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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 under §240.14a-12 |
Laureate Education, Inc. | ||||
(Name of Registrant as Specified In Its Charter) | ||||
N/A | ||||
(Name of Person(s) Filing Proxy Statement, if other than the Registrant) | ||||
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(4) | Date Filed: |
650 S. Exeter Street
Baltimore, Maryland 21202
April 13, 2018March 27, 2020
Dear Stockholder,
We cordially invite you to attend the 20182020 Annual Meeting of Stockholders of Laureate Education, Inc. ("Laureate") to be held on Wednesday,Monday, May 23, 2018,11, 2020, at 10:00 a.m., Eastern Daylight Time,Time. This year's meeting will be a completely virtual meeting. Our virtual stockholder meeting format will use technology designed to increase stockholder access, save Laureate and our stockholders time and money, provide to our stockholders the rights and opportunities to participate in the virtual meeting similar to what they would have at an in-person meeting, and enable increased stockholder attendance and participation because stockholders can participate from any location around the AMA New York Executive Conference Center, located at 1601 Broadway, New York, New York 10019.world. In addition to online attendance, we will provide stockholders with the opportunity to hear all portions of the official meeting, submit written questions and comments during the meeting, and vote online during the open poll portion of the meeting. You may attend the meeting, vote your shares and submit questions electronically during the meeting via live webcast by visiting www.virtualshareholdermeeting.com/LAUR2020.
The attached Notice of 20182020 Annual Meeting and proxy statement describe the business that we will conduct at the 20182020 Annual Meeting webcast and provide information about us that you should consider when you vote your shares. As set forth in the attached proxy statement, the meeting will be held:
Please take the time to carefully read each of the proposals in the accompanying Proxy Statement before you vote.
Your vote is extremely important regardless of the number of shares you own.
In order to To ensure that your shares are represented at the 20182020 Annual Meeting, whether you plan to virtually attend or not, please vote in accordance with the enclosed instructions. You can vote your shares by telephone, electronically via the Internet or by completing and returning the enclosed proxy card or vote instruction form. If you vote using the enclosed proxy card or vote instruction form, you must sign, date and mail the proxy card or vote instruction form in the enclosed envelope. If you decide to attend the 20182020 Annual Meeting and wish to modify your vote, you may revoke your proxy and vote in person via attendance at the 20182020 Annual Meeting.
Thank you for your continued interest in Laureate Education, Inc. We look forward to seeing you at the meeting.Laureate.
Sincerely,
Douglas L. BeckerKenneth W. Freeman
Chairman of the Board of Directors
The proxy statement is dated April 13, 2018,March 27, 2020 and is first being made available to stockholders on or about April 13, 2018.March 27, 2020.
NOTICE OF 20182020 ANNUAL MEETING
OF STOCKHOLDERS
The 20182020 Annual Meeting of Stockholders of Laureate Education, Inc., a public benefit corporation formed under the laws of Delaware, will be held onWednesday, Monday, May 23, 2018,11, 2020, at 10:00 a.m., Eastern Daylight Time,, via a virtual meeting that will be webcast live and accessed at theAMA New York Executive Conference Center, located at 1601 Broadway, New York, New York 10019www.virtualshareholdermeeting.com/LAUR2020 for the following purposes:
The Proxy Statement accompanying this Notice describes each of these items in detail. The Proxy Statement contains other important information that you should read and consider before you vote.
The Board of Directors has fixed the close of business on March 28, 201816, 2020 as the record date for the 20182020 Annual Meeting. Only the holders of record of our Class A common stock or Class B common stock as of the close of business on the record date are entitled to notice of, and to vote at, the 20182020 Annual Meeting webcast and any adjournmentadjournments thereof. A list of the holders of record of our Class A common stock and Class B common stock will be available at the 20182020 Annual Meeting webcast and, during the 10 days prior to the 20182020 Annual Meeting webcast, at the offices of our corporate headquarters located at 650 S. Exeter Street, Baltimore, Maryland 21202.
Laureate is furnishing proxy materials to its stockholders through the Internet as permitted under the rules of the Securities and Exchange Commission. Under these rules, many stockholders will receive a Notice of Internet Availability of Proxy Materials instead of a paper copy of the Notice of Annual Meeting of Stockholders and Proxy Statement, our proxy card, and our Annual Report to Stockholders. We believe that this process gives us the opportunity to serve you more efficiently by making the proxy materials available quickly online and reducing costs associated with printing and postage. Stockholders who do not receive a Notice of Internet Availability of Proxy Materials will receive a paper copy of the proxy materials by mail.
You can vote your shares of Class A common stock or Class B common stock by telephone, electronically via the Internet or by completing and returning the enclosed proxy card or vote instruction form. If you vote using the enclosed proxy card or vote instruction form, you must sign, date and mail the proxy card or vote instruction form in the enclosed envelope. If you decide to attend
the 20182020 Annual Meeting webcast and wish to modify your vote, you may revoke your proxy and vote in person via attendance at the 20182020 Annual Meeting.Meeting webcast.
BY ORDER OF THE BOARD OF DIRECTORS: | ||
Baltimore, Maryland | Victoria E. Silbey Senior Vice President, Secretary, Chief Legal Officer and Chief |
PROXY STATEMENT SUMMARY2018
2020 ANNUAL MEETING OF STOCKHOLDERS
Date and Time: | May 10:00 a.m., Eastern Daylight Time | |
Place: | ||
Record Date: | March |
Voting Matters and Board Recommendation
| Proposal Description | Board Vote Recommendation | Page Number with More Information | |||||
---|---|---|---|---|---|---|---|---|
Proposal 1 | Election of | "FOR" all nominees | ||||||
Proposal 2 | Advisory vote | "FOR" | ||||||
Proposal 3 | "FOR" | |||||||
This Proxy Statement Summary contains highlights of certain information in this Proxy Statement. Because it is only a summary, it does not contain all of the information that you should consider before voting. Please review the complete Proxy Statement and Laureate's Annual Report on Form 10-K for additional information.
650 S. Exeter Street
Baltimore, Maryland 21202
PROXY STATEMENT FOR THE LAUREATE EDUCATION, INC.20182020 ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON MAY 23, 201811, 2020
This Proxy Statement is being furnished to the holders of the Class A common stock and Class B common stock of Laureate Education, Inc., a Delaware public benefit corporation ("Laureate"), in connection with the solicitation by our Board of Directors of proxies to be voted at the 20182020 Annual Meeting of Stockholders of Laureate (the "2018"2020 Annual Meeting") to be held onWednesday, Monday, May 23, 2018,11, 2020, at10:00 a.m., Eastern Daylight Time,, via a virtual meeting that will be webcast live and accessed at theAMA New York Executive Conference Center, located at 1601 Broadway, New York, New York 10019,www.virtualshareholdermeeting.com/ LAUR2020, or at any adjournment of the 2018 Annual Meeting,adjournments thereof, for the purposes set forth in the accompanying Notice of 20182020 Annual Meeting. The principal executive offices of Laureate are located at 650 S. Exeter Street, Baltimore, Maryland 21202.
TheOn or about March 27, 2020, our proxy materials or the Notice of Internet Availability of Proxy Materials, is firstas applicable, are being mailed, and this Proxy Statement and the other proxy materials are first being made available via the Internet free of charge atwww.proxyvote.com, on or about April 13, 2018 to all stockholders entitled to notice of, and to vote at, the 20182020 Annual Meeting.Meeting webcast. At the close of business on March 28, 2018,16, 2020, the record date for the 20182020 Annual Meeting, there were 55,111,486118,822,074 shares of Class A common stock and 132,384,10690,813,257 shares of Class B common stock, respectively, outstanding and entitled to notice of and to vote at the 20182020 Annual Meeting.Meeting webcast.Only the holders of record of our Class A common stock and Class B common stock as of the close of business on the record date are entitled to notice of, and to vote at, the 20182020 Annual Meeting webcast and any adjournmentadjournments thereof. We also will begin mailing paper copies of our proxy materials to stockholders who requested them on or about April 13, 2018.
If a stockholder executes and returns the enclosed proxy card or vote instruction form or submits vote instructions to us by telephone or via the Internet, the stockholder may nevertheless revoke the proxy at any time prior to its use by filing with the Secretary of Laureate a written revocation or a duly executed proxy bearing a later date or by submitting revised vote instructions to us by telephone or via the Internet prior to 11:59 p.m. EDT on Tuesday,Sunday, May 22, 2018,10, 2020, in accordance with the instructions on the accompanying proxy card or vote instruction form. A stockholder who attends the 20182020 Annual Meeting in personvia webcast may revoke his or her proxy at that time and vote in person via attendance at the virtual meeting if so desired.
Unless revoked or unless contrary instructions are given, each proxy that is properly signed, dated and returned or authorized by telephone or via the Internet in accordance with the instructions on the enclosed proxy card or vote instruction form prior to the start of the 20182020 Annual Meeting webcast will be voted as indicated on the proxy card or vote instruction form or via telephone or the Internet and if no indication is made, each such proxy will be deemed to grant authority to vote, as applicable:
PROPOSAL 1: FOR the election of Douglas L. Becker, Brian F. Carroll, Andrew B. Cohen, William L. Cornog, Pedro del Corro, Michael J. Durham, Kenneth W. Freeman, George Muñoz, Dr. Judith Rodin, Eilif Serck-Hanssen, Ian K. Snow, and Steven M. Taslitz, and Quentin Van Doosselaere, each of whom shall hold office for a term of one year, expiring at the annual meeting in 2019,2021, and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.
PROPOSAL 2: FOR the advisory vote to approve named executive officer compensation.
PROPOSAL 3: FOR ratification of the appointment of PricewaterhouseCoopers LLP as Laureate's independent registered public accounting firm for the year ending December 31, 2018.2020.
PROPOSAL 4: 1 YEAR forIn the advisory vote ondiscretion of the frequency of future advisory votes on executive compensation.
PROPOSAL 5: FORproxies with respect to the transaction of such other business as may properly come before the 20182020 Annual Meeting webcast and any adjournments thereof.
OUR BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" THE ELECTION OF EACH OF THE NOMINEES LISTED UNDER PROPOSAL 1, "FOR" THE ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION UNDER PROPOSAL 2, AND "FOR" THE RATIFICATION OF AUDITORS UNDER PROPOSAL 3, AND "1 YEAR" FOR THE ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION UNDER PROPOSAL 4.3.
TABLE OF CONTENTS | i | |
QUESTIONS AND ANSWERS ABOUT THE | 1 | |
PROPOSAL 1: ELECTION OF DIRECTORS | ||
Recommendation of our Board of Directors | 7 | |
Nominees for Election to the Board of Directors | 7 | |
Corporate Governance | 11 | |
Directors Designated by Certain of the Wengen Investors under the Wengen Securityholders Agreement | 11 | |
Director Independence | 11 | |
Controlled Company Exception | 12 | |
Board Leadership Structure | 12 | |
Board Attendance | 13 | |
Board Committees | ||
Compensation Committee Interlocks and Insider Participation in Compensation Decisions | 14 | |
Code of Conduct and Ethics | ||
| ||
Delinquent Section 16(a) Reports | 15 | |
EXECUTIVE COMPENSATION | ||
Compensation Discussion and Analysis | ||
| ||
| 32 | |
Summary Compensation Table | 32 | |
Grants of Plan-Based Awards | 34 | |
Outstanding Equity Awards at | 36 | |
Option Exercises and | 37 | |
| ||
| 38 | |
Potential Payments | ||
CEO Pay Ratio | 44 | |
DIRECTOR COMPENSATION | ||
| ||
| ||
| ||
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS | ||
CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS, AND DIRECTOR INDEPENDENCE | ||
Wengen Securityholders Agreement and Registration Rights Agreement | 57 | |
Management Stockholder's Agreements | 57 | |
Series A Preferred Stock | 58 | |
Transactions between Laureate and Affiliates, Wengen and Directors | 58 | |
Conflicts of Interest Policy | 58 | |
Information Regarding the Laureate Board | 59 | |
PROPOSAL 2: NON-BINDING ADVISORY VOTE ON EXECUTIVE COMPENSATION ("SAY-ON-PAY") | ||
Recommendation of our Board of Directors | 60 | |
PROPOSAL 3: FOR RATIFICATION OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY'S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM | ||
Recommendation of our Board of Directors | ||
AUDIT COMMITTEE MATTERS | 61 | |
Audit Committee Report | 61 | |
Audit Fees and All Other Fees | ||
Audit Committee Pre-approval of Service of Independent Registered Public Accounting Firm | ||
| ||
ANNUAL REPORT | ||
COMMUNICATIONS WITH THE BOARD OF DIRECTORS | ||
DEADLINES FOR SUBMITTING STOCKHOLDER PROPOSALS FOR THE | ||
HOUSEHOLDING OF PROXY MATERIALS | ||
OTHER MATTERS |
i
QUESTIONS AND ANSWERS ABOUT THE 20182020 ANNUAL MEETING
To attend and participate in the 2020 Annual Meeting webcast, you will need the 16-digit control number included in your Notice and Access Card, on your proxy card or on the instructions that accompanied your proxy materials. If your shares are held instreet name, you should contact your bank or broker to obtain your 16-digit control number or otherwise vote through the bank or broker. The meeting webcast will begin promptly at 10:00 a.m., Eastern Daylight Time. We encourage you to access the meeting prior to the start time. Online check-in will begin at 9:45 a.m., Eastern Daylight Time, and you should allow ample time for the check-in procedures.
If you hold your shares instreet name and want to attend the 2018 Annual Meeting, you must bring your government-issued photo identification, together with:
All packages and bags are subject to inspection.
Annual Meeting, you can vote at the 2020 Annual Meeting. A summary of the information that you need to attend the 2020 Annual Meeting webcast is provided below:
If your shares are held instreet name, your bank, broker or other nominee may provide you with a Notice of Internet Availability of Proxy Materials that contains instructions on how to access our proxy materials and vote online or to request a paper or email copy of our proxy materials. If you received these materials in paper form, the materials included a vote instruction form so that you can instruct your bank, broker or other nominee how to vote your shares.
Please see the Notice of Internet Availability of Proxy Materials or the information that your bank, broker or other nominee provided you for more information on these voting options.
Q:
If your shares are held instreet name, you cannot vote those shares at the 2018 Annual Meeting unless you have a legal proxy from your bank, broker or other nominee. If you plan to attend and vote your street-name shares at the 2018 Annual Meeting, you should request a legal proxy from your broker, bank or other nominee and bring it with you to the 2018 Annual Meeting.Contents
Whether or not you plan to attend the 2018 Annual Meeting, we strongly encourage you to vote your shares by proxy before the 2018 Annual Meeting.
Laureate Education, Inc.
650 S. Exeter Street,
Baltimore, Maryland 21202
Attn: Secretary
If your shares are held instreet name, you should contact your bank, broker or other nominee about revoking your voting instructions and changing your vote before the 20182020 Annual Meeting.Meeting webcast.
If you are eligible to vote at the 20182020 Annual Meeting, you also can revoke your proxy or voting instructions and change your vote at the 20182020 Annual Meeting webcast by submittingcasting a written ballot via the online platform before the polls close.
If any other item is properly presented for a vote at the meeting, the shares represented by your properly submitted proxy will be voted at the discretion of the proxies.
If your shares are held instreet name, your bank, broker or other nominee may vote your shares on certain "routine" matters. The ratification of independent auditors is currently considered to be a routine matter. On this matter, your bank, broker or other nominee can:
The other matters that you are being asked to vote on are not routine and cannot be voted by your bank, broker or other nominee without your instructions. When a bank, broker or other nominee is unable to vote shares for this reason, it is called a "broker non-vote."
For Proposal 2, the advisory vote to approve named executive officer compensation, the affirmative vote of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) present in person via attendance at the virtual meeting or represented by proxy (and entitled or required to vote thereon) at the 20182020 Annual Meeting at which a quorum is present will be required for approval.
For Proposal 3, the ratification of the appointment of PricewaterhouseCoopers LLP as Laureate's independent registered public accounting firm for the year ending December 31, 2018,2020, the affirmative vote of a majority of the voting power of the shares of our Class A common stock and Class B common stock (voting together as a single class) present in person via attendance at the virtual meeting or represented by proxy (and entitled or required to vote thereon) at the 20182020 Annual Meeting at which a quorum is present will be required for approval.
For Proposal 4, the advisory vote proposing a once per year advisory vote on executive compensation, the option that receives the most votes will be considered the option selected by stockholders.
Broker non-votes and abstentions by stockholders from voting (including banks, brokers or other nominees holding their clients' shares of record who cause abstentions to be recorded) will be counted towards determining whether or not a quorum is present.present at the virtual meeting. However, as the 1311 nominees receiving the highest number of affirmative votes will be elected, abstentions and broker non-votes will not affect the outcome of the election of Directors. With regard to the affirmative vote of the shares present at the virtual meeting or represented by proxy, required for Proposal 2, sincebecause it is a non-routine matter, broker non-votes and abstentions will have the effect of a vote against Proposal 2. With regard to Proposal 4, since the option receiving the greatest number of votes—1 year, 2 years, or 3 years—will be the frequency recommended by our stockholders, abstentions and broker
non-votes will have no effect onnot impact the outcome of Proposal 4.2. With regard to the affirmative vote of the shares present at the virtual meeting or represented by proxy required for Proposal 3, it is a routine matter so there will be no broker non-votes but(and brokerage firms may vote in their discretion on this matter on behalf of beneficial owners who have not furnished voting instructions before the date of the 2020 Annual Meeting), and abstentions will have the effect of a vote against Proposal 3.
For Proposal 2 and Proposal 3, you may vote "FOR," "AGAINST," or "ABSTAIN." If you elect to "ABSTAIN," the abstention has the same effect as a vote "AGAINST."
For Proposal 4, you may vote for "1 YEAR," "2 YEARS" or "3 YEARS" or "ABSTAIN." Abstentions will have no effect on the outcome of Proposal 3.
If you provide specific instructions with regard to certain items, your shares will be voted as you instruct on such items. If no instructions are indicated on a properly executed proxy card or over the telephone or Internet, the shares will be voted as recommended by our Board of Directors. (See "What will happen if I submit my proxy but do not vote on a proposal?" above for additional information.)
facsimile transmission. No additional compensation will be paid to such directors, officers, or employees for soliciting proxies. We have engaged Broadridge Financial Solutions, Inc. ("Broadridge") to assist us in the distribution of proxies. We will also reimburse brokerage firms and other custodians, nominees and fiduciaries for their expenses incurred in sending our proxy materials to beneficial owners of our common stock as of the record date.
PROPOSAL 1: ELECTION OF DIRECTORS
At the 20182020 Annual Meeting, our stockholders will be asked to elect 1311 directors for a one-year term expiring at the next annual meeting of stockholders. Subject to the Wengen Securityholders Agreement (as defined below), each director will hold office until his or her successor has been elected and qualified or until the director's earlier death, resignation or removal.
Our Board of Directors consists of 13 persons, seven of whom are designated by Wengen Alberta, Limited Partnership, an Alberta limited partnership ("Wengen"), our controlling stockholder.
In connection with the completion of our initial public offering, we entered into an amended and restated securityholders agreement dated February 6, 2017 (the "Wengen Securityholders Agreement"), with Wengen and certain other parties thereto, which provides, among other things, for the designation of directors by Wengen. Under the Wengen Securityholders Agreement, until Wengen ceases to own at least 40% of the common equity of Laureate, it is entitled to designate a proportion of our directors commensurate with its relative economic ownership of our common stock; however, as of the date of this Proxy Statement, Wengen has chosen to limit its designees on our Board of Directors. Pursuant to the Wengen Securityholders Agreement, four of Wengen's seven director designees are selected by Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates, "KKR"), Sterling Capital Partners II, L.P., Bregal Investments, Inc. (together with its affiliates, "Bregal"), and Cohen Private Ventures, LLC (together with its affiliates, "CPV"). KKR is entitled to designate one of Laureate's directors so long as KKR owns at least a number of shares held through or acquired from Wengen in an amount equal to $75 million divided by the per share initial public offering price of the Class A common stock. Mr. Cornog currently serves as the KKR-designated director. Sterling Capital Partners II, L.P. is entitled to designate one of Laureate's directors so long as Sterling Capital Partners II, L.P., Sterling Capital Partners III, L.P., SP L Affiliate, LLC, Messrs. Becker and Taslitz and each of their respective affiliates (together the "Sterling Parties") collectively own at least a number of shares held through or acquired from Wengen in an amount equal to $75 million divided by the per share initial public offering price of the Class A common stock. Mr. Taslitz currently serves as the Sterling-designated director. Bregal is entitled to designate one of Laureate's directors so long as Bregal owns at least a number of shares held through or acquired from Wengen in an amount equal to $75 million divided by the per share initial public offering price of the Class A common stock. Mr. Van Doosselaere currently serves as the Bregal-designated director. CPV is entitled to designate one of Laureate's directors so long as CPV owns at least a number of shares held through or acquired from Wengen in an amount equal to $75 million divided by the per share initial public offering price of the Class A common stock. Mr. Cohen currently serves as the CPV-designated director. The remaining three Wengen designees to the Laureate Board of Directors are selected by the vote of holders of a majority of interests in Wengen and are currently Mr. Carroll, Mr. del Corro and Mr. Snow. Wengen may decide to change the individuals it is entitled to have elected to our Board of Directors. In the event that any of KKR, Bregal, CPV or the Sterling Parties ceases to own its respective minimum number of shares, then the director designee selected by such party shall offer his or her resignation and such party shall no longer be entitled to designate a director to our Board of Directors. The Wengen Securityholders' Agreement does not terminate upon the dissolution of Wengen. See "—Certain Relationships and Related Party Transactions, and Director Independence—Information Regarding the Laureate Board" for additional information.
In December 2017, Wengen entered into an agreement with Mr. Becker, who previously served as Laureate's Chief Executive Officer, whereby Mr. Becker will serve as the non-executive Chairman of
Laureate's board. See "—Executive Compensation—Potential Payments Upon Termination or Change in Control—Becker Chairman Agreement" for additional information.
Our Board of Directors recommends voting "FOR" the election of each of the Director nominees as directors, each of whom shall hold office for a term of one year, expiring at the annual meeting in 2019,2021, and until his or her successor is elected and qualified, or until his or her earlier death, resignation or removal.
Each proxy or vote instruction form will be voted for the election of each of the Director nominees as directors, unless the proxy contains contrary instructions. Shares of Class A common stock and Class B common stock represented by proxies received by the Board of Directors and not so marked as to withhold authority to vote for any individual nominee or for all nominees will be voted (unless one or more nominees are unable to serve) for the election of the nominees named below. The Board of Directors knows of no reason why any such nominee should be unable or unwilling to serve, but if such should be the case, proxies will be voted for the election of some other person or the size of the Board of Directors will be fixed at a lower number.
Each of the nominees currently serves as a member of our Board of Directors. OurThree of our directors are elected in accordance with the provisions of the Wengen Securityholders Agreement.Agreement (as defined below). See "Certain Relationships and Related Transactions, and Director Independence—Information Regarding"—Corporate Governance—Directors Designated by Certain of the Laureate Board.Wengen Investors under the Wengen Securityholders Agreement." Subject to the provisions of the Wengen Securityholders Agreement, our directors are elected by a plurality of the votes cast by the stockholders present or represented by proxy and entitled to vote at the annual meeting. Abstentions and broker non-votes are not considered votes cast and will have no effect on the outcome of this proposal.
The names of the nominees for election to the Board of Directors and certain information about such nominees, including their ages, are set forth below. For information concerning the number of shares of common stock beneficially owned by each nominee, see "—Security"Security Ownership of Certain Beneficial Owners and Management".Management and Related Stockholder Matters."
Name | Age | Position | |||
---|---|---|---|---|---|
Director | |||||
Andrew B. Cohen | Director | ||||
William L. Cornog | Director | ||||
Pedro del | Director | ||||
Michael J. | Director | ||||
Kenneth W. | 69 | Director, Chairman of the Board | |||
George Muñoz* | 68 | Director | |||
Director | |||||
Eilif Serck-Hanssen | Director, President and Chief Executive Officer | ||||
Ian K. | Director | ||||
Steven M. Taslitz | |||||
Director |
Douglas L. Becker has served as our Chairman since February 2000. Mr. Becker served as our Chief Executive Officer from February 2000 until December 31, 2017 and as President from June 2011 until September 2015. From April 1993 until February 2000, Mr. Becker served as Laureate's President and Co-Chief Executive Officer. Mr. Becker has been a Director of Laureate since December 1989.
Mr. Becker was a director of Constellation Energy Corporation from April 1999 through May 2009. He currently serves on the boards of several private companies. From 2004 to June 2015, Mr. Becker served as a director of Meritas LLC, a privately owned family of college preparatory schools. Mr. Becker also serves on the boards of two nonprofit companies: International Youth Foundation, a nonprofit Global NGO focusing on youth employment, education and civic engagement, for which Mr. Becker serves as Chairman and as a member of its audit committee and compensation committee; and Sylvan Laureate Foundation, focused on Baltimore, Maryland and the other communities in which our employees live to seek and support best practices in education and training, for which Mr. Becker serves as a member of its compensation committee.
Brian F. Carroll is the Managing Partnermanaging partner of Carroll Capital LLC. He was, through 2016, a Membermember of KKR, a global alternative asset manager. He joined KKR in 1995 and was head of the Consumerconsumer and Retailretail teams in Europe. He also was also a member of the European Investment Committee. In addition to serving as a director of Laureate, Mr. Carroll serves as a director of Flowgroup Plc, and in the past five years has served as a member of the board of directors of Pets at Home Group Plc, Cognita, Northgate Information Solutions, SMCP and Afriflora. Prior to joining KKR, Mr. Carroll was with Donaldson, Lufkin & Jenrette, where he worked on a broad range of high yield financing, corporate finance and merchant banking transactions. HeIn the past five years, Mr. Carroll has served as a member of the boards of directors of Flowgroup Plc, Pets at Home Group Plc, Cognita, Northgate Information Solutions, SMCP and Afriflora. Mr. Carroll earned a B.S. and B.A.S. from the University of Pennsylvania and an M.B.A. from Stanford University Graduate School of Business. Mr. Carroll has been a Director and the Chairman of the Compensation Committee of our Board of Directors since July 2007.
Andrew B. Cohen is a Managing Director atthe chief investment officer and co-founder of Cohen Private Ventures, LLC, which invests long-term capital, primarily in direct private investments and other opportunistic transactions, and manages family office activities, on behalf of Steven A. Cohen. PriorFrom 2002 to his position with Cohen Private Ventures,2005 and from 2010 to 2014, Mr. Cohen was a managing director, directoran analyst and analystportfolio manager at S.A.C. Capital Advisors, L.P., an investment management firm and itsthe predecessor from 2002 to 2005 and 2010 to 2014.Cohen Private Ventures, LLC. From 2005 to 2010,2009, Mr. Cohen was a managing director and partner of Dune Capital Management LP, an investment management firm. Mr. Cohen began his career at Morgan Stanley, where he was an analyst in the real estate department and principal investing group (MSREF) and then an associate in the mergers and acquisitions group after business school. Mr. Cohen received his B.A. from the University of Pennsylvania and his M.B.A. from the Wharton School of the University of Pennsylvania. Mr. Cohencurrently is a director of Kadmon Holdings,Republic First Bancorp, Inc. He alsoand serves onas a member of the boards of directors of several private companies. He also serves on the National Advisory Board of the Johns Hopkins Berman Institute of Bioethics and the Painting and Sculpture Committee of The Whitney Museum of American Art. In the past five years, Mr. Cohen has served as a member of the board of directors of Kadmon Holdings, Inc. Mr. Cohen earned a B.A. from the University of Pennsylvania and an M.B.A. from the Wharton School of the University of Pennsylvania. Mr. Cohen has been a Director since June 2013.
William L. Cornog joined KKR Capstone, a consulting firm that provides services to KKR portfolio companies, in 2002 and currently serves as Global Headthe managing partner of KKR Capstone. Mr. Cornog serves as a member of KKR's Americas, EMEA, and APAC, Infrastructure, TMT Growth Portfolio Management, Investment & Distribution and Valuation Committees. Prior to joining KKR Capstone, Mr. Cornog was with Williams Communications Group as the senior vice president and general manager of Network Services.network services. Prior to Williams Communications Group, Mr. Cornog was a partner at The Boston Consulting Group. Mr. Cornog also has also worked in direct marketing with Age Wave Communications and in marketing and sales positions with SmithKline Beckman. Mr. Cornog holdscurrently is a director of Channel Control Merchants and Optir, private companies in which KKR is an investor. Mr. Cornog earned a B.A. from Stanford University and an M.B.A. from Harvard Business School. Mr. Cornog has been a Director since February 2017.2017 and the Chairman of the Nominating and Corporate Governance Committee of our Board of Directors since January 2018.
Pedro del Corro is a Membermember of Torreal, S.A. ("Torreal"), one of the largest private investment firms in Spain. He joined Torreal in 1990 and is currently a Managing Directormanaging director and Member of the Board. In addition to serving as a Director of Laureate, he is currently a member of the board of directors of Universidad Europea de Madrid, a member of theLaureate International Universities network located in Spain, Imagina, Saba Infraestructuras and Arbarin.its board. Prior to joining Torreal, Mr. del Corro held various positions with Procter & Gamble in Spain, Belgium, the United Kingdom and Portugal. HeMr. del Corro currently is a director of each of Arbarin Sicav, S.A. and Inversiones Naira Sicav, S.A. In the past five years, he has served as a member of the boards of directors of Universidad Europea de Madrid, S.L.U., Imagina Media Audiovisual, S.L. and Saba Infraestructuras. Mr. del Corro earned a law
degree from the Universidad de Deusto and a business administration degree from ICADE Business School—Universidad Pontificia de Comillas. Mr. del Corro has been a Director since February 2017.
Michael J. Durham has beenwas a member of the Boardboard of Directorsdirectors and chairman of the Audit Committeeaudit committee of Travelport Worldwide Limited since 2014.from 2014 until June 2019. From 2000 to 2012, Mr. Durham was Presidentthe president and Chief Executive Officerchief executive officer of Cognizant Associates ("Cognizant"), a consulting company he
founded. Before founding Cognizant, Mr. Durham served as Director, Presidentdirector, president and Chief Executive Officerchief executive officer of The Sabre Group, Inc. ("Sabre"), then a NYSE-listed company providing information technology services to the travel industry. Mr. Durham held those positions from October 1996, the date of Sabre, Inc.'sSabre's initial public offering, until October 1999. Prior to that, Mr. Durham worked at AMR Corp./American Airlines, serving as Senior Vice Presidentthe senior vice president and Treasurertreasurer of AMR Corporation and Senior Vice Presidentthe senior vice president of Financefinance and Chief Financial Officerthe chief financial officer of American Airlines until he assumed the position of Presidentpresident of Sabre. DuringIn the precedingpast five years, Mr. Durham has served onas a member of the boards of directors of numerous publicly traded and privately held companies, including Asbury Automotive Group Inc., Acxiom CorporationCambridge Capital Acquisition Corp. and The Hertz Corporation. Mr. Durham received hisearned a B.A. from the University of Rochester and an M.B.A. from Cornell University. Mr. Durham has been a Director since April 2017.
Kenneth W. Freeman serveshas served as the Chairman of our lead independent director.Board of Directors since January 2019. Mr. Freeman joinedis Dean Emeritus and Professor of the Practice at Boston University Questrom School of Business. He was named Dean Emeritus in September 2018 after serving as the Allen Questrom Professor and Dean of the Questrom School of Business infrom August 2010.2010 to September 2018. Mr. Freeman served as a senior advisor of Kohlberg Kravis Roberts & Co.KKR from August 2010 through December 2014. From October 2009 to August 2010, Mr. Freeman was a member of KKR Management LLC, the general partner of KKR & Co. L.P. Mr. Freeman was a member of the limited liability company that served as the general partner of Kohlberg Kravis Roberts & Co. L.P.KKR from 2007. He joined the firm as Managing Directora managing director in May 2005. From May 2004 to December 2004, Mr. Freeman was Chairmanthe chairman of Quest Diagnostics Incorporated, and from January 1996 to May 2004, he served as Chairmanthe chairman and Chief Executive Officerchief executive officer of Quest Diagnostics Incorporated. From May 1995 to December 1996, Mr. Freeman was Presidentthe president and Chief Executive Officerchief executive officer of Corning Clinical Laboratories, the predecessor company to Quest Diagnostics.Diagnostics Incorporated. Prior to that, he served in various general management and financial roles with Corning Incorporated. Mr. Freeman currently servesis a director of the Center for Higher Ambition Leadership. In the past five years, Mr. Freeman has served as chairman of the board of trustees of Bucknell University, and chairman of the Graduate Management Admissions Council. He served on the boardAdmission Council and chairman of directors of HCA Holdings,Lake Region Medical, Inc. from 2010 until 2014. Mr. Freeman receivedearned a BSBA summa cum laude, Phi Beta Kappa, from Bucknell University in 1972, and an M.B.A. with Distinction from Harvard Business School in 1976.School. Mr. Freeman has been a Director since April 20172017.
George Muñoz has been a principal in the Washington, D.C.-based investment banking firm Muñoz Investment Banking Group, LLC since 2001. Mr. Muñoz has also been a partner in the Chicago-based law firm Tobin & Muñoz, LLC since 2002. Mr. Muñoz served as Presidentthe president and Chief Executive Officerchief executive officer of the Overseas Private Investment Corporation from 1997 to January 2001. Mr. Muñoz was Chief Financial Officerthe chief financial officer and Assistant Secretaryassistant secretary of the U.S. Treasury Department from 1993 until 1997. Mr. Muñoz is a certified public accountant and an attorney. Mr. Muñoz is a director of Marriott International, Inc. (and a member of its audit committee), Altria Group, Inc. and Anixter International, Inc., and a trustee of the National Geographic Society. Mr. Muñoz served three terms as president of the Chicago Board of Education in the mid-1980s. Mr. Muñoz has taught courses in globalization at Georgetown University in Washington D.C. and is co-author of the book "Renewing the American Dream: A Citizen's Guide for Restoring of Competitive Advantage." Mr. Muñoz hascurrently is a director of each of Marriott International, Inc. (and a member of its audit committee), Altria Group, Inc. and Anixter International, Inc. (and a member of its compensation committee), and a trustee of the National Geographic Society. Mr. Muñoz earned a B.B.A. in Accounting from the University of Texas, a J.D. and a Master of Public Policy from Harvard University, and aan LL.M. in Taxation from DePaul University. Mr. Muñoz has been a Director since March 2013 and the Chairman of the Audit Committee of theour Board of Directors since August 2013.
Dr. Judith Rodin served as Presidentthe president of The Rockefeller Foundation from March 2005 to January 2017. The foundation supports efforts to combat global social, economic, health and environmental challenges. From 1994 to 2004, Dr. Rodin served as Presidentthe president of the University of
Pennsylvania. Before that, Dr. Rodin chaired the Department of Psychology at Yale University, and also served as Deanthe dean of the Graduate School of Arts and Sciences and Provost,provost, and served as a faculty member at the university for 22 years. Dr. Rodin is also a director of Citigroup Inc. and Comcast Corporation. She also currently serves on the boards of several private companies.From 1997 to 2013, Dr. Rodin served as a directormember of the
board of directors of AMR Corporation from 1997(and a member of its audit committee). From 2002 to 2013.2018, Dr. Rodin holdsserved as a member of the board of directors of Comcast Corporation (and a member of its audit and compensation committees). From 2004-2017, Dr. Rodin served as a member of the board of directors of Citigroup Inc. (and a member of its compensation committee). Dr. Rodin currently serves as a member of the boards of directors of several private companies, and advises and speaks globally on education, resilience, impact investing and philanthropy. Dr. Rodin earned a B.A. from the University of Pennsylvania and a Ph.D. from Columbia University. Dr. Rodin has been a Director since December 2013.
Eilif Serck-Hanssen serveshas served as our Chief Executive Officer a position he has held since January 2018.2018 and took on the additional title of President in July 2019. From March 2017 to December 2017, Mr. Serck-Hanssen served as our President and Chief Administrative Officer, as well as our Chief Financial Officer. From July 2008 through March 2017, Mr. Serck-Hanssen served as our Executive Vice President and Chief Financial Officer. From February 2008 until July 2008, Mr. Serck-Hanssen served as chief financial officer and president of international operations at XOJET, Inc. In January 2005, Mr. Serck-Hanssen was part of the team that founded Eos Airlines, Inc., a premium airline, and until February 2008, Mr. Serck-Hanssen served as its executive vice president and chief financial officer. Prior to starting Eos Airlines, Mr. Serck-Hanssen served in several financial executive positions at US Airways, Inc. (now American Airlines, Inc.) and Northwest Airlines, Inc. (now Delta Airlines, Inc.), including serving as a senior vice president and Treasurertreasurer of US Airways, Inc. Prior to joining the airline industry, Mr. Serck-Hanssen spent over five years with PepsiCo, Inc., in various international locations and three years with PricewaterhouseCoopers LLP (formerly Coopers & Lybrand Deloitte) in London. Mr. Serck-Hanssen earned a B.A. in management science from the University of Kent at Canterbury (United Kingdom), a B.S. in civil engineering from the Bergen University College (Norway), and an M.B.A. in finance at the University of Chicago Booth School of Business. He is an Associate Chartered Accountant (ACA) and a member of the Institute of Chartered Accountants in England and Wales. Mr. Serck-Hanssen earned a B.A. from the University of Kent at Canterbury (United Kingdom), a B.S. from the Bergen University College (Norway) and an M.B.A. from the University of Chicago Booth School of Business. Mr. Serck-Hanssen has been a Director since January 2018.
Ian K. Snow is chief executive officer and a co-founding Partnerpartner of Snow Phipps Group, LLC ("Snow Phipps"), a private equity firm. Prior to the formation of Snow Phipps in April 2005, Mr. Snow was a Managing Directormanaging director at Ripplewood Holdings L.L.C., a private equity firm, where he worked from its inception in 1995 until March 2005. Mr. Snow received a B.A., with honors, in history from Georgetown University. He currently serves as a director of each of the following private companies in which Snow Phipps holds an equity interest: EnviroFinance Group,Blackhawk Industrial Distribution, Inc., Brook &Whittle Limited, Cascade Environmental LLC, a company specializing in financing the acquisition, cleanupDecoPac, Inc., ECRM, LLC, Electric Guard Dog, LLC, FeraDyne Outdoors, LLC, HCTec, Inc., Ideal Tridon Holdings, Inc., Kele, Inc. and redevelopment of contaminated properties; Velocity Commercial Capital,Teasdale Foods, Inc., a small balance commercial real estate lender; ZeroChaos, LLC, a provider of contingent workforce management solutions; Velvet, Inc., a designer, manufacturer and wholesaler of upscale apparel brands; and Service Champ, Inc., a vehicle products distributor. In addition, from From 1996 until 2007, Mr. Snow wasserved as a directormember of the board of directors of Asbury Automotive Group, Inc. (and, from 2006 until 2007, a member of theits audit committee of the board of directors) of Asbury Automotive Group, Inc.committee). Mr. Snow earned a B.A., with honors, from Georgetown University. Mr. Snow has been a Director since July 2007.
Steven M. Taslitz has served since 1983 as a Senior Managing Directorthe chairman of Sterling Partners and an owner of Sterling Fund Management, LLC, a private equity firm he co-founded with Mr. Becker and others. Mr. Taslitz currently serves as a director of each of the following privately held companies in which investment vehicles managed by Sterling Partners holdsFund Management, LLC hold an equity interest: Conversant Intellectual Property, Inc., an intellectual property management company;Black Rifle Coffee Company, LLC, Innovation Holdings, LLC, parent to I/O Data Centers,Surgical Solutions, LLC, and Baselayer, LLC, data center and data center operating systems companies; Prospect Mortgage, LLC, a retail mortgage origination company;and Wengen Investments Limited; Sterling Fund Management, LLC; Secondary Opportunity Book, LLC; Sterling Venture Partners, LLC; Sterling Capital Partners, LLC; Sterling Capital Partners II, LLC; Sterling Capital Partners III, LLC; SC Partners III AIV One GP Corporation; Sterling Partners 2009, LLC; and Sterling Capital Partners IV, LLC. In addition, from April 2005 to October 2012, Mr. Taslitz was a director of Ameritox Ltd., a prescription monitoring solution provider and Ameritox Testing Management, Inc., a laboratory services company.Limited. Mr. Taslitz also serves on the compensation
committeesas a managing member of the boards of directorsgeneral partners of each of these companies other than Conversant Intellectual Property, Inc. and serves as a member of the audit committee of the board of directors of Ameritox, Ltd.Sterling's investment funds. Mr. Taslitz received hisearned a B.A., with honors, in accounting from the University of Illinois. Mr. Taslitz has been a Director since July 2007.
Quentin Van Doosselaere is Co-Chief Executive Officer of Bregal Investments, Inc., a private equity investment business. Mr. Van Doosselaere joined Bregal in January 2009. Following his business school graduation in 1984, he moved to New York and began his career at Drexel Burnham Lambert. He then joined Bankers Trust Co. as a Managing Director and ran various global capital markets businesses. In the mid-1990s, he held executive positions in a number of non-profit organizations before going into academia. He was affiliated with Columbia University and Oxford University when he joined Bregal. Mr. Van Doosselaere serves as a member of the investment committees of Bregal Capital, Bregal Sagemount, Bregal Partners, Bregal Freshstream, Bregal Energy, Bregal Private Equity Partners, Ranch Capital Investment and Birchill Exploration. Mr. Van Doosselaere holds a degree from the Solvay Brussels School of Economics of the Université Libre de Bruxelles (Belgium) and a Ph.D. from Columbia University. Mr. Van Doosselaere has been a Director since January 2015.
During the past ten years, none of Laureate or its current Directors has (i) been convicted in a criminal proceeding (excluding traffic violations and similar misdemeanors) or (ii) been a party to any judicial or administrative proceeding (except for matters that were dismissed without sanction or settlement) that resulted in a judgment, decree or final order enjoining such person from future
violations of, or prohibiting activities subject to, federal or state securities laws, or a finding of any violation of federal or state securities laws.
Except as described below, duringDuring the past ten years, (i) no petition has been filed under federal bankruptcy laws or any state insolvency laws by or against any of our current directors, (ii) no receiver, fiscal agent or similar officer was appointed by a court for the business or property of any of our current directors and (iii) none of our current Directorsdirectors was an executive officer of any business entity or a general partner of any partnership at or within two years before the filing of a petition under the federal bankruptcy laws or any state insolvency laws by or against such entity.
In January 2005, Mr. Serck-Hanssen joined the team that founded Eos Airlines, Inc. Eos Airlines was an all first-class shuttle between New York and London. Mr. Serck-Hanssen left Eos in February 2008, and Eos filed for protection under Chapter 11 of the U.S. Bankruptcy Code in late April 2008, after the collapse of Bear Stearns & Co., its largest single client, and the start of the U.S. economic downturn, which caused funding commitments from its financial sponsors to be withdrawn.
With the exception of Mr. Serck-Hanssen, who is a Norwegian citizen and a permanent resident of the United States, Mr. Van Doosselaere, who holds Belgian citizenship, and Mr. del Corro, who holds Spanish citizenship, all of the Directors listed above are U.S. citizens.
Our Board of Directors consists of 11 persons, three of whom are designated pursuant to the amended and restated securityholders agreement, dated February 6, 2017 (the "Wengen Securityholders Agreement"), among the Company, Wengen Alberta, Limited Partnership, an Alberta limited partnership and our controlling stockholder ("Wengen"), and certain other parties thereto. Under the Wengen Securityholders Agreement, each of the following is entitled to designate one of our directors so long as each owns at least 5,357,143 shares held through or acquired from Wengen: (i) Cohen Private Ventures, LLC (together with its affiliates, "CPV"), (ii) Kohlberg Kravis Roberts & Co. L.P. (together with its affiliates, "KKR") and (iii) Sterling Capital Partners II, L.P., Sterling Capital Partners III, L.P., SP L Affiliate, LLC, Douglas L. Becker and Mr. Taslitz and each of their respective affiliates (together, the "Sterling Parties"). Mr. Cohen currently serves as the CPV designated director, Mr. Cornog currently serves as the KKR designated director and Mr. Taslitz currently serves as the Sterling designated director.
Pursuant to the Wengen Securityholders Agreement, in the event that any of CPV, KKR or the Sterling Parties ceases to own its respective minimum number of shares, the director designee selected by such party shall offer his or her resignation and such party shall no longer be entitled to designate a director to our Board of Directors. The Wengen Securityholders' Agreement does not terminate upon the dissolution of Wengen.
The Wengen Securityholders Agreement further provides that until Wengen ceases to own at least 40% of the common equity of Laureate, it is entitled to designate a proportion of our directors commensurate with its relative economic ownership of our common stock. On September 12, 2019, Wengen and its investors collectively ceased to own at least 40% of the common equity of Laureate. Consequently, Wengen's right under the Wengen Securityholders Agreement to designate directors to serve on our Board of Directors terminated. The Wengen Securityholders Agreement did not require the director designees selected by Wengen—Messrs. Carroll, del Corro and Snow—to offer their resignations. Accordingly, as of March 27, 2020, each of Messrs. Carroll, del Corro and Snow continues to serve on our Board of Directors.
As discussed below, as a "controlled company," we are not subject to the rules of The Nasdaq Stock Market ("Nasdaq") requiring that our Board of Directors be comprised of a majority of independent directors. Our Board of Directors did, however, evaluate the independence of Dr. Rodin and Messrs. Carroll, del Corro, Durham, Freeman, Muñoz and Snow based on the Nasdaq definition of independence. The Nasdaq rules require that determinations regarding the independence of directors are made by the boards of directors of listed companies. The Nasdaq rules characterize an independent
director as a director who is not an executive officer or employee of the company and who does not have a relationship that, in the opinion of the board of directors, would interfere with exercising independent judgment in carrying out a director's responsibilities. The Nasdaq rules contain certain categorical standards that serve as prohibitions against directors with certain specified relationships being considered independent.
After careful review of the information provided by each director whose independence was being evaluated and conducting discussions with each such director, and upon the recommendation of the Nominating and Corporate Governance Committee, our Board of Directors affirmatively determined that each of Dr. Rodin and Messrs. Carroll, del Corro, Durham, Freeman, Muñoz and Snow satisfied the Nasdaq independence standards for purposes of serving as a director on our Board of Directors.
Wengen controls a majority of the voting power of our outstanding common stock. As a result, we are a "controlled company" within the meaning of the Nasdaq corporate governance standards. Under the Nasdaq rules, a company of which more than 50% of the voting power is held by an individual, group or another company is a "controlled company" and may elect not to comply with certain Nasdaq corporate governance standards, including:
We utilize, and intend to continue to utilize, certain of these exemptions. As of March 27, 2020, a result,majority of our Board of Directors does not and will not have a majorityconsist of independent directors,directors; however, our Nominating/Nominating and Corporate Governance Committee and Compensation Committee do not and will not consist entirely of independent directors and such committees do not and will not be subject to annual performance evaluations. Accordingly, for so long as we are a "controlled company"company," our stockholders will not have the same protections afforded to stockholders of companies that are subject to all of the Nasdaq corporate governance requirements.
During 2017, there were 13 meetingsOur Board of Directors currently is led by an independent director, Kenneth W. Freeman, Chairman of the Board. Our Bylaws and Corporate Governance Guidelines permit the roles of Chairman of the Board and Chief Executive Officer to be filled by the same or different individuals. This flexibility allows our Board of Directors to decide, from time to time, in its business judgment after considering relevant factors, including the specific needs of the business and what is in the best interest of the stockholders, whether the two roles should be combined or separated. Our Board of Directors believes that our stockholders are best served at this time by having an independent director serve as Chairman of the Board. Our Board of Directors believes that this leadership structure effectively allocates authority, responsibility and oversight between management and members of our Board of Directors. The Chief Executive Officer retains primary responsibility for the operational leadership and strategic direction of the Company, while the Chairman facilitates our Board's oversight of management and promotes communication between senior management and Directors.
During 2019, our Board of Directors held 11 meetings and five actions by written consent. Each incumbent Directorits committees collectively held 22 meetings. All of our Directors attended at least 75% of theBoard and applicable committee meetings held by the Board of Directors during the period in which each such Director served as a member of our Board of Directors. All2019. Directors are expected to attend meetings of theour Board of Directors, meetings of the Committeescommittees upon which they serve and meetings of our stockholders absent cause. Each incumbent Director attended the annual meeting of stockholders in May 2019.
Our Board of Directors has four standing committees: an Audit Committee, a Compensation Committee, a Nominating and Corporate Governance Committee and a Committee on Education.
The Audit Committee meets with our independent auditors to: (i) review whether satisfactory accounting procedures are being followed by us and whether our internal accounting controls are adequate; (ii) monitor audit and non-audit services performed by the independent auditors; (iii) approve fees charged by the independent auditors; and (iv) perform all other oversight and review of Laureate's financial reporting process. The Audit Committee also reviews the performance of the independent auditors and annually selects the firm of independent auditors to audit Laureate's financial statements. The Audit Committee currently consists of Messrs. Muñoz, Durham and Freeman, who each have sufficient knowledge in financial and auditing matters, and the Board of Directors has determined that Mr. Muñoz is an "audit committee financial expert" for purposes of Regulation S-K, Item 407(d)(5). Mr. Muñoz also serves as the Audit Committee's chairman. The Board of Directors has affirmatively determined that each of Messrs. Muñoz, Durham and Freeman meets the definition of "independent director" for purposes of the Nasdaq rules and the independence requirements of Rule 10A-3 of the Securities and Exchange Act.Act of 1934 (as amended, the "Exchange Act") and the Nasdaq listing rules. There were sixnine meetings of the Audit Committee during 2017.2019.
The Compensation Committee establishesreviews and advises our Board of Directors on the Company's overall compensation philosophy, polices and plans, reviews and approves the compensation for the Chief Executive Officer and the other executive officers of Laureate and generally reviews benefits and compensation for all officers and employees. The Compensation Committee also administers our 2007 Planequity plans and our 2013 Plan.approves grants of equity awards. The Compensation Committee currently consists of Messrs. Carroll, Cohen, Cornog, del Corro, Freeman and Muñoz, with Mr. Carroll serving as the current Chairman. There were eightsix meetings of the Compensation Committee during 2017 and one action by written consent.2019.
The Nominating and Corporate Governance Committee develops and recommends to the Board of Directors criteria for selecting qualified director candidates, identifies individuals qualified to become members of the Board of Directors and recommends to the Board of Directors candidates for election to the Board of Directors, considers committee member qualifications, appointment and removal, recommends corporate governance principles, promotes and assesses the Company's stated public
benefit and activities as a public benefit corporation, and provides oversight in the evaluation of the Board of Directors and each committee. The Nominating and Corporate Governance Committee currently consists of Messrs. Cornog, Durham Snow and Van DoosselaereSnow and Dr. Rodin. Mr. Cornog serves as the current Chairman of the Nominating and Corporate Governance Committee. There were twofour meetings of the Nominating and Corporate Governance Committee during 2017.
Each of the above Committees has adopted a written charter, which has been approved by our Board of Directors. Copies of each charter are posted on our website.2019.
The Committee on Education reviews and advises our Board of Directors regarding academic matters and policies, as well as new education products and technologies. The Committee on Education works closely with our Board Advisory Committee on Education, which also includes distinguished outside educational experts. The Committee on Education currently consists of Messrs. Freeman Taslitz and Van DoosselaereTaslitz and Dr. Rodin, with Dr. Rodin serving as the current Chairwoman. There were three meetings of the Committee on Education during 2017.2019.
Each of the above Committees has adopted a written charter, which has been approved by our Board of Directors. Copies of each charter are available on our website at http://investors.laureate.net under "Leadership & Governance."
During 2019, no member of the Compensation Committee (i) had a relationship with us other than as a Director and, in certain cases, a stockholder or (ii) was (A) an officer or employee or a former officer, (B) a participant in a "related person" transaction or (C) an executive officer of another entity where one of our executive officers served on the Board of Directors. See "Certain Relationships and Related Party Transactions, and Director Independence" for a discussion of certain transactions to which affiliates of the members of the Compensation Committee were party.
The Company has adopted a code of conduct and ethics that applies itsto all of its employees, including the Chief Executive Officer, Chief Financial Officer and Chief Accounting Officer. The Code of Conduct and Ethics is postedavailable on our website.website at http://investors.laureate.net under "Leadership & Governance."
Our Board of Directors' role in risk oversight of the Company is consistent with the Company's leadership structure, with the President and CEO and other members of our executive leadership team having responsibility for assessing and managing the Company's risk exposure and our Board of Directors and its committees providing oversight in connection with those efforts. Our Board of Directors exercises these responsibilities regularly as part of its meetings and also through its committees, each of which examines various components of risk as part of its responsibilities. Our Board of Directors regularly reviews the Company's risk management program and processes.
The Audit Committee, among other things, has responsibility for oversight of risk management and in connection therewith (i) reviews with our President and CEO and CFO any report on significant deficiencies in the design or operation of our internal controls that could adversely affect the Company's ability to record, process, summarize or report financial data, any material weaknesses in our internal controls identified to the auditors, and any fraud that involves management or other employees who have a significant role in our internal controls; (ii) reviews and approves any related-party transactions, after reviewing each such transaction for potential conflicts of interests and other improprieties; (iii) provides oversight of the Company's ethics and compliance activities; (iv) discusses with management and our independent auditor any correspondence with regulators or governmental agencies that raise material issues regarding the Company's financial statements or accounting policies; (v) discusses with management the Company's major financial risk exposures and the steps management has taken to monitor and control such exposures; and (vi) reviews with the Company's chief legal officer and reports to our Board of Directors on litigation, material government investigations and compliance with applicable legal requirements and the Company's Code of Conduct.
The Compensation Committee, among other things, monitors and assesses the risks associated with the Company's compensation programs and policies and consults with its independent compensation consultant and with management regarding such risks.
The Nominating and Corporate Governance Committee, among other things, (i) reviews on an ongoing basis the adequacy of the corporate governance principles applicable to the Company and (ii) in consultation with the Audit Committee, reviews the Company's Code of Conduct periodically and recommends such changes to such Code of Conduct as the Committee shall deem appropriate, and adopts procedures for monitoring and enforcing compliance with such Code of Conduct.
The Committee on Education, among other things, reviews on an ongoing basis and monitors risk associated with accreditation, academic quality, program development, student experience and outcomes, faculty development and technology infrastructure with respect to of all of the Company's institutions.
The Company's executive leadership team is responsible for assessing and managing the Company's various exposures to risk on a day-to-day basis, including the creation of appropriate risk management policies. The Company has developed a consistent, systemic and integrated approach to risk management, including the risk management program, to help determine how best to identify, manage, and mitigate significant risks throughout the Company. Management regularly reports to our Board of Directors and its committees on a variety of risks.
Based on a review of reports filed with the SECSecurities and Exchange Commission (the "SEC") by our directors, executive officers and beneficial owners of more than 10% of our Class A common stock regarding their ownership and transactions in our common stock and written representations from those directors and executive officers, we believe that each director, executive officer and beneficial owner of more than 10% of our Class A common stock has filed timely reports under Section 16(a) of the Securities Exchange Act of 1934 during 2017,2019, except that StepStone Funds, William L. Cornog, Pedro del Corro, and Michael Durham eachone Form 4 with respect to shares co-owned by Mr. Taslitz was filed a Form 3 late relating to their respective initial holdings of the Company's common stock in connection with the Company's initial public offering; Point72Asseta cashless option exercise by one of Mr. Taslitz's co-owners of such shares. See "Security Ownership of Certain Beneficial Owners and Management L.P., its general partner, Point72 Capital Advisors, Inc., and its sole shareholder, Steven A. Cohen, filed a Form 3 and amendment to Form 3 late relating to their initial holdings of the Company's common stock in connection with the Company's initial public offering and filed one Form 4 late covering a total of seven transactions; Kenneth Freeman filed his Form 3 late relating to his initial holdings of the Company's common stock in connection with his becoming a director of the Company and one Form 4 late covering one transaction; and Enderson Guimarães filed one Form 4 late covering 3 transactions.Related Stockholder Matters—Beneficial Ownership Table—Note 17" for additional information.
This Compensation Discussion and Analysis provides an overview of our executive compensation philosophy, the overall objectives, of our executive compensation program, and each material elementelements of compensation, forand the factors and process used in making compensation decisions with respect to our fiscal year ended December 31, 2017 that we provided to each person who2019 named executive officers ("NEOs") listed below.
NEOs | Title | |
---|---|---|
Eilif Serck-Hanssen(1) | President and Chief Executive Officer | |
Jean-Jacques Charhon | Executive Vice President and Chief Financial Officer | |
Timothy Grace | Chief Human Resources Officer | |
Victoria Silbey(2) | Senior Vice President, Secretary, Chief Legal Officer and Chief Ethics and Compliance Officer | |
Paula Singer | Chief Executive Officer of Walden and Laureate Online Partners | |
Ricardo Berckemeyer(3) | Former President and Chief Operating Officer | |
José Roberto Loureiro(4) | Former Chief Executive Officer, Brazil |
Our Named Executive Officers for the fiscal year ended December 31, 2017, and their respective titles as of the end of the year were as follows:
The discussion regarding the 2019 compensation of our NEOs is divided into five sections.
Page: | ||||
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Executive Summary | 16 | |||
Compensation Governance | 18 | |||
Executive Compensation Program | 19 | |||
Policies and Other Considerations | 28 | |||
Recent Developments | 30 |
On February 6, 2017 we completedThe primary focus of our initial public offering. Since the beginning of 2017 we have experienced a significant transition atcompensation philosophy is to pay for performance. We believe that our executive management level. With the goal of making our organization nimbler, improving decision making processes, and ensuring senior management is closer to our students, we undertook a complete global organization design reviewprograms are effectively designed, align well with the intention of eliminating layers and increasing the span of controlinterests of our managers. As a result of this review, some senior positions were eliminated. As previously disclosed instockholders and are instrumental to achieving our Quarterly Report on Form 10-Q for the period ended September 30, 2017, effective August 1, 2017, we also changed our operating segments in order to realign our segments according to how our chief operating decision maker allocates resourcesbusiness strategy and assesses performance. Seven individuals who had served as executive officers prior to their departure concluded their service as executive officers by the end of 2017. One person who served as an executive officer at the end of 2016 currently serves the Company in a non-executive officer capacity as of the date of this Proxy Statement and other persons who were employed by us at the end of 2016 became executive officers after the end of 2017. New executives joined the senior management team in 2017, with a new CFO joining us at the beginning of 2018.
On September 13, 2017, we announced a transition plan whereby, effective January 1, 2018, our then President, Chief Administrative Officer, and Chief Financial Officer Eilif Serck-Hanssen, became our Chief Executive Officer, and our then Chief Operating Officer, Ricardo Berckemeyer, assumed the additional title of President. Also, effective as of January 1, 2018, our Founder, Chairman and Chief Executive Officer, Douglas Becker, transitioned into the role of non-executive Chairman of the Board of Directors. See "—Potential Payments Upon Change in Control—Becker Chairman Agreement" below for additional information regarding Mr. Becker's transition to non-executive Chairman of the Board of Directors.key financial objectives.
In addition to the Company's 2017 priorities of executing our business plan to achieve strategic and operational results, such as growing Adjusted EBITDA,driving financial performance, expanding margins, improving liquidity, and maximizing academic quality and successful student outcomes, and completing B Corp recertification, among the highestmost critical strategic priorities for the Companyour NEOs during 20172019 were to:
On March 28, 2017, Mr. Serck-Hanssen was appointed President, Chief Administrative Officer and Chief Financial Officer, and Mr. Berckemeyer was appointed Chief Operating Officer and Chief Executive Officer, Latin America. In connection with his promotion, on May 23, 2017, the Compensation Committee approved an increase in the compensation payable to Mr. Serck-Hanssen. Effective May 23, 2017, Mr. Serck-Hanssen's annual base salary increased from $605,855 to $710,496, and Mr. Serck-Hanssen's annual target Annual Incentive Plan ("AIP") award opportunity under the Amended Plan (as defined below) increased to 120% of his base salary.
On May 23, 2017, the Compensation Committee established new cash Long-Term Incentive Plan ("LTIP") opportunities for each of Messrs. Serck-Hanssen and Berckemeyer. Each of Messrs. Serck-Hanssen and Berckemeyer is eligible to receive up to $1.0 million upon satisfaction of 2017 performance criteria and up to an additional $2.0 million upon satisfaction of 2018 performance criteria. The LTIP awardsHighlighted below are conditioned on the achievement of corporate Adjusted EBITDA performance goals and may be earned over separate one-year periods subject to continued employment. Any amounts payable under the LTIPs will be payable in 2019 upon certification by the Compensation Committee of achievementsome of the applicable performance goals. In March 2018, the Compensation Committee certified that the applicable 2017 performance goals had been achievedkey governance and the first portion of the cash LTIPsdesign features with respect to our executive compensation programs for each executive will be payable in 2019, subject to such executive's continued employment through the payment date.2019:
Upon Mr. Serck-Hanssen's appointment as Chief Executive Officer effective January 1, 2018, his annual base salary increased from $710,496 to $850,000 and his annual target AIP award opportunity under the Amended Plan (as defined below) increased from 120% to 130% of his base salary. In addition, on September 13, 2017, Mr. Serck-Hanssen received an award of non-qualified stock options to purchase: (A) 145,773 shares of the Company's Class A common stock with an exercise price of $18.36, which stock options will become vested and exercisable on the first anniversary of the grant date and will expire on the third anniversary of the grant date, and (B) 145,773 shares of the Company's Class A common stock with an exercise price of $21.00, which stock options will become vested and exercisable on the second anniversary of the grant date and will expire on the fourth
What we do: | What we do NOT do: | |
---|---|---|
Align pay with performance | Guarantee bonus payouts | |
Incorporate multiple performance metrics within our variable pay components | Pay when performance does not meet the pre-determined thresholds and targets | |
Set challenging performance objectives | Provide excessive executive perquisites | |
Incorporate payout caps for performance-based short- and long-term incentives | Target NEO compensation at a specific market reference | |
Develop an appropriate peer group for our competitive benchmarking | Award equity grants that have "single-trigger" accelerated vesting | |
Conduct competitive benchmarking against the peer group | Accelerate vesting of restricted stock or RSUs for retirement | |
Consider guidance from an independent compensation consultant | Provide a supplemental executive retirement plan or supplemental executive medical plan | |
Maintain stock ownership guidelines for our executive officers Maintain an executive severance policy | Provide for change in control tax gross-ups Offer payment of dividends for unearned equity awards Allow any hedging or pledging transactions |
anniversary of the grant date, in each case subject to continued employment through the vesting date. The Compensation Committee wanted to provide an incentive to Mr. Serck-Hanssen to work to increase our stock price for the benefit of all our investors. Accordingly, the exercise prices of these stock options are substantially in excess of the fair market value of our Class A common stock on the grant date, which was $14.82. Mr. Serck-Hanssen will only recognize value from these stock options if the price of our Class A common stock increases above $18.36 before September 2020, and above $21.00 before September 2021.Governance
Upon Mr. Berckemeyer's assumption of his new role as President of the Company effective January 1, 2018, his annual base salary increased from $710,496 to $800,000 and his AIP opportunity under the Amended Plan (as defined below) increased from 120% to 130% of his base salary. In addition, on September 13, 2017, Mr. Berckemeyer received an award of non-qualified stock options to purchase: (A) 200,000 shares of the Company's Class A common stock with an exercise price of $18.36, which will become vested and exercisable on the first anniversary of the grant date and will expire on the third anniversary of the grant date, and (B) 200,000 shares of the Company's Class A common stock with an exercise price of $21.00, which will become vested and exercisable on the second anniversary of the grant date and will expire on the fourth anniversary of the grant date, in each case subject to Mr. Berckemeyer's continued employment. The Compensation Committee wanted to provide an incentive to Mr. Berckemeyer to work to increase our stock price for the benefit of all our investors. Accordingly, the exercise prices of these stock options are substantially in excess of the fair market value of our Class A common stock on the grant date, which was $14.82. Mr. Berckemeyer will only recognize value from these stock options if the price of our Class A common stock increases above $18.36 before September 2020, and above $21.00 before September 2021.
On November 6, 2017, the Company filed a Current Report on Form 8-K disclosing the appointment of Jean-Jacques Charhon as the Company's new Executive Vice President and Chief Financial Officer effective January 1, 2018. A copy of Mr. Charhon's offer letter was filed as an Exhibit to the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and is incorporated herein by reference. Mr. Charhon will be a Named Executive Officer for 2018.
In connection with our 2007 leveraged buyout and in connection with Mr. Becker's service as Chairman and Chief Executive Officer of Laureate, Wengen granted Mr. Becker a profits interest in Wengen ("Executive Profits Interests" or "EPI"), allowing Mr. Becker the potential to share in a portion of Wengen's profits. As of December 31, 2014, all the Executive Profits Interests were vested. Upon the consummation of our initial public offering, all of Mr. Becker's Executive Profits Interests were to be liquidated and exchanged for a number of shares of our Class B common stock then held by Wengen having an aggregate fair market value equal to that portion of Wengen's share in us to which Mr. Becker would have been entitled on account of the liquidated Executive Profits Interests (the "EPI Shares"). At the initial public offering price of $14.00 per share, Mr. Becker received zero EPI Shares. On the date of our initial public offering, the Company granted to Mr. Becker options (the "EPI Options") to purchase 2,773,098 shares (representing that number of shares of our Class B common stock necessary, when added to the shares to be transferred by Wengen pursuant to the previous sentence above (which was zero), for Mr. Becker to have the same ownership percentage of us that the Executive Profits Interests represented in the profits of Wengen) of the Company's Class B common stock. The exercise price of the EPI Options is equal to (i) $17.00 with respect to 50% of the shares of our Class B common stock subject to the EPI Options and (ii) $21.32 with respect to 50% of the shares of our Class B common stock subject to the EPI Options and the EPI Options fully vested upon consummation of our initial public offering and remain exercisable until December 31, 2019, unless earlier terminated in accordance with the terms of the EPI Option agreements or the 2013 Plan, as applicable. See "—2017 Grants of Plan Based Awards."
For Mr. Becker, the amount shown in the Option Awards column of the Summary Compensation Table for 2017 includes $14,600,361, the grant date fair value, which is an estimated value computed in accordance with ASC 718, of 2,773,098 EPI Options issued to Mr. Becker on January 31, 2017. Although we issued these EPI Options in 2017 and SEC rules require us to report the grant date fair value in the Summary Compensation Table, they relate to the EPI held by Mr. Becker in Wengen since our 2007 leveraged buyout.
In connection with the 2007 leveraged buyout, an entity affiliated with Mr. Becker and Steven M. Taslitz, a Director of Laureate, and two other founding partners of Sterling Partners (individually, a "Sterling Founder", and collectively, the "Sterling Founders"), of which Mr. Becker owns approximately 24%, received different profits interests in Wengen as compensation for services provided in connection with the leveraged buyout. Effective upon completion of our initial public offering, all of these profits interests were liquidated in exchange for the transfer to this affiliated entity by Wengen of zero shares of our Class B common stock held by Wengen.
Pursuant to an agreement the Sterling Founders entered into on January 20, 1999 in connection with a partnership formed by them (the "Founders' Agreement"), the Sterling Founders share equally, on a net after-tax basis, in certain equity-based compensation they receive, in the aggregate, in connection with services rendered by any of them to certain entities, including Laureate. The Founders' Agreement provides, in certain circumstances, and subject to contractual restrictions, that securities received by a Sterling Founder as compensation for services rendered by him to certain entities shall be assigned or transferred to the Sterling Founders pro rata, or to a partnership they form, as soon as practicable after such assignment or transfer is permitted by contract and applicable law. The Founders' Agreement further provides that if such securities or other property are not transferable or assignable, the rights to receive the net proceeds of such property upon disposition shall be so transferred or assigned. Prior to any such transfer or assignment, each Sterling Founder controls the voting and disposition of any such securities received by such Sterling Founder.
As a result, each Sterling Founder has an economic interest in any share-based compensation received by Mr. Becker in connection with his employment by the Company or any holdings he has in the Company, including any dividends on, or the proceeds from the sale of, the shares of Class B common stock issuable upon the exercise of the EPI Options by Mr. Becker.
The Compensation Committee is responsible for establishing, implementing,actively engaged in the compensation process to ensure appropriate compensation governance. The majority of compensation earned by our NEOs is a function of corporate and evaluating our employee compensationindividual financial and benefit programs. Theoperational performance against pre-established goals. Our executive officers have line of sight and considerable impact on the achievement of these goals. Our CEO, management and the Compensation Committee, periodically reviews and makes recommendations toin consultation with the Board of Directors with respect to the adoption of, or amendments to, all equity-based incentive compensation plans for employees, and cash-based incentive plans for executive officers, and evaluates whether the relationship between the incentives associated with these plans and the level of risk-taking by executive officers in response to such incentives is reasonably likely to have a material adverse effect on the Company. The Compensation Committee annually evaluates the performance of our Chief Executive Officer and our other executive officers, establishes the annual salaries and annual cash incentive awards for our Chief Executive Officer and our other executive officers, and approves all equity awards. The Compensation Committee's objective is toindependent compensation consultant, ensure thatthorough oversight regarding the totalamount and form of executive compensation paid tovia the Named Executive Officers as well as our other senior officers is fair, reasonable, and competitive. Generally, the types of compensation and benefits provided to our Named Executive Officers are like those provided to other senior members of our management team.following pay governance processes:
Role | Management | Chief Executive Officer | Compensation Committee | Independent Compensation Consultant | ||||
---|---|---|---|---|---|---|---|---|
Set CEO Target Compensation | — | — | Approve | Advise | ||||
Set Named Executive Officer Target Compensation | — | Recommend | Approve | Advise | ||||
Design Cash and Equity Incentive Programs (Metrics, Targets and Award Opportunities) | Develop | Recommend | Approve | Advise | ||||
Authorize Equity Grants and Cash Incentive Payouts | Recommend | Review | Approve | Review | ||||
Select and Review Peer Group | Develop | Recommend | Approve | Develop |
The goal of our executive compensation program is to create long-term value for our investors while at the same time rewarding our executives for superior financial and operating performance and
encouraging them to remain with us for long, productive careers. We believe the most effective way to achieve this objective is to design an executive compensation program balanced to reward the achievement of specific annual, long-term and strategic goals and aligning executives' interests with those of our investors by further rewarding performance above established goals. No variable compensation is guaranteed. We use this philosophy as the foundation for evaluating and improving the effectiveness of our executive pay program. The following are the core elements of our executive compensation philosophy:
By incorporating these elements, we believe our executive compensation program is responsive to our investors' objectives and effective in attracting, motivating, and retaining the level of talent necessary to grow and manage our business successfully.
Our compensation process for each fiscal year begins in the preceding September when senior management meets to set the next year's budgets. Using the budgets developed during October and November, each year in December, the Board of Directors approves our revenue, earnings, and student enrollment goals for the following year. These goals serve as the target metrics in our AIP, a non-equity short-term incentive plan under the Amended Plan designed to create a link between executive compensation and company performance, and our cash LTIPs with certain Named Executive Officers, which are designed to reward superior performance over a longer period and thereby provide an incentive for these executives to remain with us. See "—Elements of Laureate's 2017 Compensation Program—Incentive Opportunity." In March, the Compensation Committee meets to review the Named Executive Officers' prior year's performance, set their base salary levels for the current fiscal year, approve the AIP for the current year, and approve or modify individual goals for the Named Executive Officers that were recommended by management for the discretionary portion of our AIP. In March, the Compensation Committee assesses performance and certifies the extent to which the prior year's performance goals have been achieved and authorizes the payment of any earned incentive compensation.
Prior to the March Compensation Committee meeting, the CEO and the Chief Human Resources Officer ("CHRO") review the prior year's performance of each Named Executive Officer (other than the CEO, whose performance is reviewed only by the Compensation Committee). Since May 31, 2017 we have had an acting CHRO. The conclusions reached, and recommendations based on these reviews, including with respect to salary adjustments and AIP cash award amounts, are presented to the Compensation Committee at its March meeting. The Compensation Committee determines salary adjustments and AIP cash awards for our Named Executive Officers, considering the CEO's
recommendations. The CEO and CHRO are not members of the Compensation Committee and do not participate in deliberations regarding their own compensation.
We have reviewed and considered our compensation plans and practices for all our employees and do not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. We utilize many design features that mitigate the possibility of encouraging excessive risk-taking behavior. Among these design features are:
During 2017, the former CHRO, the acting CHRO, and members of the human resources staff met several times with Frederic W. Cook & Co., Inc. ("FW Cook"), an independent executive compensation consulting firm was retained by and reported directly to the Compensation Committee for advice and perspective regarding market trends that could affect our decisions about our executive compensation program and practices. During this time, FW Cook assessed our compensation philosophy and the structure of our programs and reviewed our existing equity and variable pay compensation documents. FW Cook then advised management about alternatives it could consider before recommending executive compensation design and amountsdid not provide any other services to the Compensation Committee. Before engaging FW Cook, the Compensation Committee assessed theCompany. Upon assessment of independence of FW Cook pursuant to SEC rules, andthe Compensation Committee concluded that the work performed by FW Cook does not raise any conflictsno conflict of interest.
interest arose from this relationship. In its capacity as the Compensation Committee's independent compensation consultant with respect to compensation decisions for 2019, FW Cook has provided insight to the Compensation Committee on certain regulatory requirements and concerns of our investors, assistingassisted with the development of conceptual designs for future equity and cash incentive compensation programs and providingprovided to the Compensation Committee with relevant market data and alternatives to consider when making compensation decisions for the CEO and other Named Executive Officers.NEOs.
In order to obtain a fresh perspective on strategies that best align company performance and stockholder value with executive compensation, in September 2019, the Compensation Committee retained Meridian Compensation Partners, LLC ("Meridian") as its independent compensation consultant. Meridian provided services to the Compensation Committee for decisions related to 2020 compensation, but did not provide services to the Compensation Committee with respect to 2019 compensation decisions.
In making executive compensation determinations, the Compensation Committee also considers the results of the non-binding, advisory shareholder votes on our executive compensation program. Our shareholders approved our executive compensation program by over 99% of votes cast on the say-on-pay proposal in our 2019 Proxy Statement. The Compensation Committee used its existing Compensation Peer Group, which had last been updated in 2014, as partis mindful of our shareholders' endorsement of the 2017Compensation Committee's past decisions and policies and has maintained its general approach to executive compensation processfor decisions made to evaluatedate. The Compensation Committee will continue to consider the competitiveness of the compensation targets forresults from this year's and future advisory shareholder votes regarding our executive team (the "2017 Peer Group"). The 2017 Peer Group included three distinct elements, each representing a key Laureate characteristic. These business characteristics include: (1) industry, (2) size and complexity and (3) growth and profitability.compensation program.
The Executive Compensation Committee had defined these characteristicsProgram
Compensation Philosophy, Strategy and selected peer companiesPrinciples
We design motivational incentives for each group as follows:our leaders to align their interests with three main priorities that are also important to our investors:
We use a diverse set of equity and cash incentives realizable upon achievement against performance targets. Each incentive is selected to encourage the right behaviors and results for our success and that of our students in the S&P 1500near- and long-term. Additionally, our program discourages our executives from taking excessive risk and encourages them to model, in an ethical way, our values, culture and mission, which is to expand access to quality higher education to make the world a better place.
The following four guiding principles further shape our executive compensation program:
In September 2017,Target compensation levels for our executive officers are not dictated by any specific percentile of the market. Rather, the Compensation Committee requested that FW Cook identify a frameworkconsiders such data in addition to the following factors to establish target pay levels:
Compensation Peer Group to be used for compensation decisions going forward (the "2018 Peer Group", and collectively with the 2017 Peer Group, the "Peer Groups"). The 2018 Peer Group was developed focusing on comparability in terms of size, complexity (including global presence), profitability, and business content. The 2018 Peer Group comprises 23 companies:
The Compensation Committee uses data derived from our Peer Groupspeer group to inform its decisions about overall compensation, compensation elements, optimum pay mix and the relative competitive landscape of our executive compensation program. The Compensation Committee uses multiple reference points when establishing target compensation levels. Because comparative compensation information is just one of several analytic tools the Compensation Committee uses in setting executive compensation, it has discretion in determining the nature and extent of its use. Moreover, given the limitations associated with comparative pay information for setting individual executive compensation, the Compensation Committee may elect not to use the comparative compensation information at all while making individual compensation decisions.
In approving 2017 compensation for the Named Executive Officers, the Compensation Committee took under advisement the recommendation of the CEO and acting CHRO relating to the total compensation package for the Named Executive Officers and, based on company-wide operating results and the extent to which individual performance objectives were met, the Compensation Committee determined 2017 compensation for each of the Named Executive Officers. In determining whether to approve or modify management-recommended compensation for the Named Executive Officers in 2017, the Compensation Committee reviewed non-financial factors as part of the overall evaluation of performance. Such non-financial factors included judging the extent to which each Named Executive Officer identified business opportunities, maximized network synergies for Laureate, shared best practices and maximized the mix of our geographic revenues, programs, modalities and levels of study. The Compensation Committee believes non-financial measures are often "leading indicators" of financial performance and are especially important to a geographically dispersed company like Laureate. The Compensation Committee believes that the total 2017 compensation opportunity for our Named Executive Officers was competitive while at the same time being responsible to our investors because a significant percentage of total compensation in 2017 was allocated to variable compensation, paid only upon achievement of both individual and Company performance objectives. In 2017, the Compensation Committee also took into account the Company's succession plan and management changes in determining executive compensation, with a particular emphasis on the transition of Mr. Becker's role and the promotions and significantly increased responsibilities of Messrs. Serck-Hanssen and Berckemeyer.
The following is a summary of key considerations that affected the development of 2017 compensation targets and 2017 compensation decisions for our Named Executive Officers (and which the Compensation Committee believes will continue to affect its compensation decisions in future years):
Market Targets. We target base salary for our Named Executive Officers generally near the 50th percentile of the Compensation Peer Group. AIP and LTIP awards are set as a percentage of base salary based on competitive data from the Compensation Peer Group. Although historically a specific pay mix for our Named Executive Officers has not been set, it has been and will continue to be our policy to allocate a significantly larger portion of the Named Executive Officers' compensation in the form of variable or "at risk" compensation than is allocated to junior members of management. By targeting our Named Executive Officers' base salaries near the 50th percentile and using competitive data to determine the percentages of the AIP and equity incentive targets, most of our Named Executive Officers' pay is at risk, consistent with strategies followed by other comparable companies and the Compensation Committee's pay-for-performance philosophy. Market targets are frequently reviewed to ensure competitiveness with other companies' executives with similar responsibilities to our Named Executive Officers.
Emphasis on Performance. Laureate's compensation program provides increased pay opportunity correlated with superior performance over the long term. When evaluating base salary, individual performance is the primary driver that determines each Named Executive Officer's annual increase, if any. In our AIP, both organizational and individual performance are key drivers in determining each Named Executive Officer's non-equity incentive award.
The Importance of Organizational Results. Laureate's AIP uses the achievement of specific organizational metrics in determining approximately 80% of the Named Executive Officers' target annual cash incentive awards. This is because the Compensation Committee believes it is important to hold the Named Executive Officers accountable for both the results of their organization and overall company results. Our 2017 AIP was designed to emphasize and reward the Named Executive Officers for corporate performance. The Compensation Committee believes
that individual contributions by the Named Executive Officers significantly affect both regional and overall corporate results. The payment of LTIP awards and the vesting of performance options and performance share units granted under our 2013 Plan and our Amended Plan are dependent on the Company achieving overall corporate financial goals.
Stockholder Approved 2017 Stock Option Repricing and Amendment and Restatement of 2013 Plan
On June 19, 2017, our Board of Directors approved, and Wengen, the holder of a majority of the voting power of the issued and outstanding shares of Class A common stock, par value $0.004 per share ("Class A common stock"), of the Company, and Class B common stock, par value $0.004 per share ("Class B common stock"), of the Company, voting together as a single class, by written consent (i) approved a one-time stock option repricing (the "Option Repricing") as described in more detail below and (ii) approved and adopted the Laureate Education, Inc. Amended and Restated 2013 Long-Term Incentive Plan (the "Amended Plan"), an amendment and restatement of our 2013 Long-Term Incentive Plan (the "2013 Plan").
Since 2013, the Company has maintained the 2013 Plan for the benefit of certain directors, officers, and employees of the Company and its subsidiaries, as well as for others performing consulting or advisory services for the Company. The purpose of the plan has been to provide incentives that will attract, retain and motivate high performing officers, directors, employees and consultants by providing them with appropriate incentives to maximize shareholder value and contribute to the long-term success of the Company. We have granted stock options under the 2013 Plan (and now under the Amended Plan) consistent with the view that stock-based incentive compensation opportunities play a key role in our being able to recruit, motivate and retain qualified individuals. While our compensation packages generally include a number of different components, we believe equity compensation is key to linking pay to performance as it encourages employees to work toward our success and aligns their interests with those of our investors by providing them with a means by which they can benefit from increasing the value of the Company's stock.
Under the Option Repricing, the exercise price of each Relevant Option (as defined below) was amended to reduce such exercise price to the average closing price of a share of the Company's Class A common stock as reported on the Nasdaq Global Select Market over the twenty (20) calendar days preceding the date on which the Option Repricing became effective. "Relevant Options" were all outstanding stock options as of June 19, 2017 (vested or unvested) to acquire shares of Class B common stock granted under the 2013 Plan during calendar years 2013 through 2016. The Option Repricing became effective on July 20, 2017, which was the 20th calendar day after we mailed a Notice and Information Statement to stockholders. All Relevant Options were eligible for the repricing and, accordingly, the exercise price of each such stock option was automatically amended, without any action required by the holder thereof, to be $17.44. Stockholder approval was required for the Option Repricing under the listing rules of the Nasdaq Stock Market (the "Nasdaq Listing Rules") and the terms of the 2013 Plan. Such approval was received by the Company from Wengen by written consent dated June 19, 2017.
Since the closing of our initial public offering on February 6, 2017, our Class A common stock has traded on the Nasdaq Global Select Market under the symbol "LAUR". Prior to that date, there was no public trading market for our Class A common stock. There is currently no established public trading market for our Class B common stock. Each share of Class B common stock is convertible at any time at the option of the holder into one share of Class A common stock. In addition, each share of Class B common stock will convert automatically into one share of Class A common stock upon any transfer, whether or not for value, except for certain transfers described in our amended and restated certificate of incorporation, including transfers for tax and estate planning purposes, including to trusts, corporations and partnerships controlled by a holder of Class B common stock. From the time the Relevant Options were granted, when our share price was determined by the Compensation Committee
Laureate's compensation peer group used for setting 2019 pay was comprised of 23 companies that were selected based on several factors,upon various criteria, including, an independent third-party valuation,but not limited to the following:
Our 2019 compensation peer group was:
Acadia Healthcare Company, Inc. | Amkor Technology, Inc. | CommScope Holding Company, Inc. | ||
Convergys Corporation | Cooper-Standard Holdings Inc. | Dover Corporation | ||
Graham Holdings Company | JELD-WEN Holding, Inc. | Jones Lang LaSalle Incorporated | ||
Leggett & Platt, Incorporated | NCR Corporation | News Corporation | ||
ON Semiconductor Corporation | Quanta Services, Inc. | Regal Beloit Corporation | ||
Sanmina Corporation | Sealed Air Corporation | Sonoco Products Company | ||
Stericycle, Inc. | The Brink's Company | The Interpublic Group of Companies, Inc. | ||
TTM Technologies, Inc. | Vishay Intertechnology, Inc. |
Executive Compensation Pay Components
Laureate's executive compensation program underwater stock options may be perceived by their holders as having a reducedis composed of three main components: base salary, our Annual Incentive Plan ("AIP") and our long-term equity incentive plan. To ensure alignment with our pay for performance philosophy, we focus our executive compensation program on variable pay while still providing competitive fixed base salaries to promote both short-term and long-term retention effect due to the difference between the exercise prices and the current price of our Class A common stock.performance.
The Board believes thatgraphs below show the Option Repricing, as designed, was in the best interest of stockholdersAnnual Total Target Compensation for our CEO and the Company, as the repriced stock options were designed to reverse the condition of lost incentive and value, restore the retentive benefit of the affected stock options, and reduce or eliminate the need to grant replacement equity incentives, which would have depleted the available share reserve under the plan, or to grant replacement cash incentives, which could put an undue strain onAverage Annual Target Compensation for other NEOs (excluding our cash resources.CEO) for 2019:
Participation in the Option Repricing wasValues above do not voluntaryinclude special equity or discretionary; all Relevant Options were eligible for the repricing and, accordingly, the exercise price of each such Relevant Option was automatically amended as described above, without any action required by the holder thereof. No additional stock options were granted by the Company in connection with the Option Repricing.
Also, on June 19, 2017, the board approved and adopted the Amended Plan, which was approved by Wengen, our majority stockholder (the "Majority Holder"), by written consent dated June 19, 2017. Stockholder approval of the Amended Plan was required under the Nasdaq Listing Rules and the terms of the Amended Plan. The 2013 Plan was revised and updated to include the following material changes which were specifically approved by the Majority Holder in the form of the Amended Plan: (i) an increase in the number of shares of Class A common stock that may be issued pursuant to awards under the Amended Plan from 12,170,918 to 14,713,960; (ii) the addition of performance metrics, the ability to grant cash awards and annual limits on grants, intended to qualify awardsthat were given as performance-based awards that would not have been subject to certain limits on tax deductibilitya part of compensation payable to certain executives under the tax laws then in effect; and (iii) an extension of the term of the 2013 Plan so that it will expire on June 18, 2027, the day before the tenth anniversary of the date the Board adopted the Amended Plan.
We operate in a challenging marketplace in which our success depends to a great extent on our ability to attract and retain employees, directors andnew hire, promotional or other service providers of the highest caliber. One of the tools the Board regards as essential in addressing these human resource challenges is a competitive equity incentive program. The Company's employee stock incentive program provides a range of incentive tools and sufficient flexibility to permit the Compensation Committee to implement it in ways that will make the most effective use of the shares the Company's stockholders authorize for incentive purposes. The Board determined that increasing the shares reserved for issuance under the 2013 Plan was necessary for the Company to continue to offer a competitive equity incentive program. The Board and the Majority Holder approved the Amended Plan which includes an increase in the number of shares of Class A common stock that may be issued pursuant to awards under the Amended Plan from 12,170,918 to 14,713,960.
The Amended Plan and our 2007 Stock Incentive Plan for Key Employees of Laureate Education, Inc. and its Subsidiaries (the "2007 Plan") are the only equity plans under which the Company has stock options outstanding. For more information regarding the Option Repricing and the Amended Plan, see the Definitive Schedule 14C we filed with the SEC on June 30, 2017.agreements.
There are three key componentsThe base salary of our executive compensation program forNEOs is intended to provide a competitive fixed element of income to reward responsibility, experience, skills and competencies relative to the market, while effectively managing our Named Executive Officers: baseoverall fixed expenses. Annual salary AIP awards, and long-term equity incentive awards. Four of our Named Executive Officers, Messrs. Serck-Hanssen, Berckemeyer, Daniels, and Guimarães also have participated in LTIPs. The components of incentive compensation (the AIP awards, equity awards and LTIPs)increases, if any, are significantly "at-risk," as the degree to which the AIP awards and LTIPs are paid and the performance vesting and the intrinsic value of the equity awards all depend on the extent to which certain of our operating and financial goals are achieved. In addition to these key compensation elements, the Named Executive Officers are provided certain other compensation. See "—Other Compensation." When reviewing compensation levels, each component of compensation is reviewed independently, and the total pay package is reviewed in the aggregate. However, the Compensation Committee believes that an important component of aligning the interests of investors and executives is to place a strong emphasis on "at risk" compensation linked to overall Company performance.
Base Salary. We pay our Named Executive Officers base salaries to compensate them for services rendered each year. Base salary is a regular, fixed-cash payment, the amount of which is based on position, experience, and performance after consideringfrom the following primary factors—internal review of the executive's compensation, relative to both U.S. national market targets and other executives' salaries, and the Compensation Committee's assessment of the executive's individual prior performance. Salary levels are typically considered annually as part of our performance review process but can be adjusted in connection with a promotion or other change in job responsibility. Merit-based increases to salaries of the Named Executive Officers are determined each Marchyear by the Compensation Committee after the Compensation Committee assesses performance by each executive during the preceding fiscal year.
Committee. The 20172019 salaries for the Named Executive OfficersNEOs were:
Executive | 2017 Salary | |||
---|---|---|---|---|
Douglas L. Becker | $ | 1,038,608 | ||
Eilif Serck-Hanssen | $ | 710,496 | (1) | |
Ricardo M. Berckemeyer | $ | 710,496 | (2) | |
Timothy Daniels | $ | 600,000 | ||
Robert W. Zentz | $ | 506,545 | ||
Enderson Guimarães | $ | 906,017 |
Executive | 2019 Base Salary | Increase (% of 2018 Base Salary) | |||
---|---|---|---|---|---|
Eilif Serck-Hanssen | $ | 850,000 | — | ||
Jean-Jacques Charhon | $ | 600,000 | — | ||
Timothy Grace | $ | 500,000 | — | ||
Victoria Silbey | $ | 532,650 | — | ||
Paula Singer(1) | $ | 459,000 | 2% | ||
Ricardo Berckemeyer(2) | $ | 800,000 | — | ||
José Roberto Loureiro(3) | $ | 470,215 | 3% |
Incentive Opportunity. In addition to receiving base salaries, the Named Executive Officers participate in the AIP each year. Messrs. Serck-Hanssen, Berckemeyer, Daniels and Guimarães also participated in LTIPs in 2017. However, as a result of the termination of his employment, Mr. Guimarães did not receive any 2017 payment under his LTIP. The Compensation Committee has identified several factors that it believes are critical to the success of our business and these factors, in various combinations, are incorporated into the Amended Plan, the AIP and the LTIPs:
TableAnnual Incentive Plan
Our annual incentive plan is intended to recognize measures of Contents
expenses relatedoverall company performance and profitability. Both individual and organizational targets are designed to our EiP initiative. For 2017, the Compensation Committee used an Adjusted Financing EBITDA targetbe challenging, but attainable.
The AIP Target Amount for purposes of the AIP, whicheach NEO is like Adjusted EBITDA but excludes non-cash compensation expenses, including expenses relating to long-term incentive plans, acquisition costs, support charges, and royalty/network fees and also excludes the impact of foreign currency exchange rates and certain extraordinary or non-recurring items, which the Compensation Committee believes are not indicative of ongoing results ("Adjusted Financing EBITDA"). The Compensation Committee believes that Adjusted Financing EBITDA is an important measure in evaluating management's success in positioning the Company for sustainable profitability, which is a primary goal of the Company.
Certain adjustments in measuring performance. In measuring financial performance for purposes of our incentive compensation programs, the Compensation Committee focuses on the fundamentals of the underlying businessindividual performance and adjustsis calculated using the following formula:
The organizational multiplier for items that are not indicative of ongoing results. For example, revenue and Adjusted Financing EBITDA measures are expressed in constant currencies (i.e., excluding the effects of foreign currency translation) because we believe that period-to-period changes in foreign exchange rates can cause our reported results to appear moreexecutives with corporate or less favorable than business fundamentals indicate. The Compensation Committee's approach to other types of adjustments is subject to pre-established guidelines, including materiality, and to provide clarity and consistency on how it views the business when evaluating performance. Charges/credits that may be excluded from Adjusted Financing EBITDA include: strategic items (such as restructurings, acquisitions and divestitures); regulatory items (changes in law, or tax or accounting rules); and external items (extraordinary, non-recurring events such as natural disasters).
Annual Cash Incentive Opportunity. Our AIP is an annual cash incentive program designed to create a link between executive compensation and performance of the participants and the Company during the current year. The AIP provides metrics for the calculation of annual incentive-based cash compensation after assessing the executive's performance against pre-determined quantitative and qualitative measures within the context of our overall performance. In the event of attainment of minimum performance goals under the AIP, the Compensation Committee may exercise negative discretion to adjust awards downwards from a potential maximum amount. Eighty percent of each Named Executive Officer's 2017 AIP award is determined based on corporate performance; twenty percentregional responsibility is based on individual performance. In evaluating individual performance, the Compensation Committee reviews the annual objectives setLaureate's overall business results. The organizational multiplier for eachexecutives with regional responsibility reflects an average of the Named Executive Officers at the start of the year (by the Compensation Committee for the CEOtheir regional results and by the CEO for all other Named Executive Officers) and uses its judgment to determine whether the objectives were achieved. Individual results for the year are rated by the Compensation Committee on a scale from 0% to 200%Laureate's overall business results.
based Organizational multipliers for 2019 were calculated using the four metrics presented in the table below:
Financial Metric | Weight | |||
---|---|---|---|---|
Adjusted Financing EBITDA | 30 | % | ||
Unlevered Free Cash Flow | 30 | % | ||
Revenues | 20 | % | ||
New Enrollment | 20 | % |
Of the metrics listed above, three focus on the recommendationfinancial sustainability of the CEO, except with respect to his ownorganization: Adjusted Financing EBITDA, Unlevered Free Cash Flow and Revenues; and one is an education-industry based metric: New Enrollment.
All organizational multipliers, the individual performance which is determined exclusivelymultipliers of each NEO and the overall annual incentive award for each NEO are typically reviewed and approved annually by the Compensation Committee.Committee at its March meeting.
Generally, our overall incentive awards are capped at 200% of target; however, the Compensation Committee has discretion to adjust such caps based on individual performance for the year. Considerations affecting evaluation of individual performance may include extraordinary economic or business conditions, the state of the business, deviations from forecasted business targets that are unrelated to the executive's performance and other external factors that, in the CEO's judgment (or the Compensation Committee's judgment in the case of the CEO's individual performance), may have affected our financial and operating results. The Compensation Committee also considers constructive strategic issues that have long-term consequences, such as positive student outcomes like job placement and on-time graduation, achieving the highest academic and operational standards and regulatory compliance. The Named Executive OfficersNEOs also are also rewarded for important strategic contributions, likesuch as building succession plan pipelines and high-performance cultures. In reviewing the compensation of the Named Executive Officers,NEOs, the Compensation Committee considers the executive's performance, the importance of histhe executive's position to us and the executive's future leadership potential.
The metrics used for the Annual Incentive Plan are defined as follows:
AIP award levels for the Named Executive Officers are dependent on the extent to which specified levels of business metrics and certain individual goals have been achieved. The goals specified in the AIP for each of the above-discussed metrics derive from management's annual business plan (the "annual plan") and management's plan for the next five fiscal years (the "long-range plan"), both of which are reviewed by the Board of Directors each December. The CEO and CHRO work with the Compensation Committee to set target metrics for the AIP based on our Board-approved annual plan and the financial goals contained therein, which the Directors believe should be attainable but only with considerable effort.
In March 2017, the Compensation Committee adopted the 2017 AIP. Weighting under the 2017 AIP consisted of: Adjusted Financing EBITDA, 40%; Revenues, 15%; Operating EBITDA Margin, 10%; New Enrollments, 15%; and Individual Performance, 20%. If at least 95% of the corporate and/or regional Adjusted Financing EBITDA target is not achieved for the year, the maximum AIP payment for Named Executive Officers is capped at 100% of target. If at least 80% of the corporatebelieves that Adjusted Financing EBITDA is not achievedan important measure in evaluating management's success in positioning the Company for the year, the AIP plan pool for the Company's executive officers,sustainable profitability, which includes the Named Executive Officers, is not funded. If at least 90%a primary goal of the corporate and/or regional Adjusted Financing EBITDA target is not achieved for the year, the Compensation Committee may elect not to pay any awards to any participant under the 2017 AIP.
In 2017, AIP target award opportunities ranged from 75% to 130% of the base salary of each Named Executive Officer, depending on the executive's level of responsibility and the effect the Compensation Committee perceived the Named Executive Officer to have on Company operations. The Compensation Committee took into consideration Compensation Peer Group competitiveness and compensation equity across various Company executive positions when setting the range of target 2017 AIP award opportunities for our Named Executive Officers. The Compensation Committee also gave each Named Executive Officer the opportunity to earn a 2017 AIP award above the target opportunity up to a maximum of 200% of his AIP target opportunity, if the Company achieved certain levels of performance and the Compensation Committee determined that the individual had achieved certain goals, as well.
In measuring financial performance for purposes of our incentive compensation programs, the Compensation Committee focuses on the fundamentals of the underlying business performance and adjusts for items that are not indicative of ongoing results. For example, Adjusted Financing EBITDA, unlevered free cash flow (for the corporate level metric) and revenue measures are expressed in constant currencies (i.e., excluding the effects of foreign currency translation) because we believe that period-to-period changes in foreign exchange rates can cause our reported results to appear more or less favorable than business fundamentals indicate. The Compensation Committee's approach to other types of adjustments is subject to pre-established guidelines, including materiality, and is designed to provide clarity and consistency as to how it views the business when evaluating performance. Charges and credits that may be excluded from Adjusted Financing EBITDA include strategic items (such as restructurings, acquisitions and divestitures) and regulatory items (such as changes in law or tax or accounting rules), and charges and credits that may be excluded from Adjusted Financing EBITDA and unlevered free cash flow include certain extraordinary and non-recurring items (such as natural disasters or social unrest).
AIP awards granted to our Named Executive Officers for 2017 performancepayments reflect the Compensation Committee's assessment of each Named Executive Officer'sNEO's individual performance and our overall performance when measured against the goals established by the Compensation Committee-established goalsCommittee for 20172019 of Adjusted Financing EBITDA, Revenues, Operating EBITDA Margin,unlevered free cash flow, revenues, new enrollments and individual objectives. The 20172019 AIP was designed so that a multiplier willwould be applied to the respective weight of each metric, which proportionally reducesreduced or increasesincreased the Named Executive Officer'sNEO's award depending onupon the extent to which the goal for each metric iswas missed or exceeded, as applicable, and as set forth in the table below for each Named Executive Officer.NEO. Except as described below, for performance percentages between the levels set forth in the table, the resulting payout percentage would be adjustedwas interpolated on a linear basis. Because the Compensation Committee's intent in designing the 20172019 AIP was for the Named Executive OfficersNEOs to stressfocus on improved corporate and regional profitability and internal controls, the 20172019 AIP provided that: (i) had we achieved 85%90% or less of the 20172019 corporate and/or regional Adjusted Financing EBITDA goal, as applicable, none of the Named Executive OfficersNEOs would have received any 20172019 AIP Award,award, (ii) the individual performance multiplier of 20% was capped at 200% achievement and (ii)may not exceed the organizational multiplier, and (iii) had the Company achieved less than 95% of the 2017 corporate and/a deficiency or regional Adjusted Financing EBITDA goal, as applicable, none of the Named Executive Officers wouldmaterial weakness in internal controls under an NEO's responsibility been identified, such NEO's AIP award could have received more than his target award opportunity, regardless of whether the goal for any of the other metrics had been exceeded.reduced. Additionally, the 20172019 AIP provided that if the Company achieved 85% or less of the established goal for new enrollments, 90%95% or less of the established goal for revenues or if Operating EBITDA Margin was80% or less than or equal toof the applicable 2016 result,established
goals for unlevered free cash flow, then the portion of the Named Executive Officer'sNEO's AIP award dependent on that metric would behave been entirely deducted from his or her total 20172019 AIP award opportunity.
Percent Payout | Performance Against Plan | Adjusted Financing EBITDA | Revenues | Operating EBITDA Margin | New Enrollments | Performance Against Plan | Adjusted Financing EBITDA | Unlevered Free Cash Flow | Revenues | New Enrollments | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Weight | 40% | 15% | 10% | 15% | 30% | 30% | 20% | 20% | ||||||||||||
200% | Percent of Target | 110% | 110% | 2016 result + 100 bps | 115% | Percent of Target | 110% | 120% | 105% | 115% | ||||||||||
100% | Value for 100% payout | Target | Target | 2016 result + 50 bps | Target | Value for 100% Payout | Target | Target | Target | Target | ||||||||||
0% | Percent of Target | 90% | 90% | 2016 Result | 85% | Percent of Target | 90% | 80% | 95% | 85% |
The following tables below contain the goal for each metric used in the 2017 AIP and the 2017 results used by the Compensation Committee to determine the AIP awards earned in respect of 20172019 performance by each of the Named Executive Officers,NEOs. For all NEOs, other than Messrs. DanielsMs. Singer and Guimarães. 2017Mr. Loureiro, 2019 AIP awards for all Named Executive Officers for whom performance waswere measured were based on corporate level performance results. For Ms. Singer, the 2019 AIP award was measured based 50% on corporate level performance results and 50% on the performance results of the business unit for which goalsshe had responsibility, Online and results are shownPartnerships. For Mr. Loureiro, a portion of his severance was paid in the table below.lieu of an AIP award. Of the four financial metrics used to determine 20172019 AIP awards, Adjusted Financing EBITDA wasand unlevered free cash flow were weighted the heaviest because of the Compensation Committee's focus on corporate and regional profitability.profitability and liquidity. While each of Operating EBITDA Margin, Revenues,revenues and new enrollment areis critical to our ability to grow over the long term, the Compensation Committee believes that Adjusted Financing EBITDA isand unlevered free cash flow are the most important measuremeasures of sustainable corporate profitability.profitability and liquidity. In assessing performance under the AIP, the Compensation Committee has discretion to adjust certain financial metrics as set forth above in "—Certain adjustments in measuring performance". In assessing 20172019 performance under the AIP, the Compensation Committee took into account the impact of certain notable items, including expenses relatingthose related to changes in accounting standards and the 2017 corporate debt refinancing, impactstiming of the 2017 earthquake in Mexico, and costs and expenses relating to certain real estate dispositions that the Compensation Committee determined were not indicative of the ongoing operational results of our business. These adjustments included disregarding the impact of certain non-recurring items that had the effect of increasing reported results, such as the sale by one of our subsidiaries of certain real property in Ecuador.2019 divestitures.
CORPORATE 2019 AIP PERFORMANCE TARGETS
As a result of the termination of their employment neither Mr. Daniels nor Mr. Guimarães received a payment under the 2017 AIP. However, under the terms and conditions of their respective Separation Agreements, a portion of each of their respective separation payments included an amount
Performance Metric | Target | Weighted Target as % of Award | Weighted Target as % of Corporate Component | 2019 Actual Performance | 2019 Actual Payout % | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Organizational multiplier metrics | ||||||||||||||||
Adjusted Financing EBITDA* | $ | 633.8 | 24 | % | 30 | % | $ | 664.6 | 45 | % | ||||||
Unlevered Free Cash Flow* | $ | 287.9 | 24 | % | 30 | % | $ | 384.1 | 60 | % | ||||||
Revenues* | $ | 3,256.3 | 16 | % | 20 | % | $ | 3,254.8 | 20 | % | ||||||
New Enrollments | 456,653 | 16 | % | 20 | % | 487,491 | 29 | % | ||||||||
| | | | | | | | | | | | | | | | |
80 | % | 100 | % | 153.63 | % |
equal to their target award under the 2017 AIP. As a result, for Mr. Daniels an amount equal to his target 2017 AIP award of $600,000 was included in his separation payment and for Mr. Guimarães an amount equal to his target 2017 AIP award of $1,177,821 was included in his separation payment. For Messrs. Daniels and Guimarães we report these amounts in the All Other Compensation Column of the Summary Compensation Table.
Corporate 2017ONLINE AND PARTNERSHIPS 2019 AIP PERFORMANCE TARGETS
Performance Metric | Target | Weighted Target as % of Award | Weighted Target as % of Corporate Component | 2017 Results | 2017 Results as a % of Corporate Goal | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Adjusted Financing EBITDA(1) | $ | 775.9 | 40 | % | 50 | % | $ | 788.2 | 57.9 | % | ||||||
Revenue(1) | $ | 4,165.0 | 15 | % | 18.8 | % | $ | 4,123.4 | 16.9 | % | ||||||
Operating EBITDA Margin | 19.3 | % | 10 | % | 12.5 | % | 19.9 | % | 25.0 | % | ||||||
New Enrollments | 532,723 | 15 | % | 18.8 | % | 519,075 | 15.6 | % | ||||||||
Individual Performance | 20 | % | ||||||||||||||
| | | | | | | | | | | | | | | | |
100 | % | 100 | % | 115.4 | % |
Performance Metric | Target | Weighted Target as % of Award | Weighted Target as % of Corporate Component | 2019 Actual Performance | 2019 Actual Payout % | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Organizational multiplier metrics | ||||||||||||||||
Adjusted Financing EBITDA* | $ | 192 | 24 | % | 30 | % | $ | 193 | 32 | % | ||||||
Unlevered Free Cash Flow* | $ | 193 | 24 | % | 30 | % | $ | 201 | 36 | % | ||||||
Revenues* | $ | 659 | 16 | % | 20 | % | $ | 636 | 13 | % | ||||||
New Enrollments | 34,759 | 16 | % | 20 | % | 31,406 | 7 | % | ||||||||
| | | | | | | | | | | | | | | | |
80 | % | 100 | % | 87.97 | % |
In determining the AIP awards, the Compensation Committee considered 2019 results with respect to each performance metric and 2019 results as a percentages of the applicable corporate goal—in particular, that the Company (i) exceeded the targets for Adjusted Financing EBITDA and new enrollments, (ii) slightly missed the target for revenues and (iii) significantly exceeded the target for unlevered free cash flow. The table below provides information relating to the 20172019 AIP target for each of the Named Executive Officers,NEOs (other than for Mr. Loureiro, who received a portion of his severance payment in lieu of bonus), both in dollar amounts and as a percentage of year-end base salary.
Executive | Bonus Salary Amount ($) | AIP Target Award as % of 2019 Year-End Salary | Target 2019 AIP Award ($) | Approved Individual Performance Multiplier | Actual Award $ | Actual Award as a % of Target Award | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Eilif Serck-Hanssen | 850,000 | 130 | % | 1,105,000 | 150 | % | 1,689,589 | 152.90 | % | ||||||||||
Jean-Jacques Charhon | 600,000 | 100 | % | 600,000 | 150 | % | 917,424 | 152.90 | % | ||||||||||
Timothy Grace | 500,000 | 80 | % | 400,000 | 150 | % | 611,616 | 152.90 | % | ||||||||||
Victoria Silbey | 532,650 | 100 | % | 532,650 | 150 | % | 814,443 | 152.90 | % | ||||||||||
Paula Singer(1) | 459,000 | 100 | % | 459,000 | 125 | % | 558,328 | 121.64 | % | ||||||||||
Ricardo Berckemeyer(2) | 800,000 | 130 | % | 1,040,000 | 100 | % | 866,901 | — |
In recent years, we have used cash long-term incentive plans ("LTIPs") as part of his original 2017 objectives. In making this assessment, the Compensation Committee applied a 100% individual multiplier to Mr. Berckemeyer's 2017 performance. Had the Compensation Committee applied his 2017 salary and target award, it also wouldour overall compensation for our senior executive team. These LTIPs have applied a higher individual multiplier. The table below reflects these adjustments for Mr. Berckemeyer.
Executive | Bonus Salary Amount ($) | AIP Target Award as % of 2017 Year-End Salary | Target 2017 AIP Award ($) | Approved Individual Multiplier | Actual Award $ | Actual Award as a % of Target Award | |||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas L. Becker | 1,038,608 | 120 | % | 1,246,330 | 100 | % | 1,399,479 | 112.3 | % | ||||||||||
Eilif Serck-Hanssen | 710,496 | 120 | % | 852,595 | 150 | % | 1,042,621 | 122.3 | % | ||||||||||
Ricardo M. Berckemeyer | 800,000 | 130 | % | 1,040,000 | 100 | % | 1,167,795 | 112.3 | % | ||||||||||
Timothy Daniels | 600,000 | 100 | % | 600,000 | — | — | — | ||||||||||||
Robert W. Zentz | 506,544 | 75 | % | 379,908 | 100 | % | 426,591 | 112.3 | % | ||||||||||
Enderson Guimarães | 906,017 | 130 | % | 1,177,821 | — | — | — |
Long-Term Cash Incentive Opportunity. Messrs. Serck-Hanssen, Berckemeyer and Daniels each participated in a LTIP in 2017. The LTIPs arebeen multi-year cash incentive plans designed to motivate and reward participants for the achievement of performance goals over a multi-yearan extended period by offering them the opportunity to receive cash payments based on the achievement of suchthose goals. The multi-year performance period iswas designed to provide an additional incentive for the Named Executive OfficersNEOs to remain with Laureate through the performance period and beyond. The LTIP awards are conditioned
have been conditioned on the achievement of Company financial performance goals and are earned over separate one-year periods subject to continued employment through the payment date. Messrs. Serck-Hanssen and Berckemeyer received paymentsStarting in early 2017 attributable to 2016 performance under their previous LTIPs, which amounts are reported in the Non-Equity Incentive Plan column of the Summary Compensation Table for 2016. No amounts have yet been paid to Messrs. Serck-Hanssen or Berckemeyer under their LTIPs approved in May 2017. The amounts paid to Mr. Daniels with respect to 2017 appear in the Non-Equity Incentive Plan column of the Summary Compensation Table and were paid to him pursuant to the Daniels Separation Agreement.
On May 23, 2017,2018, the Compensation Committee established new cash LTIP opportunitiesbegan phasing out the use of LTIPs and including a larger portion of long-term stock-based compensation for Messrs. Serck-Hanssenthe NEOs.
In accordance with the provisions of the Transitional Employment Agreement effective November 9, 2017 between the Company and Berckemeyer. Each of Mr. Serck-Hanssen and Mr. Berckemeyer isMs. Singer (the "Singer TEA"), Ms. Singer was eligible to earn a special long-term bonus (the "Singer Special LTB"), which permitted her to receive up to $1.0 million upon satisfactionan aggregate amount of 2017 performance criteria and up$500,000, of which $100,000 was eligible to an additional $2.0 millionbe earned upon satisfaction of 2018 performance criteria and $400,000 was eligible to be earned upon satisfaction of 2019 performance criteria. The LTIP awards are conditioned on the achievement of corporate Adjusted EBITDA performance goalscriteria was related to (i) Laureate Online revenue and may be earned over separate one-year periods subject to continued employment through the payment date. Any amounts payable under the LTIPs will be payable in early 2019 upon certification(ii) Laureate Online adjusted EBITDA. As determined by the Compensation Committee in March 2019 and 2020, the 2018 and 2019 performance goals, respectively, were not achieved, and thus Ms. Singer did not earn any amounts under the Singer Special LTB.
The Laureate Education, Inc. Amended and Restated 2013 Long-Term Incentive Plan (as amended and restated from time to time, the "2013 Plan") was established for the benefit of achievementofficers, employees and certain directors of the applicableCompany and its subsidiaries, as well as for others performing consulting or advisory services for the Company. The purpose of the 2013 Plan has been to provide incentives that will attract, retain and motivate high performing officers, employees, directors and consultants by providing them with appropriate incentives to maximize stockholder value and contribute to the long-term success of the Company. We have granted long-term equity awards under the 2013 Plan consistent with the view that stock-based incentive compensation opportunities play a key role in our being able to recruit, motivate and retain qualified individuals. While our compensation packages generally include a number of different components, we believe that equity compensation is key to linking pay to performance, goals. In March 2018,as it encourages employees to work toward our success and aligns their interests with those of our stockholders by providing them with a means by which they can benefit from increasing the Compensation Committee certified thatvalue of the applicable 2017 performance goals had been achieved and the firstCompany's stock.
Our stock-based compensation is intended to be a significant portion of the cash LTIP for each executive is banked and will be payable, subjectNEO compensation to continued employment through the payment date, in 2019.
Pursuant to the Daniels Separation Agreement we paid Mr. Daniels $267,910 for 2016 performance under Mr. Daniels's LTIP, which had been earned and accrued but not yet paid as of December 31, 2017 and $300,000 for 2017 performance under Mr. Daniels's LTIP. See "—Potential Payments Upon Termination or Change in Control—Daniels Separation Agreement" for more information.
Long-Term Equity Incentive Opportunity. The use of long-term equity incentives createscreate a link between executive compensation and Laureate'sour long-term performance, thereby creating alignment between executive and investorstockholder interests.
Equity awards for our Named Executive Officers under the Amended Plan were determined based on market competitiveness, criticality of position and individual performance (both historical and expected future performance). There is no set weight given to these factors. Performance awards for our Named Executive Officers under the 2013 Plan prior to 2016 can vest subject to an annual corporate Equity Value Target, while performance awards granted during 2016 and 2017 are subject to an Adjusted EBITDA target. Equity Value is generally defined as Adjusted EBITDA, minus noncontrolling interests equity value, multiplied by 10, minus net debt, all calculated on a foreign currency neutral basis. The Compensation Committee uses its discretion in determining appropriate equity award levels for the Named Executive Officers.
During 2016 the Compensation Committee began to evolve our equity grant practices commencing with the annual equity awards made in 2016 to employees other than the Named Executive Officers. During 2017 the Compensation Committee continued to refine our long-term incentive award program to make it more consistent with market practice, appropriately aligning pay with performance, and maximizing share usage under our Amended Plan.
The principal long-term equity incentive design features adopted in 2016 and 2017 included:
Stock Options: Historically, stock options have been, and we expect they will continue to be, a core element of long-term incentive opportunity for our Named Executive Officers. The Compensation Committee believes that the best way to align compensation of our Named Executive OfficersNEOs with long-term growth and profitability is to design long-term incentive compensation that is, to a great degree, dependent onupon Company performance. 2017 grants
In 2019, our annual grant program used a mix of time-based stock options granted to our Named Executive Officers (other than those granted to Mr. Becker in connection with his EPI, those granted to Messrs. Serck-Hanssen and Berckemeyer in September, and those granted to Mr. Zentz under the Zentz Separation Agreement)three types of equity incentives for NEO grants:
See "—Arrangements with Certain Named Executive Officers—Chairman and Chief Executive Officer Compensation" for more information concerning the EPI Options the Company granted to Mr. Becker.
Performance Share Units: The PSUs granted in 2017 vest in equal annual installments over a three-year period subject to satisfaction of an Adjusted Financing EBITDA target. PSUs granted prior to 2017 were eligible to vest subject to satisfaction of an annual Equity Value Target. See "—Outstanding Equity Awards" for information about the vesting terms of our outstanding PSUs.
In March 2018, the Compensation Committee determined, based on the Company's audited consolidated financial statements for 2017, that the applicable 2017 performance goals had been achieved, and the PSUs subject to those performance goals had vested and were settled in shares of common stock in March 2018. PSUs are affected by all changes in the fair market value of our common stock and, therefore, the value to the Named Executive Officers is affected by both increases and decreases in the fair market value. Except as provided in an individual agreement, alltarget was $883,611,000. All unvested PSUs are forfeitable upon termination of employment prior to vesting. PSUs do not provide voting or dividend rights until the units are vested and settled in shares of our Class A common stock.
Except as provided in an individual agreement, alldate. All unvested RSUs are forfeitable upon termination of employment prior to vesting. RSUs do not provide voting or dividend rights until the units are vested and settled in shares of our Class A common stock.
We believe that the use of both performance-based and time-based awards creates a strong focus on executive motivation, performance and retention. For additional information on all 2019 and outstanding equity grants to the NEOs, see the "Grants of Plan-Based Awards" table and the "Outstanding Equity Awards at Fiscal Year-End" table under "Executive Compensation Tables."
In July 2019, the Compensation Committee approved an additional equity award for Mr. Charhon, with a grant date of August 1, 2019, that was designed to further incentivize Mr. Charhon's future performance, encourage retention of his services and align his interests with those of the Company's stockholders. The terms of this additional award, which included PSUs, RSUs and options, were the same as the terms of his 2019 annual grant.
Our NEOs also may receive inducement grants at the time of hire or grants for recognition and retention, promotions or other purposes. The equity award value, vesting requirements and type of award for these ad hoc grants may vary depending on the purpose of the grant. Except for the additional grant awarded to Mr. Charhon, as described above, no NEO received any such grant in 2019.
In March 2020, the Compensation Committee determined, based on the Company's 2019 audited consolidated financial statements, that the applicable 2019 performance goals based on Adjusted EBITDA had been achieved for those PSUs that were granted on an annual basis to certain executives, including the NEOs (the "Annual PSUs"). Accordingly, the 2019 tranche of the Annual PSUs vested and were settled in shares of our Class A common stock in March 2020.
Messrs. Charhon and Grace and Ms. Silbey received retention grants of performance-based options and PSUs (collectively, the "Retention Grants") in order to increase their performance incentives to the same level as other executive officers. The Retention Grants vested one third based on Adjusted EBITDA targets for 2018 and two thirds based on Adjusted EBITDA targets for 2019. The Adjusted EBITDA targets in the Annual PSUs and in the Retention Grants are based on different targets, with certain items, such as certain strategic corporate initiatives, taken into account in the targets for the Retention Grants. In March 2019 and March 2020, the Compensation Committee determined that the performance goals for 2018 and 2019, respectively, in the Retention Grants had not been achieved. Accordingly, all of the Retention Grants were forfeited.
Deferred Compensation. The Post-2004 DCP We also maintain a deferred compensation plan (the "Post-2004 DCP"), which is intended to promote executive retention by providing a long-term savings opportunity on a tax-efficient basis to approximately 82 eligible Company employees for the 2017 plan year, including certain of the Named Executive Officers. The Post-2004 DCP allows participants to defer up to 85% of their base salaries and 100% of any AIP awards, with investment results based on investment decisions and market results and payout following termination of employment or another selected payout schedule. Payouts of Post-2004 DCP balances are made in a lump sum or in installments, at the election of the participants. Each year, we have the ability, but not the obligation, to make matching employer contributions to each participant's Post-2004 DCP account if the participant made salary reduction contributions to the 401(k) Retirement Savings Plan, received less than the full match under the 401(k) Retirement Savings Plan on the salary reduction contribution because of the limit in Section 401(a)(17) of the Code on compensation and made at least a $5,000 minimum contribution to his or her 401(k) Retirement Savings Plan account. To date, we have not made any matching contributions to any participant Post-2004 DCP account, nor have we chosen to make any other discretionary employer contributions permitted to be made to participants pursuant to the Post-2004 DCP.basis. See "—2017Executive Compensation Tables—2019 Nonqualified Deferred Compensation" below for information relating to the 2017 Post-2004 DCP accounts of certain of our Named Executive Officers. All amounts deferred under the Post-2004 DCP are unfunded and unsecured obligations of Laureate, receive no preferential creditors' standing and are subject to the same risks as any of our other general obligations.additional information.
Benefits
Benefits. We provide various employee benefit programs to our Named Executive Officers,NEOs, including medical, dental, life/accidental death and dismemberment, and disability insurance benefits, and our 401(k) Retirement Savings Plan. These benefit programs are generally available to all of our U.S.-based full-time employees. Named Executive OfficersOur NEOs were also provided with individual supplemental executive long-term disability coverage in 2017 and2019. Through the Company's Group Pinnacle Care plan, which is offered to all U.S.-based full-time employees, our NEOs may participate in the Pinnacle Care Health Consulting Service, a medical concierge service that provides advice and other assistance with health care decisions and gives them access to medical services around the world. In connection with their separation from employment, we agreed to provide Mr. Guimarães and Mr. Daniels with relocation benefits. These benefits are provided to the Named Executive OfficersNEOs to eliminate potential distractions from performing their regular job duties. We believe that the cost of these programs is counterbalanced by an increase in productivity by the executives receiving access to
them. In connection with offers of employment, the Company may provide relocation benefits to executives, including the NEOs.
In March 2018, the Compensation Committee approved a general severance policy for all employees, including our NEOs, with a goal of providing consistent decisions regarding severance payment amounts and timing of payments upon termination of executive and non-executive employees. In July 2019, the Company established the Laureate Education, Inc. Severance Policy for Executives (the "Executive Severance Plan"), which forms part of the general severance policy. The Executive Severance Plan, which applies to all NEOs, provides severance benefits in connection with a "qualifying termination," which is defined to mean a termination of employment: (i) prior to a "change in control," by the Company other than for "cause;" and (ii) on or after a "change in control," by the Company other than for "cause" or by the executive officer for "good reason." For a detailed description of the Executive Severance Plan, see "—Executive Compensation Tables—Potential Payments upon Termination or Change in Control."
Messrs. Serck-Hanssen and Charhon and Ms. Silbey Offer Letters and Ms. Singer Transitional Employment Agreement.
At the time Mr. Serck-Hanssen was hired as our Executive Vice President and Chief Financial Officer in 2008, our other executive officers were parties to retention agreements entered into in connection with our 2007 leveraged buyout, which have since expired, that provided, among other things, for a lump-sum severance benefit in the event we terminated the executive's employment without cause. Because Mr. Serck-Hanssen was being hired as an executive officer at a time when these retention agreements were still in effect, the Compensation Committee thought it appropriate to authorize Mr. Serck-Hanssen's written offer of employment to include a provision entitling Mr. Serck-Hanssen to the same lump sum severance benefit in the event we terminate his employment without cause.
At the time each of Mr. Charhon and Ms. Silbey was hired, the Compensation Committee determined that it was appropriate to authorize a written offer of employment that included a provision entitling each to a severance benefit in the event of a termination of employment without cause and other than for disability.
Following certain announcements by the Company in 2017 regarding its decision to divest assets in certain markets, the Compensation Committee determined it was appropriate for the Company to enter into the Singer TEA, which included a provision entitling Ms. Singer to a severance benefit in the event that we terminate her employment without cause prior to December 31, 2019.
See "—Executive Compensation Tables—Potential Payments upon Termination or Change in Control" for a discussion of the severance benefits available to our NEOs.
Policies and Other Considerations
We recognize the importance of utilizing quantifiable standards to ensure that our executives' personal financial interests are in close alignment with those of our stockholders. To that end, our Director & Executive Officer Stock Ownership and Retention Guidelines (the "Stock Ownership Guidelines") require executives, including our NEO's, to have stock ownership levels as follows: five times annual base salary for our CEO and three times annual base salary for all other executives.
The following are considered when determining if an executive has met these guidelines:
The following are not considered:
Until such guidelines are met and as each award is exercised, vested or earned, the CEO is expected to retain 75% of net profit shares and other NEOs are expected to retain 50% of net profit shares for other NEOs.
Laureate prohibits employees, executive officers and directors from engaging in any form of hedging transaction or holding Laureate securities in margin accounts, or pledging Laureate securities as collateral for loans.
Management, the Compensation Committee and the Compensation Committee's independent compensation consultant have reviewed and considered our compensation plans and practices for all of our employees and do not believe that our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the Company. We utilize many design features that mitigate the possibility of encouraging excessive risk-taking behavior. Among these design features are the following:
In October 2013,Under the Compensation Committee adopted anCompany's Executive Incentive Compensation Recoupment Policy, also known as a "clawback." Under these clawback provisions,"clawback" policy, executives thatwho violate confidentiality, non-competition, and non-solicitation agreements forfeit any outstanding awards under the 2013 Plan or the Amended Plan and must return any gains realized from awards prior to the violation. These provisions serve to protect our intellectual property and human capital and help ensure that executives act in the best interests of Laureate and its investors. We plan to revise the Executive Incentive Compensation Recoupment Policy to be consistent with the final rules implementing the requirements of the Dodd-Frank Act.
As part of its role, the Compensation Committee considers the tax and accounting impacts reflected in our financial statements when establishing our compensation plans. The forms of compensation it selects are intended to be cost-efficient.cost efficient. Under GAAP, the cash AIP awards, LTIP awards, and performance-based equity awards result in "accrual" accounting, which means that the estimated payout of the award, along with any changes in that estimate, are recognized over the performance period. Our ultimate expense will equal the value earned by and paid to the executives. Therefore, the ultimate expense is not determinable until the end of the performance period.
Additionally, the Compensation Committee considers whether the forms of compensation it selects are tax deductible compensation consistent with our philosophies of aligning pay with performance and the interests of our Named Executive OfficersNEOs with those of our investors.
The following table summarizesOn January 27, 2020, we announced that our Board of Directors had authorized the total compensation earned in 2015, 2016 and 2017 by Messrs. Becker, Serck-Hanssen, Berckemeyer, and Guimarães, and in 2017 byCompany to explore strategic alternatives for each of its businesses to unlock stockholder value (the "Strategic Alternative Process"). As part of this process, we will evaluate all potential options for our businesses, including sales, spin-offs or business combinations. There can be no assurance as to the other Named Executive Officers. Messrs. Daniels and Zentz were not Named Executive Officersoutcome of this process, including whether it will result in 2015the completion of any transaction, the values that may be realized from any potential transaction or 2016.how long the review process will take.
WeAlso, in January 2020, the Compensation Committee recommended and our Board of Directors approved certain changes to the Company's compensation programs in connection with the Strategic Alternative Process, which changes were finalized by the Compensation Committee in February 2020.
In connection with these changes, the NEOs are eligible to receive a pro-rata annual bonus (based on target) for the year of a qualifying termination of employment on or following a change in control under the Executive Severance Plan. In addition, if an NEO is terminated without "cause" or resigns with "good reason" either prior to the completion of the Strategic Alternative Process or within 12 months following the end of the Strategic Alternative Process, the NEO will receive the same benefits (including the pro-rata target annual bonus referred to in the prior sentence) the NEO would have omitted from this tablereceived upon a qualifying termination of employment on or following a change in control under the columns for ChangeExecutive Severance Policy.
In addition, if a participant under the 2013 Plan, including an NEO, is terminated without "cause" or resigns with "good reason" either prior to the completion of the Strategic Alternative Process or within 12 months following the end of the Strategic Alternative Process, then all outstanding equity awards then held by the participant under the 2013 Plan will receive the same treatment as such equity awards would have received upon a qualifying termination on or following a change in Pension Value and Nonqualified Deferred Compensation Earnings because no Named Executive Officer received such typescontrol (i.e., full accelerated vesting of compensation during 2017, 2016 or 2015.unvested equity awards).
Finally, in connection with these changes, a cash retention bonus program in which the NEOs are eligible to participate was implemented, except in the case of Ms. Singer, who is instead eligible for the Singer Retention/Transaction Bonus, defined below. The retention bonus under the program is payable on the earlier of a change in control or the date on which our Board of Directors determines that the Strategic Alternative Process is complete, and the amount of the retention bonus will be determined based on the NEO's current base salary, the length of the Strategic Alternative Process and the total value to stockholders. Under this program, if an NEO is terminated without "cause" or resigns with "good reason" before the end of the Strategic Alternative Process, then the NEO would be eligible to receive a lump-sum pro-rata award. Additional information regarding these changes can be found on our Current Reports on Form 8-K filed onJanuary 31, 2020 andFebruary 28, 2020.
Ms. Singer is eligible for the payment of a special bonus upon the earlier of July 31, 2021 and the date of the closing of a transaction that results in the Company having sold all or substantially all of its interest in or assets of the Company's Online and Partnerships segment (such bonus, the "Singer Retention/Transaction Bonus"). If such a transaction occurs prior to July 31, 2021, Ms. Singer will receive a bonus equal to 75% of her 2019 base salary (the "Singer Bonus Amount"). If such a transaction does not occur prior to July 31, 2021, Ms. Singer will receive a bonus equal to 50% of the Singer Bonus Amount. Ms. Singer's entitlement to the Singer Retention/Transaction Bonus is contingent upon her continued employment through the date of such a transaction or July 31, 2021, as applicable.
The changes discussed in the paragraphs above (i) were implemented for the NEOs through individual letter agreements that the Company entered into with the NEOs in March 2020 and (ii) do not apply to Messrs. Berckemeyer and Loureiro as formerly employed NEOs.
On March 10, 2020, in connection with the Strategic Alternative Process, our Board of Directors evaluated the designations of its current executive officers (as that term is defined under Rule 3b-7 of the Securities Exchange Act of 1934) and determined that Ms. Singer would no longer be designated as an executive officer.
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Compensation Committee recommended to our Board of Directors that the Compensation Discussion and Analysis be included in this Proxy Statement for filing with the SEC and incorporated by reference into the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2019.
COMPENSATION COMMITTEE
Brian F. Carroll
Andrew B. Cohen
William L. Cornog
Pedro del Corro
Kenneth W. Freeman
George Muñoz
The following table sets forth information regarding the compensation of our NEOs for 2019, 2018 and 2017.
SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary ($) | Bonus ($) | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation ($)(14) | All Other Compensation ($)(15) | Total ($) | |||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas L. Becker | 2017 | 1,115,104 | 20,375,498 | (9)(10) | 1,399,479 | 45,372 | (16) | 22,935,453 | |||||||||||||||||
Founder, Chairman & CEO(1) | 2016 | 1,014,916 | 4,071,544 | 1,291,784 | 43,815 | (16) | 6,422,059 | ||||||||||||||||||
2015 | 994,220 | 1,420,461 | 45,477 | (16) | 2,460,158 | ||||||||||||||||||||
Eilif Serck-Hanssen | 2017 | 686,716 | 1,677,188 | (8) | 2,424,458 | (9)(11) | 1,042,621 | 11,709 | (17) | 5,842,692 | |||||||||||||||
President, Chief Administrative | 2016 | 592,034 | 706,640 | 672,613 | 1,134,734 | 11,559 | (17) | 3,117,580 | |||||||||||||||||
Officer and Chief Financial | 2015 | 579,962 | 524,989 | 1,161,174 | 12,272 | (17) | 2,278,397 | ||||||||||||||||||
Officer(2) | |||||||||||||||||||||||||
Ricardo M. Berckemeyer | 2017 | 708,174 | 1,677,188 | (8) | 2,984,664 | (9)(12) | 1,167,795 | 43,604 | (18) | 6,581,425 | |||||||||||||||
Chief Operating Officer and CEO, | 2016 | 694,288 | 706,640 | 676,500 | 2,055,211 | 40,903 | (18) | 4,173,542 | |||||||||||||||||
LatAm(3) | 2015 | 680,130 | 2,117,978 | 50,012 | (18) | 2,848,120 | |||||||||||||||||||
Timothy Daniels | 2017 | 623,077 | (7) | 288,461 | (9) | — | 2,648,950 | (19) | 3,560,488 | ||||||||||||||||
Chief Executive Officer, EMEAA(4) | |||||||||||||||||||||||||
Robert W. Zentz | 2017 | 543,853 | (7) | 340,375 | (8) | 1,946,624 | (9)(13) | 426,591 | 1,028,627 | (20) | 4,286,071 | ||||||||||||||
Senior Vice President, Secretary & General Counsel(5) | |||||||||||||||||||||||||
Enderson Guimarães | 2017 | 731,807 | (7) | 1,326,711 | (9) | — | 2,287,980 | (21) | 4,346,498 | ||||||||||||||||
President & Chief Operating | 2016 | 905,014 | 746,890 | 2,245,192 | 12,093 | 3,909,189 | |||||||||||||||||||
Officer(6) | 2015 | 300,000 | 1,800,000 | 5,054,170 | 11,284,109 | 963,718 | 98,427 | 19,500,424 |
Name and Principal Position | Year | Salary ($) | Stock Awards(1) | Option Awards(1) | Non-Equity Incentive Plan Compensation ($)(2) | All Other Compensation ($)(3) | Total ($) | |||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Eilif Serck-Hanssen | 2019 | 850,000 | 1,862,500 | 621,075 | 1,689,589 | 12,009 | 5,035,173 | |||||||||||||||
President and Chief Executive | 2018 | 850,000 | 1,960,215 | 653,608 | 1,671,349 | 11,859 | 5,147,031 | |||||||||||||||
Officer | 2017 | 686,716 | 1,677,188 | 2,424,458 | 2,042,621 | 11,709 | 6,842,692 | |||||||||||||||
Jean-Jacques Charhon | 2019 | 600,000 | 1,107,358 | 369,203 | 917,424 | 8,400 | 3,002,385 | |||||||||||||||
Executive Vice President and | 2018 | 600,000 | 461,220 | 753,790 | 387,312 | 62,950 | 2,265,272 | |||||||||||||||
Chief Financial Officer | ||||||||||||||||||||||
Timothy Grace | 2019 | 500,000 | 292,159 | 97,423 | 611,616 | 8,400 | 1,509,598 | |||||||||||||||
Chief Human Resources Officer | 2018 | 297,436 | 321,730 | 107,220 | 520,416 | 423,133 | 1,669,935 | |||||||||||||||
Victoria Silbey | 2019 | 532,650 | 389,039 | 129,730 | 814,443 | 8,400 | 1,874,262 | |||||||||||||||
Senior Vice President, Secretary, | ||||||||||||||||||||||
Chief Legal Officer and Chief | ||||||||||||||||||||||
Ethics and Compliance Officer | ||||||||||||||||||||||
Paula Singer | 2019 | 457,500 | 328,679 | 109,602 | 558,328 | 8,400 | 1,462,509 | |||||||||||||||
Chief Executive Officer, Walden | ||||||||||||||||||||||
and Laureate Online Partners | ||||||||||||||||||||||
Ricardo Berckemeyer(4) | 2019 | 448,717 | 1,460,781 | 1,462,465 | (5) | 866,901 | 932,035 | 5,170,899 | ||||||||||||||
Former President and | 2018 | 800,000 | 1,537,426 | 512,630 | 1,373,882 | 38,334 | 4,262,273 | |||||||||||||||
Chief Operating Officer | 2017 | 708,174 | 1,677,188 | 2,984,664 | 2,167,795 | 43,604 | 7,581,425 | |||||||||||||||
José Roberto Loureiro(6) | 2019 | 380,747 | 304,198 | 101,440 | — | 1,081,252 | 1,867,637 | |||||||||||||||
Former Chief Executive | 2018 | 511,226 | 361,460 | 120,523 | 626,954 | 42,300 | 1,662,463 | |||||||||||||||
Officer, Brazil |
For 2018, includes $116,287 earned under Mr. Loureiro's LTIP based on a foreign currency exchange rate of Brazil Real to the calculationUnited States Dollar of such value.
For each of 2016Messrs. Serck-Hanssen, Charhon and 2015Grace and Mses. Silbey and Singer, includes $8,400 contributed by us pursuant to our 401(k) matching program.
For Mr. Guimarães only, the 2015 and 2017 401(k) match was $0.
For 2015,Mr. Berckemeyer, includes $3,609separation payments made pursuant to the Berckemeyer Separation Agreement as follows: $843,333 for the portion of severance paid in 2019, $12,924 for the portion of health insurance coverage paid in 2019, $25,000 for outplacement services and $17,757 for unused accrued vacation. Also includes $30,702 for family transportation and $2,319 for executive supplemental disability plan premiums. See "—Potential Payments upon Termination or Change in Control—Separation Agreement for Mr. Berckemeyer" for additional information.
For Mr. Loureiro, includes separation payments made pursuant to the Loureiro Separation Agreement as follows: $507,148 for statutory severance, $162,402 for the portion of voluntary severance paid in 2019, $259,895 for his pro rata 2019 AIP bonus, $108,399 for unused accrued vacation and $12,170 for the portion of health and life insurance benefits paid in 2019. The separation payments (other than for voluntary severance) are based on a foreign currency exchange rate of Brazil Real to United States Dollar as of end of the month for August 2019 of 0.2407. See "—Potential Payments upon Termination or Change in Control—Separation Agreement for Mr. Loureiro" for additional information. Also includes $19,726 for health insurance coverage, $6,826 for executive supplemental disability plan premiums, paid by us$3,496 for car allowance and $713 in distributionsexpenses and transportation, and $1,190 for food expenses.
Eilif Serck-Hanssen Offer Letter. At the time Mr. Serck-Hanssen was hired as our Executive Vice President and Chief Financial Officer in July 2008, our other executive officers were parties to retention agreements entered into in connection with the leveraged buyout, which have since expired, that provided, among other things, for a lump sum severance benefit in the event we terminated the executive's employment without cause. Because Mr. Serck-Hanssen was being hired as an executive officer at a time when these retention agreements were still in effect, the Compensation Committee thought it appropriate to authorize Mr. Serck-Hanssen's written offer of employment to include a provision entitling Mr. Serck-Hanssen to the same lump sum severance benefit in the event we terminate his employment without cause. See "—Potential Payouts Upon Termination or Change in Control—Involuntary Termination Without Cause" for a discussion of the severance benefits available to Mr. Serck-Hanssen.
The table below sets forth information regarding grants of plan-based awards to our Named Executive Officers in 2017. The grants include award opportunities for our Named Executive Officers under our AIP for performance during 2017, equity awards made in June to Messrs. Serck-Hanssen, Berckemeyer, and Zentz,Represents the incremental fair value of $975,349 on the modificationJuly 15, 2019, Mr. Berckemeyer's termination date, of June 19, 2017 of repricing certain stock options granted under the 2013 Plan, and the accounting charge we recognized in connection with the extension of post-termination exercise periods for vested stock options held by Messrs. Becker and Zentz from 90 days to the earlier of: (a) the expiration date of the stock option; or (b) December 31, 2022, in connection with deemed Retirement. See "—Compensation Discussion and Analysis—Elements of Laureate's Compensation Program—Incentive Opportunity" and "—Shareholder Approved 2017 Stock Option Repricing/Retention Equity Grant" above for further discussion of these grants. For Mr. Becker, this table also includes the EPI Options that were granted to him on January 31, 2017 in connection with our initial public offering in connection with the liquidation of his Executive Profits Interests in Wengen. See "—Executive Profits Interests" above.
| | | | | | | | | | | | Grant Date Fair Value of Stock and Option Awards ($) | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | All Other Option Awards: Number of Securities Underlying Options (#) | | |||||||||||||||||||||||||
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#) | Exercise or Base Price of Option Awards ($/share) | ||||||||||||||||||||||||||||||
Name | Grant Date | Award Type | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||
Douglas L. Becker | 3/7/17 | AIP(1) | 1 | 1,246,330 | 2,492,659 | |||||||||||||||||||||||||||||||
10/2/13 | Options(2) | 802,212 | 17.44 | 1,203,317 | ||||||||||||||||||||||||||||||||
10/2/13 | Options(3) | 802,212 | 17.44 | 4,356,006 | ||||||||||||||||||||||||||||||||
10/25/16 | Options(2) | 162,267 | 17.44 | 215,815 | ||||||||||||||||||||||||||||||||
1/31/17 | EPI Options | 1,386,549 | 17.00 | 7,889,464 | ||||||||||||||||||||||||||||||||
1/31/17 | EPI Options | 1,386,549 | 21.32 | 6,710,897 | ||||||||||||||||||||||||||||||||
Eilif Serck-Hanssen | 3/7/17 | AIP(1) | 1 | 852,595 | 1,705,190 | |||||||||||||||||||||||||||||||
5/24/17 | Cash LTIP(7) | 1,000,000 | 2,000,000 | 3,000,000 | ||||||||||||||||||||||||||||||||
10/2/13 | Options(2) | 254,776 | 17.44 | 382,164 | ||||||||||||||||||||||||||||||||
6/14/17 | Options(4) | 57,937 | 17.89 | 542,290 | ||||||||||||||||||||||||||||||||
6/14/17 | RSUs(5) | 31,250 | 559,063 | |||||||||||||||||||||||||||||||||
6/14/17 | PSUs(6) | 62,500 | 1,118,125 | |||||||||||||||||||||||||||||||||
9/13/17 | Options(8) | 145,773 | 18.36 | 776,970 | ||||||||||||||||||||||||||||||||
9/13/17 | Options(9) | 145,773 | 21.00 | 723,034 | ||||||||||||||||||||||||||||||||
Ricardo M. Berckemeyer | 3/7/17 | AIP(1) | 1 | 852,595 | 1,705,190 | |||||||||||||||||||||||||||||||
5/24/17 | Cash LTIP(7) | 1,000,000 | 2,000,000 | 3,000,000 | ||||||||||||||||||||||||||||||||
10/2/13 | Options(2) | 256,249 | 17.44 | 384,374 | ||||||||||||||||||||||||||||||||
6/14/17 | Options(4) | 57,937 | 17.89 | 542,290 | ||||||||||||||||||||||||||||||||
6/14/17 | RSUs(5) | 31,250 | 559,063 | |||||||||||||||||||||||||||||||||
6/14/17 | PSUs(6) | 62,500 | 1,118,125 | |||||||||||||||||||||||||||||||||
9/13/17 | Options(8) | 200,000 | 18.36 | 1,066,000 | ||||||||||||||||||||||||||||||||
9/13/17 | Options(9) | 200,000 | 21.00 | 992,000 | ||||||||||||||||||||||||||||||||
Timothy Daniels | 3/7/17 | AIP(1) | 1 | 600,000 | 1,200,000 | |||||||||||||||||||||||||||||||
7/11/17 | Bonus(10) | 1 | 250,000 | 250,000 | ||||||||||||||||||||||||||||||||
10/2/13 | Options(2) | 192,307 | 17.44 | 288,461 | ||||||||||||||||||||||||||||||||
Robert W. Zentz | 3/7/17 | AIP(1) | 1 | 379,909 | 759,817 | |||||||||||||||||||||||||||||||
10/2/13 | Options(2) | 113,919 | 17.44 | 170,879 | ||||||||||||||||||||||||||||||||
10/2/13 | Options(3) | 113,919 | 17.44 | 587,822 | ||||||||||||||||||||||||||||||||
7/10/14 | Options(2) | 18,586 | 17.44 | 26,950 | ||||||||||||||||||||||||||||||||
7/10/14 | Options(3) | 14,868 | 17.44 | 76,719 | ||||||||||||||||||||||||||||||||
3/4/15 | Options(2) | 18,688 | 17.44 | 25,789 | ||||||||||||||||||||||||||||||||
3/4/15 | Options(3) | 11,211 | 17.44 | 57,849 | ||||||||||||||||||||||||||||||||
5/2/16 | Options(2) | 8,016 | 17.44 | 10,741 | ||||||||||||||||||||||||||||||||
5/2/16 | Options(3) | 5,342 | 17.44 | 27,565 | ||||||||||||||||||||||||||||||||
6/14/17 | Options(4) | 11,758 | 17.89 | 110,055 | ||||||||||||||||||||||||||||||||
6/14/17 | Options(3) | 3,918 | 17.89 | 20,256 | ||||||||||||||||||||||||||||||||
6/14/17 | RSUs(5) | 6,342 | 113,458 | |||||||||||||||||||||||||||||||||
6/14/17 | PSUs(6) | 12,684 | 12,684 | 226,917 | ||||||||||||||||||||||||||||||||
8/24/17 | Options(11) | 200,000 | 18.36 | 832,000 | ||||||||||||||||||||||||||||||||
Enderson Guimarães | 3/7/17 | AIP(1) | 1 | 1,177,821 | 2,355,643 | |||||||||||||||||||||||||||||||
9/17/15 | Options(2) | 982,749 | 17.44 | 1,326,711 |
Narrative to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment Arrangements. We have entered into offer letters or employment agreements with Messrs. Serck-Hanssen and Charhon and Mses. Silbey and Singer. See "—Potential Payments upon Termination or Change in Control" and "—Compensation Discussion and Analysis—Messrs. Serck-Hanssen and Charhon and Ms. Silbey Offer Letters and Ms. Singer Transitional Employment Agreement" for more information.
Annual Incentive Awards. In 2019, annual cash incentive awards were granted under the 2019 AIP. See "—Compensation Discussion and Analysis—Annual Incentive Plan" for more information regarding the 2019 AIP.
Long-Term Incentive Awards. In 2019, the Company granted annual long-term incentive awards to NEOs in the Options Awards columnform of the Summary Compensation Table.(4)Granted under the Amended Plan. These time-based vestingPSUs, RSUs and stock options, have a 10-year term and vest in equal annual installments beginning on December 31, 2017,as described below. Each award is subject to continued employment (with limited exceptions for termination of employment due to death, permanent disability and qualifying termination following a change of control). The exercise price is $17.89 per share.(5)Granted under the Amended Plan. These RSUs vest in three equal annual installments beginning on December 31, 2017, subject to continued employment (with limited exceptions for termination of employment due to death, permanent disability and qualifying termination following a change of control).(6)Granted under the Amended Plan. One third of these PSUs will be eligible to vest based upon achievement of the applicable Adjusted EBITDA targets for each of 2017, 2018, and 2019, subject in each case to continued employment through the applicable vesting date (with limited exceptions for termination of employment due to death, permanent disability and qualifying termination following a change in control). See "—Compensation Discussion and Analysis—Long-Term Incentive Plan: Stock-Based Compensation" for more information regarding these awards.
Time-based Stock Options. The annual grant time-based stock options have a 10-year term and vest in equal annual installments over a three-year period beginning on December 31, 2019. The exercise price is $14.90 per share.
PSUs. One-third of control).(7)Each of Mr. Serck-Hanssen and Mr. Berckemeyer isthe annual grant PSUs will be eligible to receive up to $1.0 millionvest based upon satisfaction of 2017 performance criteria and up to an additional $2.0 million upon satisfaction of 2018 performance criteria. The LTIP awards are conditioned on the achievement of corporatethe applicable Adjusted EBITDA performance goalstargets for each of 2019, 2020, and 2021.
RSUs. The annual grant RSUs vest in three equal annual installments beginning on December 31, 2019.
For Messrs. Berckemeyer and Loureiro, their termination of employment occurred prior to the vesting of any portion of their 2019 PSUs, RSUs and options; therefore, all such awards were forfeited effective on their respective termination dates.
The following table sets forth information regarding grants of plan-based awards to our NEOs in 2019:
| | | | | | | | | | | | Grant Date Fair Value of Stock and Option Awards ($)* | ||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | All Other Option Awards: Number of Securities Underlying Options (#) | | |||||||||||||||||||||||||
| | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | Estimated Future Payouts Under Equity Incentive Plan Awards | Exercise or Base Price of Option Awards ($/share) | |||||||||||||||||||||||||||||||
Name | Grant Date | Award Type | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | ||||||||||||||||||||||||||||
Eilif Serck-Hanssen | 5/21/19 | AIP(1) | 1 | 1,105,000 | 2,210,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 102,657 | $ | 14.90 | 621,075 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 83,333 | — | — | — | — | 1,241,662 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 41,667 | — | — | 620,838 | ||||||||||||||||||||||||||
Jean-Jacques Charhon | 5/21/19 | AIP(1) | 1 | 600,000 | 1,200,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 36,232 | $ | 14.90 | 219,204 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 29,412 | — | — | — | — | 438,239 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 14,706 | — | — | 219,119 | ||||||||||||||||||||||||||
8/1/19 | Options(2) | — | — | — | — | — | — | 25,295 | $ | 16.40 | 149,999 | |||||||||||||||||||||||||
8/1/19 | PSUs(2) | — | — | — | 18,293 | — | — | — | — | 300,005 | ||||||||||||||||||||||||||
8/1/19 | RSUs(2) | — | — | — | — | — | 9,146 | — | — | 149,994 | ||||||||||||||||||||||||||
Timothy Grace | 5/21/19 | AIP(1) | 1 | 400,000 | 800,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 16,103 | $ | 14.90 | 97,423 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 13,072 | — | — | — | — | 194,773 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 6,536 | — | — | 97,386 | ||||||||||||||||||||||||||
Victoria Silbey | 5/21/19 | AIP(1) | 1 | 532,650 | 1,065,300 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 21,443 | $ | 14.90 | 129,730 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 17,407 | — | — | — | — | 259,364 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 8,703 | — | — | 129,675 | ||||||||||||||||||||||||||
Paula Singer | 5/21/19 | AIP(1) | 1 | 459,000 | 918,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 18,116 | $ | 14.90 | 109,602 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 14,706 | — | — | — | — | 219,119 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 7,353 | — | — | 109,560 | ||||||||||||||||||||||||||
Ricardo M. Berckemeyer | 5/21/19 | AIP(1) | 1 | 1,040,000 | 2,080,000 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 80,515 | $ | 14.90 | 487,116 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 65,359 | — | — | — | — | 973,849 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 32,680 | — | — | 486,932 | ||||||||||||||||||||||||||
10/2/13 | Perf Options(3) | — | — | — | 73,213 | — | — | — | $ | 17.44 | 165,461 | |||||||||||||||||||||||||
10/2/13 | Time Options(3) | — | — | — | — | — | — | 183,036 | $ | 17.44 | 413,661 | |||||||||||||||||||||||||
6/14/17 | Time Options(3) | — | — | — | — | — | — | 38,625 | $ | 17.89 | 86,123 | |||||||||||||||||||||||||
9/13/17 | Time Options(3) | — | — | — | — | — | — | 200,000 | $ | 18.36 | 268,000 | |||||||||||||||||||||||||
3/7/18 | Time Options(3) | — | — | — | — | — | — | 22,163 | $ | 13.97 | 42,104 | |||||||||||||||||||||||||
José Roberto Loureiro | 5/21/19 | AIP(1) | 1 | 459,719 | 919,438 | — | — | — | — | — | — | — | ||||||||||||||||||||||||
3/6/19 | Options | — | — | — | — | — | — | 16,767 | $ | 14.90 | 101,440 | |||||||||||||||||||||||||
3/6/19 | PSUs | — | — | — | 13,611 | — | — | — | — | 202,804 | ||||||||||||||||||||||||||
3/6/19 | RSUs | — | — | — | — | — | 6,805 | — | — | 101,395 |
The following table provides information concerning unexercised options, PSUs and RSUs that were granted to our NEOs under our 2013 Plan and restricted shares that have not vested as of the end of the most recently completed fiscal year for each Named Executive Officer. Each outstanding award is represented by a separate row, which indicates the number of securities underlying the award, including awards that have been transferred other than for value (if any).2019.
For option awards, the table disclosesprovides the number of shares underlying both exercisable and unexercisable options, as well as the exercise price and the expiration date. For stock unit awards, the table provides the total number of unvested units that have not vested and the aggregate market value of shares of stock issuable upon vesting of these units that have not vested.
unvested units. We computed the market value of stock unit awards by multiplying the fair market value of our Class A common stock at the end of the most recently completed fiscal yearDecember 31, 2019 ($13.56)17.61) by the number of shares of stock or units.
Stock options granted under the 2013 Plan and the Amended Plan generally have a ten-year term and must have an exercise price of no less than fair market value on the date of grant, which is the closing price of our Class A common stock on the Nasdaq on the date of grant. The value of our stock options to each grantee is entirely dependent on stock price appreciation beyond the date of grant and the ability to sell the shares acquired upon exercise of options. On June 19, 2017, the Board of Directors and the Majority Holder approved the Option Repricing. See "—2017 Stock Option Repricing & Amendment & Restatement of 2013 Plan."
The following table sets forth information regarding outstanding equity awards held by our Named Executive Officers as of the end of 2017, including equity awards granted under our 2007 Plan, our 2013 Plan, and our Amended Plan to the Named Executive Officers.
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR ENDYEAR-END
| | Option Awards | Stock Awards | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Original Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(3) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(5) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($) | |||||||||||||||||||||
Douglas L. Becker(6) | 10/2/13 | 756,368 | 45,843 | $ | 17.44 | 12/31/22 | 36,253 | 491,591 | |||||||||||||||||||||||
1/31/17 | 1,386,549 | $ | 17.00 | 12/31/19 | |||||||||||||||||||||||||||
1/31/17 | 1,386,549 | $ | 21.32 | 12/31/19 | |||||||||||||||||||||||||||
Eilif Serck-Hanssen | 8/5/08 | 281,250 | $ | 21.28 | 8/5/18 | ||||||||||||||||||||||||||
10/2/13 | 240,215 | 14,561 | $ | 17.44 | 10/2/23 | 11,514 | $ | 156,143 | |||||||||||||||||||||||
5/14/15 | 20,380 | $ | 276,353 | ||||||||||||||||||||||||||||
10/25/16 | 21,607 | $ | 292,991 | 8,643 | $ | 117,199 | |||||||||||||||||||||||||
6/14/17 | 19,310 | 38,627 | $ | 17.89 | 6/14/27 | 20,835 | $ | 282,523 | 62,500 | $ | 847,500 | ||||||||||||||||||||
9/13/17 | 145,773 | $ | 18.36 | 9/13/20 | |||||||||||||||||||||||||||
9/13/17 | 145,773 | $ | 21.00 | 9/13/21 | |||||||||||||||||||||||||||
Ricardo Berckemeyer | 10/2/13 | 241,604 | 14,645 | $ | 17.44 | 10/2/23 | 11,580 | $ | 157,038 | ||||||||||||||||||||||
10/25/16 | 21,607 | $ | 292,991 | 8,642 | $ | 117,186 | |||||||||||||||||||||||||
6/14/17 | 19,310 | 38,627 | $ | 17.89 | 6/14/27 | 20,835 | $ | 282,523 | 62,500 | $ | 847,500 | ||||||||||||||||||||
9/13/17 | 200,000 | $ | 18.36 | 9/13/20 | |||||||||||||||||||||||||||
9/13/17 | 200,000 | $ | 21.00 | 9/13/21 | |||||||||||||||||||||||||||
Timothy Daniels | 10/2/13 | 181,318 | 10,989 | $ | 17.44 | 3/31/18 | 8,692 | $ | 117,864 | ||||||||||||||||||||||
Robert W. Zentz | 10/2/13 | 107,407 | 6,512 | $ | 17.44 | 12/31/22 | 5,149 | 69,820 | |||||||||||||||||||||||
7/10/14 | 13,629 | 1,239 | $ | 17.44 | 12/31/22 | 651 | 8,828 | ||||||||||||||||||||||||
3/4/15 | 9,965 | 1,246 | $ | 17.44 | 12/31/22 | 652 | 8,841 | ||||||||||||||||||||||||
5/2/16 | 5,342 | $ | 17.44 | 12/31/22 | |||||||||||||||||||||||||||
6/14/17 | 3,918 | $ | 17.89 | 12/31/22 | 4,227 | $ | 57,318 | ||||||||||||||||||||||||
8/24/17 | 200,000 | $ | 18.36 | 3/31/20 | |||||||||||||||||||||||||||
Enderson Guimarães(7) |
| | Option Awards | Stock Awards | ||||||||||||||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable(1) | Number of Securities Underlying Unexercised Options (#) Unexercisable(2) | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)(3) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#)(4) | Market Value of Shares or Units of Stock That Have Not Vested ($)(5) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(6) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(5) | |||||||||||||||||||||
Eilif Serck-Hanssen | 10/02/2013 | 254,776 | — | — | $ | 17.44 | 10/02/2023 | — | — | — | — | ||||||||||||||||||||
06/14/2017 | 57,937 | — | — | $ | 17.89 | 06/14/2027 | — | — | 20,833 | $ | 366,869 | ||||||||||||||||||||
09/13/2017 | 145,773 | — | — | $ | 18.36 | 09/13/2020 | — | — | — | — | |||||||||||||||||||||
09/13/2017 | 145,773 | — | — | $ | 21.00 | 09/13/2021 | — | — | — | — | |||||||||||||||||||||
03/07/2018 | 56,516 | 28,258 | $ | 13.97 | 03/07/2028 | 15,590 | $ | 274,540 | 62,362 | $ | 1,098,195 | ||||||||||||||||||||
03/06/2019 | 34,219 | 68,438 | $ | 14.90 | 03/06/2029 | 27,778 | $ | 489,171 | 83,333 | $ | 1,467,494 | ||||||||||||||||||||
Jean-Jacques | 01/02/2018 | 89,552 | — | — | $ | 14.72 | 01/02/2023 | — | — | — | — | ||||||||||||||||||||
01/02/2018 | — | — | 11,333 | $ | 17.89 | 01/02/2028 | — | — | 21,333 | (3) | $ | 375,674 | |||||||||||||||||||
03/07/2018 | 13,298 | 6,649 | — | $ | 13.97 | 03/07/2028 | 3,668 | $ | 64,593 | 14,673 | $ | 258,392 | |||||||||||||||||||
03/06/2019 | 12,078 | 24,154 | — | $ | 14.90 | 03/06/2029 | 9,804 | $ | 172,648 | 29,412 | $ | 517,945 | |||||||||||||||||||
08/01/2019 | 8,431 | 16,864 | — | $ | 16.40 | 08/01/2029 | 6,098 | $ | 107,386 | 18,293 | $ | 322,140 | |||||||||||||||||||
Timothy Grace | 05/29/2018 | 8,592 | 4,295 | — | $ | 15.55 | 05/29/2028 | 2,299 | $ | 40,485 | 9,195 | $ | 161,924 | ||||||||||||||||||
05/29/2018 | — | — | 7,120 | $ | 17.89 | 05/29/2028 | — | — | 13,280 | (3) | $ | 233,861 | |||||||||||||||||||
03/06/2019 | 5,368 | 10,735 | — | $ | 14.90 | 03/06/2029 | 4,357 | $ | 76,727 | 13,072 | $ | 230,198 | |||||||||||||||||||
Victoria Silbey | 09/07/2017 | 17,053 | — | — | $ | 14.58 | 09/07/2027 | — | — | 6,058 | $ | 106,681 | |||||||||||||||||||
12/12/2017 | — | — | 7,468 | $ | 17.89 | 12/12/2027 | — | — | 15,360 | (3) | $ | 270,490 | |||||||||||||||||||
05/23/2018 | 3,816 | 1,908 | — | $ | 15.27 | 05/23/2028 | 1,053 | $ | 18,543 | 4,214 | $ | 74,209 | |||||||||||||||||||
03/06/2019 | 7,148 | 14,295 | — | $ | 14.90 | 03/06/2029 | 5,802 | $ | 102,173 | 17,407 | $ | 306,537 | |||||||||||||||||||
Paula Singer | 10/02/2013 | 256,249 | — | — | $ | 17.44 | 10/02/2023 | — | — | — | — | ||||||||||||||||||||
03/07/2018 | 9,974 | 4,986 | — | $ | 13.97 | 03/07/2028 | 2,751 | $ | 48,445 | 11,005 | $ | 193,798 | |||||||||||||||||||
03/06/2019 | 6,039 | 12,077 | — | $ | 14.90 | 03/06/2029 | 4,902 | $ | 86,324 | 14,706 | $ | 258,973 | |||||||||||||||||||
Ricardo Berckemeyer(7) | 10/02/2013 | 256,249 | — | — | $ | 17.44 | 07/15/2021 | — | — | — | — | ||||||||||||||||||||
06/14/2017 | 38,625 | — | — | $ | 17.89 | 07/15/2021 | — | — | — | — | |||||||||||||||||||||
09/13/2017 | 200,000 | — | — | $ | 18.36 | 09/13/2020 | — | — | — | — | |||||||||||||||||||||
03/07/2018 | 22,163 | — | — | $ | 13.97 | 07/15/2021 | — | — | — | — | |||||||||||||||||||||
José Roberto Loureiro(8) | — | — | — | — | — | — | — | — | — | — |
December 31, 2020 and 7,951 vest on December 31, 2021; Mr. Grace—4,478 vest on December 31, 2020 and 2,178 vest on December 31, 2021; Ms. Silbey—3,954 vest on December 31, 2020 and 2,901 vest on December 31, 2021; Ms. Singer—5,202 vest on December 31, 2020 and 2,451 vest on December 31, 2021; and Messrs. Berckemeyer and Loureiro—none.
The following table includes certain information with respect to stock options exercised during fiscal year 2019 by NEOs and vesting of restricted sharesRSUs and PSUs during fiscal 2017. We have omitted the columns pertaining to Option Awards as they are inapplicable, because no Named Executive Officer exercised any options during fiscal 2017.
Table of Contents2019.
OPTION EXERCISES AND STOCK VESTED
| Stock Awards | ||||||
---|---|---|---|---|---|---|---|
| Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) | |||||
Douglas L. Becker | 36,253 | (1) | $ | 529,294 | |||
Eilif Serck-Hanssen | 11,513 | (1) | $ | 168,090 | |||
10,415 | (2) | $ | 141,540 | ||||
Ricardo Berckemeyer | 11,580 | (1) | $ | 169,068 | |||
10,415 | (2) | $ | 141,540 | ||||
Timothy Daniels | 8,690 | (1) | $ | 126,874 | |||
Robert W. Zentz | 7,103 | (1) | $ | 103,704 | |||
3,496 | (2) | $ | 47,511 | ||||
Enderson Guimarães | 81,962 | (1) | $ | 1,196,645 | |||
73,437 | (3) | $ | 1,068,508 |
| | | Stock Awards | ||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Option Awards | ||||||||||||
| Number of Shares Acquired on Vesting (#)(2) | | |||||||||||
| Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($)(1) | Value Realized on Vesting ($)(3) | ||||||||||
Eilif Serck-Hanssen | — | — | 91,911 | 1,467,470 | |||||||||
Jean-Jacques Charhon | — | — | 18,955 | 310,420 | |||||||||
Timothy Grace | — | — | 9,076 | 146,144 | |||||||||
Victoria Silbey | — | — | 15,150 | 242,824 | |||||||||
Paula Singer | — | — | 10,705 | 172,192 | |||||||||
Ricardo Berckemeyer | — | — | 45,289 | 677,976 | |||||||||
José Roberto Loureiro | 5,211 | 7,973 | 6,553 | 98,099 |
Table of Contents 2017 Pension Benefits
No Named Executive Officer participates in any defined benefit pension plan or arrangement provided by Laureate.
OurOf the eligible NEOs, only Ms. Singer elected to participate in the Post-2004 DCP permitsin years prior to 2019. No contributions were made by Ms. Singer to the Post-2004 DCP in 2019. Mr. Loureiro was not eligible because the Post-2004 DCP is only available to participants based in the United States. The following table provides information about earnings, withdrawals/distributions and balances under the Post-2004 DCP in 2019:
NONQUALIFIED DEFERRED COMPENSATION
Executive | Aggregate earnings in last FY ($) | Aggregate withdrawals/ distributions ($) | Aggregate balance at last FYE ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Eilif Serck-Hanssen | — | — | — | |||||||
Jean-Jacques Charhon | — | — | — | |||||||
Timothy Grace | — | — | — | |||||||
Victoria Silbey | — | — | — | |||||||
Paula Singer | 166,227 | 71,119 | 1,354,972 | |||||||
Ricardo Berckemeyer | — | — | — | |||||||
José Roberto Loureiro | — | — | — |
The Post-2004 DCP provides eligible employees the opportunity to defer up to 85% of their base salaries and 100% of any bonus or annual cash and/or long-term incentive awards, which may be allocatedawards. Each participant allocates such deferred compensation to notional investments selected by the participantsparticipant that are similar to investment alternatives available in our 401(k) Retirement Savings Plan and payPlan. The deferred compensation will be paid out following termination of employment or otheron a selected payout schedule, which payouts will be madeeither in a lump sum or in installments, at the election of the participants. Mr. Becker was the only Named Executive Officer who had any balance in our Post-2004 DCP during 2017.participant. The minimum annual deferral amount under the Post-2004 DCP is $5,000. Each year, a participant may elect to receive that year's deferral balance in a future year while the participant is still employed (a scheduled in-service withdrawal) or after employment terminates (a retirement payment). Each year, we have the ability, but not the obligation, to make matching employer contributions to each participant's Post-2004 DCP account if the participant made salary reduction contributions to the 401(k) Retirement Savings Plan, received less than the full match under the 401(k) Retirement Savings Plan on the salary reduction contribution because of the limit in Section 401(a)(17) of the Internal Revenue Code on compensation and made at least a $5,000 minimum contribution to his or her 401(k) Retirement Savings Plan account. To date, we have not chosen to make amade any matching contributioncontributions to any participant'sparticipant Post-2004 DCP account, nor have we chosen to make any other discretionary employer contributions permitted to be made to participants pursuant to the Post-2004 DCP. All amounts deferred under the Post-2004 DCP. InDCP are unfunded and unsecured obligations of Laureate, receive no preferential creditors' standing and are subject to the eventsame risks as any of death or disabilityour other general obligations. Of our NEOs, only Ms. Singer participated in the Post-2004 DCP in years prior to terminating employment, the participant's Post-2004 DCP balance will be distributed (to the participant's beneficiaries, in the case of death), in a lump sum the February following the year
in which death or disability occurs. In the event of termination of employment, Post-2004 DCP balances will be distributed in a lump sum or in up to 15 annual installments (based on the termination payment election the participant had previously made for each Post-2004 DCP annual year contribution), beginning in February following the year in which the participant's employment was terminated. If there is a separation of service without an effective termination payment election for a Plan year, that Plan year's deferral balance will be paid in a lump sum in the February following the year of separation of service. Mr. Becker also participates in a deferred compensation plan that was frozen and closed to new participants in December 2004 (the "Pre-2005 DCP").2019. No contributions were made by Ms. Singer to the Pre-2005 DCP in 2017. The payout terms of the Pre-2005 DCP are like those of the Post-2004 DCP. No other Named Executive Officer participates in the Pre-2005 DCP.
Information regarding Mr. Becker's participation in the Post-2004 DCP and in the Pre-2005 DCP is included in the following table. Following the termination of Mr. Becker's employment on December 31, 2017, his balances under our Pre-2005 DCP and Post-2004 DCP will be distributed to him in accordance with his elections and the terms and conditions of each plan.2019.
NONQUALIFIED DEFERRED COMPENSATION
Name | Executive Contributions in Last FY ($) | Registrant Contributions in Last FY ($) | Aggregate Earnings (Loss) in Last FY ($)(1) | Aggregate Withdrawals/ Distributions ($) | Aggregate Balance at Last FYE ($) | |||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas L. Becker(2) | — | — | $ | 1,580,432 | — | $ | 9,990,440 | |||||||||
Eilif Serck-Hanssen | — | — | — | — | — | |||||||||||
Ricardo M. Berckemeyer | — | — | — | — | — | |||||||||||
Timothy Daniels | — | — | — | — | — | |||||||||||
Robert W. Zentz | — | — | — | — | — | |||||||||||
Enderson Guimarães | — | — | — | — | — |
The narrative description and table below reflectsreflect potential payments to each of our NEOs, other than Mr. Serck-HanssenBerckemeyer and Mr. Berckemeyer inLoureiro, assuming various termination and change in control scenarios basedof employment events, including on compensation, benefits and equity levels in effect on December 29, 2017, which was the last business day of fiscal 2017. The amounts shown assume that the termination or following a change in control event, was effective as of December 31, 2017.2019. For stock valuations, we have assumed that the price per share is the fair market valueclosing price of our stock at December 29, 2017, the last day on which our Class A common stock traded during 2017,as of December 31, 2019, which was $13.56, the closing price on Nasdaq on that date.$17.61. The table below excludes any amounts payable to the Named Executive Officeran NEO to the extent that these amounts are available generally to all salaried employees and do not discriminate in favor of our executive officers.NEOs.
Because the employment of each of our Named Executive Officers other than Mr. Serck-HanssenMessrs. Berckemeyer and Mr. BerckemeyerLoureiro terminated on or before December 31, 20172019, we disclose in this section what each such Named Executive Officerof Mr. Berckemeyer and Mr. Loureiro actually received as a result of the termination of his employment, not what could have been payable under other scenarios.
result of the termination of his employment. See "—Separation Agreements" for more information. The Company also made certain changes to its severance and equity termination payment practices for Fiscal Year 2020 that are not addressed below. See "—Compensation Discussion and Analysis—Recent Developments" for more information.
During 2019, the Executive Severance Plan covered all NEOs. If an NEO has an applicable employment agreement (or offer letter), the NEO will receive the greater of the benefits under such employment agreement and the benefits the NEO would receive under the Executive Severance Plan. Messrs. Serck-Hanssen and BerckemeyerCharhon and Mses. Silbey and Singer all have offer letters or employment agreements that provide less generous total benefits than those provided under the Executive Severance Plan and as such the benefits described for them in this section are those under the Executive Severance Plan. See "—Compensation Discussion and Analysis—Severance Pay Arrangements" for more information.
The Executive Severance Plan provides severance benefits in connection with a "qualifying termination," which is defined to mean a termination of employment: (i) prior to a "change in control," by the Company other than for "cause;" and (ii) on or after a "change in control," by the Company other than for "cause" or by the executive officer for "good reason."
All payments under the Executive Severance Plan or applicable offer letter described below require the NEO to execute a general release of claims in favor of the Company, which includes standard restrictive covenants, including a two-year covenant not to compete.
Unless the "qualifying termination" occurs in connection with a "change in control," the severance benefit for Mr. Serck-Hanssen under both his offer letter and the Executive Severance Plan is equal to one and a half times his (i) annual base salary at the annual rate in effect on the date of termination of employment plus (ii) annual target bonus. For Messrs. Grace and Charhon and Mses. Silbey and Singer, the severance benefit multiple is one times the annual base salary plus the annual target bonus. Under their respective offer letters, Mr. Charhon and Ms. Silbey are eligible to receive a severance benefit multiple of two times their annual base salary, which, as of December 31, 2019, would be the same amount as one times their annual base salary plus annual target bonus. Mr. Serck-Hanssen would receive the severance payment in a lump-sum whereas Messrs. Charhon and Grace and Mses. Silbey and Singer would receive the amount in equal installments over 12 months.
The NEO subject to a qualifying termination, and his or her eligible dependents, also would be entitled to coverage under the Company's group medical benefit programs on the same terms as the Company provides to similarly situated executives for up to 18 months (in the case of Mr. Serck-Hanssen) or up to 12 months (in the case of Messrs. Grace and Charhon and Mses. Silbey and Singer) following a qualifying termination. In addition, the NEO would be entitled to receive outplacement assistance for nine months.
NEOs are not entitled to cash severance benefits on a "change in control." However, the cash payments due on an involuntary termination by the Company without "cause" or by the NEO for "good reason" are increased if the termination occurs in connection with a "change in control." If the "qualifying termination" occurs during the 12-month period on or following a "change in control," the severance benefit for Mr. Serck-Hanssen is a lump sum equal to two times his annual base salary and annual target bonus. For Messrs. Charhon and Grace and Mses. Silbey and Singer, the multiple is one and a half times the relevant amount. In addition, the NEO will receive a pro-rated lump sum bonus
payment based on the actual performance under the terms of the AIP. All of the NEOs also are entitled to coverage under the Company's group medical benefit programs on the same terms the Company provides to similarly situated executives for up to 18 months following a qualifying termination.
For each of our NEOs, "good reason" generally means the occurrence of any of the following without the NEO's consent: (i) a material diminution in base salary; (ii) a substantial diminution in authority, duties and responsibilities; or (iii) a relocation by more than 50 miles from the NEO's principal location in which the NEO is required to perform services; provided, however, that in any event, such event is not cured within the applicable notice period.
For each of our NEOs, "cause" generally means (i) gross negligence or willful malfeasance in connection with the performance of his or her duties; (ii) conviction of, or pleading guilty or nolo contendere to, any felony; (iii) theft, embezzlement, fraud or other similar conduct by the executive in connection with the performance of his or her duties; or (iv) a willful and material breach of any other applicable agreements including, without limitation, engaging in any action in breach of any applicable restrictive covenants.
Under the Executive Severance Plan, the NEOs are not entitled to any severance benefits upon Terminationa voluntary termination unless the voluntary termination is in connection with a "change in control" and is for "good reason."
If any payments or benefits provided to an NEO pursuant to the Executive Severance Plan would trigger the payment of the excise tax imposed by Section 4999 of the Internal Revenue Code or any similar tax imposed by state or local law, then the NEO will receive (i) the full payment or (ii) a payment reduced to the minimum amount necessary to avoid any such excise tax, whichever amount is greater on a post-tax basis. In no event is the Company responsible to gross-up or indemnify any NEO for excise taxes paid or reductions to payments and benefits received to avoid such excise taxes.
Under the equity awards granted to NEOs under the 2013 Plan, the following treatment is generally provided for in the applicable award agreements:
Payments Regardless of Manner of Termination. Regardless of the termination scenario, Messrs. Serck-Hanssen and Berckemeyer will receive earned but unpaid base salary through the employment termination date, along with any other accrued or vested payments or benefits owed under any of our plans or agreements covering them as governed by the terms of those plans or agreements.
Payments Uponupon Termination Due to Death or DisabilityDisability.. In the event of a termination due to death or disability of Mr. Serck-Hanssen or Mr. Berckemeyer,an NEO, all unvested RSUs, PSUs or options will be forfeited, except that: (i) any such unvested RSUs or time options that would have vested on the next applicable vesting date subsequent to but during the same calendar year as, the death or disability will become vested; and (ii) any unvested performance options or PSUs that would, but for the termination of employment due to death or disability, have vested had the applicable performance goal for the calendar year during which the death or disability occurred been achieved will remain outstanding until the Compensation Committee determines whether the applicable performance goal has been achieved and will become vested if and when the Compensation Committee determines that the applicable performance goal has been achieved or will terminate on the date the Compensation Committee determines that the applicable performance goal has not been achieved, and the balance of the unvested portion of the performance option or PSU will terminate as of the date of termination of employment due to death or disability.be forfeited. In the event of a termination due to death or disability, vested options may (by the employee'sNEO's beneficiary in the case of death) be exercised only for a period of two years from the termination due to death or disability of Mr. Serck-Hanssen or Mr. Berckemeyer.the NEO.
Involuntary Termination and Resignation for Good Reason. If Mr. Serck-Hanssen's or Mr. Berckemeyer's employment is terminated by us without cause, or he resigns for good reason, all unvested RSUs, PSUs and options will be forfeited; provided, however, that if the termination occurs subsequent Certain PSU award agreements applicable to the end of a fiscal year but priorNEOs do not provide the extended vesting period noted above and are noted in the footnotes to the publication of our audited financial statements for such year and the Compensation Committee determines, upon publication of such financial statements, that one or more tranches of performance-vested stock options or PSUs would have vested and become nonforfeitable based upon the audited financial statements for such year, that portion of the performance-vested stock options or PSUs that would otherwise have become vested and nonforfeitable had the termination occurred after the date of the Compensation Committee's determination will become vested and nonforfeitable upon such determination, and he will have 90 days from the termination date to exercise any vested options held on the termination date.
For each of Mr. Serck-Hanssen or Mr. Berckemeyer, "good reason" is defined as (i) a reduction in base salary (other than a general reduction in base salary that affects all similarly situated employees), (ii) a substantial diminution in his title, duties and responsibilities, other than any isolated, insubstantial and inadvertent failure by the Company or its subsidiaries that is not in bad faith, or (iii) a transfer of his primary workplace by more than 50 miles from his current workplace; provided, however, that in any event, such conduct is not cured within ten business days after he gives the Company notice of such event.
If Mr. Serck-Hanssen's employment is terminated by us without cause, he will receive a lump sum cash payment equal to 18 months' base salary and 150% of the target cash award under the AIP for the fiscal year in which the termination occurs. If Mr. Berckemeyer's employment is terminated by us without cause, he will receive payments equal to 18 months' base salary and 150% of the target cash award under the AIP for the fiscal year in which the termination occurs, in the form of salary continuation over a period of 18 months. In each case receipt of such payments is conditioned on the executive executing and allowing to become effective a customary release agreement, which includes a two-year covenant not to compete or disclose confidential information.table below.
For each of Mr. Serck-Hanssen or Mr. Berckemeyer, "cause" means (i) gross negligence or willful malfeasance in connection with the performance of his duties; (ii) conviction of, or pleading guilty or nolo contendere to, any felony; (iii) theft, embezzlement, fraud or other similar conduct by the executive in connection with the performance of his duties; or (iv) a willful and material breach of any other applicable agreements including, without limitation, engaging in any action in breach of any applicable restrictive covenants.
Payments UponInvoluntary Termination and Voluntary Resignation or Termination for CauseResignation.. If Mr. Serck-Hanssen or Mr. Berckemeyer resigns without good reason oran NEO's employment is terminated by the Companyus without cause, or if he or she resigns for cause, he will forfeitany reason, then all unvested equity grantsRSUs, PSUs and options will be forfeited, except that if he resigns without good reason, allan NEO's qualifying termination occurs subsequent to the end of the fiscal year but prior to the Compensation Committee's determination regarding whether any annual performance goal has been achieved, any portion of the PSUs which would have been eligible, but for the termination, to vest will remain outstanding until the Compensation Committee determines whether the applicable performance goal has been achieved and will become vested if and when the Compensation Committee determines that the applicable performance goal has been achieved or will terminate on the date on which the Compensation Committee determines that the applicable performance goal has not been achieved, and the balance of the unvested portion of the PSUs will be forfeited. All vested but unexercised options held at the time of termination will be exercisable for a period of 90 days post-termination.post termination.
Certain PSU award agreements applicable to the NEOs do not provide the extended vesting period noted above and are noted in the footnotes to the table below.
Payments upon Termination for Cause. If employmentan NEO resigns or is terminated by the Company for cause, he or she will forfeit all unvested and vested awards also will be forfeited.equity grants (options to the extent unexercised) at the time of termination.
Vested
Exercisability Provisions. For certain options granted to Messrs. Serck-Hanssen and Berckemeyer and Ms. Singer on October 2, 2013, vested stock options will remain exercisable for a period equal to the shorter of: (i) two years post-terminationpost termination of employment and (ii) the remaining term of the original option grant for any participant, including any Named Executive Officer,such NEO, who (a) has a minimum of five continuous years of service with us and (b) provides at least six months' prior written notice of his or her resignation. VestedFor certain options granted to Messrs. Serck-Hanssen and Berckemeyer on September 13, 2017, vested stock options will remain exercisable for a period equal to the shorter of (i) five years post-termination of employment and (ii) the remaining term of the original stock option grant for any participant, including any Named Executive Officer,such NEO who (a) has a combined age and years of service equal to at least 70, including a minimum of five continuous years of service with us and (b) provides at least 12 months' prior written notice of his retirement. For certain options granted annually to participants, including any NEO, vested stock options will remain exercisable for a period equal to the shorter of: (i) five years post termination of employment and (ii) the remaining term of the original option grant for any participant who (a) has a combined age and years of service equal to at least 70, including a minimum of five continuous years of service with us and (b) for any annual grants issued during or prior to 2018, provides at least 12 months' prior written notice of his or her retirement.
If Mr. Serck-Hanssen or Mr. Berckemeyeran NEO ceases to be an eligible individual under the 2007 Plan, the 2013 Plan or the Amended Plan coincident withon or within 18 months after a change in control as a result of an involuntary termination without cause or his or her resignation with good reason, (a "Qualifying Termination"), to the extent not already vested or previously forfeited, (1) that portion of time vestedany outstanding options, RSUs, and that portion of the RSUs that would otherwise havePSUs will become vested and, exercisable on or before the third anniversary of the effective date of the Qualifying Termination will become vested andwith respect to options, exercisable immediately prior to the effective date of the Qualifying Termination and the balance of the unvested portion of the time vested options will terminate without becoming vested, and (2) that portion of performance options and PSUs that would otherwise have become vested and exercisable had we achieved the applicable performance goal in the three fiscal years (or, if shorter, the remaining initial target years) ending coincident with or immediately subsequent to the effective date of the Qualifying Termination will become vested and exercisable immediately prior to the effective date of the Qualifying Termination and the balance of the unvested portion of the performance options or PSUs will terminate without becoming vested. In addition, the cash severance payable to each will bequalifying termination.
increased to 24 months' salary and 200% of the target cash award under the AIP for the fiscal year in which the termination occurs, in the form described above.
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
Name | Benefit | Without Cause/Good Reason Termination | Termination due to Death or Disability(1) | Change in Control plus Qualifying Termination(1) | Benefit | Without Cause/Good Reason Termination | Termination due to Death or Disability | Change in Control plus Qualifying Termination | ||||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Eilif Serck-Hanssen | Cash Severance | $ | 2,344,636 | (2) | $ | 3,126,181 | (3) | Cash Severance | $ | 2,932,500 | (1) | — | $ | 3,910,000 | (2) | |||||||||
Acceleration of RSU vesting(4) | $ | 851,866 | Benefits(3) | $ | 65,039 | — | $ | 65,039 | ||||||||||||||||
Acceleration of PSU vesting(5) | $ | 1,120,842 | Acceleration of options(4) | — | — | $ | 288,326 | |||||||||||||||||
| | | | | | | | | ||||||||||||||||
Total | $ | 2,344,636 | $ | 5,098,890 | ||||||||||||||||||||
Ricardo M. Berckemeyer | Cash Severance | $ | 2,344,636 | (6) | $ | 3,126,181 | (7) | |||||||||||||||||
Acceleration of RSU vesting(4) | $ | 575,514 | Acceleration of RSU vesting(5) | — | — | $ | 763,711 | |||||||||||||||||
Acceleration of PSU vesting(5) | $ | 1,121,724 | Acceleration of PSU vesting(6) | — | $ | 1,405,137 | $ | 2,932,558 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |||||
Total | $ | 2,344,636 | $ | 4,823,418 | Total | $ | 2,997,539 | $ | 1,405,137 | $ | 7,959,634 | |||||||||||||
Jean-Jacques Charhon | Cash Severance | $ | 1,200,000 | (7) | — | $ | 1,800,000 | (8) | ||||||||||||||||
Benefits(3) | $ | 34,127 | — | $ | 38,691 | |||||||||||||||||||
Acceleration of options(4) | — | — | $ | 110,065 | ||||||||||||||||||||
Acceleration of RSU vesting(5) | — | — | $ | 344,628 | ||||||||||||||||||||
Acceleration of PSU vesting(6) | — | $ | 409,221 | $ | 1,474,151 | |||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Total | $ | 1,234,127 | $ | 409,221 | $ | 3,767,535 | ||||||||||||||||||
Timothy Grace | Cash Severance | $ | 900,000 | (7) | — | $ | 1,350,000 | (8) | ||||||||||||||||
Benefits(3) | $ | 45,414 | — | $ | 55,622 | |||||||||||||||||||
Acceleration of options(4) | — | — | $ | 37,940 | ||||||||||||||||||||
Acceleration of RSU vesting(5) | — | — | $ | 117,212 | ||||||||||||||||||||
Acceleration of PSU vesting(6) | — | $ | 157,715 | $ | 625,983 | |||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Total | $ | 945,414 | $ | 157,715 | $ | 2,186,757 | ||||||||||||||||||
Victoria Silbey | Cash Severance | $ | 1,065,300 | (7) | — | $ | 1,597,950 | (8) | ||||||||||||||||
Benefits(3) | $ | 51,373 | — | $ | 64,560 | |||||||||||||||||||
Acceleration of options(4) | — | — | $ | 43,204 | ||||||||||||||||||||
Acceleration of RSU vesting(5) | — | — | $ | 120,717 | ||||||||||||||||||||
Acceleration of PSU vesting(6) | — | $ | 245,976 | $ | 757,917 | |||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Total | $ | 1,116,673 | $ | 245,976 | $ | 2,584,348 | ||||||||||||||||||
Paula Singer | Cash Severance | $ | 918,000 | (7) | — | $ | 1,377,000 | (9) | ||||||||||||||||
Benefits(3) | $ | 45,356 | — | $ | 55,534 | |||||||||||||||||||
Acceleration of options(4) | — | — | $ | 50,878 | ||||||||||||||||||||
Acceleration of RSU vesting(5) | — | — | $ | 134,769 | ||||||||||||||||||||
Acceleration of PSU vesting(6) | — | $ | 183,232 | $ | 452,771 | |||||||||||||||||||
| | | | | | | | | | | ||||||||||||||
Total | $ | 963,356 | $ | 183,232 | $ | 2,070,952 |
resignation for "good reason" as of December 31, 2019. The terms of the RSUs provide that portion ofany unvested PSUsRSUs that would, otherwisebut for the termination due to death or disability, have become vested and exercisable had we achievedon the Equity Value Targetnext scheduled vesting date would vest as of the termination date. Because the information in this table assumes such termination due to death or disability occurred as of December 31, 2019, there is no such acceleration of RSUs.
fair market value of unvested PSUs outstanding unvested RSUs that could vest pursuant to the terms of the RSUs within the applicable period followingunder annual equity grant awards on December 31, 2017.
On September 14, 2017, we issuedJune 10, 2019, Laureate disclosed that Mr. Berckemeyer would be leaving the Company. Mr. Berckemeyer separated under the terms of the Berckemeyer Separation Agreement. In connection with Mr. Berckemeyer's departure, Laureate agreed to provide him 1.5 times his then current base salary and target annual bonus as severance ("Cash Severance"), payable in equal installments over 18 months, as well as subsidized COBRA benefits, if he so elects, for those 18 months. He also received a presspro-rated bonus for the 2019 calendar year based on the assumptions that his individual performance multiplier would be 100% and the corporate performance multipliers will be the same multipliers as used for Laureate's most senior executives for payment of 2019 bonuses under the 2019 AIP. All of these payments were subject to Mr. Berckemeyer's execution of a general release and on September 19, 2017, we filedcontinued compliance with certain restrictive covenants, including non-competition. Under the terms of the Berckemeyer Separation Agreement, all unvested stock options, PSUs and RSUs as of July 15, 2019 held by Mr. Berckemeyer were forfeited without any payment therefor and to the extent that any equity awards granted to Mr. Berckemeyer consisted of options, the exercise period for each option was extended to the earlier of the latest original expiration date of such option or July 15, 2021.
Subject to his compliance with the restrictive covenants and other obligations in the Berckemeyer Separation Agreement, Mr. Berckemeyer will receive Cash Severance of $2,760,000, health insurance benefits of $42,297, accrued vacation of $17,757, and a Current Report on Form 8-K (the "Becker Form 8-K") reporting, among other things,payment in respect of a pro-rated 2019 annual bonus of $866,901.
On June 10, 2019, Laureate disclosed that Mr. Becker, who then served as the Company's Chairman and Chief Executive Officer,Loureiro would effective January 1, 2018, become the Company's non-executive Chairman of the Board. The Becker Form 8-K reported further that the Company and Mr. Becker expected to enterbe retiring. Laureate entered into a Separation Agreement with him and, Mutual Release (the "Separation Agreement") and would discloseon July 31, 2019, Mr. Loureiro separated under the material terms of suchhis Separation Agreement following its execution. On December 29, 2017,(the "Loureiro Separation Agreement"). In connection with Mr. Loureiro's departure, Laureate agreed to provide him one times his then current base salary and target annual bonus as payable in lieuequal installments over 12 months ("Voluntary Severance"). He also received a statutory severance in accordance with applicable law and a pro-rated bonus for the 2019 calendar year based on the calculated "at target" amount as set forth in the 2019 Annual Incentive Plan. All of entering intothe equity awards granted to Mr. Loureiro continue to be governed by the applicable terms. Effective as of July 31, 2019, all unvested stock options, PSUs and RSUs held by Mr. Loureiro were forfeited without any payment therefor. To the extent that any equity awards granted to Mr. Loureiro consisted of options, Mr. Loureiro had 90 days after his separation date to exercise such options, otherwise the unexercised vested stock options will be forfeited without any payment therefor. See "—Option Exercises and Stock Vested during 2019" for more information regarding options exercised by Mr. Loureiro.
Subject to his compliance with the restrictive covenants and other obligations in the Loureiro Separation Agreement, weMr. Loureiro will receive Voluntary Severance of $405,183, statutory severance of $507,147, a payment in respect of a pro-rated 2019 AIP of $259,895, accrued vacation of $108,399 and our Majority Holder entered into a Chairmanhealth and life insurance benefits of $37,227.
See "—Summary Compensation Agreement (the "Chairman Agreement") with Mr. Becker setting forthTable" for more information about the payments under the terms under which Mr. Becker now serves asof the non-executive ChairmanBerckemeyer Separation Agreement and the Loureiro Separation Agreement.
Presented below is the ratio of annual total compensation of our BoardCEO to the annual compensation of Directors.our median employee. The Chairman Agreement was filed as an exhibit toratio presented below is a reasonable estimate calculated in a manner consistent with SEC rules.
In identifying the median employee, we calculated the annual target total cash compensation of each employee globally (excluding our Annual Report on Form 10-KCEO) for the fiscal year12-month period that ended on December 31, 20172019. Annual target total cash compensation for these purposes included base salary, including any additional allowances based on regional practice, and bonus target amount (i.e. base/base including allowances multiplied by target bonus percent). This was calculated using internal Human Resources system records and supplemental allowance data. We did not apply any cost-of-living adjustments as part of the calculation.
As of December 31, 2019, including discontinued operations, we had approximately 51,000 employees, of which approximately 6,000 were full-time academic teaching staff and 18,000 were part-time academic teaching staff. The employee population used for the median calculation was comprised of approximately 40% part-time employees, of which approximately 90% are part-time faculty who work within the institutions across the Laureate network. We selected the median employee based on 51,209 full-time, part-time, temporary, and expatriate workers who were employed as of December 31, 2019. This population excludes student employees, interns, and summer/seasonal employees, who were omitted pursuant to thede minimis exemption provided under SEC rules. The employees who were excluded were from Australia, Brazil, Chile, Honduras, Malaysia, New Zealand and the United States. We also did not include external contractors, fixed-term contractors or independent consultants in our determination. The total employee population excluded from the calculation was less than 5% of our full employee population as of December 31, 2019. For employees who were hired in 2019 but did not work the complete year, we annualized their target total cash compensation, but did not make any full-time equivalent adjustments. We employ people around the
world, and a significant portion of our workforce is incorporated herein by reference.located outside the U.S. The employee population used for the median calculation was comprised of approximately 10% employees based in the U.S. and approximately 90% employees based outside the U.S.
Pursuant to the Chairman Agreement:The 2019 annual total compensation of our CEO and median employee is provided below:
Additionally, the restrictive covenants regarding confidentiality, competition with the Company and non-solicitation set forth in Section 22 of each of Mr. Becker's Management Stockholder's Agreements have been deleted in their entirety and replaced with the restrictive covenants set forth in the Chairman Agreement. Specifically, Mr. Becker agreed:
employed by the Company on December 31, 2017 or was involuntarily terminated from the Company at any time); and
Effective at the close of December 31, 2017, Mr. Becker's combined age and years of service was greater than 70, including more than five years of continuous service immediately preceding such date. Accordingly, and notwithstanding the fact that at least 12 months' advance written notice was not provided, Mr. Becker's employment with the Company was deemed to have been terminated "by reason of Retirement" for purposes of each stock option agreement with the Company to which Mr. Becker is a party other than his EPI options. See "—2017 Summary Compensation Table" and "—2017 Grants of Plan Based Awards" for more information regarding the non-cash compensation deemed to have been received by Mr. Becker in connection with the modification of these stock options. All unvested stock options and units held by Mr. Becker as of December 31, 2017 were forfeited as of such date.
On July 11, 2017, we entered into a Separation Agreement and General Release with Mr. Daniels (the "Daniels Separation Agreement"), whereby Mr. Daniels agreed to continue to serve as our Chief Executive Officer, EMEAA, through December 31, 2017. On December 31, 2017, Mr. Daniels's employment with the Company terminated and within the time specified in the Daniels Separation Agreement, Mr. Daniels executed and did not revoke a supplemental release of claims in the form specified in the Daniels Separation Agreement. The Daniels Separation Agreement was filed as an exhibit to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017 and is incorporated herein by reference.
Pursuant to the Daniels Separation Agreement, Mr. Daniels received the following payments and benefits:
Mr. Daniels also remains eligible to receive tax equalization pursuant to the terms of his expatriate assignment and an additional bonus of up to $250,000 in June 2018 based on the proceeds of our asset divestitures and his contribution to their sale.
On August 28, 2017, we entered into a Separation Agreement and General Release with Mr. Zentz (the "Zentz Separation Agreement"), whereby Mr. Zentz agreed to continue to serve as our Senior Vice President, Secretary and General Counsel through the date that the Board appointed a new Secretary and General Counsel, and thereafter to remain an employee of the Company through December 31, 2017. On September 12, 2017, the Board appointed Victoria E. Silbey Senior Vice President, Secretary and Chief Legal Officer of the Company. On December 31, 2017, Mr. Zentz's
employment with the Company ended. Within the time period specified in the Zentz Separation Agreement, Mr. Zentz executed and did not revoke a supplemental release of claims in the form specified in the Zentz Separation Agreement. The Zentz Separation Agreement was filed as an exhibit to our Quarterly Report on Form 10-Q for the fiscal quarter ended September 30, 2017 and is incorporated herein by reference.
Pursuant to the Zentz Separation Agreement, Mr. Zentz received the following payments and benefits:
Effective at the close of December 31, 2017, Mr. Zentz's combined age and years of service was greater than 70, including more than five years of continuous service immediately preceding such date. Accordingly, and notwithstanding the fact that at least 12 months' advance written notice was not provided, Mr. Zentz's employment with the Company was deemed to have been terminated "by reason of Retirement" for purposes of each stock option agreement with the Company to which Mr. Zentz is a party. See "—2017 Summary Compensation Table" and "—2017 Grants of Plan Based Awards" for more information regarding the non-cash compensation deemed to have been received by Mr. Zentz in connection with the modification of these stock options. All unvested stock options and units held by Mr. Zentz as of December 31, 2017 were forfeited as of such date.
On July 6, 2015, we entered into an offer letter with Mr. Guimarães pursuant to which Mr. Guimarães agreed to serve as our President and Chief Operating Officer, effective as of September 1, 2015. The offer letter provided for accelerated vesting of certain RSUs granted to Mr. Guimarães in 2015 and payment of an amount equal to one year of salary and bonus at target if we terminated his employment without cause.
Mr. Guimarães's service as our President and Chief Operating Officer terminated effective March 23, 2017, and on the same date, we entered into a Separation Agreement and General Release with Mr. Guimarães (the "Guimarães Separation Agreement") whereby Mr. Guimarães resigned his position as President and Chief Operating Officer of the Company and agreed to provide transition
services to the Company until June 30, 2017 or such earlier or later date as determined by the Company. Effective September 29, 2017, Mr. Guimarães's employment with the Company terminated pursuant to the terms of the Guimarães Separation Agreement. The Guimarães Separation Agreement was filed as an exhibit to our Quarterly Report on Form 10-Q for the fiscal quarter ended March 31, 2017 and is incorporated herein by reference.
On November 9, 2017, Mr. Guimarães and the Company entered into a Supplemental Release Agreement (the "Guimarães Release Agreement"). In accordance with the terms of the Guimarães Release Agreement, we reimbursed Mr. Guimarães for $200,000 of expenses related to the sale of his residence in Miami, Florida and his repatriation to Montreal, Quebec, Canada. The Guimarães Release Agreement was filed as an exhibit to our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 and is incorporated herein by reference.
Pursuant to the Guimarães Separation Agreement and the Guimarães Release Agreement, Mr. Guimarães received the following payments and benefits in 2017:
At the time of the termination of his employment Mr. Guimarães held outstanding performance share units and a nonqualified stock option. There was no accelerated vesting of either the performance share units or option in connection with termination of Mr. Guimarães's employment. All unvested units and stock options held by Mr. Guimarães as of September 29, 2017 were forfeited as of that date.
The following table summarizes the compensation paid to or earned by our Directors in 2017. We have omitted from this table the columns for Option Awards, Non-Equity Incentive Plan Annual Compensation and Change in Pension Value and Nonqualified Deferred Compensation Earnings, as no amounts are required to be reported in any of those columns for any director during 2017.
Messrs. Friedman, Miller, and Smidt served as directors prior to our initial public offering. Each tendered his resignation as a member of our Board and all Committees of the Board on which they served, effective immediately upon the closing of the initial public offering on February 7, 2017. Messrs. Cornog and Del Corro were appointed by the Board as Wengen-designated Directors, effective immediately upon the closing of our initial public offering on February 7, 2017. Messrs. Durham and Freeman were appointed by the Board as non-employee, independent Directors on April 28, 2017.
Mr. Zoellick previously elected to receive director compensation for 2014-2016 in an initial grant of 18,558 shares of restricted stock on July 15, 2014. All of these restricted shares vested and became nonforfeitable on January 1, 2017. Mr. Zoellick also received a $165,000 one-time cash payment in January 2017. Mr. Zoellick resigned as a Director effective December 31, 2017.
The Compensation Committee has approvedconducts an annual review and assessment of all compensation, forincluding cash and equity-based compensation, paid by the Company to our non-employee, independent Directors. Ourdirectors and our non-employee, Wengen-designated directors. In connection therewith, the Compensation Committee may consult with its independent Directors who served during 2017 were: Messrs. Durham, Freeman, Muñoz,compensation consultant regarding the amount and Zoellick,type of compensation to be paid and Dr. Rodin. Effective asconsider comparative data deemed appropriate by the independent compensation consultant. The following table describes the components of January 1, 2017,the non-employee independent Directorsdirectors' compensation for 2019:
Fees | Amount | Form of Payment(1) | |||
---|---|---|---|---|---|
Annual Board Retainer | |||||
Independent Directors(2) | $ | 225,000 | • 50% in cash and 50% in RSUs | ||
Wengen-Designated Directors(3) | $ | 50,000 | • 100% in cash or RSUs, at the recipient's election | ||
Committee Retainers | • 100% in cash | ||||
Audit Committee | |||||
Member | $ | 15,000 | |||
Chair | $ | 25,000 | |||
Compensation Committee | |||||
Member | $ | 10,000 | |||
Chair | $ | 20,000 | |||
Nominating & Corporate Governance Committee | |||||
Member | $ | 7,500 | |||
Chair | $ | 15,000 | |||
Committee on Education | |||||
Member | $ | 10,000 | |||
Chair | $ | 50,000 | |||
Annual Chairman Retainer | $ | 175,000 | (4) | • $100,000 in cash and $75,000 in RSUs |
Eachoz.
We reimburse our non-employee directors for all reasonable out-of-pocket expenses incurred in connection with attending any Board of common stock is determined based on the fair market value of our Class A common stock on the grant date, with vesting quarterly in arrears.Director or Committee meeting and approved continuing education programs and activities.
Each Directordirector who is subject to U.S. federal income taxes and is not contractually obligated to remit his or her Directordirector compensation to the Wengen investor on whose behalf he or she serves (if applicable) is eligible to participate in ourthe Post-2004 DCP and defer receipt of his or her annual compensation in accordance with the terms of the Post-2004 DCP. No Wengen-designatedGeorge Muñoz is the only director who deferred anya portion of his 20172019 compensation.
In addition, Stock Ownership Guidelines
Our Stock Ownership Guidelines apply to our compensation program for non-employee, independent Directors provideddirectors and executive officers, but not to our non-employee, Wengen-designated directors. Under the Stock Ownership Guidelines, each covered director is expected to own a number of shares equal to or greater than five times the cash portion of the annual board retainer (currently $112,500). There is no required time within which the covered director must attain the applicable stock ownership level. Until a covered director complies with the Stock Ownership Guidelines, the covered director is expected to retain 75% of net profit shares from each award on exercise, vesting or earn-out.
The below table shows the compensation that each independent director earned for the following annual cash retainers in 2017, which were paid quarterly in arrears.
| Member | Chair | |||||
---|---|---|---|---|---|---|---|
Audit Committee | $ | 15,000 | $ | 25,000 | |||
Compensation Committee | $ | 10,000 | $ | 20,000 | |||
Nominating & Corporate Governance Committee | $ | 7,500 | $ | 15,000 | |||
Committee on Education | $ | 10,000 | $ | 50,000 |
None of our Directors received separate compensation for attending meetings of ourhis or her 2019 Board of Directors or any Committees thereof.and committee service. Our ChairmanPresident and former CEO, Mr. Becker, was the only Director during 2017 who also was an employee of Laureate. Mr. Becker wasSerck-Hanssen, is not entitled to separate compensation for his service on our Board of Directors during 2017. Non-employee Directors are reimbursed for travel and other expenses directly related to Director activities and responsibilities.
Some Directors served on the Board or one or more of its committees for less than all of 2017. For these directors, annual and committee retainers were prorated to reflect the portion of the year the director served as a member of the Board or of the Committee, as applicable.
2017 Director Compensation
Directors.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | All Other Compensation ($) | Total ($) | |||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|
Douglas L. Becker(2) | — | — | — | — | |||||||||
Brian F. Carroll(3) | 70,000 | — | — | 70,000 | |||||||||
Andrew B. Cohen(4) | 9,167 | 53,366 | — | 62,533 | |||||||||
William J. Cornog(5) | 20,834 | 53,366 | 74,200 | ||||||||||
Pedro del Corro(6) | 9,167 | 53,642 | 62,809 | ||||||||||
Michael J. Durham(7) | 88,750 | 80,050 | 168,800 | ||||||||||
Kenneth W. Freeman(8) | 90,000 | 80,050 | 170,050 | ||||||||||
Darren M. Friedman(9) | 5,000 | — | — | 5,000 | |||||||||
John A. Miller(10) | 4,167 | — | — | 4,167 | |||||||||
George Muñoz(11) | 34,167 | 240,149 | 274,316 | ||||||||||
Judith Rodin(12) | 172,500 | 120,074 | 292,574 | ||||||||||
Jonathan D. Smidt(13) | 5,417 | — | — | 5,417 | |||||||||
Ian K. Snow(14) | 65,000 | — | — | 65,000 | |||||||||
Steven M. Taslitz(15) | 60,833 | — | — | 60,833 | |||||||||
Quentin Van Doosselaere(16) | 63,750 | — | — | 63,750 | |||||||||
Robert B. Zoellick(17) | 277,500 | 120,074 | 397,574 |
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Total ($) | |||||||
---|---|---|---|---|---|---|---|---|---|---|
Brian F. Carroll | 70,000 | — | 70,000 | |||||||
Andrew B. Cohen(2) | 10,000 | 49,996 | 59,996 | |||||||
William J. Cornog | 25,000 | 49,996 | 74,996 | |||||||
Pedro del Corro(3) | 10,000 | 49,996 | 59,996 | |||||||
Michael J. Durham | 135,000 | 112,480 | 247,480 | |||||||
Kenneth W. Freeman | 235,000 | 174,963 | 409,963 | |||||||
George Muñoz(4) | 147,500 | 112,480 | 259,980 | |||||||
Judith Rodin | 170,000 | 112,480 | 282,480 | |||||||
Eilif Serck-Hanssen | — | — | — | |||||||
Ian K. Snow(5) | 57,500 | — | 57,500 | |||||||
Steven M. Taslitz(6) | 60,000 | — | 60,000 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION IN COMPENSATION DECISIONS
Steven Taslitz, formerly a member of the Compensation Committee, is the Senior Managing Director of Sterling Partners, and Douglas Becker, our Chairman and former CEO, is a director of Sterling Fund Management, LLC, the management affiliate of Sterling Partners. During 2017, no other members of the Compensation Committee (i) had a relationship with us other than as a Director and, in certain cases, a stockholder nor (ii) was (A) an officer or employee or a former officer, (B) a participant in a "related person" transaction or (C) an executive officer of another entity where one of our executive officers served on the Board of Directors. See " Certain Relationships and Related Transactions, and Director Independence " for a discussion of certain transactions to which affiliates of the members of the Compensation Committee were party.
REPORT OF THE COMPENSATION COMMITTEE
The Compensation Committee has reviewed and discussed the Compensation Discussion and Analysis as required by Item 402(b) of Regulation S-K with management. Based on such review and discussions, the Compensation Committee recommended to the Board of Directors, and the Board approved, that the Compensation Discussion and Analysis be included in Laureate's Annual Report on Form 10-K or the 2018 Annual Meeting Proxy Statement on Schedule 14A.
Under the guidance of a written charter adopted by the Board of Directors, the purpose of the Audit Committee is to oversee the accounting and financial reporting processes of Laureate and audits of its financial statements. The responsibilities of the Audit Committee include appointing and providing for the compensation of Laureate's independent registered public accounting firm and approving the audit and non-audit services to be provided by the independent registered public accounting firm. Each of the members of the Audit Committee meets the independence requirements of Nasdaq.
Management has primary responsibility for the system of internal controls and the financial reporting process. PricewaterhouseCoopers LLP, Laureate's independent registered public accounting firm ("PricewaterhouseCoopers LLP"), has the responsibility to express an opinion on the financial statements based on an audit conducted in accordance with generally accepted auditing standards.
In this context and in connection with the audited financial statements contained in Laureate's Annual Report on Form 10-K, the Audit Committee has reviewed and discussed the audited financial statements as of and for the fiscal year ended December 31, 2017 with Laureate's management and PricewaterhouseCoopers LLP. The Audit Committee has also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Statement of Auditing Standards No. 61,Communication with Audit Committees, as amended by Statement of Auditing Standards No. 90, Audit Committee Communications. The Audit Committee has received and reviewed the written disclosures and the letter from PricewaterhouseCoopers LLP required by the Independence Standards Board Standard No. 1,Independence Discussions with Audit Committees, discussed with the auditors their independence, and concluded that the non-audit services performed by PricewaterhouseCoopers LLP are compatible with maintaining their independence. The Audit Committee has also discussed with PricewaterhouseCoopers LLP the matters required to be discussed by Auditing Standard No. 1301 adopted by the Public Company Accounting Oversight Board (United States) regardingCommunication with Audit Committees.
Based on the foregoing reviews and discussions, the Audit Committee recommended to the Board of Directors that the audited financial statements be included in Laureate's Annual Report on Form 10-K for the fiscal year ended December 31, 2017 filed with the Securities and Exchange
Commission and instructed the registered public accounting firm that the Audit Committee expects to be advised if there are any subjects that require special attention.
The foregoing reports of the Compensation Committee and Audit Committee shall not constitute "soliciting material," shall not be deemed "filed" with the SEC and are not to be incorporated by reference into any of our other filings under the Securities Act of 1933, as amended, or the Exchange Act, except to the extent that we specifically incorporate either such report by reference therein.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
RELATED STOCKHOLDER MATTERS
The following table sets forth certain information with respect to the beneficial ownership of our common stock at February 28, 2018,14, 2020, for:
The address of each beneficial owner listed in the table unless otherwise noted is c/o Laureate Education, Inc., 650 SouthS. Exeter Street, Baltimore, Maryland 21202.
We have determined beneficial ownership in accordance with the rules of the SEC. Except as indicated by the footnotes below, we believe, based on the information furnished to us, that the persons and entities named in the table below have sole voting and investment power with respect to all shares of common stock that they beneficially own, subject to applicable community property laws.
Applicable percentage ownership is based on 55,106,512118,578,038 shares of Class A common stock and 132,389,08090,814,034 shares of Class B common stock outstanding at February 28, 2018. The table below includes shares of Class A common stock issuable upon conversion of our Series A Preferred Stock deemed beneficially owned by a person whose holdings of our common stock is required to be reported below in the table.14, 2020. In computing the number of shares of common stock beneficially owned by a person, and the percentage ownership of that person and the percentage of total voting power, we deemed outstanding shares of common stock subject to options held by that person that are currently exercisable or exercisable within 60 days of
February 28, 2018.14, 2020. We did not deem these shares outstanding, however, for the purpose of computing the percentage ownership of any other person.
Under our Insider Trading Policy, directors and executive officers are prohibited from engaging in any form of hedging transaction, holding our securities in margin accounts and pledging our securities as collateral for loans. None of the shares held by our directors or current executive officers shown on the table below is pledged. In addition, the Company's Stock Ownership Guidelines require non-employee, independent directors and executive officers to retain a certain ownership level of Company stock. See "Executive Compensation—Compensation Discussion and Analysis—Stock Ownership Guidelines" and "Director Compensation—Stock Ownership Guidelines" for a complete description of these guidelines.