Performance MeasurePercentage of Total Incentive Compensation Opportunity 2013 | Net Income | ·35% | Revenue | The key non-financial performance objectives component which was based on individual performance was eliminated.25% | Company-Wide Quality Focused Outcomes | 40% | | · | Company-wide quality focused outcomes including placement rates, graduation rates and cash collections were added. |
| · | Discretionary increases to the amounts payable under the plan are no longer permitted, the Compensation Committee retains the ability to reduce payments notwithstanding the level of attainment of the performance metrics to the extent it deems appropriate. |
| · | The aggregate maximum bonus that can be earned by each of our named executive officers under the 2011 MIC is capped at 200% of the executive’s target. |
Bonus Component | Percentage of Total Bonus | 2010 | 2011 | Net Income | 60% | 35% | Revenue | 20% | 25% | Key Non-Financial Performance Objectives Component | 20% | 0% | Company-Wide Quality Focused Outcomes | 0% | 40% |
At the beginning of 2011,2013, the Compensation Committee set target goals for each of the above performance measures. In general, the Compensation Committee sets the net income and revenue performance targets that are above the performance targets publicly announced for the Company to alignCompany. This is consistent with the Compensation Committee’s philosophy that a performance-based annual bonuscompensation awards should incent our named executive officers to attain better than average performance. For 2011, the Compensation Committee and our board of directors set the target bonus levels equal to 100% of base salary for Mr. McAlmont, 75% of base salary for Messrs. Shaw and Ribeiro and 50% of base salary for Ms. Jameson.
Net Income Component Component. For 2011,2013, 35% of each named executive officer’s target bonus isincentive opportunity was based on the achievement of net income goals. The named executive officers cancould earn a portion of their target bonusincentive opportunity if our net income iswas within 10% of our target goal. The percentage of the net income component paid decreases by 10% for each percentage point that actual performance iswas below our target net income goal. No bonus will be paidpayments are made with respect to the net income component if actual performance iswas at or below 90% of our target net income goal. Our named executive officers cancould earn more than their target net income component bonus if our net income iswas greater than the target goal. The percentage would increaseincreases by 8% for each percentage point that actual performance iswas above the target net income goal. The maximum amount that can be earned by each named executive officer is 200% of the target net income bonus component. For 2011,2013, the Compensation Committee set a net income goal of $47.9$0. Actual net income, as adjusted, was $(6.0) million. As we did not achieve at least 90% of our net income goal in 2011,2013, none of the named executive officers received a bonus payment with respect to the to net income component. Revenue Component Component. For 2011,2013, 25% of each named executive officer’s target bonusincentive opportunity was based on the achievement of revenue goals. The named executive officers cancould earn a portion of their target bonusincentive opportunity if our revenues arewere within 5%10% of our target goal. The percentage of the revenue component paid decreases by 20%10% for each percentage point that actual performance iswas below our target revenue goal. No bonus will be paidpayments are made with respect to the revenue component if actual performance iswas at or below 95%90% of our target revenue goal. Our named executive officers cancould earn more than their target revenue component bonus if our revenue isrevenues were greater than the target goal. The percentage would increaseincreases by 8% for each percentage point that actual performance iswas above the target revenue goal. The maximum amount that can be earned by each named executive officer is 200% of the target bonus component for revenue. For 2011,2013, the Compensation Committee set a revenue goal of $649$390.2 million. Actual revenues, as adjusted, were $345.0 million. As we did not achieve at least 90% of our revenue goal, in 2011, none of ourthe named executive officers received a bonus payment with respect to the revenuenet income component. Company-Wide Quality Focused Outcomes Component Component. Each of our named executive officers cancould earn 40% of their target bonusincentive opportunity for the achievement of company-wide quality focused outcomes. The Compensation Committee established these objectives at the beginning of the year. The performance goals relaterelated to the achievement of specific aspects of the Company’s business strategy and corporate initiatives relating to student outcomes and to shareholder value. These initiatives includeincluded graduation rates, placement rates and cash collections and arewere weighted equally. No bonus will be paidpayments are made with respect to each initiative of the company-wide quality focused outcomes component if the specified target for such initiative iswas not attained. Our named executive officers cancould earn more than their target bonusincentive opportunity for this component if performance with respect to one or more of the initiatives iswas greater than the target goal. The percentage would increaseincreased by 8% for each percentage point that actual performance iswas above the target goal for the initiative. The maximum amount that can be earned by each named executive officer is 200% of the target bonus component for company-wide quality focused outcomes. For 20112013 we targeted (i) graduation rates of 54%60.0%, (ii) placement rates of 77%74.0%, and (iii) cash collections of 10%16.0%. Actual results for these metrics were 54%64.6%, 72%75.4% and 14%24.0%, respectively. As a result, the Company achieved 31.4%138.75% of the 40% of their target bonusincentive opportunity attributable to Company-wide quality focused outcomes in 20112013 and each of our named executive officers received a corresponding percentage of the company-wide quality focused outcomes bonus component. Aggregate Incentive Bonus Compensation Paid. Based on the above, for 2011,2013, each of our named executive officers received an aggregate incentive bonusaward of 31.4%55.5% of their respective target bonusincentive opportunities as set forth below:
Named Executive Officer | | Target 2013 MIC Plan Award | | | Total 2013 MIC Plan Payment | | Shaun E. McAlmont | | $ | 500,000 | | | $ | 227,291 | | Scott M. Shaw | | $ | 300,000 | | | $ | 166,375 | | Cesar Ribeiro | | $ | 273,750 | | | $ | 151,817 | | Piper P. Jameson | | $ | 232,500 | | | $ | 128,940 | |
Named Executive Officer | | Total 2011 MIC Plan Bonus Paid | | Shaun E. McAlmont | | $ | 156,803 | | Scott M. Shaw | | $ | 88,202 | | Cesar Ribeiro | | $ | 85,850 | | Piper P. Jameson | | $ | 43,278 | |
Long-Term Stock Incentives Stock incentives focus executives’ attention on the Company from the perspective of an owner with an equity stake in the business. The Compensation Committee believes that the Company’s long-term performance is achieved through an ownership culture that encourages long-term performance by our named executive officers through grants of stock-based awards. Our shareholder-approved 2005 Long-Term StockIncentive Plan provides for the grant of stock options, restricted stock, performance stock and other equity-based awards. Equity awards are generally made at the discretion of the Compensation Committee based on a multiplicity of factors, including total compensation at peer companies, the level of equity ownership of the executives, and judgments of individual performance during the year. In 2010, the Compensation Committee did not grant any equity awards to our named executive officers. In 2011, the Compensation Committee implemented a new restricted stock program pursuant to which each of the named executive officers received awards of both time-based restricted stock and performance-based restricted stock. The Compensation Committee believes that moving to a combination of time-based and performance-based restricted stock grants will better align the interests of our named executive officers with those of our shareholders. Each Performance-Based Restricted Stock. 2013 Performance Shares. On April 30, 2013, the Compensation Committee granted performance-based restricted stock awards to certain members of our senior management, including each of our named executive officers received the following grants in 2011:
Named Executive Officer | | Time-Based Restricted Stock | | | Performance-Based Restricted Stock | | | | Number of Shares | | | Value | | | Number of Shares | | | Value | | Shaun E. McAlmont | | | 58,747 | | | $ | 900,000 | | | | 35,928 | | | $ | 600,000 | | Scott M. Shaw | | | 39,165 | | | $ | 600,000 | | | | 23,952 | | | $ | 400,000 | | Cesar Ribeiro | | | 31,332 | | | $ | 480,000 | | | | 19,162 | | | $ | 320,000 | | Piper P. Jameson | | | 30,818 | | | $ | 400,000 | | | | 11,976 | | | $ | 200,000 | |
The time-based restricted stock awards vest over four years with 20% vesting on the date of grant and on each of the first through fourth anniversaries of the grant date.
The performance-based restricted stock (“2013 Performance Shares”). The 2013 Performance Shares vest in equal installments over four years based upon the attainment of both (i) ana threshold operating income margin of at least eight percent6.5% during any one or more of the fiscal years in the period beginning January 1, 20112014 and ending December 31, 20142016 and (ii) annual earnings before interest, taxes, depreciation and amortization (“EBITDA”)EBITDA targets during each of the four years during thefour-year performance period.
The EBITDA targets will beare set by the Compensation Committee at the beginning of each applicable year. Twenty-five percent of the 2013 Performance Shares will vest if the EBITDA target for the applicable year is attained. If the applicable EBITDA target is not attained, the Compensation Committee has the discretion to determine that the 2013 Performance Shares that would have vested had the target been attained will not be forfeited but, instead, will be subject to a catch-up EBITDA target to be set in the subsequent year. A catch-up target is a stretch goal that requires a greater level of performance than the performance goal set for the applicable performance period. In addition, notwithstanding the attainment of the applicable performance targets, the Compensation Committee has the discretion to determine that all or a portion of the 2013 Performance Shares will not vest based on facts and circumstances occurring after the date of grant that the Compensation Committee deems relevant. Provided that the threshold operating income margin is attained, upon a change in control or an executive’s termination of employment due to death, disability, by the executive for Good Reason or by the Company without Cause, the 2013 Performance Shares will immediately vest. If the threshold goal is not attained, the Performance Shares will be forfeited upon a change in control or termination of employment for any reason. The number of 2013 Performance Shares granted to each of our names executive officers is as follows:
Named Executive Officer | | 2013 Performance-Based Shares | | Shaun E. McAlmont | | | 97,691 | | Scott M. Shaw | | | 69,272 | | Cesar Ribeiro | | | 56,838 | | Piper P. Jameson | | | 35,524 | |
2011 Performance Shares. On April 29, 2011, the Compensation Committee granted performance-based restricted stock awards to certain executives including each of the named executive officers (“2011 Performance Shares”). The 2011 Performance Shares have substantially the same terms and conditions as the 2013 Performance Shares. In 2011 the Company had an operating margin, as adjusted, of 8.8% in 2011, thereby attaining the threshold performance metric. Formetric applicable to the 2011 performance period thePerformance Shares. 2013 EBITDA Goals. The Compensation Committee set an EBITDA target of $105$26.4 million for the 2013 performance period. This target was applicable to both the 2011 and 2013 Performance Shares. Actual EBITDA, as adjusted, for 2013 was $16.3 million. TheAs the Company did not attain thisthe 2013 EBITDA target, and as a result nonone of the 2011 or 2013 Performance Shares vested in 2011. subject to the 2013 goals vested. In February, 2012,March 2014, the Compensation Committee set both ana 2014 catch-up EBITDA target forapplicable to the 2011 Performance Shares subject to vesting in 2012 and a catch-up EBITDA performance target for the2013 Performance Shares that didwould have vested in 2013. This catch up EBITDA target requires a greater level of performance (47%) than the general performance target set for 2014. These targets will be disclosed in our 2015 proxy. As disclosed in our 2013 proxy, the 2012 EBITDA target applicable to the 2012 vesting tranche of the 2011 Performance Shares was also not vest in 2011.satisfied. The Compensation Committee set a 2013 catch-up EBITDA target is a “stretch” goal thatof $45 million. This catch up EBITDA target requires a greater level of performance than the 2012 EBITDA target. If the catch-upgeneral EBITDA target is attained in 2012,set for 2013. The Company’s actual EBITDA for 2013 was $16.3 million and the Company did not attain this 2013 catch-up target. As a result, none of the 2011 Performance Shares will vestsubject to the 2013 catch-up target vested and those shares (25% of the original grant) were forfeited. To date, None of our named executive officers have received any shares with respect to their performance-based restricted stock grants and each of our named executive officers has forfeited 50% of the performance-based shares that were issued in March 2013.2011. The Company does not currently require our named executive officers to hold shares acquired in connection with equity awards beyond the applicable vesting period. Time-Based Restricted Stock. The Company did not award any time-based restricted stock to our named executive officers in 2013. No Backdating or Spring Loading The Company does not backdate options or grant options retroactively. In addition, we do not plan to coordinate grants of options, restricted stock or other equity awards so that they are made before announcement of favorable information or after announcement of unfavorable information. Stock options are granted at fair market value on the date the option grants are approved by our Compensation Committee. Fair market value has been consistently determined as the closing price on the NASDAQ Global Select Market on the grant date. All option grants and restricted stock awards require the approval of the Compensation Committee. The Company’s general practice is to grant options and restricted stock only on the dates of a regularly scheduled Compensation Committee meeting, although there are occasions when grants have been made on other dates. Independent Compensation Consultant
The Compensation Committee retained Pay Governance, LLC as its independent consultant in July 2010. The Compensation Committee relied on Pay Governance for guidance in determining the levels and structure of director and executive compensation for 2011. Pay Governance reported directly to the Compensation Committee and did not perform any services for the Company other than advice on executive and director compensation pursuant to their engagement by the Compensation Committee. Pay Governance’s role was to provide an independent review of competitive market data and to advise the Compensation Committee on all compensation matters for all top executives, including the named executive officers. This included: reviewing the Company’s total compensation philosophy, suggesting alternative incentive plan designs and attending Compensation Committee meetings if requested. Pay Governance did not have authority to approve compensation actions by the Company. The Compensation Committee and the independent directors of the board retain the authority to make final approval on compensation actions for the named executive officers.
Pay Governance did not provide additional guidance with respect to 2012 compensation which remained at the same levels and in the same forms as 2011 compensation.
Comparative Data The Company has not implemented a formal benchmarking process and does not target named executive officer compensation at a specified level of a peer group. In 2011,2013, the Compensation Committee in consultation with its independent compensation consultant, informally reviewed compensation information set forth in public filings with the SEC (including base salaries, annual incentive bonuses and equity-based compensation) for the following companies: American Public Education, Inc., Bridgepoint Education, Inc., Capella Education Co., Career Education Corporation, Corinthian Colleges, Inc., DeVry, Inc., Education Management Corporation, Grand Canyon Education Inc., ITT Educational Services, Inc., Strayer Education, Inc. and Universal Technical Institute, Inc. The purpose of this review was to determine whether the level of compensation proposed to be paid to the Company’s named executive officers during 20112013 was outside the range of the compensation paid to the named executive officers at our peer companies, with the understanding that adjustments would be considered if such proposed compensation proved to be significantly outside the range of our peer groups. TheAfter this informal review, the Compensation Committee determined that the compensation proposed to be paid to the Company’s named executive officers was within the peer group range and consequently that no adjustments were required. The Compensation Committee also reviewed general survey data across a broad cross-section of industries for companies with revenues similar to ours. Employment Agreements and Change in Control Benefits The Company is party toentered into employment agreements with each of our named executive officers. The employment agreements with Messrs. McAlmont, Shaw and Ribeiro wereofficers that became effective on January 1, 20112013, upon the expiration of their prior employment agreements. The employment agreement with Ms. Jameson was entered into on November 1, 2011. Each of these agreements will expire on December 31, 2012. These2014. The agreements are described below under “Employment Agreements.”
Payments upon a Termination or Change in Control
As described in more detail below under “Potential Payments upon a Termination or Change in Control,”In 2011, the Compensation Committee amended the employment agreements with Messrs. McAlmont, Shaw and Ribeiroour executive officers to provide for severance benefits upon an involuntary termination or a resignation for any reason within 30 days following the first anniversary of a“double-trigger” change in control.control severance benefits. Previously, the employment agreements contained a “single-trigger” change in control severance benefit. The amended employment agreement with Ms. Jameson providesagreements provide for severance benefits only upon an involuntary termination of employment during the two-year period following a change of control. All stock options and restricted stock awards held by our named executive officers will immediately vest upon the occurrence of a change in control. This is referred to asThe performance-based restricted stock will vest upon a “double trigger.” The Compensation Committee has determined that any new or amended employment agreements with our executive officers will contain only “double trigger” change in control severance benefits. In addition, allonly if the threshold operating income margin target has been attained.
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We do not provide our executive officers with tax gross-ups pursuant tofor “excess parachute payments” under Section 280G of the Internal Revenue Code upon a change in control. In the event that any payment or distribution by us to or for the benefit of our named executive officers would be considered a “parachute payment” for purposes of Section 280G, the amount of such payments may be reduced to the largest amount permissible without triggering excise taxes under Section 4999 of the Internal Revenue Code. Retirement Plans
The Company maintains a plan qualified under Section 401(k) of the Internal Revenue Code for the benefit of all employees. Our named executive officers are eligible to participate in this plan on the same terms and conditions as all other employees. At the discretion of our board of directors, we may make discretionary matching and/or profit-sharing contributions into our 401(k) plan for eligible employees, which may be subject to vesting requirements. We believe that a 401(k) plan encourages our employees to save for future retirement needs and we encouraged this in 20112013 by matching 30% of our employee’s annual contributions, up to 6% of total compensation, subject to a compensation limitation and/or a contributions limitation pursuant to the Internal Revenue Code. With respect to each of the named executive officers, the following matching contributions were made on their behalf under our 401(k) plan for 2011:2013: $3,000 for Mr. McAlmont; $4,950$5,250 for Mr. Shaw; $4,950$5,250 for Mr. Ribeiro and $4,950$4,495 for Ms. Jameson. We do not provide any additional retirement benefits for our named executive officers. None of our named executive officers participate in a non-qualified deferred compensation program or pension arrangement. Welfare Benefits and Perquisites
Our named executive officers are eligible to participate in our medical and dental health insurance plans, our life insurance plan and our long-term disability insurance plan on the same terms and conditions as all other employees. We also provide our named executive officers with supplemental life insurance. We believe that the insurance plansbenefits we offer are important components of our comprehensive benefit package, which encourages employees to remain with us. We also provide each of the named executive officers with use of a vehicle for business and personal use and pay for associated costs, including automobile insurance, parking and fuel, as part of their employment agreements described below.fuel. The executives are responsible for all taxes related to this benefit and we do not pay any tax gross-ups with respect to perquisites or other compensation.benefit. We do not provide any other perquisites or benefits to our named executive officers and we do not pay any tax gross-ups with respect to perquisites.any compensation.
2011 Advisory Vote on Executive Compensation
At the 2011 Annual Meeting, as required by Section 14A(a)(1) of the Securities Exchange Act, we provided shareholders with an advisory “say-on-pay” vote to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis and the accompanying tabular and narrative disclosures contained in the proxy statement issued with respect to that meeting. Shareholder votes with respect to this resolution were: 9,861,091 for and 6,092,702 against, with 69,924 abstaining. There were also 2,910,326 broker non-votes with respect to the proposal.
The Compensation Committee reviewed these results in considering our compensation programs. As described above, in 2011 we made key changes to our annual cash and long-term stock incentive compensation program to enhance our pay-for performance philosophy and better align the interests of our executives and shareholders. These include (i) eliminating the individual performance component of our MIC Plan and adding a component linked to company-wide quality focused outcomes that directly impact the Company’s overall health and viability (placement rates, graduation rates and cash collections), (ii) eliminating discretionary increases to MIC Plan payments, (iii) capping the maximum bonus amount payable under the MIC Plan at 200% of target and (iv) implementing a performance-based restricted stock grant that vests vest upon the attainment of EBITDA targets during each year of the four-year vesting period.
In addition, the Compensation Committee has determined that any new or amended employment agreements with our executive officers will only provide for “double-trigger” change in control severance benefits that require both the occurrence of a change in control and a subsequent involuntary termination. Ms. Jameson’s employment agreement contains a “double-trigger” change in control severance provision. The agreements with Messrs. McAlmont, Shaw and Ribeiro currently provide for the payment of severance benefits upon a termination or resignation for any reason during a 30-day period commencing on the first anniversary of the date of change in control. Each of these agreements will expire on December 31, 2012.
Tax Deductibility of CompensationCompensation; Accounting Section 162(m) of the Internal Revenue Code precludes a public corporation from taking a deduction for compensation in excess of $1 million with respect to each of the named executive officers (excluding the Chief Financial Officer), unless certain specific performance criteria. Section 162(m) exempts qualifying performance-based compensation from the deduction limit if applicable requirements are satisfied.met. The Compensation Committee strives to provide our named executive officers with compensation programs that will preserve the tax deductibility of compensation paid by the Company, to the extent reasonably practicable and to the extent consistent with the Company’s other compensation objectives. However, the Compensation Committee believes that shareholder interests are best served if it retains the flexibility to compensate named executive officersexecutives in a manner intended to promote varying corporate goals, even if certain amounts that may be payable in excess of $1 million may not be deductible under Section 162(m). The Compensation Committee also takes accounting considerations, including the impact of Financial Accounting Standards Board Accounting Standards Codification 718 Compensation – Stock Compensation (FASB Statement 123(R), Share Based Payments), into account in structuring compensation programs and determining the form and amount of compensation awarded. The Compensation Committee has reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. Based on that review and discussion, the Compensation Committee has recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement. | COMPENSATION COMMITTEE | | J. Barry Morrow (Chairman) James J. Burke, Jr. | | Paul E. Glaske | | Charles F. Kalmbach |
Name and Principal Position | Year | | Salary ($) | | | Bonus ($) | | | Stock Awards ($) | | | Non-Equity Incentive Plan Compensation ($) | | | All Other Compensation ($) | | | Total ($) | | (1) | | | | | | | | | (2) | | | (3) | | | (4) | | | | | Shaun E. McAlmont | 2013 | | | 500,000 | | | | 0 | | | | 287,500 | | | | 277,291 | | | | 10,154 | | | | 1,074,945 | | President and | 2012 | | | 500,000 | | | | 0 | | | | 1,174,640 | | | | 285,859 | | | | 12,189 | | | | 1,972,688 | | Chief Executive Officer | 2011 | | | 500,000 | | | | 0 | | | | 1,050,000 | | | | 156,803 | | | | 9,542 | | | | 1,716,345 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Scott M. Shaw | 2013 | | | 400,000 | | | | 0 | | | | 197,500 | | | | 166,375 | | | | 13,001 | | | | 776,876 | | Executive Vice President and | 2012 | | | 393,750 | | | | 0 | | | | 1,051,270 | | | | 160,796 | | | | 10,349 | | | | 1,616,165 | | Chief Administrative Officer | 2011 | | | 375,000 | | | | 0 | | | | 700,000 | | | | 88,202 | | | | 11,211 | | | | 1,174,413 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cesar Ribeiro | 2013 | | | 364,500 | | | | 0 | | | | 160,000 | | | | 151,817 | | | | 12,359 | | | | 688,676 | | Executive Vice President, Chief | 2012 | | | 364,500 | | | | 0 | | | | 661,270 | | | | 156,508 | | | | 11,624 | | | | 1,193,902 | | Financial Officer and Treasurer | 2011 | | | 364,500 | | | | 0 | | | | 560,000 | | | | 85,850 | | | | 12,321 | | | | 1,022,671 | | | | | | | | | | | | | | | | | | | | | | | | | | | | Piper Jameson | 2013 | | | 310,000 | | | | 0 | | | | 100,000 | | | | 128,940 | | | | 11,197 | | | | 550,137 | | Executive Vice President and | 2012 | | | 310,000 | | | | 0 | | | | 388,950 | | | | 132,924 | | | | 9,006 | | | | 840,880 | | Chief Marketing Officer | 2011 | | | 281,417 | | | | 0 | | | | 450,000 | | | | 43,278 | | | | 9,952 | | | | 784,647 | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Summary Compensation Table
for Fiscal Year End December 31, 2011
Name and Principal Position (1) | | | Year | | | Salary ($) | | | Bonus ($) (2) | | | Stock Awards ($) (3) | | | Non-Equity Incentive Plan Compensation ($) (4) | | | All Other Compensation ($) (7) | | | Total ($) | | Shaun E. McAlmont | | | | 2011 | | | | 500,000 | | | | - | | | | 1,050,000 | | (5 | ) | | | 156,803 | | | | 9,542 | | | | 1,716,345 | | President and | | | | 2010 | | | | 420,000 | | | | 193,825 | | | | - | | | | | | 388,920 | | | | 11,550 | | | | 1,014,295 | | Chief Executive Officer | | | | 2009 | | | | 375,000 | | | | 187,500 | | | | 999,000 | | (6 | ) | | | 562,500 | | | | 6,465 | | | | 2,130,465 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Scott M. Shaw | | | | 2011 | | | | 375,000 | | | | - | | | | 700,000 | | (5 | ) | | | 88,202 | | | | 11,211 | | | | 1,174,413 | | Executive Vice President and | | | | 2010 | | | | 350,000 | | | | 133,515 | | | | - | | | | | | 249,075 | | | | 10,054 | | | | 742,644 | | Chief Operating Officer | | | | 2009 | | | | 325,000 | | | | 159,375 | | | | 499,500 | | (6 | ) | | | 365,625 | | | | 9,645 | | | | 1,359,145 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cesar Ribeiro | | | | 2011 | | | | 364,500 | | | | - | | | | 560,000 | | (5 | ) | | | 85,850 | | | | 12,321 | | | | 1,022,671 | | Executive Vice President, Chief | | | | 2010 | | | | 340,000 | | | | 127,879 | | | | - | | | | | | 256,530 | | | | 11,514 | | | | 735,923 | | Financial Officer and Treasurer | | | | 2009 | | | | 315,000 | | | | 145,625 | | | | 299,700 | | (6 | ) | | | 354,375 | | | | 9,206 | | | | 1,123,906 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Piper Jameson (8) | | | | 2011 | | | | 281,417 | | | | - | | | | 450,000 | | (5 | ) | | | 43,278 | | | | 9,952 | | | | 784,647 | | Executive Vice President and | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Marketing Officer | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
__________
(1)In 2011,2013, the Company had four executive officers. Ms. Jameson became an executive officer on November 1, 2011. (2) The amounts in this column for 2009 and 2010 reflect the value of the discretionary adjustments to the cash bonuses paid under the Company’s MIC Plan as described in the “Compensation Discussion and Analysis.” Pursuant to the 2011 MIC Plan no discretionary adjustments are permitted. (3) Represents the aggregate grant date fair value of restricted stock grants during each of the years presented. The fair values of these grants were determined in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures). See Note 1 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011,2013, regarding assumptions underlying the valuation of equity awards. Whether, and to what extent, a named executive officer realizes value will depend on our actual operating performance, stock price fluctuations and the named executive officer’s continued employment. Amounts reported for these awards may not represent the amounts that the named executive officers will actually realize from the awards.
(4) ReflectsPursuant to the Securities and Exchange Commission disclosure rules, the dollar value included in the table with respect to 2013 represents the grant date fair value of cash incentive bonuses paid under our MIC Plan as described in25% of the “Compensation Discussion and Analysis.”
(5) Theperformance-based restricted stock awards granted in each of 2011 consist of time-based restricted stock and performance-based restricted stock2013 (“Performance Shares”). The dollar value included in the table with respect to 2011 and 2012 represents the grant date fair value of (i) the time-based restricted stock granted in the applicable year and (ii) 25% of the performance shares granted in 2011.
Time-based restricted stock awards generally vest ratably over four years with 20% vesting on each of the date of grant and the first through fourth anniversaries of the date of grant. The time-based restricted stock awards granted to each of the NEOs on March 2, 2012 vested in full on March 2, 2013. The Performance Shares vest based upon the attainment of (i) a threshold operating income margin target and (ii) EBITDA targets set by the Compensation Committee each year during the applicable four-year performance period as described in the “Compensation Discussion and Analysis.” As none of the 2011, 2012 or 2013 EBITDA targets were attained, to date, the named executive officers have not received any value with respect to the 2011or 2013 Performance Shares. The terms and conditions of the time-based restricted stock and the Performance Shares are described in detail above in the “Compensation Discussion and Analysis.” There is no vesting period on the right to vote or the right to receive dividends on the restricted stock awards. (3)Reflects the value of cash incentive awards paid under our MIC Plan as described in the “Compensation Discussion and Analysis.” (4)Amounts reflected in this column include 401(k) matching contributions for each named executive officer as well as the costs related to personal use of a company-owned vehicle by the named executive officers and premiums paid on life insurance policies during 2013. With respect to each of the named executive officers, the following matching contributions were made on their behalf under our 401(k) plan for 2013: $3,000 for Mr. McAlmont; $5,250 for Mr. Shaw; $5,250 for Mr. Ribeiro and $4,495 for Ms. Jameson.
Grants of Plan-Based Awards for Fiscal Year End December 31, 2013 | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | Estimated Future Payouts Under Equity Incentive Plan Awards | | Name | Grant Date | Committee Determination Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | | | | | (1) | | | (1) | | | (2) | | | (2) | | | (2) | | Shaun E. McAlmont | 4/30/2013 | 4/30/2013 | | | 0 | | | | 500,000 | | | | 1,000,000 | | | | 137,500 | | | | 137,500 | | | | 137,500 | | | 4/29/2011 | 3/1/2013 | | | | | | | | | | | | | | | 150,000 | | | | 150,000 | | | | 150,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Scott M. Shaw | 4/30/2013 | 4/30/2013 | | | 0 | | | | 300,000 | | | | 600,000 | | | | 97,500 | | | | 97,500 | | | | 97,500 | | | 4/29/2011 | 3/1/2013 | | | | | | | | | | | | | | | 100,000 | | | | 100,000 | | | | 100,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cesar Ribeiro | 4/30/2013 | 4/30/2013 | | | 0 | | | | 273,375 | | | | 546,750 | | | | 80,000 | | | | 80,000 | | | | 80,000 | | | 4/29/2011 | 3/1/2013 | | | | | | | | | | | | | | | 80,000 | | | | 80,000 | | | | 80,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Piper Jameson | 4/30/2013 | 4/30/2013 | | | 0 | | | | 232,500 | | | | 465,000 | | | | 50,000 | | | | 50,000 | | | | 50,000 | | | 4/29/2011 | 3/1/2013 | | | | | | | | | | | | | | | 50,000 | | | | 50,000 | | | | 50,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)Represents target and maximum payout levels under the Company’s 2013 MIC Plan. The actual amount of incentive awards earned by each named executive officer in 2013 is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.(2)Represents the Performance Shares. The Performance Shares were approved and the 20112013 EBITDA target (applicable to 25% of the Performance Shares) was set on February 23, 2011, subject to approval of our 2005 Long-Term Stock Plan by our shareholders. At our 2011 Annual Meeting, our shareholders approved the plan and on April 29, 2011, the Performance Shares were granted to the named executive officers.March 1, 2013. Pursuant to the Securities and Exchange Commission disclosure rules, the dollar value included in the table represent the grant date fair value of 25% of the Performance Shares. There is no vesting periodThe terms and conditions of the Performance Shares are described in detail above in the “Compensation Discussion and Analysis.”
at Fiscal Year End December 31, 2013
| | Option Awards | | | Stock Awards | | Name | | Number of securities underlying unexercised options (#) Exercisable | | | 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 ($) | | | Equity Incentive Plan Awards: Number of unearned shares, units or other rights that have not vested (#) | | | Equity Incentive Plan Awards: Market or payout value of unearned shares, units or other rights that have not vested ($) | | | | | | | | | | (1) | | | (2) | | | (3) | | | (4) | | | (3) | | Shaun E. McAlmont | | | 15,000 | | | | 20.00 | | | 06/23/15 | | | | 10,000 | (5) | | | 49,800 | | | | 26,946 | (9) | | | 134,191 | | | | | 60,000 | | | | 17.92 | | | 07/20/16 | | | | 23,499 | (6) | | | 117,025 | | | | 97,691 | (10) | | | 486,501 | | | | | 20,000 | | | | 11.96 | | | 03/01/17 | | | | 125,874 | (7) | | | 626,853 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Scott M. Shaw | | | 15,000 | | | | 11.96 | | | 03/01/17 | | | | 5,000 | (5) | | | 24,900 | | | | 17,964 | (9) | | | 89,461 | | | | | | | | | | | | | | | | | 15,666 | (6) | | | 78,017 | | | | 69,272 | (10) | | | 344,975 | | | | | | | | | | | | | | | | | 21,429 | (8) | | | 106,716 | | | | | | | | | | | | | | | | | | | | | | | | | 83,916 | (7) | | | 417,902 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Cesar Ribeiro | | | 40,000 | | | | 25.00 | | | 06/07/14 | | | | 3,000 | (5) | | | 14,940 | | | | 14,373 | (9) | | | 71,578 | | | | | 15,000 | | | | 14.19 | | | 12/09/15 | | | | 12,533 | (6) | | | 62,414 | | | | 56,838 | (10) | | | 283,053 | | | | | 25,000 | | | | 17.92 | | | 07/20/16 | | | | 67,132 | (7) | | | 334,317 | | | | | | | | | | | | | 12,458 | | | | 11.96 | | | 03/01/17 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Piper Jameson | | | 1,667 | | | | 11.96 | | | 03/01/17 | | | | 1,000 | (5) | | | 4,980 | | | | 8,982 | (9) | | | 44,730 | | | | | 8,333 | | | | 16.19 | | | 10/26/16 | | | | 7,834 | (6) | | | 39,013 | | | | 35,524 | (10) | | | 176,910 | | | | | | | | | | | | | | | | | 41,958 | (7) | | | 208,951 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
(1)Option awards granted to the named executive officers were granted on the rightdate 10 years prior to vote or the right to receive dividends on these shares.expiration date. All Option awards are fully vested. (6) The(2)Except as otherwise noted, all time-based restricted stock awards granted in 2009grants awarded to the named executive officers vest ratably on the date of grant and on each of the first through fifth anniversaryfourth anniversaries of the grant date; however, there is no vesting period on the right to vote or the right to receive dividends on these shares.the restricted stock. Upon an executive’s termination of employment due to death, disability, by the executive for good reason or by the Company without cause or a change in control, the restricted stock will immediately vest.
(7) Amounts reflected in this column include 401(k) matching contributions for each named executive officer as well as the portion(3)All equity award values are based on a December 31, 2013 closing stock price of personal use of a company-owned vehicle by the named executive officers during 2011.$4.98.
(8) Ms. Jameson was promoted to the position of Executive Vice President and Chief Marketing Officer on November 1, 2011.
Grants of Plan-Based Awards
for Fiscal Year End December 31, 2011
| | | | Estimated Future Payouts Under Non- Equity Incentive Plan Awards | | | | | | | | Name | Grant Date | Committee Determination Date | | Threshold ($) | | | Target ($) (1) | | | Maximum ($) | | | All Other Stock Awards: Number of Shares of Stock or Units (#) | | | Grant Date Fair Value of Stock and Option Awards ($) | | Shaun E. McAlmont | 2/23/2011 | 2/23/2012 | | | 0 | | | | 500,000 | | | | 1,000,000 | | | | 58,747 | (2) | | | 900,000 | | | 4/29/2011 | 2/23/2012 | | | | | | | | | | | | | | | 35,928 | (3) | | | 150,000 | | | | | | | | | | | | | | | | | | | | | | | | | Scott M. Shaw | 2/23/2011 | 2/23/2012 | | | 0 | | | | 281,250 | | | | 562,500 | | | | 39,165 | (2) | | | 600,000 | | | 4/29/2011 | 2/23/2012 | | | | | | | | | | | | | | | 23,952 | (3) | | | 100,000 | | | | | | | | | | | | | | | | | | | | | | | | | Cesar Ribeiro | 2/23/2011 | 2/23/2012 | | | 0 | | | | 273,375 | | | | 546,750 | | | | 31,332 | (2) | | | 480,000 | | | 4/29/2011 | 2/23/2012 | | | | | | | | | | | | | | | 19,162 | (3) | | | 80,000 | | | | | | | | | | | | | | | | | | | | | | | | | Piper Jameson | 2/23/2011 | 2/23/2012 | | | 0 | | | | 138,000 | | | | 276,000 | | | | 19,583 | (2) | | | 300,000 | | | 4/29/2011 | 2/23/2012 | | | | | | | | | | | | | | | 11,976 | (3) | | | 50,000 | | | 11/1/2011 | 11/1/2012 | | | | | | | | | | | | | | | 11,235 | (2) | | | 100,000 | | | | | | | | | | | | | | | | | | | | | | | | |
__________
(1) Represents target and maximum payout levels under the Company’s 2011 MIC. The actual amount of incentive bonus earned by each named executive officer in 2011 is reported under the Non-Equity Incentive Plan Compensation column in the Summary Compensation Table.
(2) Represents the time-vested restrictedPerformance-based stock awards.
(3) Represents the Performance Shares. The Performance Shares were approved and the 2011 EBITDA target (applicable to 25% of the Performance Shares) was set on February 23, 2011, subject to approval of our 2005 Long-Term Stock Plan by our shareholders. At our 2011 Annual Meeting, our shareholders approved the plan and on April 29, 2011, the Performance Shares were granted to the named executive officers. Pursuant to the Securities and Exchange Commission disclosure rules, the dollar value included in the table represent the grant date fair value of 25% of the Performance Shares.
Oustanding Equity Awardsat Fiscal Year End December 31, 2011
| | 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 (#) (3) | | Market value of shares or units of stock that have not vested ($) (10) | | | | | | | | | | | | | | | | | Shaun E. McAlmont | | 15,000 | | - | | 20.00 | | 6/23/2015 (1) | | 10,000 | (4) | | 79,000 | | | | 60,000 | | - | | 17.92 | | 7/20/2016 (2) | | 4,000 | (5) | | 31,600 | | | | 20,000 | | - | | 11.96 | | 3/1/2017 (2) | | 30,000 | (6) | | 237,000 | | | | | | | | | | | | 46,998 | (7) | | 371,281 | | | | | | | | | | | | 35,928 | (8) | | 283,831 | | | | | | | | | | | | | | | | | Scott M. Shaw | | 50,000 | | - | | 14.00 | | 11/3/2013 (1) | | 10,000 | (4) | | 79,000 | | | | 15,000 | | - | | 11.96 | | 3/1/2017 (2) | | 4,000 | (5) | | 31,600 | | | | | | | | | | | | 15,000 | (6) | | 118,500 | | | | | | | | | | | | 31,332 | (7) | | 247,523 | | | | | | | | | | | | 23,952 | (8) | | 189,221 | | | | | | | | | | | | | | | | | Cesar Ribeiro | | 40,000 | | - | | 25.00 | | 6/7/2014 (1) | | 10,000 | (4) | | 79,000 | | | | 15,000 | | - | | 14.19 | | 12/9/2015 (2) | | 4,000 | (5) | | 31,600 | | | | 25,000 | | - | | 17.92 | | 7/20/2016 (2) | | 9,000 | (6) | | 71,100 | | | | 12,458 | | - | | 11.96 | | 3/1/2017 (2) | | 25,066 | (7) | | 198,018 | | | | | | | | | | | | 19,162 | (8) | | 151,380 | | | | | | | | | | | | | | | | | Piper P. Jameson | | 1,667 | | - | | 11.96 | | 3/1/2017 (2) | | 3,200 | (5) | | 25,280 | | | | 8,333 | | - | | 16.19 | | 10/26/16 (2) | | 3,000 | (6) | | 23,700 | | | | | | | | | | | | 15,667 | (7) | | 123,772 | | | | | | | | | | | | 11,976 | (8) | | 94,610 | | | | | | | | | | | | 8,988 | (9) | | 71,005 | | | | | | | | | | | | | | | | |
__________
(1) Option awards granted to the named executive officers were granted on the date 10 years prior to the expiration date and vest ratably on the first through fifth year anniversary of the grant date.
(2) Option awards granted to the named executive officers were granted on the date 10 years prior to the expiration date and vest ratably on the first through third year anniversary of the grant date.
(3) Except as otherwise noted, all restricted stock grants awarded to the named executive officers vest ratably on the first through fifth year anniversary of the grant date; however, there is no vesting period on the right to vote or the right to receive dividends on these shares.
(4) Restricted stock grants were awarded on October 30, 2007.
(5) Restricted stock grants were awarded on February 29, 2008.
(6) Restricted stock grants were awarded on November 2, 2009.
(7) Restricted stock grants were awarded on February 23, 2011 and vest over four years with 20% vesting on the date of grant and on each of the first through fourth anniversaries of the grant date.
(8) Restricted stock grants were awarded on April 29, 2011 and vest in equal installments over four years based upon the attainment of annual EBITDA performance criteria targets set by the Compensation Committee for each year during the performance period. The terms and conditions of the Performance Shares are described in detail above in the “Compensation Discussion and Analysis.”
(9) Restricted stock grant awarded(5)Awarded on November 1, 20112, 2009 and vest over four years with 20% vesting on the date of grant and on each of the first through fourth anniversariesfifth anniversary of the grant date.
(10) All equity award values are based(6)Awarded on a December 31, 2011, closing stock price of $7.90.February 23, 2011.
(7)Awarded on December 5, 2012. (8)Awarded on May 1, 2012. (9)Awarded on April 29, 2011. (10)Awarded on April 30, 2013. Option Exercises and Stock Vested as of Fiscal Year End December 31, 20112013
| | Stock Awards | | Name | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting | | | | | | | (1) | | Shaun E. McAlmont | | | 81,708 | | | | 456,907 | | Scott M. Shaw | | | 62,948 | | | | 353,455 | | Cesar Ribeiro | | | 46,645 | | | | 267,789 | | Piper Jameson | | | 27,749 | | | | 155,575 | |
| Options Awards | | Stock Awards | | Name | Number of Shares Acquired on Exercise (#) | | Value Realized on Exercise ($) (1) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting (2) | | Shaun E. McAlmont | - | | - | | 33,749 | | 384,214 | | Scott M. Shaw | 21,651 | | 159,351 | | 24,833 | | 284,321 | | Cesar Ribeiro | - | | - | | 21,266 | | 244,355 | | Piper Jameson | - | | - | | 8,763 | | 112,787 | |
__________
(1) Value realized represents the excess of the fair market value of the shares at the time of exercise over the exercise price of the options. (2) Value realized represents the fair market value of the shares at the time of vesting.
Potential Payments upon a Termination or Change in Control The following table summarizes the value of the termination payments and benefits that our named executive officers would receive upon: | ● · | the executive’s Involuntary Termination (as defined in their respective employment agreements)below); |
| ● · | a Change in Control (as defined in their respective employment agreements)below); |
| ●
| the executive’s voluntary resignation (other than pursuant to an Involuntary Termination) during the 30-day period commencing on the first anniversary of the date of the Change in Control; or |
| ● · | the executive’s death or disability. |
In each case, the amounts are determined as if the trigger event occurred on December 31, 2011. The terms2013 and equity is valued based on the closing stock price of these benefits are described below.$4.98 on December 31, 2013. This table excludes vested account balances under our 401(k) plan which is generally available to all of our employees. The terms of the benefits are set forth in the employment agreements with each of the named executive officers is set forth below. as described immediately following the table. Payment upon a Termination of Employment or Change in Control at Fiscal Year End December 31, 2011 2013Name | | | | | Benefits ($) (3) | | | | Shaun E. McAlmont | | | | | | | | | Involuntary Termination | 1,739,548 | | 1,002,712 | | 18,560 | | 2,760,820 | | Change in Control | - | | 1,002,712 | | - | | 1,002,712 | | Resignation During a 30-Day Period Commencing on the First Anniversary of the Date of the Change in Control (1) | 869,774 | | - | | 18,560 | | 888,334 | | Death or Disability (4) | 156,803 | | 1,002,712 | | - | | 1,159,515 | | Termination for Cause or Resignation without Good Reason | - | | - | | - | | - | | Scott M. Shaw | | | | | | | | | Involuntary Termination | 915,594 | | 665,844 | | 18,569 | | 1,600,007 | | Change in Control | - | | 665,844 | | - | | 665,844 | | Resignation During a 30-Day Period Commencing on the First Anniversary of the Date of the Change in Control (1) | 610,396 | | - | | 18,569 | | 628,965 | | Death or Disability (4) | 88,202 | | 665,844 | | - | | 754,046 | | Termination for Cause or Resignation without Good Reason | - | | - | | - | | - | | Cesar Ribeiro | | | | | | | | | Involuntary Termination | 899,444 | | 531,098 | | 18,560 | | 1,449,102 | | Change in Control | - | | 531,098 | | - | | 531,098 | | Resignation During a 30-Day Period Commencing on the First Anniversary of the Date of the Change in Control (1) | 599,630 | | - | | 18,560 | | 618,190 | | Death or Disability (4) | 85,850 | | 531,098 | | - | | 616,948 | | Termination for Cause or Resignation without Good Reason | - | | - | | - | | - | | Piper P. Jameson | | | | | | | | | Involuntary Termination | 644,472 | | 338,367 | | 18,992 | | 1,001,831 | | Change in Control | - | | 338,367 | | - | | 338,367 | | Resignation During a 30-Day Period Commencing on the First Anniversary of the Date of the Change in Control | - | | - | | - | | - | | Death or Disability (4) | 43,278 | | 338,367 | | - | | 381,645 | | Termination for Cause or Resignation without Good Reason | - | | - | | - | | - | |
_____________
Name | | Aggregate Severance | | | Stock Awards | | | Benefits | | | Total | | | | ($) | | | ($) | | | ($) | | | ($) | | | | | | | (1) | | | (2) | | | | | Shaun E. McAlmont | | | | | | | | | | | | | Involuntary Termination | | | 1,563,150 | | | | 1,414,370 | | | | 25,297 | | | | 3,002,817 | | | | | | | | | | | | | | | | | | | Change in Control | | | - | | | | 1,414,370 | | | | - | | | | 1,414,370 | | | | | | | | | | | | | | | | | | | Death or Disability (3) | | | 500,000 | | | | 1,414,370 | | | | - | | | | 1,914,370 | | | | | | | | | | | | | | | | | | | Termination for Cause or Resignation without Good Reason | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | Scott M. Shaw | | | | | | | | | | | | | | | | | Involuntary Termination | | | 845,378 | | | | 1,061,971 | | | | 25,852 | | | | 1,933,201 | | | | | | | | | | | | | | | | | | | Change in Control | | | - | | | | 1,061,971 | | | | - | | | | 1,061,971 | | | | | | | | | | | | | | | | | | | Death or Disability (3) | | | 300,000 | | | | 1,061,971 | | | | - | | | | 1,361,971 | | | | | | | | | | | | | | | | | | | Termination for Cause or Resignation without Good Reason | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | Cesar Ribeiro | | | | | | | | | | | | | | | | | Involuntary Termination | | | 777,994 | | | | 766,302 | | | | 25,637 | | | | 1,569,933 | | | | | | | | | | | | | | | | | | | Change in Control | | | - | | | | 766,302 | | | | - | | | | 766,302 | | | | | | | | | | | | | | | | | | | Death or Disability (3) | | | 273,375 | | | | 766,302 | | | | - | | | | 1,039,677 | | | | | | | | | | | | | | | | | | | Termination for Cause or Resignation without Good Reason | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | | Piper Jameson | | | | | | | | | | | | | | | | | Involuntary Termination | | | 661,398 | | | | 496,964 | | | | 25,057 | | | | 1,183,419 | | | | | | | | | | | | | | | | | | | Change in Control | | | - | | | | 496,964 | | | | - | | | | 496,964 | | | | | | | | | | | | | | | | | | | Death or Disability (3) | | | 232,500 | | | | 496,964 | | | | - | | | | 729,464 | | | | | | | | | | | | | | | | | | | Termination for Cause or Resignation without Good Reason | | | - | | | | - | | | | - | | | | - | | | | | | | | | | | | | | | | | | |
(1) Resignation for any reason during the 30-day period commencing on the first anniversary of the date of the Change in Control. If a resignation constitutes an Involuntary Termination, the executive will be entitled to the higher payments. Ms. Jameson’s employment agreement contains a “double-trigger” change in control severance benefits provisions that requires both the occurrence of a change in control and a subsequent involuntary termination.
(2) (1)All outstanding stock options, restricted stock and performance shares granted by the Company to the named executive officers will become fully vested and immediately exercisable upon (i) a changeChange in control,Control, (ii) an involuntary terminationInvoluntary Termination or (iii) upon the executive’s death or disability. Vesting of the Performance Shares upon a change in control is contingent upon the Company attaining the threshold operating income margin target. This target was satisfied with respect to the 2011 Performance Shares but has not been satisfied with respect to the 2013 Performance Shares.
(3) (2)Includes a cash payment equal to the Company’s estimate of the employer portions of the premiums that would be necessary to continue the executive’s health care benefits coverage until the first anniversary of the executive’s date of termination.
(4) (3)Includes an annual bonusincentive compensation award for the year of termination based upon attainment of target levels.
Employment Agreements The Company is party to employment agreements with each of our named executive officers. Employment Agreement with Shaun E. McAlmont Employment Period.Period. The agreement provides that Mr. McAlmont will serve as our President & Chief Executive Officer through December 31, 2012.2014. Compensation and Benefits. We have agreed that we will compensate Mr. McAlmont withwill receive a minimum annual base salary of $500,000. Mr. McAlmont$500,000, will also be eligible to earn an annual bonus for each calendar year during the term of his employment, pursuant to the terms of our MIC Planparticipate in effect for such calendar year. For a description of the MIC Plan please see the “Compensation Discussion and, Analysis.” Mr. McAlmont will also be included, to the extent eligible, in all of our employee benefit plans, programs and arrangements (including, without limitation, any plans, programs or arrangements providing for retirement benefits, profit sharing, disability benefits, health and life insurance or vacation and paid holidays) that are established for, or made available to, our senior executives. In addition, we will furnish Mr. McAlmont with coverage by our customary director and officer indemnification arrangements, subject to applicable law.
Involuntary Termination. In the event that during Mr. McAlmont’s employment term, there isof an “Involuntary Termination” (as defined below) of Mr. McAlmont’s employment, we will pay him: (1) two times the amount of his base salary, as is then in effect; (2) two times the average of his annual bonusincentive compensation award over the prior two years; (3) all outstanding reasonable travel and other business expenses incurred as of the date of his termination; and (4)(3) a cash amount equal to the Company’s estimate of the employer portion of the premiums necessary to continue his health care benefits coverage for the earlier of (A) one year and (B) the date on which he is covered under another group health plan. Mr. McAlmont will also be entitled to receive any other accrued compensation and benefits otherwise payable to him as of the date of his termination. All the aforementioned paymentsThese amounts would be paid by us in a lump-sum amount no later60 days following his termination. In addition, Mr. McAlmont will receive a prorated annual award under the MIC Plan for the year in which the Involuntary Termination occurs based on actual performance, payable at the time that awards are generally paid to employees for the applicable year. Termination for Cause; Resignation Other than 30 days afterfor Good Reason. In the event that Mr. McAlmont’s employment is terminated by us for Cause or Mr. McAlmont resigns from his employment other than for “Good Reason” (as defined below), we will pay him his accrued but unpaid base salary and employee benefits earned through the date of his termination. This lump sum payment may be deferredtermination, including, without limitation, any MIC Plan award due but not yet paid for six months,a completed calendar year. Death or Disability. In the event that Mr. McAlmont dies or his employment is terminated as a result of his disability, we will pay him (or his estate, if necessary, to comply with Section 409Aapplicable) his accrued but unpaid base salary and employee benefits earned through the date of the Internal Revenue Code.his termination, including, without limitation, any MIC Plan award due but not yet paid for a completed calendar year. In addition, (i) Mr. McAlmont will receive a prorated target MIC Plan award for the year of termination and (ii) all of Mr. McAlmont’s outstanding stock options and restricted stock shall become fully vested, and stock options shall become immediately exercisable and remain exercisable for one year (or until the option’s normal expiration date, if earlier). For purposes of Mr. McAlmont’s employment agreement, “Involuntary Termination” means the termination of his employment (1) by us (or any successor thereto) without “Cause” (as defined in his employment agreement) or (2) by Mr. McAlmont for “Good Reason” (as defined in his employment agreement). Termination for Cause; Resignation Other than for Good Reason. In the event that during Mr. McAlmont’s employment term, Mr. McAlmont’s employment is terminated by us for Cause, or Mr. McAlmont resigns from his employment other than for Good Reason, we will pay him his accrued but unpaid base salary earned through the date of termination, unreimbursed expenses, plus any other accrued but unpaid employee benefits earned through the date of his termination, including, without limitation, any annual bonus due but not yet paid for a completed calendar year.
Death or Disability. In the event that during Mr. McAlmont’s employment term, Mr. McAlmont dies or his employment is terminated as a result of his disability, we will pay him (or his estate, if applicable) his accrued but unpaid base salary earned through the date of termination, unreimbursed expenses, plus any other accrued but unpaid employee benefits earned through the date of his termination, including, without limitation, any annual bonus due but not yet paid for a completed calendar year. In addition, (i) Mr. McAlmont will receive a prorated target annual bonus for the year of termination and (ii) all outstanding stock options and restricted stock shall become fully vested, and stock options shall become immediately exercisable and remain exercisable for one year (or until the option’s normal expiration date, if earlier).
Change in Control. Upon a Change“Change in ControlControl” (as defined in his employment agreement)below), we (or our successor) will continue the employment of Mr. McAlmont and Mr. McAlmont will continue performing services for us for a period of two years commencing on the date of the Change in Control and ending on the second anniversary thereof. In addition, all outstanding stock options granted and restricted stock awarded by us or any of our affiliates to Mr. McAlmont will become fully vested and immediately exercisable on the date of the Change in Control. During a 30-day period commencing on the first anniversary of the date of the Change in Control, Mr. McAlmont will have the right to resign from his employment with us (or our successor) for any reason and receive an amount equal to (i) one times the amount of his base salary, as is then in effect, and (ii) one times the average of his annual bonus paid to him for the two years immediately prior to the year in which such resignation occurs. If, however, such resignation constitutes an Involuntary Termination (as defined above), he will receive payments in accordance with the Involuntary Termination provisions described above. All of the aforementioned payments would be paid by us in a lump-sum amount no later than 30 days after the date of his termination.
Reduction in Payments. In the event that any payment or distribution by us to or for the benefit of Mr. McAlmont pursuant to the terms of the employment agreement or otherwise would be considered a “parachute payment” and the amount of the parachute payment, after deduction of all relevant taxes, including excise taxes imposed by Section 4999 of the Internal Revenue Code, is less than the amount Mr. McAlmont would receive if he was paid three times his average “base amount” less $1.00, then the aggregate amounts constituting the parachute payment will be reduced (or returned by Mr. McAlmont if already paid to him) to an amount that will equal three times his average “base amount” less $1.00.
Noncompetition. Mr. McAlmont is subject to a noncompetition restrictive covenant during the term of his employment and for two years thereafter, although the covenant will not apply if his employment is terminated due to an Involuntary Termination or he resigns during the 30-day period commencing on the first anniversary of a Change in Control.Termination. Nonsolicitation. Mr. McAlmont is subject to a nonsolicitation restrictive covenant of clients, employees and key consultants during the term of this employment and for one year thereafter. Confidentiality. Mr. McAlmont is subject to a confidentiality restrictive covenant of unlimited duration. Waiver and Release. Our obligations upon a termination of employment under Mr. McAlmont’s employment agreement are subject to Mr. McAlmont executing and delivering a waiver and release (relating to his release of claims against us) in a form reasonably and mutually agreed upon.us. Employment Agreements with Messrs. Shaw and Ribeiro and Ms. Jameson The terms of the Company’s employment agreements for Messrs. Shaw and Ribeiro and Ms. Jameson are identical to those set forth in Mr. McAlmont’s employment agreement described above, except thatthat: (a) Mr. Shaw will serve as Executive Vice President and Chief Operating Officer and will receive a minimum annual base salary of $375,000;$400,000; (b) Mr. Ribeiro will serve as Executive Vice President, Chief Financial Officer and Treasurer, and will receive a minimum annual base salary of $364,500; (c) Ms. Jameson will serve as Executive Vice President and Chief Marketing Officer and will receive a minimum salary of $310,000; and (d) in the event of an Involuntary Termination, of either of Messrs. Shaw’s or Ribeiro’s or Ms. Jameson’s employment term, each shall be entitled to receive a payment of one and one half times his base salary and average annual bonusincentive compensation award (as opposed to two times); and (e) Ms. Jameson’s employment agreement contains a “double-trigger” change in control severance which provides for the payment of severance benefits only upon the occurrence of both a change in control and a subsequent involuntary termination.. “Involuntary Termination” generally means the termination of the executive’s employment by the executive for Good Reason (as defined below) or by the Company without Cause. Prior to a Change“Change in ControlControl” (as defined below), “Cause” generally means any of the following: (i) the executive’s willful failure to perform his duties in any material respect, (ii) malfeasance or gross negligence in the performance of his duties, (iii) the executive’s conviction of a felony, (iv) the executive’s intentional or reckless disclosure of confidential information, (v) the executive’s commission of an act of sexual harassment that would normally constitute grounds for termination, or (vi) any other act or omission by the executive which is materially injurious to the financial condition or business reputation of the Company or any of its affiliates .affiliates. The definition also requires that the Executive be given 30 days’ notice to cure a breach of (i) and (ii) above. After a Change in Control, Cause would not include (iii), (iv)(v) and (v)(vi) above. “Good Reason” generally means the occurrence of any of the following without the executive’s written consent: (i) a reduction in the executive’s base salary or minimum guaranteedtarget annual bonus;incentive compensation award; (ii) an adverse change in the executive’s title, authority, duties or responsibilities; (iii) the relocation of the executive’s principal place of employment;employment to a location more than 10 miles from West Orange, New Jersey; (iv) a failure by the Company to pay material compensation when due; or (v) a material breach of the Employment Agreement by the Company. The definition also requires that the ExecutiveCompany be given 10 days’ notice to cure any Good Reason that is susceptible to cure. “Change in Control” generally means any of the following: (i) when a person directly or indirectly becomes the beneficial owner of 25% or more of either (1) the then outstanding common stock, or (2) the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (other than any acquisition directly from the Company, by the Company, or by an employee benefit plan sponsored by the Company); (ii) when, during any period of 24 consecutive months, the individuals who constitute the board of directors cease to constitute at least a majority thereof; (iii) when the shareholders approve a reorganization, merger or consolidation of the Company without the consent or approval of a majority of the board of directors; (iv) when there is a consummation of a merger, amalgamation or consolidation of the Company with any other corporation, the issuance of voting securities of the Company in connection with such a transaction or the sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another corporation(unless there is no significant change in the beneficial ownership of the common stock); or (v) a complete liquidation or dissolution of the Company or the sale or other disposition of all or substantially all of the assets of the Company. Director Compensation The following chart summarizes the annual cash compensation for the Company’s non-employee directors during 2011:2013: Director Compensation for Fiscal Year End December 31, 20112013
| | Fees Earned or Paid in Cash ($) | | | | | | Total ($) | | Alvin O. Austin | | | 53,500 | | | | 55,000 | | | | 108,500 | | Peter S. Burgess | | | 68,500 | | | | 55,000 | | | | 123,500 | | James J. Burke, Jr. | | | 47,500 | | | | 55,000 | | | | 102,500 | | Celia H. Currin | | | 53,500 | | | | 55,000 | | | | 108,500 | | Paul E. Glaske | | | 57,500 | | | | 55,000 | | | | 112,500 | | Charles F. Kalmbach | | | 53,500 | | | | 55,000 | | | | 108,500 | | Alexis P. Michas | | | 87,500 | | | | 95,000 | | | | 182,500 | | J. Barry Morrow | | | 57,500 | | | | 55,000 | | | | 112,500 | |
Name (1) | Fees Earned or Paid in Cash ($) | | Stock Awards ($) | | Total ($) | | Alvin O. Austin | 55,000 | | 55,000 | | 110,000 | | Peter S. Burgess | 70,000 | | 55,000 | | 125,000 | | James J. Burke, Jr. | 50,500 | | 55,000 | | 105,500 | | Celia H. Currin | 55,000 | | 55,000 | | 110,000 | | Paul E. Glaske | 62,000 | | 55,000 | | 117,000 | | Charles F. Kalmbach | 56,500 | | 55,000 | | 111,500 | | Alexis P. Michas | 90,500 | | 95,000 | | 185,500 | | J. Barry Morrow | 62,000 | | 55,000 | | 117,000 | |
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| (1) | Shaun E. McAlmont does not receive any fees or stock awards for his service as a director. |
| (2) | Represents the grant date fair value of restricted stock awards.awards granted on April 30, 2013. The fair values of these grants were determined in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures) as determined based on applying the assumptions used in the Company’s financial statements. See Note 1 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2011,2013, regarding assumptions underlying the valuation of equity awards. These grants vest on the first anniversary of the award date, April 29, 2012.30, 2014. |
The following table lists the cumulative number of shares of restricted stock held bygranted to our non-employee directors as of December 31, 2011:2013:
Name | | Restricted Shares | | Alvin O. Austin | | 5,496 | 23,227 | | Peter S. Burgess | | 18,937 | 36,668 | | James J. Burke, Jr. | | 18,937 | 36,668 | | Celia H. Currin | | 19,493 | 37,224 | | Paul E. Glaske | | 18,937 | 36,668 | | Charles F. Kalmbach | | 11,899 | 29,630 | | Alexis P. Michas | | 21,333 | 51,959 | | J. Barry Morrow | | 19,493 | 37,224 | |
CompensationCompensation of Directors In 2011,2013, the Company paid each of its non-employee directors an annual retainer of $40,000 for services to the Company. In addition, each non-employee director received $1,500 per board meeting attended in person or by telephone. Non-employee directors on committees of the board each received an additional payment of $1,500 for each committee meeting attended on a day other than the day of a board meeting for which that director has been compensated. The Audit Committee Chairman received an additional $15,000 annual retainer and the chairpersons of the Nominating and Corporate Governance Committee Chairman received an additional $10,000 annual retainer and the Compensation Committee Chairmaneach received an additional $10,000 annual retainer. TheAlexis Michas, our Non-Executive Chairman received an additional annual retainer of $80,000. Fifty percent of this retainer was paid in cash and the remaining 50% was paid in 2,396restricted stock. Mr. Michas received 7,181 shares restricted stock on April 29, 2011.30, 2013. The restricted stock vests in full on April 30, 2014, the first anniversary of the grant date.
Non-employee directors are also eligible to receive awards of restricted stock under the 2005 Non-Employee Directors Restricted Stock Plan (the “Restricted Stock Plan”) as compensation for their services as directors. Initial Grant of Restricted Stock. Pursuant to the Restricted Stock Plan, eachEach non-employee director receives an initial award of shares of restricted stock equal to $60,000 (based on the fair market value of a share of common stock on the date of grant) for service as a director of the Company on the first day of the calendar month following the month in which such non-employee director first becomes a non-employee director. Annual Grants of Restricted StockStock.. The Restricted Stock Plan also provides that, as of On the date of each annual meeting, each non-employee director shall automatically receive an award of shares of restricted stock equal to $55,000 (based on the fair market value of a share of common stock on the date of grant) for service as a director of the Company, provided that such non-employee director continues to serve as a director of the Company immediately after such annual meeting. On April 29, 2011, 3,29330, 2013, 9,874 shares of common stock were awarded to each of our eight non-employee directors. The per share fair market value of the common stock on April 29, 2011,30, 2013 was $16.70.$5.57. All awards of common stock under the Restricted Stock Plan granted since 2010 vest on the first anniversary of the grant date. There is no vesting period on the right to vote or the right to receive dividends on these shares. As of December 31, 2011, there were a total of 150,606 shares outstanding under the Restricted Stock Plan of which 116,238 shares are vested. The Audit Committee assists the board of directors in fulfilling its oversight responsibilities with respect to the Company’s financial reporting process, by monitoring, among other matters, the quality and integrity of the Company’s financial statements, the independence and performance of Deloitte & Touche LLP (“D&T”), the Company’s independent registered public accounting firm, and the performance of the Company’s internal auditors. Management has primary responsibility for preparing the financial statements and for the reporting processes, including the design and maintenance of the Company’s system of internal controls. The independent registered public accounting firm is responsible for auditing the Company’s consolidated financial statements and opining upon the effectiveness of internal control over financial reporting in accordance with the standards of the Public Company Accounting Oversight Board (PCAOB). The Audit Committee is solely responsible for the compensation, appointment and oversight of the Company’s independent registered public accounting firm.firm. In this context, the Audit Committee has met and held discussions with management, the independent registered public accounting firm and the internal auditors, separately and together, with and without management present, regarding the Company’s audited consolidated financial statements as of December 31, 2011,2013, and for the year then ended and regarding the Company’s internal controls. Management represented to the Audit Committee that the Company’s consolidated financial statements were prepared in accordance with generally accepted accounting principles in the U.S. The Audit Committee also discussed with the independent registered public accounting firm the matters required to be discussed by PCAOB Interim Auditing Standard AU Section 380 (CommunicationsNo. 16 (Communications with Audit Committees)Committees). Further, the Audit Committee discussed with the internal auditors the Company’s plans for and scope of internal audits, identification of audit risks and results of audit activities. The Audit Committee reviewed and discussed with the independent registered public accounting firm the auditor’s independence from the Company and its management. As part of that review, the Company’s independent registered public accounting firm submitted to the Audit Committee the written disclosures and the letter required by Independence Standards Board Standard No. 1, as amendedPCAOB Rule 3526 (Independence Discussions with Audit Committees) in which D&T affirmed its independence from the Company. Further, the Audit Committee discussed with D&T the firm’s independence and considered whether D&T’s provision of non-audit services to the Company was compatible with maintaining D&T’s independence. The Audit Committee concluded that D&T is independent from the Company and its management. Based upon the considerations described above and subject to the limitations upon the role and responsibilities of the Audit Committee as set forth in the Audit Committee’s charter, the Audit Committee recommended to the board of directors that the audited consolidated financial statements for the year ended December 31, 2011,2013, be included in the Company’s 20112013 Annual Report on Form 10-K.
| AUDIT COMMITTEE | | Peter S. Burgess, Chairman | | Celia H. Currin | | Charles F. Kalmbach | | Alvin O. Austin |
PROPOSALPROPOSAL 2: ADVISORY VOTE ON THE COMPANY’S COMPENSATIONOF NAMED EXECUTIVE OFFICERS
Pursuant to the rules of the Securities and Exchange Commission adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, we are providing shareholders with an advisory “say-on-pay” vote to approve the compensation of our named executive officers as disclosed in the Compensation Discussion and Analysis and tabular and narrative disclosures of this proxy statement. We encourage shareholders to read the Compensation Discussion and Analysis beginning on page 11 of this proxy statement, which describes how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table and other related compensation tables and narrative which provide detailed information on the compensation of our named executive officers. The Compensation Committee and the board of directors believe that the policies and procedures articulated in this proxy statement are effective in achieving our goals and that the compensation of our named executive officers reported in this proxy statement has contributed to the Company’s recent and long-term success.goals. The board unanimously recommends a vote for the following resolution: “RESOLVED, that the shareholders hereby approve the compensation of the named executive officers as disclosed pursuant to Item 402 of Regulation S-K, including the Compensation Discussion and Analysis, the accompanying compensation disclosure tables and any related narrative disclosure in this proxy statement.” Although the vote on this Proposal 2 is advisory and non-binding, the Compensation Committee and the board will review the voting results on the proposal and will consider shareholder views in connection with our executive compensation program. Our board of directors unanimously recommends a vote FOR the proposal to approve the compensation of named executive officers described in this proxy statement. Proxies that are executed and returned will be voted FOR that proposal, except to the extent that particular proxies contain instructions to vote against, or to abstain from voting with regard to, that proposal. PROPOSALPROPOSAL 3: RATIFICATION OF APPOINTMENT OFINDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee has appointed Deloitte & Touche LLP, which has served as the Company’s independent registered public accounting firm since 1999, to be the Company’s independent registered public accounting firm for the year ending December 31, 2012.2014. Deloitte & Touche LLP has advised the Company that it does not have any direct or indirect financial interest in the Company. Representatives of Deloitte & Touche LLP are expected to attend the annual meeting and will be given the opportunity to make a statement if they choose to do so. They will also be available to respond to appropriate questions. Before appointing Deloitte & Touche LLP, the Audit Committee carefully considered Deloitte & Touche LLP’s qualifications, including the firm’s performance as independent registered public accounting firm for the Company in prior years and its reputation for integrity and competence in the fields of accounting and auditing. The Audit Committee also considered whether Deloitte & Touche LLP’s provision of non-audit services to the Company is compatible with its independence from the Company. Shareholders will be asked at the annual meeting to ratify the appointment of Deloitte & Touche LLP. If the shareholders ratify the appointment, the Audit Committee may still, in its discretion, appoint a different independent registered public accounting firm at any time during the year 20122014 if it concludes that such a change would be in the best interests of the Company. If the shareholders fail to ratify the appointment, the Audit Committee will reconsider, but not necessarily rescind, the appointment of Deloitte & Touche LLP. FeesFees Billed by Independent Registered Public Accounting Firm As more fully described below, all services to be provided by Deloitte & Touche LLP are pre-approved by the Audit Committee, including audit services, tax services and certain other services. The SEC requires disclosure of fees billed by the Company’s independent registered public accounting firm for certain services. The following table sets forth the aggregate fees billed toby Deloitte & Touche LLP during the years ended December 31, 20112013 and 2010:2012: Fee Category | | 2011 | | | 2010 | | | 2013 | | | 2012 | | Audit and Audit Related Fees | | $ | 852,800 | | | $ | 930,500 | | | | 772,350 | | | $ | 856,090 | | Tax Fees | | | 218,497 | | | | 313,250 | | | | 178,247 | | | | 173,325 | | All Other Fees | | | 3,600 | | | | 3,600 | | | | 7,880 | | | | 7,880 | | | | | | | | | | | | Total Fees | | $ | 1,074,897 | | | $ | 1,247,350 | | | $ | 958,477 | | | $ | 1,037,295 | |
Audit and Audit Related Fees consisted principally of audit services of our consolidated financial statements, review of our quarterly financial statements, services that are normally provided by the independent auditors in connection with statutory and regulatory filings and the audit of the effectiveness of our internal control over financial reporting, as required by Section 404 of the Sarbanes-Oxley Act of 2002. Tax Fees consisted principally of professional services rendered by Deloitte & Touche LLP in connection with the Company’s tax compliance activities, including technical and tax advice related to the preparation of tax returns. All Other Fees primarily consisted of professional services rendered in connection with the Company’s 401(k) and pensionemployee benefit plan. A
udit Audit Committee Pre-Approval Policy The Audit Committee approves, prior to engagement, all audit and non-audit services provided by Deloitte & Touche LLP and all fees to be paid for such services. All services are considered and approved on an individual basis. In its pre-approval and review of non-audit service fees, the Audit Committee considers, among other factors, the possible effect of the performance of such services on the auditors’ independence. A majority of the votes cast at the annual meeting will be required to ratify the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2012.2014. The board of directors recommends a vote FOR the ratification of the appointment of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for 2012.2014.
ANNUAL ANNUAL REPORT AND FINANCIAL STATEMENTS ANDCOMMITTEE AND CORPORATE GOVERNANCE MATERIALS OF THE COMPANY Copies of the Company’s Annual Report filed with the SEC on Form 10-K for the year ended December 31, 2011,2013, including the Company’s consolidated financial statements and financial statement schedule, will be mailed to interested shareholders, without charge, upon written request. Exhibits to the Form 10-K will be provided upon written request and payment to the Company of the cost of preparing and distributing those materials. The current charters of the board’s Audit, Compensation, Nominating and Corporate Governance Committees, along with the Company’s Code of Business Ethics and Conduct and Integrity Assurance Program, are available to interested shareholders upon request and are posted on our website at www.lincolnedu.com. Written requests should be sent to Lincoln Educational Services Corporation, 200 Executive Drive, Suite 340, West Orange, New Jersey 07052, Attention: Investor Relations. CORPORATECORPORATE GOVERNANCE GUIDELINES AND CODE OF ETHICS The board of directors has adopted corporate governance guidelines, which include guidelines for determining director independence, director responsibilities, director access to management and independent advisors, and director stock ownership guidelines. The board of directors has adopted an Integrity Assurance Program – A Code of Business Ethics and Conduct that applies to all directors, officers and employees and that is intended, among other things, to comply with Section 406 of the Sarbanes-Oxley Act of 2002 and related SEC and NASDAQ Marketplace Rules requiring a code of ethics for a company’s directors, officers and employees. A copy of the Integrity Assurance Program – A Code of Business Ethics and Conduct is posted on our website at www.lincolnedu.com. The Audit Committee must approve any requests for amendments to or waivers from the Integrity Assurance Program with respect to directors and executive officers and the Company intends to report such amendments or waivers that are required to be reported pursuant to the rules of the SEC and the NASDAQ Global Select Market on the Company’s website.
Transactions with Related Persons The Company recognizes that related person transactions present a heightened risk of conflicts of interest. As a general matter, it is the preference of the Company to avoid related person transactions. The term “related person transaction” refers to a transaction required to be disclosed pursuant to Item 404 of Regulation S-K, under the Securities Act of 1933, as amended. Nevertheless, the Company recognizes that there are situations where related person transactions may be in, or may not be inconsistent with, the best interests of the Company and its shareholders. As a result, pursuant to the Company’s Audit Committee written charter, the Audit Committee is charged with the responsibility to review and approve all related person transactions on an ongoing basis. All such transactions must be approved in advance by the Audit Committee. In addition, the Company’s Code of Business Ethics and Conduct (the “Code of Conduct”) contains policies and procedures with respect to conflicts of interest and related person transactions. The Code of Conduct requires that all directors, officers, employees and certain other persons subject to the Code of Conduct, adhere to it and prohibits certain arrangements that may be relevant to related person transactions including, but not limited to, prohibitions against: obtaining a substantial interest in any entity which does or seeks to do business with, or is a competitor of, the Company; entering into various arrangements (including family or other relationships) which might dissuade such director, officer, employee or other person from acting in the best interest of the Company; entering into a financial transaction or relationship with a student, prospect, vendor, agent or competitor of the Company; benefiting, or seeking to benefit, (directly or indirectly) from such person’s position with the Company from any sale, purchase or other activity of the Company; using Company property or information for personal gain; obtaining loans or guarantees for personal obligation from the Company; and competing with the Company.
SHAREHOLDERSHAREHOLDER PROPOSALS FOR THE 20132015 ANNUAL MEETING OF SHAREHOLDERS Shareholder proposals that are intended to be presented at the 20132015 Annual Meeting of Shareholders pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, must be received by the Secretary of the Company, in writing, no later than November 30 2012,28, 2014, in order to be considered for inclusion in the Company’s proxy materials for that annual meeting. Shareholder proposals and shareholder nominations for election to the board of directors must also comply with the current advance notice and other requirements set forth in the Company’s bylaws to be eligible to be presented at an annual meeting. These requirements include, in part, the requirement that any such proposal or nomination must, with certain exceptions if the date of the annual meeting is advanced or delayed more than 30 days from that of the first anniversary of this year’s annual meeting, be submitted to the Secretary of the Company at least 120 and not more than 150 days prior to the first anniversary of the date of mailing of the notice for this year’s annual meeting (or between October 31, 2012,29, 2014, and November 30, 2012,28, 2014, based on this year’s notice mailing date of March 30, 2012)28, 2014).
COMMUNICATING COMMUNICATING WITH THE BOARD OF DIRECTORS You may contact any non-employee director, or the entire board, at any time. Your communication should be sent to the Lincoln Educational Services Corporation Board of Directors – Non-Employee Directors, c/o Corporate Secretary, Lincoln Educational Services Corporation, 200 Executive Drive, Suite 340, West Orange, New Jersey 07052. Communications are distributed to the board, or any board member as appropriate, depending on the facts and circumstances outlined in the communication. Certain items that are unrelated to the duties and responsibilities of the board will be excluded, such as spam and other junk mail, resumes and other job inquiries, surveys and business solicitations or advertisements. Material that is unduly hostile, threatening, illegal or similarly unsuitable will also be excluded. We will make available to any non-employee director any communication that is filtered in accordance with the process described above, at that director’s request. Some banks, brokers and other nominee record holders may participate in the practice of “householding” proxy statements and annual reports. This means that unless shareholders give contrary instructions, only one copy of our proxy statement or annual report may be sent to multiple shareholders in each household who share an address. We will promptly deliver a separate copy of either document to you if you call or write to us at the following address or telephone number: Lincoln Educational Services Corporation, c/o Corporate Secretary, 200 Executive Drive, Suite 340, West Orange, New Jersey 07052, telephone (973) 736-9340. If you want to receive separate copies of our proxy statement or annual report in the future, or if you are receiving multiple copies and would like to receive only one copy per household, you should contact your bank, broker or other record holder, or you may contact us at the above address or telephone number. Proxy authorizations submitted via the Internet must be received by 7:00 p.m. (Eastern Time) on April 30, 2012.May 1, 2014. To give your proxy authorization via the Internet, please read the instructions accompanying the enclosed proxy card. Costs associated with electronic access, such as from access providers, will be borne by the shareholder. | By Order of the Board of Directors | | /s/ Kenneth M. Swisstack![](https://capedge.com/proxy/DEF 14A/0001140361-14-014572/image00004.jpg) | | Kenneth M. Swisstack | | Corporate Secretary | West Orange, New Jersey | | March 30, 201228, 2014 | |
LINCOLN EDUCATIONAL SERVICES CORPORATION VOTE BY INTERNET QUICK ★ ★ ★ EASY ★ ★ ★ IMMEDIATE |
As a shareholder of Lincoln Educational Services Corporation, you have the option of voting your shares electronically through the Internet, eliminating the need to return the proxy card. Your electronic vote authorizes the named proxies to vote your shares in the same manner as if you marked, signed, dated and returned the proxy card. Votes submitted electronically over the Internet must be received by 7:00 p.m., Eastern Time, on April 30, 2012.May 1, 2014.
![](https://capedge.com/proxy/DEF 14A/0001140361-12-018334/image1.jpg) ![](https://capedge.com/proxy/DEF 14A/0001140361-14-014572/image00005.jpg) | | ![](https://capedge.com/proxy/DEF 14A/0001140361-12-018334/image2.jpg) ![](https://capedge.com/proxy/DEF 14A/0001140361-14-014572/image00006.jpg) | Vote Your Proxy on the Internet: Go to www.cstproxyvote.com Have your proxy card available when you access the above website. Follow the prompts to vote your shares. | OR | Vote Your Proxy by mail: Mark, sign and date your proxy card, then detach it, and return it in the postage-paid envelope provided. |
PLEASE DO NOT RETURN THE PROXY CARD IF YOU ARE VOTING ELECTRONICALLY |
▼ FOLD AND DETACH HERE AND READ THE REVERSE SIDE ▼ | PROXY | Please mark your votes like this | X |
1. Election of Directors: | | | | | | | | 2. Advisory vote to approve named executive officer compensation. | | | | | FOR ALL | | WITHHOLD | | FOR ALL EXCEPT | | o FOR o AGAINST o ABSTAIN | o 01. Alvin O. Austin | | o 06. Charles F. Kalmbach | | NOMINEES | | AUTHORITY | | | | | | | | o 02. Peter S. Burgess | | o 07. Shaun E. McAlmont | | | | | | below) | | | | | | o 03. James J. Burke, Jr.o 04. Celia H. Currin o 05. Paul E. Glaske | | o 08. Alexis P. Michas o 09. J. Barry Morrow | | o | | o | | o | | 3. Ratification of the appointment of Deloitte & Touche LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2014. | o 04. Celia H. Currin
| | o 09. J. Barry Morrow | | | | | | | | | o 05. Paul E. Glaske | | | | | | | | | | | | | | | | | | | | | o FOR o AGAINST o ABSTAIN | | | | (To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the box next to each nominee that you wish to withhold authority as shown here) | | | | 3. Ratification of the appointment of Deloitte & Touche LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2012. | | | | | | | | | | | | | | | | | | | | | | | | | o FOR o AGAINST o ABSTAIN | | | | | | | | | | | | (To withhold authority to vote for any individual nominee(s), mark “FOR ALL EXCEPT” and fill in the box next to each nominee that you wish to withhold authority as shown here) | | | | | | | To change the address on your account, please check the box at the right and indicate your new address in the address space to the left. Please note that changes to the registered name(s) on the account may not be submitted via this method. | o | | | | | | Check here if you plan to attend the meeting | o | | | | | | | | | | | | | | | | | COMPANY ID: | | | | | | | | | | | | | | | | | | | | | | | | | | | PROXY NUMBER: | | | | | | | | | | | | | | | | | | | | | | | | | | | ACCOUNT NUMBER: | |
Signature | | Signature | | Date | | , 2012.2014. |
ANNUAL MEETING OF SHAREHOLDERS OF
LINCOLN EDUCATIONAL SERVICES CORPORATION
MAY 1, 2012 2, 2014 Please date, sign and mail your proxy card in the envelope provided as soon as possible.
▼ FOLD AND DETACH HERE AND READ THE REVERSE SIDE ▼
LINCOLN EDUCATIONAL SERVICES CORPORATION
Proxy For Annual Meeting of Shareholders
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
The undersigned shareholder of Lincoln Educational Services Corporation, a New Jersey corporation (the “Company”), hereby appoints Shaun E. McAlmont and Cesar Ribeiro, and each of them, as proxies for the undersigned, with full power of substitution in each of them, to attend the Annual Meeting of Shareholders of the Company to be held on Tuesday,Friday, May 1, 2012,2, 2014, at 10:00 a.m., local time, at the Wilshire Grand Hotel, 350 Pleasant Valley Way, West Orange, New Jersey 07052,Lincoln Culinary Institute, 85 Sigourney Street, Hartford, Connecticut 06105, and any adjournment(s) or postponement(s) thereof, to cast on behalf of the undersigned all votes that the undersigned is entitled to cast at such meeting and otherwise to represent the undersigned at the meeting, with the same effect as if the undersigned were present. The undersigned hereby acknowledges receipt of the Notice of Annual Meeting of Shareholders and the accompanying Proxy Statement and revokes any proxy previously given with respect to such shares. THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST IN ACCORDANCE WITH THE SPECIFICATIONS MADE BY THE UNDERSIGNED. IF THIS PROXY IS EXECUTED, BUT NO SPECIFICATION IS MADE BY THE UNDERSIGNED, THE VOTES ENTITLED TO BE CAST BY THE UNDERSIGNED WILL BE CAST “FOR” ALL NOMINEES, AND, “FOR” PROPOSALS 2 AND 3 AND OTHERWISE IN THE DISCRETION OF THE PROXIES AT THE ANNUAL MEETING OR ANY ADJOURNMENT (S)ADJ OURNMENT(S) OR POSTPONEMENT (S)POSTPONEMENT(S) THEREOF.
(Continued and to be dated and signed on reverse side)
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