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. ^ )
Filed by the
Registrant ☐ Filed by a Party other than the
Registrant ☐
Check the appropriate box:
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Preliminary Proxy Statement
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Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))
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Definitive Proxy Statement
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Definitive Additional Materials
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Soliciting Material under §240.14a-12
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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)
Payment of Filing Fee (Check the appropriate box):
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Fee computed on table below per Exchange Act Rules 14a-6(i)(1) and 0-11.
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Title of each class of securities to which the transaction applies:
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Aggregate number of securities to which the transaction applies:
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Per unit price or other underlying value of the transaction computed pursuant to Exchange Act Rule 0-11 (set forth the amount on which the filing fee is calculated and
state how it was determined):
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(4)
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Proposed maximum aggregate value of the transaction:
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Fee paid previously with preliminary materials.
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Check box if any part of the fee is offset as provided by Exchange Act Rule 0-11(a)(2) and identify the filing for which the offsetting fee was paid previously.
Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.
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Amount Previously Paid:
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Form, Schedule or Registration Statement No.:
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550 West Van Buren Street
Chicago, IL 60607
NOTICE OF
ANNUAL MEETING OF STOCKHOLDERS
May 5, 2017
The Annual Meeting of Stockholders of Huron Consulting Group Inc. (the Company) will be held at the Companys corporate headquarters
located at 550 West Van Buren Street, Chicago, Illinois 60607 on May 5, 2017, at 11:00 a.m. Central Time, for the following purposes:
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To elect to the board of directors the two persons nominated by the board of directors to serve as Class I
Directors;
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To approve the Companys Amended and Restated 2012 Omnibus
Incentive Plan;
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An advisory vote to approve the Companys executive compensation;
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An advisory vote on the frequency of the advisory stockholder vote to approve the Companys executive
compensation;
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To ratify the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the
fiscal year ending December 31, 2017; and
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To transact such other business as may properly come before the meeting or any postponement or adjournment thereof.
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Only stockholders of record at the close of business on March 8, 2017 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, 2017
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Important Notice
Regarding the Availability of
Proxy Materials for the Stockholder Meeting to be
Held on May 5, 2017
The Proxy Statement and Annual Report to Stockholders are
available at
www.edocumentview.com/HURN
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TABLE OF CONTENTS
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2017 PROXY STATEMENT
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PROXY STATEMENT
FOR
ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 5, 2017
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This Proxy Statement is furnished in connection with the solicitation of proxies to be voted at the 2017 Annual Meeting
of Stockholders of Huron Consulting Group Inc. (the Company, Huron, we or us). The 2017 Annual Meeting of Stockholders (the Annual Meeting) will be held on Friday, May 5, 2017 at 11:00
a.m. Central Time, at the Companys 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.
GENERAL INFORMATION ABOUT THE MEETING
Q
UORUM
AND
V
OTING
R
EQUIREMENTS
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, 2017 (the Record Date) will be entitled to vote at the Annual
Meeting. As of the Record Date, there were 22,088,724 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 Companys 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 least
one-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 broker
non-votes
on some proposals but not others, will be considered present at the
meeting for purposes of determining a quorum.
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2017 PROXY STATEMENT
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1
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PROPOSAL 1
ELECTION OF DIRECTORS
B
OARD
OF
D
IRECTORS
The Companys third
amended and restated certificate of incorporation divides the Companys board of directors into three classes, with each class being elected to a three-year term.
The board of directors has nominated H. Eugene Lockhart and George E. Massaro as Class I 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.
This Proxy Statement relates only to the solicitation of proxies from the stockholders with respect to the election of the two nominees as Class I
Directors and the other matters described herein. The board of directors knows of no reason that Mr. Lockhart or Mr. Massaro might be unavailable to serve as the Class I Directors, and each has expressed an intention to serve, if
elected. If Mr. Lockhart or Mr. Massaro 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 I 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 broker
non-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. Lockhart and Mr. Massaro as Class I Directors, unless specified otherwise.
THE BOARD OF DIRECTORS
RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
THE ELECTION OF MR. LOCKHART AND MR. MASSARO AS CLASS I DIRECTORS.
A
BOUT
THE
B
OARD
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Class and Year
in
Which
Term Expires
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Committees
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Name
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Principal Occupation
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Independent
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A
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C
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N&CG
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H. Eugene Lockhart
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Senior Advisor and Partner, General Atlantic LLC
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Class I 2017
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c
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Age 67, Director since 2006
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George E. Massaro
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Vice Chairman of the Board, Huron Consulting Group Inc.
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Class I 2017
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Age 69, Director since 2004
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Not Standing for Election
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John S. Moody
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Chief Executive Officer, Parkside Capital
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Class II 2018
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Age 68, Director since 2005
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Debra Zumwalt
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Vice President and General Counsel, Stanford University
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Class II 2018
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Age 61, Director since 2014
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James D. Edwards
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Retired Managing PartnerGlobal Markets at Arthur Andersen LLP
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Class III 2019
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Age 73, Director since 2004
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John McCartney
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Non-executive
Chairman, Huron Consulting
Group Inc.
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Class III 2019
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Age 64, Director since 2004
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James H. Roth
Age 59, Director since 2009
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Chief Executive Officer and President of Huron Consulting Group Inc. and Huron
Consulting Services LLC, our principal operating subsidiary
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Class III 2019
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A
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Audit Committee
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Chairman
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C
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Compensation Committee
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N&CG
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Nominating and Corporate Governance Committee
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2017 PROXY STATEMENT
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Presented below is information regarding the directors of the Company.
N
OMINEES
TO
B
OARD
OF
D
IRECTORS
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H. Eugene Lockhart
Director since October 2006
Audit Committee (Chair)
Compensation Committee (Member)
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Professional Experience
In November 2013, Mr. Lockhart became Senior Advisor and Partner at General Atlantic LLC, a leading global growth investment
firm. In October 2013, he founded and became Chairman 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, Community Choice Financial, CLIP, DemystData, Factor Trust, Avant, BillDesk, and others.
Board Service
Mr. Lockhart was appointed to the board of Metro Bank PLC, a 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 Aarons, Inc., a
lease-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 Hurons board his broad 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 worlds most recognized companies, Mr. Lockhart contributes to Huron his many contacts, including those with investors.
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2017 PROXY STATEMENT
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3
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George E. Massaro
Director since October 2004
Nominating and Corporate Governance Committee (Member)
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Professional Experience
Mr. Massaro has served as Vice Chairman of Hurons board since May 2010, and had previously served in the role from March
2005 until July 2009. In the interim, he had served as
Non-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 LLPs
1,200-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 provider of research products and preclinical services for
the biomedical community, since 2003. He also serves on the board of directors of Eastern Bank Corporation, an independent mutual bank holding company in New England. Mr. Massaro is a member of the board of trustees of Mount Auburn Hospital in
Cambridge. In addition, he is a member of the finance committee of the Archdiocese of Boston.
Education
Mr. Massaro received a B.A. in Accounting and Finance from Bentley College and an MBA from Babson College.
Individual Contributions
As the former Chief Operating Officer of Huron from 2003 to 2005, Mr. Massaro possesses a unique understanding of Hurons
business and history. His many years of experience in public accounting and management of a professional services practice, as well as his service on the boards of healthcare and pharma-centered institutions, enable him to provide a broad range of
business insights as well as contacts in the business community.
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2017 PROXY STATEMENT
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D
IRECTORS
N
OT
S
TANDING
FOR
E
LECTION
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John S. Moody
Director since October 2005
Audit Committee (Member)
Compensation Committee (Member)
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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.
Board Service
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 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 spent the majority of his career working with real estate related businesses. He has served on multiple boards of
directors, including serving as chairman and vice chairman, of companies organized as real estate investment trusts engaged in commercial real estate, as well as a company offering diversified forest products. As the former chief executive officer
of a public company which owned Class A office buildings throughout the United States, as well as a professionally trained real estate and corporate attorney with broad experience in the capital markets, Mr. Moody has provided
introductions to his many business contacts.
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2017 PROXY STATEMENT
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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 Childrens 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
firms 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., an 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
As a practicing attorney and
in-house
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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2017 PROXY STATEMENT
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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 partnerglobal 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 worlds 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.
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2017 PROXY STATEMENT
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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 Corporations 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 a
non-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 Hurons principal business
offices.
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2017 PROXY STATEMENT
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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 Hurons 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 of
Forbes
Best
Management Consulting Firms in 2016,
Forbes
Americas Best Employers in 2015 and 2016, and by
Consulting
magazine 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 ranked in the top five of
Modern 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 Hurons inception in 2002, until he became CEO, Mr. Roth was a managing director and practice leader of the Companys 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), 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 brings to the board his well-informed perspective on the strategy and operations of institutions of higher education and
academic medical centers, including their research facilities. Named in 2009 and in 2011 by
Consulting
magazine 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.
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2017 PROXY STATEMENT
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9
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E
XECUTIVE
O
FFICERS
The Companys executive officers are as follows:
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Name
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Age
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Position
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James H. Roth
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59
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Chief Executive Officer, President and Director
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C. Mark Hussey
|
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56
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Executive Vice President and Chief Operating Officer
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John D. Kelly
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41
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Executive Vice President, Chief Financial Officer and Treasurer
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Diane E. Ratekin
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60
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Executive Vice President, General Counsel and Corporate Secretary
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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 Hurons 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 servicing
in-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., Dominicks 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
Hurons 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 Hurons Assistant Treasurer from February 2015
until February 2016. Prior to joining Hurons Finance and Accounting department, Mr. Kelly was a Director in the Companys 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 & Touches 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 Hurons Assistant Corporate Secretary since
May 2009. Ms. Ratekin has been employed in Hurons 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.
D
IRECTOR
I
NDEPENDENCE
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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10
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2017 PROXY STATEMENT
|
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 Hurons 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. Zumwalts exercise of independent judgment in carrying out her responsibilities
as a director.
B
OARD
L
EADERSHIP
S
TRUCTURE
AND
R
ISK
O
VERSIGHT
Board Leadership
Huron formally separated the roles of chairman of the board and chief executive officer in 2010. Our
Non-executive
Chairman is John McCartney and our Chief Executive Officer is James H. Roth. As
Non-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 boards responsibilities is to review the adequacy of the Companys systems for compliance with all applicable laws and regulations
for safeguarding the Companys 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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Board of Directors
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Regularly considers potential business risks
facing the Company, including those surrounding security and privacy, revenue recognition, quality assurance, strategic planning, employee retention, international compliance, business continuity, merger integration and market shifts
Maintains oversight of key governance programs
relating to insider trading, business conduct and ethics, export controls and other critical issues
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Audit Committee
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Meets with and reviews reports from independent registered public accounting firm and internal auditors
Receives regular reports from the General
Counsel on legal developments
Examines
issues presented by the Chief Compliance Officer on whistleblower hotline and corporate
compliance-related
matters
Considers reports of the Enterprise Risk
Management Committee on strategic, operational, financial and compliance risks that may materially affect the Companys ability to achieve its business objectives
Evaluates controls in place to address
Hurons global FCPA risks, including anti-bribery training materials and programs
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Compensation Committee
|
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Annually reviews a risk assessment of all Huron compensation plans
Reviews the design and goals of compensation
programs in the context of potential risks to the Company
Reviews and evaluates compensation arrangements
to assess the potential for undue risk taking
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Nominating and Corporate
Governance Committee
|
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Leads an annual self-assessment to ensure the board and its committees are properly fulfilling their roles
Ensures board candidates possess the appropriate
experience and expertise required to effectively serve on Hurons board
Annually reviews Hurons corporate
governance guidelines to confirm they reflect best practices
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2017 PROXY STATEMENT
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11
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B
OARD
M
EETINGS
AND
C
OMMITTEES
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 2016 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 Rule
16b-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 Rule
10A-3(b)(1).
A detailed discussion of each committees mission, composition and responsibilities is contained within the committee charters available in the Investor Relations section of the Companys web
site at
www.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 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 permitted
non-audit
services and applicable fees. The Audit Committee met eight times
in 2016. 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, 2016 appears below under the caption PROPOSAL 5RATIFICATION OF APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRMReport 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. 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
COMPENSATIONCompensation Discussion and AnalysisRole of Management. In addition, during 2016, the CEO participated in all of the Compensation Committees meetings and in all of the executive sessions, except for those in which
the Compensation Committee considered the CEOs performance, compensation and incentives. The Committee extended the engagement of Semler Brossy Consulting Group, 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 COMPENSATIONCompensation Discussion and AnalysisRole of Compensation Advisor. The Report of the Compensation Committee on
Executive Compensation appears below under the caption EXECUTIVE COMPENSATIONCompensation 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.
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12
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2017 PROXY STATEMENT
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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 persons judgment, experience,
independence, understanding of the Companys 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 Companys 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
Companys Corporate Secretary. In addition, the Companys bylaws permit stockholders to nominate directors at a stockholders meeting. To make a director nomination at the annual meeting, a stockholder must notify the Companys
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, or
corporatesecretary@huronconsultinggroup.com
. In either case, the notice must meet all of the requirements contained in the bylaws.
D
IRECTOR
R
ESIGNATION
P
OLICY
The Companys 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) broker
non-votes
will not be counted as either votes
withheld from or for such persons 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 directors resignation is not accepted by the board of directors, such director shall continue to serve until such directors successor
is duly elected and qualified, or until such directors earlier death, resignation, retirement, disqualification or removal. If a directors 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.
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2017 PROXY STATEMENT
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13
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S
TOCKHOLDER
C
OMMUNICATIONS
P
OLICY
The Companys 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
17
th
Floor
Chicago, Illinois 60607
E-mail
messages should be sent to
corporatesecretary@huronconsultinggroup.com
.
A stockholder must include his or her name and address in any such written or
e-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.
D
IVERSITY
OF
B
OARD
S
KILLS
AND
E
XPERIENCE
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.
C
OMPENSATION
OF
D
IRECTORS
The Huron
non-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:
|
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Non-executive
Chairman - $235,000
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Vice Chairman - $85,000
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Other independent directors - $60,000
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Board and committee meeting fee of $1,000 per meeting (The Chairman does not receive board or committee meeting fees.)
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Annual committee chairperson retainer of:
|
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Nominating and Corporate Governance - $10,000
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Annual restricted stock grant of $170,000 (granted on the date of the Companys annual meeting and priced based upon
the closing stock price on the date immediately preceding the annual meeting) which vests ratably over 12 quarters. If a new independent director joins the board after the Companys annual meeting, the award is prorated as follows:
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If the new director joins within six months of the Companys annual meeting, the new director will receive half of
the annual grant.
|
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If the new director joins over six months after the Companys annual meeting, no grant will be made.
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14
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2017 PROXY STATEMENT
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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.
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A new independent director will receive an initial restricted stock grant equal to $200,000, which will vest ratably over
12 quarters.
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All directors are reimbursed for
out-of-pocket
expenses for attending board and committee meetings.
|
Directors are eligible to participate in our deferred compensation plan, which is described under the caption EXECUTIVE COMPENSATION2016
Nonqualified Deferred Compensation. One director has participated since 2013, and a second director elected to participate beginning in 2015.
D
IRECTOR
C
OMPENSATION
T
ABLE
The following table summarizes the fees paid and the aggregate grant date fair value of shares granted to each of the
non-employee
directors in 2016. Directors who are also officers or employees of the Company receive no compensation for duties performed as a director.
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Name
|
|
Fees Earned or
Paid in Cash ($)
|
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|
Stock
Awards ($)(1)
|
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Change in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(2)
|
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|
Total ($)
|
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James D. Edwards (3)
|
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|
85,750
|
|
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|
169,975
|
|
|
|
|
|
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|
255,725
|
|
H. Eugene Lockhart (3)
|
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|
97,500
|
|
|
|
169,975
|
|
|
|
|
|
|
|
267,475
|
|
George E. Massaro (3)
|
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|
102,000
|
|
|
|
169,975
|
|
|
|
|
|
|
|
271,975
|
|
John McCartney (3)(4)
|
|
|
235,000
|
|
|
|
169,975
|
|
|
|
26,763
|
|
|
|
431,738
|
|
John S. Moody (3)
|
|
|
89,250
|
|
|
|
169,975
|
|
|
|
|
|
|
|
259,225
|
|
Debra Zumwalt (5)
|
|
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95,000
|
|
|
|
169,975
|
|
|
|
7,969
|
|
|
|
272,944
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(1)
|
This column represents the aggregate grant date fair value of shares granted to our directors in 2016. Grant date fair
value is based on the closing price of Huron stock on the last trading day prior to the grant date. Each of these grants vests ratably over the 12 calendar quarters following the grant.
|
(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 2016 that exceeded the SEC benchmark market rate equal to 120% of the long-term applicable federal rate (based on the average rate for 2016 of 2.70%). For
2016, the actual earnings for Mr. McCartney and Ms. Zumwalt were $41,326 and $12,822, respectively.
|
(3)
|
At December 31, 2016, each of Messrs. Edwards, Lockhart, Massaro, McCartney and Moody held 4,326 shares of
restricted common stock.
|
(4)
|
Mr. McCartney has access to office space at the Companys principal business offices in Chicago. The Company
does not incur any incremental costs in connection with the provision of this office space.
|
(5)
|
At December 31, 2016, Ms. Zumwalt held 5,115 shares of restricted common stock.
|
S
ECTION
16(
A
) B
ENEFICIAL
O
WNERSHIP
R
EPORTING
C
OMPLIANCE
Pursuant to Section 16(a) of the 1934 Act, the Companys 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.
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2017 PROXY STATEMENT
|
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15
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S
TOCK
O
WNERSHIP
OF
C
ERTAIN
B
ENEFICIAL
O
WNERS
AND
M
ANAGEMENT
The
following table sets forth, as of the Record Date, certain information regarding the beneficial ownership of our common stock by:
|
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each person known by us to beneficially own 5% or more of our common stock;
|
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each of our named executive officers;
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each member of our board of directors; and
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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.
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Beneficial Ownership
|
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Name of beneficial owner (1)
|
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Shares
|
|
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%
|
|
Beneficial owners of 5% or
more:
|
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|
|
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Wellington Management Group LLP (2)
|
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2,318,482
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|
|
|
10.67
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|
The Vanguard Group, Inc. (3)
|
|
|
1,778,862
|
|
|
|
8.18
|
|
FMR LLC (4)
|
|
|
1,499,788
|
|
|
|
6.90
|
|
BlackRock, Inc. (5)
|
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1,434,380
|
|
|
|
6.60
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|
TimesSquare Capital Management, LLC (6)
|
|
|
1,346,957
|
|
|
|
6.20
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|
Dimensional Fund Advisors LP (7)
|
|
|
1,169,958
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|
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|
5.39
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|
Directors and Executive
Officers:
|
|
|
|
|
|
|
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James D. Edwards (8)
|
|
|
20,032
|
|
|
|
*
|
|
C. Mark Hussey (9)
|
|
|
51,328
|
|
|
|
*
|
|
H. Eugene Lockhart (10)
|
|
|
22,180
|
|
|
|
*
|
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George E. Massaro (11)
|
|
|
16,252
|
|
|
|
*
|
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John McCartney (12)
|
|
|
53,335
|
|
|
|
*
|
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John S. Moody (13)
|
|
|
18,932
|
|
|
|
*
|
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Diane E. Ratekin (14)
|
|
|
33,995
|
|
|
|
*
|
|
James H. Roth (15)
|
|
|
366,259
|
|
|
|
1.65
|
|
Debra Zumwalt (16)
|
|
|
9,908
|
|
|
|
*
|
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All directors and executive officers as a group (10 persons)
(17)
|
|
|
595,364
|
|
|
|
2.69
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|
*
|
Indicates less than 1% ownership.
|
(1)
|
The principal address for each of the stockholders, other than Wellington Management Group LLP, The Vanguard Group, Inc.,
FMR LLC, BlackRock, Inc., TimesSquare Capital Management, LLC, and Dimensional Fund Advisors LP, listed below, is c/o Huron Consulting Group Inc., 550 West Van Buren Street, Chicago, Illinois 60607.
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(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 9, 2017.
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16
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2017 PROXY STATEMENT
|
(3)
|
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 10, 2017.
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(4)
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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, 2017.
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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 24, 2017.
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(6)
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The principal address of TimesSquare Capital Management, LLC is 7 Times Square, 42nd Floor, New York, New York 10036.
Information regarding beneficial ownership of our common stock by TimesSquare Capital Management, LLC is included herein in reliance on a Schedule 13G/A filed with the SEC on February 13, 2017.
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(7)
|
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 filed with the SEC on February 9, 2017.
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(8)
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Includes 3,634 shares of restricted common stock.
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(9)
|
Includes 15,647 shares issuable upon exercise of options that are exercisable currently or within 60 days of the Record
Date. Also includes 11,005 shares of restricted common stock.
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(10)
|
Includes 3,634 shares of restricted common stock.
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(11)
|
Includes 3,634 shares of restricted common stock.
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(12)
|
Includes 3,634 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.
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(13)
|
Includes 3,634 shares of restricted common stock.
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(14)
|
Includes 7,904 shares issuable upon exercise of options that are exercisable currently or within 60 days of the Record
Date. Also includes 4,873 shares of restricted common stock.
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(15)
|
Includes 170,746 shares issuable upon exercise of options that are exercisable currently or within 60 days of the Record
Date. Also includes 26,082 shares of restricted common stock, as well as 3,855 shares held by a family limited liability company.
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(16)
|
Includes 4,269 shares of restricted common stock.
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(17)
|
Includes 2,032 shares of common stock and 1,111 shares of restricted common stock held by John D. Kelly, who was
appointed Chief Financial Officer effective January 3, 2017. Also includes an aggregate of 194,297 shares issuable upon exercise of options held by members of the group that are exercisable currently or within 60 days of the Record Date, as
well as 64,399 shares of restricted common stock held by the Directors and Executive Officers listed above.
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2017 PROXY STATEMENT
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17
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EXECUTIVE COMPENSATION
C
OMPENSATION
D
ISCUSSION
AND
A
NALYSIS
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).
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SECTION 1 EXECUTIVE SUMMARY
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Huron is a global professional services firm committed to achieving sustainable results in partnership with our clients. We bring a depth of expertise
in strategy, operations, advisory services, technology and analytics to drive lasting and measurable results in the healthcare, higher education, life sciences and commercial sectors. Through focus, passion and collaboration, Huron provides guidance
to support organizations as they contend with the change transforming their industries and businesses.
Named Executive Officers
This past year, Hurons named executive officer team consisted of the following individuals:
Mr. Roth, Chief Executive Officer, President
and Director.
Mr. Hussey, Executive Vice
President, Chief Operating Officer and Chief Financial Officer.
1
Ms. Ratekin, Executive Vice President, General Counsel and Corporate Secretary.
Hurons named executive officers are responsible for our Company-wide business operations and setting overall strategy of the organization.
Practice Leadership
Each of Hurons 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 financial results, 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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Strategy
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Business
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Compensation
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Our business strategy is to be the premier
professional services firm specializing in the healthcare, education, and life sciences industries while providing complementary advisory, technology and analytic capabilities to these vertical markets as well as to the commercial sector. To ensure
the success of our strategy and our ability to deliver sustained value to our shareholders, Huron focuses on the following key drivers:
Deliver high-value, quality client service to
our clients to support their comprehensive needs from strategy to implementation.
Specialize in providing a holistic service
offering that integrates the strength of our industry knowledge in the healthcare, education and life sciences markets with our leading capabilities, including technology and analytics.
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 client-facing employees who have a variety of different experience levels including subject matter and/or technical expertise.
Supplement organic growth by identifying,
executing and successfully integrating acquisitions that expand or complement our current market offerings, deepen our industry expertise or broaden our capabilities to better align our business with our core clients needs.
Optimize corporate infrastructure to
effectively scale and support the Companys long-term growth plans, while enhancing EBITDA margins.
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Our compensation plan philosophy has three
key elements:
Motivate and reward performance in the long-term best interests of shareholders.
Deliver competitive total compensation
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 Companys financial and operational performance. The
performance measures directly link into our business strategy through net revenue, Adjusted EBITDA margin, and Adjusted Diluted EPS growth as well as fulfillment of strategic measures identified each year by the board of directors.
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 critical to generating revenue and to the overall success of Huron. We use stock as both a retention tool and an
incentive to encourage behaviors that will benefit the 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 this element of our compensation aligns the interests of our individual practices with the Company as a whole and significantly differentiates Hurons compensation program from
our competitors programs, because of the amount of equity provided below the NEO level.
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1
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On January 3, 2017, Mr. John Kelly was promoted to
the title 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 relinquished
this role and has become Executive Vice President and Chief Operating Officer.
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18
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2017 PROXY STATEMENT
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Business Actions and Results
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To understand our compensation decision making, it is important to understand the Companys financial and strategic performance during 2016.
Business results were as follows
2
:
Results for the year were lower than expected due to
softness in Healthcare, the largest segment. However, solid performance in the Higher Education and Life Sciences and Business Advisory segments partially offset this performance.
While we delivered results that were lower than our
initial guidance, we completed three significant strategic acquisitions: MyRounding and HSM in the Healthcare segment, and ADI in the Business Advisory segment. We believe these acquisitions position Huron for success in the future, particularly in
support of our technology services. In aggregate, these acquisitions contributed over $34.5 million in revenues during 2016 and all performed as planned in 2016.
Introduced a single, unified brand to strengthen the
firms position in the marketplace.
Net revenues
of $726.3 million, 3.9% higher than the prior year.
Adjusted EBITDA decreased 7.8% to $128.5 million, or
17.7% of net revenues, compared to 19.9% in the prior year.
Adjusted diluted EPS of $3.21, a 7.4% increase from the
prior year.
Continued to align corporate
infrastructure with business expectations to gain efficiencies and lower SG&A expense.
Maintained a strong balance sheet as measured by the
Companys leverage ratio while funding more than $138.3 million in acquisitions, share repurchases and capital expenditures.
Continued to generate strong cash flow from operations of
$128.3 million.
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Compensation Program Actions
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The Compensation Committee took several compensation actions beginning in 2014 to better align the compensation program for the NEOs with our business
strategy and shareholder interests.
In 2014, added a three-year performance measurement period to performance shares to align multi-year performance and long-term compensation; 2016 marks the third year of the
three-year performance measurement period.
In 2014,
replaced stock options with restricted share awards (RSAs) in the service-based equity portion of the Long-Term Incentive Plan to align with our peer group and to balance the risk profile of our compensation program given the addition of a
three-year performance factor in the performance share plan.
In 2014, introduced a clawback policy to safeguard against
unwarranted compensation in the event of a financial restatement.
In 2015 and 2016, revised the peer group to include more
companies with similar revenue and business characteristics to Huron.
In 2016, worked to update senior management employment
agreements to better align with current market practices.
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2
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In the discussion of the Companys 2016 performance, the Compensation Committee discusses certain of
Hurons results of operations using non-GAAP financial measures, which are discussed in the Companys Annual Report on Form 10-K for the year ended December 31, 2016 (the 2016 Annual Report on Form 10-K), Item 7,
Managements Discussion and Analysis of Financial Condition and Results of Operations under the subheading Non-GAAP Measures. These non-GAAP financial measures include Adjusted EBITDA, Adjusted EBITDA margin and Adjusted diluted
EPS. EBITDA is defined as net income from continuing operations before interest and other expenses, income tax expense and depreciation and amortization. Adjusted EBITDA represents EBITDA as adjusted by adding back restructuring charges and other
gains and losses. Adjusted EBITDA margin is Adjusted EBITDA expressed as a percentage of net revenues. Adjusted diluted EPS is defined as diluted earnings per share from continuing operations adjusted by adding back the same items as Adjusted
EBITDA, in addition to amortization of intangible assets, and non-cash interest on convertible notes, all on a tax effected basis.
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2017 PROXY STATEMENT
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19
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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 alignment between Company performance and compensation paid to the NEOs. The results of our key metrics and their impact on our compensation programs for 2014 to 2016 were:
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2016
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Plan and Metric
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Performance
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Payout Result
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Annual Incentive Plan (Cash)
Revenue (40% weighting)
Adjusted EBITDA Margin (30% weighting)
Strategic measures (30% weighting)
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Revenue Below threshold funding
Adjusted EBITDA Margin Below threshold
funding
Strategic measures 70%
funding
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After applying weighting:
2016 annual incentive payout was 21% of target
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Performance Shares (Annual Component)
Adjusted Diluted EPS (100% weighting)
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Adjusted Diluted EPS 55% of target, 55% funding
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Based on actual performance, 55% of the performance shares were earned for 2016
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Stock Price
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Decreased 15%
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Lowered value of unexercised stock options, unvested restricted stock and performance shares
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2015
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Plan and Metric
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Performance
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Payout Result
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Annual Incentive Plan (Cash)
Revenue (40% weighting)
Adjusted EBITDA Margin (30% weighting)
Strategic measures (30% weighting)
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Revenue Below threshold funding
Adjusted EBITDA Margin At target, 100%
funding
Strategic measures 100%
funding
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After applying weighting:
2015 annual incentive payout was 60% of target
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Performance Shares (Annual Component)
Adjusted Diluted EPS (100% weighting)
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Adjusted Diluted EPS Below threshold, 0% funding
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Based on actual performance, 0% of the performance shares were earned for 2015
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Stock Price
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Decreased 13%
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Lowered value of unexercised stock options, unvested restricted stock and performance shares
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2014
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Plan and Metric
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Performance
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Payout Result
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Annual Incentive Plan (Cash)
Revenue (40% weighting)
Adjusted EBITDA Margin (30% weighting)
Strategic measures (30% weighting)
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Revenue 98% of target, 73% funding
Adjusted EBITDA Margin Above maximum, 125%
funding
Strategic measures 100%
funding
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After applying weighting:
2014 annual incentive payout was 97% of target
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Performance Shares (Annual Component)
Adjusted Diluted EPS (100% weighting)
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Adjusted Diluted EPS Above maximum, 125% funding
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Based on actual performance, 125% of the performance shares
were earned for 2014
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Stock Price
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Increased 9%
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Raised value of unexercised stock options, unvested restricted stock and performance shares
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Peer Groups
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We 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 roles of the executive officers are similar to those of our executives (see Section 4 for more detail). 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 (see Section 3 for more detail).
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 on the size or public/private nature of the organizations.
In order to assess our business performance, we review all of our
business competitors, many of which are private, much larger in size or are subsets of larger companies. As a result, obtaining comparative business results can be challenging. We review the best available information from the companies with whom we
compete.
The complexity of the business composition of our peer group makes
obtaining comparable performance data difficult. As a result, we have chosen to set executive performance goals based on absolute rather than relative performance measures.
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20
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2017 PROXY STATEMENT
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SECTION 2 - COMPENSATION PROGRAM OVERVIEW
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Hurons executive compensation program is structured to align executive pay with Company performance. The strength of
this alignment was recognized by our shareholders in 2016 as Huron received over 99% approval 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:
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Achieving financial performance in comparison to
pre-established
goals (net
revenue, Adjusted EBITDA margin, and adjusted diluted EPS measured annually and/or over a three-year period)
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Attaining critical annual strategic initiatives
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Delivering value to shareholders
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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.
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Best Practice Elements:
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Establish Competitive Compensation Levels.
We target the total direct compensation
for our NEOs at levels that are within +/- 15% of market median total direct compensation levels.
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Maintain a Double Trigger.
Our change of control arrangements provide
benefits on a double trigger, meaning that the severance benefits are paid, and equity awards vest, only if our NEOs incur a qualifying termination in connection with a change of control.
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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. Potential incentive payouts are capped and we conduct a risk assessment of all compensation plans annually. In addition, NEO
LTI diluted EPS performance calculations do not increase if performance is driven by share repurchases that were not factored into the annual plan.
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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.
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Maintain a Clawback Policy.
We maintain a compensation recoupment
policy (commonly referred to as a clawback policy), which generally provides that the Company may recover performance-based compensation paid to NEOs and such other individuals designated by our independent directors, if payout was based
on financial results that were subsequently restated. The policy guards against unwarranted compensation in the event of a financial restatement, supports the accuracy of our financial statements and helps to align the interests of our NEOs with
those of our stockholders.
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Retain an Independent Compensation Consultant.
The Compensation Committee retains an
independent consultant to assist in developing and reviewing our NEO compensation strategy and to confirm that the design and pay levels of our compensation programs are consistent with our goals and market practices.
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Consider the Impact of Tax and Accounting Rules.
The Compensation Committee takes
into account the effect of tax and accounting rules in structuring our NEO compensation program. For example, all of the elements of the incentive-based compensation to our NEOs (annual incentive plan, restricted stock plan and performance stock
unit plan) are designed to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code and thus generally are intended to be fully deductible for federal income tax purposes. However, the tax code rules
are complex and no particular result can be guaranteed. Furthermore, the Compensation Committee reserves the right to pay compensation that may not be deductible under Section 162(m).
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Review Share Utilization.
We regularly review overhang levels (the dilutive impact of
equity awards on our shareholders).
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No Excise Tax
Gross-Ups.
Our NEOs are not
entitled to receive any
gross-up
payments related to excise taxes that may be imposed in connection with golden parachute arrangements under the Companys change of control severance
plan.
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Hedging or Pledging of Company Stock.
The board has adopted a revised Insider Trading
Policy that prohibits directors, officers, employees, and contractors from hedging activities, holding Company securities in a margin account or pledging Company securities as collateral for a loan.
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No Timing of Equity Grants.
We maintain a disciplined equity approval
policy. We do not grant equity awards in anticipation of the release of material,
non-public
information. Similarly, we do not time the release of material,
non-public
information based on equity grant dates.
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No Executive Perquisites that are not provided widely at Huron.
We do not provide
material benefits or perquisites to our NEOs that are not provided widely within Huron.
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2017 PROXY STATEMENT
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21
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The key operational aspects of our compensation program are summarized in the following table:
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Dimension of Program
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Description
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Total Compensation
Opportunity
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We generally strive to
establish targets for total direct compensation within +/- 10% to 15% of the peer group median. Target total direct compensation includes base salary, annual incentive compensation and long-term incentive (LTI) awards. Total actual compensation
received by our named executive officers depends on Company financial and stock price performance.
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Compensation
Vehicles
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We rely on base salary, annual
cash incentive, restricted stock and performance shares.
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Base salary
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Reflects the fundamental role of the
executive.
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Annual cash incentive
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Rewards for achieving specific key measures
of short-term Company performance.
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Restricted Stock
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Serves to retain talent, promote executive
ownership, and balance risk in the compensation portfolio. This component makes up 30% of the total target LTI award.
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Performance shares
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Aligns executive pay opportunities with both short-term and long-term
Company performance. If performance is below the minimum annual threshold, no shares will be earned. This component makes up 70% of the total target LTI award.
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Performance Metrics
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Goal Setting
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Significant rigor is put into the determination of the Company
goals. The Compensation Committee and the board carefully review goals submitted by management. Goals are set based on the Companys financial plans taking into consideration shareholder expectations for growth and profitability.
Performance metrics on both the Annual Incentive Plan and the
performance share plan are set such that zero awards are earned if the annual performance is below a minimum threshold level.
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Annual Incentive Plan
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Revenue
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Reflects the Companys commitment to
growth through continued expansion of its service offerings and market presence.
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Adjusted EBITDA Margin Percentage
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Aligns with Companys focus on
profitable growth.
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Strategic Measures
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Reinforces the importance of achieving specific initiatives that are
necessary for continued success.
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Long-Term Incentive Plan
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Performance Shares:
Non-GAAP
Adjusted Diluted EPS
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Ensures that the named executive officers
are focused on profitability for shareholders over the multi-year performance period. The final value of the performance shares will also reflect the changes in the stock price, aligning the interests of the named executive officers with the
shareholders.
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Restricted Equity: Stock Price
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The value of the restricted equity to the
executive is a function of stock price performance during the vesting period and helps align the interests of the executives with the interests of shareholders.
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22
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2017 PROXY STATEMENT
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SECTION 3 - COMPENSATION PROGRAM DETAILS
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Targeting of Total Direct Compensation
The Compensation Committee targets total direct compensation within 10% to 15% of the median of the Executive Pay Peer Group for CEO and COO/CFO. 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 Committees assessment has also been supplemented by data
from the Radford Group Technology Survey for companies with annual revenue between $500M and $999.9M. It is 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.
2016 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. Roths compensation. Mr. Husseys 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. Ratekins total target compensation opportunity was increased 4% to align her compensation with competitive levels.
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Compensation Element
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James H. Roth
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C. Mark Hussey
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Diane E. Ratekin
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Base Salary
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$900,000
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$600,000
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$400,000
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Target AIP Payout
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110% of base salary
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100% of base salary
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50% of base salary
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Target LTI Payout
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225% of base salary
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175% of base salary
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100% of base salary
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For 2017, the Compensation Committee changed Mr. Husseys base salary to $750,000 to recognize his increased
role in leading the transformation of the Healthcare practice and changed Mr. Roths target LTI to 300% and Ms. Ratekins 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 as
Non-Equity
Incentive Plan Compensation. This plan has three performance criteria
(with the corresponding weight noted below):
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1.
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Net Revenue (40%). Net revenues for 2016 were $694 million which was below the target level and resulted in a 0%
funding for this component. Revenues generated by the acquisitions completed in 2016 that were not included in the NEO revenue target established at the beginning of 2016 are excluded for purposes of measuring performance.
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2.
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Adjusted EBITDA Margin Percentage (30%). Actual Adjusted EBITDA margin percentage excluding the impact of the
acquisitions completed in 2016 that were not included in the Adjusted EBITDA margin percentage target established at the beginning of 2016, including discontinued operations of 17.7%, resulted in 0% funding for this component.
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3.
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Strategic Measures (30%). The measures that were approved by the Compensation Committee at the beginning of 2016 focused
on further development of each practice area and further improvements in the effectiveness and efficiencies of Hurons infrastructure. In considering the specific performance against each of the strategic measures, the Compensation Committee
concluded that the executives met or exceeded performance on several measures including balance sheet management, corporate-wide technology and branding efforts, as well as practice level initiatives for Business Advisory. The Committee also
concluded that the executives did not meet performance expectations in certain other areas. After considering the performance in all areas, the Compensation Committee determined that this performance should result in funding of 70% of target.
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Based on these results, the overall performance payout under the Annual Incentive Plan was 21% of target.
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2017 PROXY STATEMENT
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23
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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 $0.05 GAAP EPS was exceeded in 2016.
The chart below shows the plan structure, the results of each performance measure and the calculation of the annual incentive award. The 25% target is a
threshold and 0% is earned if below that threshold.
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2016 Performance Targets ($MM)
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Measure
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Weight
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25%
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100%
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125%
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Actual
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% Earned
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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
|
|
*
|
Full long-term equity grant at target performance.
|
Restricted Stock Awards
The restricted stock granted will vest 25% per year over four years except for 1,000 shares of Ms. Ratekins 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.
|
|
¡
|
Annual Performance
. At the start of each year, the Compensation Committee approves
annual performance goals and sets threshold, target and maximum performance levels based on Adjusted Diluted EPS.
|
|
¡
|
Three-Year Performance
. Three-year performance is assessed using the three-year average
of the actual annual performance achievement against the annual goals.
|
|
|
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.
|
|
|
|
|
|
24
|
|
|
|
2017 PROXY STATEMENT
|
|
|
The grant is then divided into two parts:
|
|
¡
|
40% of the adjusted award is deemed to be earned based on the annual performance and vests immediately.
|
|
¡
|
The remaining 60% of the adjusted award will remain unearned and is subject to an additional adjustment based on three-year
performance.
|
|
|
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.
|
|
¡
|
50% of the earned amount (30% of the total award) vested at the end of 2016.
|
|
¡
|
50% of the earned amount (30% of the total award) will vest at the end of 2017.
|
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
|
%
|
(1)
|
Actual Adjusted Diluted EPS is calculated on a continuing operations basis and also excludes the impact of share
repurchases made subsequent to the establishment of the performance target and certain acquisitions completed in 2016.
|
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%
|
|
³
120%
|
|
69%
|
(1)
|
This multiplier table starts at .75 because the target awards were already adjusted subject to annual performance and
were
re-earned
based on three-year performance. A multiple of 2.0 was used on the high end. The Compensation Committee determined that if performance over a three-year period averaged 120% or more, that
represented exceptional sustained performance and justified a significant award.
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
25
|
|
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 to
out-perform
expectations.
The Annual Incentive Plan will continue to have the same measures and weightings:
40% Revenue, 30% Adjusted EBITDA Margin, and 30% Strategic Measures. The maximum incentive opportunity will increase from 125% to 150% of target to better align with market practice and to enhance the incentives for participants to achieve maximum
performance levels.
The Long-Term Incentive Plan will continue to have the same mix of vehicles: 30% Restricted Stock Awards and 70% Performance
Share Awards. 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 the
one-year
performance period (60% of award) and a three-year performance period (40% of award). The
one-year
performance will be 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 at 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.
|
|
|
|
|
26
|
|
|
|
2017 PROXY STATEMENT
|
|
SECTION 4 - ADDITIONAL DISCLOSURES RELATED TO COMPENSATION PROGRAM
|
Executive Pay Peer Group
In 2016, based on the annual review of Executive Pay Peer Group criteria, 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 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 between
one-half
to two times Hurons trailing 12 months
revenue as of Hurons 2015 fiscal
year-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.
|
|
|
Dun & Bradstreet Corporation
|
|
|
Heidrick & Struggles International, Inc.
|
|
|
Korn/Ferry International
|
|
|
Navigant Consulting Inc.
|
|
|
Resources Connection, Inc.
|
Due to corporate transactions impacting two peer organizations that occurred during 2016, the Compensation Committee removed the following two companies
from the peer group:
Employment Agreements with Mr. Roth, Mr. Hussey 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 Hurons termination of the executives 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
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
27
|
|
executives employment is terminated without cause or he or she resigns for good reason, the executive will receive enhanced severance benefits. Huron provides enhanced severance benefits
with a
so-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 contain any
gross-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 an
in-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.
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 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.
|
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 independent compensation consultant, Semler Brossy Consulting Group, LLC (Semler Brossy). The Compensation Committee
has the sole authority to amend or terminate the services of Semler Brossy.
In 2016, 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, Human Resources 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
|
|
|
|
|
28
|
|
|
|
2017 PROXY STATEMENT
|
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.
Role of Compensation Advisor
The Compensation Committee continued to retain Semler Brossy as its advisor for the 2016 fiscal year to assist in the ongoing assessment of our executive
compensation strategy and program. Semler Brossy reports directly to the Compensation Committee and serves at its sole discretion. Semler Brossy does not perform any services for the Company other than those in connection with its work for the
Compensation Committee. The Compensation Committee annually analyzes whether the work of Semler Brossy as a compensation consultant 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 the individual compensation advisors employed by Semler Brossy as compensation consultants to the Company has not created any conflict of interest.
2016 Say on Pay Vote
In 2016, 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. Shareholders at the 2011 Annual Meeting expressed a preference that advisory votes on executive compensation occur every year.
Consistent with this preference, the Company has held its advisory vote on the compensation of the Companys named executive officers annually until this 2017 Annual Meeting, at which time shareholders are being 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 and non-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 to any named executive officer in 2016. 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 Hurons named executive officers and
non-employee
directors. The guidelines, set forth below, are consistent with peer practices and
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
29
|
|
designed to promote alignment with the interests of stockholders and the Companys 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
Directors
(first elected prior to 2014 annual meeting)
|
|
the lesser of 3x annual retainer or 9,000 shares
|
Until the relevant stock ownership target is achieved, executive officers and
non-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 of our
non-employee
directors serving as of the 2016 annual meeting
have met the stock 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 Hurons stock and prohibits any other transaction that hedges the ownership in Hurons 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 deductibility for federal income tax purposes of compensation in excess of $1 million to the CEO or any of the next three most highly paid executive officers of a publicly held corporation (other than the CFO). Huron may
deduct compensation exceeding $1 million for federal income tax purposes if the compensation is paid pursuant to a performance-based, nondiscretionary plan that is approved by stockholders. Both the Annual Incentive Plan and the equity plans
are intended to comply with all the provisions of Section 162(m), although the rules are complex and any particular result cannot be guaranteed and, furthermore, the Compensation Committee reserves the right to pay compensation that may not be
deductible under Section 162(m).
Section 280G
. Section 280G of the Code disallows a companys tax deduction for certain payments in connection with a change of control defined as excess parachute payments, and Section 4999 of the Code
imposes a 20% excise tax on certain persons who receive excess parachute payments. The Compensation Committee amended Senior Management Agreements in 2010 to ensure that any covered payments would be reduced to the extent necessary so that no
portion of such payments is subject to the excise tax.
C
OMPENSATION
C
OMMITTEE
R
EPORT
The Compensation Committee has reviewed and discussed with management the information
contained under the caption Compensation Discussion and Analysis and, based on this review and discussion, has recommended to the board of directors that it be included in this Proxy Statement and incorporated by reference into our 2016
Annual Report on Form
10-K.
Debra Zumwalt, Chair
H. Eugene Lockhart
John S. Moody
|
|
|
|
|
30
|
|
|
|
2017 PROXY STATEMENT
|
|
REQUIRED COMPENSATION DISCLOSURES
|
2016 S
UMMARY
C
OMPENSATION
T
ABLE
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name and Principal Position
|
|
Year
|
|
Salary
($)
|
|
Non Equity
Incentive Plan
Compensation
($)
|
|
Stock
Awards
($)(1)
|
|
|
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)(2)
|
|
All Other
Compensation
($)(3)
|
|
Total
Compensation
($)
|
|
James H. Roth
|
|
2016
|
|
900,000
|
|
207,900
|
|
|
1,939,930
|
|
|
83,903
|
|
27,109
|
|
|
3,158,842
|
|
President and Principal
Executive Officer
|
|
2015
|
|
900,000
|
|
594,000
|
|
|
2,662,934
|
|
|
|
|
31,134
|
|
|
4,188,068
|
|
|
2014
|
|
900,000
|
|
960,300
|
|
|
2,237,621
|
|
|
|
|
30,634
|
|
|
4,128,555
|
|
C. Mark
Hussey
|
|
2016
|
|
600,000
|
|
126,000
|
|
|
1,005,895
|
|
|
60,624
|
|
26,435
|
|
|
1,818,954
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane E.
Ratekin
|
|
2016
|
|
400,000
|
|
42,000
|
|
|
438,686
|
|
|
6,411
|
|
35,221
|
|
|
922,318
|
|
Executive Vice President,
General Counsel and
Corporate Secretary
|
|
2015
|
|
400,000
|
|
120,000
|
|
|
473,415
|
|
|
|
|
30,635
|
|
|
1,024,050
|
|
|
2014
|
|
400,000
|
|
194,000
|
|
|
397,764
|
|
|
7,988
|
|
28,761
|
|
|
1,028,513
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(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.
|
|
In 2016, the executives each received grants of restricted stock and performance share units. The amounts above reflect
the grant date fair value of the restricted stock and performance share unit awards. The fair value of the 2016 performance share units is based on the accounting assumptions used at the time of grant. At the time of grant, it was estimated that 40%
of the award, which is tied to annual performance, would have been earned at 100%, and 60% of the award, which is tied to three-year performance, would have been earned at 90%. The 90% estimated payout was based on the average performance compared
to target for the three-year period 2014 to 2016. Actual performance for 2014 and 2015 was 151% and 0%, respectively, and 2016 was estimated to be 100%, resulting in a three-year average of 84%. Based on the payout table established for the deferred
portion of the award, the average performance of 84% would result in a 90% payout. Based on actual 2014-2016 performance, the three-year average performance was 69%, also resulting in a 90% payout for the three-year component of the awards under
this plan.
|
|
The below chart is the detail of the Stock Awards amounts in the Summary Compensation Table above, representing the grant
date fair value of both the performance share units and the restricted stock awards.
|
|
|
|
|
|
|
|
Grant Date Fair Value
|
|
|
2016 Performance
Share Units ($)
|
|
2016 Restricted Stock
Awards ($)
|
James H. Roth
|
|
1,332,430
|
|
607,500
|
C. Mark Hussey
|
|
690,875
|
|
315,020
|
Diane E. Ratekin
|
|
263,187
|
|
175,499
|
|
The actual amount earned on the performance share unit awards granted in 2016 was 55%. The below chart represents the
adjusted values using the value of the earned performance shares:
|
|
|
|
|
|
|
|
|
|
Impact on Total Compensation Using Earned
Value
of Performance Share Units
|
|
|
2016 Earned
Performance
Share Units ($)
|
|
2016 Restricted
Stock Awards ($)
|
|
Total Compensation Based on
Value of Earned
Performance Share Units ($)
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
31
|
|
|
In 2015, the executives each received grants of restricted stock and performance share units. The amounts in the Summary
Compensation Table above reflect the grant date fair value of the restricted stock and performance share unit awards. The fair value of the 2015 performance share units is based on the accounting assumptions used at the time of grant. At the time of
grant, it was assumed that 40% of the award, which is tied to annual performance, would have been earned at 100%, and 60% of the award, which is tied to three-year performance, would have been earned at 175%. The 175% estimated payout value was
based on the average performance compared to target for the three-year performance 2014 to 2016. Actual performance for 2014 was 151%, and based on the assumption that performance for 2015 and 2016 was estimated to be at 100%, the resulting
three-year average would be 117%. Based on the payout table established for the deferred portion of the award, the average performance of 117% would result in a 175% payout. Based on actual 2015 performance, the payout for the performance share unit
awards granted in 2015 was 0%.
|
|
In 2014, the executives each received grants of restricted stock and performance share units. The amounts in the Summary
Compensation Table above reflect the grant date fair value of the restricted stock and performance share unit awards. The fair value of the 2014 performance share units is based on the accounting assumptions used at the time of grant. At the time of
grant, it was assumed that 40% of the award, which is tied to annual performance, would have been earned at 100%, and 60% of the award, which is tied to three-year performance, would have been earned at 125%. The 125% estimated payout value was
based on the assumption that each of the three years for 2014, 2015 and 2016 was earned at 100%, resulting in a 125% multiple. The
one-year
component of this award was earned at 125% of target. Based on actual
2014 to 2016 performance, the actual payout of the three-year component of this award was 112.5%.
|
|
For further details on the 2016 performance share unit plan, please refer to Performance Share Awards in
Section 3 - Compensation Program Details of the Compensation Discussion and Analysis.
|
(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 2016, 2015 and 2014 of 2.70%,
3.05% and 3.79%, respectively). For 2016, the actual earnings for Mr. Roth, Mr. Hussey and Ms. Ratekin were $126,937, $83,390 and $9,579, respectively. Mr. Roth began participation in the deferred compensation plan in 2015.
Mr. Hussey began participation in the plan in 2014. Ms. Ratekins earnings relate to amounts contributed to the plan prior to her becoming a named executive officer. Please see the section entitled 2016 Nonqualified Deferred
Compensation below for more detail.
|
(3)
|
All Other Compensation for 2016 is detailed in the table below.
|
2016 All Other Compensation
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive Long-
Term Disability
($)(1)
|
|
|
Executive $1MM
Term Life
Insurance
($)(2)
|
|
|
Company Provided
401(k) Match
($)(3)
|
|
|
Other Benefits
and
Perquisites
($)(4)
|
|
|
Total All
Other
Compensation
($)
|
|
James H. Roth
|
|
|
6,776
|
|
|
|
4,433
|
|
|
|
15,900
|
|
|
|
0
|
|
|
|
27,109
|
|
C. Mark Hussey
|
|
|
7,101
|
|
|
|
3,204
|
|
|
|
15,900
|
|
|
|
230
|
|
|
|
26,435
|
|
Diane E. Ratekin
|
|
|
7,952
|
|
|
|
7,044
|
|
|
|
15,900
|
|
|
|
4,325
|
|
|
|
35,221
|
|
(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 $320 annually for purchases that assist in maintaining work-life balance.
|
|
|
|
|
|
32
|
|
|
|
2017 PROXY STATEMENT
|
2016 G
RANTS
OF
P
LAN
-B
ASED
A
WARDS
The following table summarizes the grants of equity awards and annual cash
incentive awards for 2016 to each named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Estimated Future Payouts
Under
Non-Equity
Incentive
Plan Awards (1)
|
|
|
|
|
|
Estimated Future Payouts
Under Equity Incentive
Plan Awards (2)(3)
|
|
|
|
|
|
|
|
Name
|
|
Grant
Date
|
|
|
Date of
Compensation
Committee
Action
|
|
|
Threshold
($)
|
|
|
Target
($)
|
|
|
Maximum
($)
|
|
|
|
|
|
Threshold
(#)
|
|
|
Target
(#)
|
|
|
Maximum
(#)
|
|
|
All Other
Stock
Awards:
Number of
Shares of
Stock
(#)(3)
|
|
|
Full Grant
Date Fair
Value of
Each
Award
($)(4)
|
|
James H. Roth
|
|
|
3/1/2016
|
(5)
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,553
|
|
|
|
10,212
|
|
|
|
12,765
|
|
|
|
|
|
|
|
566,970
|
|
|
|
|
3/1/2016
|
(6)
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,872
|
|
|
|
15,319
|
|
|
|
38,298
|
|
|
|
|
|
|
|
765,460
|
|
|
|
|
3/1/2016
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
10,942
|
|
|
|
607,500
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
990,000
|
|
|
|
1,237,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
C. Mark Hussey
|
|
|
3/1/2016
|
(5)
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,324
|
|
|
|
5,295
|
|
|
|
6,619
|
|
|
|
|
|
|
|
293,978
|
|
|
|
|
3/1/2016
|
(6)
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,489
|
|
|
|
7,943
|
|
|
|
19,858
|
|
|
|
|
|
|
|
396,896
|
|
|
|
|
3/1/2016
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
5,674
|
|
|
|
315,020
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
|
600,000
|
|
|
|
750,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Diane E. Ratekin
|
|
|
3/1/2016
|
(5)
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
504
|
|
|
|
2,017
|
|
|
|
2,521
|
|
|
|
|
|
|
|
111,984
|
|
|
|
|
3/1/2016
|
(6)
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
567
|
|
|
|
3,026
|
|
|
|
7,565
|
|
|
|
|
|
|
|
151,203
|
|
|
|
|
3/1/2016
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
2,161
|
|
|
|
119,979
|
|
|
|
|
3/1/2016
|
|
|
|
2/25/2016
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
1,000
|
|
|
|
55,520
|
|
|
|
|
|
|
|
|
|
|
|
|
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 125% of target. Based on the achievement of specific financial goals, the Compensation Committee determined
that 21% of the target award was earned.
|
(2)
|
The 2016 grant of PSUs consists of two components: a
one-year
component based on
2016 performance and a three-year component based on both 2016 and 2014-2016 performance. Annual performance with respect to the 2016 performance period is assessed after the end of the 2016 performance period and the target number of PSUs is
adjusted based on 2016 performance. There is no payout if a threshold level of performance is not achieved. The adjustment ranges from 25% of target for threshold performance to 125% of target for maximum performance. Forty percent of the adjusted
PSUs (which comprise the
one-year
component) are earned and vest following the 2016 performance period. Based on the 2016 Adjusted EPS performance, the Compensation Committee determined that the amount of
one-year
PSUs earned was 55%, and these shares vested immediately.
|
|
The remaining 60% of the adjusted PSUs (which comprise the three-year component) are subject to a three-year performance
period (2014-2016). The multiple that could be applied on the three-year portion of the award ranges from 0.75 to 2.0. Once the 2014-2016 performance period is complete, 50% of the final award vests immediately and 50% of the final award is subject
to a service period through the end of 2017. Maximum is shown at 250% since 125% can be earned based on
one-year
performance and additional 200% earned on three-year performance (125% * 200%). Based on the
2016 Adjusted EPS performance, the Compensation Committee determined that the amount of three-year PSUs earned was 55%. These shares were subject to further adjustment based on 2014-2016 performance. Based on 2014-2016 Adjusted EPS performance, the
Compensation Committee determined that 90% of these shares had been earned resulting in 50% of the three-year component having been earned (55% earned based on
one-year
performance * 90% earned based on
three-year performance results in 50% earned).
|
|
The grant date fair value of the 2016 PSUs is based on the accounting assumptions used at the time of grant. At the time
of grant, it was estimated that the
one-year
component of the award would have been earned at 100% and that the three-year component of the award would have been earned at 90%. The estimated payout was based
on the average performance compared to target for the three-year period 2014 to 2016. Actual performance for 2014 and 2015 was 151% and 0%, respectively, and 2016 was estimated to be 100%, resulting in a three-year average of 84%. Based on the
payout table established for the three-year component of the award, the average performance of 84% would result in a 90% payout. Based on actual 2014-2016 performance, the three-year average performance was 69%, also resulting in a 90% payout for
the three-year component of the awards under this plan.
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
33
|
|
|
The following table shows the actual number of PSUs earned and vested with respect to 2016 and 2014-2016 performance
(which represents the earned amount for both the
one-year
and three-year component on the 2016 grant).
|
|
|
|
|
|
|
|
|
|
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 Companys 2012 Omnibus Incentive Plan.
|
(4)
|
The full grant date fair values of the March 1, 2016 PSUs are based on the closing price of Huron stock of $55.52 on
February 29, 2016, the last trading day prior to the grant of the awards. The total number of shares earned by recipients of these awards was contingent on meeting Adjusted EPS goals as described in Note (2) above.
|
(5)
|
The March 1, 2016 grant of PSUs consists of two components, a
one-year
component for the 2016 performance period and a three-year component for the 2014-2016 performance period. This row reports information for the
one-year
component of the award for 2016.
|
(6)
|
The March 1, 2016 grant of PSUs consists of two components, a
one-year
component for the 2016 performance period and a three-year component for the 2014-2016 performance period. This row reports information for the three-year component of the award for the 2014-2016 performance period.
|
|
|
|
|
|
34
|
|
|
|
2017 PROXY STATEMENT
|
2016 O
UTSTANDING
E
QUITY
A
WARDS
AT
F
ISCAL
Y
EAR
-E
ND
The following table sets forth certain information concerning outstanding stock and option awards as of December 31, 2016 for each named executive
officer. Market value is based on the closing price of Huron stock of $50.65 on December 30, 2016, the last trading day of the fiscal year.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Grant
Date
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)(1)
Exercisable
|
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
|
|
|
Option
Exercise
Price ($)
|
|
|
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
|
|
(1)
|
Option grants are subject to 25% vesting on each anniversary of the grant date provided the individual is still employed
by Huron on the applicable vesting dates.
|
(2)
|
Consists of unvested restricted stock as of December 31, 2016 that vests 25% annually over four years from the date
of grant provided the individual is still employed by Huron on the applicable vesting dates.
|
(3)
|
Consists of unvested restricted stock as of December 31, 2016 that vests 100% after one year from the date of grant
provided the individual is still employed by Huron on the applicable vesting date.
|
(4)
|
Consists of shares that have been delivered in respect of PSUs for which the performance condition has been satisfied,
that are unvested, and only subject to the remainder of the service period. The unvested stock will vest in full on December 31, 2017 provided the individual is still employed by Huron on this date.
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
35
|
|
2016 O
PTION
E
XERCISES
AND
S
TOCK
V
ESTED
The following table sets forth certain information concerning stock option
exercises and restricted stock vesting during 2016 for each named executive officer.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Option Exercises
|
|
|
|
|
Stock Awards
|
|
Name
|
|
Shares Acquired
On Exercise (#)
|
|
Value Realized
On Exercise ($)(1)
|
|
|
|
|
Shares Acquired
On Vesting (#)(2)
|
|
|
Value Realized
On Vesting ($)(3)
|
|
James H. Roth
|
|
0
|
|
0
|
|
|
|
|
|
|
21,211
|
|
|
|
980,142
|
|
C. Mark Hussey
|
|
0
|
|
0
|
|
|
|
|
|
|
8,885
|
|
|
|
406,252
|
|
Diane E. Ratekin
|
|
4,706
|
|
140,898
|
|
|
|
|
|
|
3,957
|
|
|
|
182,373
|
|
(1)
|
The value realized on exercise equals the difference between the option exercise price and the market value of Huron
stock on the date of exercise, multiplied by the number of shares exercised. Market value is measured as the closing price of Huron stock on the date of exercise.
|
(2)
|
Includes restricted stock that vested in 2016 and performance share units (PSUs) that were allocated on February 23,
2017, the date on which the actual performance results for 2016 were determined.
|
(3)
|
The value realized on vesting equals the market value of Huron stock measured as the closing price of the stock on the
most recent business day preceding the vesting date multiplied by the number of shares received on vesting.
|
2016 N
ONQUALIFIED
D
EFERRED
C
OMPENSATION
The following table shows the deferred compensation activity for the named executive officers in 2016.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Executive
Contributions
in 2016 ($)(1)
|
|
|
Company
Contributions
in 2016 ($)
|
|
|
Aggregate
Earnings in
2016 ($)
|
|
|
Aggregate
Withdrawals/
Distributions
in 2016 ($)
|
|
|
Aggregate
Balance as of
12/31/16 ($)(2)
|
|
James H. Roth
|
|
|
469,276
|
|
|
|
|
|
|
|
126,937
|
|
|
|
|
|
|
|
1,584,644
|
|
C. Mark Hussey
|
|
|
63,000
|
|
|
|
|
|
|
|
88,390
|
|
|
|
|
|
|
|
842,656
|
|
Diane E. Ratekin
|
|
|
|
|
|
|
|
|
|
|
9,579
|
|
|
|
|
|
|
|
117,278
|
|
(1)
|
Executive contributions include deferral of bonus for 2016, which amounts are also included in the
Non-Equity
Incentive Plan Compensation column of the 2016 Summary Compensation Table. These bonus amounts will be deposited into the accounts once 2016 bonuses are paid in March 2017.
|
(2)
|
The aggregate balance as of December 31, 2016 includes amounts deferred with respect to 2016 compensation that were
funded after fiscal
year-end.
|
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.
|
|
|
|
|
36
|
|
|
|
2017 PROXY STATEMENT
|
|
POTENTIAL PAYMENTS UPON TERMINATION OR
CHANGE OF CONTROL
|
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 Agreements are detailed below.
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, the 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 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 Agreement 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. Husseys 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 Amended and Restated Senior Management Agreement with Mr. Hussey, effective as of January 1, 2017 (the New Hussey Agreement). Under the New Hussey Agreement, Mr. Husseys employment will continue unless either
the Company or Mr. Hussey delivers to the other 60 days advance written notice of the cessation of Mr. Husseys employment. The New Hussey Agreement may be earlier terminated by Mr. Hussey or the Company pursuant to its
terms.
Under the Senior Management Agreement with Ms. Ratekin that was in effect during 2016, Ms. Ratekins 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. Ratekins employment will continue unless either the Company or Ms. Ratekin delivers to the other 60
days advance written notice of the cessation of Ms. Ratekins 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 executives performance, Company performance and the Companys compensation policies. Mr. Roths 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 Companys 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 Companys compensation policies.
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
37
|
|
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.
|
|
|
|
|
Event
|
|
Restricted Stock and Options
|
|
Performance Shares
|
Normal Vesting
|
|
25% annual vesting over 4 years
|
|
40% of earned shares vest in 1Q17; 60% subject to
2014-2016
performance (50% vest in 1Q17, 50% in
1Q18).
|
Voluntary Termination
|
|
Forfeit
|
|
Forfeit
|
Termination for Cause
|
|
Forfeit
|
|
Forfeit
|
Approved Retirement (comply with
non-compete
provisions)
|
|
Subject to
non-compete,
vesting continues per normal course post-retirement
|
|
Earned pro rata based on actual performance. Subject to
non-compete,
vesting continues per normal
course post retirement.
|
Death or Disability
|
|
Full acceleration
|
|
Earned pro rata based on actual performance. Vesting accelerated at end of performance period.
|
Involuntary/Good Reason
Termination
|
|
Pro rata vesting
|
|
Earned pro rata based on actual performance.
|
Change of Control (COC),
No Termination
|
|
No impact, assumed by acquirer
|
|
Performance period ends upon COC. Shares earned equal average of (i) finished performance years and (ii) unfinished performance
years assumed at 100% target. Vesting continues per normal course.
|
Involuntary/Good Reason
Termination
Post-COC
|
|
Full acceleration
|
|
Full acceleration
|
Other Benefits
Mr. Roth, Mr. Hussey and Ms. Ratekin will be eligible to participate in the Companys 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 officers 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 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 and
non-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 Companys 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
|
|
|
|
|
|
38
|
|
|
|
2017 PROXY STATEMENT
|
|
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 Companys then outstanding securities; or (c) the merger does not represent a sale of all or substantially all of the Companys assets;
|
|
|
the stockholders approve a plan of complete liquidation or dissolution; or
|
|
|
there is a disposition or sale of all or substantially all of the Companys 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. Roths 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. Husseys 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 Companys 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. Ratekins 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 three 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
Companys 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 executives resignation for Good Reason.
Definition of Good Reason in Relation to a Change of Control
Under all three 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 executives 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 an
across-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.
|
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
39
|
|
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):
|
|
|
Executive
|
|
Severance Benefits
|
James H. Roth
|
|
An amount in cash equal to his then
current annual base salary and his then current target bonus (increased in 2017 to two times the sum of his base salary and target bonus); pro rata bonus in the year of termination based on actual results; 12 months continuation of medical,
dental and vision insurance coverage (increased in 2017 to 24 months); pro rata vesting of all unvested restricted shares and service-based option awards, and pro rata vesting of performance shares that would otherwise have been earned in the year
of termination. Severance amounts are payable in a lump sum.
|
C. Mark Hussey
|
|
An amount in cash equal to six months of
his then current annual base salary (increased in 2017 to one and a half times the sum of his base salary and his then current target bonus, and a pro rata bonus in the year of termination based on actual results), six months continuation of
medical insurance (increased in 2017 to 18 months), pro rata vesting of all unvested restricted shares, and pro rata vesting of performance shares that would otherwise have been earned in the year of termination. Severance amounts are payable in a
lump sum.
|
Diane E. Ratekin
|
|
An amount in cash equal to six months of
her then current annual base salary (increased in 2017 to the sum of her base salary and her then current target bonus, and pro rata bonus in the year of termination based on actual results), six months continuation of medical insurance
(increased in 2017 to 12 months), pro rata vesting of all unvested restricted shares, and pro rata vesting of performance shares that would otherwise have been earned in the year of termination. Severance amounts are payable in a lump
sum.
|
In the event an executive qualifies for an approved retirement and signs a
non-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, 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). 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). 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 awards will vest and performance shares will vest in accordance with the applicable
performance share equity 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 executives Senior Management Agreement.
|
|
|
|
|
40
|
|
|
|
2017 PROXY STATEMENT
|
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):
|
|
|
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 bonus (increased in 2017 to two and a half times his base salary and target bonus), pro rata target bonus in the year of termination, 24 months continuation of medical,
dental and vision insurance coverage (increased in 2017 to 30 months), and accelerated vesting of all outstanding equity grants that were awarded at or prior to the time of the Change of Control. Severance amounts are payable in a lump
sum.
|
C. Mark Hussey
|
|
An amount in cash equal to the sum of
his then current annual base salary and his then current target bonus (increased in 2017 to two times his base salary and target bonus), pro rata target bonus in the year of termination, 12 months continuation of medical insurance (increased
in 2017 to 24 months), and accelerated vesting of all outstanding equity grants that were awarded at or prior to the time of the Change of Control. Severance amounts are payable in a lump sum.
|
Diane E. Ratekin
|
|
An amount in cash equal to the sum of
her then current annual base salary and her then current target bonus (increased in 2017 to one and a half times her base salary and target bonus), pro rata target bonus in the year of termination, 18 months continuation of medical insurance
(increased from 12 months) and accelerated vesting of all outstanding equity grants that were awarded at or prior to the time of the Change of Control. Severance amounts are payable in a lump sum.
|
Golden Parachute Cutback
All three 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.
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
41
|
|
P
OTENTIAL
P
AYMENTS
UPON
T
ERMINATION
OR
C
HANGE
OF
C
ONTROL
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, 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, 2016 and uses a share price of $50.65, the closing price of our stock on December 30,
2016, the last trading day before our fiscal year-end.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Name
|
|
Benefit
|
|
Termination
without Cause or
Resignation for
Good Reason ($)
|
|
|
Permanent Disability or
Death ($)
|
|
|
Involuntary
Termination Following
Change of Control ($)
|
|
James H. Roth
|
|
Salary
|
|
|
900,000
|
|
|
|
|
|
|
|
1,800,000
|
|
|
|
Bonus
|
|
|
990,000
|
|
|
|
|
|
|
|
1,980,000
|
|
|
|
Pro rata bonus (1)
|
|
|
207,900
|
|
|
|
|
|
|
|
990,000
|
|
|
|
Equity acceleration (2)
|
|
|
1,151,563
|
|
|
|
1,691,254
|
|
|
|
1,691,254
|
|
|
|
Benefits continuation
|
|
|
14,006
|
|
|
|
7,003
|
|
|
|
28,012
|
|
|
|
Total Value
|
|
|
3,263,469
|
|
|
|
1,698,257
|
|
|
|
6,489,266
|
|
C. Mark Hussey
|
|
Salary
|
|
|
300,000
|
|
|
|
|
|
|
|
600,000
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
Pro rata bonus
|
|
|
|
|
|
|
|
|
|
|
600,000
|
|
|
|
Equity acceleration (2)
|
|
|
464,261
|
|
|
|
707,884
|
|
|
|
707,884
|
|
|
|
Benefits continuation
|
|
|
6,544
|
|
|
|
3,272
|
|
|
|
13,087
|
|
|
|
Total Value
|
|
|
770,805
|
|
|
|
711,156
|
|
|
|
2,520,971
|
|
Diane E. Ratekin
|
|
Salary
|
|
|
200,000
|
|
|
|
|
|
|
|
400,000
|
|
|
|
Bonus
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
Pro rata bonus
|
|
|
|
|
|
|
|
|
|
|
200,000
|
|
|
|
Equity acceleration (2)
|
|
|
234,816
|
|
|
|
365,997
|
|
|
|
365,997
|
|
|
|
Benefits continuation
|
|
|
6,465
|
|
|
|
3,232
|
|
|
|
12,929
|
|
|
|
Total Value
|
|
|
441,281
|
|
|
|
369,229
|
|
|
|
1,178,926
|
|
(1)
|
Mr. Roths pro rata bonus for termination without Cause or resignation for Good Reason is based on actual
performance from 2016. See Compensation Discussion and Analysis for disclosure regarding amount earned.
|
(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 multiplied by the closing price on December 30, 2016, the last trading day before our fiscal year-end. These amounts do not reflect the value of stock that continues to vest per the original schedule
post termination. 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 agreements.
|
|
|
|
|
|
42
|
|
|
|
2017 PROXY STATEMENT
|
C
OMPENSATION
C
OMMITTEE
I
NTERLOCKS
AND
I
NSIDER
P
ARTICIPATION
During 2016, 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.
C
ERTAIN
R
ELATIONSHIPS
AND
R
ELATED
T
RANSACTIONS
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 SECs 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 SECs related
person disclosure requirements between Huron and a board member or a principal stockholder and members of their immediate families.
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.
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
43
|
|
PROPOSAL 2
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.
|
|
|
|
|
As of March 2, 2017:
|
|
|
|
Stock options
outstanding
|
|
|
194,297
|
|
Weighted average
exercise price of stock options outstanding
|
|
|
$29.06
|
|
Weighted average
remaining contractual life of stock options outstanding
|
|
|
4 years
|
|
Shares subject to
outstanding restricted stock and other full value awards (unvested and unearned)
|
|
|
818,614
|
|
Shares remaining for
grant under the existing 2012 Omnibus Incentive Plan
|
|
|
606,660
|
|
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
Hurons 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 Hurons 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.
|
|
|
|
|
44
|
|
|
|
2017 PROXY STATEMENT
|
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 minimum
one-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 to
non-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 on
tax-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 on
tax-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. Broker
non-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 COMPANYS 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);
|
|
|
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
|
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
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
45
|
|
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 a
pre-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
such
pre-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 the
pre-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 Hurons 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:
|
|
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:
|
|
|
|
|
46
|
|
|
|
2017 PROXY STATEMENT
|
|
|
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 Companys 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 Companys stockholders if approval is required under the rules of any stock exchange on which the Companys 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 participants
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 persons 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
participants 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 any
12-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:
|
|
|
|
|
|
|
|
|
|
|
|
2017 PROXY STATEMENT
|
|
|
|
47
|
|
|
|
return on total stockholder equity;
|
|
|
earnings or book value per share of Company common stock (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;
|
|
|
levels of expense, costs or liabilities;
|
|
|
department, division or business unit level performance;
|
|
|
stock price appreciation;
|
|
|
total stockholder return (TSR);
|
|
|
implementation or completion of critical projects or processes;
|
|
|
days sales outstanding (DSO);
|
|
|
financial coverage ratios;
|
|
|
other
non-GAAP
financial measures; and
|
|
|
any combination of the foregoing.
|
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 or
non-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;
|
|
|
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;
|
|
|
an event either not directly related to the operations of the Company or not within reasonable control of the
Companys 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
|
|
|
|
|
48
|
|
|
|
2017 PROXY STATEMENT
|
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
participants 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 the
one-year
and
two-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 participants 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.
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2017 PROXY STATEMENT
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49
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|
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 as
non-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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50
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2017 PROXY STATEMENT
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PROPOSAL 3
ADVISORY VOTE TO APPROVE THE COMPANYS 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 COMPENSATIONCompensation 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 2016 Annual Meeting of Stockholders, in excess of 99% of the votes
cast on this proposal voted to support Hurons 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. Broker
non-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.
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2017 PROXY STATEMENT
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51
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PROPOSAL 4
ADVISORY VOTE ON THE FREQUENCY OF THE ADVISORY STOCKHOLDER VOTE TO APPROVE THE COMPANYS 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 separate
non-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 broker
non-votes
will have no impact on the frequency of the
advisory vote recommended by stockholders. Although the vote is
non-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 and
non-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 FUTURE
NON-BINDING
STOCKHOLDER VOTES ON THE COMPENSATION OF OUR EXECUTIVE OFFICERS.
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52
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2017 PROXY STATEMENT
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PROPOSAL 5
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. 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. Broker
non-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 Companys independent registered public accounting firm for the fiscal year ending December 31, 2017, unless specified otherwise.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS VOTE
FOR
THE RATIFICATION OF THE APPOINTMENT OF PRICEWATERHOUSECOOPERS LLP AS THE
COMPANYS INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR THE FISCAL YEAR ENDING DECEMBER 31, 2017.
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.
A
UDIT
AND
N
ON
-A
UDIT
F
EES
The following table presents fees for
professional audit services rendered by PwC for the audit of the Companys annual financial statements for the years ended December 31, 2016 and December 31, 2015, and fees for other services rendered by PwC during those periods:
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2016
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2015
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(in thousands)
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Audit Fees
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$
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1,393
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$
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1,680
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Audit-Related Fees
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419
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10
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Tax Fees
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33
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31
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All Other Fees
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2
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4
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Total
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$
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1,847
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|
|
|
|
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$
|
1,725
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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 2016 and 2015 were compatible.
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2017 PROXY STATEMENT
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53
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P
OLICY
ON
A
UDIT
C
OMMITTEE
P
REAPPROVAL
OF
A
UDIT
AND
N
ON
-A
UDIT
S
ERVICES
OF
I
NDEPENDENT
R
EGISTERED
P
UBLIC
A
CCOUNTING
F
IRM
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 and
non-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 SECs 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.
R
EPORT
OF
THE
A
UDIT
C
OMMITTEE
The primary purpose of the Audit Committee is to assist the board of directors in its general oversight of the
Companys 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.
Hurons 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. Hurons independent registered public accounting
firm, PwC, is responsible for performing an independent audit of Hurons 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 Hurons systems of internal control for the fiscal year ended December 31, 2016.
These activities included, but were not limited to, the following during the fiscal year ended December 31, 2016:
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Discussed with Hurons internal auditors their continuing work in support of examination of internal controls and
financial compliance controls.
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Reviewed and discussed with management and PwC the audited financial statements and the quarterly financial statements
for the year ended December 31, 2016. Management has the primary responsibility for such financial statements.
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Discussed with PwC the matters requiring discussion under current auditing standards.
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Received the written disclosures and the letter from PwC in accordance with the applicable requirements of the Public
Company Accounting Oversight Board regarding PwCs communications with the Audit Committee concerning independence.
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In
reliance on the Committees 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 Hurons Annual Report on Form
10-K
for the fiscal year ended December 31, 2016 for filing with the Securities and Exchange Commission.
H.
Eugene Lockhart, Chairman
John McCartney
John S.
Moody
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54
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2017 PROXY STATEMENT
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SUBMISSION OF STOCKHOLDER PROPOSALS
In order to be included in the Companys proxy statement relating to its next annual meeting, stockholder proposals must be received no later than
November 27, 2017 by the Corporate Secretary at the Companys principal executive offices. Pursuant to the Companys bylaws, stockholders who intend to present an item for business at the next annual meeting (other than a proposal
submitted for inclusion in the Companys proxy materials) must provide notice to the Corporate Secretary no earlier than January 5, 2018 and no later than February 4, 2018. Notice of stockholder proposals must contain the information
required by the Companys 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.
OTHER MATTERS
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 Companys 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.
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By Order of the Board of Directors
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Diane E. Ratekin
Executive Vice President, General Counsel
and Corporate
Secretary
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Chicago, Illinois
March 27, 2017
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2017 PROXY STATEMENT
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55
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APPENDIX A
HURON CONSULTING GROUP INC.
2012 OMNIBUS INCENTIVE PLAN
(As Amended and Restated Effective May 1, 2017)
1.
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History and Purpose.
Huron Consulting Group Inc., a Delaware corporation (
Huron
), previously
established the Huron Consulting Group Inc. 2012 Omnibus Incentive Plan, as amended from time to time (the
Plan
) to attract and retain employees,
non-employee
directors and
independent contractors providing services to Huron and/or the Affiliates (defined below), to motivate Participants (defined below) to achieve long-term goals of Huron and the Affiliates, to provide incentive compensation opportunities that are
competitive with those of other corporations, and to further align Participants interests with those of Hurons stockholders, and thereby to promote the long-term financial interest of Huron and the Affiliates, including growth in value
of Hurons equity and enhancement of long-term stockholder value. The Plan has been previously amended, and the following provisions constitute an amendment, restatement, and continuation of the Plan effective May 1, 2017.
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2.
|
Definitions.
As used in the Plan, the following definitions apply to the terms indicated below:
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(a)
|
Administrative Actions
shall have the meaning set forth in Section 5(d).
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(b)
|
Affiliate
means any corporation, partnership, joint venture or other entity during any period in which
(i) Huron, directly or indirectly, owns at least 50% of the combined voting power of all classes of stock of such entity or at least 50% of the ownership interests in such entity or (ii) such entity, directly or indirectly, owns at least
50% of the combined voting power of all classes of stock of Huron.
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(c)
|
Agreement
shall mean an agreement between Huron and a Participant evidencing an Award or a notice of
an Award, in a form approved by the Committee.
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(d)
|
Alternative Agreement
shall mean, with respect to any Participant, an employment agreement, senior
management agreement or other written agreement describing the Participants terms of employment with Huron or an Affiliate.
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(e)
|
Award
shall mean any award described in Section 7 or 8 of the Plan.
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(f)
|
Board of Directors
shall mean the Board of Directors of Huron.
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(g)
|
Business Criteria
shall mean (i) return on total stockholder equity; (ii) earnings or book
value per share of Common Stock (
EPS
); (iii) adjusted EPS; (iv) net income (before or after taxes); (v) 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; (vi) return on assets, capital or investment; (vii) market share; (viii) market capitalization; (ix) cost reduction
goals; (x) levels of expense, costs or liabilities; (xi) department, division or business unit level performance; (xii) operating income; (xiii) sales or revenues; (xiv) stock price appreciation; (xv) total stockholder
return (
TSR
); (xvi) implementation or completion of critical projects or processes; (xvii) adjusted EBITDA; (xviii) days sales outstanding (
DSO
); (xix) financial coverage ratios; (xx) other
non-GAAP
financial measures, or (xxi) any combination of the foregoing.
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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).
A-1
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 or
non-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 Hurons 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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(h)
|
Cash Incentive Award
shall mean the grant of a right to receive a payment of cash (or, in the
discretion of the Committee, shares of Common Stock having value equivalent to the cash otherwise payable) that is contingent on achievement of performance objectives or other conditions over a specified period established by the Committee. The
grant of Cash Incentive Awards may also be subject to such other conditions, restrictions, and contingencies, as determined by the Committee, including provisions relating to deferred payment.
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(i)
|
Cause
shall mean, unless otherwise defined in a Participants Agreement or an Alternative
Agreement, any of the following actions or failures by the Participant, as determined in the reasonable judgment of Huron: (i) engaging in conduct that violates written policies of Huron or any Affiliate; (ii) failure to perform the
essential functions of his or her job (except for a failure resulting from a bona fide illness or incapacity); (iii) failure to carry out the reasonable directions of Huron or any Affiliate, issued through Hurons Chief Executive Officer,
the Board of Directors, other appropriate senior employee responsible for the Participants business unit or area, the Participants supervisor, or the person to whom the Participant reports; (iv) embezzlement, misappropriation of
corporate funds, any act of fraud, dishonesty or self-dealing, or the commission of a felony or any significant violation of any statutory or common law duty of loyalty to Huron or any Affiliate; (v) an act or omission that could adversely and
materially affect the business or reputation of Huron or any Affiliate or involves moral turpitude; or (vi) a breach of a material provision of this Plan, the Agreement evidencing an Award or an Alternate Agreement.
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(j)
|
Change of Control
shall mean the first to occur of the following events:
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(i)
|
any Person becomes the Beneficial Owner, directly or indirectly, of Common Stock or voting securities of Huron (not
including in the amounts beneficially owned by such Person any Common Stock or voting securities acquired directly from Huron or the Affiliates) representing 40% or more of the combined voting power of Hurons then outstanding securities;
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(ii)
|
there is consummated a merger or consolidation of Huron or any direct or indirect subsidiary of Huron with any Person,
other than (A) a merger or consolidation which would result in the voting securities of Huron outstanding immediately prior to such merger or consolidation continuing to represent (either by remaining outstanding or by being converted into
voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the securities of Huron or such surviving entity or any parent thereof outstanding immediately after such merger or consolidation;
(B) a merger or consolidation effected to implement a recapitalization of Huron (or
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A-2
|
similar transaction) in which no Person other than existing security holders is or becomes the Beneficial Owner, directly or indirectly, of securities of Huron (not including in the amount
Beneficially Owned by such Person any Common Stock or voting securities acquired directly from Huron or any Affiliate) representing 50% or more of the combined voting power of Hurons then outstanding securities; or (C) a merger or
consolidation of a subsidiary of Huron that does not represent a sale of all or substantially all of the assets of Huron;
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(iii)
|
the stockholders of Huron approve a plan of complete liquidation or dissolution of Huron (except for a plan of
liquidation or dissolution effected to implement a recapitalization of Huron addressed in paragraph (ii) above); or
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(iv)
|
there is consummated an agreement for the sale or disposition of all or substantially all of the assets of Huron to a
Person, other than a sale or disposition by Huron of all or substantially all of the assets of Huron to an entity, at least 50% of the combined voting power of the voting securities of which are owned by stockholders of Huron.
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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 in
Rule 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 Hurons 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 in
Rule 12b-2
promulgated under Section 12 of the Exchange Act.
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(k)
|
Code
shall mean the Internal Revenue Code of 1986, as amended from time to time, and any regulations
promulgated thereunder.
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(l)
|
Committee
shall mean a committee of the Board of Directors consisting of two or more persons each of
whom shall qualify as an outside director within the meaning of Section 162(m) of the Code, a nonemployee director within the meaning of Rule
16b-3
promulgated under the Exchange Act,
as amended from time to time, and an independent director within the meaning of the NASD Rule 4350(c)(1).
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(m)
|
Common Stock
shall mean the common stock of Huron, par value $.01 per share.
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(n)
|
Covered Employee
shall have the meaning set forth in Section 162(m) of the Code.
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(o)
|
Disabled
shall mean permanently and totally disabled within the meaning of Section 22(e)(3) of the
Code.
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(p)
|
Effective Date
shall have the meaning set forth in Section 3.
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(q)
|
Eligible Individuals
shall mean employees of Huron or any of the Affiliates (including officers,
whether or not they are directors of Huron or any Affiliate), independent contractors providing services to Huron or any Affiliate and
non-employee
directors of Huron or any Affiliate.
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(r)
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Exchange Act
shall mean the Securities Exchange Act of 1934, as amended from time to time.
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(s)
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Exercise Price
shall have the meaning set forth in Section 7(c).
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A-3
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(t)
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Fair Market Value
of a share of Common Stock as of any date shall mean the value determined in
accordance with the following rules:
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(i)
|
If the Common Stock is at the time listed or admitted to trading on any stock exchange, then the Fair Market Value shall
be the closing price per share of Common Stock on such date on the principal exchange on which the Common Stock is then listed or admitted to trading or, if no such sale is reported on such date, on the last preceding date on which a sale was so
reported.
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(ii)
|
If the Common Stock is not at the time listed or admitted to trading on a stock exchange but bid and asked prices for the
Common Stock are regularly reported, then the Fair Market Value shall be the arithmetic mean between the closing or last bid and asked prices for the Common Stock on such date or, if no bid and asked prices for Common Stock are reported on such
date, on the most recent day immediately prior thereto on which bid and asked prices were so reported.
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(iii)
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If the Common Stock is not listed or admitted to trading on any stock exchange and if prices are not regularly reported
for the Common Stock as described in paragraph (ii), the Fair Market Value shall be as determined by the Committee in good faith in its sole discretion or under procedures established by the Committee, whose determination shall be conclusive and
binding.
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(iv)
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For purposes of determining the Fair Market Value of shares of Common Stock that are sold pursuant to a broker-assisted
cashless exercise program, Fair Market Value shall be the price at which such shares are sold.
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(u)
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Full Value Award
shall mean an Award that is granted pursuant to Section 8 hereof and that is the
grant of one or more shares of Common Stock or a right to receive one or more shares of Common Stock in the future, which grant may be subject to one or more of the following, as determined by the Committee:
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(i)
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The grant may be in consideration of a Participants previously performed services or surrender of other
compensation that may be due.
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(ii)
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The grant may be contingent on the achievement of performance or other objectives during a specified period.
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(iii)
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The grant may be subject to a risk of forfeiture or other restrictions that will lapse upon the achievement of one or
more goals relating to completion of service by the Participant or achievement of performance or other objectives.
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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 Participants 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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(v)
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Huron
shall have the meaning set forth in Section 1.
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(w)
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Incentive Stock Option
shall mean an Option that qualifies as an incentive stock option
within the meaning of Section 422 of the Code, or any successor provision, and which is designated by the Committee as an Incentive Stock Option.
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(x)
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Nonqualified Stock Option
shall mean an Option other than an Incentive Stock Option.
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(y)
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Option
shall mean an Award that is granted pursuant to Section 7 hereof that entitles a
Participant to purchase shares of Common Stock at the applicable Exercise Price established by the Committee.
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(z)
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Participant
shall mean an Eligible Individual to whom an Award is granted pursuant to the Plan.
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(aa)
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Performance-Based Compensation
shall have the meaning set forth in Section 9.
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(bb)
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Plan
shall have the meaning set forth in Section 1.
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A-4
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(cc)
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Retirement
shall mean the voluntary termination with Huron and the Affiliates of a Participant who is
in the position of corporate vice president, managing director or executive officer and (i) such termination occurs on or after the date on which he or she has attained age 62 and completed at least seven years of employment with Huron and
(ii) in conjunction with such termination such Participant has executed a
non-competition
and
non-solicitation
agreement provided by Huron. A Participants
termination of employment shall not be considered to be on account of Retirement if the employment is terminated by Huron or any Affiliate for any reason.
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(dd)
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Stock Appreciation Right
shall mean an Award is granted pursuant to Section 7 hereof that
entitles a Participant to receive, upon exercise of the Award, an amount of cash or shares of Common Stock (as determined in accordance with the terms of the Plan and the Award) having a value equal to the excess of: (i) the value, determined
at the time of exercise, of a specified number of shares of Common Stock; over (ii) the applicable Exercise Price.
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(ee)
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Subsidiary
shall mean a subsidiary corporation of Huron within the meaning of
Section 424(f) of the Code.
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3.
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Effective Date and Duration of Plan.
The Plan, as amended and restated, will be effective May 1, 2017 (the
Effective Date
), subject to approval by Hurons stockholders. The Plan shall be unlimited in duration; however, in the event of Plan termination, the Plan shall remain in effect as long as any shares of Common Stock awarded
under it are outstanding and not fully vested. No new Awards will be made under the Plan on or after the tenth anniversary of the Effective Date or, if earlier, on or after termination of the Plan.
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4.
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Shares Reserved and Other Limitations.
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(a)
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Source of Shares
. Shares of Common Stock reserved for issuance under the Plan may be authorized but unissued
shares of Common Stock or authorized and issued shares of Common Stock held in Hurons treasury, including shares purchased in the open market or in private transactions.
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(b)
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Shares Available for Awards
. Subject to the terms and conditions of the Plan, the number of shares of Common Stock
reserved for issuance under the Plan shall be 3,052,204 shares (comprised of: (i) the 1,398,204 shares of Common Stock authorized under the Plan as originally adopted, (ii) an additional 850,000 shares of Common Stock authorized in the
amendment and restatement of the Plan effective May 2, 2014, and (iii) an additional 804,000 shares of Common Stock authorized in this amendment and restatement of the Plan), subject to adjustment as provided herein.
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Additionally, in the event that a corporation acquired by (or combined with) Huron or any subsidiary has shares available under a
pre-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 such
pre-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 the
pre-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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(c)
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Individual Limitations on Awards
.
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(i)
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The maximum number of shares of Common 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 adjustment as provided herein).
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A-5
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(1)
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If Awards are denominated in shares of Common Stock but an equivalent amount of cash is delivered in lieu of shares of
Common Stock, the foregoing limit shall be applied based on the methodology used by the Committee to convert the number of shares into cash.
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(2)
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If delivery of shares of Common Stock or cash is deferred until after shares of Common Stock have been earned, any
adjustment in the amount delivered to reflect actual or deemed investment experience after the date the shares are earned shall be disregarded.
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(ii)
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For any participant who is an outside director of Huron, 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 shall not exceed $1,500,000; provided, however, that if an individual employee becomes an outside director
(or vice versa) during a calendar year, the limit in this sentence shall not apply to Awards granted to the individual in the individuals capacity as an employee.
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(d)
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Limits on Incentive Stock Options
. The maximum number of shares of Common Stock to which Incentive Stock Options
relate that may be granted under the Plan shall be 325,000 (subject to adjustment as provided herein).
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(e)
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Individual Limitations on Cash Incentive Awards
. The maximum amount payable to any Participant for any
12-month
performance period with respect to a Cash Incentive Award granted under the Plan that is intended to be Performance-Based Compensation shall be $10,000,000 (prorated for performance periods that are greater
or lesser than 12 months). For purposes of this Section 4(e):
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(i)
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If the Award is denominated in cash but an equivalent amount of Common Stock is delivered in lieu of delivery of cash,
the foregoing limit shall be applied to the cash based on the methodology used by the Committee to convert the cash into shares.
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(ii)
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If delivery of shares of Common Stock or cash is deferred until after cash has been earned, any adjustment in the amount
delivered to reflect actual or deemed investment experience after the date the cash is earned shall be disregarded.
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(f)
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Adjustments for Change in Capitalization
. In the event that any dividend or other distribution is declared
(whether in the form of cash, Common Stock, or other property), or there occurs any recapitalization, stock split, reverse stock split, reorganization, merger, consolidation,
spin-off,
combination, repurchase,
share exchange or other similar corporate transaction or event, the Committee shall equitably adjust, in its sole and absolute discretion, (i) the number and kind of shares of stock which may thereafter be issued in connection with Awards;
(ii) the number and kind of shares of stock or other property issued or issuable in respect of outstanding Awards; (iii) the exercise price, grant price or purchase price relating to any Award; (iv) the limitations set forth in
Sections 4(b), 4(c), 4(d), and 4(e) (provided that, with respect to Incentive Stock Options, such adjustment shall be made in accordance with Section 424 of the Code and any regulations thereunder and provided further that, to the extent
applicable, such adjustment shall comply with Section 409A of the Code); and (v) any other adjustments that the Committee determines to be equitable (which may include, without limitation, (1) replacement of Awards with other Awards which
the Committee determines have comparable value and which are based on stock of a company resulting from the transaction and (2) cancellation of the Award in return for cash payment of the current value of the Award, determined as though the
Award is fully vested at the time of payment, provided that in the case of an Option or Stock Appreciation Right, the amount of such payment may be the excess of value of the shares of Common Stock subject to the Option or Stock Appreciation Right
at the time of the transaction over the Exercise Price).
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(g)
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Reuse of Shares
. Except to the extent that to do so would prevent the grant of Incentive Stock Options hereunder,
the following shares of Common Stock shall again become available for Awards:
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(i)
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any shares subject to an Award that remain unissued upon the cancellation, surrender, exchange, forfeiture or termination
of such Award without having been exercised or settled; and
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A-6
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(ii)
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to the extent an Award is paid or settled in cash, the number of shares of Common Stock with respect to which such
payment or settlement is made.
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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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(x)
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any shares subject to an Award that are retained as payment of the exercise price of an Option;
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(y)
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any shares retained to satisfy: (A) all tax withholding obligations with respect to an 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
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(z)
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any shares repurchased by Huron using stock option exercise proceeds.
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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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(h)
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Special Vesting Rules for All Awards
. Except for Awards (when aggregated with all other Awards under the Plan)
which do not exceed 5% of the total number of shares of Common Stock reserved for issuance under the Plan in the aggregate, in no event shall the required period of service for full vesting be less than one year (subject, to the extent provided by
the Committee, to acceleration of vesting in the event of the Participants death, Disability, or Change of Control).
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(i)
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Dividends
. Dividends may be accrued but shall not be paid with respect to any Award unless and until the
Participant has vested in the underlying Award.
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5.
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Administration of the Plan.
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(a)
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General
. The Plan shall be administered by the Committee. The Committee shall have the authority in its sole
discretion, subject to and not inconsistent with the express provisions of the Plan, to administer the Plan and to exercise all the powers and authorities either specifically granted to it under the Plan or necessary or advisable in the
administration of the Plan, including, without limitation, the authority to (i) grant Awards; (ii) determine the Eligible Individuals to whom, and the time or times at which, Awards shall be granted; (iii) 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; (iv) determine whether, to what
extent, and under what circumstances an Award may be settled, cancelled, forfeited, exchanged, or surrendered; (v) conclusively construe and interpret the Plan and all Awards; (vi) prescribe, amend and rescind rules and regulations
relating to the Plan; (vii) determine the terms and provisions of Agreements; and (viii) make all other determinations deemed necessary or advisable for the operation and administration of the Plan. The Committee may, in its sole and
absolute discretion, without amendment to the Plan (but subject to the terms and conditions of the Plan), (w) accelerate the date on which any Option or Stock Appreciation Right becomes exercisable; (x) waive or amend the operation of Plan
provisions respecting exercise after termination of employment (provided that the term of an Option or Stock Appreciation Right may not be extended beyond ten years from the date of grant); (y) accelerate the vesting date, or waive any
condition imposed hereunder, with respect to any Full Value Award; and (z) otherwise adjust any of the terms applicable to any such Award in a manner consistent with the terms of the Plan.
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(b)
|
Decisions Binding
. Any interpretations of the Plan by the Committee and any decisions made by it under the Plan
are final and binding on all persons.
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(c)
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Delegation
. Except to the extent prohibited by the applicable rules of any stock exchange or applicable law, the
Committee may allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it. Any such allocation or
delegation may be revoked by the Committee at any time. Without limiting the generality of the foregoing, the Committee may delegate to one or more officers of Huron or any of its Affiliates the authority to act on behalf of the Committee with
respect to any matter,
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A-7
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right, obligation, or election that is the responsibility of or that is allocated to the Committee herein, and that may be so delegated as a matter of law, except for grants of Awards to persons
(i) who are
non-employee
members of the Board or otherwise are subject to Section 16 of the Exchange Act or (ii) who are, or who are reasonably expected to be, covered employees for
purposes of Section 162(m) of the Code.
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(d)
|
Indemnification
. No member of the Committee (or an authorized delegate of the Committee), and no officer of Huron
or any of the Affiliates, shall be liable for any action taken or omitted to be taken by such individual or by any other member of the Committee or officer of Huron or any Affiliate in connection with the performance of duties under this Plan,
except for such individuals own willful misconduct or as expressly provided by law (the
Administrative Actions
). Further, the Committee (and all delegates of the Committee), in addition to such other rights of
indemnification as they may have as members of the Board of Directors or officers of Huron or an Affiliate, any individual serving as a Committee member (and any authorized delegate) shall be indemnified and held harmless by Huron to the fullest
extent allowed by law against all costs and expenses reasonably incurred by them in connection with any action, suit or proceeding to which they or any of them may be party by reason of any Administrative Action.
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6.
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Participation.
Subject to the terms and conditions of the Plan, the Committee shall determine and designate, from
time to time, from among the Eligible Individuals those persons who will be granted one or more Awards under the Plan and, subject to the terms and conditions of the Plan, a Participant may be granted any Award permitted under the provisions of the
Plan and more than one Award may be granted to a Participant. Except as otherwise agreed between Huron and the Participant, or except as otherwise provided in the Plan, an Award under the Plan shall not affect any previous Award under the Plan or an
award under any other plan maintained by Huron or any of the Affiliates. No Participant or other person shall have any claim to be granted any Award, and there is no obligation for uniformity of treatment of Participants, or holders or beneficiaries
of Awards, or of multiple Awards granted to a Participant. The terms and conditions of Awards and the Committees determinations and interpretations with respect thereto need not be the same with respect to each Participant (whether or not such
Participants are similarly situated).
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7.
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Options and Stock Appreciation Rights.
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(a)
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Grant of Awards
. The Committee may grant Options and/or Stock Appreciation Rights to Eligible Individuals, subject
to the terms and conditions of the Plan.
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(b)
|
Identification of Options
. Each Option shall be clearly identified as either an Incentive Stock Option or a
Nonqualified Stock Option.
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(c)
|
Exercise Price
. The
Exercise Price
of an Option or Stock Appreciation Right shall be
established by the Committee at the time the Option or Stock Appreciation Right is granted; provided, however, that in no event shall the Exercise Price be less than 100% of the Fair Market Value of a share of Common Stock on the date of grant (or,
if greater, the par value of a share of Common Stock on the date of grant).
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(d)
|
No Repricing/Prohibition on
Buy-Back
. Except for either adjustments
pursuant to Section 4(f) or reductions of the Exercise Price approved by Hurons stockholders, the Exercise Price for any outstanding Option or Stock Appreciation Right may not be decreased after the date of grant nor may an outstanding Option
or Stock Appreciation Right granted under the Plan be surrendered to Huron as consideration for the grant of a replacement Option or Stock Appreciation Right with a lower Exercise Price. Except as approved by Hurons stockholders, in no event
shall any Option or Stock Appreciation Right granted under the Plan be surrendered to Huron in consideration for a cash payment if, at the time of such surrender, the Exercise Price of the Option or Stock Appreciation Right is greater than the then
current Fair Market Value of a share of Common Stock. In addition, no repricing of an Option shall be permitted without the approval of Hurons stockholders if such approval is required under the rules of any stock exchange on which Common
Stock is listed.
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A-8
|
(i)
|
Each Option or Stock Appreciation Right shall become exercisable at the time determined by the Committee at the date of
grant, subject to the terms and conditions of the Plan. At the time of grant of an Option or Stock Appreciation Right, as applicable, the Committee may impose such restrictions or conditions of the exercisability of the Award as it, in its absolute
discretion, deems appropriate, including, but not limited to, achievement of performance goals based on one or more Business Criteria or conditions relating to the completion of a specified period of service. Subject to Section 7(g) hereof, the
Committee shall determine the expiration date of each Option and Stock Appreciation Right, as applicable, which shall be no later than the tenth anniversary of the date of grant of the Award. No Option or Stock Appreciation Right, as applicable, may
be exercised after the expiration date applicable thereto. If an Option (other than an Incentive Stock Option) has an expiration date during or within three days of a Blackout Period (defined as any period of time when, pursuant to any policies of
Huron, any securities of the Corporation may not be traded by certain persons as designated by the Corporation), then the expiration date of such Option shall be extended for a period of 30 days following the end of the Blackout Period or such
longer period as permitted by the Committee. Notwithstanding the foregoing, no extension of the exercise period may occur if it would cause the Option to become subject to and in violation of the requirements of Section 409A(a) of the Code.
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(ii)
|
An Option or Stock Appreciation Right shall be exercised by delivering the form of notice of exercise provided by Huron.
Unless otherwise provided in the Award Agreement, an Option will be automatically exercised via a broker-assisted cashless exercise upon the expiration date of the Option if the value of a share of Common Stock on the expiration date exceeds the
Exercise Price for such Option.
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(iii)
|
Payment for shares of Common Stock purchased upon the exercise of the Option shall be made on the effective date of such
exercise by one or a combination of the following means (except that in the case of exercise using a broker-assisted cashless exercise, payment may be made as soon as practicable after exercise): (1) in cash or cash equivalents; (2) by
tendering, by actual delivery or attestation, shares of Common Stock owned by the Participant for at least six months prior to the date of exercise and valued on the effective date of such exercise; or (3) by any such other methods (including
broker-assisted cashless exercise via a broker selected by the Committee) as the Committee may from time to time authorize; provided, however, that in all cases, the method of making such payment shall be in compliance with applicable law.
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(iv)
|
Payment in settlement of a Stock Appreciation Right may be made solely in whole shares of Common Stock valued on the date
of exercise of the Stock Appreciation Right or alternatively, in the sole discretion of the Committee, solely in cash or a combination of cash and shares. If the Committee decides that payment will be made in shares of Common Stock, and the amount
payable results in a fractional share, payment for the fractional share will be made in cash.
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(v)
|
Upon the exercise of an Option or settlement of a Stock Appreciation Right in shares of Common Stock, in a manner
determined by the Committee, either (1) certificates for shares of Common Stock shall be issued in the name of or for the account of the Participant or other person entitled to receive such shares or (2) shares of Common Stock shall be
credited to such persons account via book-entry transfer and shall be registered in such persons name solely on the records of Hurons transfer agent, in each case, as soon as practicable following the effective date on which the
Option or Stock Appreciation Right, as applicable, is exercised.
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(f)
|
Provisions Relating to Incentive Stock Options
. Incentive Stock Options may only be granted to employees of Huron
and its Subsidiaries, in accordance with the provisions of Section 422 of the Code. To the extent that the aggregate Fair Market Value of shares of Common Stock with respect to which Incentive Stock Options are exercisable for the first time by
a Participant during any calendar year under the Plan and any other stock option plan of Huron or any of its Subsidiaries shall exceed $100,000, such Options shall be treated as Nonqualified Stock Options. For purposes of the preceding sentence,
Fair Market Value shall be determined as of the date on which each such Incentive Stock Option is granted. No Incentive Stock Option may be granted to an individual if, at the time of the
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A-9
|
proposed grant, such individual owns (or is deemed to own under the Code) stock possessing more than ten percent of the total combined voting power of all classes of stock of Huron and its
Subsidiaries
unless (i) the exercise price of such Incentive Stock Option is at least 110% of the Fair Market Value of a share of Common Stock at the time such Incentive Stock Option is granted and (ii) such Incentive Stock Option
is not exercisable after the expiration of five years from the date such Incentive Stock Option is granted. A Participant shall be required to notify Huron of any disposition of shares of Common Stock issued pursuant to the exercise of an Incentive
Stock Option under the circumstances described in Section 421(b) of the Code (relating to certain disqualifying dispositions), within 10 days of such disposition.
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(g)
|
Effect of Termination of Employment or Provision of Services on Options and Stock Appreciation Rights
. The
Committee shall determine the effect of termination of employment or termination of service on each Option and Stock Appreciation Right, subject to the terms and conditions of the Plan. Unless otherwise provided by the Committee:
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(i)
|
any Option or Stock Appreciation Right that is outstanding on the date on which a Participants employment or
service with Huron and the Affiliates terminates due to death or as a result of the Participants being Disabled shall become fully vested and exercisable on the date on which the Participants employment or service terminates due to the
Participants death or as a result of the Participants being Disabled;
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(ii)
|
any Option or Stock Appreciation Right that is outstanding on the date on which a Participants employment or
service with Huron and the Affiliates terminates for Cause, whether or not then exercisable, shall be terminated effective as of the day immediately prior to the date of termination;
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(iii)
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any Option or Stock Appreciation Right that is outstanding on the date that a Participants employment or service
with Huron and the Affiliates terminates for any reason other than Cause, death, or the Participants being Disabled, (1) shall remain exercisable for the
90-day
period following such termination to
the extent that it is exercisable at the time of such termination, but in no event following the expiration of its term and (2) shall be terminated effective as of the date of termination to the extent it remains unexercisable as of the date of
termination; and
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(iv)
|
with respect to any Participant who is an employee of Huron or any Affiliate and who is in a position of corporate vice
president, managing director or executive officer, any Option or Stock Appreciation Right that is outstanding on the date on which such Participants employment with Huron and the Affiliates terminates due to Retirement shall continue to vest
and be exercisable in accordance with its terms as though the Participant had remained in the employ of Huron and its Affiliates, provided that the Participant complies with the terms of the
non-competition
agreement and
non-solicitation
agreement in the form determined by Huron and signed by the Participant; provided further, however, that the foregoing provisions of this paragraph (iv) shall not apply with
respect to any Option or Stock Appreciation Right that is subject to Section 409A of the Code.
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(h)
|
Leaves of Absence
. Unless otherwise provided by the Committee and, with respect to Incentive Stock Options, to the
extent permitted under Section 422 of the Code, subject in all cases to the terms and conditions of the Award, in the case of any Participant who takes an approved unpaid leave of absence (i) the Participants employment or service
shall not be deemed to be terminated solely because of such leave of absence; (ii) the Participant shall continue to vest in his or her outstanding Options and Stock Appreciation Rights under the Plan during the first 30 days of such leave of
absence; and (iii) the Participant shall cease to vest in his or her outstanding Options and Stock Appreciation Rights under the Plan during any period of such leave of absence which exceeds 30 days.
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(i)
|
Post-Exercise Limitations
. Without otherwise limiting the Committees authority under the Plan, the
Committee, in its discretion, may impose such restrictions on shares of Common Stock acquired pursuant to the exercise of an Option or received in settlement of a Stock Appreciation Right as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, share ownership by the Participant, conformity with Hurons recoupment or clawback policies and such other factors as the
Committee determines to be appropriate.
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A-10
8.
|
Full Value Awards and Cash Incentive Awards.
|
|
(a)
|
Grant of Awards
. The Committee may grant Full Value Awards and/or Cash Incentive Awards to Eligible Individuals,
subject to the terms and conditions of the Plan.
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|
(b)
|
Effect of Termination of Employment or Provision of Services on Full Value Awards
. The Committee shall determine
the effect of termination of employment or termination of service on each Full Value Award, subject to the terms and conditions of the Plan. Unless otherwise provided by the Committee:
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(i)
|
any Full Value Award that is outstanding on the date on which a Participants employment or service with Huron and
the Affiliates terminates due to death or as a result of the Participants being Disabled shall become fully vested (and exercisable, if applicable) on the date on which the Participants employment or service terminates due to the
Participants death or as a result of the Participants being Disabled;
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(ii)
|
a Full Value Award that is outstanding on the date on which a Participants employment or service with Huron and the
Affiliates terminates for Cause shall be terminated effective as of the day immediately prior to the date of termination and all shares subject to the Full Value Award (whether or not then vested or distributable) shall be terminated effective as of
the day immediately prior to the date of termination;
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(iii)
|
any Full Value Award that is outstanding on the date that a Participants employment or service with Huron and the
Affiliates terminates for any reason other than Cause, death, the Participants being Disabled or Retirement and that has not vested on the date of termination (and all rights with respect thereto, such as dividends or dividend equivalents)
shall be terminated effective as of the date of termination; and
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(iv)
|
with respect to any Participant who is an employee of Huron or any Affiliate and who is in a position of corporate vice
president, managing director or executive officer, any Full Value Award that is outstanding on the date on which such Participants employment with Huron and the Affiliates terminates due to Retirement shall continue to vest and be
distributable in accordance with its terms as though the Participant had remained in the employ of Huron and the Affiliates; provided that the Participant complies with the terms of the
non-competition
agreement and
non-solicitation
agreement in the form determined by Huron and signed by the Participant; provided further, however, that the foregoing provisions of this paragraph (iv) shall not apply with
respect to any Full Value Award that is subject to Section 409A of the Code.
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(c)
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Leaves of Absence
. Unless otherwise provided by the Committee, subject in all cases to the terms and conditions of
the Award, in the case of any Participant who takes an approved unpaid leave of absence (i) the Participants employment or service shall not be deemed to be terminated solely because of such leave of absence; (ii) the Participant
shall continue to vest in his or her outstanding Full Value Awards under the Plan during the first 30 days of such leave of absence; and (iii) the Participant shall cease to vest in his or her outstanding Full Value Awards under the Plan during
any period of such leave of absence which exceeds 30 days.
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(d)
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Restrictions
. Without otherwise limiting the Committees authority under the Plan, the Committee, in its
discretion, may impose such restrictions on shares of Common Stock acquired pursuant to the grant or settlement of a Full Value Award or the payment or retention of a Cash Incentive Award as it determines to be desirable, including, without
limitation, restrictions relating to disposition of the shares and forfeiture restrictions based on service, performance, share ownership by the Participant, conformity with Hurons recoupment or clawback policies and such other factors as the
Committee determines to be appropriate.
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9.
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Performance-Based Compensation.
The Committee may designate any Full Value Award or a Cash Incentive Award granted
to a Participant under the Plan as Performance-Based Compensation within the meaning of Section 162(m) of the Code and regulations thereunder. To the extent required by Section
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A-11
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162(m) of the Code, any such Award so designated shall be conditioned on the achievement of one or more performance targets as determined by the Committee and the following shall apply:
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(a)
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Establishment of Performance Criteria
. The performance targets established for the performance period by the
Committee shall be objective (as that term is described in regulations under Section 162(m) of the Code), and shall be established in writing by the Committee not later than 90 days after the beginning of the performance period (but in no event
after 25% of the performance period has elapsed), and while the outcome as to the performance targets is substantially uncertain. The performance targets established by the Committee may be with respect to corporate performance, operating group or
sub-group
performance, individual performance, other group or individual performance, or division performance, and shall be based on one or more of the Business Criteria.
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(b)
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Certification of Targets
. A Participant otherwise entitled to receive a Performance-Based Compensation Award for
any performance period shall not receive a settlement or payment of the Award until the Committee has determined that the applicable performance target(s) have been attained. To the extent that the Committee exercises discretion in making the
determination required by this Section 9(b), such exercise of discretion may not result in an increase in the amount of the payment.
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(c)
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Special Termination Rules
. Subject to the other terms and conditions of the Plan, if an Award is intended to
constitute Performance-Based Compensation, the Committee may provide that if a Participants employment with Huron and the Affiliates terminates because of death or the Participants being Disabled, or if a Change of Control occurs prior
to the Participants termination date, the Participants Performance-Based Compensation may become vested without regard to whether the Award would continue to constitute Performance-Based Compensation.
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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.
10.
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Change of Control.
Except as otherwise provided in an Agreement or an Alternative Agreement, in the event that
(a) a Participant is employed on the date of a Change of Control and the Participants employment or service, as applicable, is terminated by Huron or the successor to Huron (or a related company which is his or her employer) for reasons
other than Cause within 12 months
following the Change of Control, or (b) the Plan is terminated by Huron or its successor following a Change of Control without provision for the continuation of outstanding Awards hereunder, all Options
and Stock Appreciation Rights which are then outstanding shall become immediately exercisable and all other Awards shall become fully vested. If, (i) upon a Change of Control, awards in other shares or securities are substituted for outstanding
Awards under the Plan and immediately following the Change of Control the Participant becomes employed (if the Participant was an employee immediately prior to the Change of Control) or remains in continued service (as a director or independent
contractor if the Participant was a director or independent contractor immediately prior to the Change of Control) of the entity into which Huron merged, or the purchaser of substantially all of the assets of Huron or a successor to such entity or
purchaser, the Participant shall not be treated as having terminated employment or service for purposes of this Section 10 until such time as the Participant terminates employment or service with the merged entity or purchaser (or successor),
as applicable, and (ii) if, in connection with a Change of Control, a Participant is offered employment with a successor to Huron (or an Affiliate) for which the Participant is reasonably qualified and on financial terms and conditions which
are comparable to the financial terms and conditions that applied to the Participants employment immediately prior to the Change of Control, if the Participant does not accept the offer of employment and if, as a result, the Participants
employment with Huron, the Affiliates and their respective successors is terminated, the Participant shall not be treated as having a termination of employment for purposes of this Section 10.
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A-12
11.
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Rights as a Stockholder.
No person shall have any rights as a stockholder with respect to any shares of Common
Stock covered by or relating to any Award until the date of issuance of a stock certificate with respect to such shares or the date of crediting such shares to such persons account via book-entry transfer. Except for adjustments pursuant to
Section 4(f), no adjustment to any Award shall be made for dividends or other rights for which the record date occurs prior to the date such stock certificate is issued or credit via book-entry transfer is made.
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12.
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Limitations of Implied Rights.
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(a)
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No Right to Employment or Continued Service
. Nothing contained in the Plan or any Agreement shall confer upon any
Participant any right with respect to the continuation of employment by or provision of services to Huron and the Affiliates or interfere in any way with the right of Huron and the Affiliates, subject to the terms of any separate agreement to the
contrary, at any time to terminate such employment or service or to increase or decrease the compensation of any Participant.
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(b)
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No Claim to Award
. No person shall have any claim or right to receive an Award hereunder. The grant of an Award to
a Participant at any time shall neither require the Committee to grant any other Award to such Participant or other person at any time nor preclude the Committee from making subsequent grants to such Participant or any other person.
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(c)
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No Right to Assets or Property
. Neither a Participant nor any other person shall, by reason of the Plan, acquire
any right in or title to any assets, funds or property of Huron or any Affiliate whatsoever, including, without limitation, any specific funds, assets, or other property which Huron or any Affiliate, in its sole discretion, may set aside in
anticipation of a liability under the Plan. A Participant shall have only a contractual right to the amounts, if any, payable under the Plan, unsecured by any assets of Huron and any Affiliate. Nothing contained in the Plan shall constitute a
guarantee by Huron or any Affiliate that the assets of such companies shall be sufficient to pay any benefits to any person.
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(a)
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Compliance with Law
. Notwithstanding anything herein to the contrary, Huron shall not be obligated to cause to be
issued or delivered any certificates evidencing shares of Common Stock pursuant to the Plan (or any crediting of shares to a persons account via book-entry transfer) unless and until Huron is advised by its counsel (which may be Hurons
in-house
counsel) that the issuance and delivery of such certificates (or crediting of such shares to an account) is in compliance with all applicable laws, regulations of governmental authority and the requirements
of any securities exchange on which shares of Common Stock are traded. The Committee may require, as a condition of the issuance and delivery of certificates (or crediting to an account) pursuant to the terms hereof, that the recipient of such
shares make such agreements and representations, and that, if applicable, such certificates bear such legends, as the Committee, in its sole discretion, deems necessary or advisable.
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(b)
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Transfer of Shares
. The transfer of any shares of Common Stock hereunder shall be effective only at such time as
counsel to Huron (which may be Hurons
in-house
counsel) shall have determined that the issuance and delivery of such shares is in compliance with all applicable laws, regulations of governmental
authority and the requirements of any securities exchange on which shares of Common Stock are traded. The Committee may, in its sole discretion, defer the effectiveness of any transfer of shares of Common Stock hereunder in order to allow the
issuance of such shares to be made pursuant to registration or an exemption from registration or other methods for compliance available under federal or state securities laws. The Committee shall inform the Participant in writing of its decision to
defer the effectiveness of a transfer. During the period of such deferral in connection with the exercise of an Option, the Participant may, by written notice, withdraw such exercise and obtain the refund of any amount paid with respect thereto.
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14.
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Withholding Taxes.
All Awards and other payments under the Plan are subject to withholding of all applicable
taxes. Whenever cash is to be paid pursuant to an Award, Huron and the Affiliates shall have the right to deduct therefrom an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. Whenever shares of
Common Stock are to be delivered pursuant to an Award, Huron and the Affiliates shall have the right to require the Participant to remit to Huron and the Affiliates in
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A-13
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cash an amount sufficient to satisfy any federal, state and local withholding tax requirements related thereto. With the approval of the Committee, a Participant may satisfy the foregoing
requirement by electing to have Huron and the Affiliates withhold from delivery shares of Common Stock having a value equal to the amount of tax required to be withheld, as determined by the Committee or through the surrender of shares of Common
Stock which the Participant already owns. As determined solely by Huron and the Affiliates, the number of shares used for withholding may exceed the number needed to satisfy the required withholding but shall not exceed the number of shares of
Common Stock needed for the maximum tax withholding under applicable law (or other rates that will not have a negative accounting impact). Such a withholding election may be made by the Participant with respect to all or any portion of the shares to
be delivered pursuant to an Award.
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15.
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Notification of Election Under Section 83(b) of the Code.
If any Participant shall, in connection with the
acquisition of shares of Common Stock under the Plan, make the election permitted under Section 83(b) of the Code, such Participant shall notify Huron of such election within 10 days of filing notice of the election with the Internal
Revenue Service.
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16.
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Amendment or Termination of the Plan.
The Board of Directors may, at any time, suspend or terminate the Plan or
revise or amend it in any respect whatsoever; provided, however, that approval of Hurons stockholders shall be required for any such amendment if and to the extent such approval is required in order to comply with applicable law (including,
but not limited to, the Incentive Stock Option regulations and any amendments thereto), or stock exchange or automated quotation system listing requirement. Without limiting the generality of the foregoing, no amendment of the Plan will be made
without the approval of Hurons stockholders if such amendment would (a) materially increase the benefits accruing to a Participant under the Plan; (b) increase the aggregate number of shares of Common Stock that may be issued under
the Plan; (c) modify the requirements as to eligibility for participation in the Plan; or (d) be required under Section 7(d) of the Plan (relating to prohibitions on repricing and
buy-backs).
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Nothing in this Section 16 shall restrict the Committees 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 Participants rights under any outstanding Award.
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(a)
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General
. Awards under the Plan are not transferable except as designated by the Participant by will or by the laws
of descent and distribution. Upon the death of a Participant, outstanding Awards granted to such Participant may be exercised only by the executor or administrator of the Participants estate or by a person who shall have acquired the right to
such exercise by will or by the laws of descent and distribution. No transfer of an Award by will or the laws of descent and distribution shall be effective to bind Huron unless the Committee shall have been furnished with (i) written notice
thereof and with a copy of the will and/or such evidence as the Committee may deem necessary to establish the validity of the transfer and (ii) an agreement by the transferee to comply with all the terms and conditions of the Award that are or
would have been applicable to the Participant and to be bound by the acknowledgments made by the Participant in connection with the grant of the Award.
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(b)
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Family Members
. Notwithstanding Section 17(a), during a Participants lifetime, the Committee may, in its
sole discretion, pursuant to the provisions set forth in this Section 17(b), permit the transfer, assignment or other encumbrance of an outstanding Option, unless such Option is an Incentive Stock Option and the Committee and the Participant intend
that it shall retain such status. Subject to the approval of the Committee and to any conditions that the Committee may prescribe, a Participant may, upon providing written notice to Huron, elect to transfer any or all Options granted to such
Participant pursuant to the Plan to members of his or her immediate family, including, but not limited to, children, grandchildren and spouse or to trusts for the benefit of such immediate family members or to partnerships in which such family
members are the only partners; provided, however, that no such transfer by any Participant may be made in exchange for consideration. Any such transferee must agree, in writing, to be bound by all terms and conditions of the Plan.
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A-14
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(c)
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Beneficiary
. A Participant may file with the Committee a written designation of a beneficiary on such form as may
be prescribed by the Committee and may, from time to time, amend or revoke such designation. If no designated beneficiary survives the Participant, the executor or administrator of the Participants estate shall be deemed to be the
Participants beneficiary.
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(a)
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Notices
. Any notice or document required to be filed with the Committee under the Plan will be properly filed if
delivered or mailed by registered mail, postage prepaid, to the Committee, in care of Huron at its principal executive offices. The Committee may, by advance written notice to affected persons, revise such notice procedure from time to time. Any
notice required under the Plan (other than exercise notice) may be waived by the person entitled to notice.
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(b)
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Form and Time of Elections
. Unless otherwise specified herein, each election required or permitted to be made by
any Participant or other person entitled to benefits under the Plan, and any permitted modification or revocation thereof, shall be in writing filed with the applicable Committee at such times, in such form, and subject to such restrictions and
limitations, not inconsistent with the terms of the Plan, as the Committee shall require.
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(c)
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Agreement
. The Committee may require a Participant to enter into an Agreement evidencing the Award, which
Agreement shall contain such terms and conditions, not inconsistent with the Plan, as the Committee determines in its discretion.
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(d)
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Liability for Cash Payments
. Subject to the terms and conditions of the Plan, Huron and each Affiliate shall be
liable for payment of cash due under the Plan with respect to any Participant to the extent that such benefits are attributable to the service rendered for Huron or the Affiliate, as applicable, by the Participant. Any disputes relating to the
liability of Huron or an Affiliate for cash payments shall be resolved by the Committee.
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(e)
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Evidence
. Evidence required of anyone under the Plan may be by certificate, affidavit, document or other
information which the person acting on it considers pertinent and reliable, and signed, made or presented by the proper party or parties.
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(f)
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Gender and Number
. Where the context admits, words in any gender shall include any other gender, words in the
singular shall include the plural and the plural shall include the singular.
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(g)
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Expenses and Receipts
. The expenses of the Plan shall be paid by Huron. Any proceeds received by Huron in
connection with any Award may be used for general corporate purposes.
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(h)
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Applicable Law, Venue
. Except to the extent preempted by any applicable federal law, the Plan shall be construed
and administered in accordance with the laws of the State of Delaware without reference to its principles of conflicts of law. Any legal action related to this Plan shall be brought only in a federal or state court located in Chicago, Illinois.
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(i)
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No Fractional Shares
. No fractional shares of Common Stock shall be issued or delivered pursuant to the Plan. The
Committee shall determine whether cash, other Awards, or other property shall be issued or paid in lieu of such fractional shares or whether such fractional shares or any rights thereto shall be forfeited or otherwise eliminated.
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19.
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Severability.
If any provision of the Plan is held to be invalid or unenforceable, the other provisions of the
Plan shall not be affected but shall be applied as if the invalid or unenforceable provision had not been included in the Plan.
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20.
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Foreign Employees.
Notwithstanding any other provision of the Plan to the contrary, the Committee may grant Awards
to eligible persons who are foreign nationals on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan.
In furtherance of such purposes, the 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 or an Affiliate
operates or has employees.
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A-15
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Admission Ticket
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Electronic Voting Instructions
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You can vote by Internet!
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Available 24 hours a day, 7 days a week!
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Instead of mailing your proxy, you may choose one of the voting methods outlined below to vote your proxy.
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VALIDATION DETAILS ARE LOCATED BELOW IN THE TITLE BAR.
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Proxies submitted by the Internet must be received by
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1:00 a.m., Eastern Time, on May 5, 2017.
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Vote by Internet
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Go to
www.envisionreports.com/HURN
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Or scan the QR code with your smartphone
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Follow the steps outlined on the secure website
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Using a
black ink
pen, mark your votes with an
X
as shown in this example. Please do not write outside the designated areas.
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☒
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q
IF YOU HAVE NOT VOTED VIA
THE INTERNET, FOLD ALONG THE PERFORATION, DETACH AND RETURN THE BOTTOM PORTION IN THE ENCLOSED ENVELOPE.
q
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A
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Proposals The Board recommends a vote
FOR
all nominees,
FOR
Proposals 2, 3 and 5 and every 1 YR for Proposal 4.
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1.
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Election of Directors:
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For
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Withhold
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For
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Withhold
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+
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01 - H. Eugene Lockhart
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☐
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☐
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02 - George E. Massaro
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☐
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☐
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For
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Against
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Abstain
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For
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Against
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Abstain
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2.
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To approve the Companys Amended and Restated 2012 Omnibus Incentive Plan.
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☐
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☐
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☐
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3.
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An advisory vote to approve the Companys executive compensation.
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☐
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☐
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☐
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1 YR
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2 YRS
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3 YRS
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Abstain
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For
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Against
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Abstain
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4.
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An advisory vote on the frequency of advisory stockholder votes to approve the Companys executive compensation.
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☐
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☐
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☐
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☐
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5.
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To ratify the appointment of PricewaterhouseCoopers LLP as the Companys independent registered public accounting firm for the fiscal year ending December 31, 2017.
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☐
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☐
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☐
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B
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Non-Voting Items
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Change of Address
Please print your new address below.
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Comments
Please print your comments below.
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Meeting Attendance
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Mark the box to the right if you plan to attend the Annual Meeting.
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☐
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C
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Authorized Signatures This section must be completed for your vote to be counted. Date and Sign Below
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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.
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Signature 1 Please keep signature within the box.
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Signature 2 Please keep signature within the box.
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/ /
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2017 Annual Meeting Admission Ticket
2017 Annual Meeting of
Huron Consulting Group Inc. Stockholders
Friday, May 5, 2017, 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 2017 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, 2017
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, 2017 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.
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.)
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