DEF 14A of Lincoln Educational Services Corp
Filed Apr 10, 2025 · FY20240001140361-25-013183
PROPOSAL 1: ELECTION OF DIRECTORS
PROPOSAL 1: ELECTION OF DIRECTORS At the Annual Meeting, shareholders will be asked to elect a total of ten directors. Our bylaws provide for a minimum of three directors and a maximum of 11 directors, as set by the Board of Directors from time to time. Each elected director will hold office until the next annual meeting of shareholders or until the director’s successor is duly elected and qualified. All of the nominees for director have consented to being named in this Proxy Statement and to serve if elected, and the Board of Directors knows of no reason why any of the nominees would be unable or unwilling to serve if elected. If any nominee should, for any reason, be unable or unwilling to serve, the shares represented by valid proxies received by the Company will be voted for the election of such other person for the office of director as the Board of Directors may nominate in the place of such nominee or the size of the Board of Directors may be reduced. Shareholders may withhold authority to vote their proxies for either (i) the entire slate of nominated directors by checking the box marked WITHHOLD AUTHORITY on the proxy card; or (ii) any one or more of the individual nominees by following the instructions on the proxy card. Instructions on the accompanying proxy card that withhold authority to vote for one or more of the nominees will cause any such nominee to receive fewer votes. Upon recommendation of the Nominating and Corporate Governance Committee, the following ten persons have been selected by the Board of Directors as nominees for election to the Board of Directors: John A. Bartholdson, James J. Burke, Jr., Anna Cabral, Kevin M. Carney, Marta Newhart, Michael A. Plater, Felecia J. Pryor, Carlton E. Rose, Scott M. Shaw, and Sylvia J. Young. The Company’s directors have a variety of backgrounds, which reflects the Company’s continuing efforts to achieve a diversity of insights and perspectives. As further discussed below, the director nominees are considered based upon, among other criteria, their business knowledge and experience, relevant ability and experience to the Company’s business and operations, and reputation in their fields. Additional information about these nominees is provided in the table and biographical information that follows.
Required Vote
Required Vote The affirmative vote of a plurality of votes cast by holders of our Common Stock, present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors, is required to elect John A. Bartholdson, James J. Burke, Jr., Anna Cabral, Kevin M. Carney, Marta Newhart, Michael A. Plater, Felecia J. Pryor, Carlton E. Rose, Scott M. Shaw and Sylvia J. Young. The Board of Directors recommends a vote “FOR” each of the named nominees for director.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS The following sets forth certain information concerning the director nominees and executive officers of the Company named in this Proxy Statement (ages as of March 20, 2025):
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| Director | Age | Position Held | | John A. Bartholdson (1) | 54 | Non-Executive Chair of the Board of Directors | | James J. Burke, Jr. (2) (3) | 73 | Director | | Anna Cabral (4) | 65 | Director | | Kevin M. Carney (4) | 61 | Director | | Marta Newhart (3) | 63 | Director | | Michael A. Plater (3) (4) | 68 | Director | | Felecia J. Pryor (2) (3) | 50 | Director | | Carlton E. Rose (2) (4) | 63 | Director | | Sylvia J. Young (2) (4) | 63 | Director | | Scott M. Shaw | 62 | President & Chief Executive Officer, Director | | Brian K. Meyers | 58 | Executive Vice President, Chief Financial Officer and Treasurer | | Chad D. Nyce | 52 | Executive Vice President, Chief Operating Officer |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| (1) Prior to being named Non-Executive Chair of the Board of Directors on May 2, 2024, Mr. Bartholdson served as Chair of the Nominating and Corporate Governance Committee and a member of each of the Audit Committee and Compensation Committee. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| (2) Member of the Compensation Committee. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| (3) Member of the Nominating and Corporate Governance Committee. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
| (4) Member of the Audit Committee. |
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
John A. Bartholdson was appointed to our Board of Directors in 2019 and named Non-Executive Chair of the Board of Directors on May 2, 2024. Mr. Bartholdson is a co-founder and partner of Juniper Investment Company, LLC, a New York-based private investment firm. Mr. Bartholdson also currently serves on the board of directors of Bioventus, Inc., where he serves as the Chairperson of the Compensation Committee, and as the Chair of the board of directors of Theragenics Corporation, a privately-held company. Previously, he served as a member of the board of directors of Obagi Medical Products, Inc., a publicly-traded company, as well as on the boards of numerous private companies. Prior to co-founding Juniper Investment Company, Mr. Bartholdson was a partner of Stonington Partners, Inc., where he worked from 1997 to 2011. Mr. Bartholdson received his B.A. from Duke University and his M.B.A. from Stanford Graduate School of Business. He has many years of experience leading and overseeing investments across a range of industries and has a successful record of managing investments in public companies. Mr. Bartholdson’s extensive management oversight, service on multiple public and private company boards and committees, and deep transactional expertise provide valuable insight to the Board of Directors. James J. Burke, Jr. has served on our Board of Directors since 1999. He is the founder of JJB Capital Partners LLC, a private investment firm formerly known as J. Burke Capital Partners LLC, and was its managing member from 2007 through 2024. He was also the co-founder, partner, and director of Stonington Partners, Inc. (1994-2007) and co-founder of Merrill Lynch Capital Partners, Inc., a private equity fund for which he was the President and CEO from 1987 to 1999. He received a B.A. from Brown University and an M.B.A. with Distinction from Harvard University Graduate School of Business Administration. Mr. Burke also serves on the board of directors of a number of privately-owned companies and several non-profit organizations. Mr. Burke brings extensive financial and business knowledge to the Board of Directors through his engagement in private equity investing since 1981. Throughout his career, he has been responsible for sourcing and analyzing investment opportunities, where he has developed both expertise and significant knowledge regarding the managerial, operational and financial aspects of a business. His extensive investment and industry experience provides valuable insight to the Board of Directors. Anna Cabral was appointed to our Board of Directors on June 27, 2024. Ms. Cabral is currently a board member of Navient Corporation, a student loan servicer, where she serves as Chair of the Audit Committee and a member of the Nominations and Governance Committee. She has been a director at Navient Corporation since December 2014. She served as Treasurer of the United States of America from 2004 to 2009. In this role, she oversaw the Bureau of Engraving and Printing and the U.S. Mint, and led the Treasury Department’s community development and public outreach efforts, including financial education initiatives designed to increase financial literacy and remove barriers to Americans’ success. From 2009 to 2018, Ms. Cabral served as senior advisor for external relations at the Inter-American Development Bank. She also served as director of the Smithsonian Institution's Center for Latino Initiatives and CEO of the Hispanic Association on Corporate Responsibility. She has served as chair of the Financial Services Roundtable Retirement Security Council, chairs the BBVA Microfinance Foundation, and is a member of MANA, a national Latina organization. From 1991 to 1999, Ms. Cabral served as the executive staff director of the United States Senate Republican Conference Task Force for Hispanic Affairs, and from 1993 to 1999, she served as Chief Clerk, and later as deputy staff director, for the United States Senate Committee on the Judiciary. Ms. Cabral has a B.A. in Political Science from the University of California, Davis; a Master of Public Administration degree from Harvard University John F. Kennedy School of Government; and a J.D. from George Mason University School of Law. Her extensive administrative experience provides valuable insight to the Board of Directors. Kevin M. Carney has served on our Board of Directors since 2020. Mr. Carney retired as Executive Vice President and Chief Financial Officer of Web.com Group, Inc. (formerly a NASDAQ-listed company). Mr. Carney joined the founding management team of Web.com in 1998 and served as its Chief Financial Officer through 2018. Prior to Web.com, Mr. Carney was Director of Finance and Chief Financial Officer of The Carlyle Group and Carlyle International, respectively, from 1990 through 1994 and then served as Director of Mergers and Acquisitions at Manor Care, Inc. (formerly a NYSE listed company). He began his career as an auditor with Arthur Andersen & Co. as a Certified Public Accountant and holds a B.S. in Accounting and Finance from Boston College. Mr. Carney’s extensive accounting, financial, and executive management experience in both financial and technology industries is of significant value to the Board of Directors. Marta Newhart was appointed to our Board of Directors on June 27, 2024. Ms. Newhart is currently serving as Independent Director, Enterprise Leader and Chief Marketing, Communications & Brand Officer for APCO Worldwide, a global advisory and advocacy firm serving as strategic advisors to some of the world’s leading corporations. Prior to her appointment to APCO's International Advisory Council, she served as Chief Marketing, Communications and Brand Officer for Westinghouse Electric Company and was a successful senior executive at Boeing, Johnson Controls and Medtronic. She has held two overseas assignments in China and Argentina. She has extensive experience in M&A transactions, including eight at Westinghouse. Ms. Newhart has a B.A. in International Business and International Communications from the University of Washington in Seattle and an M.B.A. in Business Management and Marketing from Pepperdine University in Malibu. Ms. Newhart’s extensive business and executive management experience in large-cap, global manufacturing firms and prior board experience, provides valuable insight to our Board of Directors. Michael A. Plater, Ph.D. has served on our Board of Directors since 2020. Dr. Plater is a former President of Strayer University, having begun his career at Strayer University, LLC, now a subsidiary of Strategic Education, Inc., in 2010, holding successive positions as Provost and Chief Academic Officer, Interim President, and President before his retirement. Prior to joining Strayer, Dr. Plater held various positions at a number of educational institutions such as Dean of the College of Arts and Sciences at North Carolina A&T State University, Associate Dean of the Graduate School at Brown University, Director of the Entrepreneurial Center, University of Florida Business School, and consultant to the Wharton Small Business Development Center. Dr. Plater served as Vice President of Higher Education of Kelly Educational Staffing from April 2021 through June 2023. Dr. Plater is a graduate of Harvard College with a B.A. in Economics, holds an M.B.A. in Business Administration from the Wharton School of Business, and a Ph.D. in American Studies from The College of William and Mary. Dr. Plater’s significant experience in academic management and adult education provides valuable insight to our Board of Directors.
BOARD OF DIRECTORS AND EXECUTIVE OFFICERS
Felecia J. Pryor has served on our Board of Directors since 2021. Ms. Pryor currently serves as Senior Vice President and Chief People Officer at John Deere, where she has responsibility for human resources, labor relations, brand marketing and communications, and aviation and security. Prior to joining John Deere, she served as the Executive Vice President & Chief Human Resource Officer for BorgWarner, where her primary focus, on a global level, included compensation and employee benefits, talent management, labor, employment, social responsibility, and internal communications. Additionally, she served more than 16 years in human resources at the Ford Motor Company across a multitude of areas with increased levels of responsibility in labor relations and corporate human resources roles. She also served as Ford’s Vice President of Human Resources for Ford ASEAN (Bangkok, Thailand) and Human Resources Director Ford Asia Pacific (Nanjing, China). Ms. Pryor is a licensed Michigan attorney who holds a B.A. in Criminal Justice from Valdosta State University, a Master of Public Administration from Florida Atlantic University, and a J.D. from Western Michigan University Thomas M. Cooley Law School. Ms. Pryor’s extensive experience in human resources, added perspective stemming from her previous automotive industry experience, and her current position in heavy equipment manufacturing and technology bring a valuable perspective to the Board of Directors. Carlton E. Rose has served on our Board of Directors since 2020. Mr. Rose was employed by United Parcel Service from 1980 until his retirement in March 2023. He began his career as a package handler and, during his 43-year tenure, earned numerous promotions as a result of his technical skills, business skills, and team leadership, culminating in his most recent position as its President, Global Fleet Maintenance & Engineering. In June of 2023, Mr. Rose was appointed to the board of directors of REE Automotive, an automotive technology company and provider of fully by-wire electric trucks and platforms. In September of that year, he was appointed as REE’s Chairman of that board, effective October 16, 2023. A native of Marion, Indiana, Mr. Rose is an automotive engineering graduate of the Indianapolis campus of Lincoln Technical Institute, now Lincoln College of Technology. Mr. Rose’s history as a graduate of one of our schools, as well as his extensive management experience, affords him a unique perspective on our Company from which our Board of Directors benefits. Sylvia J. Young has served on our Board of Directors since 2023. Ms. Young has been a dedicated veteran of hospital administration since 1985, most recently serving as President and Chief Executive Officer of HCA Continental Division from June 2012 until her retirement in 2023. HCA Continental Division, a $3.6 billion net revenue regional health care system, includes HealthONE in Denver, CO and Wesley Healthcare in Wichita, KS. Before her appointment to the Denver-based Division headquarters, Ms. Young served as President of HCA’s Sunrise Health System. Ms. Young is currently the CEO of Young Consulting Advisors, LLC. In May 2023, Ms. Young joined the board of directors of Pediatrix Medical Group, Inc., a publicly-traded company formerly known as Mednax, Inc. In April 2019, Ms. Young was appointed At-Large Trustee of the American Hospital Association Board of Trustees. Ms. Young holds a B.A. in Public Administration from Samford University in Birmingham and a Master of Health Administration from the University of Alabama, Birmingham. Ms. Young’s extensive business experience provides significant value to our Board of Directors. Scott M. Shaw joined the Company in 2001 and currently serves as our President and Chief Executive Officer. Mr. Shaw has served on our Board of Directors from 2001 to 2006 and since July 2015. Prior to assuming the position of President and Chief Executive Officer, Mr. Shaw served in the positions of President and Chief Operating Officer, Executive Vice President and Chief Administrative Officer, and Senior Vice President of Strategic Planning and Business Development of the Company. Prior to joining Lincoln, Mr. Shaw was a partner at Stonington Partners, Inc., where he had been since 1994. As a partner at Stonington Partners, Mr. Shaw was responsible for identifying, evaluating, and acquiring companies and then assisting in their oversight by participating on the board of directors of the acquired companies. In addition, Mr. Shaw worked closely with senior management to develop long-term strategic plans, to evaluate acquisitions and new investment opportunities, to assist with refinancing, and to execute on the final sale of the company either to the public or to another company. Mr. Shaw also served as a consultant to Merrill Lynch Capital Partners Inc., a private investment firm associated with Merrill Lynch & Co., Inc., from 1994 through 2000. Mr. Shaw holds a B.A. from Duke University and an M.B.A. from the Wharton School of Business. His extensive financial and business management experience, long history with the Company, and deep knowledge of the industry continues to provide our Board of Directors with strong insights into the industry and its evolving landscape. Brian K. Meyers joined the Company in 2002 and currently serves as our Executive Vice President, Chief Financial Officer, and Treasurer. Mr. Meyers has more than 30 years of accounting and financial management experience. Prior to joining Lincoln, Mr. Meyers served as Vice President and Controller for Candie’s Inc. and began his career in 1989 with Richard A. Eisner (currently EisnerAmper LLP), a public accounting firm. He is a Certified Public Accountant and holds a B.S. in Accounting from Wagner College. Chad D. Nyce joined the Company in 2020 as Executive Vice President and Chief Innovation Officer. In 2025, Mr. Nyce assumed the positions of Executive Vice President and Chief Operating Officer. Previously, he was the Chief Operating Officer at Strayer University, LLC, now a subsidiary of Strategic Education, Inc., from 2007 to 2019 and, prior to his tenure at Strayer, was a Regional Vice President of Operations for InteliStaf Healthcare, Inc., one of the nation's largest privately-held healthcare staffing firms, from 2004 to 2007. Prior to his tenure at InteliStaf, Mr. Nyce served as a Vice President of the Investment Banking Division at Goldman, Sachs & Co. and also held senior management positions at BostonCoach, a wholly owned subsidiary of Fidelity Investments. Mr. Nyce holds a B.B.A. and an M.B.A. from Temple University.
Information Concerning the Board of Directors
Information Concerning the Board of Directors Our Board of Directors and its committees meet throughout the year on a set schedule and also hold special meetings and act by written consent from time to time as appropriate. Directors are expected to attend our annual meetings of shareholders, board meetings, and meetings of the committees on which they serve. They are also expected to prepare for meetings in advance and to dedicate the time at each meeting as necessary to properly discharge their responsibilities. Informational materials, useful in preparing for meetings, are distributed in advance of each meeting. During the fiscal year ended December 31, 2024, there were six meetings of the Board of Directors. Each of the directors attended all of the meetings of the Board of Directors and the committees on which he or she served, except for Mr. Burke, who did not attend one meeting of the Nominating and Corporate Governance Committee. Ms. Cabral and Ms. Newhart, who were appointed to the Board of Directors on June 27, 2024, attended all of the meetings of the Board of Directors and the committees on which they served from the dates of their appointments to the Board of Directors and such committees. In addition, all of our directors, other than Ms. Cabral and Ms. Newhart, attended our 2024 Annual Meeting of Shareholders on May 2, 2024, which occurred prior to their appointments.
2024 Advisory Vote on Executive Compensation
| What We Do: | What We Don't Do: | | Maintain a Pay-for-Performance Compensation Philosophy. Performance-based pay represents a significant portion of our NEO's target total direct compensation. We strive to position pay at market/50th percentile, with pay outside of this based on organizational and individual performance. | Backdate or Spring Load Option Awards. We do not backdate options or grant options retroactively. In addition, we do not plan to coordinate grants of options, restricted stock, or other equity awards so that they are made before announcement of favorable information or after announcement of unfavorable information. | | Rely on an Independent Compensation Consultant. We seek advice from an independent compensation consultant to ensure pay practices are aligned with our strategies and appropriately competitive to market levels | Use excise tax gross-ups. As discussed below under the heading “Employment Agreements and Change in Control Benefits,” we do not provide our executive officers with tax gross-ups for “excess parachute payments” upon a change in control. | | Cap Annual Incentive Compensation. The aggregate maximum annual incentive award that can be earned by each of our named executive officers is capped at 200% of their target. | Excessive Severance. We provide severance features that are consistent with market practice, including amounts and payout definitions, whether in the event of termination or termination in the event of a Change-in-Control. | | Maintain Clawback Policies. We maintain clawback policies for the recovery of performance-based cash and equity compensation. | Use Special Retirement Programs. We do not maintain enhanced retirement arrangements for our executive officers. Executive officers are eligible to participate in our 401(k) plan in the same manner as all other employees | | Review Stock Ownership. Annually, we review executive stock holdings to ensure alignment with competitive standards and shareholder interests. | Perquisites or benefits. We do not provide other perquisites or benefits to named executive officers. |
Compensation Philosophy and Objectives
Compensation Philosophy and Objectives The Company and the Compensation Committee believe that compensation paid to executive officers should be closely aligned with our performance on both a short-term and long-term basis, and that such compensation should assist us in attracting and retaining key executives that are critical to our long-term success. Our compensation program is designed to offer executive officers competitive compensation based on our performance and the individual’s contribution, performance, and leadership in the execution of our business model. Our compensation policies are intended to motivate, reward, and retain highly qualified executives for long-term strategic management and enhancement of shareholder value, to support a performance-oriented environment that rewards achievement of specific internal Company goals, and to attract and retain executives whose abilities are critical to our long-term success and competitiveness. Our compensation goals are further intended to mitigate incentives for our executives to take excessive risks that may be adverse to the Company and our shareholders in the long-term. The Compensation Committee has reviewed all components of the compensation for the named executive officers, including salary, annual incentives, equity, and long-term incentive compensation; the dollar value to the executive and cost to the Company of all perquisites; and the actual projected payout obligations under potential severance and change in control scenarios.
Compensation Program
| • | eliminating the individual performance component of our annual incentive compensation program and adding a component linked to company-wide financial outcomes that directly reflects the Company’s overall health and viability; |
Compensation Program
| • | capping the maximum amount payable under the annual incentive compensation program at 200% of target; |
Compensation Program
| • | instituting clawback policies for the recovery of performance-based cash and equity compensation; |
Compensation Program
| • | granting performance-based restricted stock that vests upon the attainment of adjusted EBITDA targets established for each year; and |
Compensation Program
| • | eliminating “catch up” vesting on performance-based restricted stock (see discussion below). |
POLICIES AND PRACTICES RELATED TO THE GRANT OF CERTAIN EQUITY AWARDS
POLICIES AND PRACTICES RELATED TO THE GRANT OF CERTAIN EQUITY AWARDS
CLOSE IN TIME TO THE RELEASE OF MATERIAL NONPUBLIC INFORMATION
CLOSE IN TIME TO THE RELEASE OF MATERIAL NONPUBLIC INFORMATION While the Company’s LTIP allows for the grant of stock options and similar option-like securities, the Company does not currently, and has not in recent history, grant stock options or similar option-like securities to its directors, named executive officers, or other employees, and it did not grant any stock options during the fiscal year ended December 31, 2024. As such, the Company does not currently have a formal policy with respect to the timing of awards of such securities. The Compensation Committee approves the grant of equity compensation awards at approximately the same time every year pursuant to a pre-determined schedule. The Compensation Committee does not take material nonpublic information into account when determining the timing and terms of any equity award. The Company does not time the disclosure of material nonpublic information for the purpose of affecting the value of executive compensation.
Setting Executive Compensation
Setting Executive Compensation We intend to continue our strategy of compensating our executives through programs that emphasize performance-based incentive compensation. We have structured annual cash and long-term equity incentive compensation to both motivate executives to achieve the business goals set by the Company and to reward the executives for achieving such goals. Our executive compensation program is further designed to discourage excessive risk taking by assessing performance across multiple dimensions and metrics, including both regulatory performance and student outcomes. For the named executive officers, the main components of our compensation program are base salary, an annual performance-based cash incentive, and long-term performance-based restricted stock. In allocating compensation among these components, the Compensation Committee believes that the compensation of senior management, the levels of management having the greatest ability to influence our performance, should be predominantly performance-based. Base salary is intended to provide a certain level of income commensurate with an executive’s position, responsibilities, and contributions to the Company. The annual performance-based cash incentive compensation focuses on short-term performance while the performance-based restricted stock is tied to achievement of performance over a three-year performance period. This mix of short- and long-term incentives provides sufficient rewards to motivate near-term performance, while at the same time providing significant incentives to keep our executives focused on longer-term corporate goals that drive shareholder value. In addition, we believe this balance of short-term and long-term incentive compensation and the mix of varied performance metrics helps mitigate the incentive for executives to take excessive risk that may have the potential to harm the Company in the long-term. Compensation for Scott M. Shaw, our President and Chief Executive Officer, is based on the Compensation Committee’s independent assessment of Mr. Shaw’s performance during the year. Our President and Chief Executive Officer plays a significant role in setting the compensation for the other named executive officers by presenting an evaluation of each executive’s performance and his recommendation for levels of their compensation. The Compensation Committee makes all final decisions with respect to the total compensation package for each of the named executive officers and has the authority to accept, reject, or modify these recommendations in connection with its determination. The Compensation Committee may retain compensation consultants having special competence to assist it in evaluating the compensation of the named executive officers, in its sole discretion.
Performance-Based Executive Compensation
| • | During the fiscal years ended December 31, 2024 and 2023, performance-based restricted stock comprised 50% of the executive equity compensation. Such performance-based restricted stock vests based upon the attainment of performance metrics set by the Compensation Committee each year for the applicable three-year vesting period of the restricted stock grant. The terms of these awards are described in more detail below under “Long-Term Stock Incentives.” |
Performance-Based Executive Compensation
| • | We maintain an annual performance-based Management Incentive Compensation Plan (the “MIC Plan”) for cash bonus compensation. Payments under the MIC Plan are based on the attainment of predetermined adjusted EBITDA target. The terms of these awards are described in more detail below under “2024 Annual Performance-Based Incentive Compensation.” |
2024 Annual Performance-Based Incentive Compensation
2024 Annual Performance-Based Incentive Compensation Our named executive officers are eligible to participate in the MIC Plan. Under the MIC Plan, the Compensation Committee approves the calculation of performance-based cash incentive opportunities for our named executive officers based on financial performance targets. Awards under the MIC Plan reflect the Compensation Committee’s belief that a significant portion of the total annual compensation of each named executive officer should be contingent upon the overall financial performance of the Company. At the beginning of the fiscal year ended December 31, 2024, the Compensation Committee defined the 2024 cash incentive performance target goal based to the Company’s adjusted EBITDA performance. For the fiscal year ended December 31, 2024, the Compensation Committee set the incentive compensation target at 100% of base salary for Mr. Shaw and 75% of base salary for Mr. Meyers and Mr. Nyce. The maximum award allowable under the MIC Plan to any named executive officer in any given year is 200% of their incentive compensation target. Adjusted EBITDA Performance. For the fiscal year ended December 31, 2024, each named executive officer’s target incentive opportunity was fully based on the achievement of the adjusted EBITDA target goal. The Company exceeded the adjusted EBITDA target goal, and as a result, the named executive officers earned 105.9% of their respective incentive compensation targets as set forth below:
2024 Annual Performance-Based Incentive Compensation
| Named Executive Officer | Target 2024 MIC Plan Award (% of Salary) | Target 2024 MIC Plan Award ($) | Total 2024 MIC Plan Payment ($) | | Scott M. Shaw | 100% | 650,000 | 688,629 | | Brian K. Meyers | 75% | 300,000 | 317,829 | | Chad D. Nyce | 75% | 281,250 | 297,964 |
2024 Annual Performance-Based Incentive Compensation
The Compensation Committee has full discretion to modify awards up or down based on other performance criteria critical to the success of the organization including operational, regulatory, and educational quality considerations that would otherwise not be reflected in the adjusted EBITDA targets above. No such discretion was exercised this year.
Long-Term Stock Incentives
Long-Term Stock Incentives Stock incentives focus executives’ attention on the Company from the perspective of an owner with an equity stake in the business, thereby aligning interests with those of shareholders. The Compensation Committee believes that the Company’s long-term performance is achieved through an ownership culture that encourages long-term performance by our named executive officers through grants of stock-based awards. Our shareholder-approved LTIP provides for the grant of stock options, restricted stock, performance stock, and other equity-based awards. Awards are made at the discretion of the Compensation Committee based on a multiplicity of factors including total compensation at peer companies, the level of equity ownership of the executives, and judgments of individual performance during the year. The Compensation Committee believes that a combination of time-based and performance-based restricted stock grants better align the interests of our named executive officers with those of our shareholders. Adjusted EBITDA targets are set by the Compensation Committee at the beginning of each applicable year. If the applicable adjusted EBITDA target is not attained, the Compensation Committee has the discretion to determine that the performance-based restricted stock that would have vested had the target been attained will not be forfeited but instead will be subject to a catch-up adjusted EBITDA target to be set in the subsequent year. A catch-up target is a stretch goal that requires a greater level of performance than the performance goal set for the applicable performance period. The catch-up target is applicable only for awards issued prior to December 31, 2023. In addition, notwithstanding the attainment of the applicable performance targets, the Compensation Committee has the discretion to determine that all or a portion of performance-based restricted stock will not vest based on facts and circumstances occurring after the date of grant that the Compensation Committee deems relevant.
Time-Based Restricted Stock Awards
Time-Based Restricted Stock Awards On each of February 22, 2024 and February 23, 2023, the Compensation Committee awarded time-based restricted stock (the “Time-Based Restricted Shares”) to certain members of our management, including each of our named executive officers. The Time-Based Restricted Shares vest ratably over three years and represent 50% of the total restricted shares awarded in each year.
Performance-Based Restricted Stock Awards
Performance-Based Restricted Stock Awards On February 22, 2024, the Compensation Committee awarded performance-based restricted stock (the “Performance-Based Restricted Shares”) to certain members of our management, including each of our named executive officers. The Performance-Based Restricted Shares vest over three years upon the attainment of certain financial performance targets set by the Compensation Committee for each of the fiscal years 2024, 2025, and 2026, the attainment of which is determined in March of each succeeding year. The Performance-Based Restricted Shares represent 50% of the total restricted shares awarded. On February 23, 2023, the Compensation Committee awarded Performance-Based Restricted Shares to certain members of our management including each of our named executive officers. The Performance-Based Restricted Shares vest over three years upon the attainment of certain financial performance targets set by the Compensation Committee for each of the fiscal years 2023, 2024, and 2025, the attainment of which is determined in March of each succeeding year. The Performance-Based Restricted Shares represent 50% of the total restricted shares awarded.
Compensation Consultants
Compensation Consultants In determining the compensation of our named executive officers, the Compensation Committee considers many factors such as the executive’s position with the Company and the level of responsibility, skills, and experience required by the position, the executive’s experience and qualifications, the Company’s ability to replace such individual, and the overall competitive environment for executive talent. The Committee has the authority to retain its own advisor to consider, from time to time, the Company’s compensation philosophy and programs and provide guidance, as appropriate. The Committee relies on an independent compensation consultant for guidance in determining the appropriate structure of director and executive compensation as well as appropriate levels of compensation. In 2024, the Compensation Committee retained Grant Thornton Advisors LLC (“Grant Thornton”) as its independent compensation consultant and considered data and analysis regarding competitive pay practices among the Company’s peers as a guide in determining the appropriate level of executive officer compensation. The Compensation Committee has assessed the independence of Grant Thornton in its capacity as the compensation consultant to the Compensation Committee pursuant to SEC and NASDAQ rules and concluded that no conflict of interest exists that would prevent Grant Thornton from serving as an independent consultant to the Compensation Committee.
Employment Agreements and Change in Control Benefits
Employment Agreements and Change in Control Benefits The Company has entered into employment agreements with Messrs. Shaw, Meyers, and Nyce. Each of these agreements will expire on December 31, 2025. The employment agreements are described below under “Employment Agreements.” The employment agreement for each of Messrs. Shaw, Meyers, and Nyce provides that upon a change in control of the Company, the term of the agreement will be extended automatically for an additional two-year term, commencing on the date of the change in control and ending on the second anniversary of the date of the change in control. Each employment agreement further provides that all stock options and restricted stock awards held by the named executive officer will immediately vest in such event. We do not provide our named executive officers with tax gross-ups for “excess parachute payments” under Section 280G of the Internal Revenue Code upon a change in control. In the event that any payment or distribution by us to or for the benefit of our named executive officers would be considered a “parachute payment” for purposes of Section 280G, the amount of such payments may be reduced to the largest amount permissible without triggering excise taxes under Section 4999 of the Internal Revenue Code.
Executive Compensation
| Name and Principal Position | Year | Salary ($) | Stock Awards (1) ($) | Non-Equity Incentive Plan Compensation (2) ($) | All Other Compensation (3) ($) | Total ($) | | Scott M. Shaw | 2024 | 650,000 | 1,200,000 | 688,629 | 19,016 | 2,557,645 | | President and | 2023 | 500,000 | 1,200,000 | 740,000 | 18,683 | 2,458,683 | | Chief Executive Officer | | | | | | | | Brian K. Meyers | 2024 | 400,000 | 500,000 | 317,829 | 16,052 | 1,233,881 | | Executive Vice President, Chief | 2023 | 358,955 | 500,000 | 398,440 | 13,236 | 1,270,631 | | Financial Officer and Treasurer | | | | | | | | Chad D. Nyce | 2024 | 375,000 | 500,000 | 297,964 | 6,500 | 1,179,464 | | Executive Vice President, | 2023 | 300,000 | 350,000 | 222,000 | 5,927 | 877,927 | | Chief Operating Officer | | | | | | |
Potential Payments upon a Termination or Change in Control
Potential Payments upon a Termination or Change in Control The following table summarizes the value of the termination payments and benefits that our named executive officers would receive upon:
Potential Payments upon a Termination or Change in Control
| • | the Executive’s Involuntary Termination (as defined below); |
Potential Payments upon a Termination or Change in Control
| • | a Change in Control (as defined below); or |
Potential Payments upon a Termination or Change in Control
| • | the Executive’s Death or Disability. |
Potential Payments upon a Termination or Change in Control
In each case, the amounts are determined as if the trigger event occurred on December 31, 2023 and equity is valued based on the closing stock price of $15.82 on December 31, 2024. This table excludes vested account balances under our 401(k) plan, which is generally available to all of our employees. The terms of the benefits are set forth in the employment agreements of our named executive officers as described immediately following the table.
Payment upon Termination
Payment upon Termination
Director Compensation
Director Compensation The following chart summarizes the compensation earned by non-employee directors for the fiscal year ended December 31, 2024:
Director Compensation
| Name | Annual Retainer ($) | Audit Committee ($) | Nominating & Corporate Governance ($) | Compensation Committee ($) | Stock Awards (1) ($) | Total ($) | | John A. Bartholdson (2) | 75,000 | 4,000 | 5,000 | 3,000 | 105,000 | 192,000 | | James J. Burke, Jr. | 55,000 | - | 6,000 | 8,000 | 60,000 | 129,000 | | Anna Cabral (3) | 27,500 | 4,000 | - | - | 50,000 | 81,500 | | Kevin M. Carney | 55,000 | 15,000 | - | - | 60,000 | 130,000 | | J. Barry Morrow (4) | 23,750 | - | - | - | - | 23,750 | | Marta Newhart (3) | 27,500 | - | 3,000 | - | 50,000 | 80,500 | | Michael A. Plater (5) | 55,000 | 8,000 | 8,000 | - | 60,000 | 131,000 | | Felecia J. Pryor | 55,000 | - | 6,000 | 8,000 | 60,000 | 129,000 | | Carlton E. Rose | 55,000 | 8,000 | - | 6,000 | 60,000 | 129,000 | | Sylvia J. Young | 55,000 | 4,000 | - | 6,000 | 60,000 | 125,000 | | Grand Total | 483,750 | 43,000 | 28,000 | 31,000 | 565,000 | 1,150,750 |
Director Compensation
| (1) Represents the grant date fair value of a restricted stock award granted on May 2, 2024 to each of the Directors, with the exception of Ms. Cabral and Ms. Newhart, whose stock awards were granted on June 27, 2024. The fair value of this grant was determined in accordance with FASB ASC Topic 718 (excluding the effect of estimated forfeitures) as determined based on applying the assumptions used in the Company’s financial statements. See Note 10 to the audited consolidated financial statements in our Annual Report on Form 10-K for the year ended December 31, 2024, regarding assumptions underlying the valuation of equity awards. |
Director Compensation
| (2) Mr. Bartholdson served as Chair of the Nominating and Corporate Governance Committee and a member of each of the Audit Committee and the Compensation Committee through May 2, 2024, on which date Mr. Bartholdson stepped down from his committee positions and became Non-Executive Chair of the Board of Directors. |
Director Compensation
| (3) Ms. Cabral and Ms. Newhart were appointed to the Board on June 27, 2024. |
Director Compensation
| (4) Mr. Morrow served as Chair of the Board of Directors through May 2, 2024, the date of his resignation from the Board of Directors. |
Director Compensation
| (5) On May 2, 2024, Mr. Plater replaced Mr. Bartholdson as the Chair of the Nominating and Corporate Governance Committee. |
Director Compensation
Fiscal year 2024 Compensation Structure. The Governance Committee approves Board compensation with feedback from executive management. Each of the non-employee directors earned an annual retainer and received awards of shares of restricted Common Stock under the 2020 Long-Term Incentive Plan as compensation for their services as directors as follows:
Director Compensation
| Annual Element | Board Members ($) | Non-Executive Chair Additional Retainer ($) | Audit Committee ($) | Nominating and Corporate Governance Committee ($) | Compensation Committee ($) | | Cash Retainer | 55,000 | 40,000 | | | | | Restricted Stock Grant | 60,000 | 45,000 | | | | | Committee Chair | | | 15,000 | 10,000 | 10,000 | | Committee Member | | | 8,000 | 6,000 | 6,000 |
Director Compensation
As compensation received by directors is pro-rated for portions of the year in which each director holds a particular position with the Board or particular committee, to the extent not a full year. As a result, total annual compensation for each of the directors for fiscal year 2024 as reflected in the Director Compensation Table above may not be calculable from the Fiscal Year 2024 Board Compensation Structure. We reimbursed the Directors for their out-of-pocket travel and related expenses incurred while attending Board and committee meetings. Annual Grants of Restricted Stock. On the date of each annual meeting of shareholders, each non-employee director receives an award of shares of restricted Common Stock equal to $60,000 and the Chair receives $105,000 (based on the fair market value of a share of the Company’s Common Stock on the date of grant) for service as a director of the Company, provided that such non-employee director continues to serve as a director of the Company immediately after such annual meeting. On May 2, 2024, each non-employee director, with the exception of Ms. Cabral and Ms. Newhart, received 5,343 shares of restricted Common Stock, with a fair value of $60,000, while Mr. Bartholdson received 9,350 shares of restricted Common Stock, with a fair value of $105,000. The restricted stock awards vest in full on May 2, 2025, the first anniversary of the grant date. The per share fair market value of a share of the Company’s Common Stock on May 2, 2024, based on the closing price of the Common Stock on such date, was $11.23. On June 27, 2024, Ms. Cabral and Ms. Newhart received 4,348 shares of restricted Common Stock, with a fair value of $50,000, which fully vest on May 2, 2025. The stock awards were prorated in relation to the date that Ms. Cabral and Ms. Newhart were appointed to the Board of Directors. The per share fair market value of a share of the Company’s Common Stock on June 27, 2024, based on the closing price of the Common Stock on such date, was $11.50.
Pay Versus Performance
Pay Versus Performance The following table shows, for the last three fiscal years, the total compensation paid to our named executive officers as reflected in our Summary Compensation Table (the “SCT”), “compensation actually paid” to our named executed officers (as determined in accordance with applicable rules), our total shareholder return (“TSR”), and our net income. The information provided under the heading “Pay versus Performance” shall not be considered “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Securities Exchange Act of 1934, as amended, except to the extent that we specifically incorporate it by reference into a filing.
Pay Versus Performance
| Year | Total Compensation Per SCT Paid to Principal Executive Officer (1) ($) | Compensation Actually Paid to Principal Executive Officer (2) ($) | Average Compensation Total for Non- Principal Executive Officer - NEOs (3) ($) | Average Compensation Actually Paid to Non-Principal Executive Officer - NEOs (4) ($) | Value of Initial Fixed $100 Investment Based on Total Shareholder Return (5) ($) | Net Income (in thousands) (6) ($) | | 2024 | 2,557,645 | 4,365,629 | 1,206,672 | 1,904,289 | 212 | 9,891 | | 2023 | 2,458,683 | 4,021,370 | 1,074,279 | 1,687,803 | 154 | 25,997 | | 2022 | 1,740,984 | 842,209 | 824,827 | 386,446 | 89 | 12,634 |
Pay Versus Performance
| (1) The dollar amounts reported are the amounts of total compensation reported for Scott M. Shaw, our President and Chief Executive Officer, recognized as our Principal Executive Officer for these purposes for each corresponding year in the “Total” column of the Summary Compensation Table. |
Pay Versus Performance
| (2) The dollar amounts reported represent the amount of “compensation actually paid” to Mr. Shaw, as computed in accordance with Item 402(v) of Regulation S-K. In accordance with the requirements of Item 402(v) of Regulation S-K, the following table sets forth the adjustments made to Mr. Shaw’s total compensation for each year to determine the “compensation actually paid”. Mr. Shaw holds no stock options, no awards were modified during the year, and no dividends or other earnings were paid during the year prior to the vesting date of an award. |
Pay Versus Performance
| (3) The dollar amounts reported represent the average of the amounts reported for our named executive officers, NEOs, excluding Mr. Shaw, in the “Total” Column of the Summary Compensation Table for each corresponding year. The NEOs, excluding Mr. Shaw, included for purposes of calculating the average amounts in each applicable year are Mr. Meyers and Mr. Nyce. |
Pay Versus Performance
| (4) The dollar amounts reported represent the average of the amounts of “compensation actually paid” to our NEOs, excluding Mr. Shaw, as computed in accordance with Item 402(v) of Regulation S-K. In accordance with the requirements of Item 402(v) of Regulation S-K, the following table sets forth the adjustments made to our NEOs’ total compensation, excluding Mr. Shaw for each year to determine the “compensation actually paid”. Neither of Messrs. Meyers or Nyce holds any options, no awards were modified during the year, and no dividends or other earnings were paid during the year prior to the vesting date of an award. |
Pay Versus Performance
| (5) The dollar amounts reported represent the value of an initial fixed investment of $100 and are calculated by dividing the sum of (i) the cumulative amount of dividends for the measurement period, assuming dividend reinvestment, and (ii) the difference between the closing stock price of the Company’s Common Stock at the end and at the beginning of the measurement period, by the closing stock price of our Common Stock at the beginning of the measurement period. The closing stock price of the Company’s Common Stock on the last trading day in December in each of 2024, 2023 and 2022 was $15.82, $10.04 and $5.79, respectively. There were no dividends in any of such years. |
Pay Versus Performance
| (6) The dollar amounts reported represent the amount of net income reflected in our consolidated audited financial statements for the applicable year. |
Pay Versus Performance
The following table reconciles total compensation per the SCT compared with “compensation actually paid” to the Principal Executive Officer and Non-Principal Executive Officer NEOs:
Pay Versus Performance
| Adjustments to Determine “Compensation Actually Paid” to the Principal Executive Officer | | | | | | | | | Year | Total Compensation Per SCT ($) | Deduct Amounts Reported as Stock Awards in SCT($) | Add Year-end Value of Unvested Equity Awards Granted in Year ($) | Change in Value of Unvested Equity Awards Granted in Prior Years ($) | Change in Value of Equity Awards Granted in Prior Years Which Vested in Year ($) | Deduct Prior Year-end Fair Value of Awards Granted in Prior Years That Failed to Meet the Vesting Conditions in Year ($) | Total Compensation Actually Paid ($) | | 2024 | 2,557,645 | (1,200,000) | 1,973,387 | 1,042,504 | (7,907) | - | 4,365,629 | | 2023 | 2,458,683 | (1,200,000) | 1,959,025 | 777,380 | 26,282 | - | 4,021,370 | | 2022 | 1,740,984 | (1,100,000) | 873,665 | (264,053) | (6,979) | (401,408) | 842,209 |
Pay Versus Performance
| Adjustments to Determine Average “Compensation Actually Paid” to the Non-Principal Executive Officer NEOs | | | | | | | | | Year | Average Compensation Per SCT ($) | Deduct Amounts Reported as Stock Awards in SCT ($) | Add Year-end Value of Unvested Equity Awards Granted in Year ($) | Change in Value of Unvested Equity Awards Granted in Prior Years ($) | Change in Value of Equity Awards Granted in Prior Years Which Vested in Year ($) | Deduct Prior Year-end Fair Value of Awards Granted in Prior Years That Failed to Meet the Vesting Conditions in Year ($) | Average Compensation Actually Paid ($) | | 2024 | 1,206,672 | (500,000) | 822,260 | 378,587 | (3,231) | - | 1,904,289 | | 2023 | 1,074,279 | (425,000) | 693,814 | 327,968 | 16,742 | - | 1,687,803 | | 2022 | 824,827 | (425,000) | 337,552 | (165,627) | (5,948) | (179,358) | 386,446 |
Analysis of the Information Presented in the Pay Versus Performance Table
Analysis of the Information Presented in the Pay Versus Performance Table As described in more detail in the section “Compensation Discussion and Analysis,” the Company’s executive compensation program is comprised of a variety of components including a performance-based approach. While the Company utilizes several performance metrics to align executive compensation with Company performance, not all of these are covered by the Pay Versus Performance table. Further, while the Company seeks to incentivize long-term performance, this is not necessarily aligned with “compensation actually paid” (as computed in accordance with Item 402(v) of Regulation S-K) for a particular year. In accordance with Item 402(v) of Regulation S-K, the Company is providing the following descriptions of the relationships between information presented in the Pay versus Performance table. Compensation Actually Paid and Cumulative TSR The following graph provides a description of the relationship between the amount of “compensation actually paid” to Mr. Shaw and the average amount of “compensation actually paid” to the Company’s NEOs as a group (excluding Mr. Shaw) to the Company’s Cumulative Total Shareholder Return (“TSR”) over the three years presented in the Pay Versus Performance table. Compensation Actually Paid and Net Income The following graph provides a description of the relationship between the amount of “compensation actually paid” to Mr. Shaw and the average amount of “compensation actually paid” to the Company’s NEOs as a group (excluding Mr. Shaw) to the Company’s net income over the three years presented in the Pay Versus Performance table.