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| Michael P. Morrell | Director since 2014
Age 67
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Mr. Morrell retired in 2003 as president of Allegheny Energy Supply Company, a wholly owned subsidiary of Allegheny Energy, Inc., an electric utility holding company. He joined Allegheny in 1996 as senior vice president and chief financial officer. Prior to that, he worked for 19 years at General Public Utilities Corporation, an electric utility holding company, as vice president and treasurer, vice president of a General Public Utilities Corporation subsidiary and as a nuclear engineer. Mr. Morrell began his career as a nuclear submarine officer in the U. S. Navy, and worked as a nuclear engineer at Burns & Roe, Inc. for one year. He previously served on the boards of directors of all Allegheny subsidiaries, all General Public Utilities Corporation subsidiaries and the Utilities Mutual Insurance Company. Most recently, Mr. Morrell has served as business manager for a non-profit and was an adjunct professor of mathematics at Shepherd University. |
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In recommending the election of Mr. Morrell, the Board considered the following key competencies: energy experience; CFO experience; and nuclear experience. |
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| Daniel B. Poneman | Director since 2015 Age 6062 |
| Mr. Poneman has been President and Chief Executive Officer and a director of Centrus since March 23, 2015. From 2009 to 2014, Mr. Poneman was the Deputy Secretary of Energy, also serving as the chief operating officer of the U.S. Department of Energy. Between April 23, 2013 and May 21, 2013, Mr. Poneman served as Acting Secretary of Energy. Prior to assuming his duties as Deputy Secretary, Mr. Poneman served as a principal of the Scowcroft Group for eight years, providing strategic advice to corporations in a variety of strategic industries. In addition, for eight years he practiced law as a partner at Hogan & Hartson and as an associate at Covington & Burling, advising clients on regulatory and policy matters. In prior tours of government, he served as a White House Fellow and as Director of Defense Policy and Arms Control for the National Security Council. From 1993 through 1996 he was Special Assistant to the President and Senior Director for Nonproliferation and Export Controls at the National Security Council. Mr. Poneman is a Senior Fellow at the Belfer Center for Science and International Affairs at the Harvard Kennedy School, a Distinguished Fellow at the Paulson Institute, and a member of the Council on Foreign Relations. |
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| | In recommending the election of Mr. Poneman, the Board considered the following key competencies: current service as Centrus CEO; energy experience; government and contracting experience; and nuclear and defense experience. |
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| Neil S. Subin | Director since 2017 Age 54 |
| Mr. Subin serves as Chairman of Broadbill Investment Partners, LLC, a private investment manager he co-founded in 2011. Prior to founding Broadbill, Mr. Subin was the founder and Managing Director of Trendex Capital Management Corp., a private investment advisor focusing primarily on financially distressed companies. Prior to Trendex, Mr. Subin was a private investor. Mr. Subin serves on a number of boards, including FiberTower Corp., PHAZR Inc., Phosphate Holdings, Inc., Penn Treaty American Corp., and Institutional Financial Markets, Inc. |
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| In recommending the election of Mr. Subin, the Board considered the following key competencies: finance experience; and public company board experience. |
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| In connection with the Company’s private exchange offer, Broadbill Investment Partners, LLC, entered into a Support Agreement on January 5, 2017 with the Company. Mr. Subin was appointed to the Board of Directors to fill a vacancy created under the Support Agreement. Please see the section of this proxy statement titled “Governance of the Company - Transactions with Related Persons” for additional details. |
OTHER DIRECTORS
Investor-Designated Directors
In connection with the Company’s emergence from Chapter 11 bankruptcy on September 30, 2014 (the “Effective Date”), Toshiba America Nuclear Energy Corporation (“Toshiba”) and BWXT Investment Company (“B&W”) each received in exchange and on account of their shares of the Company’s Series B-1 12.75% convertible preferred stock and warrants to purchase up to 250,000 shares of the Company’s common stock: (i) 718,200 shares (1,436,400 shares in the aggregate) of the Company’s new Class B common stock; and (ii) $20.19 million in principal amount of the Company’s 8% PIK toggle notes ($40.38 million in the aggregate), which were exchanged for new 8.25% senior notes due 2027 on February 14, 2017. As of April 6, 2018, Toshiba and B&W currently hold 718,200 and 687,882 shares, respectively, of the Company’s Class B common stock.
Class B common stock and Class A common stock have the same rights, powers, preferences and restrictions and rank equally in all matters, except when voting on certain matters. Toshiba and B&W, as the holders of all of the Class B common stock, have the right to elect a total of two directors of the Company (the “Investor-Designated Directors”) if they maintain a designated ownership percentage. In 2017, Theodore Dalheim, Jr. served as the Investor-Designated Director until his resignation April 25, 2017. Since that time, a replacement director has not been elected thereby creating a vacancy.
Hiroshi Sakamoto served as an Investor-Designated Director in 2017 until his resignation August 31, 2017 at which time he was succeeded by Tetsuo Iguchi.
Toshiba and B&W could lose their right to appoint the Investor-Designated Directors under certain circumstances, including reductions in their equity holdings of the Company below certain thresholds. The holders of Class A common stock do not have the right to vote for Investor-Designated Directors. Holders of Class B common stock are generally not entitled to vote on matters on which the holders of Class A common stock vote. Holders of Class B common stock are generally limited to voting for the Investor-Designated Directors and certain other matters pertaining to the rights and obligations of the holders of Class B common stock only.
Mr. Iguchi abstains from voting on any matters involving Toshiba and its affiliates.
Biographical information, including relevant business and professional experience for each of the investor-designated directorsInvestor-Designated Director currently serving on our Board is provided below:
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| Hiroshi SakamotoTetsuo Iguchi | Director since 20102017 Age 5951 |
Mr. Sakamoto has served asIguchi is Senior Vice President of Government & Industry Relations and General Manager Toshiba Nuclear Energy Holdings (US) Inc., a subsidiaryof the Washington D.C. office of Toshiba Corporation, since April 2007. Since April 2008,America, Inc. Mr. Sakamoto hasIguchi previously was assigned to the Overseas Sales and Marketing Department for Nuclear Division and also served as Senior Vice President and Board Director,one of the Mount Fuji project team members working for Fukushima Daiichi restoration efforts. In July 2012, he was appointed Assistant General Manager of the Corporate Government & External Relations Division. He transferred to Toshiba America Nuclear Energy Corporation, also a subsidiary of Toshiba Corporation. Mr. Sakamoto joined Toshiba Corporation in April 1981 and has held a variety of positions of increasing responsibility over his career, includingInc. as Vice President for Nuclear Business Development from April 2003 to September 2009Government and SeniorIndustry Relations and Deputy General Manager of the Washington DC office in January 2013 and was Visiting Fellow for Nuclear Energy Engineering from October 2001 to March 2003 at Toshibathe Center for Strategic and International Corporation, a subsidiary of Toshiba Corporation focusing on the energy business. Mr. Sakamoto has a Bachelors Degree and a Masters Degree in Nuclear Engineering from Kyoto University. |
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| Theodore Dalheim, Jr. | Director since 2014
Age 53
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Mr. Dalheim is vice president of finance and group controller for BWX Technologies, Inc. Mr. Dalheim previously held positions with The Babcock and Wilcox Company and its affiliate companies as vice president, finance for B&W Nuclear Operations Group, Inc., B&W Nuclear Energy, Inc., B&W mPower, Inc. and Generation mPower LLC and group controller for B&W Power Generation Group, Inc. Prior to joining B&W in 2007, Mr. Dalheim served as vice president, chief financial officer and corporate secretary of Marine Mechanical Corporation, now BWXT NOG-Euclid. Mr. Dalheim holds a Bachelors Degree in Business Administration from Miami University and a Juris Doctor from Cleveland State University.Studies (CSIS). |
GOVERNANCE OF THE COMPANY
Governance Information
Our Governance Guidelines
The Board has adopted Governance Guidelines, which serve as principles addressing the role of the Board of Directors in the areas of fiduciary oversight, independence, evaluation of the chief executive officer, and succession planning. The Governance Guidelines also set standards relating to the composition and operation of the Board and its committees, including standards relating to the selection and qualification of directors, evaluation of the Board and its committees, and director education. The Governance Guidelines are administered by the Board’s Compensation, Nominating and Governance Committee (“CN&G Committee”), which regularly reviews director criteria and qualifications, and leads the performance assessments of the Board and its Committees. The Board annually assesses the adequacy and effectiveness of its Governance Guidelines. CopiesA copy of the current Governance Guidelines areis available on our website at www.centrusenergy.com under “Corporate Governance” or upon written request, addressed to the Secretary at the following address: (i) if prior to April 29, 2016, the Secretary, Centrus Energy Corp., 6903 Rockledge Drive, Suite 400, Bethesda, Maryland 20817 or (ii) if on or after April 29, 2016, the Secretary, Centrus Energy Corp., 6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817.
Executive Sessions of Non-Management Directors
Our Governance Guidelines contemplate that non-management directors meet regularly in executive session. During 2015,2017, the non-management directors met without management at regularly scheduled executive sessions, and Mikel H. Williams, currentour Chairman, presided at these executive sessions.
Communications with the Board of Directors
The Board has an established process to receive communications from stockholders and other interested parties. This process has been approved by a majority of the independent directors. Stockholders and other interested parties may contact the Board, the presiding director for executive sessions of the non-management directors, or the non-management directors as a group, by mail or electronically. Communications by mail should be addressed to such recipient or recipients in care of Centrus’ Secretary at the following addresses: (i) if prior to April 29, 2016 then to c/o Secretary, Centrus Energy Corp., 6903 Rockledge Drive, Suite 400, Bethesda, Maryland 20817 or (ii) if on or after April 29, 2016 then to c/o Secretary, Centrus Energy Corp., 6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817. Electronic communications can be made through our website at www.centrusenergy.com. Under the Corporate Governance section, you will find a link to the e-mail address for writing an electronic message to the Board, the presiding director for executive sessions of the non-management directors, or the non-management directors as a group.
Director Independence
The NYSE MKTAmerican listing standards require that the boards of listed companies have a majority of independent directors and, with limited exceptions, that audit and compensation committee members must all be independent as affirmatively determined by the Board. At its March 20162018 meeting, after reviewing the NYSE MKTAmerican standards of independence, the Board of Directors affirmatively determined that the following eight directorssix director nominees were independent: Mr. Williams, Mr. Diament, Mr. Hood, Mr. Jagodinski, Ms. Jamieson, Mr. Lunat, Dr. Madia, and Mr. Morrell.Subin. The basis for these determinations was that each of these eight directors (other thanMessrs. Williams, Diament, and Jagodinski, and Ms. Jamieson and Dr. Madia)Madia, had no relationships with the Company other than being a director and/or stockholder of the Company. In evaluating the independence of Mr. Subin, the Board also considered Broadbill Investment Partners, LLC’s and MilFam LLC’s position as noteholders of the Company. Mr. Subin co-founded and currently serves as chairman of the board of Broadbill Investment Partners, LLC and, on January 12, 2018, Mr. Subin succeeded to the position of president and manager of MilFam LLC, which serves as manager, general partner, or investment advisor to a number of entities formerly managed or advised by the late Lloyd Miller. The Board also determined that Dr. Madia had no material relationship with the Company taking into account his position as a Director on the Board of a potential partner or competitor in government procurements.these holdings did not compromise Mr. Subin’s independence. The Investor-Designated Directors are not considered to be independent. All of the members of the Company’s Audit and Finance and CN&G committees are independent.
Investor-Designated Directors
In connection with the Company’s emergence from Chapter 11 bankruptcy on September 30, 2014 (the “Effective Date”), Toshiba America Nuclear Energy Company (“Toshiba”) and Babcock and Wilcox Investment Company (“B&W”) each received in exchange and on account of their shares of the Company’s Series B-1 12.75% convertible preferred stock and warrants to purchase up to 250,000 shares of the Company’s common stock: (i) 718,200 shares (1,436,400 shares in the aggregate) of the Company’s new Class B common stock; and (ii) $20.19 million in principal amount of the Company’s 8% PIK toggle notes ($40.38 million in the aggregate).
Class B common stock and Class A common stock have the same rights, powers, preferences and restrictions and rank equally in all matters, except when voting on certain matters. Toshiba and B&W, as the holders of the Class B common stock, have the right to elect a total of two directors of the Company (the “Investor-Designated Directors”). Messrs. Sakamoto and Dalheim are currently serving as the Investor-Designated Directors. Toshiba and B&W could lose this right under certain circumstances, including reductions in their equity holdings of the Company below certain thresholds.
Mr. Sakamoto and Mr. Dalheim abstain from voting on any matters involving Toshiba, B&W and their affiliates.
Criteria for Board Membership
The CN&G Committee believes that the minimum qualifications for serving as a director of the Company are that a nominee demonstrate, by significant accomplishment in his or her field, an ability to make a meaningful contribution to the Board’s oversight of the business and affairs of the Company. This assessment includes the consideration of each director’s, or each nominee’s, business background, experience and capabilities complementary to other directors’ experience and capabilities, financial acumen, experience with government, willingness and ability to devote adequate time to the Company, integrity, and any other factor deemed appropriate, all in the context of an assessment of the perceived needs of the Board at that point in time. In addition, the Board considers the diversity of its members when considering a candidate. Centrus does not have a formal policy on Board diversity, however, Centrus’ Board of Directors Governance Guidelines include diversity as one of the criteria to be considered in reviewing the appropriate skills and characteristics required of Board members and nominees. When the CN&G Committee considers diversity, it takes an expansive view and seeks to achieve a diversity of viewpoints, skills, experience and other factors.
The CN&G Committee identifies potential nominees by asking current directors to notify the committee if they become aware of persons meeting the criteria described above, who might be available to serve on the Board. The CN&G Committee also, from time to time, may engage firms that specialize in identifying director candidates.
Once a person has been identified by the CN&G Committee as a potential candidate, the committee may collect and review publicly available information regarding the person to assess whether the person should be considered further. If the CN&G Committee determines that the candidate warrants further consideration, the Chairman or another member of the committeeCN&G Committee or their designee contacts the person. Generally, if the person expresses a willingness to be considered and to serve on the Board, the CN&G Committee requests information from the candidate, reviews the person’s accomplishments and qualifications, including in light of any other candidates that the committee might be considering, and conducts one or more interviews with the candidate. In certain instances, committee members may contact one or more references provided by the candidate or may contact other members of the business community or other persons that may have greater first-hand knowledge of the candidate’s accomplishments. The committee’sCN&G Committee’s evaluation process does not vary based on whether or not a candidate is recommendednominated by a stockholder.
After Mr. Sakamoto andDalheim’s resignation from the Board, B&W has not replaced him. After Mr. Dalheim wereSakamoto’s resignation from the Board, Mr. Iguchi was designated by Toshiba and B&W, respectively.Toshiba. Under the terms of the Chapter 11 plan support agreements with Toshiba and B&W, the CN&G Committee reviewed the qualifications of Mr. Sakamoto and Mr. DalheimIguchi prior to their electionhis appointment to the Board.
In connection with its private exchange offer completed in February 2017, the Company entered into a Support Agreement (the “Support Agreement”) with certain holders of the Company’s 8.0% payment-in-kind toggle notes due 2019/2024 (the “8% PIK Notes”), including Toshiba and BWX Technologies, Inc., an affiliate of B&W (collectively, the “Support Parties”). Under the Support Agreement, the Support Parties requested that the Company consider appointing Mr. Subin to the Board. The CN&G Committee reviewed the qualifications of Mr. Dalheim was electedSubin prior to his appointment to the Board in December 2014 to replace the previous B&W designee.
Board.
Director Nominations by Stockholders
The CN&G Committee will consider director candidates recommendednominated by stockholders. In considering candidates submitted by stockholders, the CN&G Committee will take into consideration the needs of the Board and the qualifications of the candidate. To have a candidate considered by the CN&G Committee, a stockholder must comply with notification requirements in Centrus’ bylaws. The bylaws require, among other things, that a stockholder must submit the recommendationnomination in writing and must include the following information:
the name of the stockholder and evidence of the person’s ownership of Company stock, including the number of shares owned and the length of time of ownership; and
the name of the candidate, the candidate’s resume or a listing of his or her qualifications to be a director of the Company and the person’s consent to be named as a director if selected by the CN&G Committee and nominated by the Board.
Under our bylaws, a stockholder’s nomination for director must be delivered to the Company’s Secretary not less than 90 days nor more than 120 days prior to the anniversary date of the previous year’s annual meeting, unless the date of the next annual meeting is more than 30 days before or more than 60 days after such anniversary date, in which case notice must be received not later than the tenth day following the day on which notice of the meeting is mailed or public disclosure of the date of the annual meeting is made. Accordingly, stockholder nominationsFor the dates of submission of director candidates for director must be received by the Company between January 12, 2017 and February 11, 2017, in order to be considered timely, unless the Company gives notice that the date of theour 2019 annual meeting, is more than 30 days before, or more than 60 days after, May 12, 2017.
please see the section of this proxy statement titled “Date for Submission of Stockholder Proposals.”
Board Leadership Structure and Role in Risk Oversight
The Board does not have a policy on whether or not the role of the Chairman and Chief Executive Officer should be separate. However, Centrus currently has a separate, independent Chairman. Mr. Williams has been Chairman since September 2014. Centrus believes this leadership structure is appropriate for Centrus at this time because Mr. Williams provides valuable oversight of management, while avoiding potential conflicts, and encouraging a proactive and effective board.Board. In his role as Chairman, Mr. Williams provides Board leadership, presides at all Board meetings and approves all Board agendas.
The Board has responsibility for risk oversight of Centrus and exercises this oversight function both through the entire Board and through the individual committees of the Board. Individuals who are responsible for Centrus’ key risks report directly to the entire Board on a regular basis regarding Centrus’ enterprise risk management (ERM)(“ERM”) program. The Audit and Finance CommitteeBoard has responsibility to discuss the Company’s guidelines and policies governing risk assessment and risk management and the process by which each is handled. The risks that are identified as part of Centrus’ ERM program and through the Audit and Finance CommitteeBoard’s process flow down to the specific committees based on their areas of responsibility. For example, the Audit and Finance Committee oversees the management by Centrus of risks as they relate to audit and finance matters or other matters within the committee’s scope of responsibilities, while the Technology, Competition and Regulatory Committee oversees the management by Centrus of risks as they relate to compliance with regulatory requirements or other matters within the committee’s scope of responsibilities.
Code of Business Conduct
Centrus has a code of business conduct, applicable to all of our directors, officers and employees. The code of business conduct provides a summary of the standards of conduct that are at the foundation of our business operations. The code of business conduct states that we conduct our business in strict compliance with all applicable laws and addresses other important matters such as conflicts of interest and how violations of the code may be reported and will be handled. Each director, officer and employee must read the code of business conduct and sign a form stating that he or she has read, understands and agrees to comply with the code of business conduct. Our Business Conduct Committee, comprised of members of management, is responsible for monitoring performance under the code of business conduct and for addressing any issues that arise with respect to the code. A copy of the code of business conduct is available on our website at www.centrusenergy.com or upon written request, addressed to the Secretary at (i) if prior to April 29, 2016, the Secretary, Centrus Energy Corp., 6903 Rockledge Drive, Suite 400, Bethesda, Maryland 20817, or (ii) if on or after April 29, 2016, the Secretary, Centrus Energy Corp., 6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817. We will disclose on the website any amendments to, or waivers from, the code of business conduct that are required to be publicly disclosed.
Transactions with Related Persons
The Board has adopted a policy and procedures for review, approval or ratification of transactions involving the Company and “related persons” (the Company’s directors and executive officers and stockholders owning 5% or greater of the Company’s outstanding stock, or their immediate family members). The policy covers any related person transaction that meets the minimum threshold for disclosure under the relevant SEC rules or that is otherwise referred to the Board for review. This generally includes transactions involving amounts exceeding $120,000 in which a related person has a direct or indirect material interest. Under this policy, related person transactions must be approved by the CN&G Committee, although the Chairman of the Board may direct that the full Board review specific transactions. The transaction must be approved in advance whenever feasible and, if not feasible, must be ratified at the CN&G Committee’s next meeting. In determining whether to approve or ratify a related person transaction, the CN&G Committee will take into account all factors it deems appropriate, including: whether the subject matter of the transaction is available from other non-affiliated sources; whether the transaction is on terms no less favorable to the Company than terms generally available from an unaffiliated third party; the extent of the related person’s interest in the transaction; and whether the transaction is in the best interests of the Company.
Management is responsible for the development and implementation of processes and controls to ensure that related person transactions are identified and that disclosure is made as required by law. To that end, currently we annually require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related person transactions.
InPursuant to the Support Agreement, which the Company entered into in connection with the Company’s restructuring,private exchange offer completed in February 2017, the Company engaged AP Services, LLC (“APS”agreed to increase the number of members of its Board by one and, at the request of the Support Parties in their capacity as holders of the Company’s 8.25% senior secured notes due 2027 (the “8.25% Notes”) (which were issued in exchange for the 8% PIK Notes), an affiliate of AlixPartners, LLP (“AlixPartners”) to provide various consulting and management servicesconsider appointing to the Board a qualified person designated by the Support Parties who was reasonably acceptable to the Company. John R. Castellano, the Company’s former interim President and Chief Executive Officer, is a partner at AlixPartners and served as the Company’s Chief Restructuring Officer from October 2013 until October 2014 pursuant to that engagement.On August 2, 2017, Mr. CastellanoSubin was appointed to the Board to fill the vacancy created under the Support Agreement. Broadbill Investment Partners, LLC, which Mr. Subin co-founded and serves as the Interim President and Chief Executive Officerchairman of the Company, effective October 17, 2014, and served in that position until March 23, 2015. Mr. Castellano’s services to the Company were billed by APS under its agreement with the Company. Mr. Castellano did not receive separate compensation from the Company for serving as either the Chief Restructuring Officer or the Interim President and Chief Executive Officerboard, was one of the CompanySupport Parties that executed a Support Agreement and did not participateparticipated in anythe 2017 private exchange offer. Out of a total $74.3 million principal amount of the Company’s employee benefit plans. During8.25% Notes, Broadbill Investment Partners, LLC holds $1,448,676 principal amount of the year ended December 31, 2014,8.25% Notes and MilFam LLC, of which Mr. Subin succeeded to the position of president and manager on January 12, 2018 and which serves as manager, general partner, or investment advisor of a number of entities formerly managed or advised by the late Lloyd Miller holds $14,612,463 principal amount of the 8.25% Notes. Broadbill Investment Partners, LLC and MilFam LLC receive interest on the 8.25% Notes, which is payable by the Company incurred approximately $5.0 million in fees related to its engagement with APS, including approximately $2.0 million related to the services provided by Mr. Castellano as Chief Restructuring Officer and Interim President and Chief Executive Officer. During the year ended December 31, 2015, the Company incurred approximately $0.9 million in fees related to its engagement with APS, including approximately $0.6 million related to the services provided by Mr. Castellano as Chief Restructuring Officer and Interim President and Chief Executive Officer.semi-annually.
Corporate Governance Information
Stockholders will find information about our corporate governance practices on our website at www.centrusenergy.com. Our website contains information about our Board, of Directors, Board committees, current copies of our bylaws and charter, committee charters, code of business conduct and governance guidelines. Stockholders may obtain, without charge, hard copies of the above documents by writing to the Secretary at (i) if prior to April 29, 2016, the Secretary, Centrus Energy Corp. 6903 Rockledge Drive, Suite 400, Bethesda, Maryland 20817 or (ii) if on or after April 29, 2016, the Secretary, Centrus Energy Corp., 6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817.
Board and Committee Membership
Pursuant to the Delaware General Corporation Law, under which Centrus is organized, our business, property, and affairs are managed under the direction of our Board of Directors.Board. Members of the Board are kept informed of our business through discussions with the Chief Executive Officer and other officers, by reviewing materials prepared for them by management, by participating in meetings of the Board and its committees, and by other means.
It is the Board’s policy that all directors attend the annual meeting. All of the incumbent directors attended the 20152017 annual meeting.
During 2015,2017, the Board of Directors held 1214 meetings. All incumbent directors attended 75% or more of the Board of Directors’Board’s meetings and meetings of the committees on which they served.
The Board has designated four standing committees, each identified in the table below. With the exception of the Executive Committee, the committees are composed entirely of non-employee directors. The Board has adopted a written charter for each of these committees. The full text of each charter is available on the Company’s website located at www.centrusenergy.com.
The table below sets forth the membership of these committees as of March 31, 2016April 6, 2018 and the number of meetings held in 2015:2017:
| | | Director | | Executive Committee | | Audit and Finance Committee | | Compensation, Nominating and Governance Committee | | Technology, Competition and Regulatory Committee | Executive Committee | Audit and Finance Committee | | Compensation, Nominating and Governance Committee | | Technology, Competition and Regulatory Committee |
| Theodore Dalheim, Jr. | | |
| Michael Diament | | X | | Chair | | X | X | | Chair | | X |
| Osbert Hood | | X | | |
| W. Thomas Jagodinski | | X | | Chair | | X | Chair | |
| Patricia J. Jamieson | | X | | | X | | X | |
| Suleman E. Lunat | | X | | |
| William J. Madia | | X | | Chair | X | | Chair |
| Michael P. Morrell | | X | | |
| Daniel B. Poneman | | X | | X | |
| Hiroshi Sakamoto | | |
| Neil S. Subin | | | X | |
| Mikel H. Williams | | Chair | | X | Chair | X | | X | | X |
| Number of Meetings in 2015 | | 2 | | 7 | | 9 | | 5 | |
| Number of Meetings in 2017 | | 1 | 6 | | 10 | | 5 |
15Mr. Iguchi, currently our only Investor-Designated Director, does not serve on any of the four standing committees. In 2017, none of the Investor-Designated Directors served on any of the four standing committees.
The functions performed by our four standing committees are described below.
Audit and Finance Committee
The Audit and Finance Committee represents and assists the Board with the oversight of: the integrity of the Company’s financial statements, the Company’s compliance with legal and regulatory requirements, the independent auditor’s qualifications and independence, the performance of the Company’s internal audit function, and the performance of the independent auditors. In addition, the Committee is responsible for appointing, retaining, compensating, evaluating and, if necessary, terminating the Company’s independent auditors. The Committee is also responsible for advising the Board regarding significant financial matters. The Committee is also responsible for discussing the Company’s guidelines and policies governing risk assessment and risk management and the process by which each is handled and to oversee the management by the Company of risks as they relate to audit and finance matters or other matters within the Committee’s scope of responsibilities. The Committee meets regularly in executive session with the Company’s independent auditor and with the Company’s chief audit executive.
The Board has determined that each member of the Audit and Finance Committee is an “independent director” in accordance with NYSE MKTAmerican listing standards. Under the NYSE MKTAmerican listing standards, all audit committee members must be “financially literate,” as that term is determined by the Board in its business judgment. Further, under SEC rules, the Board must determine whether at least one member of the audit committee is an “audit committee financial expert,” as defined by the SEC’s rules. The Board has determined that all members of the Audit and Finance Committee are “financially literate” and qualify as “audit committee financial experts.”
Compensation, Nominating & Governance Committee
The CN&G Committee’s responsibilities include annually reviewing the performance of the Chief Executive Officer and other senior management; overseeing and administering the Company’s executive compensation program; and reviewing, overseeing and evaluating overall compensation programs and policies for the Company and its employees. The CN&G Committee is also responsible for overseeing the management by the Company of risks as they relate to the Company’s compensation policies and practices and other matters within the committee’s scope of responsibilities. The CN&G Committee is also responsible for periodically reviewing compensation for non-employee directors and making recommendations to the Board. The CN&G Committee also establishes performance objectives under the Company’s incentive programs and oversees administration of employee benefit plans.
The functions of the CN&G Committee also include the following: identifying and recommending to the Board individuals qualified to serve as directors of the Company; recommending to the Board directors to serve on committees of the Board; advising the Board with respect to matters of Board composition and procedures; developing and recommending to the Board a set of corporate governance principles applicable to the Company and overseeing corporate governance matters generally; overseeing the annual evaluations of the Chief Executive Officer, the Board and its committees; and overseeing the management by the Company of risks as they relate to the Company’s corporate governance or other matters within the committee’s scope of responsibilities.
The CN&G Committee will consider director candidates recommendednominated by stockholders in accordance with the procedures previously described under “Governance Information - Director Nominations by Stockholders.” In addition, the CN&G Committee is responsible for reviewing the Company’s code of business conduct and overseeing the Company’s processes for monitoring compliance, and for reviewing and approving all transactions between the Company and any related person under the Company’s related person transaction policy previously described.
The Board has determined that each member of the CN&G Committee is an “independent director” in accordance with NYSE MKTAmerican listing standards.
The CN&G Committee has retained a consultant, Pay Governance, to provide the committeeCommittee with independent compensation data, analysis and advice. Pay Governance reports to the CN&G Committee and its chairman. Under the CN&G Committee’s charter, the CN&G Committee has sole authority to retain and terminate themits compensation consultant and to approve theirthe consultant’s fees and other retention terms. Throughout 2015,2017, the compensation consultant worked closely with the CN&G Committee and attended a majority of CN&G Committee meetings and met with the CN&G Committee regularly in executive session. Examples of projects assigned to the compensation consultant during 20152017 included market studies of executive pay and of Board pay, pay-for-performance analysis, review of a peer group for executive compensation benchmarking, a review of walk-away values as of year-end (i.e. the benefits executives would be entitled to receive had their employment terminated at that time) and advice on compensation best practices.
The CN&G Committee, in consultation with management, has reviewed the design and operation of the Company’s compensation arrangements and evaluated the relationship between the Company’s risk management policies and practices and these arrangements. As a result of this review, the CN&G Committee has determined that the Company’s compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.
Technology, Competition and Regulatory Committee
The Technology, Competition and Regulatory Committee’s responsibilities include providing oversight and guidance to management with respect to the Company’s technology initiatives, with a focus on the potential technological advances and technological risk related to the Company’s centrifuge technology; informing the Board of significant energy policy developments and developments in enrichment technology; monitoring competition and market demand in the enrichment industry; monitoring the protection of the Company’s intellectual property; monitoring issues with respect to the Company’s information technology; monitoring operational readiness activities; and overseeing the management by the Company of risks as they relate to the Company’s technology, competition or other matters within the committee’sCommittee’s scope of responsibilities.
The Committee’s responsibilities include monitoring the Company’s compliance with regulatory requirements, overseeing the Company’s initiatives with and involving various agencies of the United States government and applicable State governments. The Committee is also responsible for advising the Board on regulatory and other governmental considerations in the Board’s deliberations and decision-making processes, and overseeing the management by the Company of risks as they relate to the Company’s compliance with regulatory requirements or other matters within the Committee’s scope of responsibilities.
Executive Committee
The primary function of the Executive Committee is to aid the Board in handling matters which, in the opinion of the Chairman of the Board, should not be postponed until the next scheduled meeting of the Board, as the law permits.
Compensation of Directors
Non-Employee Director Compensation Arrangement
Annual compensation for non-employee directors typically covers service for the one-year term of approximately one year commencing at the annual meeting. For the 2015-20162017-2018 term, the Board of Directors approved the following compensation structure for non-employee directors:
Annual cash retainer of $60,000, paid in four quarterly installments on June 30, September 30, December 31 and March 31.
Board meeting fees are paid to each director based on the number of boardBoard meetings attended. Directors attending a Board meeting in person receive a fee of $3,000 per meeting and directors receive a fee of $1,500 for each Board meeting attended telephonically. Meeting fees are paid in arrears at the time that annual cash retainer payments are made.
Annual grant of 5,000 RSUs that vestsvest on May 7, 2016.the earlier of the first anniversary of the grant date or the next annual meeting of stockholders. However, vesting is accelerated upon (1) the director attaining eligibility for retirement, (2) termination of the director’s service by reason of death or disability, or (3) a change in control.control of the Company. Settlement of RSUs is made in shares of Centrus common stock upon the director’s retirement or other endtermination of service.service as a Board member.
$100,000 annual fee for the Chairman of the Board. An annual fee of $15,000 will be paid for the Audit and Finance Committee chairman and also for the CN&G Committee chairman. An annual fee of $50,000 will be paid for the Technology, Competition and Regulatory Committee chairman. Committee fees are paid in four quarterly installments at the time annual cash retainer payments are made.
Committee meeting fees are paid to each director that is a duly elected member of that committee based on the number of committee meetings attended. A meeting fee of $1,500 will be paid for committee meetings held in conjunction with a full boardBoard meeting. A meeting fee of $3,000 will be paid for in-person committee meetings held independently of a boardBoard meeting. A meeting fee of $1,500 will be paid for each committee meeting attended telephonically. Meeting fees are paid in arrears at the time annual cash retainer payments are made.
All non-employee directors are reimbursed for any reasonable expenses incurred in connection with their duties as directors of the Company. Mr. Poneman, our President and Chief Executive Officer, does not receive separateany additional compensation for his service as a Board activities. Themember. Mr. Iguchi, currently our only Investor-Designated Directors described under “Governance Information - Investor-Designated Directors” doDirector also does not receive compensation from the Company for their Board activities.his service on the Board. Our Investor-Designated Directors are, however, eligible to receive reimbursement of expenses in connection with service as a member of the Board.
Non-Employee Director Compensation infor Fiscal Year 2015
2017
| | Name | | Fees Earned or Paid in Cash ($) | | Stock Awards(1) ($) | | Total ($) | | Fees Earned or Paid in Cash ($) | | Stock Awards(2) ($) | | Total ($) |
| Michael Diament | | $147,347 | | $25,700 | | $173,047 | | | $ | 127,500 |
| | $ | 25,000 |
| | $ | 152,500 |
| |
| Osbert Hood | | 124,377 | | 25,700 | | 150,077 | | |
| W. Thomas Jagodinski | | 147,347 | | 25,700 | | 173,047 | | | 114,000 |
| | 25,000 |
| | 139,000 |
| |
| Patricia J. Jamieson | | 126,049 | | 25,700 | | 151,749 | | | 102,000 |
| | 25,000 |
| | 127,000 |
| |
| Suleman E. Lunat | | 121,377 | | 25,700 | | 147,077 | | |
| William J. Madia | | 176,441 | | 25,700 | | 202,141 | | | 143,000 |
| | 25,000 |
| | 168,000 |
| |
| Michael P. Morrell | | 125,877 | | 25,700 | | 151,577 | | |
| Neil Subin | | | 38,500 |
| | 20,600 |
| | 59,100 |
| |
| Mikel H. Williams | | 240,505 | | 25,700 | | 266,205 | | | 205,000 |
| | 25,000 |
| | 230,000 |
| |
| | | |
_______________
|
| |
| (1) | The Investor-Designated Directors do not receive director compensation. Mr. Poneman also does not receive director compensation. Mr. Poneman’s compensation as our President and Chief Executive Officer is set forth in the Summary Compensation Table of this proxy statement. Mr. Subin joined our Board in August 2017 and his director compensation is reflective of the duration of his service as a director of our Company. |
| (2) | The amounts shown in the Stock Awards column represent the aggregate grant date fair value of RSU awards granted to directors in 20152017 under the Centrus Energy Corp. 2014 Equity Incentive Plan, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718, Compensation - Stock Compensation (“ASC Topic 718”). For a discussion of valuation assumptions, see Note 1312 to our consolidated financial statements included in our annual report on Form 10-K for the year ended December 31, 2015.2017. In accordance with SEC rules, the amounts shown exclude the impact of estimated forfeitures related to service-based vesting conditions. |
The amounts shown in the Stock Awards column for each of the non-employee directors includes the following grants of RSUs, which have the following grant date fair value, calculated using the closing price of Centrus’ common stock on the date of grant in accordance with FASB ASC Topic 718:
| | | Name | | Grant Date | | Number of Restricted Stock Units | | Grant Date Fair Value | | Grant Date | | Number of Restricted Stock Units | | Grant Date Fair Value |
| Michael Diament | | 05/07/15 | | 5,000 | | $25,700 | | 05/31/2017 | | 5,000 | | $ | 25,000 |
| |
| Osbert Hood | | 05/07/15 | | 5,000 | | 25,700 | |
| W. Thomas Jagodinski | | 05/07/15 | | 5,000 | | 25,700 | | 05/31/2017 | | 5,000 | | 25,000 |
| |
| Patricia J. Jamieson | | 05/07/15 | | 5,000 | | 25,700 | | 05/31/2017 | | 5,000 | | 25,000 |
| |
| Suleman E. Lunat | | 05/07/15 | | 5,000 | | 25,700 | |
| William J. Madia | | 05/07/15 | | 5,000 | | 25,700 | | 05/31/2017 | | 5,000 | | 25,000 |
| |
| Michael P. Morrell | | 05/07/15 | | 5,000 | | 25,700 | |
| Neil Subin | | | 08/02/2017 | | 5,000 | | 20,600 |
| |
| Mikel H. Williams | | 05/07/15 | | 5,000 | | 25,700 | | 05/31/2017 | | 5,000 | | 25,000 |
| |
The number of RSUs outstanding at December 31, 20152017 for each of our current non-employee directors is 7,917.Messrs. Diament, Jagodinski, and Williams, and Ms. Jamieson and Dr. Madia was 17,917 (of which 5,000 RSUs were unvested on that date). The number of RSUs outstanding at December 31, 2017 for Mr. Subin was 5,000 (of which 5,000 RSUs were unvested on that date).
Our Executive Officers
Executive officers are elected by and serve at the discretion of the Board of Directors.Board. Our executive officers at March 25, 2016April 6, 2018 are as follows:
|
| | | | |
| Name | | Age | | Position |
| Daniel B. Poneman | | 6062 | | President and Chief Executive Officer |
Kevin AlldredLarry B. Cutlip | | 5758 | | Senior Vice President, Business StrategyField Operations |
Elmer W. DykeMarian K. Davis | | 52 | | Senior Vice President, Business Operations |
Stephen S. Greene | | 5859 | | Senior Vice President, Chief Financial Officer and Treasurer |
Marian K. DavisElmer W. Dyke | | 5754 | | Senior Vice President, Business Operations and Chief Audit ExecutiveCommercial Officer |
| Stephen S. Greene | | 60 | | Senior Vice President, Corporate Development and Strategy |
| Dennis J. Scott | | 58 | | Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary |
| John M.A. Donelson | | 5153 | | Vice President, Marketing, Sales and Power |
Steven R. Penrod | | 59 | | Vice President, American Centrifuge |
Richard V. Rowland | | 67 | | Vice President, Human ResourcesChief Marketing Officer |
Daniel B. Poneman has been President and Chief Executive Officer since March 23, 2015 and served as the Company’swas Chief Strategic Officer fromin March 6, 2015 until March 31, 2015. A complete description of Mr. Poneman’s background is included under “Nominees for Director.”
Kevin Alldred has been Senior Vice President, Business Strategy since October 2015. Prior to joining the Company, Mr. Alldred worked forPoneman was Deputy Secretary of Energy from May 2009 to October 2014, in which capacity he also served as Chief Operating Officer of the International Atomic Energy Agency (“IAEA”), where heU.S. Department of Energy.
Larry B. Cutlip has been Senior Vice President, Field Operations since January 2018, was project manager forVice President, Field Operations from May 2016 through December 2017, was Deputy Director of the IAEA LEU BankAmerican Centrifuge Project from January 2015 to May 2016, was Director, Centrifuge Manufacturing from April 20122008 to September 2015,December 2014, was Director, Program Management and an expert assisting with a nuclear infrastructure project, research reactor projectsStrategic Planning from December 2005 to April 2008, was Manager, Engineering from May 1999 to December 2005, and non-proliferation projects from February 2010 to March 2012.
held positions in operations management and engineering at the Company and its predecessors since 1981.
Elmer W. Dyke has been Senior Vice President, Business Operations and Chief Commercial Officer since January 2018 and was Senior Vice President, Business Operations from September 2015.2015 through December 2017. Prior to joining the Company, Mr. Dyke was Vice President for Sales at NAC International from January 2014 to September 2015, anda Senior Vice President of NAC’sNAC International’s global consulting business and Vice President of International Sales from August 2010 to December 2013.September 2015.
Stephen S. GreeneMarian K. Davis has been Senior Vice President, Chief Financial Officer and Treasurer since April 2018. Ms. Davis was Vice President, Finance and Accounting from January 2018 to April 2018 and Vice President and Chief Audit Executive from July 2011 through December 31, 2017.
Stephen S. Greene has been Senior Vice President, Corporate Development and Strategy since April 2018. Mr. Greene served as Senior Vice President, Chief Financial Officer and Treasurer from July 2015 to April 2018 and was Vice President, Finance and Treasurer from February 2007 to July 2015.
Marian K. DavisDennis J. Scott has been Vice President and Chief Audit Executive since July 2011. Prior to joining the Company, Ms. Davis was Senior Vice President, General Counsel, Chief Compliance Officer and Corporate Internal Audit for Sunrise Senior Living, Inc.Secretary since January 2018 and Vice President, General Counsel, Chief Compliance Officer and Corporate Secretary from November 2003May 2016 through December 2017. Mr. Scott was Deputy General Counsel and Director, Corporate Compliance from April 2011 to May 2010.2016, Acting Deputy General Counsel from August 2010 to April 2011, Assistant General Counsel and Director, Corporate Compliance from April 2005 to August 2010 and Assistant General Counsel from January 1994 to April 2005.
John M.A. Donelson has been Vice President, Sales and Chief Marketing Officer since January 2018 and Vice President, Marketing, Sales and Power sincefrom April 2011. He2011 through December 2017. Mr. Donelson was previously Vice President, Marketing and Sales from December 2005 to April 2011, Director, North American and European Sales from June 2004 to December 2005, Director, North American Sales from August 2000 to June 2004 and Senior Sales Executive from July 1999 to August 2000.2000.
Steven R. Penrod has been Vice President, American Centrifuge since August 2014 and was Vice President, Enrichment Operations from February 2010 to August 2014 and was General Manager of the Paducah Gaseous Diffusion Plant since 2005.
Richard V. Rowland has been Vice President, Human Resources since April 2012 and was previously Corporate Director of Human Resources from March 1997 to April 2012.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
Security Ownership of Management
Directors, Director Nominees and Executive Officers
The following table shows the beneficial ownership of the Company’s common stock as of March 18, 201619, 2018 by each of the Company’s directors and director nominees, by each executive officer named in the Summary Compensation Table, and by all directors and executive officers of the Company as a group. Unless otherwise indicated in the table, each person has the sole power to vote and dispose of the shares reported as beneficially owned by such person. The directors and executive officers as a group do not own more than 1% of the total outstanding shares.
|
| | | | |
Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership(1)
|
Directors and Nominees | | | |
Michael Diament | | 7,917 |
| |
Hiroshi Sakamoto | | — |
| |
Mikel H. Williams | | 7,917 |
| |
Theodore J. Dalheim, Jr. | | — |
| |
Osbert Hood | | 7,917 |
| |
W. Thomas Jagodinski | | 7,917 |
| |
Patricia J. Jamieson | | 7,917 |
| |
Suleman E. Lunat | | 7,917 |
| |
William J. Madia | | 7,917 |
| |
Michael P. Morrell | | 7,917 |
| |
Daniel B. Poneman(2)
| | 75,000 |
| |
Named Executive Officers | | | |
Stephen S. Greene | | 2,500 |
| |
John M.A. Donelson | | 2,500 |
| |
Directors and all executive officers as a group (18 persons) | | 151,428 |
| |
|
| | | | | | |
Name of Beneficial Owner(1) | | Amount and Nature of Beneficial Ownership(2) | Percentage of Class Owned |
| Directors and Nominees | | | | |
| Mikel H. Williams | | 17,917 |
| | * |
|
| Michael Diament | | 17,917 |
| | * |
|
| Tetsuo Iguchi | | — |
| | * |
|
| W. Thomas Jagodinski | | 17,917 |
| | * |
|
| Patricia J. Jamieson | | 17,917 |
| | * |
|
| William J. Madia | | 17,917 |
| | * |
|
Neil S. Subin (3) | | 860,315 |
| | 11.3 |
|
Daniel B. Poneman (4) | | 225,000 |
| | 2.9 |
|
| Named Executive Officers | | | | |
| Stephen S. Greene | | 22,500 |
| | * |
|
| Elmer W. Dyke | | 33,333 |
| | * |
|
Directors and all executive officers as a group (14 persons) (4) | | 1,250,881 |
| | 16.4 |
|
________________
|
| |
| * | Represents less than 1% of our outstanding common stock. |
| (1) | The Company has issued 9,038,751 shares of common stock, consisting of 7,632,669 shares of Class A common stock and 1,406,082 shares of Class B common stock. The Class B common stock is held by Toshiba and B&W. The Holders of Class B common stock have the same rights, powers, preferences and restrictions and ranks equally in all matters with the Class A common stock, except in regards to voting. The Class B common stock would convert to Class A common stock upon transfer to a non-Class B common stock holder. |
| (2) | Includes 5,000 RSUs that vest on May 7, 201617, 2018 for each of the following directors: Messrs. Diament, Hood, Jagodinski, Lunat, MorrellSubin, and Williams, and Dr. Madia and Ms. Jamieson. However, vesting is accelerated upon (1)(i) the director attaining eligibility for retirement, (2)(ii) termination of the director’s service by reason of death or disability, or (3)(iii) a change in control. Settlement of RSUs is made in shares of Centrus Class A common stock upon the director’s retirement or other end of service. |
(2)(3) | Based on a Schedule 13D filed on January 23, 2018 which provides that (i) Mr. Subin has sole voting power for 860,315 shares and sole power to dispose or to direct the disposition of all shares, (ii) Mr. Subin is the managing member and manager of MilFam, LLC, which is adviser to various entities formally managed or advised by the late Lloyd I. Miller, (iii) Mr. Subin serves as trustee of a number of Miller family trusts, (iv) Mr. Subin does not have any pecuniary interest in the 792,658 shares common stock owned by such Miller family entities, (v) 62,657 shares of common stock are owned by Broadbill Partners II, L.P., a private investment firm co-founded by Mr. Subin, and (vi) Mr. Subin owns 5,000 shares of common stock directly. |
| (4) | Includes 75,000225,000 shares of Common Stock that may be acquired under stock options that are currently exercisable or will become exercisable within 60 days. |
| |
Security Ownership of Certain Beneficial Owners
The following table sets forth information as to those holders known to the Company to be the beneficial owners of more than 5% of the outstanding shares of the Company’s Class A common stock as of March 18, 2016.19, 2018. All information shown is based on information reported by the filer on a Schedule 13G or 13D filed with the SEC on the dates indicated in the footnotes to this table.
|
| | | | |
| Name and Address of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class Owned (1) |
Lloyd I. Miller, IIINeil Subin | | | | |
3300 South Dixie HighwayBroadbill Investment Partners, LLC | | | | |
Suite 1-365157 Columbus Avenue 5th Floor | | | | |
West Palm Beach, Florida 33405New York, NY 10023 | | 792,658860,315(2)
| | 10.5%11.3% |
| | | | | |
| Morris Bawabeh | | | | |
| 15 Ocean Avenue | | | | |
Brooklyn, New YorkNY 11225 | | 1,374,0431,590,000(3)
| | 18.2%20.8% |
| | | | | |
| Global X Management Company LLC | | | | |
600 Lexington Avenue, 20th20th Floor | | | | |
New York, NY 1002210023 | | 396,803663,497(4)
| | 5.2%8.7% |
| | | | |
________________
|
| |
| (1) | Based on 7,563,6007,632,669 shares of the Company’s Class A common stock outstanding as of March 18, 2016.19, 2018. |
| (2) | Based on a Schedule 13G/A13D filed on February 1, 2016January 23, 2018 which statesprovides that (i) Mr. MillerSubin has sole voting power for 860,315 shares and dispositivesole power with respect to 792,658dispose or to direct the disposition of all shares, (ii) Mr. Subin is the reported securities as (i)managing member and manager of a limited liability company thatMilFam, LLC, which is the adviser to a certain trust, (ii) managervarious entities formally managed or advised by the late Lloyd I. Miller, (iii) Mr. Subin serves as trustee of a limited liability company that isnumber of Miller family trusts, (iv) Mr. Subin does not have any pecuniary interest in the general partner792,658 shares common stock owned by such Miller family entities, (v) 62,657 shares of common stock are owned by Broadbill Partners II, L.P., a certain limited partnership, (iii) contributor to a SEP individual retirement account, (iv) trustee for a certain generation skipping trust,private investment firm co-founded by Mr. Subin, and (v) an individual.(vi) Mr. Subin owns 5,000 shares of common stock directly. |
| (3) | Based on a Schedule 13G/13D/A filed on February 1, 2016 and includes7, 2017 which provides that shares that may be deemed directly or indirectly beneficially held by each of the following: Mr. Bawabeh’s spouse, Dolly Bawabeh, Kulayba LLC, a limited liability company of which Mr. Bawabeh is the sole member, and Gates Equities,M&D Bawabeh Foundation, Inc. a general partnershipcharitable foundation of which Mr. Morris Bawabeh is a partner.director and officer.Mr. Bawabeh disclaims beneficial ownership in the 84,500 shares held by the foundation. |
| (4) | Based on a Schedule 13G13G/A filed on February 16, 201614, 2018 which statesprovides that the filer has sole voting power for 663,497 shares and sole power to dispose or to direct the disposition of all shares. Global X Management Company LLC (“GXMC”) is a registereddisclaims beneficial ownership of these securities which are owned by investment adviser that furnishescompanies and for which it serves as investment advice to the Global X Uranium ETF, a separate series of the Global X Funds, an investment company.adviser |
SECTION 16(a) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a) of the Securities Exchange Act of 1934 requires the Company’s executive officers and directors, and persons who own more than 10% of any registered class of the Company’s equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10% stockholders are required by regulation to furnish the Company with copies of all Section 16(a) reports they file.
Based solely on its review of the copies of the reports it has received and written representations provided to the Company from the individuals required to file the reports, the Company believes that during the fiscal year ended December 31, 20152017 the Company’s officers, directors and greater than 10% stockholders timely filed all reports they were required to file under Section 16(a), except for the following: a late Form 3 filed by Mr. Dalheim; and one late Form 3 filed by Morris Bawabeh, a beneficial owner of more than 10% of Centrus Common Stock, and four late Forms 4 filed on February 1, 2016 by Morris and Dolly Bawabeh reporting 79 transactions..
EXECUTIVE COMPENSATION
Highlights of Our Executive Compensation Program
Our executive compensation program is built on a strong governance framework and pay-for-performance philosophy. Key design elements and features of this program are:
Our Compensation, Nominating and GovernanceCN&G Committee exercises strong oversight of all elements of executive compensation;
Base salary in 20152017 represented 64%55% or less of each named executive officer’s total direct compensation opportunity, with the remainder of compensation being variable or “at risk;”risk” (with annual bonuses included as “total direct compensation” based on the amount actually awarded to the executive for 2017 and equity awards, if any, included based on the grant date fair value of awards granted to the executive as determined under applicable accounting rules; no equity awards were granted to executives in 2017);
Our Compensation, Nominating and GovernanceCN&G Committee usesretains Pay Governance as its an independent compensation consultant;
Our equity incentive plan includes a compensation recovery or “clawback” provision that applies to all equity plan participants;
Except for Mr. Poneman, our CEO, there are no employment agreements with other executives, and cash severance payments upon a termination is limited to (a) two times base salary and annual bonus for Mr. Poneman and one times base salary and bonus for other executives and (b) the executive’s prorated performance bonus based on actual performance;
Changeour executives. The Company has change in control agreements with each of the covered executives (including each of the named executive officers), which are “double-trigger” requiring both a change in control of the Company and a separation from servicean involuntary or constructive termination of the executive’s employment within a specified period of the change in control to receive benefits. These agreements provide for automatic renewal to protect employees; however, we retain the ability to terminate the agreements prior to a change in control with sufficient notice;
Excise tax-gross ups have been eliminated from all
Cash severance payments upon an involuntary termination outside of a change in control agreements;for Mr. Poneman under his employment agreement are limited to (a) two times base salary and annual bonus and (b) Mr. Poneman’s pro-rated performance bonus based on actual performance for the year in which the termination of employment occurs. Cash severance payments upon an involuntary termination outside of a change in control for all other executives under their change in control agreements are limited to (a) one times base salary and annual bonus for other executives and (b) the executive’s prorated performance bonus based on actual performance for the year in which the termination of employment occurs;
We do not provide excise tax-gross ups to our executives under their employment or change in control agreements or any other agreement; and
We have a strong risk management program with specific responsibilities assigned to the Board and its committees, and considerationwith the goal of avoiding excessive risk in our compensation decisions.programs.
Our 2015 Executive2017 Compensation Program
The 2017 Company-wide cash bonus plan, which is designed to reward employees for the achievement of certain key business objectives, provides for a cash award to all executive and non-executive level employees, including each named executive officer. Each named executive officer was granted an award, which was determined as described herein. As soon as practical after the year is completed, our CN&G Committee reviews actual performance against the performance goals established by the CN&G Committee for the year and determines subjectively what it believes to be the appropriate level of the award, if any, for the named executive officers and the other executive and non-executive level employees. The payout of the award ranges based upon position from 80% to 100% of target for each named executive officer. The sum of the target awards of all the participants in the 2017 Company-wide cash bonus plan, including named executives, is utilized to determine an award pool, and the sum of all the awards granted to participants, including named executives other than the CEO, cannot exceed the award pool without the consent of the CN&G Committee. The amount of the target award for Mr. Poneman was 100% of base salary and the amount of the target award for each of Messrs. Greene and Dyke was 80% of base salary.
On January 1, 2015,
In March 2018, our CN&G Committee reviewed the 2015performance of the Company against the 2017 goals and objectives and determined that the award pool would be paid at 100.6% of the target level, and the CEO provided recommendations on how the award pool would be allocated amongst the participants, including the named executive officers, other than as to himself. The amounts awarded to each named executive officer for 2017 performance are set forth in the Summary Compensation Table in the column entitled “Non-Equity Incentive Plan Compensation.”
Long Term Incentive Cash Award under 2016 Executive Incentive Plan became effective, which plan
Our 2016 Executive Incentive Plan provides for thean award to each executive of an annual cash award for 20152016 (“Annual Award”) and, paid in 2017, a three-year long-term incentive plan (“LTIP”) consisting of a cash award (“LTI”LTI Cash Award”) to be granted upon the attainment of the applicable performance goals as certified by the CN&G Committee, as well as,, payable in 2019, and a grant of equity (“as a notional award (the “LTI Equity Award”), also payable in 2019, under the Company’s 2014 Equity Incentive Plan. Plan, each as described in more detail below. Executive officers are also entitled to cash bonuses pursuant to our Company-wide cash bonus plan, as described above.
The 20152016 Executive Incentive Plan ariseswas adopted under and is subject to the terms of the 2014 Equity Incentive Plan, as amended and restated from time to time. The 2014 Equity Incentive Plan, which became effective on the Effective Date,September 30, 2014, as amended in 2017, authorizes the issuance of up to 1,000,0001,200,000 shares of Company common stock to the Company’s employees, officers, directors and other individuals providing services to the Company or its affiliates pursuant to options, stock appreciation rights, restricted stock units, restricted stock, performance awards, dividend equivalent rights and other stock based awards, as well as cash based awards.
The LTIP rewards performance over a three-year period from January 1, 2016 through December 31, 2018. The LTIP Cash Award is tied to the achievement of specific strategic business transition goals, and the LTI Equity Award is tied to the appreciation of the price of the Company’s Class A common stock. Pursuant to the 20152016 Executive Incentive Plan, each named executive officer is eligible to receive an Annual Award and the maximum AnnualLTI Cash Award payout for each named executive officer is 125% of target. The CN&G Committee determined it would not institute an LTI or Equity Award under the 2015 Equity Incentive Plan for any named executive officer. The CN&G Committee measured performance goals during the one year-period from January 1, 2015 through December 31, 2015.
As soon as practical after the year is completed, our CN&G Committee reviews actual performance against the stated goals and determines subjectively what it believes to be the appropriate level of cash bonus, if any, for the named executive officers. For 2015, 80% of each award was based upon achievement of predetermined Company objectives and 20% of each award was based on achievement of specific individual performance objectives. The predetermined Company objectives for 2015 consisted of:
achievement of cash flow targets as identified in the approved 2015 budget;
continuation of corporate restructuring efforts and achievement of targeted levels of selling, general and administrative expenses;
renegotiation150% of the supply commitment under a 2011 agreement withexecutive’s target award. For the Russian government entity Joint Stock Company “TENEX”;
growth ofLTIP Cash Award, the low-enriched uranium business;
ability to obtain separative work units from alternative supply sources;
achievement of revenue and gross profit targets for the low-enriched uranium business segment;
reaching a new agreement regarding the scope and funding for operations of American Centrifuge activities by the third quarter of 2015;
the successful positioning of the Company for a significant role in one of the government’s national security; projects that continues to allow for the Company to commercialize the American Centrifuge Project technology; and
achievement of cost targets under the ACTDO Agreement through the third quarter of 2015.
In March 2016, our CN&G Committee reviewed the performance of the Company and of each individual named executive officer against the 2015 goals and objectives and elected to pay annual performance-based cash incentive award to the named executive officers at 94.8%amount of the target level. The amounts awarded toaward for each named executive officer for 2015 performance are set forthis 90% of base salary. Each named executive officer’s LTI Equity Award will be paid out as a notional award at the conclusion of the three-year period, with the appreciation in the Summary Compensation Tablevalue of the Company’s common stock over that period to be paid in the column entitled “Non-Equity Incentive Plan Compensation.”
form of cash, common stock or a combination. In the event the Equity Award is granted in common stock, the LTI Equity Award would vest immediately. For the LTI Equity Award, the amount of the target award is 10% of base salary for each named executive officer.
401(k) Retirement Plan and Executive Deferred Compensation Program
Centrus maintains a 401(k) retirement plan that is intended to be a tax-qualified defined contribution plan under Section 401(k) of the Internal Revenue Code. In general, all of the Company’s employees are eligible to participate in the plan beginning on the first day of their employment. The 401(k) plan includes a salary deferral arrangement pursuant to which participants may elect to reducedefer a portion of their current compensation by up to the statutorily prescribed limit, generally equal to $18,000 for 2015,2017, and have the amount of the reductiondeferral contributed to the 401(k) plan. For 2015,2017, the 401(k) plan provided for a Company-matching contribution of (1) 200 percent200% on before-tax contributions up to the first 2 percent2% of a participant’s eligible pay, (2) 100 percent100% on before-tax contributions on the next 2 percent2% of a participant’s eligible pay, and (3) 50 percent50% on before-tax contributions on the next 2% of a participant’s eligible pay.
Additionally, effective June 1, 2015, Centrus amended and restated its Executive Deferred Compensation Plan, which hashad been frozen since December 31, 2012. Certain of the Company’s named executive officers participate in the Executive Deferred Compensation Plan.For 2015,2017, the Company provided an employer match under the Executive Deferred Compensation Plan equal to the maximum matching contribution amount that would have been provided to each participant under the 401(k) plan as reduced by the amount of the actual Company matching contributions received bymade to the participant duringparticipant’s 401(k) plan account for the year. The amounts of matching contributions paidmade by the Company to each named executive officerofficer’s accounts for 20152017 are set forth in the Summary Compensation Table in the column entitled “All Other Compensation.”
Summary Compensation Table
- Fiscal Years 2016-2017
The following table sets forth information regarding the compensation for fiscal years 2016 and 2017 awarded to, earned by, or paid to (i) any individual serving as the principal executive officer of the Company during 2015,2017, and (ii) the two other most highly compensated executive officers of the Company during 20152017 who were serving as executive officers at December 31, 2015, and (iii) two former executive officers of the Company who would have been included in (ii) above but for the fact that the individual was not serving as an executive officer of the Company at December 31, 20152017 (together, the “named executive officers”).
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| Name and Principal Position | | Fiscal Year | | Salary (1) | | Bonus | | Stock Awards | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) | | All Other Compensation(5) | | Total |
| | | | | | | | | | | | | | | | | | | |
| Daniel B. Poneman – | | 2017 | | $750,000 | | $— | | $— | | $— | | $900,000 | | $— | | $294,820 |
| $1,944,820 |
| President and CEO | | 2016 | | $750,000 | | $— | | $— | | $75,000 | | $899,438 | | $— | | $103,396 | | $1,827,834 |
| | | | | | | | | | | | | | | | | | | |
| Elmer W. Dyke – | | 2017 | | $350,000 | | $— | | $— | | $— | | $281,680 | | $— | | $33,004 | | $664,684 |
| Senior Vice President, Business Operations and Chief Commercial Officer | | 2016 | | $350,000 | | $22,018 | | $— | | $35,000 | | $290,708 | | $— | | $125,855 | | $823,581 |
| | | | | | | | | | | | | | | | | | | |
Stephen S. Greene – | | 2017 | | $350,000 | | $— | | $— | | $— | | $281,680 | | $43,113 | | $38,052 | | $712,845 |
Senior Vice President, Corporate Development and Strategy; Former Senior Vice-President Chief Financial Officer and Treasurer (6) | | 2016 | | $350,000 | | $— | | $— | | $35,000 | | $316,846 | | $32,506 | | $18,550 | | $752,902 |
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| Name and Principal Position | | Fiscal Year | | Salary(1) | | Bonus | | Stock Awards | | Option Awards(2) | | Non-Equity Incentive Plan Compensation(3) | | Change in Pension Value and Non-Qualified Deferred Compensation Earnings(4) | | All Other Compensation(5) | | Total |
Daniel B. Poneman(6) | | 2015 | | $ | 608,654 |
| | $625,000(7) |
| | $ | — |
| | $ | 867,000 |
| | $ | 350,000 |
| | $ | — |
| | $ | 34,327 |
| | $ | 2,484,981 |
|
| President and CEO | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | |
John R. Castellano(8) | | 2015 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Former Interim President and CEO | | 2014 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| | | | | | | | | | | | | | | | | | | |
| Stephen S. Greene | | 2015 | | $ | 293,366 |
| | $ | — |
| | $ | — |
| | $ | 58,050 |
| | $ | 227,283 |
| | $ | — |
| | $ | 18,550 |
| | $ | 597,249 |
|
| Senior Vice President, Chief Financial Officer and Treasurer | | 2014 | | $ | 251,835 |
| | $ | — |
| | $ | — |
| | $ | 27,900 |
| | $ | 124,205 |
| | $ | 68,227 |
| | $ | 17,629 |
| | $ | 489,796 |
|
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| John M.A. Donelson | | 2015 | | $ | 355,865 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 198,146 |
| | $ | — |
| | $ | 18,550 |
| | $ | 572,561 |
|
| Vice President, Marketing, Sales and Power | | 2014 | | $ | 355,865 |
| | $ | — |
| | $ | — |
| | $ | 27,900 |
| | $ | 241,276 |
| | $ | 281,898 |
| | $ | 18,200 |
| | $ | 925,139 |
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| John C. Barpoulis | | 2015 | | $ | 310,714 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 198,184 |
| | $ | — |
| | $ | 958,888 |
| | $ | 1,467,786 |
|
| Former Senior Vice President and Chief Financial Officer | | 2014 | | $ | 475,000 |
| | $ | — |
| | $ | — |
| | $ | 37,200 |
| | $ | 598,500 |
| | $ | 318,580 |
| | $ | 18,200 |
| | $ | 1,447,480 |
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| Philip G. Sewell | | 2015 | | $ | 306,659 |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | 181,136 |
| | $ | — |
| | $ | 949,790 |
| | $ | 1,437,585 |
|
| Former Senior Vice President and Chief Development Officer | | 2014 | | $ | 484,100 |
| | $ | — |
| | $ | — |
| | $ | 37,200 |
| | $ | 609,966 |
| | $ | 308,331 |
| | $ | — |
| | $ | 1,439,597 |
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________________
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| (1) | TheFor Mr. Poneman, the amounts shown in the Salary column for Messrs. Barpoulis and Sewell2017 includes $37,500 in 2015 also include amounts paid for unused accrued vacation time.contributions under the Company’s Executive Deferred Compensation Plan. |
| (2) | The amounts shown in the Option Awards column represent the aggregate grant date fair value of option awards granted under the Company’s 2014 Equity Incentive Plan and stock appreciation rights granted under the Company’s 2016 Equity Incentive Plan during the applicable fiscal year, computed in accordance with FASB ASC Topic 718. For Mr. Poneman, option awards were made on March 6, 2015 with a Black-Scholes value of $2.89 per share. For Mr. Greene, option awards were made on July 25, 2015 with a Black-Scholes value of $2.58 per share. For a discussion of valuation assumptions, see Note 1312 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2015.2017. The stock appreciation right awards represent the LTI Equity Awards discussed above. |
| (3) | For Messrs. Poneman, Greene and Donelson,Dyke amounts shown for 20152017 in the Non-Equity Incentive Plan Compensation column include amounts of $900,000, $281,680, and $281,680, respectively, paid in April 2018 with respect to annual incentive awards based on the CN&G Committee’s evaluation of each officer’sthe Company’s performance against the annual performance objectives duringestablished for 2017 and the year. For these individuals,CEO’s recommendation on how the amounts shown for 2015 include the incentives earned during that year and include amounts paid in March 2016 for performance during 2015 under the Company’s 2015 Executive Incentive Plan. For Messrs. Barpoulis and Sewell, amounts for 2015 include prorated annual incentive awards for performance during 2015 underaward pool would be allocated amongst the Company’s 2015 Executive Incentive Plan paid in accordance withemployees, including the Company’s Executive Severance Plan. |
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| named executive officers, other than himself. |
| (4) | For Mr. Greene, the change in total pension value in 20152017 was ($8,327). For Mr. Donelson, the change in total pension value in 2015 was ($41,729). For Mr. Barpoulis, the change in total pension value in 2015 was ($152,862); and for Mr. Sewell, the change in total pension value in 2015 was ($475,239). The change in present values was due to several factors including the freeze of benefits under the 2006 SERP, decreases in discount rates and lump sum interest rates, Centrus’ adoption of the Society of Actuaries’ RP-2014 mortality tables with MP-2014 improvements with respect to annuity benefits and a reduction in the assumed period of time until benefit commencement. None of our plans provide for above-market earnings on deferred compensation amounts, and as a result, the amounts reported here do not reflect any such earnings.$43,113. |
| (5) | TheFor Mr. Poneman, the amounts shown in the All Other Compensation column for 2015 include Company matching contributions of $18,550 made under the Centrus 401(k) plan to each of Messrs. Greene and Donelson; and $17,812 made under the Centrus 401(k) plan to Mr. Barpoulis. For Mr. Poneman, the amount2017 includes $21,000$33,600 in Company matching contributions under the Company’s Executive Deferred Compensation Plan, and $13,327$218,504 in deferred compensation earnings, $18,900 made under the Centrus 401(k) plan. Theplan, and $23,816 in life insurance premiums paid by the Company.For Mr. Dyke, the amounts include Company matching contributions of $18,900 made under the Centrus 401(k) plan, $7,692 in life insurance premiums paid by the Company, $4,912 in relocation expenses, and $1,500 pursuant to the Company’s travel policy for traveling in a lower-priced air fare class. For Mr. Greene, the amount for Mr. Barpoulis includes severance compensation of $902,500;$18,900 made under the Centrus 401(k) plan, $10,907 in life insurance premiums paid by the Company, and severance health benefits of $38,576. The amount for Mr. Sewell includes severance compensation of $919,790; and severance health benefits $30,000.$8,245 in unused vacation that was paid. |
| (6) | Beginning April 3, 2018, Mr. Poneman was not a named executive officer in 2014Greene became Senior Vice President, Corporate Development and therefore his compensation information for that year is omitted in accordance with SEC rules. |
(7) | Represents a guaranteed fixed bonus paid in accordance with Mr. Poneman’s employment agreement. |
(8) | Mr. Castellano served as the Interim President and Chief Executive OfficerStrategy of the Company from October 17, 2014 until March 23, 2015. In connection with the Company’s restructuring, the Company engaged APS, an affiliate of AlixPartners, to provide various consulting and management services to the Company. Mr. Castellano is a partner at AlixPartners and had served as the Company’s Chief Restructuring Officer from October 2013 until October 2014 pursuant to that engagement. Mr. Castellano’s services to the Company were billed by APS under its agreement with the Company. Mr. Castellano has not received separate compensation from the Company for serving as either the Chief Restructuring Officer or the Interim President and Chief Executive Officer of the Company. See “Governance Information-Transactions with Related Persons” for further information regarding the fees incurred by the Company pursuant to this arrangement.
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CEO Employment Agreement
The Company entered into an employment agreement, effective as of March 6, 2015, (the “Employment Agreement”) with Mr. Poneman. The Employment Agreement has anAgreement’s initial term endingended on March 31, 2017 and automatically renews annually thereafter.renewed for a one-year term and will continued to renew annually. The Employment Agreement provides Mr. Poneman with an initial base salary of $750,000 per year which will be reviewed annually by the Company’s CN&G Committee for possible increase.
Bonus. Mr. Poneman is eligible for an annual bonus under the Company’s 2015 Executive2017 Annual Incentive PlanProgram (or its successor) with a target amount at least equal to 100% of base salary and a maximum amount of 125% of base salary (or such higher amount as the CN&G Committee may determine in the future). The actual amount of the annual bonus will be determined by the CN&G Committee in its sole discretion and based upon its assessment of whether the applicable performance goals and targets have been achieved during the fiscal year and was prorated for 2015. For fiscal year 2015, Mr. Poneman also received a guaranteed fixed annual bonus of $625,000.year.
Equity Compensation. In connection with Mr. Poneman’s commencement with employment, Mr. Poneman was granted a stock option to purchase 300,000 shares of our common stock. The option has a ten-year term with a per share exercise price equal to the fair market value of our common stock on the grant date, and vests and becomes exercisable in equal annual installments on each of the first four anniversaries of the date of grant, subject to Mr. Poneman’s continued employment on the applicable vesting dates.
Long-Term Incentive. Mr. Poneman iswas a participant in the current two-year long-term cash incentive award program under the Company’s 2014 Post-Restructuring Incentive Plan for an amount up to $350,000 to bewhich was paid on or about June 30, 2016. The actual amount of the payment if any, will bewas based on the Company’s achievement of Company performance milestones as set forth in the 2014 Post-Restructuring Incentive Plan and iswas not guaranteed.
Outstanding Equity Awards at Fiscal Year-End December 31, 2015
2017
The following table shows the number of shares of our common stock covered by stock options held by our named executive officers as of December 31, 2015.2017. No stock awards were outstanding at December 31, 2015.2017. All of the awards shown in the table below were granted under the 2014 Equity Incentive Plan. All of the stock options shown in the table below were granted with a per share exercise price equal to the fair market value of our common stock on the grant date.
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| | Option Awards | | Stock Awards |
Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price
($)
| | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested |
Daniel B. Poneman | | — | | 300,000(1)
| | $4.37 | | 03/06/25 | | — | | — |
John R. Castellano | | — | | — | | — | | — | | — | | — |
Stephen S. Greene | | — | | 7,500(2)
| | $5.62 | | 11/21/24 | | — | | — |
| | — | | 22,500(3)
| | $3.90 | | 07/24/25 | | | | |
John M.A. Donelson | | — | | 7,500(2)
| | $5.62 | | 11/21/24 | | — | | — |
John C. Barpoulis | | — | | — | | — | | — | | — | | — |
Philip G. Sewell | | — | | — | | — | | — | | — | | — |
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| | | Option Awards | | Stock Awards |
| Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested | | Market Value of Shares or Units of Stock That Have Not Vested |
| Daniel B. Poneman | | 150,000 | | 150,000(1) | | $4.37 | | 03/06/25 | | — | | — |
| | | | | 56,818(2) | | $1.32 | | 2019(2) | | | | |
| Elmer W. Dyke | | 33,334 | | 16,666(4) | | $2.71 | | 10/1/2025 | | — | | — |
| | | | | 26,515 | | $1.32 | | 2019(2) | | | | |
| Stephen S. Greene | | 7,500 | | — | | $5.62 | | 11/21/24 | | — | | — |
| | | 15,000 | | 7,500(3) | | $3.90 | | 07/24/25 | | | | |
| | | | | 26,515(2) | | $1.32 | | 2019(2) | | | | |
________________
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| (1) | Represents stock options that vest in four equal annual installments beginning one year from March 6, 2015, the date of grant. Includes 75,000 options that became exercisable on March 6, 2018. |
| (2) | Represents stock options thatthe LTI Equity Award discussed above. The LTI Equity Awards are scheduled to vest and be paid in three equal annual installments beginning one year from November 21, 2014,2019 on the date of grant.that is twenty days after the Company files its Annual Report on Form 10-K for the fiscal year ended December 31, 2018 with the SEC. |
| (3) | Represents stock options that vest in three equal annual installments beginning one year from July 24, 2015, the date of grant. |
| (4) | Represents stock options that vest in three equal annual installments beginning one year from October 1, 2015, the date of grant. |
Potential Payments Upon Termination or Change in Control
Payments Made Upon Termination
Under the Centrus Energy Corp. Executive Severance Plan, if a covered executive is terminated by the Company without cause, he is eligible to receive the following:
a prorated share of his currentor her annual incentive bonus for the year in which the executive’s termination occurs (payable at the end of the performance period based on actual performance) up to the date of termination;
a lump sum cash severance amount as described below (the “Lump Sum Cash Severance Benefit”); and
continuation of medical and dental coverage as well as life insurance (“Continuing Severance Benefits”) paid for by the Company for a period of time after termination (the “Severance Period”) (or until he receives similar coverage from a subsequent employer, whichever occurs first) and outplacement assistance services.
As of January 1, 2015, theThe Lump Sum Cash Severance Benefit for our covered executives is equal to one times annual base salary and bonus and the Severance Period is one year, except for Mr. Poneman, who is entitled to a Lump Sum Cash Severance Benefit equal to two times annual base salary and bonus and the Severance Period is two years.years (with the executive’s “bonus” for these purposes generally being the greater of the executive’s target bonus and the average of the three most recent annual incentive bonuses paid to the executive prior to the date of termination). Severance benefits are contingent upon the executive executing a release and agreeing to comply with certain restrictive covenants relating to non-competition and non-solicitation of Company employees during the Severance Period. Under the Executive Severance Plan, no severance is paid to an employee who is terminated for cause or who resigns voluntarily, including retirement. On the Effective Date, pursuant to the court-approved Plan of Reorganization, the Company’s Executive Severance Plan was amended and restated to allow covered executives to terminate for “good reason” (as defined in the plan) during the twelve-month period following the Effective Date and treat such termination as a termination without “cause” entitling the executive to severance under the terms of the plan.
Payments Made Upon a Change in Control
The Company has entered into change in control agreements with each of its named executive officers. The change in control agreements provide each executive with the following benefits (in lieu of any severance benefits under the Executive Severance Plan described above) if there is a change in control of the Company and within a protected period beginning three months before and ending three years after that change in control (the “protected period”), the Company terminates the executive’s employment without cause or the executive terminates his or her employment for “good reason” (as defined in the agreement):
a cash lump sum payment of his unpaid base salary through the date of termination, plus all other amounts to which he was entitled under any of the Company’s compensation or benefit plans under the terms of such plans;
a cash lump sum payment equal to two times the sum of his or her annual base salary and bonus (the “Change in Control Lump Sum Benefit”) (the(with the executive’s “bonus” for these purposes generally being the greater of the executive’s target bonus is generallyand the average of the three most recent annual incentive bonuses paid to the executive prior to the date of termination); and
continuation of life accident and health insurance benefits (“Continuing Change in Control Benefits”) for him or her and his or her eligible dependents for two years following such termination of employment (the “Covered Period”) or, if sooner, until he or she is covered by comparable programs of a subsequent employer.
In order to receive these benefits, the executive must comply with the non-competition, non-solicitation and confidentiality provisions of the change in control agreement during the term of the agreement and during the Covered Period.
Stock Options Granted Under the 2014 Equity Incentive Plan
Plan; LTIP
If an executive’s employment is terminated by the Company without cause or by the executive with good reason coincident with or following a change in control, all of the executive’s unvested stock options will become vested. Except as provided in the preceding sentence, if an executive’s employment is terminated by the executive voluntarily, by reason of death, disability or retirement or by the Company for reasons other than for cause, all of the executive’s unvested stock options will be cancelled. If the executive’s employment is terminated for cause, all of the executive’s stock options (whether unvested or vested) will be cancelled and forfeited. Pursuant to the terms of Mr. Poneman’s employment agreement, however, all of his outstanding and unvested stock options wouldwill vest upon death, disability or a change in control.control of the Company.
If an executive’s employment is terminated due to the executive’s death or disability, the executive will be entitled to payment of a pro-rata portion (based on the portion of the performance period the executive was actually employed by the Company) of the executive’s “target” level of LTI Cash Award. If an executive’s employment is terminated by the Company without cause or by the executive with good reason, or if the executive retires, the executive will be paid a pro-rata portion (based on the portion of the performance period the executive was actually employed by the Company) of his or her LTI Cash Award at the end of the performance period. If an executive’s employment is terminated by the Company without cause or by the executive with good reason, within three months prior to or within one year after a change in control of the Company, the executive will be paid a pro-rata portion (based on the portion of the performance period the executive was actually employed by the Company) of his or her LTI Cash Award and LTI Equity Award at the end of the performance period.
PROPOSAL 2. ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
As required by federal securities laws, the Board of Directors is providing our stockholders with an opportunity to provide a non-binding advisory vote to approve the compensation of our named executive officers as disclosed in this proxy statement. This vote, which is often referred to as the “say-on-pay” vote, provides stockholders with the opportunity to endorse or not endorse the following resolution:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the compensation tables and related narrative discussion contained in the 20162018 proxy statement, is hereby approved.”
This advisory vote to approve the compensation of our named executive officers is not binding on us, our Board of Directors or the CN&G Committee. However, our Board of Directors and the CN&G Committee will review and consider the outcome of this advisory vote when making future compensation decisions for our named executive officers.
The next such “say-on-pay” vote will occur at our 2019 annual meeting of stockholders.
The Board of Directors unanimously recommends a vote “FOR” approval of the compensation of the named executive officers.
PROPOSAL 3. RATIFICATION OF APPOINTMENT OF INDEPENDENT AUDITORS
The Audit and Finance Committee of the Company has appointed the firm of PricewaterhouseCoopers LLP to serve as the independent auditors of the Company for 2016,2018, subject to ratification of this appointment by the stockholders of the Company. One or more representatives of PricewaterhouseCoopers LLP will be present at the annual meeting and will have an opportunity to make a statement if he or she desires to do so. PricewaterhouseCoopers LLP representatives will also be available to respond to appropriate questions.
The Audit and Finance Committee has sole authority for appointing and terminating Centrus’ independent auditors for 2016.2018. Accordingly, stockholder approval is not required to appoint PricewaterhouseCoopers LLP as Centrus’ independent auditors for 2016.2018. The Audit and Finance Committee believes, however, that submitting the appointment of PricewaterhouseCoopers LLP to the stockholders for ratification is a matter of good corporate governance. If the stockholders do not ratify the appointment, the Audit and Finance Committee will review its future selection of the Company’s independent auditors.
The ratification of the appointment of PricewaterhouseCoopers LLP as Centrus’ independent auditors requires the affirmative vote of a majority of the shares present at the meeting in person or by proxy and entitled to vote.
vote at the meeting.
The Board recommends voting FOR ratification of the appointment of PricewaterhouseCoopers LLP as Centrus’ independent auditors for 2016.2018.
Audit and Non-Audit Fees
The Audit and Finance Committee pre-approves all audit and non-audit services provided by the independent auditors prior to the engagement of the independent auditors with respect to such services. The Audit and Finance Committee has delegated pre-approval authority to the Chairman of the Audit and Finance Committee, who presents any decisions to the full Audit and Finance Committee at its next scheduled meeting. The following amounts were billed to the Company by the independent auditors for services rendered for the periods indicated:
| | | Type of Fee | | Amount Billed For Year Ended December 31, 2015 | | Amount Billed For Year Ended December 31, 2014 | | Amount Billed For Year Ended December 31, 2017 | | Amount Billed For Year Ended December 31, 2016 |
| | | (In thousands) | | (In thousands) | | (In thousands) | | (In thousands) |
Audit Fees | | $ | 995 |
| | $ | 2,485 |
| | | $ | 943 | | | $ | 1,200 | | |
Audit-Related Fees(1) | | — | | | — | | | | — | | | — | | |
Tax Fees(2) | | 55 | | | 45 | | | | 92 | | | 132 | | |
All Other Fees(3) | | 2 | | | 2 | | | | 3 | | | 2 | | |
| Total | | $ | 1,052 |
| | | $ | 2,532 |
| | | $ | 1,038 | | | | $ | 1,334 | | |
| ______________________ | | | | | |
| (1) Fraud risk assessment. | | | | | |
| (2) Primarily services related to selected tax projects and IRS audit assistance for both periods. | | | | | |
| | | | | | |
| (1) Amount billed for year ended December 31, 2017 includes assurance services related to new securities. | | | | | |
| (2) Services including review of income tax returns and ad hoc tax projects. | | | | | |
(3) Service fee for access to electronic publication for both periods. | | | | | | | | |
AUDIT AND FINANCE COMMITTEE REPORT
The Audit and Finance Committee of the Board of Directors is comprised of three independent directors and operates under a written charter. The Committee meets with the internal and independent auditors, with and without management present, to facilitate and encourage private communication.
In fulfilling its responsibilities, the Committee has reviewed and discussed with management and the independent auditors the Company’s audited consolidated financial statements for the year ended December 31, 2015.2017. The Committee has discussed with the independent auditors the matters required to be discussed by PCAOB Auditing Standard 1301 (previously Auditing Standard No. 16,16), Communications with Audit Committees. In addition, the Committee has received the written disclosures and the letter from the independent accountant required by applicable requirements of the PCAOB regarding the independent accountant’s communications with the Committee concerning independence, and has discussed with the independent accountant the independent accountant’s independence.
The Committee considered and concluded that the provision of non-audit services by the independent auditors was compatible with maintaining their independence.
In reliance on the reviews and discussions referred to above, the Committee recommended to the Board of Directors that the audited consolidated financial statements referred to above be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.
2017.
Audit and Finance Committee
W. Thomas Jagodinski, Chairman
Osbert Hood
Patricia J. Jamieson
Mikel H. Williams
DATE FOR SUBMISSION OF STOCKHOLDER PROPOSALS AND OTHER INFORMATION
Date for Submission of Stockholder Proposals
Under the SEC rules, in order to be considered for inclusion in Centrus’ proxy statement for the 20172019 annual meeting of stockholders, proposals from stockholders must be received by the Secretary of the Company at (i) if prior to April 29, 2016, 6903 Rockledge Drive, Suite 400, Bethesda, Maryland 20817 or (ii) if on or after April 29, 2016, 6901 Rockledge Drive, Suite 800, Bethesda, Maryland 20817 not later than December 1, 2016.
7, 2018.
Our bylaws contain an advance notice provision regarding stockholder proposals that are not sought to be included in the Company’s proxy statement, which provides that, to be timely, a stockholder’s notice of intention to bring business before a meeting must be delivered to the Company’s Secretary, at the Company’s principal executive office, not less than 90 days nor more than 120 days prior to the anniversary date of the previous year’s annual meeting, unless the date of the next annual meeting is more than 30 days before or more than 60 days after such anniversary date, in which case notice must be received not later than the tenth day following the day on which notice of the meeting is mailed or public disclosure of the date of the annual meeting is made. Accordingly, stockholder nominations for director or other proposed items of business intended to be brought before the next annual meeting of stockholders must be received by the Company between January 12, 201717, 2019 and February 11, 201716, 2019 in order to be considered timely, unless the Company gives notice that the date of the annual meeting is more than 30 days before, or more than 60 days after, May 12, 2017.17, 2019. Any proposals received outside of that period will not be permitted to be raised at the meeting.
Other Matters
As of the date of this Proxy Statement, the Board of Directors does not know of any matters to be presented at the 20162018 annual meeting other than those specifically set forth above. If other matters should properly come before the annual meeting or any adjournment thereof, including stockholder proposals that have been excluded pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, the persons named as proxies in the enclosed proxy card intend to vote the shares represented by them in accordance with their best judgment with respect to such matters.
By order of the Board of Directors,
Dennis J. Scott
DeputySenior Vice President, General Counsel, Director,Chief Compliance Officer and Corporate Compliance and Assistant Secretary
Bethesda, Maryland
March 31, 2016April 6, 2018
