UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
(Amendment No. ^ )
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☐ | Soliciting Material under §240.14a-12 |
HURON CONSULTING GROUP INC.
(Name of registrant as specified in its charter)
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(Name of person(s) filing proxy statement, if other than the registrant)
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550 West Van Buren Street
Chicago, IL 60607
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
May 5, 20174, 2018
The Annual Meeting of Stockholders of Huron Consulting Group Inc. (the “Company”) will be held at the Company’s corporate headquarters located at 550 West Van Buren Street, Chicago, Illinois 60607 on May 5, 2017,4, 2018, at 11:00 a.m. Central Time, for the following purposes:
1 | To elect to the board of directors the | |
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An advisory vote to approve the Company’s executive compensation; | ||
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To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, | ||
| To transact such other business as may properly come before the meeting or any postponement or adjournment thereof. |
Only stockholders of record at the close of business on March 8, 20176, 2018 will be entitled to notice of and to vote at the meeting.
Stockholders, whether or not they expect to be present at the meeting, are requested to sign and date the enclosed proxy, which is solicited on behalf of the board of directors, and return it promptly in the envelope enclosed for that purpose. Any person giving a proxy has the power to revoke it at any time prior to the meeting, and stockholders who are present at the meeting may withdraw their proxies and vote in person.
By Order of the Board of Directors
Diane E. Ratekin
Executive Vice President, General
Counsel and Corporate Secretary
Chicago, Illinois
March 27, 201726, 2018
Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to be Held on May
The Proxy Statement and Annual Report to Stockholders are available atwww.edocumentview.com/HURN
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PROXY STATEMENT FOR ANNUAL MEETING OF STOCKHOLDERS TO BE HELD MAY |
This Proxy Statement is furnished in connection with the solicitation of proxies to be voted at the 20172018 Annual Meeting of Stockholders of Huron Consulting Group Inc. (the “Company,” “Huron,” “we” or “us”). The 20172018 Annual Meeting of Stockholders (the “Annual Meeting”) will be held on Friday, May 5, 20174, 2018 at 11:00 a.m. Central Time, at the Company’s corporate headquarters located at 550 West Van Buren Street, Chicago, Illinois 60607. This Proxy Statement and the accompanying proxy card are first being mailed to stockholders on or about March 27, 2017.26, 2018.
GENERAL INFORMATION ABOUT THE MEETING
The Company has one class of common stock. Each share of common stock is entitled to one vote on each matter to be voted upon at the Annual Meeting. Stockholders do not have the right to cumulate votes in the election of directors. Only stockholders of record at the close of business on March 8, 20176, 2018 (the “Record Date”) will be entitled to vote at the Annual Meeting. As of the Record Date, there were 22,088,72422,417,461 shares of common stock issued and outstanding.
The accompanying proxy is solicited from the holders of record of the common stock on behalf of the board of directors of the Company and is revocable at any time by giving written notice of revocation to the Secretary of the Company prior to the Annual Meeting or by executing and delivering a later-dated proxy by mail prior to the Annual Meeting. Furthermore, the stockholders of record who are present at the Annual Meeting may revoke their proxies and vote in person.
If your shares are held in a bank or brokerage account, you will receive proxy materials from your bank or broker, which will include a voting instruction form. If you would like to revoke voting instructions given to your bank or broker, you must follow its instructions. If you would like to attend the Annual Meeting and vote these shares in person, you must obtain a proxy from your bank or broker. You must request the proxy from your bank or broker; it will not automatically supply one to you.
All shares of the Company’s common stock represented by properly executed and unrevoked proxies will be voted by the proxies in accordance with the directions given therein. Where no instructions are indicated, properly executed proxies will be voted “FOR” the proposals set forth in this Proxy Statement for consideration at the Annual Meeting.
A quorum, consisting of at leastone-third of shares of common stock issued and outstanding, must be present at the meeting for any business to be conducted. Shares of common stock entitled to vote and represented by properly executed, returned and unrevoked proxies, including shares with respect to which votes are withheld, abstentions are cast or there are brokernon-votes on some proposals but not others, will be considered present at the meeting for purposes of determining a quorum.
ELECTION OF DIRECTORS
The Company’s third amended and restated certificate of incorporation divides the Company’s board of directors into three classes, with each class being elected to a three-year term.
The board of directors has nominated H. Eugene LockhartJohn S. Moody, Hugh E. Sawyer and George E. MassaroDebra Zumwalt as Class III Directors to be voted upon at the 2017 Annual Meeting. John S. Moody and Debra Zumwalt are Class II Directors serving terms ending at the 2018 Annual Meeting. James D. Edwards, John McCartney and James H. Roth are Class III Directors serving terms ending at the 2019 Annual Meeting. H. Eugene Lockhart and George E. Massaro are Class I Directors serving terms ending at the 2020 Annual Meeting.
This Proxy Statement relates only to the solicitation of proxies from the stockholders with respect to the election of the twothree nominees as Class III Directors and the other matters described herein. The board of directors knows of no reason that Mr. LockhartMoody, Mr. Sawyer or Mr. MassaroMs. Zumwalt might be unavailable to serve as the Class III Directors, and each has expressed an intention to serve, if elected. If Mr. LockhartMoody, Mr. Sawyer or Mr. MassaroMs. Zumwalt is unable to serve, the shares represented by all valid proxies will be voted “FOR” the election of such substitute nominee as the board of directors may recommend. There are no arrangements or understandings between any of the persons nominated to be a Class III Director and any other person pursuant to which any of such nominees was selected.
The election of a director requires the affirmative vote of a plurality of the shares of common stock present in person or represented by proxy at the Annual Meeting that are voted, provided that a quorum is represented at the meeting. A “plurality” means that the individuals who receive the largest number of votes are elected as directors up to the maximum number of directors to be elected at the meeting. Therefore, abstentions and “brokernon-votes” will have no impact on the election of directors. Properly executed proxies submitted pursuant to this solicitation will be voted “FOR” the election of Mr. LockhartMoody, Mr. Sawyer and Mr. MassaroMs. Zumwalt as Class III Directors, unless specified otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE ELECTION OF MR. LOCKHARTMOODY, MR. SAWYER AND MR. MASSAROMS. ZUMWALT AS CLASS III DIRECTORS.
Class and Year in Term Expires | Committees | |||||||||||
Name | Principal Occupation | Independent | A | C | N&CG | |||||||
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Age 69, Director since | ||||||||||||
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| Chief Executive Officer, Parkside Capital | Class II 2018 | 🌑 | 🌑 | 🌑 | |||||||
Hugh E. Sawyer Age | President and Chief Executive Officer, Regis Corporation | Class II 2018 | ||||||||||
Debra Zumwalt Age 62, Director since 2014 | Vice President and General Counsel, Stanford University | Class II 2018 | 🌑 | 🌑c | 🌑 | |||||||
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James D. Edwards Age 74, Director since 2004 | Retired Managing Partner—Global Markets at Arthur Andersen LLP | Class III 2019 | 🌑 | 🌑c | ||||||||
John McCartney Age | ||||||||||||
| Non-executive Chairman, Huron Consulting Group Inc. | Class III 2019 | 🌑 | 🌑 | ||||||||
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James H. Roth Age | Chief Executive Officer and President of Huron Consulting Group Inc. and Huron Consulting Services LLC, our principal operating subsidiary | Class III 2019 | ||||||||||
H. Eugene Lockhart Age 68, Director since 2006 | Senior Advisor, General Atlantic LLC | Class I 2020 | 🌑 | 🌑c | 🌑 | |||||||
George E. Massaro Age 70, Director since 2004 | Vice Chairman of the Board, Huron Consulting Group Inc. | Class I 2020 | 🌑 | 🌑 |
A | – Audit Committee | C | – Chairman | |||||||
C | – Compensation Committee | |||||||||
N&CG | – Nominating and Corporate Governance Committee |
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Presented below is information regarding the directors of the Company.
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DIRECTORS NOT STANDINGFOR ELECTION
John S. Moody Director since Audit Compensation
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Professional Experience
Since January 2014, Mr. Moody has been chief executive officer of Parkside Capital, formerly known as ProTerra Realty, a fund manager investing in real estate in Houston, Texas. He had previously served as president of Parkside Capital since January 2007. From 2004 until October 2005, Mr. Moody served as president and chief executive officer of HRO Asset Management, LLC, a real estate advisory business. From 2001 to 2004, Mr. Moody served as president of Marsh & McLennan Real Estate Advisors, Inc., a business that directed the execution of real estate projects and transactions for Marsh & McLennan. From 1995 to 2000, Mr. Moody was president and chief executive officer of Cornerstone Properties, Inc., a REIT that acquired, developed and operated large-scale Class A office buildings in major markets throughout the United States and that merged into Equity Office Properties Trust.
In November 2015, Mr. Moody was appointed chairman of the board of Four Corners Property Trust, Inc., a public real estate investment trust, where he also serves as chairman of the compensation committee. Mr. Moody joined the board of Hines Global REIT, a privately owned real estate investment, development and management company, in June 2009. He joined the board of directors of Potlatch Corp., a public real estate investment trust, in September 2006, and in January 2009, he assumed the role of vice chairman of Potlatch Corp. From 2001 to 2005, Mr. Moody served on the boards of directors of three publicly held REITs: Keystone Property Trust, CRIIMI MAE, Inc., and Equity Office Properties Trust.
Education
Mr. Moody received a B.A. in History from Stanford University and a J.D. with honors from The University of Texas School of Law.
Individual Contributions
Mr. Moody has served in executive officer roles in several real estate related businesses where he was responsible for the management of multi-billions of dollars in assets, and has also served as the managing partner of a full service commercial law firm. In addition, Mr. Moody has served on a number of boards of directors, including as chairman and vice chairman, of companies organized as real estate investment trusts and advisory firms. As such, Mr. Moody contributes a wealth of legal and financial expertise to the Huron board.
Director since February 2018 |
Professional Experience
Since April 2017, Mr. Sawyer has served as the President and Chief Executive Officer of Regis Corporation, a corporation that owns, franchises and operates beauty salons worldwide. Mr. Sawyer previously served as a managing director at Huron, beginning in January 2010, and led the Operational Improvement Service Line for Huron’s Business Advisory Practice. He has more than 35 years of experience leading operational improvements, turnarounds, mergers and acquisitions and strategic transformations for both public and private companies across a diverse group of industries. While at Huron, he served as Interim President and CEO of JHT Holdings, Inc., a provider of specialized transportation and logistics services, from January 2010 to March 2012; as the Chief Administrative Officer of Fisker Automotive Inc. (now known as Fisker Inc.), a manufacturer of hybrid electric vehicles, from January 2013 to March 2013; as Chief Restructuring Officer of Fisker Automotive from March 2013 to October 2013; and as Interim President of Euramax International, Inc., a global manufacturer of building products, from February 2014 to August 2015. Including Regis, he has served as the president or chief executive officer of nine companies, including Wells Fargo Armored Service Corporation, The Cunningham Group, Inc., National Linen Service, Inc., Aegis Communications Group, Inc., Allied Holdings, Inc., and Legendary Holdings, Inc.
Board Service
Mr. Sawyer has served as a director of JHT Holdings, Inc. since 2012 and has served on the boards of numerous companies, including Energy Future Competitive Holdings Company LLC and Texas Competitive Electric Holdings Company LLC from 2013 to October 2016, and Edison Mission Energy from July 2012 to April 2014, and thereafter on the Board of Managing Trustees of the EME Reorganization Trust until December 2016.
Education
Mr. Sawyer received a B.A. in English with honors from the University of Florida.
Individual Contributions
Mr. Sawyer has a history of providing transformational leadership and support to companies in a broad range of industries, including consumer car rental, consumer retail, utilities, building materials, healthcare, transportation and logistics, equipment rental, security and guard services, graphic arts and printing, industrial laundry, CRM solutions and telecommunications, automotive OEM, automotive supply, commercial nursery operations, marine retail, real estate development, resort and hotel operations. Mr. Sawyer also has extensive governance background as a board member in businesses with sophisticated constituents facing complex circumstances, and will be able to bring this experience with him to the board.
Debra Zumwalt Director since October 2014 Compensation Committee (Chair) Nominating and Corporate Governance Committee (Member)
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Professional Experience
Since 2001, Ms. Zumwalt has been the Vice President and General Counsel of Stanford University and is in charge of the legal services provided to the University and its two affiliated hospitals with combined annual revenues of over $9 billion. Ms. Zumwalt is a member of the University Cabinet and provides governance, legal and strategic advice to the boards of the University, Stanford Health Care, Lucile Packard Children’s Hospital at Stanford and Stanford Management Company, which manages over $24 billion in assets. Ms. Zumwalt is also a member of the Board of Overseers for SLAC National Accelerator Laboratory at Stanford, and a director of SUMIT Holding International, LLC and SUMIT Insurance Company Ltd., a holding company and captive insurance company providing insurance coverage for the Stanford hospitals and physicians. From 1993 to 2001, Ms. Zumwalt was a partner at Pillsbury Winthrop LLP, where she specialized in complex civil litigation and higher education law, and for whom she served as managing partner of the Silicon Valley office and a member of the firm’s governing board. Previously, from 1987 to 1993, Ms. Zumwalt was Senior University Counsel at Stanford, responsible for advising and representing the University in connection with congressional hearings, criminal and civil investigations, negotiations and litigation matters. Prior to joining Stanford in 1987, Ms. Zumwalt worked as litigation counsel for Chevron Chemical Company and as a litigation associate for Pillsbury Winthrop LLP in San Francisco.
Board Service
Ms. Zumwalt is currently a director of Exponent, Inc., a public engineering and scientific consulting company. She is also on the boards of the American University of Afghanistan and the Academy of Art University and has served on other nonprofit boards in education and legal services.
Education
Ms. Zumwalt received a B.S. in Political Science from Arizona State University and a J.D. from Stanford Law School.
Individual Contributions
Given the many roles she serves in connection with her position as chief legal officer of a university with two affiliated hospitals, Ms. Zumwalt is uniquely qualified to share with the Huron board her experience with navigating the challenges faced by both higher education and healthcare organizations. Ms. Zumwalt also contributes to the Huron board a perspective on the law and governance through her background as a former partner of a well-renowned law firm and bar association president, as well as with her current roles as director on corporate and academic boards.
DIRECTORS NOT STANDINGFOR ELECTION counsel to a university with two affiliated hospitals, Ms. Zumwalt is able to share with the Huron board a depth of experience negotiating the challenges faced by both higher education and healthcare organizations. Through her former service as a court appointed arbitrator and bar association president, as well as her current roles as director on corporate and academic boards, Ms. Zumwalt contributes a unique perspective on the law and governance.
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James D. Edwards Director since October 2004 Nominating and Corporate Governance Committee (Chair)
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Professional Experience
Mr. Edwards retired in 2002 as managing partner—global markets of Arthur Andersen LLP, a position he had held since 1998. Mr. Edwards began his career with Arthur Andersen LLP in 1964 and served in several positions in which he developed significant financial expertise in public accounting and provided consulting services to a broad range of industries.
Board Service
Mr. Edwards has served as a director of Crawford & Company, the world’s largest provider of claims adjustment and risk management solutions to insurance companies and self-insured entities, since February 2005. He had previously served on the board of Cousins Properties Incorporated, a publicly held REIT, until May 2014. Mr. Edwards had also served on the board of Transcend Services, Inc., a provider of medical transcription services to the healthcare industry, until early 2012, and had served on the board of IMS Health Incorporated, a global provider of information solutions to the pharmaceutical and healthcare industries, until February 2010.
Education
Mr. Edwards received a B.S. in Accounting from Bob Jones University and is a member of the American Institute of Certified Public Accountants.
Individual Contributions
Mr. Edwards’ experience includes 38 years with Arthur Andersen in the professional services industry and 25 years in various leadership positions, including managing partner for all operations in the United States and North America from 1987 to 1997, which enables him to effectively address the challenges and opportunities presented to Huron. Mr. Edwards possesses extensive knowledge of accounting and financial consulting services, many years of experience managing a large segment of a professional services firm, and a substantial network of prior clients in diverse fields including healthcare, pharmaceuticals and real estate.
Mr. Edwards retired in 2002 as managing partner—global markets of Arthur Andersen LLP, a position he had held since 1998. Mr. Edwards first began his career with Arthur Andersen LLP and served in several positions in which he developed significant financial expertise in public accounting and provided consulting services to a broad range of industries.
Mr. Edwards has served as a director of Crawford & Company, the world’s largest public provider of claims adjustment and risk management solutions to insurance companies and self-insured entities, since February 2005. He had previously served on the board of Cousins Properties Incorporated, a publicly held REIT, until May 2014. Mr. Edwards had also served on the board of Transcend Services, Inc., a provider of medical transcription services to the healthcare industry, until early 2012, when the company was sold. He also served on the board of IMS Health Incorporated, a global provider of information solutions to the pharmaceutical and healthcare industries, until February 2010, when the company was sold.
Education
Mr. Edwards received a B.S. in Accounting from Bob Jones University and was a long-term member of the American Institute of Certified Public Accountants.
Individual Contributions
Mr. Edwards’ experience includes a lengthy tenure with a former “Big Five” accounting firm where he served in several leadership positions, including managing partner for all operations in the United States and North America, which enables him to effectively address the challenges and opportunities presented to Huron. Mr. Edwards contributes to the Huron board his deep knowledge of accounting and financial consulting services, his many years of experience managing a large segment of a professional services firm, and an extensive network of prior clients in such fields as healthcare, pharmaceuticals and real estate.
John McCartney Director since October 2004 Non-executive Chairman of the Board (May 2010) Audit Committee (Member)
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Professional Experience
From June 1997 to March 1998, Mr. McCartney held the position of president of 3Com Corporation’s Client Access Unit. He joined the executive management team of US Robotics in March 1984 as vice president and chief financial officer and served in various executive capacities until serving as president and chief operating officer of US Robotics from January 1996 until its merger with 3Com Corporation in June 1997.
Board Service
In March 2015, Mr. McCartney was appointed to the board of Rice Energy Inc., an independent natural gas and oil company, where he has served as chairman of the compensation committee since November 2016 and has served on the audit committee since his appointment. In August 2011, Mr. McCartney joined the board of Transco, Inc., a Chicago-based company that provides solutions to customers in the railroad, electric utility, process and manufacturing industries. In July 2007, Mr. McCartney was appointed anon-executive director of Datatec Limited, a networking technology and services company, where he serves as chairman of the remuneration committee. He had previously served as vice chairman of the board of directors of Datatec from October 1998 until May 2004. From March 2011 until September 2013, Mr. McCartney served as chairman of the board of Westcon Group, Inc., a specialty distributor of networking and communications equipment, whose board he joined in August 1998 and for which he previously served as chairman from January 2001 until March 2009, and where he continues to serve as a director and member of the compensation committee. From May 2009 until February 2015, he served on the board of Covance Inc., a drug development services company. Mr. McCartney had also served as chairman of the board of directors of A.M. Castle & Co., a global distributor of specialty metal and plastic products, from January 2007 until April 2010. He had served on that board from 1998 until March 2015.
Education
Mr. McCartney received a B.A. in Philosophy from Davidson College and an MBA from The Wharton School of the University of Pennsylvania.
Individual Contributions
Mr. McCartney has served as chairman and vice chairman of the boards of several public and private companies, including those in the healthcare and drug development fields, as well as of an institution of higher education. His deep knowledge of accounting and his prior experience as chief financial officer and chief operating officer of a public company have prepared Mr. McCartney to serve as a member of the Audit Committee and to help lead Huron to its position as a prominent consultancy. Mr. McCartney is based in Chicago, the location of Huron’s principal business offices.
From June 1997 to March 1998, Mr. McCartney held the position of president of 3Com Corporation’s Client Access Unit. He joined the executive management team of US Robotics in March 1984 as vice president and chief financial officer and served in various executive capacities until serving as president and chief operating officer of US Robotics from January 1996 until its merger with 3Com Corporation in June 1997.
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Mr. McCartney was appointed anon-executive director of Datatec Limited, a public networking technology and services company, in July 2007, and currently serves as chairman of the remuneration committee and as a member of the nominating committee. He had previously served as vice chairman of the board of directors of Datatec from October 1998 until May 2004. Mr. McCartney has also served on the board of Transco, Inc., a Chicago-based company that provides solutions to customers in the railroad, electric utility, process and manufacturing industries, since August 2011. From March 2011 until September 2013, Mr. McCartney served as chairman of the board of Westcon Group, Inc., a specialty distributor of networking and communications equipment, whose board he joined in August 1998 and for which he previously served as chairman from January 2001 until March 2009, and where he continued to serve as a director and member of the compensation committee until September 2017. Mr. McCartney served on the board of Rice Energy Inc., an independent natural gas and oil company, from March 2015 until November 2017. From May 2009 until February 2015, he served on the board of Covance Inc., a drug development services company. Mr. McCartney had also served as chairman of the board of directors of A.M. Castle & Co., a global distributor of specialty metal and plastic products, from January 2007 until April 2010. He had served on that board from 1998 until March 2015. In addition, Mr. McCartney had served as chairman of the board of trustees of Davidson College from 2004 to 2008.
Education
Mr. McCartney received a B.A. in Philosophy from Davidson College and an MBA from The Wharton School of the University of Pennsylvania.
Individual Contributions
Mr. McCartney has served as chairman and vice chairman of the boards of a number of public and private organizations, including companies with a focus on healthcare and drug development and an institution of higher education. Mr. McCartney brings to the Huron board, and the Audit Committee in particular, his prior experience as chief financial officer and chief operating officer of a public company, which has enabled him to contribute to Huron’s development into a prominent consultancy. Mr. McCartney is based in Chicago, the location of Huron’s principal business offices.
James H. Roth Director since November 2009 Chief Executive Officer of Huron Consulting Group Inc. and Huron Consulting Services LLC (July 2009) President of Huron (March 2011)
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Professional Experience
As a founding member of Huron, Mr. Roth guided and grew Huron’s Higher Education consulting practice to a position of preeminence in the industry. He has more than 35 years of consulting experience working with many of the premier research universities and academic medical centers. Under his leadership as CEO, Huron Mr. Roth guided and grew Huron’s Higher Education consulting practice to a position of preeminence in the industry. He has more than 35 years of consulting experience working with many of the premier research universities and academic medical centers. Under his leadership, the Company has been named one ofForbes’ Best Management Consulting Firms in 2016,Forbes’ America’s Best Employers in 2015 and 2016, and byConsultingmagazine as one of the Best Firms to Work For from 2011 through 2016, and, for the tenth year in a row, the Healthcare practice has been named one ofForbes’Best Management Consulting Firms in 2016 and 2017,Forbes’America’s Best Employers in 2015 and 2016, and byConsultingmagazine as one of the Best Firms to Work For from 2011 through 2017, and, for ten years in a row, the Healthcare practice was ranked in the top five ofModern Healthcare’s list of Largest Healthcare Management Consulting Firms. Previously, he served as Vice President, Health and Education Consulting for the Company from January 2007 until July 2009. Since Huron’s inception in 2002, until he became CEO, Mr. Roth was a managing director and practice leader of the Company’s Higher Education consulting practice, which he grew into one of our largest organically grown practices within the firm.
Board Service
Mr. Roth was appointed to the board of Shorelight Holdings LLC, a U.S.-based company focused on partnering with leading nonprofit universities to increase access and retention of international students and boost institutional growth, in November 2014. Mr. Roth was also appointed to the board of AdVenture Interactive Corp. (d/b/a Keypath Education),Education Holdings, LLC, a leading provider of comprehensive marketing and enrollment management services to colleges and universities, in November 2014. Previously, he served on the board of Aviv REIT, a self-administered real estate investment trust specializing in skilled nursing facilities, from March 2013 until April 2015.
Education
Mr. Roth received a B.A. in Political Science and Economics from Vanderbilt University and an MBA from Southern Methodist University.
Individual Contributions
Mr. Roth bringsRoth’s distinguished career as both an officer and consultant at Huron contributes to the board his well-informedhands-on perspective onof the strategy and operations of institutions of higher education and academic medical centers, including their research facilities. Named in 2009 and in 2011Twice named byConsultingmagazine as one of the Top 25 Most Influential Consultants, Mr. Roth contributes to the board a unique understanding of the Huron organization, the consulting business, and the businesses of our clients, including research universities, hospitals and health systems, and academic medical centers.clients.
H. Eugene Lockhart
Director since December 2006
Audit Committee (Chair)
Compensation Committee (Member)
Professional Experience
In November 2012, Mr. Lockhart became Senior Advisor at General Atlantic LLC, a leading global growth investment firm. In October 2014, he founded and became Chairman and Managing Partner of MissionOG LLC, a growth stage investment firm. From 2002 until 2012, Mr. Lockhart was a venture partner at Oak Investment Partners, a venture capital firm. His prior positions include president of Global Retail Bank at Bank of America, as well as president and chief executive officer of MasterCard International. Through these investment firms, Mr. Lockhart has been actively involved in overseeing the management of high growth private companies, including NetSpend, Argus Information, Metro Bank PLC, CLIP, DemystData, Factor Trust, Avant, BillDesk, and others.
Board Service
Mr. Lockhart was appointed to the board of Metro Bank PLC, a public retail bank operating in the U.K., in March 2011, where he presently serves as the Chair of the risk and audit committee. He had served on the board of Aaron’s, Inc., alease-to-own retailer of furnishings, electronics and appliances, from August 2014 until May 2016. He previously served as a director and audit committee chairman of RadioShack Corporation, a retail seller of consumer electronic goods and services, until March 2015. He had served on the board of Asset Acceptance Capital Corp., a purchaser of accounts receivable portfolios, until its June 2013 merger with Encore Capital Group, Inc., and also served on the board of IMS Health Incorporated, a global provider of information solutions to the pharmaceutical and healthcare industries, until February 2010. Mr. Lockhart has served on numerous philanthropic boards, including serving in the past as the Chair of the Thomas Jefferson Foundation (Monticello) and the Chairman of the Darden School Foundation at the University of Virginia. He is currently serving as the Chairman of Academic Affairs for the State Council of Higher Education of Virginia (SCHEV).
Education
Mr. Lockhart received a B.S. in Mechanical Engineering from the University of Virginia and an MBA from The Darden Graduate School of Business at the University of Virginia. In addition, Mr. Lockhart is a CPA, licensed in the Commonwealth of Virginia.
Individual Contributions
Mr. Lockhart brings to Huron’s board his considerable experience overseeing and growing companies in which he represents venture capital investors, his experience as chief executive officer of leading corporations, and his service on the boards of companies and foundations in such fields as healthcare, education, pharmaceuticals, and financial services. In addition, as a former executive and chairman of some of the most visible companies in the world, Mr. Lockhart contributes to Huron a broad array of contacts.
George E. Massaro
Director since May 2004
Noaminating and Corporate Governance Committee (Member)
Professional Experience
Mr. Massaro has served as Vice Chairman of Huron’s board since May 2010, and had previously served in the role from March 2005 until July 2009. In the interim, he had served asNon-executive Chairman of Huron during a period of transition. Mr. Massaro joined the Company in August 2002 as a managing director, served as Chief Operating Officer from June 2003 until March 2005, and ceased his employment with Huron in February 2009. Prior to joining Huron, Mr. Massaro served as the managing partner of Arthur Andersen LLP’s1,200-person New England practice from 1998 to 2002 and managing partner of the Boston office from 1995 to 1998. Mr. Massaro has served clients in the financial services and high-technology industries.
Board Service
Mr. Massaro has served as a director of Charles River Laboratories, a public provider of research products and preclinical services for the biomedical community, since 2003, and currently serves as chairman of the audit committee. Mr. Massaro had served as a member of the board of trustees of Mount Auburn Hospital in Cambridge until December 2017. He had served as a member of the finance committee of the Archdiocese of Boston until December 2017. Mr. Massaro had also served on the board of directors of Eastern Bank Corporation, an independent mutual bank holding company in New England, from February 2003 until December 2017.
Education
Mr. Massaro received a B.A. in Accounting and Finance from Bentley College and an MBA from Babson College.
Individual Contributions
Mr. Massaro contributes to the Huron board his unique understanding of our business and history, gained not only through his prior service as our Chief Operating Officer from 2003 to 2005, but also through his leadership of a Huron practice. Mr. Massaro’s many years of experience in public accounting, management of a professional services practice, and service on the boards of healthcare and pharma-centered institutions, have enabled him to provide invaluable business insights along with contacts in the business community.
The Company’s executive officers are as follows:
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James H. Roth | 60 | Chief Executive Officer, President and Director | ||||
C. Mark Hussey | 57 | Executive Vice President and Chief Operating Officer | ||||
John D. Kelly | 42 | Executive Vice President, Chief Financial Officer and Treasurer | ||||
Diane E. Ratekin | 61 | Executive Vice President, General Counsel and Corporate Secretary |
James H. Roth’s biographical information is provided above under the caption “Directors Not Standing for Election.”
C. Mark Husseywas appointed Chief Operating Officer of Huron in February 2014. He has served as Executive Vice President since July 2011. He had served as Chief Financial Officer from July 2011 until January 2017. From July 2011 until February 2016, he served as Huron’s Treasurer. Prior to joining Huron, from 2002 to 2011, Mr. Hussey served as chief financial officer at Crosscom National, LLC, a privately held professional IT services organization deploying and servicingin-store technology solutions for large, national retailers. In that role, he was responsible for all finance and administrative functions for the company. Prior to that, from 2000 until 2002, he served as executive vice president and chief financial officer, North America, at Information Resources, Inc. During his career, Mr. Hussey has held senior finance, accounting and investor relations positions at entities such as EZLinks Golf, Inc., Dominick’s Finer Foods, Inc., and the Quaker Oats Company. Mr. Hussey received a B.S. in Accountancy from the University of Illinois, Urbana-Champaign and an MBA in Finance from the University of Chicago Graduate School of Business. He is a Chartered Financial Analyst, Certified Management Accountant, and Certified Public Accountant (Illinois).
John D. Kellywas appointed Executive Vice President and Chief OperatingFinancial Officer
John D. Kelly
Our Corporate Governance Guidelines require that the board of directors make an annual determination regarding the independence of each of our directors. The board of directors has determined that each of Messrs. Edwards, Lockhart, Massaro, McCartney and Moody and Ms. Zumwalt is “independent” as defined in the applicable listing standards of The NASDAQ Stock Market, Inc. (“NASDAQ”). In making its determination, the board of directors considered the standards of independence set forth in the NASDAQ Corporate Governance
Listing Standards and all relevant facts and circumstances to ascertain whether there was any relationship between a director and the Company that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director or any material relationship with the Company (either directly, or as a partner, stockholder or officer of an organization that has a relationship with the Company). In determining that Ms. Zumwalt is independent, the board of directors conducted a thorough review of payments made by Stanford University, which employs Ms. Zumwalt, to the Company for consulting services provided by the Company. After taking into consideration that Stanford University engagements comprised 0.12% of Huron’s revenues for the year 2017, 0.60% for the year 2016, and 0.25% for the year 2015, the board of directors determined that this relationship would not interfere with Ms. Zumwalt’s exercise of independent judgment in carrying out her responsibilities as a director.
BOARD COMPOSITION, LEADERSHIP STRUCTUREAND RISK OVERSIGHT
BOARD COMPOSITION
The Nominating and Corporate Secretary
James H. Roth’s biographical information is provided above under the caption “Directors Not Standing for Election.”
C. Mark Hussey was appointed Chief Operating Officer of Huron in February 2014. He has served as Executive Vice President since July 2011. He had served as Chief Financial Officer from July 2011 until January 2017. From July 2011 until February 2016, he served as Huron’s Treasurer. Prior to joining Huron, from 2002 to 2011, Mr. Hussey served as chief financial officer at Crosscom National, LLC, a privately held professional IT services organization deploying and servicingin-store technology solutions for large, national retailers. In that role, he was responsible for all finance and administrative functions for the company. Prior to that, from 2000 until 2002, he served as executive vice president and chief financial officer, North America, at Information Resources, Inc. During his career, Mr. Hussey has held senior finance, accounting and investor relations positions at entities such as EZLinks Golf, Inc., Dominick’s Finer Foods, Inc., and the Quaker Oats Company. Mr. Hussey received a B.S. in Accountancy from the University of Illinois, Urbana-Champaign and an MBA in Finance from the University of Chicago Graduate School of Business. He is a Chartered Financial Analyst, Certified Management Accountant, and Certified Public Accountant (Illinois).
John D. Kelly was appointed Executive Vice President and Chief Financial Officer of Huron effective January 3, 2017. He has served as Huron’s Treasurer since February 2016. He had served as Chief Accounting Officer of Huron from February 2015 until January 2017, and had served as Corporate Vice President from November 2012 until his appointment as Executive Vice President. Previously, Mr. Kelly had served as Controller of Huron from November 2012 until February 2015, and prior to that served as Assistant Controller from October 2009. Mr. Kelly served as Huron’s Assistant Treasurer from February 2015 until February 2016. Prior to joining Huron’s Finance and Accounting department, Mr. Kelly was a Director in the Company’s Disputes and Investigations practice for three years, serving clients in the manufacturing and services industries. Before he joined the Company in December 2006, Mr. Kelly had held several positions within Deloitte & Touche’s Assurance and Advisory Services group, most recently as a Senior Manager. He received both a B.S. and M.S. in Accounting from the University of Notre Dame. Mr. Kelly is a Certified Public Accountant (Illinois).
Diane E. Ratekin was appointed Vice President and General Counsel of Huron in February 2011, and was named Executive Vice President in April 2011. She was appointed Corporate Secretary in December 2011. She had previously served as Huron’s Assistant Corporate Secretary since May 2009. Ms. Ratekin has been employed in Huron’s legal department since January 2005, and previously served as Deputy General Counsel. Prior to joining Huron, Ms. Ratekin was a partner in the Corporate Department of McGuireWoods LLP. Previously, she spent 17 years in the legal department of Deutsche Investment Management Americas Inc., formerly known as Zurich Scudder Investments, Inc. and Kemper Financial Services, Inc., where she was a Director and Team Leader of the Corporate and Investments Team. Before that, Ms. Ratekin was a litigator at Jenner & Block. She is a member of the American Bar Association, the Chicago Bar Association and the Association of Corporate Counsel. She received a B.A. in English and a J.D. from the University of Iowa.
DIRECTOR INDEPENDENCEGovernance Committee, in conjunction with the Chair and the full board, is actively evaluating the future composition of the board in light of the age, tenure and experience of its current members. This multi-year refresh process is intended to ensure that the board has the best mix of knowledge, skills and business acumen, derived from high quality professional experience, to evaluate and support the Company’s strategy going forward. The Nominating and Corporate Governance Committee believes that its current directors, several of whom have extensive experience leading and managing professional service businesses, provide significant insight into the Company and its operations and provide valuable contributions to the board. The Committee also recognizes the potential benefits of the fresh perspectives that highly qualified new directors might bring to the board.
The Nominating and Corporate Governance Committee will consider a variety of factors as it works to enhance the composition of the board, increase diversity, reduce average tenure and ensure structured and orderly board succession through a process of both board member additions and retirements. As a result, during the next several years, the board may occasionally expand or contract as the refresh process is executed. It is the expressed desire of the board that it continue to remain relatively small in number and composed principally ofnon-executive directors.
The Nominating and Corporate Governance Committee will consider as director candidates qualified individuals recommended by stockholders through the process described below and, although it has not done so in the past, may consider candidates identified by professional search firms.
BOARD LEADERSHIP
Our Corporate Governance Guidelines require that the board of directors make an annual determination regarding the independence of each of our directors. The board of directors has determined that each of Messrs. Edwards, Lockhart, Massaro, McCartney and Moody and Ms. Zumwalt is “independent” as defined in the applicable listing standards of The NASDAQ Stock Market, Inc. (“NASDAQ”). In making its determination, the board of directors considered the standards of independence set forth in the NASDAQ Corporate Governance Listing Standards and all relevant facts and circumstances to ascertain whether there was any relationship between a director and the Company that, in the opinion of the board of directors, would interfere with the exercise of independent judgment in carrying out the responsibilities of the director or any material relationship with the Company (either directly, or as a partner, stockholder or officer of an organization that has a
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relationship with the Company). In determining that Ms. Zumwalt is independent, the board of directors conducted a thorough review of payments made by Stanford University, which employs Ms. Zumwalt, to the Company for consulting services provided by the Company. After taking into consideration that Stanford University engagements comprised 0.60% of Huron’s revenues for the year 2016, 0.25% for the year 2015, under 0.20% for the years 2014 and 2013, and under 0.50% for the years 2012 and 2011, the board of directors determined that this relationship would not interfere with Ms. Zumwalt’s exercise of independent judgment in carrying out her responsibilities as a director.
BOARD LEADERSHIP STRUCTUREAND RISK OVERSIGHT
Board Leadership
Huron formally separated the roles of chairman of the board and chief executive officer in 2010. OurNon-executive Chairman is John McCartney and our Chief Executive Officer is James H. Roth. AsNon-executive Chairman, Mr. McCartney, in consultation with Mr. Roth, develops the agendas for board meetings, determines the appropriate scheduling for board meetings, assesses the quality, quantity and timeliness of information provided from management to the board, assists the Nominating and Corporate Governance Committee in monitoring and implementing our Corporate Governance Guidelines and otherwise takes steps to ensure that the board is acting in the long-term best interests of the Company. Mr. McCartney also chairs executive sessions of the board. In addition, George E. Massaro serves as Vice Chairman.
The board has determined that our current board leadership structure is appropriate for the Company, as it believes the separation of powers is beneficial for our organization.
Risk Oversight
One of the board’s responsibilities is to review the adequacy of the Company’s systems for compliance with all applicable laws and regulations for safeguarding the Company’s assets and for managing the major risks it faces. The board executes its responsibility for risk management directly and through its committees in a variety of ways, including the following:
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The board has determined that our current board leadership structure is appropriate for the Company, as it believes the separation of powers is beneficial for our organization. RISK OVERSIGHT One of the board’s responsibilities is to review the adequacy of the Company’s systems for compliance with all applicable laws and regulations, for safeguarding the Company’s assets and for managing the major risks it faces. The board executes its responsibility for risk management directly and through its committees
Audit Committee
The board of directors conducts its business through meetings of the full board, actions taken by written consent in lieu of meetings, and by the actions of its committees. During 2017, |
The board of directors conducts its business through meetings of the full board, actions taken by written consent in lieu of meetings, and by the actions of its committees. During 2016, the board of directors held 11 meetings.
During 2016, each board member attended at least 75% of the aggregate number of board meetings and meetings of all the committees on which the director served. Although the Company does not have a formal policy regarding director attendance at our annual meetings, we encourage directors to attend. Six directors attended the 2016the board of directors held 12 meetings.
During 2017, each board member attended at least 75% of the aggregate number of board meetings and meetings of all the committees on which the director served. Although the Company does not have a formal policy regarding director attendance at our annual meetings, we encourage directors to attend. Six directors attended the 2017 Annual Meeting of Stockholders.
The board of directors operates in part through its three committees: Audit, Compensation, and Nominating and Corporate Governance. All committee members are “independent” as defined in the applicable listing standards of NASDAQ. In addition, all Compensation Committee members are“non-employee directors” within the meaning of Rule16b-3 under the Securities Exchange Act of 1934 (the “1934 Act”) and “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), and all Audit Committee members meet the criteria for independence set forth in SEC Rule10A-3(b)(1). A detailed discussion of each committee’s mission, composition and responsibilities is contained within the committee charters available in the Investor Relations section of the Company’s web site atwww.huronconsultinggroup.com.
Audit Committee
The Audit Committee responsibilities include overseeing our accounting and financial reporting processes, and overseeing the audits of our financial statements, and the Company’s internal controls over financial reporting. The Audit Committee is also responsible for the appointment, compensation, retention, oversight and evaluation of the work of any registered public accounting firm engaged for the purpose of preparing or issuing an audit report or performing other services for us. As such, the Audit Committee approves audit and permittednon-audit services and applicable fees. The Audit Committee met eightten times in 2016.2017. The members of the Audit Committee are Messrs. Lockhart (Chair), McCartney and Moody. The board of directors has determined that each Audit Committee member has sufficient knowledge in financial and auditing matters to serve on the Audit Committee. The board of directors has also determined that each of Messrs. Lockhart, McCartney and Moody is an “audit committee financial expert,” as defined by the applicable securities regulations, and that each member of the Audit Committee satisfies the applicable NASDAQ listing standards for audit committee membership.
The Report of the Audit Committee for the fiscal year ended December 31, 20162017 appears below under the caption “PROPOSAL 5—3—RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM—Report of the Audit Committee.”
Compensation Committee
Pursuant to its charter, the Compensation Committee responsibilities include overseeing our compensation and benefit plans, including all compensation arrangements for executive officers and directors, each of which the Compensation Committee reviews annually and makes changes as it deems appropriate. The Compensation Committee met seven times in 2016.2017. The members of the Compensation Committee are Ms. Zumwalt (Chair), Mr. Lockhart and Mr. Moody.
Management assists the Compensation Committee in the performance of its duties as described in more detail below under “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Role of Management.” In addition, during 2016,2017, the CEO participated in all of the Compensation Committee’s meetings and in all of the executive sessions, except for those in which the Compensation Committee considered the CEO’s performance, compensation and incentives. The Committee extendedengaged the engagementfirm of Semler Brossy Consulting Group,Pay Governance LLC as its outside compensation advisor to assist the Committee in the execution of its charter. The support provided by the advisor is described in more detail below under “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis—Role of Compensation Advisor.” The Report of the Compensation Committee on Executive Compensation appears below under the caption “EXECUTIVE COMPENSATION—Compensation Committee Report.”
Nominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee responsibilities include identifying and recommending to the board of directors appropriate director nominee candidates and providing oversight with respect to corporate governance matters. The Nominating and Corporate Governance Committee met four times in 2016.2017.
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The members of the Nominating and Corporate Governance Committee are Mr. Edwards (Chair), Mr. Massaro and Ms. Zumwalt.
Directors may be nominated by the board of directors or by stockholders in accordance with the bylaws of the Company. The Nominating and Corporate Governance Committee will review all candidates for nomination to the board of directors, including those proposed by stockholders as provided below. The Nominating and Corporate Governance Committee reviews the person’s judgment, experience, independence, understanding of the Company’s business or other related industries, and such other factors as the Nominating and Corporate Governance Committee determines are relevant in light of the needs of the board of directors and the Company. The board of directors believes that its nominees should reflect over time a diversity of experience, gender, race, ethnicity and age, although it follows no strict criteria when making decisions. The Nominating and Corporate Governance Committee selects qualified candidates and reviews its recommendations with the board of directors, which will decide whether to invite the candidate to be a nominee for election to the board of directors.
If the Nominating and Corporate Governance Committee receives a nominee recommendation in accordance with the rules of the SEC from a stockholder or group of stockholders that has beneficially owned more than 5%
of the Company’s voting common stock for at least one year as of the date of the recommendation, the name of the candidate, the name(s) of the stockholder(s) who recommended the candidate, and whether the Nominating and Corporate Governance Committee chose to nominate the candidate will be disclosed in the proxy statement, if the consent of both the stockholder and the candidate has been received.
For a stockholder to submit a candidate for consideration by the Nominating and Corporate Governance Committee, a stockholder must notify the Company’s Corporate Secretary. In addition, the Company’s bylaws permit stockholders to nominate directors at a stockholders’ meeting. To make a director nomination at the annual meeting, a stockholder must notify the Company’s Corporate Secretary within the time periods specified under “SUBMISSION OF STOCKHOLDER PROPOSALS” below. Notices should be sent to: Corporate Secretary, Huron Consulting Group Inc., 550 West Van Buren Street, 17th Floor, Chicago, Illinois 60607, orcorporatesecretary@huronconsultinggroup.com. In either case, the notice must meet all of the requirements contained in the bylaws.
The Company’s Corporate Governance Guidelines provide that in an uncontested election, any nominee for director who receives a greater number of votes “withheld” from his or her election than “for” his or her election shall promptly tender his or her resignation to the board of directors following certification of the election results, subject to acceptance by the board of directors. For purposes of this policy, (i) an “uncontested” election is one in which the number of persons properly nominated for election as directors as of the date that is ten (10) days before the record date for determining stockholders entitled to notice of or to vote at such meeting is not greater than the number of directors to be elected, and (ii) brokernon-votes will not be counted as either votes “withheld” from or “for” such person’s election.
The Nominating and Corporate Governance Committee shall make a recommendation to the board of directors as to whether to accept or reject the tendered resignation, or whether other action should be taken. The board of directors shall determine whether to accept or reject the tendered resignation, or whether other action should be taken, in its sole discretion, and publicly disclose its decision regarding the tendered resignation within ninety (90) days from the date of the certification of the election results. The Nominating and Corporate Governance Committee in making its recommendation and the board of directors in making its decision may each consider any factors or other information that they consider appropriate and relevant.
If any director’s resignation is not accepted by the board of directors, such director shall continue to serve until such director’s successor is duly elected and qualified, or until such director’s earlier death, resignation, retirement, disqualification or removal. If a director’s resignation is accepted by the board of directors pursuant to this policy, then the board of directors, in its sole discretion, may fill any resulting vacancy pursuant to the provisions of Section 2 of Article III of the bylaws of the Company or may decrease the size of the board of directors pursuant to Section 1 of Article III of the bylaws of the Company.
STOCKHOLDER COMMUNICATIONS POLICY
The Company’s board of directors has established a process for stockholders to send communications to the board of directors. Stockholders may communicate with any member of the board of directors, including the chairperson of any committee, an entire committee or the independent directors or all directors as a group, by sending written communications to:
Corporate Secretary
Huron Consulting Group Inc.
550 West Van Buren Street
17th Floor
Chicago, Illinois 60607
E-mail messages should be sent tocorporatesecretary@huronconsultinggroup.com.
A stockholder must include his or her name and address in any such written ore-mail communication. The communication must indicate that the sender is a Company stockholder.
Each communication intended for the board of directors and received by the Corporate Secretary that is related to the operation of the Company and is not otherwise commercial in nature will be forwarded to the specified party following its clearance through normal security procedures. If the communication is mailed as personal, it will not be opened, but rather will be forwarded unopened to the intended recipient.
DIVERSITYOF BOARD SKILLSAND EXPERIENCE
Huron does not have a formal policy on board member diversity. The Nominating and Corporate Governance Committee, in discussing board composition, has focused on diversity of experience in relation to the development of the business. The Nominating and Corporate Governance Committee seeks candidates from regions where Huron offices are located, with prior management experience and experience on public company boards and in relevant industries.
The Huronnon-employee director compensation program is designed to enhance our ability to attract and retain highly qualified directors and to align their interests with the long-term interests of our stockholders. The program consists of both a cash component, designed to compensate independent directors for their service on the board and its committees, and an equity component, designed to align the interests of independent directors and stockholders. Mr. Roth receives no compensation for his service on the board.
Effective as of July 1, 2016, the director compensation program is comprised of the following elements:
Annual cash retainer:
Non-executive Chairman - $235,000
Vice Chairman - $85,000
Other independent directors - $60,000
Board and committee meeting fee of $1,000 per meeting (The Chairman does not receive board or committee meeting fees.)
Annual committee chairperson retainer of:
Audit - $15,000
Compensation - $15,000
Nominating and Corporate Governance - $10,000
Annual restricted stock grant of $170,000 (granted on the date of the Company’s annual meeting and priced based upon the closing stock price on the date immediately preceding the annual meeting)of grant) which vests ratably over 12 quarters. If a new independent director joins the board after the Company’s annual meeting, the award is prorated as follows:
If the new director joins within six months of the Company’s annual meeting, the new director will receive half of the annual grant.
If the new director joins over six months after the Company’s annual meeting, no grant will be made.
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Stock ownership requirement – independent directors are expected to own Huron stock equal to the lesser of three times the annual cash retainer (currently $180,000) or 9,000 shares.
A new independentnon-employee director will receive an initial restricted stock grant equal to $200,000, which will vest ratably over 12 quarters.
All directors are reimbursed forout-of-pocket expenses for attending board and committee meetings.
Directors are eligible to participate in our deferred compensation plan, which is described under the caption “EXECUTIVE COMPENSATION—20162017 Nonqualified Deferred Compensation.” One director has participated since 2013, and a second director elected to participate beginning in 2015.
The following table summarizes the fees paid and the aggregate grant date fair value of shares granted to each of thenon-employee directors in 2016.2017. Directors who are also officers or employees of the Company receive no compensation for duties performed as a director.
Name | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | Total ($) | Fees Earned or Paid in Cash ($) | Stock Awards ($)(1) | Change in Pension Nonqualified | Total ($) | ||||||||||||||||||||||||
James D. Edwards (3) | 85,750 | 169,975 | — | 255,725 | 85,000 | 169,990 | — | 254,990 | ||||||||||||||||||||||||
H. Eugene Lockhart (3) | 97,500 | 169,975 | — | 267,475 | 101,000 | 169,990 | — | 270,990 | ||||||||||||||||||||||||
George E. Massaro (3) | 102,000 | 169,975 | — | 271,975 | 101,000 | 169,990 | — | 270,990 | ||||||||||||||||||||||||
John McCartney (3)(4) | 235,000 | 169,975 | 26,763 | 431,738 | 235,000 | 169,990 | 112,816 | 517,806 | ||||||||||||||||||||||||
John S. Moody (3) | 89,250 | 169,975 | — | 259,225 | 89,000 | 169,990 | — | 258,990 | ||||||||||||||||||||||||
Debra Zumwalt | 95,000 | 169,975 | 7,969 | 272,944 | 96,000 | 169,990 | 19,872 | 285,862 |
(1) | This column represents the aggregate grant date fair value of shares granted to our directors in |
(2) | The amount in this column represents investment gains in the deferred compensation plan. Huron does not offer a pension plan. The amount shown above represents that portion of the account earnings for |
(3) | At December 31, |
(4) | Mr. McCartney has access to office space at the Company’s principal business offices in Chicago. The Company does not incur any incremental costs in connection with the provision of this office space. |
(5) | Hugh E. Sawyer was appointed to the board in February 2018. He had previously served as a managing director at Huron from January 2010 until May 2017, where he led the Operational Improvement Service Line for Huron’s Business Advisory practice. All compensation paid to Mr. Sawyer in 2017, which consisted of base salary paid through his departure and payment of his 2016 |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Pursuant to Section 16(a) of the 1934 Act, the Company’s directors, executive officers and persons who beneficially own 10% or more of our common stock (the “Section 16 Reporting Persons”) are required to report their initial ownership of common stock and subsequent changes in that ownership to the SEC. Section 16 Reporting Persons are required to furnish the Company with copies of all Section 16(a) forms that they file. Based upon our review of forms filed by the Section 16 Reporting Persons pursuant to the 1934 Act, we have not identified any late filings in 2016.2017.
STOCK OWNERSHIPOF CERTAIN BENEFICIAL OWNERSAND MANAGEMENT
The following table sets forth, as of the Record Date, certain information regarding the beneficial ownership of our common stock by:
each person known by us to beneficially own 5% or more of our common stock;
each of our named executive officers;
each member of our board of directors; and
all directors and executive officers as a group.
Beneficial ownership is determined according to the rules of the Securities and Exchange Commission (the “SEC”) and generally means that a person has beneficial ownership of a security if he or she possesses sole or shared voting or investment power of that security and includes options that are currently exercisable or
exercisable within 60 days. Each director, officer or 5% or more stockholder, as the case may be, has furnished us with information with respect to beneficial ownership. Except as otherwise indicated, beneficial owners of common stock listed below, based on the information each of them has given to us, have sole investment and voting power with respect to their shares, except where community property laws may apply.
Beneficial Ownership | ||||||||
Name of beneficial owner (1) | Shares | % | ||||||
Beneficial owners of 5% or more: | ||||||||
Wellington Management Group LLP (2) | 2,318,482 | 10.67 | ||||||
The Vanguard Group, Inc. (3) | 1,778,862 | 8.18 | ||||||
FMR LLC (4) | 1,499,788 | 6.90 | ||||||
BlackRock, Inc. (5) | 1,434,380 | 6.60 | ||||||
TimesSquare Capital Management, LLC (6) | 1,346,957 | 6.20 | ||||||
Dimensional Fund Advisors LP (7) | 1,169,958 | 5.39 | ||||||
Directors and Executive Officers: | ||||||||
James D. Edwards (8) | 20,032 | * | ||||||
C. Mark Hussey (9) | 51,328 | * | ||||||
H. Eugene Lockhart (10) | 22,180 | * | ||||||
George E. Massaro (11) | 16,252 | * | ||||||
John McCartney (12) | 53,335 | * | ||||||
John S. Moody (13) | 18,932 | * | ||||||
Diane E. Ratekin (14) | 33,995 | * | ||||||
James H. Roth (15) | 366,259 | 1.65 | ||||||
Debra Zumwalt (16) | 9,908 | * | ||||||
All directors and executive officers as a group (10 persons) (17) | 595,364 | 2.69 |
Beneficial Ownership | ||||||||
Name of beneficial owner (1) | Shares | % | ||||||
Beneficial owners of 5% or more: | ||||||||
Wellington Management Group LLP (2) | 3,102,878 | 14.02 | ||||||
Van Berkom & Associates Inc. (3) | 1,927,915 | 8.71 | ||||||
The Vanguard Group, Inc. (4) | 1,774,571 | 8.01 | ||||||
BlackRock, Inc. (5) | 1,444,220 | 6.50 | ||||||
Dimensional Fund Advisors LP (6) | 1,393,051 | 6.30 | ||||||
Boston Partners (7) | 1,286,433 | 5.81 | ||||||
FMR LLC (8) | 1,173,291 | 5.30 | ||||||
Directors and Executive Officers: | ||||||||
James D. Edwards (9) | 21,524 | * | ||||||
C. Mark Hussey (10) | 98,945 | * | ||||||
John D. Kelly (11) | 9,386 | |||||||
H. Eugene Lockhart (12) | 22,160 | * | ||||||
George E. Massaro (13) | 17,744 | * | ||||||
John McCartney (14) | 57,155 | * | ||||||
John S. Moody (15) | 19,653 | * | ||||||
Diane E. Ratekin (16) | 39,957 | * | ||||||
James H. Roth (17) | 380,291 | 1.69 | ||||||
Hugh E. Sawyer (18) | 13,095 | * | ||||||
Debra Zumwalt (19) | 12,283 | * | ||||||
All directors and executive officers as a group (11 persons) (20) | 692,193 | 3.08 |
* | Indicates less than 1% ownership. |
(1) | The principal address for each of the stockholders, other than Wellington Management Group LLP, Van Berkom & Associates Inc., The Vanguard Group, Inc., |
(2) | The principal address of Wellington Management Group LLP is 280 Congress Street, Boston, Massachusetts 02210. The shares are owned by Wellington Management Group LLP and the following subsidiaries of Wellington Management Group LLP: Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP and Wellington Management Company LLP. Information regarding beneficial ownership of our common stock by Wellington Management Group LLP is included herein in reliance on a Schedule 13G/A filed with the SEC on February |
(3) |
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The principal address of The Vanguard Group, Inc. is 100 Vanguard Boulevard, Malvern, Pennsylvania 19355. The shares are owned by The Vanguard Group, Inc. and the following subsidiaries of The Vanguard |
Group, Inc.: Vanguard Fiduciary Trust Company and Vanguard Investments Australia, Ltd. Information regarding beneficial ownership of our common stock by The Vanguard Group, Inc. is included herein in reliance on a Schedule 13G/A filed with the SEC on February |
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(5) | The principal address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. The shares are owned by the following subsidiaries of BlackRock, Inc.: BlackRock (Netherlands) B.V., BlackRock Advisors (UK) Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A., BlackRock Investment Management (Australia) Limited, BlackRock Investment Management (UK) Ltd. and BlackRock Investment Management, LLC. Information regarding beneficial ownership of our common stock by BlackRock, Inc. is included herein in reliance on a Schedule 13G/A filed with the SEC on January |
(6) |
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The principal address of Dimensional Fund Advisors LP is Building One, 6300 Bee Cave Road, Austin, Texas 78746. Information regarding beneficial ownership of our common stock by Dimensional Fund Advisors LP is included herein in reliance on a Schedule 13G/A filed with the SEC on February 9, 2018. |
(7) | The principal address of Boston Partners is One Beacon Street, 30th Floor, Boston, Massachusetts 02108. Information regarding beneficial ownership of our common stock by Boston Partners is included herein in reliance on a Schedule 13G filed with the SEC on February |
(8) | The principal address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. The shares are owned by FMR LLC and the following subsidiaries of FMR LLC: FIAM LLC, Fidelity (Canada) Asset Management ULC, Fidelity Institutional Asset Management Trust Company, FMR Co., Inc., and Strategic Advisers, Inc. Information regarding beneficial ownership of our common stock by FMR LLC is included herein in reliance on a Schedule 13G/A filed with the SEC on February 14, 2018. |
(9) | Includes |
Includes 15,647 shares issuable upon exercise of options that are exercisable currently or within 60 days of the Record Date. Also includes |
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(11) | Includes |
(12) | Includes |
(13) | Includes 4,355 shares of restricted common stock. |
(14) | Includes 4,355 shares of restricted common stock, as well as 1,259 shares held by a wholly-owned limited liability company of which Mr. McCartney is the sole owner. |
Includes |
Includes 7,904 shares issuable upon exercise of options that are exercisable currently or within 60 days of the Record Date. Also includes |
Includes |
Includes |
Includes |
(20) | Includes an aggregate of |
COMPENSATION DISCUSSIONAND ANALYSIS
The Compensation Discussion and Analysis provides information regarding the objectives and elements of our compensation program with respect to the compensation of persons who appear in the Summary Compensation Table (who we refer to collectively throughout this Proxy Statement as our “named executive officers” or “NEOs”).
SECTION 1 — EXECUTIVE SUMMARY | ||
Huron is a global professional services firm committed to achieving sustainable results in partnership with
Named Executive Officers
• Mr. Roth, Chief Executive Officer, President and Director. • Mr. Hussey, Executive Vice President and Chief Operating Officer.1 •Mr. Kelly, Executive Vice President, Chief Financial Officer and • Ms. Ratekin, Executive Vice President, General Counsel and Corporate Secretary.
Huron’s named executive officers are responsible for our Company-wide business operations and setting overall strategy of the organization.
Practice Leadership
Each of Huron’s operating segments is led by Practice Leadership and teams of client-facing managing directors. The Practice Leaders and client-facing managing directors for each business area are responsible for the financial results of their respective business area, including revenue and EBITDA growth, while ensuring delivery of superior solutions. These leaders have the critical talent and skills that make us unique and enable us to grow our business and compete in the marketplace. It is imperative to our core business strategy that we motivate and retain our current client-facing managing directors and obtain new talent through recruiting and developing our high potential employees so that they can progress to higher level leadership roles within the Company.
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Business Strategy | ||
Our business strategy is to be the premier
• Specialize in enabling organizations to lead through transformational change by providing integrated offerings built on the strength of our industry knowledge. • Deliver high-value, quality
• Broaden and strengthen our capabilities to continue to best serve our clients while maintaining and growing our strong industry expertise. • Attract, retain, and motivate top tier • Supplement organic growth by successfully identifying, executing and • Optimize our corporate infrastructure to effectively scale and support the Company’s long-term growth plans, while enhancing EBITDA margins. |
1 | On January 3, 2017, Mr. John Kelly was promoted to the position of Executive Vice President and Chief Financial Officer (“CFO”). Formerly, Mr. Kelly had been Corporate Vice President and Chief Accounting Officer. With Mr. Kelly assuming the CFO role, Mr. Hussey has transitioned this role and has become Executive Vice President and Chief Operating Officer. Mr. Hussey also assumed the interim role of Healthcare Practice Leader. |
Compensation Strategy | ||
Our compensation
• Motivate and reward performance in the long-term best interests of shareholders. • Deliver competitive total compensation generally targeted at the median of the peer group(+/-15%). • Place a substantial portion of the compensation of our named executive officers at risk; actual payouts should vary based on the Company’s financial and operational performance. The performance measures directly link into our business strategy through net
We annually grant a |
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Business
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Business results were as follows2:
• • Net revenues were $732.6 million in 2017, compared to $726.3 million in the prior year. • Adjusted EBITDA decreased 19.3% to $104.6 million in 2017, or 14.3% of net revenues, compared to 17.9% in the prior year. • Adjusted diluted EPS was $2.15 in 2017, a 33.0% decrease from the prior year. While we delivered results that were lower than our initial guidance, we • We also completed two significant acquisitions in 2017. We acquired Innosight and Pope Woodhead in the first quarter, strategically adding to our Business Advisory segment. We believe these acquisitions • •
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Impact of Results on NEO Compensation |
Our NEO compensation relies heavily on performance-based pay – the annual and long-term incentive programs. The Compensation Committee establishes challenging goals that reflect the Company’s goals and business environment. The pay our NEOs ultimately earn is based on the level of achievement of these performance goals and our stock price performance.
Target total compensation for our CEO in 2017 was 80% “at risk”, meaning that it is contingent upon and based on Company performance and stock price performance, and the target total compensation for our other NEOs was on average 69% “at risk”.
NEO Pay Mix (Target)
Our performance in 2017 against the predetermined goals did not meet our expectations, which resulted in a small portion of our NEO’s target compensation that was “at risk” being earned. The pay actually earned by our CEO and other NEOs, compared to the target, is shown below.
NEO Pay Mix (Actual)
(1) | The 2017 annual incentive award paid out at 60.2% of target. |
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The value of the 2017 | long-term incentive reflects both a lack of payout on the Adjusted EPS component and the decline in our share price, with earned shares valued at the 12/31/17 price of $40.45. |
2014 to 2016 Compensation Decision Making
For compensation purposes, five key metrics determine the value of our incentive program to our NEOs. The Compensation Committee believes that the results of the last three years show a strong
Our pay programs create alignment between Company performance and NEO pay, as illustrated for the prior three years in the tables below. Our annual incentives yielded payouts below target in each of those years, and our long-term incentive program has only provided a payout in one year, but at a below target level.
Our executive compensation paidprograms are very aligned with shareholder value. This is reflected in a comparison of Mr. Roth’s target and realizable compensation. The graph below illustrates the target compensation opportunity provided to Mr. Roth for 2015-2017 compared to the NEOs. The resultsactual value realized, when taking into account performance achievements under our incentive programs as well as share price changes. Mr. Roth realized 56% of our key metrics and their impact on our compensation programs for 2014 to 2016 were:his target pay opportunity over the 2015-2017 period.
3-Year Aggregate CEO Pay ($000s)
(2015-2017)
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$40.45
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SECTION 2 - COMPENSATION PROGRAM OVERVIEW |
Huron’s executive compensation program is structured to align executive pay with Company performance. The strength of this alignment was recognized by our shareholders in 20162017 as Huron received over 99% approvalsupport on our shareholder advisory vote on executive compensation (commonly referred to as “Say on Pay”). We strive to provide compensation to motivate and reward performance that is in the long-term best interests of our shareholders. We define performance as a blend of:
Achieving financial performance in comparison topre-established financial goals (net revenue, Adjusted EBITDA margin, and adjusted diluted EPS measured annually and/or over a three-year period)
Attaining critical annual strategic initiatives that we believe are critical to future value creation
Delivering value to shareholders
As part of the program, we also evaluate several groups of peers depending on what we are measuring:
For executive compensation, we use a peer group of publicly traded companies (“Executive Pay Peer Group”) where the size of the companies and the roles of the executive officers are similar to those of Huron. We generally seek to target executive pay at the market median and in alignment with the pay data from this peer group. This pay data may at times be supplemented with broader survey data for specific executives, as appropriate.
For compensation of our client-facing managing directors (“Managing Director Peer Group”), we gather data from public and private companies and focus our comparators on the type of work performed, rather than primarily on the size or public/private nature of the organizations.
In order to assess our business performance, we review our business competitors, many of which are private, much larger in size or are subsets of larger companies. Therefore, obtaining comparative business results can be challenging. As a result, we have chosen to set executive performance goals based on absolute rather than relative performance measures.
In addition to these objectives, we adhere to a comprehensive set of generally accepted best practices in the structuring and design of the compensation program.
Best Practice Elements: | ||
• | Establish Competitive Compensation Levels.We target the total direct compensation for our NEOs at levels that are generally within +/- 15% of market median total direct compensation | |
• | Maintain a “Double Trigger.” | |
• | Minimize Compensation Risks.We periodically review our compensation program to confirm that our compensation policies and practices are not encouraging excessive or inappropriate risk taking by our NEOs. | |
• | Impose Robust Stock Ownership Guidelines.Our stock ownership guidelines require our NEOs to retain a significant equity stake in the Company. NEOs are expected to retain a number of shares equal to at least 60% of the net after tax value from the exercise of stock options or vesting of restricted shares and performance shares until these guidelines are met. | |
• | Maintain a “Clawback” | |
• | Retain an Independent Compensation | |
• | Consider the Impact of Tax and Accounting | |
• | Review Share | |
• | No Excise Tax | |
• | Hedging or Pledging of Company | |
• | No “Timing” of Equity | |
• | No Executive Perquisites that are not provided widely at |
The key operational aspects of our compensation program are summarized in the following table:
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SECTION 3 - COMPENSATION PROGRAM DETAILS |
Targeting of Total Direct Compensation
The Compensation Committee generally targets total direct compensation within 10% to 15%be within+/-15% of the median of the Executive Pay Peer Group for CEO and COO/CFO.our NEOs. The Compensation Committee reviews the Executive Pay Peer Group compensation data for the General Counsel position as well, but given the lack of publicly available data in recent years, the Committee’s assessment has also been supplemented byreviews data from the Radford Group Technology Survey for companies with annual revenue between $500M and $999.9M. It isThis data informs the assessment of the Compensation Committee that the total direct compensation levels of our named executive officers, including our CEO, are generally within this range relative to the median. The established targets for individual components and overall executive compensation are designed to be competitive in order to attract, motivate and retain executives necessary to drive and achieve Company objectives. In some cases, individual components may be over or under market (in order to emphasize a particular element or if individual circumstances dictate), but we believe the total direct compensation packages are market competitive.Committee’s decisions on pay adjustments.
20162017 Base Salary, Annual and Long-Term Incentive Changes
The Compensation Committee approved 2016 compensation levels (base salary and target annual and long-term incentive) in February of 2016. No change was made to Mr. Roth’s compensation. Mr. Hussey’s total target compensation opportunity was increased 30% to reflect his performance and increased responsibilities related to his role as Chief Operating Officer which he assumed in February 2014. Ms. Ratekin’s total target compensation opportunity was increased 4% to align her compensation with competitive levels.
Compensation Element | James H. Roth | C. Mark Hussey | Diane E. Ratekin | |||
Base Salary | $900,000 | $600,000 | $400,000 | |||
Target AIP Payout | 110% of base salary | 100% of base salary | 50% of base salary | |||
Target LTI Payout | 225% of base salary | 175% of base salary | 100% of base salary |
ForDuring 2017, the Compensation Committee changed Mr. Hussey’s base salary to $750,000 to recognize his increased role in leading the transformation of the Healthcare practice and changed Mr. Roth’s target LTI to 300% and Ms. Ratekin’s target LTI to 115% to be more market competitive.
2016 Annual Incentive
The Compensation Committee approved a performance-based Annual Incentive Plan for 2016. Based on the actual results on each of the performance measures, a total annual cash incentive payout of 21% of target was earned. This amount is reflected in the Summary Compensation Table asNon-Equity Incentive Plan Compensation. This plan has three performance criteria (with the corresponding weight noted below):
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Based on these results, the overall performance payout under the Annual Incentive Plan was 21% of target.
Note: A performance threshold of $0.05 GAAP EPS which must be exceeded prior to the payout of the 2016 Annual Incentive Plan is designed to comply with the terms of Section 162(m). If $0.05 GAAP EPS is exceeded, the Compensation Committee can approve a payout of up to 150% of target. The $0.05 GAAP EPS was exceeded in 2016.
The chart below shows the plan structure, the results of each performance measure and the calculation of the annual incentive award. The 25% target is a threshold and 0% is earned if below that threshold.
2016 Performance Targets ($MM) | ||||||||||||||||||||||||
Measure | Weight | 25% | 100% | 125% | Actual | % Earned | ||||||||||||||||||
Net Revenues | 40 | % | $ | 720 | $ | 740 | $ | 775 | $ | 694 | 0 | % | ||||||||||||
Adjusted EBITDA % | 30 | % | 19.0 | % | 19.3 | % | 19.5 | % | 17.7 | % | 0 | % | ||||||||||||
Strategic Measures | 30 | % | See above | 70 | % | |||||||||||||||||||
Total Earned: | 21 | % |
2016 Long-Term Equity Grants
On March 1, 2016, Huron granted long-term equity grants that were structured as 70% performance shares and 30% restricted stock.
Executive | Performance Shares Granted* | Restricted Shares Granted | ||||||
James H. Roth | 25,531 | 10,942 | ||||||
C. Mark Hussey | 13,238 | 5,674 | ||||||
Diane E. Ratekin | 5,043 | 3,161 |
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Restricted Stock Awards
The restricted stock granted will vest 25% per year over four years except for 1,000 shares of Ms. Ratekin’s grant that will vest 100% after one year, based on continued service to ensure continued retention. In addition, the Company must exceed $0.05 GAAP EPS in the year of grant for vesting to occur over the four years based on service. This condition is designed to satisfy the conditions of Section 162(m). This condition was met in 2016.
Performance Share Awards
In 2014, the Compensation Committee revised the performance share plan for named executive officers. The performance share plan is based on both three-year performance (2014 through 2016) and annual performance. The purpose of revising the plan to add a three-year performance period was to incent sustained performance over a longer term period and to better align overall compensation with total shareholder return. This replaces the 2013 design that was based 100% on annual performance. The year 2016 marks year three of the revised program.
Plan Mechanics:
A grant of performance share units was made in each of 2014, 2015 and 2016.
Each grant is assessed using both annual and three-year performance goals.
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At the end of the annual performance period, performance is evaluated against the annual performance goals and all performance share units are adjusted based on actual performance against the annual goals.
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The grant is then divided into two parts:
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At the end of 2016, three-year average performance was determined to be 69% and applied to the 60% of the award that was deferred at the end of the annual performance periods and adjusted based on the table shown below.
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2016 Annual Performance Measures and Results:
The Compensation Committee established Adjusted Diluted EPS as the performance measure with payouts ranging from 0% to 125%. Actual performance came in at 55% of the target; therefore, the grant of performance share units was adjusted to 55% as presented in the chart below.
2016 Performance Targets (1) | Actual Performance | |||||||||||||||||||||||||||
Measure | 0% | 25% | 100% | 125% | Actual | PSU Earned Percent | ||||||||||||||||||||||
Adjusted Diluted EPS | <$ | 3.10 | $ | 3.10 | $ | 3.30 | $ | 3.40 | $ | 3.18 | 55 | % |
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Three-Year Performance Measures:
Three-year performance was measured using a three-year average of the earned performance for 2014, 2015 and 2016. This three-year average used the actual earned amount from the annual performance cycles. For 2014, 2015 and 2016, the actual performance of 151%, 0% and 55%, respectively, was used in calculating the three-year average, which was 69%. Based on that average, a multiplier of .9 was applied as presented in the chart below.
Multiplier for 2014 — 2016 Three-Year Average Performance (1) | Three-Year Average Performance | |||||||||||||
.75 | .9 | 1.0 | 1.25 | 1.5 | 1.75 | 2.0 | ||||||||
< 50% | 50% to 84% | 85% to 99% | 100% to 109% | 110% to 114% | 115% to 119% | ³120% | 69% |
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2017 Changes to the Annual and Long-Term Incentive Plans
During 2016, the Compensation Committee approved changes to both the 2017 Annual and Long-Term Incentive Plans. These changes were made with the goal of continuing to evolve and improve the programs with the organizational needs of the Company, while ensuring a clear correlation between pay and performance, and effectively motivating the NEOs toout-perform expectations. The Compensation Committee approved 2017 compensation levels (base salary and target annual and long-term incentive) in February of 2017.
Compensation Element | James H. Roth | C. Mark Hussey | John D. Kelly | Diane E. Ratekin | ||||
Base Salary | $900,000 | $750,000 | $325,000 | $400,000 | ||||
Target AIP Payout | 110% of base salary | 100% of base salary | 70% of base salary | 50% of base salary | ||||
Target LTI Payout | 300% of base salary | 175% of base salary | 100% of base salary | 115% of base salary |
For 2017, the Compensation Committee increased Mr. Hussey’s base salary to $750,000 from $600,000 to recognize his performance, his leadership role in the creation of Huron’s long-term strategy, and his increased role leading the transformation of the Healthcare practice. They also increased Mr. Roth’s target LTI to 300% from 225% and Ms. Ratekin’s target LTI to 115% from 100% to be more market competitive, and increased Mr. Kelly’s total compensation by 105% to compensate for his promotion to Chief Financial Officer from Chief Accounting Officer.
For 2018, the Compensation Committee increased Mr. Kelly’s total compensation by 32% to be more market competitive. His salary was increased from $325,000 to $400,000 and his LTI was increased from a target of 100% to 120%.
2017 Annual Incentive
The Compensation Committee approved a performance-based Annual Incentive Plan will continue to have the same measures and weightings: 40% Revenue, 30% Adjusted EBITDA Margin, and 30% Strategic Measures.for 2017. The maximum incentive opportunity will increasefor 2017 increased from 125% to 150% of target to better align with market practice and to enhance the incentives for participants to achieve maximum performance levels. Based on the actual results on each of the performance measures, a total annual cash incentive payout of 60% of target was earned.
The Long-TermThis amount is reflected in the Summary Compensation Table asNon-Equity Incentive Plan will continueCompensation.
This plan is structured as shown in the table below:
Performance Measure | Weighting | Threshold | Target | Maximum | Actual | |||||
Net Revenue | 40% | $729M | $759M | $829M | $733M | |||||
Adjusted EBITDA Margin | 30% | 14.3% | 15.2% | 16.0% | 14.3% | |||||
Strategic Measures* | 30% | Committee Discretion | 100% | 150% | 125% |
* The Committee reviewed and discussed the NEOs’ performance against the strategic measures that were established at the beginning of the year. The Committee identified overachievements against certain objectives and determined the overall level of performance resulted in a payout on the strategic measures of 125% of target.
Note: A performance threshold of $0.05 Adjusted Diluted EPS which must be exceeded prior to have the same mixpayout of vehicles:the 2017 Annual Incentive Plan is designed to comply with the terms of Section 162(m). If $0.05 Adjusted EPS is exceeded, the Compensation Committee can approve a payout of up to 150% of target. The $0.05 Adjusted Diluted EPS was exceeded in 2017.
2017 Long-Term Equity Grants
On March 15, 2017, Huron made long-term equity grants that were structured as 70% performance units and 30% restricted shares.
Executive | Performance Units | Restricted Shares | ||||||
James H. Roth | 46,210 | 19,804 | ||||||
C. Mark Hussey | 22,463 | 9,627 | ||||||
John D. Kelly | 5,562 | 2,384 | ||||||
Diane E. Ratekin | 7,873 | 3,374 |
* | Full performance unit grant at target performance. |
In August of 2017, the Compensation Committee awarded Mr. Hussey an award of restricted shares with a grant date fair value of $1,000,000 in order to recognize his contributions as the interim leader of the Healthcare practice during its ongoing transformation as well as his critical role to the ongoing success of the business.
Restricted Stock Awards and 70%
The restricted stock granted to our NEOs vest 1/3 per year over three years, based on continued service to ensure retention. In addition, the Company must exceed $0.05 Adjusted EPS in the year of grant or the awards will be forfeited. This condition is designed to satisfy the provisions of Section 162(m). This condition was met in 2017.
Performance Share Awards.Awards
The performance share awards are tied to both three-year performance and annual performance. The performance share plan was redesigned for 2017, following the completion of the initial three-year performance cycle (2014-2016). The 2017 performance share plan maintains theone-year performance period (60% of award) and a three-year performance period (40% of award). Theone-year performance will beis measured 100% based on 2017 Adjusted Diluted EPS and any earned shares will vest ratably over three years. The new three-year performance period will be measured 100% based on 2019 Adjusted Diluted EPS, and any earned shares will immediately vest aton March 15, 2020, after the end of the three-year performance period. Payout opportunity remains 50% of target for threshold performance and 200% of target for maximum performance. No shares are earned for performance below threshold.
2017 Annual Performance Measures and Results:
The Compensation Committee established Adjusted Diluted EPS as the performance measure for PSUs with payouts ranging from 0% to 200%. Actual performance came in below the threshold; therefore, performance share units were not earned as presented in the chart below.
2017 Performance Targets (1) | Actual Performance | |||||||||||||||||||||||||||||||
Measure | 0% | 25% | 100% | 150% | 200% | Actual | PSU Earned Percent | |||||||||||||||||||||||||
Adjusted Diluted EPS | <$ | 2.31 | $ | 2.31 | $ | 2.46 | $ | 2.76 | $ | 3.16 | $ | 2.15 | 0 | % |
(1) | Actual Adjusted Diluted EPS is calculated on a continuing operations basis and excludes certain acquisitions completed in 2017. |
2018 NEO Compensation Program Design Changes
During 2017, we undertook a review of our NEO compensation program to ensure it continues to support our business and talent strategies, appropriately reflects peer practices, and aligns with shareholders in recognition of our ongoing transformation.
Based on this review, the Committee approved a number of changes to the NEO compensation program for 2018:
2018 Annual Incentive Program | ||
Changes Made: | Reasons for Change: | |
• Adding organic revenue growth as performance measure, replacing the budgeted revenue goal. • Adding greater specificity to and limiting the number of strategic objectives. • Widening the performance/payout range. | • Creates enhanced emphasis on the importance of top line growth in growing share price. • Provides greater clarity to performance expectations and reduces subjectivity in assessing performance. • Better reflects competitive practices while maintaining our performance focus by providing lower than typical payout for below target performance and by requiring greater performance for a maximum payout. |
The 2018 annual incentive program design is summarized below:
Threshold | Target | Maximum | ||||||||||||||||||||||||||
Performance Measure | Weighting | Performance | Payout | Performance | Payout | Performance | Payout | |||||||||||||||||||||
Organic Revenue Growth | 40 | % | 95 | % | 25 | % | 100 | % | 100 | % | 111 | % | 200 | % | ||||||||||||||
Adjusted EBITDA Margin | 30 | % | 85 | % | 25 | % | 100 | % | 100 | % | 115 | % | 200 | % | ||||||||||||||
Strategic Measures* | 30 | % | 85 | % | 25 | % | 100 | % | 100 | % | 115 | % | 200 | % |
* At the beginning of 2018, the Compensation Committee approved specific strategic measures focused on further development of each practice area and further improvements in the effectiveness and efficiencies of Huron’s infrastructure. A target award would reflect full achievement of these objectives, as assessed by the Committee. The Committee applies its judgment in determining overall performance on the measure.
2018 Long-Term Incentive Program | ||
Changes Made: | Reasons for Change: | |
• Utilizing a full three-year performance measurement cycle. • Adding a revenue growth goal to complement the adjusted EPS goal. | • Reflects multi-year performance rather than the sum of annual goals. • Focuses on the importance of top line growth to drive shareholder value. |
The 2018 long-term incentive program design is summarized below:
Weighting | Performance Measure | Performance/Vesting Timeline | ||||||||
| | 70 | % | 40% Adjusted Diluted EPS 30% Organic Revenue Growth | Three-Year (cliff) | |||||
Restricted Shares | 30 | % | Continued employment | Three-Year (ratable) |
SECTION 4 - ADDITIONAL DISCLOSURES RELATED TO COMPENSATION PROGRAM |
Executive Pay Peer Group
InThe peer group developed in 2016 to inform 2017 pay decisions was modified based on the annual review of Executive Pay Peer Group criteria, thecriteria. The Compensation Committee elected to expand the peer group from 11 companies to 16 companies. The Committee believes that this larger peer group will provide better insights into the compensation practices of business peers and will be less volatile due to the compensation changes made by one company. Companies were identified based on the following process:
1. | All companies were identified that met the following criteria: |
US headquartered and publicly traded.
Revenue betweenone-half to two times Huron’s trailing 12 months’ revenue as of Huron’s 20152016 fiscalyear-end.
Global Industry Classification Standard (GICS) codes: Research and Consulting Services, Human Resource & Employment Services, Application Software, Health Care Services or Technology, or Data Processing and Outsourced Services.
2. | Companies were then screened and selected that best met the following set of factors: |
Business and/or labor market competitor to Huron.
Similar revenue per employee.
Predominantly US revenue.
Principal business was to provide value-added consulting or advisory services to companies and organizations.
As a result of the review and application of these criteria, the Compensation Committee approved the following companies:
The Advisory Board, Inc.
Allscripts Healthcare Solutions, Inc.
athenahealth, Inc.
CBIZ Inc.
CEB, Inc.
Dun & Bradstreet Corporation
EPIQ Systems, Inc.
Exponent, Inc.
FTI Consulting, Inc.
Gartner Inc.
Heidrick & Struggles International, Inc.
ICF International Inc.
IHS, Inc.
Korn/Ferry International
Maximus, Inc.
Navigant Consulting Inc.
Premier, Inc.
Resources Connection, Inc.
DueAdditional changes were made to corporate transactions impacting twothe peer organizations that occurred during 2016,group in 2017 in advance of 2018 pay determination. Gartner acquired CEB, thus the Compensation Committee removed CEB as a peer, and the following two companies from theCommittee elected to remove Gartner and Maximus due to their larger size relative to Huron. Lastly, Acxiom Corporation and HMS Holdings Corporation were added to maintain a peer group:group of robust size.
EPIQ Systems, Inc.
IHS, Inc.
Employment Agreements with Mr. Roth, Mr. Hussey, Mr. Kelly and Ms. Ratekin
Huron has entered into agreements with each of the named executive officers that provide for benefits upon termination of employment under certain circumstances, including in connection with a change of control of the Company. Huron provides these benefits as a means of remaining competitive, retaining executive officers, focusing executive officers on shareholder interests when considering strategic alternatives, and providing income protection in the event of involuntary loss of employment. In general, these arrangements provide for severance benefits upon Huron’s termination of the executive’s employment without cause or resignation by the executive for good reason (constructive termination). In the event of a change of control of Huron, and if the
executive’s employment is terminated without cause or he or she resigns for good reason, the executive will
receive enhanced severance benefits. Huron provides these enhanced severance benefits only with aso-called “double trigger” because the Company believes that the executive officers would be materially harmed in a change of control only if it results in reduced responsibilities or compensation or loss of employment for the executive. Consistent with generally accepted best practices, Huron employment agreements do not containprovide for anygross-up provisions that would obligate the Company to pay excise tax payments to the CEO and other named executive officers in the event of a change of control.
In 2016, the Compensation Committee completed the first comprehensive review of each of the employment agreements since the hiring of our executive officers and found many of the provisions to be below market trends. Effective January 1, 2017, the board, in the case of Mr. Roth, and the Compensation Committee, in the case of Mr. Hussey and Ms. Ratekin, approved changes to these agreements to better align the provision with current market practices. Specific changes included: increasing the base salary and bonus severance multiples, enhancing medical coverage provisions, and adding anin-year pro rata bonus to the severance benefits upon termination without Cause or resignation for Good Reason, and in the event of death or disability. gross-ups.
More information on these changes and information on our use of employment agreements, including the estimated payments and benefits payable to the named executive officers, is provided under the “Potential Payments Upon Termination or Change of Control” section of this Proxy Statement.
Role of Compensation Committee
The Compensation Committee is primarily responsible for administering our executive compensation program in a manner consistent with our compensation philosophy and objectives. The principal functions of the Compensation Committee are to:
set salaries and annual and long-term incentive levels for the CEO and other named executive officers;
evaluate annually the performance of the CEO (in coordination with the full board) and review the CEO evaluations of the other named executive officers;
review and approve the design and competitiveness of our compensation plans, executive benefits and perquisites;
review and approve the total cash and stock bonus pools for the organization, and approve the individual incentive payout awards for the named executive officers;
review director compensation and make recommendations to the board;
�� | review director compensation and make recommendations to the board; |
review and approve goals used for the annual and long-term incentive plans;
retain or terminate, in its sole discretion, any independent compensation consultant used to assist the Compensation Committee;
review and evaluate compensation arrangements to assess whether they could encourage undue risk taking; and
create a Compensation Committee report on executive compensation for inclusion in the proxy statement.Proxy Statement.
The Compensation Committee acts independently, and works closely with our board of directors and the executive management team, in making many of its decisions. To support its decision making, the Compensation Committee has retained the services of an independent compensation consultant, Semler Brossy Consulting Group, LLC (“Semler Brossy”).consultant. The Compensation Committee has the sole authority to amend or terminate the services of Semler Brossy.its independent consultant.
In 2016,2017, the Compensation Committee was comprised entirely of independent directors, none of whom has at any time been an officer or employee of the Company.
Role of Management
Our CEO works together with the Corporate Vice President, Chief Human Resources Officer and the Compensation Committee of our board to establish, review and evaluate compensation packages and policies for our executive officers. Our CEO reviews the performance of each named executive officer and makes recommendations to the Compensation Committee based on his review. Our CEO, COO, CFO and General Counsel provide input into our strategic goals for future performance periods. The Compensation Committee carefully reviews all information before finalizing incentive goals, however, as we believe such a process is consistent with good governance. Prior to determining the size of the bonus pool for all employees other than
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NEOs, management reviews Company and practice-level performance with the Chairman of the board so that the bonus pool and Company profitability strike the right balance between shareholder returns and retention of employees. Our CEO does not participate in any discussions related to his own compensation.
Role of Compensation Advisor
The Compensation Committee continued to retain Semler Brossy as itsretains an independent advisor for the 2016 fiscal year to assist in the ongoing assessment of our executive compensation strategy and program. Semler BrossyThe Committee’s independent advisor reports directly to the Compensation Committee and serves at its sole discretion. Semler Brossydiscretion and does not perform any services for the Company other than those in connection with its work for the Compensation Committee. Semler Brossy served as the Compensation Committee’s independent advisor through the first half of 2017, at which time the Compensation Committee retained Pay Governance to serve as its independent advisor.
The Compensation Committee annually analyzes whether the work of Semler Brossy as a compensation consultantadvisor’s work has raised any conflict of interest. The Compensation Committee has determined, based on its analysis of NASDAQ requirements, that the work of Semler Brossy and Pay Governance and the individual compensation advisors employed by Semler Brossy and Pay Governance as compensation consultants to the Company has not created any conflict of interest.
20162017 Say on Pay Vote
In 2016,2017, we received a shareholder advisory vote (commonly referred to as “Say on Pay”) in excess of 99% in support of the named executive officer compensation. We believe this positive vote reflects the strong pay for performance relationship in our executive compensation program and supports the changes that have been made in recent years to improve the program. We continue to listen carefully to our shareholders and incorporate their feedback into our deliberations about executive compensation. ShareholdersAs in 2011, shareholders at the 20112017 Annual Meeting expressed a preference that advisory votes on executive compensation occur every year. Consistent with this preference, the Company has held and will continue to hold its advisory vote on the compensation of the Company’s named executive officers annually until this 2017the 2023 Annual Meeting at which time shareholders are beingwill again be asked to vote on the frequency of advisory votes on named executive officer compensation.
Health and Welfare Benefits
The named executive officers are eligible for the same health and welfare benefits generally available to Huron employees.
Deferred Compensation
The Company also offers a nonqualified deferred compensation plan (the “DCP”) to all managing directors, corporate vice presidents, named executive officers andnon-employee directors. The DCP allows managing directors, corporate vice presidents and executives to elect to defer up to 75% of their base salary and 100% of their annual cash incentive into a deferred compensation account and to choose from a number of investment alternatives.Non-employee directors may elect to defer up to 100% of their board fees into the DCP.
Perquisites
Huron did not provide material perquisites that are not provided widely within Huron to any named executive officer in 2016.2017. The Company provides enhanced disability and life insurance benefits to all of its managing directors, corporate vice presidents and executive officers. The CEO and Executive Vice Presidents are also offered reimbursement of the cost of an annual executive physical examination.
Clawback Provisions
In 2014, we adopted an incentive compensation recoupment policy (commonly referred to as a “clawback policy”) that provides for the potential recoupment of bonuses or awards paid to executive officers and such other individuals designated by our independent directors under our short-term and long-term incentive compensation plans, where the payout or actual award received was determined based in part on the financial performance of the Company. In the event of a material restatement of our quarterly or annual financial results, our independent directors will review all incentive compensation awarded to those individuals covered by the policy based upon the achievement of financial results that were the subject of the restatement. The independent directors have the authority to recoup all or a portion of the incentive compensation to the extent that the amount of such compensation would have been lower than the amount actually awarded, granted, paid, earned, deferred or vested based on the achievement of financial results that were subsequently reduced due to such restatement.
Stock Ownership Guidelines and Holding Requirements
In 2010, the Compensation Committee adopted stock ownership guidelines for Huron’s named executive officers andnon-employee directors. The guidelines, set forth below, are consistent with peer practices and
designed to promote alignment with the interests of stockholders and the Company’s commitment to sound corporate governance.
Position | Stock Ownership Guideline | |
CEO | the lesser of 3x salary or 120,000 shares | |
COO and CFO | the lesser of 2x salary or 50,000 shares | |
Other Executive Officers | the lesser of 1x salary or 20,000 shares | |
Non-employee | the lesser of 3x annual retainer or 9,000 shares | |
Non-employee directors | the lesser of 3x annual retainer or the # of shares equivalent to 3x annual retainer/share price on day prior to annual meeting when first elected |
Until the relevant stock ownership target is achieved, executive officers andnon-employee directors are required to retain a number of shares equal to at least 60% of the net after tax proceeds from the exercise of stock options or vesting of restricted stock and performance shares. Only shares owned outright count towards ownership requirements. Unexercised stock options and unvested performance shares or unvested restricted stock do not count.
Mr. Roth and Ms. Ratekin and all All of our NEOs andnon-employee directors serving asare in compliance with the terms of the 2016 annual meeting have met the stockour share ownership guidelines. Mr. Hussey is expected to retain a number of shares equal to at least 60% of the net after tax value from the exercise of stock options or vesting of restricted stock and performance shares until he satisfies the ownership requirements.
Hedging and Pledging
The Company has an insider trading policy that prohibits directors, officers, employees and contractors from entering into transactions in publicly traded puts, calls or other derivative securities with respect to Huron’s stock and prohibits any other transaction that “hedges” the ownership in Huron’s stock or holding Company securities in a margin account or pledging Company securities as collateral for a loan.
Tax Considerations
Section 162(m). Section 162(m) of the Code generally limits the deductibilitydisallows a tax deduction to public companies for federal income tax purposes of compensation paid in excess of $1 million for any fiscal year to certain specified covered employees. Under the CEOrules in effect before 2018, compensation that qualified as “performance-based compensation” under Section 162(m) was deductible without regard to this $1 million limit. The recent Tax Cuts and Jobs Act generally eliminated the performance-based compensation exception under Section 162(m), effective January 1, 2018, subject to a special rule that “grandfathers” certain awards and arrangements that were in effect on or anybefore November 2, 2017. To date, the IRS has not issued guidance interpreting the Tax Cuts and Jobs Act. While the Committee intended that certain incentive awards granted to our NEOs on or prior to November 2, 2017 be deductible as “performance-based compensation,” it cannot assure that result. The Committee has taken the potential impact of the next three most highly paid executive officers of a publicly held corporation (other than the CFO). Huron may deduct compensation exceeding $1 millionTax Cuts and Jobs Act into consideration when approving payout amounts for federal income tax purposes if the compensation is paid pursuant to a performance-based, nondiscretionary plan that is approved by stockholders. Both the Annual Incentive Plan and the equity plans are intended to comply with all the provisions of Section 162(m), although the rules are complex and any particular result cannot be guaranteed and, furthermore, the Compensation Committee reserves the right to pay compensation that may not be deductible under Section 162(m).performance periods ending on December 31, 2017.
Section 280G. Section 280G of the Code disallows a company’s tax deduction for certain payments in connection with a change of control defined as “excess parachute payments,” and Section 4999 of the Code imposes a 20% excise tax on certain persons who receive excess parachute payments. The Compensation Committee amended Senior Management Agreements in 2010 to ensure that any covered payments would be reduced to the extent necessary so that no portion of such payments is subject to the excise tax.
The Compensation Committee has reviewed and discussed with management the information contained under the caption “Compensation Discussion and Analysis” and, based on this review and discussion, has recommended to the board of directors that it be included in this Proxy Statement and incorporated by reference into our 20162017 Annual Report on Form10-K.
Debra Zumwalt, Chair
H. Eugene Lockhart
John S. Moody
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REQUIRED COMPENSATION DISCLOSURES |
20162017 SUMMARY COMPENSATION TABLE
Name and Principal Position | Year | Salary ($) | Non Equity Incentive Plan Compensation ($) | Stock Awards ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | All Other Compensation ($)(3) | Total Compensation ($) | Year | Salary ($) | Non Equity Incentive Plan Compensation ($) | Stock Awards ($)(1) | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(2) | All Other Compensation ($)(3) | Total Compensation ($) | ||||||||||||||||||||||
James H. Roth | 2016 | 900,000 | 207,900 | 1,939,930 | 83,903 | 27,109 | 3,158,842 | 2017 | 900,000 | 595,980 | 2,699,973 | 308,563 | 31,434 | 4,535,950 | ||||||||||||||||||||||
President and Principal Executive Officer | 2015 | 900,000 | 594,000 | 2,662,934 | — | 31,134 | 4,188,068 | 2016 | 900,000 | 207,900 | 1,939,930 | 83,903 | 27,109 | 3,158,842 | ||||||||||||||||||||||
2014 | 900,000 | 960,300 | 2,237,621 | — | 30,634 | 4,128,555 | 2015 | 900,000 | 594,000 | 2,662,934 | 0 | 31,134 | 4,188,068 | |||||||||||||||||||||||
C. Mark Hussey | 2016 | 600,000 | 126,000 | 1,005,895 | 60,624 | 26,435 | 1,818,954 | 2017 | 743,750 | 451,500 | 2,312,472 | 150,059 | 30,985 | 3,688,766 | ||||||||||||||||||||||
Executive Vice President, Principal Operating Officer and Principal Financial Officer | 2015 | 550,000 | 297,000 | 904,174 | — | 30,905 | 1,782,079 | |||||||||||||||||||||||||||||
2014 | 550,000 | 480,150 | 759,698 | 23,173 | 30,468 | 1,843,488 | ||||||||||||||||||||||||||||||
Executive Vice President and Principal Operating Officer | 2016 | 600,000 | 126,000 | 1,005,895 | 60,624 | 26,435 | 1,818,954 | |||||||||||||||||||||||||||||
2015 | 550,000 | 297,000 | 904,174 | 0 | 30,905 | 1,782,079 | ||||||||||||||||||||||||||||||
John D. Kelly (4) | 2017 | 323,333 | 136,955 | 344,197 | N/A | 23,113 | 827,598 | |||||||||||||||||||||||||||||
Executive Vice President and Principal Financial Officer | ||||||||||||||||||||||||||||||||||||
Diane E. Ratekin | 2016 | 400,000 | 42,000 | 438,686 | 6,411 | 35,221 | 922,318 | 2017 | 400,000 | 120,400 | 460,003 | 18,353 | 31,719 | 1,030,475 | ||||||||||||||||||||||
Executive Vice President, General Counsel and Corporate Secretary | 2015 | 400,000 | 120,000 | 473,415 | — | 30,635 | 1,024,050 | 2016 | 400,000 | 42,000 | 438,686 | 6,411 | 35,221 | 922,318 | ||||||||||||||||||||||
2014 | 400,000 | 194,000 | �� | 397,764 | 7,988 | 28,761 | 1,028,513 | 2015 | 400,000 | 120,000 | 473,415 | 0 | 30,635 | 1,024,050 | ||||||||||||||||||||||
(1) | This column represents the aggregate grant date fair value of restricted stock and/or performance share unit awards. The value of the performance share units in the table is consistent with the estimate of aggregate compensation cost to be recognized over the service period determined as of the grant date under FASB ASC Topic 718. |
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Grant Date Fair Value | ||||
2016 Performance Share Units ($) | 2016 Restricted Stock Awards ($) | |||
James H. Roth | 1,332,430 | 607,500 | ||
C. Mark Hussey | 690,875 | 315,020 | ||
Diane E. Ratekin | 263,187 | 175,499 |
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Impact on Total Compensation Using Earned Value of Performance Share Units | ||||||
2016 Earned Performance Share Units ($) | 2016 Restricted Stock Awards ($) | Total Compensation Based on Performance Share Units ($) | ||||
James H. Roth | 732,808 | 607,500 | 2,559,220 | |||
C. Mark Hussey | 379,979 | 315,020 | 1,508,058 | |||
Diane E. Ratekin | 144,796 | 175,499 | 803,927 |
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(2) | The amounts in this column represent investment gains in the deferred compensation plan. Huron does not offer a pension plan. The amount shown above represents that portion of the account earnings that exceeded the SEC benchmark “market” rate equal to 120% of the long-term applicable federal rate (based on the average rate for 2017, 2016 and 2015 of 2.72%, 2.70% and |
(3) | All Other Compensation for |
(4) | On January 3, 2017, Mr. Kelly was promoted to the position of Executive Vice President and Chief Financial Officer. Formerly, Mr. Kelly had been Corporate Vice President and Chief Accounting Officer. |
20162017 All Other Compensation
Name | Executive Long- Term Disability ($)(1) | Executive $1MM Term Life Insurance ($)(2) | Company Provided 401(k) Match ($)(3) | Other Benefits and Perquisites ($)(4) | Total All ($) | Executive Long- Term Disability ($)(1) | Executive $1MM Term Life Insurance | Company Provided 401(k) Match ($)(3) | Other Benefits and Perquisites ($)(4) | Total All Other Compensation ($) | ||||||||||||||||||||||||||||||
James H. Roth | 6,776 | 4,433 | 15,900 | 0 | 27,109 | 6,776 | 4,433 | 16,200 | 4,025 | 31,434 | ||||||||||||||||||||||||||||||
C. Mark Hussey | 7,101 | 3,204 | 15,900 | 230 | 26,435 | 7,101 | 3,204 | 16,200 | 4,480 | 30,985 | ||||||||||||||||||||||||||||||
John D. Kelly | 1,830 | 1,058 | 16,200 | 4,025 | 23,113 | |||||||||||||||||||||||||||||||||||
Diane E. Ratekin | 7,952 | 7,044 | 15,900 | 4,325 | 35,221 | 7,952 | 7,487 | 16,200 | 80 | 31,719 |
(1) | Executive Long-Term Disability is provided to all executives and managing directors. |
(2) | Executive Term Life Insurance is provided to all executives and managing directors. |
(3) | Huron provides a Company 401(k) match to all participating employees. |
(4) | Other Benefits and Perquisites includes the cost of an executive physical, which Huron pays for executives and certain managing directors, and a wellness benefit available to all employees that reimburses up to $320 annually for purchases that assist in maintaining work-life balance. The wellness benefit was discontinued as of June 2017. |
CEO Pay Ratio
As a result of the Dodd-Frank Act, beginning with our 2018 Proxy Statement, the SEC will require disclosure of the CEO to median employee pay ratio. Mr. Roth received 2017 annual total compensation of $4,535,950 as reflected in the Summary Compensation Table included in this Proxy Statement. Our median employee’s annual total compensation for 2017 was $118,710. As a result, we estimate that Mr. Roth’s 2017 annual total compensation was approximately 38 times that of our median employee. |
20162017 GRANTSOF PLAN-BASED AWARDS
The following table summarizes the grants of equity awards and annual cash incentive awards for 20162017 to each named executive officer.
Estimated Future Payouts UnderNon-Equity Incentive Plan Awards (1) | Estimated Future Payouts Under Equity Incentive | Estimated Future Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Future Payouts Plan Awards (2) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Name | Grant Date | Date of Compensation Committee Action | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock (#)(3) | Full Grant Date Fair Value of Each ($)(4) | Grant Date | Date of Compensation Committee Action | Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | All Other Stock Awards: Number of Shares of Stock (#)(3) | Full Grant Date Fair Value of Each Award ($)(4) | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
James H. Roth | 3/1/2016 | (5) | 2/25/2016 | — | — | — | 2,553 | 10,212 | 12,765 | — | 566,970 | 3/15/2017 | (5) | 2/20/2017 | — | — | — | 13,863 | 27,726 | 55,452 | — | 1,133,993 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | (6) | 2/25/2016 | — | — | — | 2,872 | 15,319 | 38,298 | — | 765,460 | 3/15/2017 | (6) | 2/20/2017 | — | — | — | 9,242 | 18,484 | 36,968 | — | 755,996 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/25/2016 | — | — | — | — | — | — | 10,942 | 607,500 | 3/15/2017 | 2/20/2017 | — | — | — | — | — | — | 19,804 | 809,984 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 990,000 | 1,237,500 | — | — | — | — | — | 247,500 | 990,000 | 1,485,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
C. Mark Hussey | 3/1/2016 | (5) | 2/25/2016 | — | — | — | 1,324 | 5,295 | 6,619 | — | 293,978 | 3/15/2017 | (5) | 2/20/2017 | — | — | — | 6,739 | 13,478 | 26,956 | — | 551,250 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | (6) | 2/25/2016 | — | — | — | 1,489 | 7,943 | 19,858 | — | 396,896 | 3/15/2017 | (6) | 2/20/2017 | — | — | — | 4,493 | 8,985 | 17,970 | — | 367,487 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/25/2016 | — | — | — | — | — | — | 5,674 | 315,020 | 3/15/2017 | 2/20/2017 | — | — | — | — | — | — | 9,627 | 393,744 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 600,000 | 750,000 | — | — | — | — | — | 8/21/2017 | 8/17/2017 | — | — | — | — | — | — | 32,051 | 999,991 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
187,500 | 750,000 | 1,125,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
John D. Kelly | 3/1/2017 | 2/10/2017 | — | — | — | — | — | — | 442 | 19,205 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/15/2017 | (5) | 2/20/2017 | — | — | — | 1,669 | 3,337 | 6,674 | — | 136,483 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/15/2017 | (6) | 2/20/2017 | — | — | — | 1,113 | 2,225 | 4,450 | — | 91,003 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/15/2017 | 2/20/2017 | — | — | — | — | — | — | 2,384 | 97,506 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
56,875 | 227,500 | 341,250 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Diane E. Ratekin | 3/1/2016 | (5) | 2/25/2016 | — | — | — | 504 | 2,017 | 2,521 | — | 111,984 | 3/15/2017 | (5) | 2/20/2017 | — | — | — | 2,362 | 4,724 | 9,448 | — | 193,212 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | (6) | 2/25/2016 | — | — | — | 567 | 3,026 | 7,565 | — | 151,203 | 3/15/2017 | (6) | 2/20/2017 | — | — | — | 1,575 | 3,149 | 6,298 | — | 128,794 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/25/2016 | — | — | — | — | — | — | 2,161 | 119,979 | 3/15/2017 | 2/20/2017 | — | — | — | — | — | — | 3,374 | 137,997 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
3/1/2016 | 2/25/2016 | — | — | — | — | — | — | 1,000 | 55,520 | 50,000 | 200,000 | 300,000 | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
0 | 200,000 | 250,000 | — | — | — | — | — |
(1) | For the cash award, the target, threshold and maximum represent the range of cash award that could be earned. There is no payout if a threshold level of performance is not achieved. The minimum amount that could be paid is 25% of target and maximum represents |
(2) | The |
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Name | 2016 Performance Share Units Earned for 2016 Performance | 2016 Performance Share Units Earned for 2014- 2016 Performance | ||||||
James H. Roth | 5,617 | 7,582 | ||||||
C. Mark Hussey | 2,912 | 3,932 | ||||||
Diane E. Ratekin | 1,110 | 1,498 |
(3) | Restricted stock granted under the Company’s 2012 Omnibus Incentive Plan. |
(4) | The full grant date fair value of the March 1, 2017 RSA is based on the closing price of Huron stock of $43.45 on February 28, 2017. The full grant date fair values of the March |
(5) | The March |
(6) | The March |
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20162017 OUTSTANDING EQUITY AWARDSAT FISCAL YEAR-END
The following table sets forth certain information concerning outstanding stock and option awards as of December 31, 20162017 for each named executive officer. Market value is based on the closing price of Huron stock of $50.65$40.45 on December 30, 2016,29, 2017, the last trading day of the fiscal year.
Option Awards | Stock Awards | |||||||||||||||||||||||||||||||
Name | Grant Date | Number of Securities Underlying Unexercised Options (#)(1) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested as of 12/31/2016 ($) | |||||||||||||||||||||||||
James H. Roth | 5/03/2010 | 100,000 | — | 23.43 | 5/03/2020 | — | — | |||||||||||||||||||||||||
3/11/2011 | 27,031 | — | 26.19 | 3/11/2021 | — | — | ||||||||||||||||||||||||||
3/01/2012 | 19,661 | — | 38.18 | 3/01/2022 | — | — | ||||||||||||||||||||||||||
3/01/2013 | 18,040 | 6,014 | 39.19 | 3/01/2023 | — | — | ||||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 7,230 | (4) | 366,200 | |||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 4,591 | (2) | 232,534 | |||||||||||||||||||||||||
3/01/2015 | — | — | — | — | 6,837 | (2) | 346,294 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 10,942 | (2) | 554,212 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 3,791 | (4) | 192,014 | |||||||||||||||||||||||||
C. Mark Hussey | 8/01/2011 | 1,772 | — | 32.37 | 8/01/2021 | — | — | |||||||||||||||||||||||||
3/01/2012 | 6,144 | — | 38.18 | 3/01/2022 | — | — | ||||||||||||||||||||||||||
3/01/2013 | 5,798 | 1,933 | 39.19 | 3/01/2023 | — | — | ||||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 2,455 | (4) | 124,346 | |||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 1,559 | (2) | 78,963 | |||||||||||||||||||||||||
3/01/2015 | — | — | — | — | 2,322 | (2) | 117,609 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 5,674 | (2) | 287,388 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 1,966 | (4) | 99,578 | |||||||||||||||||||||||||
Diane E. Ratekin | 3/01/2012 | 3,072 | — | 38.18 | 3/01/2022 | — | — | |||||||||||||||||||||||||
3/01/2013 | 3,624 | 1,208 | 39.19 | 3/01/2023 | — | — | ||||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 1,285 | (4) | 65,085 | |||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 816 | (2) | 41,330 | |||||||||||||||||||||||||
3/01/2015 | — | — | — | — | 1,215 | (2) | 61,540 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 2,161 | (2) | 109,455 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 1,000 | (3) | 50,650 | |||||||||||||||||||||||||
3/01/2016 | — | — | — | — | 749 | (4) | 37,937 |
Option Awards | Stock Awards | |||||||||||||||||||||||||||||
Name | Grant Date | 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 | Market Value of Shares or Stock that Have Not Vested as of 12/31/2017 ($) | |||||||||||||||||||||||
James H. Roth | 5/03/2010 | 100,000 | — | 23.43 | 5/03/2020 | — | — | |||||||||||||||||||||||
3/11/2011 | 27,031 | — | 26.19 | 3/11/2021 | — | — | ||||||||||||||||||||||||
3/01/2012 | 19,661 | — | 38.18 | 3/01/2022 | — | — | ||||||||||||||||||||||||
3/01/2013 | 24,054 | — | 39.19 | 3/01/2023 | — | — | ||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 2,296 | (1) | 92,873 | |||||||||||||||||||||||
3/01/2015 | — | — | — | — | 4,558 | (1) | 184,371 | |||||||||||||||||||||||
3/01/2016 | — | — | — | — | 8,207 | (1) | 331,973 | |||||||||||||||||||||||
3/15/2017 | — | — | — | — | 19,804 | (2) | 801,072 | |||||||||||||||||||||||
C. Mark Hussey | 8/01/2011 | 1,772 | — | 32.37 | 8/01/2021 | — | — | |||||||||||||||||||||||
3/01/2012 | 6,144 | — | 38.18 | 3/01/2022 | — | — | ||||||||||||||||||||||||
3/01/2013 | 7,731 | — | 39.19 | 3/01/2023 | — | — | ||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 780 | (1) | 31,551 | |||||||||||||||||||||||
3/01/2015 | — | — | — | — | 1,548 | (1) | 62,617 | |||||||||||||||||||||||
3/01/2016 | — | — | — | — | 4,256 | (1) | 172,155 | |||||||||||||||||||||||
3/15/2017 | — | — | — | — | 9,627 | (2) | 389,412 | |||||||||||||||||||||||
8/21/2017 | — | — | — | — | 32,051 | (1) | 1,296,463 | |||||||||||||||||||||||
John D. Kelly | 3/01/2014 | — | — | — | — | 142 | (1) | 5,744 | ||||||||||||||||||||||
3/01/2015 | — | — | — | — | 263 | (1) | 10,638 | |||||||||||||||||||||||
3/01/2016 | — | — | — | — | 264 | (1) | 10,679 | |||||||||||||||||||||||
3/01/2017 | — | — | — | — | 442 | (1) | 17,879 | |||||||||||||||||||||||
3/15/2017 | — | — | — | — | 2,384 | (2) | 96,433 | |||||||||||||||||||||||
Diane E. Ratekin | 3/01/2012 | 3,072 | — | 38.18 | 3/01/2022 | — | — | |||||||||||||||||||||||
3/01/2013 | 4,832 | — | 39.19 | 3/01/2023 | — | — | ||||||||||||||||||||||||
3/01/2014 | — | — | — | — | 408 | (1) | 16,504 | |||||||||||||||||||||||
3/01/2015 | — | — | — | — | 810 | (1) | 32,765 | |||||||||||||||||||||||
3/01/2016 | — | — | — | — | 1,621 | (1) | 65,569 | |||||||||||||||||||||||
3/15/2017 | — | — | — | — | 3,374 | (2) | 136,478 |
(1) |
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Consists of unvested restricted stock as of December 31, |
Consists of unvested restricted stock as of December 31, |
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20162017 OPTION EXERCISESAND STOCK VESTED
The following table sets forth certain information concerning stock option exercises and restricted stock vesting during 20162017 for each named executive officer.
Option Exercises | Stock Awards | Option Exercises | Stock Awards | |||||||||||||||||||||||||||||
Name | Shares Acquired On Exercise (#) | Value Realized On Exercise ($)(1) | Shares Acquired On Vesting (#)(2) | Value Realized On Vesting ($)(3) | Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | Shares Acquired On Vesting (#) (1) | Value Realized On Vesting ($)(2) | ||||||||||||||||||||||||
James H. Roth | 0 | 0 | 21,211 | 980,142 | 0 | 0 | 18,330 | 763,376 | ||||||||||||||||||||||||
C. Mark Hussey | 0 | 0 | 8,885 | 406,252 | 0 | 0 | 7,392 | 307,919 | ||||||||||||||||||||||||
John D. Kelly | 0 | 0 | 731 | 34,433 | ||||||||||||||||||||||||||||
Diane E. Ratekin | 4,706 | 140,898 | 3,957 | 182,373 | 0 | 0 | 4,387 | 184,513 |
(1) |
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Includes restricted stock that vested in |
The value realized on vesting equals the market value of Huron stock measured as the closing price of the stock on the most recent business day preceding the vesting date multiplied by the number of shares received on vesting. |
20162017 NONQUALIFIED DEFERRED COMPENSATION
The following table shows the deferred compensation activity for the named executive officers in 2016.2017.
Name | Executive Contributions in 2016 ($)(1) | Company Contributions in 2016 ($) | Aggregate Earnings in 2016 ($) | Aggregate Withdrawals/ Distributions in 2016 ($) | Aggregate Balance as of 12/31/16 ($)(2) | Executive Contributions in 2017($)(1) | Company Contributions | Aggregate Earnings in 2017($) | Aggregate Withdrawals/ Distributions in 2017 ($) | Aggregate Balance as of 12/31/17($)(2) | ||||||||||||||||||||||||||||||
James H. Roth | 469,276 | — | 126,937 | — | 1,584,644 | 846,807 | — | 385,248 | — | 2,816,699 | ||||||||||||||||||||||||||||||
C. Mark Hussey | 63,000 | — | 88,390 | — | 842,656 | — | — | 177,842 | — | 1,020,498 | ||||||||||||||||||||||||||||||
John D. Kelly | — | — | — | — | — | |||||||||||||||||||||||||||||||||||
Diane E. Ratekin | — | — | 9,579 | — | 117,278 | — | — | 22,149 | — | 139,427 |
(1) | Executive contributions include deferral of bonus for |
(2) | The aggregate balance as of December 31, |
The Company maintains the DCP, which became effective July 1, 2006. The DCP permits managing directors, corporate vice presidents and named executive officers to elect to defer up to 75% of their base salary and 100% of their annual cash incentive into a deferred compensation account and to choose from a number of generally available investment vehicles. Earnings are credited based on earnings of the investment options selected by the participant. Huron does not match any amounts deferred or otherwise contribute to the DCP except to make restoration payments to the accounts of participants who do not receive the maximum eligible 401(k) match as a result of participation in the DCP. Deferral elections for base salary and any guaranteed bonus must be made in the calendar year prior to earning such base salary or within 30 days of becoming eligible for the plan. The Company requires that deferral elections of the annual cash incentive must be made 12 months prior to the end of the applicable performance period. Independent directors may also defer up to 100% of their retainer and meeting fees into the DCP.
Payments from the plan automatically begin upon termination of employment or separation from service as a director. Key employees, including executive officers, must wait six months after termination to receive payment from the plan. Participants may elect payment in a lump sum or annual installments for up to 15 years. Upon proof of financial hardship and approval from the Compensation Committee, a participant may be allowed an early distribution. Participants may also elect to receive payments prior to termination through a scheduled distribution.
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Background
We have entered into agreements and maintain plans and arrangements that require us to pay or provide compensation and benefits to each of the named executive officers in the event of certain terminations of employment or a change of control. After a comprehensive review of the agreements in 2016, the Company entered into Amended and Restated Agreements with each of our NEOs, effective as of January 1, 2017. Specifically, the severance provisions were modified to better align the agreements with current market practices. The provisions in effect on December 31, 2016 and a summary of material changes implemented by the 2017 Senior Management Agreementsthese agreements, summarized below, are detailed below.aligned with best practices.
Senior Management Agreements
Under the Amended and Restated Senior Management Agreement with Mr. Roth that was in effect during 2016, beginning on July 30, 2012 and on each anniversary thereafter, theRoth’s agreement would be automatically renewed and extended for an additional year unless Mr. Roth or the Company provided 60 days’ notice to the other that such automatic renewal would cease. The Company entered into an Amended and Restated Senior Management Agreement with Mr. Roth, effective as of January 1, 2017 (the “New Roth Agreement”). The New Roth Agreement covers a term beginning on January 1, 2017, and continues for three years from that date. Following the expiration of that initial three-year term, the New Roth Agreementhis agreement will be automatically renewed every year, unless Mr. Roth or the Company provides 60 days’ notice to the other that such automatic renewal shall cease. The New Roth Agreementagreement may be earlier terminated by Mr. Roth or the Company pursuant to its terms.
Under the Senior Management Agreement with Mr. Hussey, that was in effect during 2016, Mr. Hussey’s employment by the Company was at will until such time as either Mr. Hussey or the Company terminated the agreement pursuant to its terms. The Company entered into an AmendedKelly and Restated Senior Management Agreement with Mr. Hussey, effective as of January 1, 2017 (the “New Hussey Agreement”). Under the New Hussey Agreement, Mr. Hussey’sMs. Ratekin’s agreements provide that employment will continue unless either the Company or Mr. Husseythe executive delivers to the other 60 days’ advance written notice of the cessation of Mr. Hussey’s employment. The New Hussey AgreementThese may be earlier terminated by Mr. Husseythe executive or the Company pursuant to itstheir terms.
Under the Senior Management Agreement with Ms. Ratekin that was in effect during 2016, Ms. Ratekin’s employment by the Company would be automatically renewed every year unless Ms. Ratekin or the Company provided 60 days’ notice to the other that such automatic renewal shall cease. The Company entered into an Amended and Restated Senior Management Agreement with Ms. Ratekin, effective as of January 1, 2017 (the “New Ratekin Agreement”). Under the New Ratekin Agreement, Ms. Ratekin’s employment will continue unless either the Company or Ms. Ratekin delivers to the other 60 days’ advance written notice of the cessation of Ms. Ratekin’s employment. The New Ratekin Agreement may be earlier terminated by Ms. Ratekin or the Company pursuant to its terms.
Annual Target Bonus
Each calendar year, each of Mr. Roth, Mr. Hussey and Ms. Ratekin will be eligible for an annual target bonus in an amount determined by the Compensation Committee based on each executive’s performance, Company performance and the Company’s compensation policies. Mr. Roth’s annual target bonus will not be less than 110% of his base salary.
Equity Awards
Mr. Roth, Mr. Hussey and Ms. Ratekin will generally be eligible to participate in the Company’s equity plans, with the amount and terms of any equity awards being in the sole discretion of the Compensation Committee and based on performance and the Company’s compensation policies.
The following table summarizes how unvested equity awards will be addressed in the event of a termination under the Senior Management Agreements that were in effect during 2016.2017.
Event | Restricted Stock and Options | Performance Shares | ||
Normal Vesting | 33% annual vesting over 3 years for awards granted on or after 3/15/2017; 25% annual vesting over 4 years for those awards granted prior to 3/15/2017 and for the award granted to C. Mark Hussey on 8/21/2017 | One-Year Performance Shares: 33% of earned Three-Year Performance Shares: 100% of the earned Three-Year Performance Shares vest in | ||
Voluntary Termination | Forfeit | |||
Termination for “Cause” | Forfeit | |||
Approved Retirement (comply withnon-compete provisions) | Subject tonon-compete, vesting continues per normal course | One-Year & Three-Year Performance Shares: Earned pro rata based on actual performance. Subject tonon-compete, vesting continues per normal course | ||
Death or Disability | Full acceleration | One-Year Performance Shares: Immediately vest pro rata based on actual performance. Three-Year Performance Shares: Earned pro rata based on actual |
Event | Restricted Stock and Options | Performance Shares | ||
Involuntary/Good Reason Termination | Pro rata vesting | |||
Change of Control (“COC”), No Termination | No impact, assumed by acquirer | One-Year & Three-Year Performance If not assumed by acquirer or acquirer does not convert shares into right to receive equivalent value in shares of new entity, then 100% of earned shares will vest and one share of Company common stock will be exchanged for each performance share and such common stock will receive the consideration paid by the acquirer in the COC. | ||
Involuntary/Good Reason TerminationPost-COC | Full acceleration | One-Year Performance Shares: Shares shall immediately fully vest. Three-Year Performance Shares: Earned shares shall immediately fully vest. |
Other Benefits
Mr. Roth, Mr. Hussey, Mr. Kelly and Ms. Ratekin will be eligible to participate in the Company’s various health and welfare benefit plans for its similarly situated key management employees.
Restrictive Covenants on Termination
For the applicable restricted period set forth in each executive officer’s Senior Management Agreement, he or she may not directly or indirectly (i) hire any employees of the Company or solicit, induce or encourage any employee of the Company or any client of the Company to leave, alter or cease his or her relationship with it or (ii) provide services that are the same as or similar to those offered by the Company to any client of the Company that he or she obtained as a client for the Company, to whom he or she provided services within the 12 months preceding termination of employment, or to whom he or she submitted a proposal during the six months prior to termination of employment. The restricted period for Mr. Roth is 12 to 24 months (depending on the type of termination) following termination of employment. The restricted period for Mr. Hussey, Mr. Kelly and Ms. Ratekin is 12 months following termination of employment for any reason. In addition, for a period of 12 to 24 months (depending on the type of termination) following the termination of his employment, Mr. Roth may not, directly or indirectly, provide services that are competitive with those of the Company to any person, firm or other business entity. Executives are also subject to a confidentiality andnon-disclosure covenant.
Key Definitions
Definition of “Change of Control”
A Change of Control is defined in all three agreements as:
any person becomes a beneficial owner of 40% or more of the Company’s outstanding securities;
there is a consummation of a merger or consolidation with any person unless (a) the voting securities of the Company outstanding immediately prior to the transaction continue to represent at least 50% of the combined voting power of the securities of the Company or such other surviving entity; (b) the merger is a recapitalization in which no person other than existing security holders becomes a beneficial owner representing 50% or more of the Company’s then outstanding securities; or (c) the merger does not represent a sale of all or substantially all of the Company’s assets;
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the stockholders approve a plan of complete liquidation or dissolution; or
there is a disposition or sale of all or substantially all of the Company’s assets other than a sale or disposition in which at least 50% of the combined voting power of the voting securities which are owned by shareholders of Huron.
Definition of “Good Reason”
Under the terms of the Senior Management Agreements that were in effect during 2016, each NEO had a slightly different definition of “Good Reason” as described below.
“Good Reason” was defined in the Roth agreement to mean a resignation following: (i) a change in Mr. Roth’s primary location of employment to a location that is more than 75 miles from Chicago, Illinois; (ii) a material breach of the Roth agreement by the Company; (iii) a material reduction in his base salary; (iv) a material diminishment of his position, title, duties or responsibilities; or (v) the execution of a binding agreement committing the Company to a Change of Control (as defined in the Roth agreement) without also committing legally and announcing publicly that Mr. Roth shall become the Chief Executive Officer of the surviving company. The Roth agreement provided the Company the right to cure prior to a resignation for Good Reason.
“Good Reason” was defined in the Hussey agreement to mean a resignation following: (i) a change in Mr. Hussey’s primary location of employment to a location that is more than 50 miles from Chicago, Illinois; (ii) a failure to comply with any material term of the Hussey agreement by the Company; or (iii) a material reduction in his base salary or benefits coverage, provided that such reduction is without his consent, is not warranted by the Company’s financial condition, and is not a change that applies uniformly to similarly situated Company executives. The Hussey agreement provided the Company the right to cure prior to a resignation for Good Reason.
“Good Reason” was defined in the Ratekin agreement to mean a resignation following a change in Ms. Ratekin’s primary location of employment to a location that is more than 75 miles from Chicago, Illinois. The Ratekin agreement provided the Company the right to cure prior to a resignation for Good Reason.
In the new Senior Management Agreements that were entered into effective January 1, 2017, the definition of “Good Reason” was harmonized across all NEOs and is now defined in all threefour agreements to mean a resignation following: (i) a change in primary location of employment to a location that is more than 50 miles from Chicago, Illinois; (ii) a failure to comply with any material term of the agreement by the Company or (iii) a material reduction in base salary or benefits coverage, provided that such reduction is without his or her consent, is not warranted by the Company’s financial condition, and is not a change that applies uniformly to similarly situated Company executives. The agreements provide the Company the right to cure prior to a senior executive’s resignation for Good Reason.
Definition of “Good Reason” in Relation to a Change of Control
Under all threefour agreements, a Change of Control Good Reason occurs if certain adverse changes occur in anticipation of, or within two years following, a Change of Control including:
(a) | any material breach of the Senior Management Agreement by the Company, |
(b) | any material adverse change in the executive’s status, responsibilities or position with the Company, |
(c) | any material reduction in his or her base salary or target bonus, other than in connection with anacross-the-board reduction in base salaries applicable in like proportions to all similarly situated executives of the Company and any direct or indirect parent of the Company, |
(d) | assignment of duties to the executive that are materially inconsistent with his or her position and responsibilities described in the Senior Management Agreement, including, specifically, assignment of a position other than as Chief Executive Officer of the surviving Company in the case of Mr. Roth, or |
(e) | requiring the executive to be principally based at any office or location that is greater than 50 miles from Chicago, Illinois. |
Termination without Cause or Resignation for Good Reason
If any of our executives with a Senior Management Agreement is terminated without Cause or resigns for Good Reason, as defined in his or her Senior Management Agreement, upon executing a general release and waiver, the Company is obligated to pay severance and continuation of benefits in varying amounts. In addition, unvested equity will accelerate on a pro rata basis upon termination without Cause or resignation for Good Reason.
The following severance benefits are payable to each of our named executive officers upon termination without Cause or resignation for Good Reason, except in the case of a Change of Control, as of December 31, 2016 (changes made in 2017 are also included below):2017:
Executive | Severance Benefits | |
James H. Roth | An amount in cash equal to two times the sum of his then current annual base salary and his then current target | |
C. Mark Hussey | An amount in cash equal to | |
John D. Kelly & Diane E. Ratekin | An amount in cash equal to |
In the event an executive qualifies for an approved retirement and signs anon-compete agreement, he or she would receive continued vesting of his or her stock options and restricted stock. There would be no acceleration, but the equity would continue to vest per the schedule as outlined in the grant agreements.
Termination of Employment Due to Death or Disability
If any of our executives dies or becomes disabled, his or her estate will receive payment of base salary and in the case of Mr. Roth,a pro rata bonus at target through the date of termination (the 2017 Senior Management Agreements provide a pro rata bonus at target for all NEOs).termination. The executive and/or his or her eligible dependents shall receive continuation of medical, dental and vision benefits for in the case of Mr. Roth, six months or, for all other executives, continuation of medical benefits for three months (the 2017 Senior Management Agreements provide the continuation of benefits for six months for all NEOs).months. In addition, unvested equity held by the executive will vest on a pro rata basis (the 2017 Senior Management Agreements provide that all outstanding, unvested time-based equity awardsoutstanding will vest and performance sharesunvested performance-based awards will vest in accordance with the applicable performance share equity agreement).agreement.
Termination of Employment Due to Termination other than for Resignation for Good Reason or Due to Cause
No severance or benefits are paid if an executive officer is terminated for Cause or resigns other than for Good Reason as defined in the executive’s Senior Management Agreement.
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Termination without Cause or Resignation for Good Reason Related to a Change of Control
If any of our executives with a Senior Management Agreement is terminated without Cause or resigns for Good Reason in conjunction with a Change of Control, as defined in his or her Senior Management Agreement, upon executing a general release and waiver, the Company is obligated to pay severance and continuation of benefits in varying amounts.
The following severance benefits are payable to each of our named executive officers upon termination without Cause or resignation for Good Reason, in the case of a Change of Control, as of December 31, 2016 (changes made in 2017 are also included below):2017:
Executive | Severance Benefits | |
James H. Roth | An amount in cash equal to two andone-halftimes the sum of his then current annual base salary and his then current target bonus, | |
C. Mark Hussey | An amount in cash equal to two times the sum of his then current annual base salary and his then current target bonus, | |
John D. Kelly & Diane E. Ratekin | An amount in cash equal to one andone-half times the sum of his or her then current annual base salary and his or her then current target bonus, |
Golden Parachute Cutback
All threefour Senior Management Agreements provide that, if any amount, right or benefit paid or payable to the executive under his or her Senior Management Agreement or any other plan, program or arrangement would constitute an “excess parachute payment” under Section 280G of the Code, subject to the excise tax imposed by Section 4999 of the Code, then the amount of payments payable to the executive under his or her Senior Management Agreement will be reduced to the extent necessary so that no portion of such payments is subject to such excise tax.
POTENTIAL PAYMENTSUPON TERMINATIONOR CHANGEOF CONTROL
The estimated amount payable or provided to each named executive officer in each situation is summarized below. These estimates are based on the assumption that the various triggering events occurred on the last day of 2016,2017, along with other material assumptions noted below. The actual amounts that would be paid to a named executive officer upon termination or a change of control can only be determined at the time the actual triggering event occurs. The estimated amount of compensation and benefits described below does not take into account compensation and benefits that a named executive officer has earned prior to the applicable triggering event, such as equity awards that have previously vested in accordance with their terms or vested benefits otherwise payable under our compensation programs.
The following table and summary set forth potential payments we would be required to make to our named executive officers upon termination of employment or change of control. The table assumes termination of employment on December 31, 20162017 and uses a share price of $50.65,$40.45, the closing price of our stock on December 30, 2016,29, 2017, the last trading day before our fiscal year-end.year end.
Name | Benefit | Termination without Cause or Resignation for Good Reason ($) | Permanent Disability or Death ($) | Involuntary Termination Following Change of Control ($) | Benefit | Termination without cause or Resignation for Good Reason ($) | Permanent Disability or Death ($) | Involuntary Termination Following Change of Control ($) | ||||||||||||||||||||
James H. Roth | Salary | 900,000 | — | 1,800,000 | Salary | 1,800,000 | 0 | 2,250,000 | ||||||||||||||||||||
Bonus | 1,980,000 | 0 | 2,475,000 | |||||||||||||||||||||||||
Bonus | 990,000 | — | 1,980,000 | Pro rata bonus (1) | 595,980 | 990,000 | 990,000 | |||||||||||||||||||||
Pro rata bonus (1) | 207,900 | — | 990,000 | Equity acceleration (2) | 584,730 | 2,157,967 | 2,157,967 | |||||||||||||||||||||
Equity acceleration (2) | 1,151,563 | 1,691,254 | 1,691,254 | Benefits continuation | 27,966 | 6,992 | 34,958 | |||||||||||||||||||||
Benefits continuation | 14,006 | 7,003 | 28,012 | Cutback (3) | 0 | 0 | 0 | |||||||||||||||||||||
Total Value | 3,263,469 | 1,698,257 | 6,489,266 | Total Value | 4,988,676 | 3,154,959 | 7,907,925 | |||||||||||||||||||||
C. Mark Hussey | Salary | 300,000 | — | 600,000 | Salary | 1,125,000 | 0 | 1,500,000 | ||||||||||||||||||||
Bonus | — | — | 600,000 | Bonus | 1,125,000 | 0 | 1,500,000 | |||||||||||||||||||||
Pro rata bonus | — | — | 600,000 | Pro rata bonus (1) | 451,500 | 750,000 | 750,000 | |||||||||||||||||||||
Equity acceleration (2) | 464,261 | 707,884 | 707,884 | Equity acceleration (2) | 374,133 | 2,315,649 | 2,315,649 | |||||||||||||||||||||
Benefits continuation | 6,544 | 3,272 | 13,087 | Benefits continuation | 20,975 | 6,992 | 27,966 | |||||||||||||||||||||
Total Value | 770,805 | 711,156 | 2,520,971 | Cutback (3) | 0 | 0 | -1,118,728 | |||||||||||||||||||||
Total Value | 3,096,608 | 3,072,641 | 4,974,887 | |||||||||||||||||||||||||
John D. Kelly | Salary | 325,000 | 0 | 487,500 | ||||||||||||||||||||||||
Bonus | 227,500 | 0 | 341,250 | |||||||||||||||||||||||||
Pro rata bonus (1) | 136,955 | 227,500 | 227,500 | |||||||||||||||||||||||||
Equity acceleration (2) | 47,285 | 231,366 | 231,366 | |||||||||||||||||||||||||
Benefits continuation | 13,490 | 6,745 | 20,235 | |||||||||||||||||||||||||
Cutback (3) | 0 | 0 | -126,140 | |||||||||||||||||||||||||
Total Value | 750,230 | 465,611 | 1,181,711 | |||||||||||||||||||||||||
Diane E. Ratekin | Salary | 200,000 | — | 400,000 | Salary | 400,000 | 0 | 600,000 | ||||||||||||||||||||
Bonus | — | — | 200,000 | Bonus | 200,000 | 0 | 300,000 | |||||||||||||||||||||
Pro rata bonus | — | — | 200,000 | Pro rata bonus (1) | 120,400 | 200,000 | 200,000 | |||||||||||||||||||||
Equity acceleration (2) | 234,816 | 365,997 | 365,997 | Equity acceleration (2) | 105,365 | 378,701 | 378,701 | |||||||||||||||||||||
Benefits continuation | 6,465 | 3,232 | 12,929 | Benefits continuation | 13,490 | 6,745 | 20,235 | |||||||||||||||||||||
Total Value | 441,281 | 369,229 | 1,178,926 | Cutback (3) | 0 | 0 | 0 | |||||||||||||||||||||
Total Value | 839,255 | 585,446 | 1,498,936 |
(1) |
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(2) | The acceleration of equity varies by grant and type of termination as outlined in the preceding sections. The value shown is equal to the number of accelerated shares |
(a) | A portion of the performance shares would continue to vest for each of the named executive officers with the number of shares determined based on an actual performance and prorated for the number of days that the executive was employed during the performance period. |
(b) | Additionally, in the event an executive qualifies for an approved retirement, they would receive continued vesting of their stock per the schedule as outlined in the grant |
(3) |
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COMPENSATION COMMITTEE INTERLOCKSAND INSIDER PARTICIPATION
During 2016,2017, there were no Compensation Committee interlocks and no insider participation in Compensation Committee decisions that were required to be reported under the rules and regulations of the 1934 Act.
CERTAIN RELATIONSHIPSAND RELATED TRANSACTIONS
It is the responsibility of the Audit Committee to review and approve, ratify or disapprove proposed transactions or courses of dealings with respect to which executive officers or directors or members of their immediate families have an interest (including all transactions required to be disclosed pursuant to the SEC’s related person disclosure requirements). In addition, it is the policy of management and board members to discuss at a meeting of the board of directors, or the appropriate board committee, those transactions requiring disclosure pursuant to the SEC’s related person disclosure requirements between Huron and a board member or a principal stockholder and members of their immediate families.
On and effective February 8, 2018, the board of directors of Huron elected Hugh E. Sawyer as a Class II director of Huron, to serve until the May 2018 Annual Meeting. Mr. Sawyer will stand forre-election at the 2018 Annual Meeting. Since April 2017, Mr. Sawyer has served as the President and Chief Executive Officer, as well as a director, of Regis Corporation (“Regis”), a company that owns, franchises and operates beauty salons worldwide. Prior to that, Mr. Sawyer served as a managing director at Huron. Mr. Sawyer also serves as a member of the board of directors of JHT Holdings, Inc.
The Company has provided general business advisory and transaction advisory services to Regis beginning in 2016. The aggregate fees received by the Company from Regis were $5.6 million in 2017, and $11,000 in 2018 (through January 31, 2018).
As a director of the Company, Mr. Sawyer will receive compensation as anon-employee director in accordance with the Company’snon-employee director compensation practices described in the Company’s 2017 Annual Proxy Statement filed with the SEC on March 27, 2017. This compensation generally consists of an annual cash retainer in the amount of $60,000, $1,000 for each meeting of the board or any committee of the board that he attends, and an annual grant of restricted stock on the date of the Company’s annual meeting with a value of $170,000. Mr. Sawyer’s initial cash retainer will be prorated to reflect his appointment date. On March 1, 2018, Mr. Sawyer received a new director restricted stock award having a value equal to $200,000, vesting ratably over the following 12 calendar quarters beginning April 1, 2018. Mr. Sawyer will not receive an annual grant of restricted stock until the 2018 Annual Meeting provided he isre-elected to the board at that time.
There are no arrangements or understandings between Mr. Sawyer and any other persons pursuant to which he was elected as a director.
In addition, Huron has a Code of Business Conduct and Ethics (the “Code of Conduct”), a copy of which is posted on our web site at www.huronconsultinggroup.com,, that applies to directors and employees and their family members. The Code of Conduct, among other things, has a policy governing conflicts of interest generally and, in particular, prohibiting certain business arrangements with the Company and clients of the Company, entering into relationships that may be perceived as impairing the ability of the individual or Huron from performing his or its duties, as the case may be, in an impartial manner, and use of corporate property for improper personal gain. Any exceptions require disclosure and approval by the Chief Compliance Officer and, in the case of officers and directors, by the Audit Committee of the board of directors. The Code of Conduct also prohibits Huron from making any personal loans or guaranteeing any personal obligations of board members and executive officers.
APPROVAL OF THE HURON CONSULTING GROUP INC. AMENDED AND RESTATED 2012 OMNIBUS INCENTIVE PLAN
Background and Reasons for Amending and Restating the Plan
The board of directors believes that the continued growth and profitability of the Company depend on our ability to attract and retain highly qualified employees. Our 2012 Omnibus Incentive Plan (the “Plan”) was approved by stockholders at our 2012 annual meeting and authorized for issuance up to 1,398,204 shares of our common stock for stock-based incentive compensation to eligible employees,non-employee directors and independent contractors. At our 2014 annual meeting, stockholders approved and authorized an additional 850,000 shares of common stock for issuance under the Plan. As of March 2, 2017, we had issued 1,012,589 shares of common stock under the Plan that are no longer subject to outstanding awards, 656,045 shares of common stock that are subject to unexercised options or unvested restricted stock awards and up to 199,186 shares that may be issued pursuant to outstanding performance share awards, leaving 606,660 shares of common stock available for grant. In addition, we have 157,680 shares of common stock that are subject to unexercised options under the 2004 Omnibus Stock Plan. The weighted average exercise price and remaining contractual life of the 194,297 total stock options outstanding from all plans were $29.06 and four years, respectively. The total number of unvested restricted stock awards and performance share awards outstanding from all plans was 818,614. See the summary table below.
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In order to increase the number of shares of common stock available as equity compensation to our employees,non-employee directors, and independent contractors and those of our subsidiaries, our board of directors has approved an amendment and restatement of the Plan (the “Restated Plan”) to increase the number of shares available for grant thereunder by 804,000 shares of common stock, subject to stockholder approval. We believe the additional shares authorized under the Restated Plan will enable us to offer competitive compensation packages that reward performance while also creating a compelling reason to remain at Huron and deliver results that benefit all constituents. We annually grant a sizeable portion of equity to our managing directors. (An average of 79% of total equity granted in the last three years was awarded to our managing directors; by contrast, approximately 11% of total equity granted in the last three years was awarded to our NEOs with the remaining 10% awarded to our directors and other employees.) As a professional services firm, we recognize that our managing directors are key to growing our business, generating revenue, enhancing our market reputation, and developing our people. As such, they are critical to the overall success of Huron. We use stock as both a retention tool and an incentive to encourage behaviors that will benefit our shareholders and the Company. Approximately 50% of the annual bonus compensation of our Practice Leaders and client-facing managing directors consists of restricted stock that vests over four years and is awarded based on prior year performance. We believe the amount of equity provided below the NEO level aligns the interests of our individual practices with the Company as a whole and significantly differentiates Huron’s compensation program from our competitors’ programs. Our ability to offer equity as a long-term component of compensation also helps us recruit talent that is critical for Huron’s continued growth. We believe that our ability to offer long-term equity incentives encourages a balanced focus on short-term goals, long-term goals and performance that cannot be as effectively achieved with cash awards alone.
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In addition to increasing the number of shares available for equity-based long-term incentive awards, the Restated Plan includes a number of enhancements to the terms of the current Plan, as described in more detail below under “Material Features of the Restated Plan.” The more significant changes include the following:
The Restated Plan prohibits dividend payments on stock options and SARs, and requires dividends and dividend equivalents (if any) on unvested awards to be held until the underlying award is vested;
The Restated Plan adds a minimumone-year vesting requirement to all equity awards with a limited carve out of 5% of the total pool to allow for exceptions, as necessary;
The Restated Plan limits the ability of shares withheld for taxes or exercise price of an award to be returned to the Plan to be made available for future grants; and
The Restated Plan provides a limit on awards tonon-employee directors for any calendar year (along with cash retainer and meeting fees).
To enable the Company to grant performance-based compensation that is exempt from the $1 million limit ontax-deductible compensation contained in Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”), the material terms of the performance goals under which compensation may be awarded under the Restated Plan must be periodically resubmitted to, and reapproved by, our stockholders. Stockholder approval of the Restated Plan will constitute approval for purposes of Section 162(m) and will allow us to grant cash and equity-based compensation that is exempt from the $1 million limit ontax-deductible compensation.
Approval Required
The approval of the Restated Plan requires the affirmative vote of the holders of a majority of the total shares of common stock present in person, or represented by proxy, and entitled to vote on the proposal, provided that a quorum is represented at the meeting. Abstentions will have the same effect as a vote against the proposal. Brokernon-votes will not be considered shares entitled to vote with respect to approval of the proposal and will not be counted as votes for or against the proposal and will therefore have no effect on the outcome of the proposal. Executed proxies will be voted “FOR” the approval of the proposal, unless specified otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” APPROVAL OF THE AMENDMENT AND RESTATEMENT OF THE COMPANY’S 2012 OMNIBUS INCENTIVE PLAN.
Description of the Restated Plan
The summary of the Restated Plan set forth below is qualified in its entirety by the full text of the proposed Restated Plan. A copy of the Restated Plan is attached as Appendix A to this Proxy Statement.
There are several types of awards that may be granted under the Restated Plan:
stock options (including both incentive stock options (“ISOs”), within the meaning of Section 422 of the Code and nonqualified options (“NQSOs”), which are options that do not qualify as ISOs);
SARs;
full value awards, which means a grant of one or more shares of common stock or a right to receive one or more shares of common stock, subject to one or more of the conditions, restrictions and contingencies determined at the time of the award; and
cash incentive awards.
If this proposal is approved by stockholders, there would be approximately 1,410,660 shares available for issuance under the Restated Plan as of May 1, 2017.
Shares subject to an award under the Restated Plan that remain unissued upon the cancellation, surrender, exchange, forfeiture or termination of the award without having been exercised or settled will again become available for award under the Restated Plan. In addition, to the extent an award under the Restated Plan is paid or settled in cash, the number of shares of common stock with respect to which such payment or settlement is made shall again be available for grants of awards pursuant to the Restated Plan. Any shares subject to an award under the Restated Plan that are retained by us as payment of the exercise price of an option or to satisfy (A) all tax withholding obligations with respect to a stock option or stock appreciation right, or (B) tax withholding obligations in excess of the minimum required withholding amount with respect to a full value award; and any shares purchased by us using stock option exercise proceeds, will not again be made available
for future grants under the Restated Plan. Further, for stock-settled stock appreciation rights (to the extent they are utilized in the future), the shares subject to the award shall be counted against the plan reserve, regardless of the number of shares issued.
In addition, if a corporation acquired by (or combined with) Huron or any subsidiary has shares available under apre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of suchpre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for awards under the Restated Plan and will not reduce the shares authorized for grant under the Restated Plan. Any such awards may not, however, be made after the date awards or grants could have been made under the terms of thepre-existing plan, absent the acquisition or combination, and may only be made to individuals who were not employees or directors of Huron or any subsidiary prior to such acquisition or combination. Notwithstanding the foregoing, such shares may not increase the number of shares available for awards of incentive stock options unless such additional share limit is approved by the shareholders in accordance with Section 422 of the Code.
The Restated Plan will be administered by the Compensation Committee. Our executive officers and Huron’s other officers, employees numbering approximately 3,000 in total, and outside directors as of March 1, 2017, will be eligible to receive awards under the Restated Plan at the discretion of the Compensation Committee. The Compensation Committee has the authority to administer the Restated Plan and to exercise all of the powers and authorities specifically granted to it under the Restated Plan as necessary or advisable in the administration of the Restated Plan, including the authority to:
grant awards;
determine the individuals to whom, and the time or times at which, awards will be granted;
determine the type and number of awards to be granted, the number of shares of common stock or cash or other property to which an award may relate and the terms, conditions, restrictions and performance criteria relating to any award;
determine whether, to what extent and under what circumstances an award may be settled, cancelled, forfeited, exchanged or surrendered;
conclusively interpret the Restated Plan and all awards;
prescribe, amend and rescind rules and regulations relating to the Restated Plan;
determine the terms and provisions of any award agreements; and
make all other determinations deemed necessary or advisable for the operation and administration of the Restated Plan.
Subject to the provisions of the Restated Plan, the Compensation Committee may:
accelerate the date on which any ISO, NQSO or SAR becomes exercisable;
waive or amend the operation of the Restated Plan provisions respecting exercise of an option or a SAR after termination of employment to a period no longer than 10 years from the date of grant of the award;
accelerate the vesting date, or waive any condition imposed by the Restated Plan, with respect to any full value award; and
otherwise adjust any of the terms applicable to any award in a manner consistent with the terms of the Restated Plan.
The Compensation Committee may delegate some of its authority under the Restated Plan to one or more of our officers, to act on behalf of the Compensation Committee with respect to any matter that is the responsibility of the Compensation Committee, as described above, and to approve awards for certain other employees.
Our board of directors may suspend or terminate the Restated Plan or revise or amend it in any respect, subject to stockholder approval where required to satisfy legal or applicable stock exchange requirements. No amendment may be made without the approval of our stockholders if such amendment would:
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materially increase the benefits accruing to a participant under the Restated Plan;
increase the aggregate number of shares of common stock that may be issued under the Restated Plan;
modify the requirements as to eligibility to participate in the Restated Plan; or
result in the repricing or buy-back of options where the exercise price of the option is greater than the then current fair market value of a share of common stock (that is, if it is “underwater”).
The Restated Plan will terminate no later than May 1, 2027. Awards granted before the termination of the Restated Plan may extend beyond that date in accordance with their terms.
Notwithstanding the provisions of the Restated Plan, the Compensation Committee may grant awards to persons who are foreign nationals on such terms and conditions different from those specified in the Restated Plan as may be necessary or desirable to foster and promote achievement of the purposes of the Restated Plan, subject in any specific case to applicable requirements, such as stockholder approval. Specifically, the Compensation Committee may make such modifications, amendments, procedures and subplans as may be necessary or advisable to comply with provisions of laws in other countries or jurisdictions in which Huron operates or has employees.
Except for adjustments pursuant to the Restated Plan or reductions of the exercise price approved by stockholders, the exercise price of any outstanding option or SAR may not be decreased after the date of grant, nor may an outstanding option or SAR granted under the Restated Plan be surrendered to the Company as consideration for the grant of a replacement option or SAR with a lower exercise price. Except as approved by the Company’s stockholders, in no event may any option or SAR be surrendered to the Company in consideration for a cash payment if, at the time of the surrender, the option or SAR is underwater. Finally, no repricing of an option may be made without the approval of the Company’s stockholders if approval is required under the rules of any stock exchange on which the Company’s common stock is listed.
Vesting terms of any award will be specified at the time an award is made, although vesting of an award will be accelerated if a participant’s employment is terminated by Huron or its successor for reasons other than cause within 12 months of a change of control or if the Restated Plan is terminated within 12 months of a change of control without provision for the continuation of outstanding awards. In addition, if a participant is terminated for cause, all of that person’s outstanding unexercised awards will expire on the date prior to the termination. Except for awards that do not exceed 5% of the total number of shares reserved for issuance under the Restated Plan, in no event will the required period of service for full vesting be less than one year (subject, to the extent provided by the Compensation Committee, to acceleration of vesting in the event of a participant’s death, disability, or change of control).
Under the Restated Plan, the maximum number of shares of stock that may be granted to any participant during any calendar year period with respect to full value awards that are intended to be performance-based compensation shall not exceed 500,000 shares in the aggregate (subject to equitable adjustment as provided). The maximum number of shares of stock to which ISOs relate that may be granted to any participant under the Restated Plan is 325,000 (subject to equitable adjustment as provided). In addition, the maximum amount payable to any person for any12-month performance period with respect to a cash incentive award that is intended to be performance-based compensation, which we discuss in further detail in the next subsection, is $10,000,000. Finally, for any participant who is an outside director, the aggregate grant date fair value of awards granted to such individual during any calendar year, along with any regular cash retainer or meeting fees paid to such participant during such calendar year, will not exceed $1,500,000.
Performance Criteria
The Restated Plan is intended to permit the grant of performance-based compensation within the meaning of Section 162(m) of the Code, which generally limits the deduction that we may take for compensation of our Chief Executive Officer, and the next three most highly compensated named executive officers (other than the Chief Financial Officer). Under Section 162(m), certain compensation, including compensation based on the attainment of performance goals, will not be subject to this limitation if certain requirements are met. The exercisability or payment of awards that are intended to qualify as performance-based compensation may be based upon one or more of the following business criteria as established by the Compensation Committee:
return on total stockholder equity;
earnings or book value per share of Company common stock (“EPS”);
adjusted EPS;
net income (before or after taxes);
earnings before all or any interest, taxes, depreciation and/or amortization (“EBIT,” “EBITA” or “EBITDA”) measured as a dollar amount or a percentage of revenue;
adjusted EBITDA measured as a dollar amount or a percentage of revenue;
return on assets, capital or investment;
market share;
market capitalization;
cost reduction goals;
levels of expense, costs or liabilities;
department, division or business unit level performance;
operating income;
sales or revenues;
stock price appreciation;
total stockholder return (TSR);
implementation or completion of critical projects or processes;
days sales outstanding (DSO);
financial coverage ratios;
othernon-GAAP financial measures; and
These business criteria may be applied to results including or excluding discontinued operations, expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of the Company, an affiliate of the Company, or a department, division or strategic business unit of the Company and/or one or more affiliates of the Company. The business criteria also may be applied to the performance of the Company and/or one or more affiliates of the Company relative to a market index, a group of other companies or a combination thereof, as determined by the Compensation Committee. The business criteria may be subject to:
a threshold level of performance below which no payment will be made (or no vesting will occur);
levels of performance at which specified payments will be made (or specified vesting will occur); and
a maximum level of performance above which no additional payment will be made (or at which full vesting will occur).
Each of the business criteria will be determined, where applicable, in accordance with generally accepted accounting principles and will be subject to certification by the Compensation Committee. The Compensation Committee has the authority to make equitable adjustments to the business criteria in recognition of:
special, unusual ornon-recurring events affecting the Company or any of its affiliates or the financial statements of the Company or any of its affiliates;
changes in applicable laws or regulations;
gains, losses or expenses determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles;
asset write-downs;
litigation, claim judgments, settlements or restatement related expenses;
accruals for reorganization and restructuring programs;
acquisitions or divestitures (including expenses related thereto);
foreign exchange gains and losses;
non-cash interest; and
an event either not directly related to the operations of the Company or not within reasonable control of the Company’s management.
To the extent that the foregoing inclusions or exclusions affect awards to covered employees under Section 162(m) of the Code which are intended to qualify as “performance-based compensation” within the meaning of said Section and regulations thereunder, such adjustments will be prescribed in a form that meets the requirements of said Section. However, unless the Compensation Committee determines otherwise before the end of the applicable time for establishing business criteria for an award, to the extent any such item affects any
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business criteria applicable to an award, then such item will be automatically excluded or included in determining the extent to which the business criteria has been achieved, whichever will produce the higher award (subject to any exercise of “negative discretion” by the Compensation Committee).
Tax Consequences
The following provides only a general description of the application of U.S. federal income tax laws to certain awards under the Restated Plan. This discussion is intended for the information of our stockholders considering how to vote at the Annual Meeting and not as tax guidance to participants in the Restated Plan, as the consequences may vary with the types of awards made, the identity of the recipients and the method of payment or settlement. Different tax rules may apply, including in the case of variations in transactions that are permitted under the Restated Plan (such as payment of the exercise price of an option by surrender of previously acquired shares of common stock). This summary does not address in any detail the effects of other federal taxes (including possible “golden parachute” excise taxes) or taxes imposed under state, local or foreign tax laws.
We generally will be entitled to withhold any required taxes in connection with the exercise or payment of any award, and may require the participant to pay such taxes as a condition to the exercise or payment of an award. ISOs may only be granted to our employees and employees of certain of our subsidiaries.
Stock Options. ISOs and NQSOs are treated differently for federal income tax purposes. ISOs are intended to satisfy the requirements of Section 422 of the Code. NQSOs need not satisfy such requirements.
Generally, a participant is not taxed on the grant of an ISO and is not taxed on the exercise of an ISO, except as described in the next sentence and provided that the participant has been an employee of the Company and its subsidiaries (determined in accordance with Internal Revenue Code rules) from the date the ISO was granted until three months before the date of exercise. The difference between the exercise price and the fair market value of the shares on the exercise date, however, will be a preference item for purposes of the alternative minimum tax, and thus a participant could be subject to the alternative minimum tax as a result of the exercise of an ISO. If a participant holds the shares acquired upon exercise of an ISO for at least two years following the ISO grant date and at least one year following exercise, the participant recognizes capital gain (or loss, as applicable), if any, upon a subsequent disposition of such shares. The measure of the gain is the difference between the proceeds received on disposition and the participant’s basis in the shares (which generally equals the exercise price).
If a participant disposes of shares acquired pursuant to exercise of an ISO before satisfying theone-year andtwo-year holding periods described above, then: (i) if the proceeds received exceed the exercise price of the ISO, the participant will recognize long-term or short-term capital gain (as applicable) equal to the excess, if any, of the proceeds received over the fair market value of the shares on the date of exercise, and will recognize ordinary income equal to the excess, if any, of the lesser of the proceeds received or the fair market value of the shares on the date of exercise over the exercise price of an ISO; or (ii) if the proceeds received are less than the exercise price of the ISO, the participant will recognize a capital loss equal to the excess of the exercise price of the ISO over the proceeds received.
We are not entitled to an income tax deduction on the grant or exercise of an ISO or on the participant’s disposition of the shares after satisfying the holding period requirements described above. If the holding periods are not satisfied, we will be entitled to a deduction in the year the participant disposes of the shares in an amount equal to the ordinary income recognized by the participant.
A recipient generally will not realize any taxable income upon the grant of an NQSO. Upon exercise of an NQSO, the participant will realize ordinary income in an amount generally measured by the excess, if any, of the fair market value of the shares on the date of exercise over the stock option exercise price. We will generally be entitled to a deduction in the same amount as the ordinary income realized by the participant. Upon the sale of shares acquired upon exercise of an NQSO, the participant will realize short-term or long-term capital gain or loss, depending upon the length of time the shares are held. Such gain or loss will be measured by the difference between the sale price of the shares and the fair market value on the date of exercise.
SARs. A participant generally will not realize any taxable income upon the grant of a SAR. Upon the exercise of such right, the participant will recognize ordinary income in an amount equal to the amount of cash and/or the fair market value, at the date of such exercise, of the shares received by the participant as a result of such exercise. We will generally be entitled to a deduction in the same amount as the ordinary income realized by the participant.
Full Value Awards. If a restriction on transferability and substantial risk of forfeiture applies to shares of common stock or other property actually distributed to a participant under an award (such as, for example, a grant of restricted stock), the participant generally must recognize ordinary income equal to the fair market value of the transferred amounts at the earliest time either the transferability restriction or risk of forfeiture lapses. In the usual case, we can claim a tax deduction in an amount equal to the ordinary income recognized by the participant, except as discussed below. A participant may elect to be taxed at the time of grant of restricted stock or other property rather than upon lapse of restrictions on transferability or the risk of forfeiture, but if the participant subsequently forfeits such shares of common stock or property he or she would not be entitled to any tax deduction, including as a capital loss, for the value of shares of common stock on which he or she previously paid tax.
If no substantial risk of forfeiture applies to property distributed to a participant, the participant generally must recognize ordinary income equal to the fair market value of shares of common stock actually received.
If an award does not consist of property (such as stock units), the participant generally must recognize ordinary income for U.S. income tax purposes when the award is paid in an amount equal to the amount payable or, if the award is settled in shares of common stock, the fair market value on the date of distribution, and we would normally be entitled to a corresponding deduction.
As discussed above, compensation that qualifies as “performance-based compensation” is excluded from the $1 million deductibility cap of Section 162(m) of the Code, and therefore remains fully deductible by the company paying it. Generally, options and SARs granted with an exercise price at least equal to 100% of fair market value of the underlying stock at the date of grant, and performance awards to employees that the Compensation Committee designates as “performance-based compensation” and that otherwise satisfy the requirements of Section 162(m) will be considered performance-based compensation. A number of requirements must be met in order for particular compensation to so qualify, however, so there can be no assurance that such compensation under the Restated Plan will be fully deductible under all circumstances. In addition, other awards under the Restated Plan, such asnon-performance-based restricted stock and restricted stock units, generally will not so qualify. Thus, compensation paid to certain named executive officers in connection with such awards may, to the extent it and other compensation that is subject to the deductibility cap under Section 162(m) exceeds $1 million in a given year, not be deductible by us as a result of Section 162(m) of the Code.
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ADVISORY VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) and the SEC, Huron annually is asking its stockholders to indicate their support for our named executive officer compensation, which includes the compensation discussion and analysis, the compensation tables and the related narrative disclosures, all as described in the section entitled “EXECUTIVE COMPENSATION—Compensation Discussion and Analysis.”
The vote solicited by this proposal, commonly known as “Say on Pay,” is advisory in nature and will not be binding on the board of directors, the Compensation Committee or Huron. However, the board of directors and the Compensation Committee value the opinions of our stockholders, will review the voting results and, to the extent determined appropriate, take into account the outcome of the vote during future deliberations on executive compensation arrangements. At the 20162017 Annual Meeting of Stockholders, in excess of 99% of the votes cast on this proposal voted to support Huron’s named executive officer compensation.
Huron believes that its executive compensation program is structured to support Huron and its business objectives. This vote is not intended to address any one specific item of compensation, but rather the overall compensation of our named executive officers and the philosophy, policies and practices described in this Proxy Statement.
The affirmative vote of the holders of a majority of the total shares of common stock, present in person or represented by proxy and entitled to vote on the proposal, is required to approve the advisory vote on the compensation arrangements of our named executive officers. Abstentions will have the same effect as a vote against the proposal. Brokernon-votes will not be considered shares entitled to vote with respect to the proposal and will not be counted as votes for or against the proposal and will therefore have no effect on the outcome of the proposal. Proxies submitted pursuant to this solicitation will be voted “FOR” the approval of the advisory vote on the compensation arrangements of our named executive officers, unless specified otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS AS DISCLOSED IN THE COMPENSATION DISCUSSION AND ANALYSIS SECTION AND THE ACCOMPANYING COMPENSATION TABLES AND NARRATIVE DISCUSSION IN THIS PROXY STATEMENT.
ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY STOCKHOLDER VOTE TO APPROVE THE COMPANY’S EXECUTIVE COMPENSATION
Huron also is required by the Dodd-Frank Act and the SEC to provide its stockholders, at least once every six years, with a separatenon-binding advisory vote on the frequency of the “Say on Pay” vote. Stockholders may indicate their preference to vote on named executive officer compensation annually, every two years, or every three years, or they may abstain from making any election.
The resolution by the stockholders on frequency is distinct from the advisory vote on the compensation of our named executive officers. This proposal deals solely with the issue of how often a “Say on Pay” proposal should be presented to our stockholders.
In 2011, the board of directors determined that an advisory vote on executive compensation that occurs every year is the most appropriate alternative for Huron. The board of directors continues to believe that having an annual advisory vote on executive compensation will allow our stockholders to provide us with their direct input on our compensation philosophy, policies and practices as disclosed in the proxy statement. Additionally, an annual advisory vote on executive compensation is consistent with our policy of seeking input from, and engaging in discussion with, our stockholders on corporate governance matters and our executive compensation philosophy, policies and practices.
We understand that our stockholders may have different views as to what is the best approach for Huron, and we look forward to hearing from our stockholders on this matter.
The option of one year, two years or three years that receives the highest number of votes cast by stockholders will be the frequency for the advisory vote recommended by stockholders. Therefore, abstentions and brokernon-votes will have no impact on the frequency of the advisory vote recommended by stockholders. Although the vote isnon-binding, the Compensation Committee and the board of directors value the opinions of stockholders and will consider the outcome of the vote on this proposal when determining the frequency of when it will submit to stockholders a vote on executive compensation. However, because this vote is advisory andnon-binding on the board of directors in any way, the board of directors may decide that it is in the best interests of our stockholders and the Company to hold an advisory vote on executive compensation more or less frequently than the frequency recommended by stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE“FOR” A FREQUENCY OF ONE YEAR FOR FUTURENON-BINDING STOCKHOLDER VOTES ON THE COMPENSATION OF OUR EXECUTIVE OFFICERS.
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RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
PricewaterhouseCoopers LLP (“PwC”), which has been the independent registered public accounting firm for the Company since its inception, has been appointed by the Audit Committee as the independent registered public accounting firm for the Company and its subsidiaries for the fiscal year ending December 31, 2017.2018. This appointment is being presented to the stockholders for ratification. The ratification of the appointment of PwC as the independent registered public accounting firm requires the affirmative vote of the holders of a majority of the total shares of common stock present in person or represented by proxy and entitled to vote on the proposal, provided that a quorum is represented at the meeting. Abstentions will have the same effect as a vote against ratification. Brokernon-votes will not be considered shares entitled to vote with respect to ratification of the appointment and will not be counted as votes for or against the ratification and will therefore have no effect on the outcome of this proposal. Proxies submitted pursuant to this solicitation will be voted “FOR” the ratification of PwC as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017,2018, unless specified otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE “FOR” THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE COMPANY’S INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017.2018.
Representatives of PwC are expected to be present at the Annual Meeting and will be provided an opportunity to make a statement and to respond to appropriate inquiries from stockholders.
The following table presents fees for professional audit services rendered by PwC for the audit of the Company’s annual financial statements for the years ended December 31, 20162017 and December 31, 2015,2016, and fees for other services rendered by PwC during those periods:
2016 | 2015 | 2017 | 2016 | |||||||||||||||||||||
(in thousands) | (in thousands) | |||||||||||||||||||||||
Audit Fees | $ | 1,393 | $ | 1,680 | $ | 1,686 | $ | 1,393 | ||||||||||||||||
Audit-Related Fees | 419 | 10 | $ | 53 | $ | 419 | ||||||||||||||||||
Tax Fees | 33 | 31 | $ | 35 | $ | 33 | ||||||||||||||||||
All Other Fees | 2 | 4 | $ | 3 | $ | 2 | ||||||||||||||||||
Total | $ | 1,847 | $ | 1,725 | $ | 1,777 | $ | 1,847 |
Audit Fees—all services, including tax services and accounting consultation, necessary to perform an audit of the consolidated financial statements of Huron; services in connection with statutory and regulatory filings or engagements, comfort letters, statutory audits, attest services and consents; and assistance with and review of documents filed with the SEC.
Audit-Related Fees—due diligence related to mergers and acquisitions; internal control reviews; attest services that are not required by statute or regulations; and consultation concerning financial accounting and reporting standards.
Tax Fees—tax compliance (review of original and amended tax returns, claims for refund and tax payment-planning services); tax planning; and other tax advice (assistance with tax audits and appeals, tax advice related to structural matters, and requests for rulings or technical advice from taxing authorities).
All Other Fees—any other work that is not audit, audit-related or a tax service.
The Audit Committee considers whether the provision of these services is compatible with maintaining the independence of the independent registered public accounting firm and has determined such services for fiscal 20162017 and 20152016 were compatible.
POLICYON AUDIT COMMITTEE PREAPPROVALOF AUDITAND NON-AUDIT SERVICESOF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
The Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. The Audit Committee has established a policy regarding preapproval of all audit andnon-audit services provided by the independent registered public accounting firm.
The Audit Committee, on a periodic basis, determines certain services that have the general preapproval of the Committee. The Audit Committee must separately preapprove any services not receiving such general preapproval. Requests for such approval must be submitted by both the independent registered public accounting firm and the CFO and must include a joint statement as to whether, in their view, the request is consistent with the SEC’s rules on auditor independence. No services are undertaken that are not preapproved. The Audit Committee will establish preapproved fee levels for all services to be provided by the independent registered public accounting firm. On a periodic basis, the CFO and the independent registered public accounting firm report to the Audit Committee regarding the actual spending for such projects and services compared to the approved amounts.
The primary purpose of the Audit Committee is to assist the board of directors in its general oversight of the Company’s financial reporting process. The Audit Committee conducted its oversight activities for Huron Consulting Group Inc. and subsidiaries (“Huron”) in accordance with the duties and responsibilities outlined in the Audit Committee charter.
Huron’s management is responsible for the preparation, consistency, integrity and fair presentation of the financial statements, accounting and financial reporting principles, systems of internal control and procedures designed to ensure compliance with accounting standards, applicable laws and regulations. Huron’s independent registered public accounting firm, PwC, is responsible for performing an independent audit of Huron’s financial statements and the effectiveness of internal control over financial reporting.
The Audit Committee, with the assistance and support of the Huron finance department and management of Huron, has fulfilled its objectives, duties and responsibilities as stipulated in the Audit Committee charter and has provided adequate and appropriate independent oversight and monitoring of Huron’s systems of internal control for the fiscal year ended December 31, 2016.2017.
These activities included, but were not limited to, the following during the fiscal year ended December 31, 2016:2017:
Discussed with Huron’s internal auditors their continuing work in support of examination of internal controls and financial compliance controls.
Reviewed and discussed with management and PwC the audited financial statements and the quarterly financial statements for the year ended December 31, 2016.2017. Management has the primary responsibility for such financial statements.
Discussed with PwC the matters requiring discussion under current auditing standards.
Received the written disclosures and the letter from PwC in accordance with the applicable requirements of the Public Company Accounting Oversight Board regarding PwC’s communications with the Audit Committee concerning independence.
In reliance on the Committee’s review and discussions of the matters referred to above, the Audit Committee recommended to the board of directors that the audited financial statements be included in Huron’s Annual Report on Form10-K for the fiscal year ended December 31, 20162017 for filing with the Securities and Exchange Commission.
H. Eugene Lockhart, Chairman
John McCartney
John S. Moody
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SUBMISSION OF STOCKHOLDER PROPOSALS
In order to be included in the Company’s proxy statement relating to its next annual meeting, stockholder proposals must be received no later than November 27, 201726, 2018 by the Corporate Secretary at the Company’s principal executive offices. Pursuant to the Company’s bylaws, stockholders who intend to present an item for business at the next annual meeting (other than a proposal submitted for inclusion in the Company’s proxy materials) must provide notice to the Corporate Secretary no earlier than January 5, 20184, 2019 and no later than February 4, 2018.3, 2019. Notice of stockholder proposals must contain the information required by the Company’s bylaws. The inclusion of any such proposal in such proxy material shall be subject to the requirements of the proxy rules adopted under the 1934 Act.
Management does not now intend to bring before the Annual Meeting any matters other than those disclosed in the Notice of Annual Meeting of Stockholders, and it does not know of any business that persons, other than management, intend to present at the meeting. Should any other matters requiring a vote of the stockholders arise, the proxies in the enclosed form confer discretionary authority on the board of directors to vote on any other matter proposed by stockholders in accordance with their best judgment. Votes against proposals or abstentions from voting on proposals will not be used to adjourn or postpone the Annual Meeting of Stockholders.
The Company will bear the cost of soliciting proxies. To the extent necessary, proxies may be solicited by directors, officers and employees of the Company in person, by telephone or through other forms of communication, but such persons will not receive any additional compensation for such solicitation. The Company will reimburse brokerage firms, banks and other custodians, nominees and fiduciaries for reasonable expenses incurred by them in sending proxy materials to the beneficial owners of the Company’s shares. The Company will supply banks, brokers, dealers and other custodian nominees and fiduciaries with proxy materials to enable them to send a copy of such materials by mail to each beneficial owner of shares of the common stock that they hold of record and will, upon request, reimburse them for their reasonable expenses in so doing.
By Order of the Board of Directors |
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Diane E. Ratekin Executive Vice President, General Counsel
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Chicago, Illinois
March 27, 201726, 2018
APPENDIX A
HURON CONSULTING GROUP INC.
2012 OMNIBUS INCENTIVE PLAN
(As Amended and Restated Effective May 1, 2017)
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Where applicable, Business Criteria may be expressed in terms of attaining a specified level of the particular criteria or the attainment of a percentage increase or decrease in the particular criteria, and may be applied to one or more of Huron, an Affiliate, or a department, division or strategic business unit of Huron and/or one or more Affiliates, or may be applied to the performance of Huron and/or one or more Affiliates relative to a market index, a group of other companies or a combination thereof, all as determined by the Committee. The Business Criteria may be subject to a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be made (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur).
Each of the Business Criteria shall be determined, where applicable, in accordance with generally accepted accounting principles and shall be subject to certification by the Committee; provided that the Committee shall have the authority to make equitable adjustments to the Business Criteria applicable to any Award in recognition of (1) special, unusual ornon-recurring events affecting Huron or any Affiliate or the financial statements of Huron or any Affiliate; (2) changes in applicable laws or regulations (including tax laws, accounting principles or other laws or provisions affecting reported results); (3) gains, losses or expenses determined to be extraordinary or unusual in nature or infrequent in occurrence or related to the disposal of a segment of a business or related to a change in accounting principles; (4) asset write-downs or impairments; (5) litigation, claim judgments, settlements or restatement related expenses; (6) accruals for reorganization and restructuring programs; (7) acquisitions or divestitures (including expenses related thereto), (8) foreign exchange gains and losses;(9) non-cash interest; and (10) an event either not directly related to the operations of Huron or not within the reasonable control of Huron’s management. To the extent that such inclusions or exclusions affect Awards to Covered Employees which are intended to qualify as “performance-based compensation” within the meaning of Section 162(m) of the Code and regulations thereunder, such adjustments shall be prescribed in a form that meets the requirements of Section 162(m) of the Code. However, notwithstanding the preceding sentence, unless the Committee determines otherwise prior to the end of the applicable time for establishing Business Criteria for an Award, to the extent any such item affects any Business Criteria applicable to an Award, then such shall be automatically excluded or included in determining the extent to which the Business Criteria has been achieved, whichever will produce the higher Award (subject to any exercise of “negative discretion” by the Committee).
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Notwithstanding the foregoing, a “Change of Control” shall not be deemed to have occurred by virtue of the consummation of any transaction or series of integrated transactions immediately following which the record holders of the Common Stock of Huron immediately prior to such transaction or series of transactions continue to have substantially the same proportionate ownership in an entity which owns all or substantially all of the assets of Huron immediately following such transaction or series of transactions.
For purposes of this Change of Control definition, (I) “Beneficial Owner” shall have the meaning set forth inRule 13d-3 under the Exchange Act; (II) “Person” shall have the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof, except that such term shall not include (w) Huron or any of Huron’s direct or indirect subsidiaries; (x) a trustee or other fiduciary holding securities under an employee benefit plan of Huron or any of the Affiliates; (y) an underwriter temporarily holding securities pursuant to an offering of such securities; or (z) a corporation owned, directly or indirectly, by the stockholders of Huron in substantially the same proportions as their ownership of stock of Huron; and (III) “Affiliate” shall have the meaning set forth inRule 12b-2 promulgated under Section 12 of the Exchange Act.
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The grant of Full Value Awards may also be subject to such other conditions, restrictions, and contingencies, as determined by the Committee, including provisions relating to dividend or dividend equivalent rights, deferred payment or settlement and purchase in the open market (including with a Participant’s own funds); provided, however, that dividends may be accrued but shall not be paid unless and until the Participant has vested in the underlying Award. Full Value Awards may include, but are not limited to, restricted stock, stock units, performance stock units, and bonus stock.
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Additionally, in the event that a corporation acquired by (or combined with) Huron or any subsidiary has shares available under apre-existing plan approved by stockholders and not adopted in contemplation of such acquisition or combination, the shares available for grant pursuant to the terms of suchpre-existing plan (as adjusted, to the extent appropriate, using the exchange ratio or other adjustment or valuation ratio or formula used in such acquisition or combination to determine the consideration payable to the holders of common stock of the entities party to such acquisition or combination) may be used for awards under the Plan and shall not reduce the shares of Common Stock authorized for grant under the Plan; provided that awards using such available shares shall not be made after the date awards or grants could have been made under the terms of thepre-existing plan, absent the acquisition or combination, and shall only be made to individuals who were not employees or directors of Huron or any subsidiary prior to such acquisition or combination. Notwithstanding the foregoing, such shares shall not increase the number of shares available for Awards of Incentive Stock Options unless such additional share limit is approved by the stockholders in accordance with Section 422 of the Code.
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The following shares of Common Stock shall not again be made available for grants pursuant to the Plan:
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For stock-settled Stock Appreciation Rights, the shares subject to the Award shall be counted against the Plan reserve, regardless of the number of shares issued.
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Nothing in this Section 9 shall preclude the Committee from granting Awards under the Plan, or the Committee, Huron or any Affiliate from granting any cash awards outside of the Plan, that are not intended to be Performance-Based Compensation; provided, however, that, at the time of grant of Awards by the Committee (other than a Stock Option or Stock Appreciation Right), the Committee shall designate whether such Awards are intended to constitute Performance-Based Compensation. To the extent that the provisions of this Section 9 reflect the requirements applicable to Performance-Based Compensation, such provisions shall not apply to the portion of an Award, if any, that is not intended to constitute Performance-Based Compensation.
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Nothing in this Section 16 shall restrict the Committee’s ability to exercise its discretionary authority pursuant to Sections 4 and 5, which discretion may be exercised without amendment to the Plan. No action hereunder may, without the consent of a Participant, reduce the Participant’s rights under any outstanding Award.
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Admission Ticket |
Electronic Voting Instructions |
You can vote by Internet! |
Available 24 hours a day, 7 days a week! |
Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy. |
VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR. |
Proxies submitted by the Internet must be received by |
1:00 a.m., |
Vote by Internet |
• Go towww.envisionreports.com/HURN |
• Or scan the QR code with your smartphone |
• Follow the steps outlined on the secure website |
Using ablack inkpen, mark your votes with anXas shown in this example. Please do not write outside the designated areas. | ☒ |
q IF YOU HAVE NOT VOTED VIA THE INTERNET, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
A | Proposals — The Board recommends a voteFOR all nominees,FOR Proposals 2, 3 and 5 and every 1 YR for Proposal 4. | Proposals — The Board recommends a voteFOR all nominees,FOR Proposals 2 and 3. | ||||||||||||||||||||||||||||||||||||||||||||||||||||||
1.
| Election of Directors:
| For
| Withhold
| For
| Withhold
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| Election of Directors:
| For
| Withhold
| For
| Withhold
| For
| Withhold
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01 - H. Eugene Lockhart | ☐ | ☐ | 02 - George E. Massaro | ☐ | ☐ | 01 - John S. Moody | ☐ | ☐ | 02 - Hugh E. Sawyer | ☐ | ☐ | 03 - Debra Zumwalt | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||||||
For
| Against
| Abstain
| For
| Against
| Abstain
| For
| Against
| Abstain
| For
| Against
| Abstain
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2. | To approve the Company’s Amended and Restated 2012 Omnibus Incentive Plan.
| ☐ | ☐ | ☐ | 3. | An advisory vote to approve the Company’s executive compensation. | ☐ | ☐ | ☐ | An advisory vote to approve the Company’s executive compensation.
| ☐ | ☐ | ☐ | 3. | To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2018. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||||||||||||||||
1 YR
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2 YRS
| 3 YRS
| Abstain
| For
| Against
| Abstain
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4. | An advisory vote on the frequency of advisory stockholder votes to approve the Company’s executive compensation. | ☐ | ☐ | ☐ | ☐ | 5. | To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2017. | ☐ | ☐ | ☐ |
B | Non-Voting Items | |||||||||||
Change of Address — Please print your new address below. | Comments — Please print your comments below. | Meeting Attendance | ||||||||||
Mark the box to the right if you plan to attend the Annual Meeting.
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C | Authorized Signatures — This section must be completed for your vote to be counted. — Date and Sign Below | |||||||||||
Please sign exactly as name(s) appears hereon. Joint owners should each sign. When signing as attorney, executor, administrator, corporate officer, trustee, guardian, or custodian, please give full title.
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Date (mm/dd/yyyy) — Please print date below.
| Signature 1 — Please keep signature within the box.
| Signature 2 — Please keep signature within the box.
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/ / |
∎ | 1 U P X | + | ||
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20172018 Annual Meeting Admission Ticket
20172018 Annual Meeting of
Huron Consulting Group Inc. Stockholders
Friday, May 5, 2017,4, 2018, 11:00 a.m. Central Time
550 West Van Buren Street, 17th Floor
Chicago, Illinois 60607
Upon arrival, please present this admission ticket
and photo identification at the registration desk.
q IF YOU HAVE NOT VOTED VIA THE INTERNET, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE. q
Proxy — Huron Consulting Group Inc.
Notice of 20172018 Annual Meeting of Stockholders
550 West Van Buren Street, 17th Floor, Chicago, Illinois 60607
Proxy Solicited by Board of Directors for Annual Meeting — Friday, May 5, 20174, 2018
James H. Roth and Diane E. Ratekin, or any of them, each with the power of substitution, are hereby authorized to represent and vote the shares of the undersigned, with all the powers which the undersigned would possess if personally present, at the Annual Meeting of Stockholders of Huron Consulting Group Inc. to be held on May 5, 20174, 2018 or at any postponement or adjournment thereof.
Shares represented by this proxy will be voted by the stockholder. If no such directions are indicated, the Proxies will have authority to vote FOR all nominees, FOR Proposals 2 3 and 5 and every 1 YR for Proposal 4.3.
In their discretion, the Proxies are authorized to vote upon such other business as may properly come before the meeting.
(Items to be voted appear on reverse side.)