter's substantial expertise in the areascharge of project management operations in Europe, North Africa and construction claims has made him highly regarded in our industry. His strategic vision, leadershipthe Middle East from 2001 to 2004, and construction industry knowledge have helpedVice President from 1993 to guide the Company on its path of growth and success. Age: 70. Other Public Company Board Service: None.
STEVEN M. KRAMER has been a director since June 2010. He is President of Synchema, LLC which he founded in 2009. Synchema is a consulting company which assists companies in various aspects of strategic planning.2001. Prior to Synchema,joining us, he worked for Walt Disney Imagineering from 1988 to 1993. Mr. Kramer was President and Chief Operating Officer of Kelstar International, which he co-founded, from 1987 until it was sold to Altana,Ghali earned both a publicly-owned German specialty chemical and pharmaceutical company, in October 2005. Kelstar is a manufacturer of aqueous coatings, ultraviolet-curable coatings and specialty chemicals for the international printing industry. He resigned from Kelstar in 2006. From the time of his resignation from Kelstar in 2006 until his founding of Synchema in 2009, Mr. Kramer pursued a variety of business interests independently. Mr. Kramer earned his B.S. in Graphic Communicationsbusiness administration and economics and an M.S. in business organizational management from the Rochester InstituteUniversity of Technology. Mr. Kramer is a member of the Board of Directors of Dragonfly Forest, Inc., a non-profit organization dedicated to providing overnight camp experiences to seriously ill children. He was a member of the Young Presidents' Organization from 2003 to 2012 and he has been a member of the World Presidents' Organization since 2012. Mr. Kramer's experience as founder and executive of his own companies and his experience with respect to strategic planning provides valuable insight regarding the Company's growth and direction.LaVerne. Age: 53. Other Public Company Board Service: None.
GARY F. MAZZUCCO has been a director since June 2013. Mr. Mazzucco founded Mazzucco & Company, CPAs in February 1977 and has served as its Managing Partner ever since. He has been providing accounting, tax and consulting services for over forty years. Prior to founding Mazzucco & Company, he was an accountant with Lybrand, Ross Brothers and Montgomery (a predecessor company of PricewaterhouseCoopers LLP) for two years and worked in private accounting for five years. Mr. Mazzucco earned his B.S. in accounting from Mount Saint Mary's University and has also served as a college professor, coach, mentor, board member, officer and trusted advisor to many individuals and organizations throughout his career. He is a certified public accountant in New Jersey. He is a member of the American Institute of Certified Public Accountants and a Fellow of the New Jersey Society of Certified Public Accountants. Age: 66. Other Public Company Board Service: None.57.
CORPORATE GOVERNANCE |
Pursuant to the Delaware General Corporation Law and the Company's Amended and Restated By-laws,Bylaws, the Company's business, property and affairs are managed by or under the direction of the Board of Directors. Members of the Board are kept informed of the Company's business through discussions with the Chief Executive Officer and other officers, by reviewing materials provided to them and by participating in meetings of the Board and its committees. We currently have sevennine members on our Board.
During 2014,2018, the Board held seven21 meetings and the committees held a total of ten24 meetings. Each incumbent director attended more than 75% of the total number of meetings of the Board of Directors and the Board committees of which he or she was a member during the period he or she served as a director in 2014.2018. Although we do not have a policy requiring all directors to attend annual meetings of stockholders, we expect all directors to attend, absent extenuating circumstances. AllEach of our directors attended the 2014our 2018 Annual Meeting of Stockholders.
Board Leadership Structure
Our Amended and Restated Bylaws provide that we will have a Chairman who will chair Board meetings and perform such other duties as set forth in our Amended and Restated Bylaws or as otherwise assigned to him by our Board. The Chairman and Chief Executive Officer may be the same person; however, our Board may separate these two positions if it deems it to be in the best interests of our Company and our stockholders to do so. Presently, the Chairman and Chief Executive Officer positions are held by two different individuals.
Role of the Board in Risk Oversight
The Board as a whole has responsibility for risk oversight, with reviews of certain areas conducted by relevant Board committees that report on their findings to the Board. The oversight responsibility of the Board and the Board committees is facilitated by management reporting processes designed to provide information to the Board concerning the identification, assessment and management of critical risks and management's risk mitigation strategies and practices. These areas of focus include operational, economic, competitive, financial (including accounting, reporting, credit, liquidity and tax), legal, regulatory, compliance, environmental, political and strategic risks. The full Board (or the appropriate Board committee), in concert with the appropriate management within the Company, reviews management reports to formulate risk identification, risk management and risk mitigation strategies. When a Board committee initially reviews management reports, the Chairman of the relevant Board committee briefs the full Board on the specifics of the matter at the next Board meeting. This process enables the Board to coordinate the risk oversight role, particularly with respect to risks spanning more than one operational area. The Compensation Committee reviews compensation policies to ensure that they do not, among other things, encourage unnecessary or excessive risk-taking.
Corporate Governance Guidelines
The Corporate Governance Guidelines adopted by the Board, which include guidelines for determining director independence, are published on the Company's website at www.hillintl.com, in the "Investors" section, and are available in print to any stockholder upon request. That section of the website makes available the Company's corporate governance materials, including Board committee charters. Those materials are also available in print to any stockholder upon request.
Committees of the Board of Directors
During 2018, the Board had standing Audit, Compensation, Risk and Governance and Nominating Committees. All members of each committee have been determined by the Board of Directors to be "independent" under applicable NYSE rules. In addition, the Board has determined that each member of the Audit Committee meets SEC independence requirements which require that members of the Audit Committee may not accept directly or indirectly any consulting, advisory or other compensatory fee from Hill or any of its subsidiaries other than their directors' compensation. The charter of each committee is available on our website at www.hillintl.com, in the "Investors" section.
Audit Committee
The Audit Committee currently consists of James Chadwick (Chair), Alan S. Fellheimer and Charles M. Gillman. The Board has determined that each member of the Audit Committee is financially literate. The Board has also determined that James Chadwick possesses accounting or related financial management expertise within the meaning of the NYSE listing standards and qualifies as an "audit committee financial expert," as defined by the rules of the SEC.
The Audit Committee assists the Board in fulfilling its oversight responsibilities by (a) reviewing the financial reports and other financial information provided by Hill to its stockholders, the SEC and others, (b) monitoring the Company's financial reporting processes and internal control systems, including the remediation of material weaknesses in internal control, (c) retaining Hill's independent registered public accounting firm, (d) overseeing the Company's independent registered public accounting firm and internal auditors and (e) monitoring the Company's compliance with its ethics policies and with applicable legal and regulatory requirements. The Audit Committee also reviews and approves any transactions between Hill and any related parties. During 2018, the Audit Committee met 8 times. The Audit Committee has been established in accordance with Section 3(a)(58)(A) of the Securities Exchange Act of 1934 (as amended, the "Exchange Act").
Compensation Committee
The Compensation Committee consists of Arnaud Ajdler (Chair), Alan S. Fellheimer and James Chadwick. Each member of the Compensation Committee is a "non-employee director" as defined in Rule 16b-3 of the Exchange Act and an "outside director" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Compensation Committee oversees Hill's executive compensation programs. The Compensation Committee reviews and recommends to the Board for approval the compensation arrangements for all of the Company's executive officers. During 2018, the Compensation Committee met 12 times. The processes of the Compensation Committee are described below in "Compensation Discussion & Analysis."
Governance and Nominating Committee
The Governance and Nominating Committee consists of Camille S. Andrews (Chair), Arnaud Ajdler and Charles M. Gillman. The Governance and Nominating Committee oversees matters relating to the evaluation and recommendation to the Board of the persons to be nominated for election as directors at any meeting of stockholders, and the persons to be appointed by the Board to fill any vacancy on the Board.
The Governance and Nominating Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience, and background sought of Board members in the context of our business and the then-current membership on the Board. This assessment includes a consideration of independence, diversity, age, skills, experience, and industry backgrounds in the context of the needs of the Board and the Company, as well as the ability of current and prospective directors to devote sufficient time to performing their duties in an effective manner. In March 2019, the Board adopted a diversity policy which formalized the guiding principles of the Governance and Nominating Committee in its recommendations of candidates to the Board, including seeking a balance in terms of knowledge and competencies of directors as well as seeking candidates for nomination to the Board who represent different genders, ages, cultural communities, geographic areas and other characteristics of the communities in which the Company conducts its business. This policy sets forth an aspirational target that at least 30% of the Board will be composed of women, ethnic minority and racially diverse individuals by June 2021.
The Governance and Nominating Committee carefully considers all director candidates recommended by our stockholders, and the Governance and Nominating Committee does not and will not evaluate such candidate recommendations any differently from the way it evaluates other candidates. The Company's Amended and Restated Bylaws set forth minimum qualifications for an individual to serve as a director of the Company. These minimum qualifications provide that no person shall qualify for service or serve as a director of the Company: (a) unless such person is in compliance with all applicable laws and regulatory requirements to which the Company's directors may be subject in connection with such person's service as a director, (b) if such person has been convicted in, or entered a plea of nolo contendere with respect to, a criminal proceeding involving fraud, misappropriation or other similar charge during the ten years preceding the date of election, or if such person has been found responsible for or admitted responsibility for fraud, misappropriation or other similar charge in any governmental investigation or proceeding or other civil judicial proceeding during the ten years preceding the date of election, or if such person has been found responsible for or admitted responsibility for any material violation of any foreign, federal or state securities law or federal commodities law during the ten years preceding the date of election, (c) if such person has been convicted of, or entered a plea of nolo contendere with respect to, any felony, (d) if such person serves on the board of directors of more than three other public companies, (e) if such person is a director, officer or holder of more than a five percent (5%) equity interest, directly or indirectly, in a business that competes, directly or indirectly, with the Company, (f) if such person has made or makes any contribution or expenditure in connection with the election of any candidate for political office, including any contribution to any committee supporting such a candidate or to a political party, in any jurisdiction which results in the Company becoming ineligible to conduct its business or any portion thereof, or (g) if such person has ever been the subject of a filing of personal bankruptcy in any jurisdiction, either voluntarily or involuntarily (and in the case of an involuntary filing, if such filing was not dismissed within 60 days) during the ten years preceding the applicable date of election.
Any stockholder who wishes to recommend an individual as a potential nominee for election to the Board should submit such recommendation in writing by mail to Hill International, Inc., One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, Pennsylvania 19103, Attn: Chair of Governance and Nominating Committee, together with information regarding the experience, education
and general background of the individual and a statement as to why the stockholder believes such individual to be an appropriate candidate for the Board of Directors of Hill. Such recommendation should be provided to Hill no later than the close of business on the 120th day prior to the one-year anniversary of the date the Company's proxy statement was released to stockholders in connection with the previous year's annual meeting. During 2018, the Governance and Nominating Committee held two meetings.
Risk Committee
The Risk Committee consists of Paul Evans (Chair), David Sgro and James Chadwick. The Risk Committee oversees matters regarding significant enterprise risks and other risks that may impact the Company's business and stockholder value as well as the processes that the Company uses to surface, understand and mitigate such risks. The Board established the Risk Committee in late 2018 and, during 2018, the Risk Committee met two times.
Majority Voting in Uncontested Elections of Directors
Our Bylaws provide for majority voting in uncontested elections of directors. Plurality voting applies in contested elections. A contested election is one in which the number of nominees exceeds the number of directors to be elected and other conditions are met. In an uncontested election, nominees will be elected directors if they receive a majority of the votes cast (i.e., the number of shares voted "for" a director must exceed the number of votes cast "withheld" from that director, without counting abstentions or broker non-votes); if a nominee is an incumbent director but is not elected, such director is required to tender his or her resignation to the Board promptly following the date of the certification of the election results. The Nominating and Governance Committee shall make a recommendation to the Board as to whether to accept or reject the tendered resignation, or whether other action should be taken. The Board shall act on the tendered resignation, taking into account the Nominating and Governance Committee's recommendation, and publicly disclose (by press release, filing with the SEC or other manner reasonably calculated to inform stockholders) its decision regarding the tendered resignation and the rationale behind the decision within 90 days from the date of the certification of the election results. In a contested election, the nominees who receive a plurality of the votes cast (i.e., more votes in favor of their election than other nominees) will be elected directors.
Communicating Concerns to Directors
The Company encourages all interested persons to communicate any concern that an officer, employee, director or representative of Hill may have engaged in illegal, dishonest or fraudulent activity, or may have violated Hill's Code of Ethics and Business Conduct. Such persons may report their concerns or other communications including suggestions or comments to the Board in one of the following ways: by mail sent to William H. Dengler, Jr., Corporate Secretary, at the Company's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, Pennsylvania 19103; by telephone at (866) 352-2792; or by email addressed to hil@openboard.info. All such communications will be referred to Mr. Dengler who will circulate them to the members of the Board, or in the case of potential violations of the Code of Ethics and Business Conduct, to the Chairman of the Audit Committee. If the communication is directed to a particular director, Mr. Dengler will forward the communication to that director. The Board does not screen stockholder communications.
Code of Ethics
All directors, officers and employees of the Company are expected to act ethically at all times and in accordance with the policies comprising Hill's Code of Ethics and Business Conduct (the "Code") which is available on our website at www.hillintl.com, in the "Investor Relations" section, and is available in print to any stockholder upon request. Any waiver or any implicit waiver from a provision of the Code applicable to Hill's chief executive officer, chief financial officer, controller, or any amendment to the Code must be approved by the Board. We will disclose on our website amendments to, and, if any are granted, any such waiver of, the Code. Hill's Audit Committee is responsible for applying the Code to specific situations in which questions are presented to it and has the authority to interpret the Code in any particular situation. If, after investigating any potential breach of the Code reported to it, the Audit Committee determines (by majority decision) that a breach has occurred, it will inform the Board of Directors. Upon being notified that a breach has occurred, the Board (by majority decision) will take or authorize such disciplinary or preventive action as it deems appropriate, after consultation with the Audit Committee and/or the Company's General Counsel, up to and including dismissal or, in the event of criminal or other serious violations of law, notification of the SEC or other appropriate law enforcement authorities.
Director IndependenceCommunicating Concerns to Directors
The standards applied byCompany encourages all interested persons to communicate any concern that an officer, employee, director or representative of Hill may have engaged in illegal, dishonest or fraudulent activity, or may have violated Hill's Code of Ethics and Business Conduct. Such persons may report their concerns or other communications including suggestions or comments to the Board in affirmatively determining whether a director is "independent," in compliance with the rulesone of the NYSE, generally provide that a director is not independent if:
(1) the director is, or has been within the last three years, our employee, or an immediate family member (defined as including a person's spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and anyone, other than domestic employees, who shares such person's home)following ways: by mail sent to William H. Dengler, Jr., is, or has been within the last three years, one of our executive officers;
(2) the director has received, or has an immediate family member who has received, during any 12-month period within the last three years, more than $120,000 per year in direct compensation from us, other than director and committee fees and pension or other forms of deferred compensation for prior service (provided such compensation is not contingent in any way on continued service);
(3) (a) the director is a current partner or employee of a firm that is our internal or external auditor; (b) the director has an immediate family member who is a current partner of such a firm; (c) the director has an immediate family member who is a current employee of such a firm and who works on our audit; or (d) the director or an immediate family member was, within the last three years, a partner or employee of such a firm and personally worked on our audit within that time;
(4) the director or an immediate family member is, or has been within the last three years, employed as an executive officer of another company where any of our present executive officersCorporate Secretary, at the same time servesCompany's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, Pennsylvania 19103; by telephone at (866) 352-2792; or served on that company's compensation committee; or
(5) the director is a current employee, or an immediate family member is a current executive officer, of a company that has made paymentsby email addressed to or received payments from us for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1,000,000 or two percent ofhil@openboard.info. All such other company's consolidated gross revenues.
In additioncommunications will be referred to these objective standards, the Board of Directors has adopted a general standard, also in compliance with NYSE rules,Mr. Dengler who will circulate them to the effect that no director qualifies as independent unless the Board of Directors affirmatively determines that the director has no material relationship with us. In making this determination, the Board considers all relevant facts and circumstances regarding any transactions, relationships and arrangements between Hill and the director, and also between Hill and any company or organization with which the director is affiliated. The Board of Directors has determined that our current independent directors are Camille S. Andrews, Brian W. Clymer, Alan S. Fellheimer, Steven M. Kramer and Gary F. Mazzucco.
Transactions with Related Persons
For the year ended December 31, 2014, there were no transactions, or series of similar transactions, to which the Company was or is to be a party in which the amount exceeded $120,000, and in which any of our directors or executive officers, any holders of more than 5% of our common stock or any members of any such person's immediate family, had or will have a direct or indirect material interest, other than compensation described in the section "Executive Officer and Director Compensation."
It is the policy and practice of our Board to review and assess information concerning transactions involving related persons. Related persons include our directors and executive officers and their immediate family members. If the determination is made that a related person has a material interest in a transaction involving us, then the disinterested members of the Board, would review and approve or ratify it, and we would disclosein the transaction in accordance with SEC rules and regulations. If the related person is a membercase of potential violations of the Board, or a family member of a director, then that director would not participate in any determination involving the transaction at issue.
Our Code of Ethics and Business Conduct, prohibits all employees, including our executive officers, from benefitting personally from any transactions with us other than approved compensation benefits.
Board Leadership Structure
Our Amended and Restated By-laws provide that we will have a Chairman who will chair board meetings and perform such other duties as set forth in our Amended and Restated By-laws or as otherwise assigned to him by our Board. The Chairman and Chief Executive Officer may be the same person; however, our Board may separate these two positions if it deems it to be in the best interests of our Company and our stockholders to do so. Effective December 31, 2014, Irvin E. Richter relinquished the Chief Executive Officer title but remained with the Company as Chairman and David L. Richter has served as the Chief Executive Officer.
The Board has not appointed a lead independent director, however, Mr. Fellheimer, Chair of the Compensation Committee, has presided over executive session meetings of independent directors.
Role of the Board in Risk Oversight
The Board as a whole has responsibility for risk oversight, with reviews of certain areas conducted by relevant Board committees that report on their findings to the Board. The oversight responsibility of the Board and the Board committees is facilitated by management reporting processes designed to provide information to the Board concerning the identification, assessment and management of critical risks and management's risk mitigation strategies and practices. These areas of focus include operational, economic, competitive, financial (including accounting, reporting, credit, liquidity and tax), legal, regulatory, compliance, environmental, political and strategic risks. The full Board (or the appropriate Board committee), in concert with the appropriate management within the Company, reviews management reports to formulate risk identification, risk management and risk mitigation strategies. When a Board committee initially reviews management reports, the Chairman of the relevantAudit Committee. If the communication is directed to a particular director, Mr. Dengler will forward the communication to that director. The Board committee briefs the full Board on the specifics of the matter at the next Board meeting. This process enables the Board to coordinate the risk oversight role, particularly with respect to risks spanning more than one operational area. The Compensation Committee reviews compensation policies to ensure that they dodoes not among other things, encourage unnecessary or excessive risk-taking.
Corporate Governance Guidelines
The Corporate Governance Guidelines adopted by the Board, which include guidelines for determining director independence, are published on the Company's website atwww.hillintl.com, in the "Investor Relations" section, and are available in print to anyscreen stockholder upon request. That section ofcommunications.
the website makes available the Company's corporate governance materials, including Board committee charters. Those materials are also available in print to any stockholder upon request.
Code of Ethics
All directors, officers and employees of the Company are expected to act ethically at all times and in accordance with the policies comprising Hill's Code of Ethics and Business Conduct (the "Code") which is available on our website atwww.hillintl.com,, in the "Investor Relations" section, and is available in print to any stockholder upon request. Any waiver or any implicit waiver from a provision of the Code of Ethics and Business Conduct byapplicable to Hill's chief executive officer, chief financial officer, chief accounting officer or controller, or any amendment to the Code of Ethics and Business Conduct must be approved by the BoardBoard. We will disclose on our website amendments to, and, must be disclosed inif any are granted, any such waiver of, the Company's Annual Report on Form 10-K or in a Current Report on Form 8-K filed with the SEC.Code. Hill's Audit Committee is responsible for applying the Code of Ethics to specific situations in which questions are presented to it and has the authority to interpret the Code of Ethics and Business Conduct in any particular situation. If, after investigating any potential breach of the Code of Ethics and Business Conduct reported to it, the Audit Committee determines (by majority decision) that a breach has occurred, it will inform the Board of Directors. Upon being notified that a breach has occurred, the Board (by majority decision) will take or authorize such disciplinary or preventive action as it deems appropriate, after consultation with the Audit Committee and/or the Company's General Counsel, up to and including dismissal or, in the event of criminal or other serious violations of law, notification of the SEC or other appropriate law enforcement authorities.
Communicating Concerns to Directors
The Company encourages all interested persons to communicate any concern that an officer, employee, director or representative of Hill hasmay have engaged in illegal, dishonest or fraudulent activity, or hasmay have violated Hill's Code of Ethics and Business Conduct. Such persons may report their concerns or other communications including suggestions or comments to the Board in one of the following ways: by mail sent to William H. Dengler, Jr., Corporate Secretary, at the Company's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, Pennsylvania 19103; by telephone at (866) 352-2792; or by email addressed to hil@openboard.info. All such communications will be referred to Mr. Dengler who will circulate them to the members of the Board, or in the case of potential violations of the Code of Ethics and Business Conduct, to the Chairman of the Audit Committee. If the communication is directed to a particular director, Mr. Dengler will forward the communication to that director. The Board does not screen stockholder communications.
Table of ContentsCOMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2014, noCode of Ethics
All directors, officers and employees of the Company are expected to act ethically at all times and in accordance with the policies comprising Hill's Code of Ethics and Business Conduct (the "Code") which is available on our website at www.hillintl.com, in the "Investor Relations" section, and is available in print to any stockholder upon request. Any waiver or any implicit waiver from a provision of the Code applicable to Hill's chief executive officer, chief financial officer, controller, or any amendment to the Code must be approved by the Board. We will disclose on our website amendments to, and, if any are granted, any such waiver of, the Code. Hill's Audit Committee is responsible for applying the Code to specific situations in which questions are presented to it and has the authority to interpret the Code in any particular situation. If, after investigating any potential breach of the Code reported to it, the Audit Committee determines (by majority decision) that a breach has occurred, it will inform the Board of Directors. Upon being notified that a breach has occurred, the Board (by majority decision) will take or authorize such disciplinary or preventive action as it deems appropriate, after consultation with the Audit Committee and/or the Company's General Counsel, up to and including dismissal or, in the event of criminal or other serious violations of law, notification of the SEC or other appropriate law enforcement authorities.
Director Independence
The standards applied by the Board in affirmatively determining whether a director is "independent," in compliance with the rules of the NYSE, generally provide that a director is not independent if:
Table of ContentsCOMMITTEES OF THE BOARD OF DIRECTORS
During 2014, the Board had standing Audit, Compensation, and Governance and Nominating Committees. All members of each committee have been determined byIn addition to these objective standards, the Board of Directors has adopted a general standard, also in compliance with NYSE rules, to be "independent" under applicable NYSE rules. In addition,the effect that no director qualifies as independent unless the Board of Directors affirmatively determines that the director has no material relationship with us. In making this determination, the Board considers all relevant facts and circumstances regarding any transactions, relationships and arrangements between Hill and the director, and also between Hill and any company or organization with which the director is affiliated. The Board of Directors has determined that each memberour current independent directors are Arnaud Ajdler, Camille S. Andrews, James Chadwick, Alan S. Fellheimer, Charles M. Gillman and David Sgro.
Involvement in Certain Legal Proceedings
Charles M. Gillman is subject to an SEC administrative order, dated February 14, 2017 (Securities Exchange Act Release No. 80038), relating to alleged violations of Section 13(d) of the Audit Committee meets SEC independence requirements which require thatSecurities Exchange Act of 1934 (the "Exchange Act") and the rules promulgated thereunder, including failing to disclose the members of a stockholder group, and further allegations that Mr. Gillman violated Section 16(a) of the AuditExchange Act and the rules promulgated thereunder, including failing to timely file initial statements of beneficial ownership on Form 3 and changes thereto on Form 4. Without admitting or denying any violations, Mr. Gillman agreed to cease and desist from committing or causing any violations of (i) Section 13(d) of the Exchange Act and Rules 13d-1 and 13d-2 promulgated thereunder and (ii) Section 16(a) of the Exchange Act and Rules 16a-2 and 16a-3 promulgated thereunder, and paid a $30,000 civil penalty to the SEC.
In October 2012, Gridiron Capital hired Grant G. McCullagh as Chief Executive Officer of LTC, a general contractor, headquartered in Detroit, Michigan. In May 2014, LTC and its related companies filed for bankruptcy in the State of Delaware. All matters involving management, the board and Gridiron, including Mr. McCullagh were resolved by mediation in 2016.
PROPOSAL 2 — ADVISORY VOTE ON NAMED EXECUTIVE OFFICER COMPENSATION |
Our stockholders have the opportunity to approve, on a nonbinding, advisory basis, the compensation of our named executive officers on an annual basis. This proposal gives our stockholders the ability to express their views on the compensation of our named executive officers as disclosed in this proxy statement.
In connection with this proposal, the Board of Directors encourages stockholders to review in detail the description of the compensation program for our named executive officers that is set forth in the section titled "Compensation Discussion and Analysis" below, as well as the information contained in the compensation tables and narrative discussion in this proxy statement.
As described in more detail in the Compensation Discussion and Analysis section, the guiding principle of our compensation philosophy is that pay should be linked to performance and that the interests of our executives and stockholders should be aligned. Our compensation program is designed to provide significant upside and downside potential depending on actual results as compared to predetermined measures of success. A significant portion of our named executive officers' total direct compensation is directly contingent upon achieving specific short- and longer-term results that are important to our long-term success and ultimately growth in stockholder value. We supplement our pay-for-performance program with a number of compensation policies that are aligned with the long-term interests of the Company and its stockholders.
We are asking our stockholders to indicate their support for the compensation of our named executive officers as disclosed in this proxy statement by voting "FOR" the following resolution:
"RESOLVED, that the shareholders of Hill International, Inc. approve, on an advisory basis, the compensation paid to Hill International's named executive officers, as disclosed pursuant to Item 402 of Regulation S-K of the Securities Act of 1933, as amended, including the Compensation Discussion and Analysis, the compensation tables and the narrative discussion in Hill International's 2019 Proxy Statement."
The approval of a majority of shares represented in person or by proxy at the Annual Meeting is required to approve this proposal. Because your vote is advisory, it will not be binding on the Board of Directors, the Compensation Committee mayor the Company. The Compensation Committee, however, will review the voting results and take them into consideration when making future decisions regarding the compensation of our named executive officers.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OUR
STOCKHOLDERS VOTE "FOR" THIS PROPOSAL.
EXECUTIVE COMPENSATION |
Executive Summary
Our Compensation Philosophy and Guiding Principles
In support of our business and our long-term success, the Company's compensation program is designed to attract, motivate, reward and retain high-quality executives necessary to continually improve financial performance, achieve profitable growth and enhance stockholder value. To that end, our Compensation Committee (the "Committee") has developed a compensation philosophy designed to reflect the following principles:
Named Executive Officers for 2018
Mr. Evans returned to service as a director only upon the appointment of Mr. Ghali as the Company's Chief Executive Officer on October 1, 2018. Terms of Mr. Evans' compensation are set forth in the section titled "Compensation of former Interim Chief Executive Officer." Mr. Martinez is no longer an employee of the Company, effective as of October 17, 2018, and Mr. Wolf served as Interim Chief Financial Officer from October 17, 2018 to November 30, 2018, the date upon which Mr. Weintraub was appointed as the Company's Senior Vice President and Chief Financial Officer.
Change in Chief Executive Officer and Chief Financial Officer
Effective October 1, 2018, Mr. Ghali was appointed as the Company's Chief Executive Officer and Mr. Evans returned to his service as a director only. Upon Mr. Ghali's appointment, the Company and Mr. Ghali agreed to terminate his former Employment Agreement and revise his compensation terms. Please see the section entitled "Former Employment Agreement with our Chief Executive Officer."
On October 17, 2018, Mr. Martinez notified the Company of his decision to resign, effective on that day, as Senior Vice President and Interim Chief Financial Officer. Effective as of Mr. Martinez's resignation, Gregory Wolf commenced serving as Interim Chief Financial Officer of the Company and served in such capacity until November 30, 2018, the date on which Mr. Weintraub was appointed as the Company's Senior Vice President and Chief Financial Officer.
2018 Performance-Based Bonuses (Cash)
In 2018, we adopted Annual Incentive Awards for Messrs. Ghali, Griffin, Evans and Martinez that are tied to achieving a balance of metrics aligned with our 2018 financial and strategic priorities: (i) Earnings Before Interest, Taxes, Depreciation and Amortization ("EBITDA") performance; (ii) an increase in sales over 2018 budgeted amounts; and (iii) retention of certain key employees. No bonus payout is made for a metric less than 80% of its respective target.
| Level | | Performance (% of "Target Performance") | Payout (% of Target Pay Opportunity) | | ||||
|---|---|---|---|---|---|---|---|---|
| | | | | | | | | |
Below Threshold | | <80% | 0% | | ||||
Threshold | 80% | 50% | ||||||
Target | | 100% | 100% | | ||||
Maximum | 120% | 200% | ||||||
| | | | | | | | | |
Note: Payouts will be calculated linearly for achieving between 80% and 120% of the Target Performance.
For 2018, we set a target EBITDA of $41.6 million, with a threshold of $33.3 million, a target sales amount of $470.2 million, with a threshold of $376.2 million, and a target key employee retention rate of 95%, with a threshold of 90%. The Annual Incentive Awards for Messrs. Ghali, Griffin and Evans are based 45% on EBITDA, 45% on sales and 10% on retention; the Annual Incentive Awards for Mr. Martinez are based 50% on EBITDA and 50% on sales. We fell short of the threshold for each metric. Consistent with our pay-for-performance philosophy, we have determined not accept directly or indirectly any consulting, advisory or other compensatoryto payout the Annual Incentive Awards.
fee from Hill or anyMr. Wolf and Mr. Weintraub were not granted Annual Incentive Award opportunities for 2018.
Mr. Levergood was not granted an Annual Incentive Award as he is eligible for a bonus under his employment agreement. Please see the section titled "Employment Agreement with Our Senior Vice President of its subsidiaries other than their directors' compensation. The charter of each committee is availableBusiness Development (Americas)" for further details on our website atMr. Levergood's employment agreement.
www.hillintl.com, in the "Investor Relations" section.2018 Long-Term Incentive Awards (Equity)
Audit Committee. During 2014,The Long-Term Incentive Awards granted to Messrs. Ghali, Martinez, Griffin, Levergood and Kardous in 2018 were comprised of a fixed cash value which would convert into restricted stock units based upon the Audit Committee consistedclosing trade price on the date the Company became current on its SEC periodic reporting obligations. These Long-Term Incentive Awards will vest 100% on the third anniversary of Brian W. Clymer (Chair), Alan S. Fellheimer, Steven M. Kramertheir grant and Gary F. Mazzucco. The Board has determined that each memberare performance-based, based on a targeted 10% Compound Annual Growth Rate ("CAGR") of a target Earnings Per Share over the Audit Committee is financially literate. The Board has also determined that Brian W. Clymer possesses accounting or related financial management expertise withinvesting period.
| Level | | Performance (CAGR % over vesting period") | Payout (% of Restricted Stock Opportunity) | | ||||
|---|---|---|---|---|---|---|---|---|
| | | | | | | | | |
Below Threshold | | <5% | 0% | | ||||
Threshold | 5% | 50% | ||||||
Target | | 10% | 100% | | ||||
Maximum | 115% | 150% | ||||||
| | | | | | | | | |
Note: Payouts will be calculated linearly for achieving between 5 and 15% CAGR.
Please refer to the meaningsection titled "Compensation of the NYSE listing standards and qualifies as an "audit committee financial expert," as defined by the rules of the SEC. For additionalour former Interim Chief Executive Officer" for information regarding the long-term incentive awards established for Mr. Clymer's experienceEvans.
Mr. Wolf and background, see "Proposal 1—Election of Directors" above.Mr. Weintraub were not granted long-term incentive awards for 2018.
2018 Compensation Governance Practices
The Audit Committee assists the Board in fulfilling its oversight responsibilities by (a) reviewing the financial reports and other financial information provided by HillWe are committed to its stockholders, the SEC and others, (b) monitoring the Company's financial reporting processes and internal control systems, (c) retaining Hill's independent registered public accounting firm, (d) overseeing the Company's independent registered public accounting firm and internal auditors and (e) monitoring the Company's compliance with its ethics policies and with applicable legal and regulatory requirements. The Audit Committee also reviews and approves any transactions between Hill and any related parties. During 2014, the Audit Committee met five times. The report of the Audit Committee is included in this Proxy Statement.
Compensation Committee. During 2014, the Compensation Committee consisted of Alan S. Fellheimer (Chair), Camille S. Andrews and Steven M. Kramer. Each member of the Compensation Committee is a "non-employee director" as defined in Rule 16b-3 of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and an "outside director" for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code").
The Compensation Committee oversees Hill's executive compensation programs. The Compensation Committee reviewspractices that drive performance and recommendsthat align the interests of our leadership team with the interests of our stockholders. We have implemented many best practices with respect to the Board for approvalcompensation of our NEOs including:
Practices we avoid with respect to the compensation of our NEOs include:
Actions Related to 2019 Executive Compensation
In addition to the actions taken in 2018, the Committee implemented a number of additional decisions for 2019 executive compensation based on the Company's performance in 2018. These decisions were as follows:
COMPENSATION DISCUSSION AND ANALYSIS
This section discusses our executive compensation programs for 2018, the compensation decisions made under those programs and the factors that were considered by the Committee in making those decisions. It focuses on the compensation for each of our NEOs for 2018.
This Compensation Discussion and Analysis" sectionAnalysis is divided into two parts:
Part 1 discusses our compensation practices and the compensation decisions for our NEOs.
Part 2 discusses our compensation framework in more detail, including how we apply our compensation philosophy and determine competitive positioning of our executive compensation and other policies.
Part 1 — Compensation Governance Practices and Decisions |
2018 Compensation Governance Practices
We are committed to executive compensation practices that drive performance and that align the interests of our leadership team with the interests of our stockholders. We are considering the appropriateness of these and other policies and practices as part of our comprehensive executive compensation strategic review. Below is a summary of best practices that we have implemented and practices we avoid with respect to the compensation of our NEOs.
| What We Do | What We Avoid | |||
|---|---|---|---|---|
| | | | | |
| Pay for Performance — A significant portion of the compensation paid to our NEOs is related to performance and tied to pre-established performance goals and stock price aligned with our short- and long-term objectives. | Excessive Perquisites — We provide very limited perquisites to our NEOs, other than our former CEO. | |||
| | | | | |
| Target Market Median — Our compensation philosophy targets NEO total direct compensation opportunity that is competitive with the companies with which we compete for executive talent. | No Speculative Trading — Board members and executive officers are prohibited from short-selling our stock and buying or selling puts and calls on our stock. | |||
| | | | | |
| Independent Compensation Consultant — The Committee engages an independent outside compensation consultant on a regular basis. | No Hedging — Board members and officers are prohibited from engaging in hedging transactions that could eliminate or limit the risks and rewards of owning our stock. | |||
| | | | | |
| Robust Stock Ownership Guidelines — We require our directors and officers, including our NEOs to own multiples of their current base salary or annual cash retainer, as applicable. Our CEO is required to have six times (6x) his annual salary and our directors are each required to have three times (3x) their annual salary. | No Repricing of Options/SARs — Our shareholder approved 2017 Equity Compensation Plan does not allow for the repricing of stock options/SARs without stockholder approval, and we have never repriced any stock option grants. | |||
| | | | | |
| Severance Payments Require Double-Trigger — The Company's 2015 Senior Executive Retention Plan and its 2016 Executive Retention Plan provide change in control severance benefits only upon a double-trigger (change in control and termination of employment). | No Unapproved Pledging of Hill Stock — The Company's insider trading policy prohibits pledging of Hill stock without review and prior approval by the Board. There are no current or open pledges of Hill stock by our current NEOs. | |||
| | | | | |
2018 Executive Compensation Elements
The following chart summarizes the key features of each element of our executive compensation program: cash (salary and annual bonus); equity (long-term incentive); retirement (401(k) Plan); and other compensation (perquisites). Each type is discussed in detail in the remainder of this proxy statement, underCompensation Discussion and Analysis and the subsection "—Roleaccompanying tables.
| Element | Type | Key Features | ||||||
|---|---|---|---|---|---|---|---|---|
| | | | | | | | | |
| Cash | Salary | • Fixed amount of compensation based on experience, contribution and responsibilities. • Salaries reviewed annually and adjusted based on market practice, individual responsibility, performance and contribution, length of service and other internal factors including contractual obligations. | ||||||
Annual Incentive Award | • For 2018, payouts could vary from 50% to 200% of certain components of the targeted metrics. For 2018, no annual bonus is awarded if less than 80% of a target is achieved. | |||||||
Bonus Pool | • For certain executive officers, including Mr. Wolf, established a bonus pool which is equal to twenty percent (20%) of each bonus pool participant's base salary and would be paid upon achievement of target pre-tax net income. No bonus pool awards were paid for 2018 performance. | |||||||
| | | | | | | | | |
| Long-Term (Equity) Incentive Compensation | Restricted Stock Units | • For Messrs. Ghali, Martinez, Griffin, Levergood and Kardous, restricted stock units ("RSUs") which shall vest over three years and based upon the achievement of a CAGR based on EPS. No restricted stock will be issued upon settlement of the RSUs if less than 50% of the target CAGR is achieved. • Former Interim CEO: under the terms of his employment agreement, entitled to $80,000 worth of Company stock based on the closing price of the Company's common stock on the last trading day of the month for each month of his service. | ||||||
| | | | | | | | | |
| Element | Type | Key Features | ||||||
|---|---|---|---|---|---|---|---|---|
| | | | | | | | | |
| Retirement | 401(k) Plan | • Qualified 401(k) plan offered to all U.S. employees that provides participants the opportunity to defer taxation on a portion of their income, up to code limits, and receive a 50% Company matching contribution up to 2% of the employee's salary. | ||||||
| | | | | | | | | |
| Other | Perquisites | • Perquisites are generally limited to benefits available to all employees of the Company, including the option to be paid in cash for vacation, sick days and/or personal days not taken. | ||||||
| | | | | | | | | |
Summary of Key 2018 Compensation Decisions
The following highlights the Committee's key compensation decisions for 2018, as reported in the section below titled "Executive Officer Compensation — Summary Compensation Table."
CEO Compensation
On August 18, 2016, we entered into an employment agreement with Raouf S. Ghali for a term of five years. Under this agreement, Mr. Ghali is to receive a base salary to be reviewed annually by the Committee. Mr. Ghali's 2018 compensation opportunity was set as follows:
Effective upon his appointment as CEO on October 1, 2018, the Company and Management."Mr. Ghali agreed to terminate his Employment Agreement and the Board approved the following new compensation terms:
GovernanceTable of Contents
For 2018, Mr. Ghali's Annual Incentive Award opportunity is $393,750, comprised of the weighted average of the $300,000 opportunity for 9 months and Nominating Committee. During 2014, the Governance$675,000 opportunity for 3 months.
CFO Compensation
On November 30, 2018, Mr. Weintraub was appointed as Senior Vice President and Nominating Committee consistedCFO of Camille S. Andrews (Chair), Brian W. Clymer, Steven M. Kramerthe Company. The Board set Mr. Weintraub's annual base salary at $410,000 per annum and Gary F. Mazzucco.he is entitled to an annual target bonus equal to 50% of his base salary and to an annual long-term incentive equity grant valued at 50% of his base salary; both the annual target bonus and the annual long-term incentive equity grant will be based upon criteria established annually by the Company's Board of Directors.
In addition, Mr. Weintraub is entitled to (i) hotel accommodations for one week, (ii) temporary housing reimbursement for up to $1,500/month for six months, (iii) eight round trip air fares from his current home, (iv) a grant of deferred stock units ("DSUs") valued at $16,534 and (v) reimbursement of moving expenses, not to exceed $16,534. The Governance and Nominating Committee oversees matters relating toCompany has also designated Mr. Weintraub as a participant in the evaluation and recommendation toCompany's 2016 Executive Retention Plan. Mr. Weintraub's DSUs will vest in three equal annual installments.
Compensation of our former Interim Chief Executive Officer
On May 3, 2017, Paul J. Evans was named Interim Chief Executive Officer of the Company. On May 10, 2017, the Board of the persons to be nominated for election as directors at any meeting of stockholders, and the persons to be appointed by the Board to fill any vacancy on the Board.
The Governance and Nominating Committee is responsible for reviewing and assessing with the Board the appropriate skills, experience, and background sought of Board members in the context of our business and the then-current membership on the Board. This assessment includes a consideration of independence, diversity, age, skills, experience, and industry backgrounds in the context of the needs of the Board and the Company, as well as the ability of current and prospective directors to devote sufficient time to performing their duties in an effective manner. Although the Company does not have a formal policy with respect to diversity standards, as a matter of practice, the Governance and Nominating Committee considers matters commonly viewed as matters of diversity in the context of the Board as a whole and, in its effort to select a Board that it believes will best serve the interestsDirectors of the Company approved the following compensation terms for Mr. Evans:
Effective October 1, 2018, the Board appointed Mr. Ghali as the Company's Chief Executive Officer and Mr. Evans returned to his service as a broad rangedirector of perspectives.
The Governance and Nominating Committee carefully considers all director candidates recommended by our stockholders, and the Governance and Nominating Committee does not and will not evaluate such candidate recommendations any differently fromCompany. For 2018, the way it evaluates otheraggregate target
candidates. incentive award for Mr. Evans was $450,000 and the aggregate monthly equity grant of Company stock was $720,000.
Compensation of Other NEOs
For each of our other NEOs, the Board made no adjustment to their respective salaries for 2018.
For Messrs. Martinez and Griffin, the Board granted Annual Incentive Award opportunities, based upon metrics determined by the Board. Pursuant to the terms of his employment agreement, Mr. Levergood is eligible to receive (i) a $100,000 bonus related to sales generated by Mr. Levergood and (ii) a $100,000 bonus related to actual revenues exceeding budgeted amounts. Messrs. Kardous and Wolf did not receive a grant of an Annual Incentive Award.
In its evaluation2017, the Board established a bonus pool for certain executive officers, including Mr. Wolf, which is equal to twenty percent (20%) of the aggregate of each proposed candidate,bonus pool participant's base salary and would be paid upon the Governanceachievement of a threshold pre-tax net income. Given Hill's 2018 performance results, no bonus pool payments were made to any participant in the bonus pool.
For Messrs. Martinez, Griffin, Levergood, and Nominating Committee considers many factors including, without limitation, the individual's experience, character, integrity, demonstrations of judgment and ability, and financial and other special expertise. Any stockholder who wishes to recommend an individual as a nominee for election toKardous, the Board should submit such recommendation in writing by mailestablished Long-Term Incentive Award opportunities as an equity grant award which would convert to Hill International, Inc., One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, Pennsylvania 19103, Attn: Chair of Governance and Nominating Committee, together with information regardingrestricted stock units based upon the experience, education and general backgroundclosing share price of the individual and a statement as to why the stockholder believes such individual to be an appropriate candidate for the Board of Directors of Hill. Such recommendation should be provided to Hill no later than 80 days prior to the anniversary ofCompany's common stock on the date on which the Company becomes current on its SEC filings. Mr. Wolf did not receive a grant of the notice accompanying these proxy materials. During 2014, the Governance and Nominating Committee held one meeting.an Long-Term Incentive Award opportunity.
COMPENSATION DISCUSSION AND ANALYSIS2018 NEO Base Salaries, Annual Incentive Target and Long-Term Incentive Expected Value
This Compensation Discussion
| Name | | | | Base Salary (1) | | Bonus Target Opportunity (2) | | Bonus Target Opportunity as % of Salary | | Long-Term Incentive Expected Value (3) | | Total Target Direct Compensation (4) | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | | | | |
Raouf S. Ghali | | | | $1,013,750 | | $393,750 | | 38.8% | | $300,000 | | $1,707,500 | | |
Todd E. Weintraub | | | 410,000 | | — | | — | | — | | 410,000 | | ||
Michael V. Griffin | | | | 528,000 | | 100,000 | | 18.9]% | | 200,000 | | 828,000 | | |
Abdo E. Kardous | | | 591,250 | | — | | — | | 300,000 | | 891,250 | | ||
J. Charles Levergood | | | | 510,000 | | 200,000 | | 28.2% | | 150,000 | | 860,000 | | |
Paul Evans | | | 540,000 | | 450,000 | | 45.3% | | 720,000 | | 1,710,000 | | ||
Marco Martinez | | | | 420,000 | | 150,000 | | 26.3% | | 200,000 | | 770,000 | | |
Gregory Wolf | | | 83,077 | | — | | — | | — | | 83,077 | |
for Mr. Evans which has been annualized in decisions with respect to the compensationabove table; additional details on such incentive award can be found in the section above titled "Compensation of our Chairman andformer Interim Chief Executive OfficerOfficer."
Annual Incentive Plans — Criteria and Rationale |
| | | | | | | | | | | | | |
| Plan | Participants | Performance Assessment | ||||||||||
| | | | | | | | | | | | | |
| Target Annual Incentive Awards | Ghali, Evans, Martinez and Griffin | EBITDA, sales growth, key employee retention | ||||||||||
| | | | | | | | | | | | | |
| Executive Leadership Sales Incentive | Levergood | Personal sales and revenue vs. budget | ||||||||||
| | | | | | | | | | | | | |
| Bonus Pool | Wolf | Pre-tax net income | ||||||||||
| | | | | | | | | | | | | |
Messrs. Weintraub and Kardous were not granted Annual Incentive plan opportunities for 2018.
1. Target Annual Incentive Awards ("TAIA")
In 2018, as in past years, the Committee evaluated the choice of the TAIA financial measure(s) using the following principles:
employees;
Historically, Hill's compensation philosophy has been
Following this review, the Committee concluded that fosters executive retention in a manner that furthers Hill's mission of maximizing long-term stockholder value, client relationships, excellent financial performance, quality of service and employee satisfaction. That philosophy has been implemented in the past by placing substantial reliance on the payment of executive salaries at the higher end of the range of compensation received by executives with comparable job responsibilities at our peer companies, as well as through the use of year-end bonuses,a blend of metrics, including EBITDA, sales growth and key employee retention, for 2018 were appropriate measures to provide an emphasis on profitable growth while focusing managers on expense control and retaining key members of the Company's personnel.
Target Setting
The 2018 target annual incentive awards for Messrs. Ghali, Evans, Martinez and Griffin were set as appropriate, to reward superior performance and long-term incentive compensation elements to incentivize performance designed to lead Hill to success over a longer term.fixed dollar amount, as set forth below.
For 2014, the Compensation Committee used various short and long-term performance-based compensation components within the mix of elements comprising the overall compensation packages paid to Hill's executive officers. The discussion that follows explains the manner in which the Compensation Committee applied these elements to develop the compensation policies and arrangements for our named executive officers.
Compensation Philosophy and Objectives
Raouf S. Ghali Michael V. Griffin Paul Evans Marco Martinez Our 2018 plan used the following performance and payout relationship: Below Threshold Threshold Target Maximum Financial Results for TAIA Purposes The Committee Metric EBITDA Sales Growth Key Employee Retention Raouf S. Ghali Michael V. Griffin Paul Evans Marco Martinez (1) Mr. Levergood is eligible to receive a bonus based on generating new sales for the Company: for every $1,000,000 of expected consulting fee revenue generated by Mr. Levergood in a calendar year, Mr. Levergood will receive a $2,000 bonus, up to a maximum of $100,000. For 2018, Mr. Levergood did not earn a bonus related to this incentive. Mr. Levergood was also eligible to receive an additional bonus of $100,000 in the event that the Company achieves or exceeds its annual sales target; for 2018, the Company did not achieve its annual sales target so no related bonus was earned by Mr. Levergood. 3. Bonus Pool The Our Long-Term Equity Incentive Program Plan Criteria and Rationale Long-term incentive compensation In this way, the combination of our Equity Award Grant Practices The Committee's equity-based awards policy contains rules on determining the grant date of equity awards and the performance based vesting criteria of such awards. 2018 Long-Term Incentive Awards In 2018, for Messrs. Ghali, Martinez, Griffin, Levergood, and Kardous, the Board established Long-Term Incentive Award opportunities as an equity grant award which would convert to restricted stock units based upon the closing share price of the The value and form of each award was determined by the Committee after considering company performance, individual impact on our financial results, market norms and relative duties and responsibilities. The value of the grants made during 2018 to our NEOs are shown in the following table. Raouf S. Ghali Marco Martinez (4) Michael Griffin J. Charles Levergood Abdo E. Kardous Additionally, the Performance. Our Company's policy is that the Compensation Committee and the Board consider an executive officer's performance in determining his or her compensation. In addition, the Compensation Committee and the Board, in their discretion, may reward performance considered by the Compensation Committee to be superior, and may provide short-term incentives to executive officers to reward superior performance in cases where such performance would not otherwise be rewarded by other elements of Hill's compensation program.Name TAIA $300,000 100,000 600,000 150,000 In consideringVariances from these target payout values are based upon Company performance against the appropriate manner in which to rewardpre-established metric targets. The performance/payout relationship around targeted performance levels was set at the beginning of the performance ofyear and reflected our named executive officers,expectation for the year that management should strive to achieve our Compensationplan and be held accountable with lower than target payouts if performance fell below plan.Level Performance
(% of "Target
Performance") Payout
(% of Target
Pay Opportunity) <80% 0% 80% 50% 100% 100% 120% 200% and Board have established compensation policies implemented throughset the creation of specific rewards and designed for particular named executive officers. In this regard, in viewTAIA target based on its evaluation of the relatively large equity interesthistorical information and its assessment that the target contained a sufficient degree of "stretch." These targets, actual 2018 performance and 2018 TAIA bonus payouts for Messrs. Ghali, Evans, Martinez and Griffin are shown in our Company owned by our Chairmanthe tables below.
2018 TAIA Performance Metrics, Weight and Chief Executive OfficerAchievement Financial Objectives Metric Weight
(1)Threshold Target Maximum 2018 Metric Bonus Payout
Factor 45% $33.3 million $41.6 million $49.9 million $15.3 million 0.0% 45% $376.2 million $470.2 million $564.3 million (2) 0.0% 10% 90% 95% 95% 76% 0.0% our PresidentGriffin. The target weight for Mr. Martinez is 50% EBITDA and Chief Operating Officer, the Compensation Committee determined to reward performance in a particular year by maintaining their base salary at the higher end50% sales growth.
2018 TAIA Threshold, Target, Maximum and Actual PayoutsName 2018 Target
Award 2018
Threshold
Award (50% of
Target Award) 2018 Maximum
Award (200% of
Target Award) Total Weighted
Bonus Payout Factor 2018 TAIA Award $300,000 $150,000 $600,000 0.0% — 100,000 50,000 200,000 0.0% — 600,000 300,000 1,200,000 0.0% — 150,000 75,000 300,000 0.0% — rangeCompany and was not eligible to receive a TAIA Payment for compensation received by executives with comparable job responsibilities at our peer companies in addition to bonus and long-term incentive compensation. In addition, the Compensation Committee recognized the intense competition for talented senior executives in the sectors in which we operate and, in rewarding performance, focused closely on the need to retain the services of our other named executive officers who do not own significant equity interests in our Company. With respect to compensation decisions made in 2014, the Compensation Committee recognized that the prolonged economic downturn continued to place pressure on the Company's competitors to attract talented personnel, which heightened the need for our Company to set compensation in a manner designed to enable the Company to retain its most able executives even to the extent their ability to achieve superior performance for the Company might be hampered by economic conditions and other factors affecting the industries we serve. As a result, the Compensation Committee continued to rely on compensation policies designed to reward performance of these executives primarily by offering year-over-year base salary increases and by using bonus and long-term incentive awards primarily to reward extraordinary performance designed to reflect the overall growth and profitability of our Company as well as in the groups they manage. Measurements of growth and profitability for these purposes were made subjectively by the Compensation Committee with reference to budgets developed by management and approved by the Board of Directors, and without reference to any particular formula used to translate increases in perceived growth or profitability to specific compensation decisions. For 2014, the Compensation Committee continued to rely to an extent on the use of mathematical formulas in considering whether an individual executive's performance merited recognition through an award of periodic bonuses. Consistent with the policy established by the Compensation Committee in 2009, the Compensation Committee set formula-based targets for annual bonuses under the Hill International, Inc. 2010 Senior Executive Bonus Plan (the "Bonus Plan") as components of the total compensation packages received by our Chairman and Chief Executive Officer and our President and Chief Operating Officer for 2014. The Bonus Plan permits the Compensation Committee or the Board to award performance-based bonuses to our senior officers based on the achievement of performance goals established by the Compensation Committee or the Board in a manner designed to enable us to deduct for federal income tax purposes this bonus compensation consistent with Section 162(m) of the Internal Revenue Code of 1986, as amended (the "Code"). The Compensation Committee believes it is of paramount importance to provide appropriate levels of compensation to our senior executives. Accordingly, the Compensation Committee may determine that the amount of a performance-based bonus award under the Bonus Plan is not sufficient to appropriately compensate or incentivize one or more senior executives for their performance with respect to the applicable performance period. In such event, the Compensation Committee may determine to award discretionary bonuses to senior executives, even if we are unable to deduct for federal income tax purposes the amount of the discretionary bonus. For 2014, the Compensation Committee awarded bonuses to each of our Chairman and Chief Executive Officer and our President and Chief Operating Officer under the Bonus Plan, which are described in more detail below. In connection with their compensation-related recommendations, our Chairman and Chief Executive Officer and our President and Chief Operating Officer recommended bonuses for our other named executive officers for 2014, and, consistent with their recommendation, the Compensation Committee determined awards of bonuses to our other named executive officers for 2014 which are described in more detail below. Alignment.2. Executive Leadership Sales IncentiveCompensation Committee believes that alignmentBoard established a bonus pool. See the section titled "Compensation of other NEOs" for additional details regarding the bonus pool.offor all our executive officers, withincluding our NEOs, is entirely equity-based. In 2018, grants of Long-term Incentive Awards to Messrs. Ghali, Martinez, Griffin, Levergood, and Kardous are solely contingent upon the interestsachievement of growth targets in EPS over a three-year period.stockholders through useAnnual Incentive Awards plan and Long-Term Incentive Awards balance the focus of stock-based incentive compensation is oneour team in a coordinated way around short-term financial, strategic and longer-term performance of our Company, both of which are directly linked to value creation for stockholders.core principlesCompany's common stock on the date on which the Company becomes current on its SEC filings. These Long-Term Incentive Awards will vest 100% on the third anniversary of their grant and are performance-based, based on a targeted 10% Compound Annual Growth Rate ("CAGR") of a target Earnings Per Share over the vesting period.
2018 Long-Term Incentive Award Opportunity ValueName Target Number of Shares to be
Issued Upon Settlement of RSUs
(1) Aggregate Grant
Date
Fair Value of RSUs
(2) Percentage of TDC (3) 73,349 $ 300,000 17.6 % 48,899 200,000 26.0 % 48,899 200,000 24.2 % 36,674 150,000 17.4 % 73,349 300,000 33.7 % compensation philosophy. As a goal,common stock on the Compensation Committee seeks to aligndate on which the compensationCompany became current with its SEC reporting obligations.our executive officers with the interests of our stockholders through the use, among other compensation elements, of stock-based incentive compensation. The Compensation Committee expects to continue using stock optionbase salary and other equity-based compensation elements to establishannual and long-term incentive compensationopportunities.our named executive officers in connection with2018.determinationtotal number of their total annual compensationshares to be issued upon settlement of the RSUs may be adjusted depending on the achievement of CAGR, as set forth in the future.
| Level | | Performance (CAGR % over vesting period") | Payout (% of Restricted Stock Opportunity) | | ||||
|---|---|---|---|---|---|---|---|---|
| | | | | | | | | |
Below Threshold | | <5% | 0% | | ||||
Threshold | 5% | 50% | ||||||
Target | | 10% | 100% | | ||||
Maximum | 115% | 150% | ||||||
| | | | | | | | | |
Note: Payouts will be calculated linearly for achieving between 5 and 15% CAGR.
The Compensation Committee andFor Mr. Evans, the Board believe it is importantestablished a monthly grant of stock valued at $80,000 per month upon the completion of each month of service as Interim CEO. Mr. Evans served as Interim CEO until October 1, 2018 at which time he returned to award a significant portion ofhis service on the total annual compensation for our ChairmanBoard.
Mr. Wolf and Chief Executive Officer and our President and Chief Operating Officer in the form of long-term incentive compensation in order to establish a reward for our most senior officers relating to the creation of value for our stockholders over the longer term. Accordingly, for 2014, the Compensation Committee recommended long-term incentive awards with aggregate grant date fair value of $870,000, or 62.1% of his base salary, to our Chairman and Chief Executive Officer and $1,100,000, or 110.0% of his base salary, to our President and Chief Operating Officer. In addition, the Compensation Committee recommendedMr. Weintraub were not granted long-term incentive awards for our other named2018.
Part 2 — Compensation Framework |
Compensation Philosophy and Objectives
Our compensation philosophy is to provide competitive executive officers which are described in more detail below.
Retention. As discussed above, we recognize the intense competition for talented senior executives in the sectors in which we operate. Accordingly, retention ofofficer pay opportunities tied to our executive officers is one of the core objectives of our compensation philosophy. Historically, the Compensation Committee has sought to attain that objective primarily through the payment of base salaries at the higher end of the range of compensation that may be paid to executives at other companies within our industry. During 2014, the Compensation Committee continued to structure the named executive officers' total compensation so that each compensation element may be used to enable the Company to retain the services of our executive officers, consistent with our overall business strategy. As a result of this consideration, for 2014, the Compensation Committee decided to increase base salaries, make equity-based long-term incentive awards as well as award bonus compensation to all our named executive officers in a manner designed to enhance the utility of these components as tools to retain our most talented senior executives, which are described in more detail below.
Risk Management Incentive. The Compensation Committee believes that the compensation policies and practices it establishes should be designed with a view to incentivizing executives to achieve short-term and long-term success. This overriding pay-for-performance approach enables us to attract, motivate and retain the type of executive leadership that will help us achieve our strategic objectives and realize increased stockholder value. To reach these goals, we have adopted the following program objectives:
Applying our Compensation Philosophy
We apply our compensation philosophy and objectives established by the Board while managing risks appropriately. The Compensation Committee attempts to provide both short-term and long-term compensation for current performance, as well as to provide incentives to achieve short-term and long-term goals. In designing these elements of compensation, the Compensation Committee seeks to incentivize appropriate levels of risk taking and to deter subjecting our Company to excessive risk.follows:
Based on its understanding, as members of the Company's Board of Directors, of the elements of risk associated with our Company's business and the operations of each of our business units, the Compensation Committee does not believe that our Company's compensation policies and practices subject our Company
| Compensation Component | Objectives | |||
|---|---|---|---|---|
| | | | | |
| Base Salary | Fair and competitive compensation to attract, retain and reward executive officers by providing a fixed level of cash compensation tied to experience, skills and capability relative to | |||
| | | | | |
| Annual Incentive (Non-Equity) Award | Cash bonus aligns executives with annual goals and objectives. Creates direct link to annual financial and operational performance. Provides the opportunity for NEOs to receive market-competitive total cash compensation when commensurate with performance. | |||
| | | | | |
| Long-Term Incentive Award | Aligns executive officers' interests with those of stockholders by linking compensation with corporate performance that will lead to increased share price for our stockholders. Retains and provides incentives to executive officers through multi-year vesting and holding periods. Promotes a sensible balance of risk and reward, without encouraging unnecessary or unreasonable risk-taking. Provides the opportunity for NEOs to receive market-competitive TDC when commensurate with performance | |||
| | | | | |
| Change in Control Severance Plan | Minimizes distractions and personal financial uncertainty created by a pending or threatened change in control by providing compensation and benefit arrangements for NEOs who do not have an employment agreement upon termination due to a change in control. | |||
| | | | | |
| 401 (k) Plan | Attracts and retains U.S. executives by providing a level of retirement investment in a tax-efficient manner. | |||
| | | | | |
| Employee Stock Purchase Plan | Attracts, retains and aligns executives with stockholders by providing an opportunity to be compensated through the benefits of stock ownership and to acquire an interest in the Company. | |||
| | | | | |
Compensation Committee, neither employment agreement provides for any particular levelCompetitive Positioning
In support of bonus compensation. Rather, underour compensation philosophy, we target the terms of these employment agreements, the Compensation Committee has full authority to establish the target levels for annual cash incentive awards as well as long-term equity-based incentive awards,compensation values consistent with the aforementioned benchmark,markets with which we compete for executive talent, capital and to establishbusiness. For NEOs, the criteria uponCommittee references broader survey sources reflecting the achievementpractices of other companies of comparable size, scope and complexity, with which we compete for talent and as recommended by our independent compensation consultant. This approach provides the awards may be earned. Accordingly,Committee with decision-quality data and context used in the review of competitive pay practices, design approaches and for pay-for-performance comparisons.
Setting Compensation Committee's view,Targets and Performance Goals
The Committee annually reviews the methods used by our Company to compensate and incentivize our employees do not create risks that are reasonably likely to have a material adverse effect on our Company. In addition, while the Board has not adopted a specific policy with regard to the "clawback" of compensation awarded on the basis of improper conduct, the Compensation Committee recognizes that laws applicable to our Company generally require the "clawback" of compensation under circumstances relating to improper or illegal behavior. Accordingly, we believe that these laws support the Board's efforts to manage risk associated with compensation. The Board recognizes that the SEC plans to propose rules relating to compensation "clawback" policies and plans to enact policies to address the final rules that are adopted.
Determining Compensation
General. In setting each element of compensation, the Compensation Committee has historically made qualitative assessments of the contributions made by each named executive officer toward our Company's achievement of its overall business and financial performance. These assessments have been employed by the Compensation Committee in determining which of the various compensation elements available to it should be included in each named executive officer's total compensation package, as well as the dollar amount thereof.
Base salaries for our named executive officers are established by the Compensation Committee on an annual basis. When establishing base salaries for named executive officers who do not have employment agreements, the Compensation Committee takes into account the performanceopportunity of each named executive officer, his roleofficer-i.e., cash compensation (salary and responsibilities within our Company and the compensation of comparable executives at other publicly traded companies in our peer group. Under the terms of their respective employment agreements described below in "Employment Agreements," each of our Chairman and Chief Executive Officer and our President and Chief Operating Officer is entitled to receive base salary and antarget annual long-term equity-based incentive award, which, when aggregated with his target bonus which he will have the opportunity to earn based on the achievement of performance targets established annually by the Compensation Committee, is not less than the 75th percentile of the total base salary, bonusopportunity) and long-term incentive award earned by executivesequity compensation (target long-term equity value).
The Committee, with comparable positions in our selected peer group companies. Our Compensation Committee believes that usinginput from its independent consultant, then sets the 75th percentile for comparative purposes reflects the high level of competency of our Company's senior executive officers.
In establishing the base salaries to which our Chairman and Chief Executive Officer and our President and Chief Operating Officer are entitled under their respective employment agreements, the Compensation Committee considered the total annualexecutive's compensation of executives at similar levels in the companies included in the selected peer group listed below in "Selected Peer Group." The allocation between targeted annual cash incentive awards and long-term equity-based incentive compensation in order to achieve targeted total compensation at the benchmark level of the 75th percentile of the "selected peer group" companies was determined through direct negotiations between the Compensation Committee and each of our Chairman and Chief Executive Officer and our President and Chief Operating Officer. These negotiations focused on the need to reach agreement on the appropriate level of targeted annual cash incentive award for each executive, with reference to the prior year's bonus target for the executivecurrent year. Salary adjustments, if any, typically become effective as of January 1 of each year or upon a promotion. The compensation proposal for our CEO is reviewed with and the Company's internal budget, approvedratified by the Board of Directors, for 2014, without the use of any formula, weighting or reference to specific factors. The Compensation Committee's focus on determining the appropriate level of targeted annual cash incentive award relates primarily to the contingent natureindependent directors of the incentiveBoard in executive session.
In making its decisions, the Committee uses several resources and tools, including competitive market information and peer group compensation trends, broader survey sources, the larger executive compensation environment, governance norms and expectations and shareholder feedback.
For 2018, the Committee set target performance levels for the financial objectives used in the TAIA and concluded that it is earned only to
the extent that the Company achieves establishedthere was an appropriate correlation between payout and performance levels. The long-term equity-based incentive compensation was determined to essentially equal the difference between the sum of executive's base salarylevels (at target, threshold and targeted annual cash incentive award, on the one hand, and the benchmarked 75th percentilemaximum) in light of the selected peer groupbusiness environment, risks associated with respect to the executive, on theachieving our five-year strategic plan and other hand.factors.
Evaluating Performance
For our other named executive officers, as in prior years, for 2014,eligible NEOs, performance determination under the Compensation Committee relied to a great extent on the assessments of their performance by our Chairman and Chief Executive OfficerTAIA and our President and Chief Operating Officer, to whom each of these other named executive officers reports. The Compensation Committee believes that this methodology allows us to account for all of the facts and circumstances of the particular executive officer's performance and enable us to most effectively reward, motivate, challenge and retain these named executive officers.
The Compensation Committee recommended an increase in base salaries for our Chairman and Chief Executive Officer and our President and Chief Operating Officer to $1,400,000 and $1,000,000, respectively, in 2014. In addition, upon the recommendation of our Chairman and Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee recommended increases in base salaries for the other named executive officers in 2014 which are described in more detail below.
In the first quarter of 2014, the Compensation Committee established targeted levels of bonus eligibility under the Bonus Plan for our Chairman and Chief Executive Officer and our President and Chief Operating Officer based partially on each of earnings before interest, taxes, depreciation and amortization ("EBITDA") for 2014, earnings per share for 2014 and debt reduction during 2014. The Compensation Committee selected these performance criteria for bonus eligibility under the Bonus PlanPool was 100% based on presentations by management to the Board concerning expectations for 2014 operating performance and related discourse among the Board and management during the first quarter of 2014.financial metrics. The Compensation Committee determined that these individuals would be eligible to earn 100% of their respective bonusalso considers competitive market norms in making final compensation targets if our Company reported EBITDA of at least $44,000,000 and diluted earnings per common share of at least $0.06 for 2014. Bonus eligibility was scaled so that a portion of the bonus compensation target would be awarded if part of an applicable target was achieved and a portion of the bonus compensation target would be earned if only one of the criteria was achieved. In addition, the Compensation Committee determined that our Chairman and Chief Executive Officer and our President and Chief Operating Officer would be eligible to earn additional bonus amounts if the Company's debt related to credit facilities was reduced by at least $10,000,000 during the year. For 2014, our Company reported EBITDA of $37,480,000 and a net loss of ($0.25) per common share and reduced its debt related to credit facilities by $16,546,000. Based upon the targets set by the Compensation Committee, these executives were each entitled under the Bonus Plan criteria and the reduction of debt goal to a bonus totalling $272,000.decisions.
Role of the Compensation Committee and Management.Management
The Compensation Committee reviews all of our Company's compensation and benefit programs. As part of its review of these programs, the Compensation Committee evaluates the competitiveness of compensation and benefits packages offered to our named executive officers and other executive officers. In addition, the Compensation Committee reviews and approves our corporate incentives, goals and performance objectives as well as the incentives, goals and performance objectives we establish for individuals under our Company's compensation and benefit programs. The Compensation Committee evaluates the level of achievement of the corporate incentives, goals and performance objectives set for individuals and, based on the level of achievement, approves any awards dependent on these criteria under our Company's compensation and benefit programs.
Consistent with prior years, as part of the executive compensation decisions made in 2014,2018, our Chairman andformer Interim Chief Executive Officer and our President and Chief OperatingExecutive Officer made recommendations to the Compensation Committee regarding the levels and elements of compensation
for the named executive officers, other than themselves, as well as for other executive officers of Hill. The Compensation Committee did not receive any compensation analysis regarding our named executive officers or Hill's other senior executive officers from any compensation consultant. After considering the recommendations of our Chairman and Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee delivered its recommendations to the Board for the Board's approval of the compensation elements and levels for the Chairman and Chief Executive Officer and the President and Chief Operating Officer, as well as for the other named executive officers. In determining its recommendations to the Board, the Compensation Committee relied considerably on assessments by our Chairman and Chief Executive Officer and our President and Chief Operating Officer of the performance and contribution of the other named executive officers.
Selected Peer Group. In 2012, the Compensation Committee identified our peer group and our "selected peer group" companies for compensation bench-marking purposes. The selected peer group includes CRA International, Inc., Exponent, Inc., Huron Consulting Group Inc. and Navigant Consulting, Inc.
Noting that the public companies with which we compete for project management business tend to be significantly larger than Hill, the Compensation Committee concluded that those direct competitors would not be an appropriate group to use for purposes of analyzing the compensation paid to our Chairman and Chief Executive Officer and our President and Chief Operating Officer. Accordingly, the companies identified above provide services in consulting or other fields that are similar to the services we provide and were selected by the Compensation Committee on the basis of their size relative to us, and the presence within those companies and us of similar business model, cultural and philosophical elements. In addition, we recognize the companies in this group as those publicly traded companies with whom we compete most aggressively for talented executives. Accordingly, we refer to these companies as our "selected peer group" companies. In our most recent survey, the companies within the selected peer group had total annual revenues ranging between $272 million and $785 million.
Equity Grant Practices. The exercise price of each stock option granted to the named executive officers, as well as to our other named executive officers, was not less than the closing price of our common stock on the date of grant. Typically, the Board awards long-term equity-based incentives to our Chairman and Chief Executive Officer and our President and Chief Operating Officer annually and other executive officers, including the other named executive officers, in two-year cycles. In this regard, in January 2014, we awarded stock options to our Chairman and Chief Executive Officer and our President and Chief Operating Officer, and in March 2014 we awarded stock options to our other executive officers, including the other named executive officers. The awards for our Chairman and Chief Executive Officer and our President and Chief Operating Officer were based on the Compensation Committee's determination that these awards reflected the appropriate level of long-term equity based incentive for those individuals. In making this determination, the Compensation Committee did not make reference to any specific criteria. In determining the awards for our other named executive officers, the Compensation Committee relied upon recommendations from our Chairman and Chief Executive Officer and our President and Chief Operating Officer. The Compensation Committee expects to consider expanding the use of stock options and other equity-based awards in the future.
We have not in the past and do not intend in the future to coordinate our grants of stock options with the release of material non-public information. We have not, as of the date of this proxy statement, adopted a policy covering compensatory equity grants. We also do not have a policy on the re-pricing of our stock options, but we have not previously re-priced any of our options. The equity compensation plan we use for awards to our named executive officers and other employees prohibits the repricing of options without stockholder approval.
Elements of Compensation
Base Salary. The Compensation Committee aims to establish the base salary for each named executive officer at a level that is reflective of the level of responsibility assumed by that officer. For our Chairman and Chief Executive Officer and our President and Chief Operating Officer, total annual compensation is targeted at the 75th percentile of executive officers serving in comparable capacities with the companies included in our selected peer group. The Compensation Committee selected the 75th percentile as the benchmark for compensation of our two most senior executive officers as a result of their demonstrated leadership of our Company's efforts to establish and expand relationships key to our revenue growth and profitability, coupled with the Compensation Committee's view that these individuals are among the top executive talent in our industry and should be compensated accordingly. In view of the significant stock ownership in our Company by our Chairman and Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee historically has leaned more heavily on base salary than on equity-based compensation for these individuals. Accordingly, the base salaries of our Chairman and Chief Executive Officer and our President and Chief Operating Officer tend to be higher than those of comparably titled executives at companies in our selected peer group to reflect generally lower reliance by the Company on bonus and equity-based compensation elements. Equally relevant, the Compensation Committee recognizes that during the time it was a privately owned business, our Company typically did not award any bonus compensation or equity-based incentives to these individuals and, instead, concentrated compensation in the form of base salary. Since our Company's business became publicly owned, the Compensation Committee has sought to transition compensation practices to methods more commonly used by publicly traded companies, but has sought doing so without reducing the base salaries of our executive officers, including our Chairman and Chief Executive Officer, our President and Chief Operating Officer and our other named executive officers.
The base salaries for our named executive officers are targeted at the higher end of our selected peer group and are adjusted to recognize varying levels of responsibility, individual performance, business segment performance, and internal Company issues. The Compensation Committee reviews each executive officer's base salary on an annual basis. During 2014, Hill's Chairman and Chief Executive Officer and its President and Chief Operating Officer were paid base salaries of $1,400,000 and $1,000,000, respectively. In its most recent survey of selected peer group of companies, the Company determined the base salaries paid to the chief executive officers within the selected peer group of companies ranged between $500,000 and $800,000 and the base salaries paid to the chief operating officers within the selected peer group of companies ranged between $450,000 and $600,000. For the reasons discussed above, the base salary levels for our Chairman and Chief Executive Officer and our President and Chief Operating Officer, relative to comparably titled executives at companies in our selected peer group, reflect our generally greater relative reliance on base salaries and lower relative reliance on bonus and equity-based compensation elements for these executives. Based on these factors, the Compensation Committee determined that the base salaries for our Company's Chairman and Chief Executive Officer and our President and Chief Operating Officer compared to the selected peer group benchmarks were appropriate and warranted. As explained above, consistent with prior years, in making executive compensation decisions for 2014, the Compensation Committee utilized recommendations of our Chairman and Chief Executive Officer and our President and Chief Operating Officer regarding the levels and elements of compensation for the named executive officers, other than themselves, as well as for other executive officers of Hill.the Company. The Committee also received a
The table below sets forthcompensation analysis regarding our senior executive officers, including our NEOs, from its compensation consultant, Pay Governance LLC, an executive compensation advisory firm. After considering the base salary for eachanalysis prepared by Pay Governance LLC and the recommendations of our named executive officers for 2013 and 2014, together with the percentage change from year-to-year.
| | Base Salary | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|
Name | 2013 | 2014 | Percentage Change | |||||||
Irvin E. Richter | $ | 1,300,000 | $ | 1,400,000 | 7.7 | % | ||||
Chairman and Chief Executive Officer | ||||||||||
John Fanelli III | 375,000 | 410,000 | 9.3 | % | ||||||
Senior Vice President and Chief Financial Officer | ||||||||||
David L. Richter | 900,000 | 1,000,000 | 11.1 | % | ||||||
President and Chief Operating Officer | ||||||||||
Raouf S. Ghali | 850,000 | 950,000 | 11.8 | % | ||||||
President, Project Management Group (International) | ||||||||||
Frederic Z. Samelian | 660,000 | 720,000 | 9.1 | % | ||||||
President, Construction Claims Group | ||||||||||
The percentage increase for the Chairman and Chief Executive Officer reflect the Compensation Committee's determination to reward his strong leadership role and performance in the face of significant challenges affecting our industry. The relatively higher percentage increase for the President and Chief Operating Officer reflect the Compensation Committee's view of his high level of responsibility over the Company and its overall revenue as well as his individual performance. The percentage increase for our Senior Vice President and Chief Financial Officer reflects his important contributions to the Company in a key role. The relatively higher percentage increase for the President of our Project Management Group (International) reflects the Compensation Committee's view of his level of responsibility over a group that contributed significantly to our overall revenue and profitability. The percentage increase for the President of our Construction Claims Group reflect the Compensation Committee's view of his level of responsibility over an important group and to more closely align his compensation with other executives at a comparable level of responsibility within his group and in the Company.
Annual Cash Incentive Awards. The Compensation Committee and the Board, in their discretion, may establish annual cash incentives from time to time. Our objective in providing annual cash incentives is to reward short-term performance that has exceeded specific expectations in circumstances where no other element of our compensation program would otherwise reward such performance without incentivizing inappropriate risk-taking or otherwise deterring achievement of our long-term goals and initiatives. As stated above in "Determining Compensation—General," as a result of the Company's reported EBITDA and the reduction in debt during 2014, our Chairman andformer Interim Chief Executive Officer and our President and Chief OperatingExecutive Officer, were entitledthe Committee determined its recommendations to receive bonuses under the Bonus PlanBoard for 2014.the Board's approval of the compensation for our NEOs. In connection with their compensation-relateddetermining its recommendations in view of their strong performance under difficult conditions during 2014,to the Board, the Committee relied considerably on assessments by our Chairman andformer Interim Chief Executive Officer and our PresidentChief Executive Officer of the performance and Chief Operating Officer recommended bonuses for ourcontribution of the other named executive officers and utilized the advice of Pay Governance LLC primarily as an effective "market check" designed to assure that compensation for 2014, and, consistent with their recommendation, the Compensation Committee determined to award bonuses to our other named executive officers for 2014 as follows: Mr. Fanelli—$50,000, Mr. Ghali—$150,000would be appropriate in view of other compensation packages that may be offered by the Company's peers and Mr. Samelian—$50,000.other prospective employers of these executives.
Post-Employment Compensation Arrangements
Long-Term Equity-Based Incentive Compensation. From timeTermination Payments
In the event of a change in control, we provide certain senior executive officers with benefits upon termination in various circumstances under our 2015 Senior Executive Retention Plan (the "2015 Retention Plan") and under our 2016 Executive Retention Plan (the "2016 Retention Plan" and, collectively with the 2015 Retention Plan, the "Retention Plans"). The Retention Plans provide change in control severance benefits only upon the occurrence of a "double-trigger" (change in control and termination of employment). Generally, the benefits under the 2015 Retention Plan provide for one year of salary and benefits continuation; the benefits under our 2016 Retention Plan provide for two years of salary upon termination following a change in control. As of December 31, 2018, there were no participants under the 2015 Retention Plan and Messrs. Ghali, Weintraub, Griffin and Kardous were eligible to time,receive benefits under the Compensation Committee and2016 Retention Plan.
We detail the Board, in their discretion, may award long-term equity-based compensation estimated to be paid to our NEOs under various termination circumstances as of December 31, 2018 in the section below titled "Executive Officer Compensation — Potential Payments Upon Termination or Change in Control."
Personal Benefits
We provide our NEOs with other benefits that we believe are reasonable and competitive so that we may attract and retain talented senior executives. In total, they represent a small percentage of each NEO's overall compensation and generally are identical to the benefits provided to all other Hill employees.
Policy on Hedging and Pledging
Our insider trading policy contains restrictions on certain transactions in Company stock by executive officers and directors. All trades by executive officers and directors must be pre-cleared. The executive officers and directors are prohibited from any trading in puts or calls, from engaging in short sales of Company stock or from hedging Company stock. Making pledges of Company stock or using it as loan collateral or as part of a margin account in the future is prohibited unless expressly approved by the Board.
executive officers, includingRisk Considerations in Our Compensation Programs
The Committee has reviewed our named executive officers. In determining the termscompensation policies and amounts of any of these awards, the Compensation Committee seeks primarily to motivate successful multi-year operational and financial performance of our Company, to encourage long-term accountability of the individuals to whom the awards are made and to further reinforce the linkage between executive performance and creation of stockholder value.
For 2014, the Compensation Committee recommended, and the Board approved, certain stock option awards for our named executive officers. The awards are shown in detail in the table under "Grants of Plan Based Awards" on page 25. As stated above in "Determining Compensation—Equity Grant Practices," the awards for our Chairman and Chief Executive Officer and our President and Chief Operating Officer were based on the Compensation Committee's determination that the awards reflected the appropriate level of long-term equity based incentive for those individuals. In making this determination, the Compensation Committee did not make reference to any specific criteria. In determining the awards for our other named executive officers, the Compensation Committee relied upon recommendations from our Chairman and Chief Executive Officer and our President and Chief Operating Officer.
In our most recent survey, total long-term compensationpractices for the chiefCompany's executive officers and concluded that any risks arising from these policies and programs are not reasonably likely to have a material adverse effect. The Committee believes that the chief operating officersmix and design of the selected peer group of companies ranged between $292,000 and $1,096,000 and between $219,000 and $636,000, respectively.
The table below sets forth the awards of long-term equity-based incentive compensation for eachelements of our namedcompensation program combined with risk-mitigating features and policies such as stock ownership guidelines and appropriate oversight and governance are appropriate and encourage executive officers for 2014, together with the aggregate grant date fair value of their respective awards calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718 and the grant date fair value of the award as a percentage of his base salary for 2014.
| | Long-Term Equity Based Incentive Compensation Awards | | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of Shares Underlying Stock Options | Number of Restricted Shares | Aggregate Grant Date Fair Value of Awards | Percentage of Base Salary | |||||||||
Irvin E. Richter | 500,000 | — | $ | 870,000 | 62.1 | % | |||||||
Chairman and Chief Executive Officer | |||||||||||||
John Fanelli III | 25,000 | — | 65,750 | 16.0 | % | ||||||||
Senior Vice President and Chief Financial Officer | |||||||||||||
David L. Richter | 500,000 | — | 1,100,000 | 110.0 | % | ||||||||
President and Chief Operating Officer | |||||||||||||
Raouf S. Ghali | 100,000 | — | 263,000 | 27.7 | % | ||||||||
President, Project Management Group (International) | |||||||||||||
Frederic Z. Samelian | 40,000 | — | 105,200 | 14.6 | % | ||||||||
President, Construction Claims Group | |||||||||||||
For 2014, the Compensation Committee recommended long-term incentive awardskey employees to our Chairman and Chief Executive Officer andstrive to our President and Chief Operating Officer. Also, upon recommendations from our Chairman and Chief Executive Officer and our President and Chief Operating Officer, the Compensation Committee recommended long-term incentive compensation for the other named executive officers. The Compensation Committee recommended these awards to the Board to further incentivize these executives and reward these executives for performanceachieve goals that creates additional stockholder value over the long-term.
Other Compensation. The forms of other compensation that are provided to our named executive officers are generally available to all employees of Hill on a non-discriminatory basis. These elements of compensation include, without limitation, benefits packages typical for companies of our size and the option to be paid in cash for vacation, sick days and/or personal days not taken. In addition, under the terms of his employment agreement, our Chairman and Chief Executive Officer was entitled to receive, among other things, two automobiles for his use and payment of specified premiums for life insurance. The employment agreement with our President and Chief Operating Officer entitled him to receive, among other things, two automobiles for his use.
Employment Agreements
Irvin E. Richter and David L. Richter were each a party to an employment agreement with the Company for a term which expired on December 31, 2014.
On January 27, 2014, the Board approved a leadership succession plan that provided for the transition of the Chief Executive Officer position as of December 31, 2014 to David L. Richter. Effective on that date, Irvin E. Richter relinquished the Chief Executive Officer title but remained with the Company as Chairman. At the same time, David L. Richter became President and Chief Executive Officer.
As of January 31, 2014, the Company entered into new five-year employment agreements with Irvin E. Richter and David L. Richter that were effective as of December 31, 2014. In determining the compensation of Irvin E. Richter under his new employment agreement, the Compensation Committee and the Board considered the important business relationships that are maintained by him and the travel demands upon him that are essential to the continued maintenance of such relationships, in addition to the traditional duties of his position as Chairman. In determining the compensation of David L. Richter under his new employment agreement, the Compensation Committee and the Board considered primarily his new and expanded responsibilities as Chief Executive Officer.
New Employment Agreement with Irvin E. Richter. Under the new agreement effective December 31, 2014, Irvin E. Richter will receive an annual base salary of no less than $1,400,000, to be adjusted annually, and will be eligible to receive an annual bonus in an amount, if any, to be determined by the Board. The agreement further provides that he will be entitled to all benefits of employment provided to other employees of the Company during the employment term. In addition, the Company will provide him with two vehicles for his use and will pay certain life insurance premiums during the employment term.
New Employment Agreement with David L. Richter. Under the new agreement effective December 31, 2014, David L. Richter will receive a base salary of no less than $1,000,000, to be adjusted annually, and will be eligible to receive an annual bonus based upon the achievement of performance criteria to be established by the Board or its Compensation Committee for the applicable year. He also will be eligible to receive an annual long-term incentive award, which may consist of stock options issued by the Company, shares of restricted stock ofbenefit the Company and other forms of equity-based, equity-linked or other long-term incentive compensation. The amountour stockholders over the long term. Our compensation policies and other terms of long-term incentive awards made to him, if any, will be determined by the Board or its Compensation Committee. The agreement also reflects the intention that the total of his base salary, bonus and long-term incentive award for each year during the employment term be not less than the 75th percentile for the chief executive officers of certain "peer group" companies. The agreement further provides that he will be entitledprocedures are applied uniformly to all benefits of employment provided to other employees of the Companyeligible participants and willwhen viewed in aggregate, our programs provide Mr. Richter with two vehicles for his use during the employment term.
Compensation for Non-Employee Directors in 2014
Non-employee directors' compensation is set by the Board at the recommendation of the Compensation Committee. For 2014, the Compensation Committee recommendedsufficient safeguards, balance and the Board approved a compensation and benefit program for non-employee directors. In developing its recommendations, the Compensation Committee was guided by the following goals: compensation should fairly pay directors for work required in order to serve on the Board and compensation should align non-employee directors' interests with the long-term interests of stockholders. For 2014, the Compensation Committee and the Board approved an annual compensation package for each non-employee director consisting of: (i) a $100,000 director's fee payable in cash, (ii) a grant of stock options, made at the meeting of our Board of Directors immediately following our annual meeting of stockholders, valued at $35,000 on the grant date, based on a Black-Scholes model, with immediate vesting and with an exercise price equal to the closing price per share of our common stock on the date of grant and exercisable over a five-year period, and (iii) an award on the same date of shares of our common stock valued at $35,000 based on the closing price per share of our common stock on the date of the award. In addition, the Chairman of the Compensation Committee and the Chairman of the Governance and Nominating Committee each receive an annual committee chairman's fee of $5,000 payable in cash, and the Chairman of the Audit Committee receives an annual committee chairman's fee of $10,000 payable in cash.
Share Ownership Guidelines
We have adopted a policy with respect to the ownership of our common stock by the members of our Board of Directors. Under our policy, each director is required to own at least 10,000 shares of our common stock. Each person is required to comply with the policy within two years after becoming subject to it. We dogovernance that does not have a policy with respect to the ownership of our common stockencourage excessive risk-taking by our executive officers.
Tax Deductibility of Compensation
We currently do not have a policy with respect to compliance with the limitations imposed by Section 162(m) of the Code, which imposes a $1,000,000 limit on the amount that a public company may deduct as an expense for compensation paid to our named executive officers.
However, the Bonus Plan which was approved by stockholders in 2010 and is being presented to the stockholders for re-approval at the Annual Meeting is designed to preserve the tax deductibility of cash incentive awards to executive officers under Section 162(m) of the Code. As mentioned above, Section 162(m) generally limits to $1,000,000 per year the deductibility, for federal income tax purposes, of cash compensation to any individual who, as of the end of the year, is one of our named executive officers. This limitation does not apply to compensation that is deemed to be "qualified performance-based" within the meaning of Section 162(m). Therefore, if compensation qualifies as "qualified performance-based" for purposes of Section 162(m), we will be permitted to deduct it for federal income tax purposes. The provisions of Section 162(m) require, among other things, that the material terms of compensation plans such as our bonus award plans must be approved by a company's stockholders every five years in order for compensation awarded under such plan to qualify as "qualified performance-based." For additional information relating to the Compensation Committee's use of the Bonus Plan and, potentially, the award of other bonus compensation, see "Compensation Philosophy and Objectives—Performance."
Table of Contentsemployees.
REPORT OF THE COMPENSATION COMMITTEE Compensation Committee Report
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis set forth above with Hill'sthe Company's management. Based on such review and discussions,discussion, the Compensation Committee recommended to Hill'sthe Board, and the Board approved, the inclusion of Directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference into the Company's Annual Report on Form 10-K for the year ended December 31, 2014. This report is provided by the following independent directors, who comprise the Committee:Proxy Statement.
Compensation Committee
Arnaud Ajdler (Chair)
James Chadwick
Alan S. Fellheimer (Chairman)
Hill's current executive officers are as follows:
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Officers are not appointed for fixed terms. Biographical information for our current officers who are not also directors follows:
RAOUF S. GHALIhas been our Chief Operating Officer since January 2015. Prior to that, he was President of our Project Management Group (International) from January 2005 to January 2015, Senior Vice President in charge of project management operations in Europe, North Africa and the Middle East from 2001 to 2004, and Vice President from 1993 to 2001. Prior to joining us, he worked for Walt Disney Imagineering from 1988 to 1993. Mr. Ghali earned both a B.S. in business administration and economics and an M.S. in business organizational management from the University of LaVerne.
THOMAS J. SPEARINGhas been Regional President (Americas) of our Project Management Group since January 2015. Prior to that, he was President of our Project Management Group (Americas) from April 2009 to January 2015 and Senior Vice President and Chief Strategy Officer from September 2007 to March 2009. Prior to joining Hill, Mr. Spearing worked for more than ten years with STV Group, most recently as Principal-in-Charge of its western region. Before that, Mr. Spearing was a Vice President of business development with Hill. Mr. Spearing earned his B.B.A. in computer and information science from Temple University, his B.S. in construction management and his B.S. in civil engineering from Spring Garden College, and his M.S. in management from Rosemont College. He is founding co-chair of Pennsylvanians for Transportation Solutions (Pen Trans), is a Women's Transportation Seminar member, a member of the Legacy Foundation and Co-Chair of the Transit Builders' Trust. In addition, he has served in various leadership roles with the American Public Transit Association, including serving as chair, vice chair and secretary of its Capital Projects Subcommittee. Mr. Spearing also is active in the Southern New Jersey Development Council, the AEC Business Builders Forum, and the CMAA, among others.
MOHAMMED AL RAIShas been Regional President (Middle East) with Hill's Project Management Group since January 2015. Prior to that, he was Senior Vice President and Managing Director (Middle East) of our Project Management Group from April 2010 to January 2015 and Vice President from 2006 to 2010. Mr. Al Rais has over 38 years of experience in the management of construction projects throughout the Middle East, North Africa, the United Kingdom and Canada. He earned his B.Sc. in city and regional planning from the University of Engineering and Technology in Pakistan and his M.Sc. in project management from the University of Reading in the United Kingdom. Mr. Al Rais is a member of the Association for Project Management in the U.K., the Canadian Business Council, the Society of Engineers in the U.A.E., the Chartered Management Institute and the Chartered Institute of Building.
FREDERIC Z. SAMELIANhas been President of our Construction Claims Group since January 2005. Prior to that, he was a Senior Vice President with us from 2003 to 2004. Before that, Mr. Samelian was President of Conex International, Inc., a construction dispute resolution firm, from 2002 to 2003 and from 2000 to 2001, an Executive Director with Greyhawk North America, Inc., a construction management and consulting firm, from 2001 to 2002, and a Director with PricewaterhouseCoopers LLP from 1998 to 2000. Before that, he had worked with Hill from 1983 to 1998, including serving as Hill's President and Chief Operating Officer from 1996 to 1998. Mr. Samelian has a B.A. in international affairs from George Washington University and an M.B.A. from Southern Illinois University at Edwardsville. He is a Project Management Professional certified by the Project Management Institute and a licensed General Building Contractor in California and Nevada. Mr. Samelian is also a Member of the Chartered Institute of Arbitrators (CIArb) and is a CIArb Accredited Mediator. He is also a licensed real estate salesperson in Nevada.
JOHN FANELLI IIIhas been our Senior Vice President and Chief Financial Officer since September 2006. Before that, Mr. Fanelli was Vice President and Chief Accounting Officer of CDI Corp. from 2005 to 2006, and he was Vice President and Corporate Controller of CDI Corporation (a subsidiary of CDI Corp.) from 2003 to 2006. CDI Corp. is a New York Stock Exchange-traded professional services and outsourcing firm based in Philadelphia with expertise in engineering, technical services and information technology. During 2003, Mr. Fanelli was a financial consultant to Berwind Corporation, an investment management company based in Philadelphia which owns a diversified portfolio of manufacturing and service businesses and real estate. Before that, Mr. Fanelli was employed for 18 years by Hunt Corporation, then a New York Stock Exchange-traded manufacturer and marketer of office products. At Hunt, he served as Vice President and Chief Accounting Officer from 1995 until 2003, and before that as Director of Budgeting, Financial Analysis and Control, from 1985 to 1995. Before that, Mr. Fanelli was employed with Coopers & Lybrand for eight years in various accounting and auditing positions. Mr. Fanelli earned his B.S. in accounting from LaSalle University and he is a Certified Public Accountant in Pennsylvania.
RONALD F. EMMAhas been our Senior Vice President and Chief Accounting Officer since January 2007. Mr. Emma had been Senior Vice President of Finance from 1999 to 2007. Before that, he was Vice President of Finance. Mr. Emma has been with Hill since 1980. Before joining Hill, he was Assistant Controller of General Energy Resources, Inc., a mechanical contracting firm, and prior to that was a Staff Accountant with the accounting firm of Haskins & Sells. Mr. Emma has a B.S. in accounting from St. Joseph's University and he is a Certified Public Accountant in New Jersey.
WILLIAM H. DENGLER, JR.has been our Senior Vice President and General Counsel since March 2007. Mr. Dengler was previously Vice President and General Counsel from 2002 to 2007, and Corporate Counsel from 2001 to 2002. Mr. Dengler also serves as corporate secretary to Hill and its subsidiaries. Prior to joining Hill, Mr. Dengler served as Assistant Counsel to former New Jersey Governors Donald DiFrancesco and Christine Todd Whitman from 1999 to 2001. Mr. Dengler earned his B.A. in political science from Western Maryland College and his J.D. from Rutgers University
Summary Compensation Table
The following table contains summary information concerning the annual compensation for our then-named executive officersNEOs during 2014, 20132018, 2017 and 2012.2016.
Name and Principal Position | Year | Salary ($) | Bonus ($) | Option Awards ($)(1)(2) | Non-Equity Incentive Compensation ($) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Irvin E. Richter(4) | 2014 | 1,400,000 | — | 870,000 | 272,000 | 1,391,423 | 3,933,423 | |||||||||||||||
Chairman and Chief Executive | 2013 | 1,300,000 | 233,700 | 895,000 | — | 262,177 | 2,690,877 | |||||||||||||||
Officer | 2012 | 1,200,000 | 200,000 | 1,175,000 | — | 252,211 | 2,827,211 | |||||||||||||||
John Fanelli III | 2014 | 410,000 | 50,000 | 65,750 | — | 11,989 | 511,989 | |||||||||||||||
Senior Vice President and Chief | 2013 | 375,000 | 40,000 | 54,750 | — | 11,472 | 481,222 | |||||||||||||||
Financial Officer | 2012 | 350,000 | 25,000 | — | — | 12,398 | 387,398 | |||||||||||||||
David L. Richter(4) | 2014 | 1,000,000 | — | 1,100,000 | 272,000 | 103,050 | 2,475,050 | |||||||||||||||
President and Chief Operating | 2013 | 900,000 | 233,700 | 895,000 | — | 84,686 | 2,113,386 | |||||||||||||||
Officer | 2012 | 800,000 | 200,000 | 1,175,000 | — | 79,749 | 2,254,749 | |||||||||||||||
Raouf S. Ghali(4) | 2014 | 950,000 | 150,000 | 263,000 | — | 58,285 | 1,421,285 | |||||||||||||||
President, Project Management | 2013 | 850,000 | 150,000 | 219,000 | — | 80,114 | 1,299,114 | |||||||||||||||
Group (International) | 2012 | 750,000 | 100,000 | — | — | 38,387 | 888,387 | |||||||||||||||
Frederic Z. Samelian | 2014 | 720,000 | 50,000 | 105,200 | — | 18,488 | 893,688 | |||||||||||||||
President, Construction Claims | 2013 | 660,000 | 50,000 | 109,500 | — | 30,025 | 849,525 | |||||||||||||||
Group | 2012 | 615,000 | 25,000 | — | — | 32,616 | 672,616 | |||||||||||||||
| Name and Principal Position | | | | Year | | Salary $ | | Bonus $ (1) | | Stock Awards $ (2) | | Option Awards $ (3) (4) | | Non-Equity Incentive Plan Compensation $ | | All Other Compensation $ (5) | | Total $ | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Raouf S. Ghali, | | | | 2018 | | 1,013,750 | | — | | — | | — | | — | | 113,173 | | 1,126,923 | | |
Chief Executive Officer (6) | | | | 2017 | | 1,135,000 | | — | | — | | 512,500 | | — | | 49,547 | | 1,697,047 | | |
| | | | 2016 | | 1,135,000 | | — | | — | | 362,500 | | — | | 51,238 | | 1,548,738 | | | |
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Todd E. Weintraub, | | | | 2018 | | 35,744 | | — | | — | | — | | — | | 636 | | 36,380 | | |
Senior Vice President and | | | | | | | | | | | | | | | | | | | | |
Chief Operating Officer (7) | | | | | | | | | | | | | | | | | | | | |
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Michael V. Griffin, | | | | 2018 | | 528,000 | | — | | — | | — | | — | | 57,839 | | 585,839 | | |
Regional President | | | | | | | | | | | | | | | | | | | | |
(Americas) | | | | | | | | | | | | | | | | | | | | |
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Abdo E. Kardous, | | | | 2018 | | 591,250 | | — | | — | | — | | — | | 99,145 | | 619,114 | | |
Regional President | | | | | | | | | | | | | | | | | | | | |
(Middle East) | | | | | | | | | | | | | | | | | | | | |
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J. Charles Levergood, | | | | 2018 | | 510,000 | | — | | — | | — | | — | | 50,474 | | 560,474 | | |
Senior Vice President of | | | | 2017 | | 510,000 | | 100,000 | | — | | — | | — | | 28,050 | | 638,050 | | |
Business Development (Americas) | | | | | | | | | | | | | | | | | | | | |
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Paul Evans, | | | | 2018 | | 542,769 | | — | | — | | — | | — | | 84,835 | | 627,604 | | |
former Interim Chief | | | | 2017 | | 474,923 | | 425,159 | | 640,000 | | — | | — | | 17,858 | | 1,557,940 | | |
Executive Officer (8) | | | | | | | | | | | | | | | | | | | | |
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Marco A. Martinez | | | | 2018 | | 335,730 | | 17,500 | | — | | — | | — | | 39,504 | | 392,734 | | |
former Senior Vice President | | | | 2017 | | 57,346 | | — | | — | | — | | — | | 501 | | 57,847 | | |
and Interim Chief | | | | | | | | | | | | | | | | | | | | |
Financial Officer (9) | | | | | | | | | | | | | | | | | | | | |
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Gregory Wolf, | | | | 2018 | | 83,076 | | — | | — | | — | | — | | 3,212 | | 86,289 | | |
former Interim Chief | | | | | | | | | | | | | | | | | | | | |
Financial Officer (10) | | | | | | | | | | | | | | | | | | | | |
received by the named executive officer. The actual value, if any, that an executive may realize from an award is contingent upon the satisfaction of the conditions to vesting in that award, and upon the excess of the stock pricepriced over the exercise price, if any, on the date the award is exercised. Thus, there is no assurance that the value, if any, eventually realized by the named executive officer will correspond to the amount shown.
Name | Life Insurance ($) | Vehicle ($) | Country Club ($) | Unused Vacation ($) | Medical and Disability ($) | 401(k) Match ($) | Total Other Compensation ($) | |||||||||||||||
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Irvin E. Richter | 168,469 | 24,793 | — | 1,175,512 | 20,049 | 2,600 | 1,391,423 | |||||||||||||||
John Fanelli III | 1,338 | — | — | 3,153 | 4,898 | 2,600 | 11,989 | |||||||||||||||
David L. Richter | 1,632 | 56,879 | 21,890 | — | 20,049 | 2,600 | 103,050 | |||||||||||||||
Raouf S. Ghali | 1,632 | 19,000 | — | 18,262 | 16,791 | 2,600 | 58,285 | |||||||||||||||
Frederic Z. Samelian | 1,632 | — | — | — | 14,256 | 2,600 | 18,488 | |||||||||||||||
The percentage of the "Total" column represented by each named executive officer's salary and bonus for each year is as follows:
Name | 2012 Salary and Bonus as a % of Total Compensation | 2013 Salary and Bonus as a % of Total Compensation | 2014 Salary and Bonus as a % of Total Compensation | |||||||
|---|---|---|---|---|---|---|---|---|---|---|
Irvin E. Richter | 49.5 | % | 57.0 | % | 42.5 | % | ||||
John Fanelli III | 96.8 | % | 86.2 | % | 89.8 | % | ||||
David L. Richter | 44.4 | % | 53.6 | % | 49.8 | % | ||||
Raouf S. Ghali | 95.7 | % | 77.0 | % | 77.4 | % | ||||
Frederic Z. Samelian | 95.2 | % | 83.6 | % | 86.2 | % | ||||
| Name | | | | Life Insurance $ | | Vehicle(s) and Parking $ | | Transportation Allowances $ | | Medical and Disability $ | | 401 (k) Match $ | | Accrued Vacation $ | | Total Other Compensation $ | | |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
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Raouf S. Ghali | | | | 984 | | — | | — | | 21,180 | | 8,250 | | 82,759 | | 113,173 | | |
Todd E. Weintraub | | | 82 | | — | | — | | 554 | | — | | — | | 636 | | ||
Michael V. Griffin | | | | 984 | | — | | — | | 13,838 | | 8,250 | | 34,767 | | 57,839 | | |
Abdo E. Kardous | | | 1,874 | | 8,114 | | — | | 10,143 | | 7,733 | | 71,280 | | 99,145 | | ||
J. Charles Levergood | | | | 984 | | — | | — | | 19,254 | | 8,250 | | 21,986 | | 50,474 | | |
Paul Evans | | | 984 | | — | | 25,167 | | 19,727 | | 8,250 | | 30,707 | | 84,835 | | ||
Marco Martinez | | | | 820 | | — | | — | | 1,020 | | 8,250 | | 29,414 | | 39,504 | | |
Gregory Wolf | | | 246 | | — | | — | | 306 | | 1,012 | | 1,647 | | 3,212 | |
Grants of Plan-Based Awards
The following table presents information about equity-basedplan-based awards made to our named executive officers in 2014. The Company did not make any stock awards in 2014.2018:
Name | Grant Date | All other stock awards: number of shares of stock or units | All other option awards: number of securities underlying options (#)(1) | Exercise or base price of option awards ($/Sh) | Grant date fair value of stock and option awards ($)(3) | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Irvin E. Richter | 1/2/14 | — | 500,000 | 4.35 | (2) | 870,000 | ||||||||||
John Fanelli III | 3/10/14 | — | 25,000 | 4.95 | 65,750 | |||||||||||
David L. Richter | 1/2/14 | — | 500,000 | 3.95 | 1,100,000 | |||||||||||
Raouf S. Ghali | 3/10/14 | — | 100,000 | 4.95 | 263,000 | |||||||||||
Frederic Z. Samelian | 3/10/14 | — | 40,000 | 4.95 | 105,200 | |||||||||||
Name | | | | Estimated Future Payments Under Non-Equity Incentive Plan Awards (1) | | All other stock awards: number of shares of stock or units (#) | | Grant date fair value of stock and option awards | | |||||||
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| | | | Grant Date | | Threshold | | Target | | Maximum | | (#) (2) | | (3) | | | |
Raouf S. Ghali | | | 3/8/18 | | $150,000 | | 300,000 | | 600,000 | | — | | $300,000 | | ||
Todd E. Weintraub (4) | | | | 3/8/18 | | — | | — | | — | | — | | — | | |
Michael V. Griffin | | | 3/8/18 | | 50,000 | | 100,000 | | 200,000 | | — | | 200,000 | | ||
Abdo E. Kardous | | | | 3/8/18 | | — | | — | | — | | — | | 300,000 | | |
J. Charles Levergood | | | 3/8/18 | | — | | 200,000 | | 200,000 | | — | | 150,000 | | ||
Paul Evans (5) | | | | Various | | 450,000 | | 450,000 | | 450,000 | | — | | 720,000 | | |
Marco Martinez | | | 3/8/18 | | 75,000 | | 150,000 | | 300,000 | | — | | 200,000 | | ||
Gregory Wolf (6) | | | | 3/8/18 | | — | | — | | — | | — | | — | | |
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the executive's termination of employment under certain circumstances. Additional information regarding the
vesting acceleration provisions applicable to equity awards is included under the heading "Potential Payments upon Termination or Change in Control."
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
Outstanding Equity Awards at Fiscal Year-End
The following table providespresents information with respect to outstanding equity awards held by our named executive officers as of December 31, 2014.2018.
| | Option Awards | Stock Awards | |||||||||||||||||
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Name | Number of securities underlying unexercised options (#) exercisable | Number of securities underlying unexercised options (#) unexercisable | Option exercise price ($) | Option expiration date | Number of shares or units of stock that have not vested (#) | Market value or units of stock that have not vested ($) | |||||||||||||
Irvin E. Richter | 320,000 | — | (1) | 6.41 | (2) | 3/31/2015 | — | — | |||||||||||
| 340,251 | 113,417 | (3) | 7.32 | (2) | 1/26/2016 | — | — | ||||||||||||
| 220,050 | 220,050 | (4) | 5.47 | (2) | 3/6/2017 | — | — | ||||||||||||
| 125,000 | 375,000 | (5) | 4.04 | (2) | 1/21/2018 | — | — | ||||||||||||
| — | 500,000 | (6) | 4.35 | (2) | 1/2/2019 | — | — | ||||||||||||
John Fanelli III | 20,000 | — | (7) | 2.45 | 3/9/2016 | — | — | ||||||||||||
| 6,000 | 4,000 | (8) | 6.31 | 6/3/2018 | — | — | |||||||||||||
| 5,000 | 20,000 | (9) | 3.67 | 1/21/2020 | — | — | |||||||||||||
| — | 25,000 | (10) | 4.95 | 3/10/2021 | — | — | |||||||||||||
David L. Richter | 150,000 | — | (7) | 2.45 | 3/9/2016 | — | — | ||||||||||||
| 212,000 | 53,000 | (11) | 5.83 | 3/31/2017 | — | — | |||||||||||||
| 340,251 | 113,417 | (3) | 7.32 | (2) | 1/26/2016 | — | — | ||||||||||||
| 220,050 | 220,050 | (4) | 5.47 | (2) | 3/6/2017 | — | — | ||||||||||||
| 125,000 | 375,000 | (5) | 4.04 | (2) | 1/21/2018 | — | — | ||||||||||||
| — | 500,000 | (12) | 3.95 | 1/2/2021 | — | — | |||||||||||||
Raouf S. Ghali | 55,489 | — | (7) | 2.45 | 3/9/2016 | — | — | ||||||||||||
| 30,000 | 20,000 | (8) | 6.31 | 6/3/2018 | — | — | |||||||||||||
| 20,000 | 80,000 | (9) | 3.67 | 1/21/2020 | — | — | |||||||||||||
| — | 100,000 | (10) | 4.95 | 3/10/2021 | — | — | |||||||||||||
Frederic Z. Samelian | 20,000 | — | (7) | 2.45 | 3/9/2016 | — | — | ||||||||||||
| 15,000 | 10,000 | (8) | 6.31 | 6/3/2018 | — | — | |||||||||||||
| 10,000 | 40,000 | (9) | 3.67 | 1/21/2020 | — | — | |||||||||||||
| — | 40,000 | (10) | 4.95 | 3/10/2021 | — | — | |||||||||||||
| | Option Awards | | Stock Awards | |||||||||||||||||||||||||||||
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Name | | | | Number of securities underlying unexercised options (#) exercisable | | | | Number of securities underlying unexercised options (#) unexercisable | | | | | Option exercise price | | | | Option expiration date | | | Equity Incentive Plan: Awards: Number of unearned shares, units or other rights that have not vested (#) | | Equity Incentive Plan Awards: Market value of unearned shares, units or other rights that have not vested ($) | ||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Raouf S. Ghali | | | | | | 100,000 | | | | | | — | | | | (1) | | | | 3.67 | | | | | | 1/21/2020 | | | | | | |
| | | | 80,000 | | | | 20,000 | | | (2) | | | 4.95 | | | | 3/10/2021 | | | | ||||||||||||
| | | | | | 120,000 | | | | | | 80,000 | | | | (3) | | | | 4.03 | | | | | | 1/27/2022 | | | | | | | |
| | | | 100,000- | | | | 150,000 | | | (4) | | | 4.00 | | | | 4/2/2023 | | | | ||||||||||||
| | | | | | 50,000 | | | | | | 200,000 | | | | (5) | | | | 4.65 | | | | | | 3/08/2024 | | | | | | | |
| | | | | | | | | | | | | | | | (6) | | (6) | |||||||||||||||
Todd E. Weintraub | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | — | | — |
Michael V. Griffin | | | | 10,000 | | | | — | | | (1) | | | 3.67 | | | | 1/21/2020 | | | | |||||||||||
| | | | | | 8,000 | | | | | | 2,000 | | | | (2) | | | | 4.95 | | | | | | 3/10/2021 | | | | | | | |
Abdo E. Kardous | | | | 25,000 | | | | — | | | (1) | | | 3.67 | | | | 1/21/2020 | | | | |||||||||||
| | | | | | 12,000 | | | | | | 3,000 | | | | (2) | | | | 4.95 | | | | | | 3/10/2021 | | | | | | | |
| | | | | | | | | | | | | | | | (6) | | (6) | |||||||||||||||
J. Charles Levergood | | | | | | 10,000 | | | | | | 15,000 | | | | (7) | | | | 4.46 | | | | | | 10/05/2023 | | | | | | |
| | | | | | | | | | | | | | | | (6) | | (6) | |||||||||||||||
based on the Company's Earnings Per Share with the filings of the Company's Form 10-K for the years ended December 31, 2011, 2012, 2013, 20142018, 2019 and 2015.
2020, with the final determination of the number of units to be made on the Cliff Vesting Date. The Company was not current with its SEC filings on the date that the RSUs were originally approved. In accordance with the terms of these grants, the RSUs could not be granted to the participants until the Company became current in its filings with the SEC. Therefore, these RSUs were granted and the value of the awards were estimated on October 12, 2018, the date the Company became current with its SEC filings. Because the Company did not estimate that the conditions under any of the performance level ranges would be met, there was no such compensation expense recorded for the year ended December 31, 2018. The total number of units issued under the awards totaled between approximately 226,000 and 678,000 had the Company estimated that the performance conditions could be met. As of October 17, 2018, Mr. Martinez is no longer an employee of the Company and accordingly the employment condition of his RSU is unable to be met, rendering the RSU invalid.
Option Exercises and Stock Vested
The following table provides information onNo NEO exercised stock options during 2018.
Former Employment Agreement with Our CEO
Under an agreement effective August 18, 2016 with a five-year term, our CEO, Raouf S. Ghali, is to receive a base salary the exerciseamount of which shall be reviewed annually by the Company's Compensation Committee. Mr. Ghali's current base salary is $1,135,000 per annum. In addition to base salary, Mr. Ghali will be eligible to receive an annual bonus based upon the achievement of performance criteria to be established by the Board or its Compensation Committee for the applicable year. Mr. Ghali also will be eligible to receive an annual long-term incentive award, which may consist of stock options issued by the Company, shares of restricted stock of the Company, and other forms of equity-based, equity-linked or other long-term incentive compensation. The amount and other terms of long-term incentive awards made to Mr. Ghali, if any, will be determined by the Board or its Compensation Committee. The agreement further provides that Mr. Ghali is entitled to all benefits of employment provided to other employees of the Company. Mr. Ghali may terminate the employment agreement at any time upon no less than 30 days prior written notice to the Company of such termination. On August 17, 2018, the Company and Mr. Ghali entered into a termination agreement with respect to Mr. Ghali's employment agreement and the Board approved new compensation terms, effective October 1, 2018. These new compensation terms include a base salary of $650,000 annually, annual participation in the Company's incentive bonus plan with an annual target cash bonus of $675,000 based on metrics to be determined by the Board, a grant of $900,000 annually in shares of the Company's common of which 50% will be performance based and 50% will be time vested and participation in the Company's 2016 Executive Retention Plan.
Employment Agreement with Our Senior Vice President of Business Development (Americas)
Under an agreement dated August 15, 2016 with a five-year term, our Senior Vice President of Business Development (Americas), J. Charles Levergood, is to receive a base salary of $510,000 per annum. The Company is required to provide Mr. Levergood with severance of one year of base salary if Mr. Levergood is terminated without cause during the first three years of his employment and six months of base salary if Mr. Levergood is terminated without cause thereafter. In addition to base salary, Mr. Levergood is eligible to receive a bonus based on generating new sales for the Company: for every $1,000,000 of expected consulting fee revenue generated by Mr. Levergood in a calendar year, Mr. Levergood will receive a $2,000 bonus, up to a maximum of $100,000. Mr. Levergood is also be eligible to receive an additional bonus of $100,000 in the event that the Company achieves or exceeds
its annual sales target. Payment of bonuses, if any, will be paid on March 15 of the following calendar year.
2015 Senior Executive Retention Plan
On January 27, 2015, the Board adopted the Hill International, Inc. 2015 Senior Executive Retention Plan (the "2015 Retention Plan") which became effective immediately. The Board adopted the 2015 Retention Plan as part of its effort to minimize distractions to certain executives created by a pending or threatened change in control and to provide such executives with compensation and benefit arrangement upon a change in control which ensure that the executives' expectations will be satisfied. The 2015 Retention Plan provides certain severance benefits during the two-year period immediately following a change in control (as defined in the 2015 Retention Plan) to certain senior officers of the Company as selected by the Board in the event of (i) involuntary termination of employment by the Company other than for certain events constituting "cause" set forth in the 2015 Retention Plan, or (ii) voluntary resignation for good reason (as defined in the 2015 Retention Plan). Under the 2015 Retention Plan, following a qualifying termination, the participant will receive (i) a lump-sum payment of an amount equal to one year of the executive's then base annual salary, payable within 30 days after the effective date of the event giving rise to the benefits under the 2015 Retention Plan, and (ii) if the executive's employment is terminated by the Company "without cause" or by the executive for "good reason" during the two-year period immediately following a change in control, any and all stock options, stock grants or other equity-based compensation granted to such executive will immediately vest. If required by Internal Revenue Code Section 409A, payments or benefits to certain executives may be delayed by up to 6 months from the date of termination. A participant that is a party to any employment agreement or other arrangement with the Company providing for severance is not eligible to receive benefits under the Plan unless he or she waives any rights to such other severance.
As of December 31, 2018, there were no Participants under the 2015 Retention Plan.
2016 Executive Retention Plan
Effective November 3, 2016, the Board adopted the Company's 2016 Executive Retention Plan (the "2016 Retention Plan") which provides for the payment of severance benefits by the Company to certain designated employees (each a "Participant") whose employment is permanently terminated due to an Involuntary Termination (as defined in the 2016 Retention Plan). Upon termination of a Participant's employment by the Company without "Cause" (as set forth in the 2016 Retention Plan) or by the Participant for "Good Reason" (as defined in the 2016 Retention Plan), the Company will be required to pay to the Participant a lump sum cash payment in an amount equal to one times the Participant's base salary at such time; notwithstanding the foregoing, if the termination is within one year following a Change in Control (as defined in the 2016 Retention Plan), the Company will be required to pay to the Participant a lump sum cash payment in an amount equal to two times the Participant's base salary at such time and any and all unvested stock options, stock grants or other stock based compensation granted to the Participant shall then immediately vest.
As of December 31, 2018, Messrs. Ghali, Weintraub, Griffin and Kardous were designated as participants under the 2016 Retention Plan. For Mr. Ghali, he is entitled to a lump sum cash payment in an amount equal to two times his base salary upon termination of his employment by the Company without "Cause" (as set forth in the 2016 Retention Plan) or by him for "Good Reason" (as defined in the 2016 Retention Plan).
Key Employee Retention Bonus Plan
On June 6, 2017, the Board authorized and approved the Company's Key Employee Retention Bonus Plan (the "Bonus Plan") and the form of Retention Agreement thereunder (the "Retention Agreement") in order to motivate and reward certain employees to continue service to the Company. The Bonus Plan designates several of the Company's named executive officers, during 2014.Michael Griffin, Abdo Kardous and Charles Levergood, as participants. The Bonus Plan and Retention Agreement provide that each participant will receive a specified cash bonus that will be paid upon the earlier of (i) the second anniversary of the participant's executed agreement under the Plan, or (ii) if a Change of Control (as such term is defined in the Bonus Plan) occurs, upon the involuntary termination of the participant.
| | Option Awards | Stock Awards | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Number of shares acquired on exercise (#) | Value realized on exercise ($) | Number of shares acquired on vesting (#) | Value realized on vesting ($) | |||||||||
Irvin E. Richter | 200,000 | 464,000 | — | $ | — | ||||||||
John Fanelli III | — | — | — | — | |||||||||
David L. Richter | — | — | — | — | |||||||||
Raouf S. Ghali | 44,511 | 181,236 | — | — | |||||||||
Frederic Z. Samelian | 30,000 | 127,500 | — | — | |||||||||
Potential Payments Upon Termination or Change in Control
The Company has entered into agreements and maintains plans that will require the Company to provide compensation to certain named executive officersindividuals in the event of a termination of employment and/or a change in control of the Company. The potential amount of compensation payable to each named executive officerindividual in each situation is set forth in the tables below. The amounts shown in the tables assume that termination of the named executive officerindividual and/or a change in control occurred on December 31, 20142018 and are based on the closing price per share of Hill common stock on that date of $3.84.$3.08. The actual amounts to be paid will depend on the circumstances and time of the termination or change in control. Please see "Compensation Discussion and Analysis—Employment Agreements" for a description of the material terms of the employment agreements we have entered into with our Chairman and our President and Chief Executive Officer. In addition, the Company has change in control arrangements with our Chief Operating Officer and President, Construction Claims Group.
Irvin E. RichterRaouf S. Ghali
Payments and Benefits | Death | By Company Without Cause | By Executive for Good Reason | By Executive Within Two Years Following a Change in Control | | | | By Company Without Cause | | By Executive for Good Reason | | By Executive Within Two Years Following a Change in Control | | | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |||||||||||||
Cash payment | $ | 350,000 | (1) | $ | 4,200,000 | (2) | $ | 4,200,000 | (2) | $ | 4,200,000 | (2) | | | | $1,300,000 | (1) | $1,300,000 | (1) | $650,000 | (1) | | |
Cost of continued benefits of employment accorded to Company employees | — | 60,147 | (3) | 60,147 | (3) | 60,147 | (3) | ||||||||||||||||
Automobile expenses | — | 74,378 | (4) | 74,378 | (4) | 74,378 | (4) | ||||||||||||||||
Reimbursement for life insurance premiums | — | 505,407 | (5) | 505,407 | (5) | 505,407 | (5) | ||||||||||||||||
Vesting of stock options | — | — | (6) | — | — | | | — | (2) | — | | — | | ||||||||||
| Vesting of RSUs | | | | — | | — | | — | (3) | | |||||||||||||
| | | | | | | | | | | | |||||||||||||
David L. RichterMichael Griffin
Payments and Benefits | Death | By Company Without Cause | By Executive for Good Reason | By Executive Within Two Years Following a Change in Control | | | | | | By Company Without Cause | | By Executive Within One Year Following a Change in Control | | | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |||||||||||||||
Cash payment | $ | 250,000 | (1) | $ | 3,000,000 | (2) | $ | 3,000,000 | (2) | $ | 3,000,000 | (2) | | | | — | | — | | | $300,000 | (3) | | | |
Cost of continued benefits of employment accorded to Company employees | — | 60,147 | (3) | 60,147 | (3) | 60,147 | (3) | ||||||||||||||||||
Automobile expenses | — | 170,638 | (4) | 170,638 | (4) | 170,638 | (4) | ||||||||||||||||||
Vesting of stock options | — | — | (5) | — | — | | | — | (2) | — | | | — | | | ||||||||||
| Vesting of RSUs | | | | — | | — | | | — | (1) | | | |||||||||||||
| | | | | | | | | | | | |||||||||||||||
Abdo Kardous
| Payments and Benefits | | | | | | By Company Without Cause | | By Executive Within One Year Following a Change in Control | | | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | ||
| Cash payment | | | | — | | — | | | $250,000 | (3) | | |
| Vesting of stock options | | | — | (2) | — | | | — | | | ||
| Vesting of RSUs | | | | — | | — | | | — | (1) | | |
| | | | | | | | | | | | ||
John Fanelli IIIJ. Charles Levergood
Payments and Benefits | For Involuntary Termination Within Two Years Following a Change in Control | | | | | | By Company Without Cause | | By Executive Within One Year Following a Change in Control | | | |||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | ||||||
Cash payment | $ | 410,000 | (1) | | | | | | $510,000 | (1) | | $300,000 | (4) | | | |
Vesting of stock options | 3,400 | (2) | | | | — | | | — | (2) | | |||||
| Vesting of RSUs | | | | — | | — | | | — | (3) | | | ||||
| | | | | | | | | | | | ||||||
Raouf S. Ghali
Payments and Benefits | For Involuntary Termination Within Two Years Following a Change in Control | |||
|---|---|---|---|---|
Cash payment | $ | 950,000 | (1) | |
Vesting of stock options | 13,600 | (2) | ||
Frederic Z. Samelian
Payments and Benefits | For Involuntary Termination Within Two Years Following a Change in Control | |||
|---|---|---|---|---|
Cash payment | $ | 720,000 | (1) | |
Vesting of stock options | 6,800 | (2) | ||
Paul Evans
Mr. Evans served as our Interim CEO from May 3, 2017 to October 1, 2018. Pursuant to the terms of his employment as Interim CEO, Mr. Evans was not eligible to receive any payments upon termination or change of control, other than the payments that were issued to Mr. Evans upon completion of his service as Interim CEO.
PAY RATIO DISCLOSURE
Summary
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Securities and Exchange Commission adopted a rule requiring annual disclosure of the ratio of the median employee's annual total compensation to the annual total compensation of the principal executive officer. The Company's principal executive officer is Mr. Ghali (the "CEO").
Method
To reasonably identify the median employee, the Company prepared a list of all employees (excluding the CEO) as of December 31, 2018. The list included part-time employees. As of December 31, 2018, the Company employed 2,725 persons (other than the CEO) of which 993 were located in the United States, 482 were located in Europe, 845 were located in the Middle East and 405 were located in other geographic areas. In certain geographic areas, such as the Middle East, compensation includes allowances (i.e., housing, travel, food, etc.) which are customary in such geographic areas.
To identify the "median employee," the Company extracted the gross wages from the Company's payroll records as well as any allowances paid by the Company or paid the employee for each employee. The Company annualized wages and salaries for those permanent employees that were not employed for the full year of 2018.
The Company then determined the employee on the list who had the median total compensation. The Company identified this employee as the median employee.
Following this, the Company estimated the median employee's annual total compensation in the same manner as the "total" compensation shown for our CEO in the section titled "Summary Compensation Table." However, as our CEO only served as CEO for three months of 2018, for purposes of calculating his annual total compensation for 2018 for the pay ratio calculation, we annualized the salary which he is to receive for his services as CEO but did not annualize any other aspect of his total compensation for 2018; accordingly, there is a difference between our CEO's total compensation calculated for our the purposes of determining the pay ration and the total compensation for our CEO which appears in the section titled "Summary Compensation Table."
2018 Pay Ratio
The median employee's 2018 estimated annual total compensation was $65,648. The CEO's 2018 annual total compensation (as annualized) was $763,173. The ratio of the CEO to median employee's 2018 estimated annual total compensation was 12:1.
Other than our former Interim CEO and our current CEO whose compensation as such is reflected on the Summary Compensation Table above, the table below details the compensation paid to our directors for their service as a descriptiondirector in 2018. The Board pays each non-employee director $120,000 for his or her service, of director compensation, see "Compensation for Non-Employeewhich, until December 2018, $80,000 was payable in cash and $40,000 was payable in deferred stock units; after December 2018, payments will be made 60% in the form of deferred stock units and 40% in cash. Also, the Chairman of the Board receives an additional annual retainer of $60,000, payable as $30,000 in cash and $30,000 in the form of deferred stock units. The Chairman of the Compensation Committee and the Chairman of the Governance and Nominating Committee each continue to receive an additional annual committee chairman's fee of $5,000 payable in cash, and the Chairman of the Audit Committee continues to receive an additional annual committee chairman's fee of $10,000 payable in cash. Directors may elect to receive deferred stock units in 2014" under the "Compensation Discussion and Analysis" sectionlieu of this proxy statement.
Our non-employee directors received the following amounts of compensation in 2014.a cash payment.
| | Fees Earned or Paid in Cash $ | Stock Awards(1)(2) $ | Option Awards(1)(3) $ | Total $ | |||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Camille S. Andrews | 105,000 | 35,000 | 35,000 | 175,000 | |||||||||
Brian W. Clymer | 110,000 | 35,000 | 35,000 | 180,000 | |||||||||
Alan S. Fellheimer | 105,000 | 35,000 | 35,000 | 175,000 | |||||||||
Steven M. Kramer | 100,000 | 35,000 | 35,000 | 170,000 | |||||||||
Gary F. Mazzucco | 100,000 | 35,000 | 35,000 | 170,000 | |||||||||
| | | | | Fees Earned or paid in Cash $ | | Stock Awards $(1) | | Total $ | | | |||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |||
David Sgro (2) | | | | 117,500 | | 40,000 | | 117,250 | | | |||
Arnaud Ajdler (3) | | | 21,250 | | 75,000 | | 96,250 | | |||||
Camille S. Andrews | | | | 85,000 | | 40,000 | | 85,000 | | | |||
James Chadwick (4) | | | 20,000 | | 78,000 | | 98,000 | | |||||
Paul J. Evans (5) | | | | 20,000 | | 72,000 | | 92,000 | | | |||
Alan S. Fellheimer | | | 80,000 | | 40,000 | | 120,000 | | |||||
Charles M. Gillman | | | | 81,000 | | 40,000 | | 121,000 | | | |||
Brian W. Clymer (6) | | | 90,000 | | 40,000 | | 130,000 | | |||||
Steven R. Curts (7) | | | | 106,349 | | — | | 188,046 | | | |||
Craig L. Martin (8) | | | 188,046 | | — | | 106,349 | | |||||
| | | | | | | | | | | | |||
settlement of certain DSUs held by Mr. Martin; such DSUs were issued to Mr Martin as part of his compensation for Board service.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Employment Agreement with Irvin E. Richter
Under an employment agreement effective December 31, 2014 with a five-year term, Irvin E. Richter receives an annual compensation of $1,400,000 and is eligible to receive an annual bonus in an amount, if any, to be determined by the Board. The agreement further provides that Mr. Richter is entitled to all benefits provided to employees of the Company during the term of the agreement. In addition, the Company agrees to provide him with two vehicles for his use and pays certain life insurance, medical and disability premiums during the term of the agreement. During 2018, Mr. Richter received a base salary of $1,400,000 and no bonus. Mr. Richter is entitled to severance benefits upon the occurrence of certain events as set forth in the agreement, including a termination by the Company without cause, by Mr. Richter for good reason or by Mr. Richter within two years of a change of control. If such an event would have occurred on December 31, 2018, Mr. Richter would have been eligible to receive approximately $4,641,000 in severance benefits.
The following table shows information regarding the beneficial ownership of our common stock as of April 15, 20152019, unless otherwise stated in a footnote to the table below, by each person or entity known by us to beneficially own more than five percent of our common stock, by our directors, by our named executive officers and by all our directors and executive officers as a group. For purposes of the following table, "beneficial ownership" means the sole or shared power to vote, or to direct the voting of, a security, or sole or shared investment power with respect to a security, or any combination thereof, and the right to acquire such power (for example, through the exercise of employee stock options granted by the Company) within 60 days. Unless otherwise indicated, the address of each of the beneficial owners is c/o Hill International, Inc., One Commerce Square, 2005 Market Street,
17th Floor, Philadelphia, PA 19103. As of April 15, 2015,2019, there were 50,373,82255,659,788 shares of our common stock outstanding.
| | Shares of Common Stock Beneficially Owned | ||||||
|---|---|---|---|---|---|---|---|
Name and Address of Beneficial Owner | Number of Shares | Percent | |||||
Wells Fargo & Company(1) | 4,335,091 | 8.6 | % | ||||
Rutabaga Capital Management(2) | 3,460,046 | 6.9 | % | ||||
NAMED EXECUTIVE OFFICERS AND DIRECTORS | |||||||
Irvin E. Richter(3) | 6,713,354 | 12.9 | % | ||||
David L. Richter(4) | 5,293,758 | 10.2 | % | ||||
Raouf S. Ghali(5) | 378,489 | * | |||||
Frederic Z. Samelian(6) | 207,126 | * | |||||
Steven M. Kramer(7) | 215,334 | * | |||||
Brian W. Clymer(8) | 176,595 | * | |||||
Alan S. Fellheimer(9) | 155,616 | * | |||||
Camille S. Andrews(10) | 130,334 | * | |||||
John Fanelli III(11) | 65,565 | * | |||||
Mohammed Al Rais(12) | 62,850 | * | |||||
Gary F. Mazzucco(13) | 51,706 | * | |||||
All directors and executive officers as a group (16 persons) | 13,741,987 | 25.3 | % | ||||
| Name and Address of Beneficial Owner | | | | Shares of Common Stock Beneficially Owned | | | |||
|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | |
| | | | Number of Shares | Percent | | ||||
Arnaud Ajdler and Engine Capital Management | | | 5,555,256 | (1) | 9.98 | % | |||
| | | | | | | | | ||
David L. Richter and Richter Capital LLC | | | 4,073,467 | (2) | 7.32 | % | |||
| | | | | | | | | ||
Irvin E. Richter | | | 3,905,413 | (3) | 7.02 | % | |||
| | | | | | | | | ||
Ancora Advisors, LLC | | | 3,593,462 | (4) | 6.46 | % | |||
| | | | | | | | | ||
Crescendo Partners II, L.P., Series M2, Crescendo Investments II, LLC, Crescendo Partners III, L.P., Crescendo Investments III, LLC, Crescendo Advisors II LLC and Eric Rosenfeld | | | 2,797,052 | (5) | 5.03 | % | |||
| | | | | | | | | ||
NAMED EXECUTIVE OFFICERS AND DIRECTORS: | | | | | |||||
Raouf S. Ghali | | | | 645,820 | (6) | 1.16 | % | | |
Todd E. Weintraub | | | 31,800 | (7) | * | | |||
Michael V. Griffin | | | | 50,540 | (8) | * | | | |
Abdo E. Kardous | | | 66,948 | (9) | * | | |||
J. Charles Levergood | | | | 15,364 | (10) | * | | | |
Paul J. Evans | | | 297,973 | (11) | * | | |||
David Sgro | | | | 235,447 | (12) | * | | | |
Alan S. Fellheimer | | | 91.719 | (13) | * | | |||
Camille S. Andrews | | | | 82,120 | (14) | * | | | |
Charles M. Gillman | | | 150,400 | (15) | * | | |||
James Chadwick | | | | 25,047 | (16) | * | | | |
Sue Steele | | | — | | * | | |||
Grant G. McCullagh | | | | — | | * | | | |
Marco A. Martinez | | | — | (17) | * | | |||
Gregory Wolf | | | | 105,000 | | * | | | |
All directors and executive officers as a group (13 persons) | | | 7,282,510 | | 13.08 | % | |||
| | | | | | | | | | |
Mr. Richter. Does not include 44,000 shares of common stock held by Mr. Richter's minor children or 5,000 held by Mr. Richter's spouse, for which Mr. Richter disclaims beneficial ownership. Includes 3,002,840 shares held in a margin account with a broker.
Equity Compensation Plan Information
The following table provides information as of December 31, 2018 for common shares (in thousands) of the Company that may be issued under our 2008 Employee Stock Purchase Plan and our 2017 Equity Compensation Plan. See Note 12 to our consolidated financial statements included in our Annual Report on Form 10-K filed with the SEC on April 1, 2019 for further information related to these plans.
| | | | | 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) (1) | | | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | ||
| | | | A | B | C | | ||||||
Equity compensation plans approved by security holders | | | 2,953 | | $3.93 | | 8,031 | | ||||
Equity compensation plans not approved by security holders | | | | — | | — | | — | | | ||
Total | | | 2,953 | | $3.93 | | 8,031 | | ||||
| | | | | | | | | | | | ||
Certain Relationships and Related Transactions, and Director Independence.
Transactions with Related Persons
For the year ended December 31, 2018, there were no transactions, or series of similar transactions, to which the Company was or is to be a party in which the amount exceeded $120,000, and in which any of our directors or executive officers, any holders of more than 5% of our common stock or any members of any such person's immediate family, had or will have a direct or indirect material interest, other than compensation described in "Executive Compensation" and "Director Compensation."
It is the policy and practice of our Board to review and assess information concerning transactions involving related persons. Related persons include our directors and executive officers and their immediate family members. If the determination is made that a related person has a material interest in a transaction involving us, then the disinterested members of the Board would review and, if appropriate, approve or ratify it, and we would disclose the transaction in accordance with SEC rules and regulations. If the related person is a member of the Board, or a family member of a director, then that director would not participate in any determination involving the transaction at issue.
Our Code of Ethics and Business Conduct prohibits all employees, including our executive officers, from benefitting personally from any transactions with us other than approved compensation benefits.
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
PRINCIPAL ACCOUNTING FEES AND SERVICES |
Services and Fees of the Independent Auditors for 2014 and 2013
EisnerAmper LLP ("EisnerAmper") served as the Company's independent registered public accounting firm for the fiscal years ended December 31, 20142018 and 2013.2017, however, as described below, the Company also engaged KPMG LLP to render services during the fiscal year ended December 31, 2017. The fees and expenses for services rendered in the past two fiscal years are set forth in the table below. The Audit Committee pre-approved all of these services.
Type of Fees | 2014 | 2013 | |||||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Audit Fees(1) | $ | 1,028,000 | $ | 1,112,500 | |||||||||||||||||
Audit-Related Fees(2) | 125,000 | — | |||||||||||||||||||
Tax Fees | — | — | |||||||||||||||||||
All Other Fees | — | — | |||||||||||||||||||
Type of Fees (in thousands) | | | 2018 | | | 2017 | | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | ||
| | | | | | EisnerAmper | KPMG | Total | | |||||||||||||
Audit Fees (1) | | | $ | 3,170 | | $3,923 | | $901 | | $ | 4,824 | | |||||||||
Audit — Related Fees (2) | | | | 46 | | — | | — | | — | | | |||||||||
All Other Fees and Expense Reimbursements (3) | | | 71 | | — | | 25 | | 25 | | |||||||||||
Total Fees | $ | 1,153,000 | $ | 1,112,500 | | | | $ | 3,287 | | $3,923 | | $926 | | $ | 4,849 | | | |||
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Table During 2017, audit fees also included amounts billed for services for the audit of Contents
RepresentativesChange of Independent Public Accountants
On April 19, 2017, the Company dismissed EisnerAmper LLP ("EisnerAmper") as its independent registered public accounting firm. The decision to change independent registered public accounting firms was approved by the Audit Committee of the Company's Board of Directors. Such dismissal became effective upon completion by EisnerAmper of its review of the unaudited quarterly financial statements of Hill International, Inc. for the fiscal quarter ended March 31, 2017 and the filing of the related Quarterly Report on Form 10-Q with the SEC on May 10, 2017.
Also on April 19, 2017, after reviewing proposals from several accounting firms, including EisnerAmper, the Audit Committee of the Board of Directors of the Company selected KPMG LLP ("KPMG") to be appointed following the filing of the Form 10-Q related to the fiscal quarter ended March 31, 2017 to serve as the Company's independent registered public accounting firm for the fiscal year ended December 31, 2017. During the two fiscal years ended December 31, 2016, and the subsequent interim period through March 31, 2017, the Company did not consult with KPMG regarding any of the matters or events set forth in Item 304(a)(2)(i) and (ii) of Regulation S-K.
The audit report of EisnerAmper on the consolidated financial statements of Hill International, Inc. as of and for the years ended December 31, 2016 and 2015, did not contain any adverse opinion or disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope, or accounting principles. The audit report of EisnerAmper LLP on the effectiveness of internal control over financial reporting for the Company as of December 31, 2016 and 2015 did conclude that internal controls over financial reporting were not effective due to identified material weaknesses.
During the two fiscal years ended December 31, 2016, and the subsequent interim period through March 31, 2017, there were no: (1) disagreements with EisnerAmper on any matter of accounting
principles or practices, financial statement disclosure, or auditing scope or procedures, which disagreements if not resolved to their satisfaction would have caused them to make reference in connection with their opinion to the subject matter of the disagreement, or (2) reportable events (as defined in Item 304(a)(1)(v) of Regulation S-K), except that EisnerAmper advised the Company it agreed with the Company that certain deficiencies in the Company's internal control over financial reporting discussed with the Company during EisnerAmper's audits of the Company's consolidated financial statements for the years ended December 31, 2016 and 2015 constituted material weaknesses.
On March 28, 2018, the Company dismissed KPMG as its independent registered public accounting firm. The decision to change independent registered public accounting firms was approved by the Audit Committee of the Company's Board of Directors (the "Audit Committee"). Also on March 28, 2018, the Audit Committee entered into an agreement with EisnerAmper to serve as the Company's independent registered public accounting firm. Such dismissal and appointment reflects the Audit Committee's belief that EisnerAmper, who served as the Company's independent public accounting firm during the restatement, will be able to complete the restatement as well as the audit of the Company's 2017 financial statements as expeditiously as possible. The Company consulted with EisnerAmper regarding the application of accounting principles in conjunction with the original audit and the restatement; however, the Company did not consult with EisnerAmper regarding any of the matters or events set forth in Item 304(a)(2)(ii) of Regulation S-K other than those related to the restatement.
As disclosed in the Company's annual report on Form 10-K for the year ended December 31, 2018, management has identified certain deficiencies that rose to the level of a material weakness related to (i) failure to maintain effective controls over certain information technology systems and processes that are expectedrelevant to be present at the Annual Meetingpreparation of Stockholdersthe Company's consolidated financial statements, (ii) failure to maintain effective monitoring and review activities including the timely assessment of control design gaps and their impact to the control environment, (iii) failure to maintain effective controls over the financial reporting process, including the application of relevant accounting standards due to an inappropriate complement of personnel with the necessary level of accounting knowledge, experience, and training in the application of US GAAP commensurate with its financial reporting requirements and the complexity of the Company's operations and transactions, (iv) misapplication of US GAAP as it relates to the estimation of the potential loss on the Company's accounts receivable and related balances, (v) inadequate design or not having controls to accurately determine the Company's liability and ensure compliance with certain tax laws and employment regulations of the jurisdictions in which the Company operates, (vi) failure to maintain effective controls over the accurate preparation, recording, and review of foreign currency related transactions in accordance with ASC 830, Foreign Currency Matters, (vii) failure to maintain effective controls to ensure the accurate preparation and review of the cash flow statement in accordance with ASC 230, Statement of Cash Flows, (viii) failure to maintain effective policies, procedures, and controls to ensure that the revenue recognition accounting for certain customer contracts was performed in accordance with ASC 605-35, Revenue Recognition, (ix) failure to maintain effective controls over the monitoring of employee termination dates related to participants in the stock option program, and (x) failure to maintain effective controls over its income tax provision and related balance sheet accounts (collectively, the "Material Weaknesses").
As a result of these Material Weaknesses, management concluded that, as of December 31, 2018, the Company's internal control over financial reporting was not effective.
The Audit Committee of the Company's Board of Directors discussed the Material Weaknesses with EisnerAmper.
The Company's management, with oversight from the Audit Committee of the Company's Board of Directors, is actively engaged in remediation efforts to address the Material Weaknesses. Management has taken and will havetake a number of actions to remediate the opportunityMaterial Weaknesses as are described in the Company's annual report on Form 10-K for the year ended December 31, 2018 which description is incorporated by reference herein.
When fully implemented and operational, the Company's management believes the Company's measures will remediate the Material Weaknesses identified and strengthen its internal control over financial reporting. The Company is committed to make a statement if they desirecontinuing to do so. It is also expected that those representativesimprove its internal control processes, and will be availablecontinue to responddiligently and vigorously review its financial reporting controls and procedures. As the Company's management continues to evaluate and work to improve its internal control over financial reporting, the Company's management may determine to take additional measures to address the Material Weaknesses or determine to modify, or in appropriate questions.circumstances not to complete, certain of the remediation measures described in the Company's annual report on Form 10-K for the year ended December 31, 2018.
Pre-Approval Policy of Audit Services and Permitted Non-Audit Services of Independent Auditors
The Audit Committee pre-approves all audit and permissible non-audit services provided by the independent registered public accounting firm. These services may include audit services, audit-related services, tax services and other services and are pre-approved in one of two methods. Under the first method, the engagement to render the services would be entered into pursuant to pre-approval policies and procedures established by the Audit Committee, provided (i) the policies and procedures are detailed as to the services to be performed, (ii) the Audit Committee is informed of each service, and (iii) such policies and procedures do not include delegation of the Audit Committee's responsibilities under the Exchange Act to the Company's management. Under the second method, the engagement to render the services would be presented to and pre-approved by the Audit Committee (subject to the de minimis exceptions for non-audit services described in Section 10A(i)(1)(B) of the Exchange Act that are approved by the Audit Committee prior to the completion of the audit). The Chairman of the Audit Committee haswill have the authority to grant pre-approvals of audit and permissible non-audit services by the independent registered public accounting firm,auditors, provided that all pre-approvals by the Chairman must be presented to the full Audit Committee at its next scheduled meeting. The Company will provide for appropriate funding, as determined by the Audit Committee, for payment of compensation to the independent registered public accounting firm and to any consultants, experts or advisors engaged by the Audit Committee.
AUDIT COMMITTEE REPORT |
The Audit Committee oversees the Company's financial reporting process on behalf of, and reports to, the Board. The Audit Committee has oversight of: (a) the integrity of the Company's financial statements; (b) the Company's compliance with legal and regulatory requirements; (c) the qualifications and independence of the Company's registered independent registered public accounting firm; (d) the Company's systems of internal controls established for finance, accounting, legal compliance and ethics; (e) the performance of the Company's registered independent public accounting firm; and (f) the integrity of the financial reports and other financial information prepared by the Company for submission to any governmental or regulatory body or the public. A more complete description of the duties and responsibilities of the Audit Committee is set forth in the Audit Committee's charter, which has been adopted by the Board. A copy of the Audit Committee Charter can be found in the Company's website atwww.hillintl.com, in the "Investors" section.
Management of the Company has the primary responsibility for the financial reporting process (including establishing and maintaining adequate internal financial controls), for preparing the consolidated financial statements in accordance with U.S.U. S. generally accepted accounting principles, and for the report on the Company's internal control over financial reporting. EisnerAmper, the Company's independent registered public accounting firm for 2014,2018, is responsible for auditing those consolidated financial statements and expressing an opinion as to their conformity with U.S. generally accepted accounting principles and on the effectiveness of the Company's internal control over financial reporting.
The Audit Committee has reviewed and discussed with management and EisnerAmper the audited financial statements for the year ended December 31, 20142018 and EisnerAmper's evaluation of the Company's internal control over financial reporting. The Audit Committee has discussed with EisnerAmper the matters that are required to be discussed by standards ofStatement on Auditing Standards No. 61, Communication with the Audit Committees, as amended (AICPA, Professional Standards, Vol. 1, AU section 380), as adopted by the Public Company
Accounting Oversight Board.Board ("PCAOB") in Rule 3200T. EisnerAmper has provided to the Audit Committee the written disclosures and the letter required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent accountant's communications with the Audit Committee concerning independence, and the Audit Committee has discussed with EisnerAmper that firm's independence. The Audit Committee has reviewed and approved the compatibility of EisnerAmper providing both audit and non-audit services to the Company and its affiliates with EisnerAmper's independence. The Audit Committee has also reviewed and approved, among other things, the amount of fees paid to EisnerAmper for audit and non-audit services.
Based on the review and discussions referred to above, the Audit Committee recommended to the Company's Board of Directors that the audited financial statements for the year ended December 31, 20142018 be included in the Company's 2014 Annual Report on Form 10-K for 2018 for filing with the Securities and Exchange Commission. This report is provided by the following independent directors, who comprise the Audit Committee:
Brian W. ClymerJames Chadwick (Chairman)
Alan S. FellheimerStevenCharles M. KramerGary F. MazzuccoGillman
PROPOSAL 2—RE-APPROVAL OF OUR 2010 SENIOR EXECUTIVE BONUS PLAN
Other Matters |
The Board of Directors recommends that stockholders re-approve the Hill International, Inc. 2010 Senior Executive Bonus Plan ("Bonus Plan"). The purpose of asking stockholders to re-approve the Bonus Plan is so that incentive awards granted under the Bonus Plan may meet the requirements of tax-deductible qualified performance-based compensation under Section 162(m) of the Internal Revenue Code ("Section 162(m)"). Section 162(m) authorizes corporate tax deductions for certain executive compensation in excess of $1 million, if such compensation is paid under a performance plan and stockholders have approved the material terms of the performance plan at least once every five years. Stockholders previously approved the Bonus Plan in 2010, so approval is required in 2015 to meet the requirements under Section 162(m). If the Bonus Plan is not approved by stockholders, we would not be able to deduct any cash compensation over $1,000,000 that is awarded to any executive officer after 2014.
Recommendation and Vote Required
Approval of the proposal to re-approve the Bonus Plan will require the affirmative vote of the holders of a majority of the outstanding shares of our common stock represented in person or by proxy and entitled to vote at the meeting.
OUR BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS THAT OURSTOCKHOLDERS VOTE "FOR" THE PROPOSAL TO RE-APPROVE THE BONUS PLAN.
Background
The Board of Directors believes that our executive officers should be compensated through a mix of salary, bonus awards and long-term incentive compensation, and that this compensation should be tax-deductible by us to the largest extent possible. The Board of Directors and the Compensation Committee have determined that the Bonus Plan should be sufficiently flexible to allow the Compensation Committee to make awards in appropriate amounts and with appropriate performance periods and performance goals to whichever existing, new or recently promoted executive or other officers the Compensation Committee designates as plan participants. The Board of Directors and the Compensation Committee believe the Bonus Plan enables us to attract, retain, motivate and reward the exceptional level of leadership required for the continued success of the Company.
Tax Deductibility
The Bonus Plan is being presented to stockholders for re-approval in order to preserve the tax deductibility of cash incentive awards to executive officers under Section 162(m). Section 162(m) generally limits to $1,000,000 per year the deductibility, for Federal income tax purposes, of cash compensation to any individual who, as of the end of the year, is the chief executive officer of a public company or one of the other three most highly compensated executive officers (other than the chief financial officer). This limitation does not apply to compensation that is deemed to be "qualified performance-based" within the meaning of Section 162(m). Therefore, if compensation qualifies as "qualified performance-based" for purposes of Section 162(m), we will be permitted to deduct it for federal income tax purposes.
The provisions of Section 162(m) require, among other things, that the material terms of compensation plans such as our bonus award plans must be approved by a company's stockholders every five years in order for compensation awarded under such plan to qualify as "qualified performance-based." The Company's stockholders last approved the Bonus Plan at the Company's Annual Meeting in 2010.
Stockholder approval of the Bonus Plan is only one of several requirements under Section 162(m) that must be satisfied for amounts paid under the Bonus Plan to qualify as performance-based compensation. Even if stockholder re-approval is obtained under this proposal at the Annual Meeting, there can be no guarantee that amounts payable under the Bonus Plan will qualify as performance-based compensation.
Below is a description of the material provisions of the Bonus Plan, in accordance with the stockholder approval requirements under Section 162(m). The complete text of the Bonus Plan can be found as Appendix A to the Company's Definitive Proxy Statement filed with the Securities and Exchange Commission on April 30, 2010, which text is incorporated herein by reference. The following description is qualified in its entirety by reference to the full text of the Bonus Plan.
Material Provisions of the Bonus Plan
The material provisions of the Bonus Plan are as follows:
Participants. The participants in the Bonus Plan are those officers designated as participants by the Compensation Committee for a given Performance Period (as defined in the Bonus Plan and described below). If the Bonus Plan is approved by stockholders, the Compensation Committee has designated that the participants for fiscal 2015 will be David L. Richter and Raouf S. Ghali.
Performance Periods. The Compensation Committee has the discretion to establish Performance Periods for Awards (as defined in the Bonus Plan and described below) under the Bonus Plan. Performance Periods may be equal to one of our full fiscal years, or may be longer or shorter than a full fiscal year. Multiple Awards may be granted to any participant.
Awards. Awards are payable to participants in the Bonus Plan based on the achievement of one or more pre-established performance goals. For each Award established under the Bonus Plan, prior to or within the first 90 days of the relevant Performance Period (or, if the Performance Period is shorter than a full year, within the first 25% of the Performance Period), in accordance with the requirements of Section 162(m), the Compensation Committee will establish one or more performance goals with respect to such Performance Period and an objective formula or method for computing the amount of the Award payable to each participant if the specified performance goals are achieved. The performance goals established by the Compensation Committee will be based on one or more of the business criteria set forth in the Bonus Plan (see below). At or after the end of each Performance Period, the Compensation Committee will determine whether and to what extent the performance goals have been achieved and will calculate the amount of the Award to be paid to each participant, if any,
based upon the levels of achievement of the relevant performance goals and the objective formula or method established with respect to such Performance Period. The establishment of performance goals and the granting of Awards under the Bonus Plan will, in all cases, be implemented in a manner that is consistent with the requirements of Section 162(m) and the Treasury Regulations promulgated thereunder.
Performance Goals. The performance goals from which the Compensation Committee can set performance targets will relate to the achievement of financial goals based on the attainment of specified levels of one or more of the following: earnings per share, share price, market share, gross revenue, net revenue, net income, pre-tax income, pre-tax pre-bonus income, operating income, cash flow, collection of receivables, debt ratings, debt-to-capital ratio, generation of cash, enhancement of liquidity with respect to cash or cash equivalents, issuance of new debt, establishment of new credit facilities, retirement of debt, return on equity, return on assets, return on capital, return on revenues, attraction of new capital, net margin, pre-tax margin, total shareholder return, acquisition or disposition of assets, acquisition or disposition of entities or businesses, creation of new performance and compensation criteria for key personnel, recruiting and retaining key personnel, customer satisfaction, employee morale, hiring of strategic personnel, development and implementation of Company policies, strategies and initiatives, creation of new joint ventures, initiation, expansion, completion or other measures with respect to one or more projects or other business opportunities, increasing the Company's public visibility and corporate reputation, development of corporate brand name, overhead cost reductions, savings, productivity, or any combination of or variations on the preceding business criteria. The Board may specify any reasonable definition of the above business criteria. The performance goals established by the Board based on the above business criteria may be described in terms of objectives that are related to the individual participant or objectives that are Company-wide or related to any of its subsidiaries, operating divisions or other operating units and measured, where the Board deems appropriate, before or after any applicable unusual, unanticipated or non-reoccurring items, and may be measured in comparison to a budget approved by the Board, a peer group established by the Board or a stated target established by the Board.
Cap on Awards. Section 162(m) requires that the maximum potential Award amount payable under the Bonus Plan be disclosed to, and approved by, our stockholders, in order for any Award, regardless of its amount, to be tax-deductible by us. In order to ensure tax deductibility of all Awards under the Bonus Plan, the Compensation Committee has established that no Award payable under the Bonus Plan can exceed $1,500,000 (the "Award Cap"), and in no event will the maximum aggregate amount payable to any participant with respect to Awards that have Performance Periods that end in the same fiscal year exceed two times the Award Cap, regardless of the number of Awards that would otherwise be payable in that fiscal year (the "Annual Payment Cap"). Awards that are limited pursuant to the Annual Payment Cap may not be carried over and paid during a subsequent fiscal year. The Compensation Committee will have no discretion to increase the amount of any Awards beyond the Award Cap or the Annual Payment Cap, as applicable, but may, in its sole discretion, reduce the amount of an Award to any lesser amount, or set the Awards at any lesser amount, including as low as $0, based on such facts and circumstances as it deems relevant.
Payment of Awards. Awards under the Bonus Plan may be paid in cash, equity or a combination of the two. The equity portion of any Award under the Bonus Plan may be paid in shares of restricted stock, shares of unrestricted stock or restricted or unrestricted stock units, all of which will be issued from a plan adopted by the Board of Directors and approved by the Company's stockholders or a successor plan. To the extent an Award is settled with equity, such equity shall be valued as of the end of the Performance Period for the Award.
Amendment and Termination of the Bonus Plan. The Bonus Plan may be terminated or revoked by action of the Compensation Committee or the Board of Directors at any time. The Bonus Plan may be amended from time to time by the Compensation Committee, provided that no amendment may be
made to the class of individuals who are eligible to participate in the Bonus Plan, the business criteria specified in the Bonus Plan or the maximum amount payable under the Bonus Plan without disclosure to and approval by our stockholders, unless stockholder approval is not required in order for the Award paid under the Bonus Plan to a covered employee (as defined in Section 162(m)) to constitute qualified performance-based compensation under Section 162(m). The Bonus Plan may be amended by the Compensation Committee as it deems appropriate in order to comply with the provisions of Section 162(m).
The Board is not aware of any matters other than those set forth in this proxy statement that will be presented for action at the annual meeting. However, if any other matter should properly come before the meeting, the persons authorized by the accompanying proxy will vote and act with respect thereto, in what according to their judgment is in the interests of Hill and its stockholders.
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) Beneficial Ownership Reporting Compliance |
Section 16(a) of the Exchange Act requires our directors and executive officers and persons who beneficially own more than 10% of our common stock to file initial reports of ownership and changes in ownership with the SEC. To the Company's knowledge based on a review of copies of such reports furnished to Hill and on written representations made by such persons, all of the Company's directors, executive officers and beneficial owners of more than 10% of our common stock have complied with all Section 16(a) filing requirements with respect to 20142018 except that, due to administrative oversights, required Form 4 reports were not filed on a timely basis on behalf of the following persons: Irvin E. Richter (2 transactions), David L. RichterPaul J. Evans (1 transaction), Raouf S. Ghali (1 transaction)Gregory Wolf (2 transactions) and Frederic Z. SamelianJames M. Chadwick (1 transaction).
Annual Report |
In addition to the proxy statement and proxy card, a copy of the Company's 20142018 Annual Report, which includes the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2014,2018, and which is not part of the proxy soliciting material, is enclosed. The 20142018 Annual Report is being furnished to our stockholders without the exhibits to the Form 10-K. The Company will provide a copy of the exhibits to any stockholder upon request. Stockholders may under some circumstances be responsible for the Company's reasonable expenses in furnishing such exhibits.
Stockholders who directly hold their shares of Hill and who previously have elected not to receive an annual report for a specific account may request Hill to promptly mail the 20142018 Annual Report to that account by writing to William H. Dengler, Jr., Corporate Secretary, at the Company's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, PA 19103; or by calling Hill's investor relations consultant, The Equity Group, Inc., at (212) 836-9600.
DELIVERY OF DOCUMENTS TO STOCKHOLDERS SHARING AN ADDRESS
Delivery of Documents to Stockholders Sharing an Address |
If you are the beneficial owner, but not the record holder, of shares of Hill common stock, your broker, bank or other nominee may only deliver one copy of this proxy statement and the 20142017 Annual Report to multiple shareowners who share an address, unless that nominee has received contrary instructions from one or more of the stockholders. Hill will deliver promptly, upon written or oral request, a separate copy of this proxy statement and the 20142017 Annual Report to a stockholder at a shared address to which a single copy of the documents was delivered. A stockholder who wishes to receive a separate copy of the proxy statement and annual report, now or in the future, should submit this request in writing to William H. Dengler, Jr., Corporate Secretary, at the Company's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, PA 19103; or by calling Hill's Investor Relations consultant, The Equity Group, Inc., at (212) 836-9600.
TableANNUAL MEETING OF STOCKHOLDERS OF HILL INTERNATIONAL, INC. JUNE 11, 2019 GO GREEN e-Consent makes it easy to go paperless. With e-Consent, you can quickly access your proxy material, statements and other eligible documents online, while reducing costs, clutter and paper waste. Enroll today via www.astfinancial.com to enjoy online access. NOTICE OF INTERNET AVAILABILITY OF PROXY MATERIAL: The Notice of ContentsMeeting, Proxy Statement, Proxy Card and Annual Report are available at: www.hillintl.com in the "Investor Relations" section. Please sign, date and mail your proxy card in the envelope provided as soon as possible. Please detach along perforated line and mail in the envelope provided. 20430000000000001000 7 061119 2. Advisory vote to approve the Company’s named executive execution of this Proxy of a Notice of 2019 Annual Meeting and a Proxy Statement changes to the registered name(s) on the account may not be submitted via Note: Please sign exactly as your name or names appear on this Proxy. When shares are held jointly, each holder should sign. When signing as executor, administrator, attorney, trustee or guardian, please give full title as such. If the signer is a corporation, please sign full corporate name by duly authorized officer, giving full title as such. If signer is a partnership, please sign in partnership name by authorized person. THE BOARD OF DIRECTORS RECOMMENDS YOU VOTE “FOR” EACH OF THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSAL 2. PLEASE SIGN, DATE AND RETURN PROMPTLY IN THE ENCLOSED ENVELOPE. PLEASE MARK YOUR VOTE IN BLUE OR BLACK INK AS SHOWN HERE x 1. To elect the following persons to the Board of Directors of the Company for the term described in the Proxy Statement: NOMINEES: FOR ALL NOMINEESO David Sgro O Sue Steele WITHHOLD AUTHORITYO Grant G. McCullagh FOR ALL NOMINEESO Paul J. Evans FOR ALL EXCEPT (See instructions below) INSTRUCTIONS: To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the circle next to each nominee you wish to withhold, as shown here: FOR AGAINST ABSTAIN officer compensation The undersigned acknowledges receipt from Hill International, Inc. prior to the dated April 30, 2019. THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS. SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS MADE, THE SHARES REPRESENTED WILL BE VOTED “FOR” EACH OF THE NOMINEES LISTED IN PROPOSAL 1 AND “FOR” PROPOSAL 2. IN THEIR DISCRETION, THE PROXIES ARE AUTHORIZED TO VOTE UPON SUCH OTHER BUSINESS AS MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT THEREOF. Mark here if you plan to attend the Annual Meeting. To change the address on your account, please check the box at right and indicate your new address in the address space above. Please note that this method. Signature of Stockholder Date: Signature of StockholderDate:
STOCKHOLDER PROPOSALS- 1 HILL INTERNATIONAL, INC. PROXY FOR THE 20162018 ANNUAL MEETING
We anticipate that we will hold our 2016 OF STOCKHOLDERS JUNE 11, 2019 THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned stockholder of Hill International, Inc. hereby appoints Raouf S. Ghali and William H. Dengler, Jr. and each of them, with full power of substitution, as proxies to vote the shares of stock which the undersigned could vote if personally present at the 2019 Annual Meeting of Stockholders on or about June 10, 2016. Stockholders who wish to present proposalsof Hill International, Inc. to be included in the Company's proxy materials for the 2016 Annual Meeting of Stockholders must submit such proposals to usheld on June 11, 2019, at Hill International, Inc.,11:00 a.m. Eastern Time, at One Commerce Square, 2005 Market Street, 17thSt., 1st Floor, Philadelphia, PA 19103, Attn: Corporate Secretary,and at any adjournment or postponement thereof, as hereinafter specified and, in their discretion, upon such other matters as may properly come before the meeting. The undersigned hereby revokes all proxies previously given. If the undersigned holds any of the shares of common stock in a fiduciary, custodial or joint capacity or capacities, this proxy is signed by January 1, 2016 and must complythe undersigned in every such capacity as well as individually. When properly executed, this proxy will be voted in the manner directed herein. On matters for which you do not specify a choice, the shares will be voted in accordance with the proceduresrecommendation of Rule 14a-8 under the Exchange Act.
Under our Amended and Restated By-laws, if you wish to nominate a candidate for election to the Board or to propose any business at our 2016 Annual Meeting of Stockholders (whichDirectors. If no direction is made, this proxy will not be includedvoted “FOR” each of the nominees listed in the proxy statement for such meeting), you must give notice to our Corporate Secretary no earlier than March 12, 2016Proposal 1 and no later than April 11, 2016. The notice must include information specified in our Amended“FOR” Proposal 2. (Continued and Restated By-laws. We will not entertain any proposals or nominations at our 2016 Annual Meeting of Stockholders that do not meet the requirements set forth in our Amended and Restated By-laws.
For any proposal that is not submitted by a stockholder for inclusion in the proxy materials relating to the 2016 Annual Meeting of Stockholders, but is instead sought by such stockholder to be presented directly atsigned on the 2016 Annual Meeting of Stockholders, SEC rules permit us to exercise discretionary voting authority regarding such proposal to the extent conferred by proxy if we: (i) receive timely notice of the proposal and advise stockholders in the proxy materials relating to the 2016 Annual Meeting of Stockholders of the nature of the proposal and how we intend to vote on such matter (unless the stockholder making the proposal complies with the requirements of Rule 14a-4(c)(2) under the Exchange Act; or (ii) do not receive notice before March 16, 2016 and a specific statement to that effect is made in the proxy materials relating to the 2016 Annual Meeting of Stockholders.reverse side) 14475 1.1 COMMENTS:
Householding Information
SEC regulations permit the Company to send a single set of proxy materials, which includes this Proxy Statement, the Annual Report to Stockholders and the Notice of Internet Availability of Proxy Materials, to two or more shareholders that share the same address. Each stockholder will continue to receive his or her own separate proxy card. Upon written or oral request, the Company will promptly deliver a separate set of proxy materials to a stockholder at a shared address that only received a single set of proxy materials for this year. If a stockholder would prefer to receive his or her own copy, please contact William H. Dengler, Jr., Corporate Secretary, at the Company's principal executive office: One Commerce Square, 2005 Market Street, 17th Floor, Philadelphia, PA 19103; by telephone at (866) 352-2792; or by email addressed to hil@openboard.info. Similarly, if a stockholder would like to receive his or her own set of the Company's proxy materials in future years or if a stockholder shares an address with another stockholder and both would like to receive only a single set of the Company's proxy materials in future years, please contact Mr. Dengler.
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