UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549

 

 

FORM 8-K

 

 

CURRENT REPORT

Pursuant to Section 13 or 15(d)

of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): May 11, 2017

 

 

Endurance International Group Holdings, Inc.

(Exact Name of Registrant as Specified in Charter)

 

 

 

Delaware   001- 36131   46-3044956
(State or Other Jurisdiction   (Commission   (IRS Employer
of Incorporation)   File Number)   Identification No.)

 

10 Corporate Drive, Suite 300

Burlington, MA

  01803
(Address of Principal Executive Offices)   (Zip Code)

Registrant’s telephone number, including area code: (781) 852-3200

 

(Former Name or Former Address, if Changed Since Last Report)

 

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

 

☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

 

☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

 

☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

 

☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

 

Emerging growth company  ☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

 

 

 

Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers

2017 Management Incentive Plan

On May 11, 2017, on the recommendation of the Compensation Committee of the Board of Directors (the “Compensation Committee”) of Endurance International Group Holdings, Inc. (the “Company”), the Board of Directors of the Company adopted the 2017 Management Incentive Plan (the “2017 MIP”), a cash-based incentive compensation plan pursuant to which eligible Company employees, including named executive officers other than chief executive officer Hari Ravichandran, are eligible for an annual bonus.

Annual bonuses may be earned by eligible employees under the 2017 MIP based on the achievement by the Company of pre-established targets for GAAP Revenue (weighted 50%) and Adjusted EBITDA (weighted 50%) for the year ending December 31, 2017. GAAP Revenue is as reported in the Company’s publicly-filed financial statements and Adjusted EBITDA is defined as follows, consistent with the definition used in the Company’s public filings: net (loss) income, excluding the impact of interest expense (net), income tax expense (benefit), depreciation, amortization of other intangible assets, stock-based compensation, restructuring expenses, transaction expenses and charges, (gain) loss of unconsolidated entities, and impairment of other long-lived assets.

The Company’s percentage achievement of the target for each of the GAAP Revenue and Adjusted EBITDA metrics (each, a “Metric Target Achievement Factor”) will be evaluated separately, and the payout under each metric (the “Metric Target Payout”) will be weighted accordingly and added together to determine the level of bonus pool funding. The Company must reach a Metric Target Achievement Factor of at least 88% for a metric before that metric will contribute to the bonus pool funding, at which point the Metric Target Payout for that metric will be as follows:

 

Metric Target

Achievement Factor

 

Metric Target

Payout

88%   50%
92%   75%
96%   90%
100%   100%
103%   150%
106%   175%

Metric Target Payouts will be determined using linear interpolation between the stated percentages. If a Metric Target Achievement Factor is equal to or greater than 106%, the maximum payout for such metric is 175%.

If the bonus pool is funded, individual bonuses will be calculated based upon the weighted Metric Target Payouts for each metric and each individual’s eligible earnings, target bonus percentage, and individual performance.

All payments and bonus pool funding are at the discretion of the Board of Directors. The Board of Directors or a committee of the Board of Directors may make adjustments to achievement of performance metrics and payout levels under the 2017 MIP to address the impact of any mergers, acquisitions or other unexpected activities, developments, trends or events. In addition, achievement of the performance metrics may include or exclude any of the following events that occur during the performance year: any reorganization or restructuring transactions; extraordinary nonrecurring items; and significant acquisitions or divestitures.

The foregoing summary of the terms of the 2017 MIP is qualified in its entirety by reference to the 2017 MIP, a copy of which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.

CFO Compensation Changes; Appointment of Interim Chief Operating Officer

On May 11, 2017, the Compensation Committee approved an increase to the annual base salary and target bonus percentage for Marc Montagner, the Company’s chief financial officer. Effective April 1, 2017, Mr. Montagner’s base salary was increased from $475,000 to $500,000. Effective July 1, 2017, Mr. Montagner’s target bonus percentage was increased from 75% to 100% of his eligible base salary. The Compensation Committee also approved the grant of a cash bonus award to Mr. Montagner in the amount of $200,000 in recognition of his performance and expanded responsibilities.

On May 15, 2017, the Board of Directors of the Company appointed Mr. Montagner as interim chief operating officer in addition to his current position as chief financial officer.

Mr. Montagner, age 56, has served as our chief financial officer since September 2015. Mr. Montagner was previously chief financial officer at LightSquared, Inc. from January 2012 until August 2015. Previously, he had been executive vice president of strategy, development and distribution at LightSquared from 2009 to 2010. On May 14, 2012, LightSquared filed for reorganization under Chapter 11 of the U.S. Bankruptcy Code. From June 2010 to December 2011, Mr. Montagner served as managing partner of DuPont Circle Partners LLC. Prior to joining LightSquared in February of 2009, Mr. Montagner was managing director and co-head of the Global Telecom, Media and Technology Merger and Acquisition Group at Banc of America Securities. Until 2006, he was senior vice president, corporate development and M&A with the Sprint Nextel Corporation. Prior to 2002, Mr. Montagner was a managing director in the Media and Telecom Group at Morgan Stanley.

 

Item 9.01. Financial Statements and Exhibits

 

(d) Exhibits

 

10.1    2017 Management Incentive Plan

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

    ENDURANCE INTERNATIONAL GROUP HOLDINGS, INC.
Date: May 16, 2017      
   

/s/    Marc Montagner        

    (Signature)
    Name:   Marc Montagner
    Title:   Chief Financial Officer

EXHIBIT INDEX

 

Exhibit
No.

  

Description

10.1    2017 Management Incentive Plan

Exhibit 10.1

 

LOGO

  

2017 Management Incentive Program

Purpose

The purpose of the Endurance International Group Holdings, Inc. (the “Company”) Management Incentive Program is to share the success of the Company. This document describes guidelines and administration.

Eligibility

Eligibility is determined by role and level within the Company; generally full-time Director-level (SM) and above professionals. Eligible employees are notified in writing. Employees must be hired by October 31 st to be eligible for that year’s bonus. To receive payment, an employee must be actively working for the Company at the time payment is made and in good standing. Any employee eligible to participate in any other discretionary incentive plan including without limitation a sales commission plan is ineligible.

Participation Level

Individual target bonus percentage is determined by organization level.

Eligible Earnings

Eligible earnings include payments made during the year of regular earnings excluding payments for overtime, bonuses and other special or incentive payments.

Participation Effective Date

For new hires with program participation, the effective date is the start date. For current employees added to the program or receiving a target adjustment, the effective date is July 1 if the change is made during the annual merit cycle, or the start of the next quarter if the change is made outside of the annual merit cycle.

Annual Bonus Pool Determination

Bonus pool funding is dependent on the Company’s achievement of the GAAP Revenue and Adjusted EBITDA targets recommended by management and approved by the Board of Directors or a committee of the Board. Achievement of the performance metrics is based on performance results from the previous year as determined by the Finance group and approved by the Board or a committee of the Board, and may include or exclude any of the following events that occur during the performance year: any reorganization or restructuring transactions; extraordinary nonrecurring items; and significant acquisitions or divestitures. Adjustments to achievement of performance metrics and/or payout levels may be made to neutralize the impact of any mergers, acquisitions or other unexpected activities, developments, trends or events.

Each performance metric is weighted 50% and the minimum threshold for each metric must be achieved by the Company before such metric will contribute towards the bonus calculation. The MIP can pay out if the minimum threshold of one metric is hit but not the other. Achievement of 100% GAAP Revenue and 100% Adjusted EBITDA performance will equate to 100% funding of the bonus pool. Bonus pool funding will be determined using linear interpolation between the stated percentages.

 

Metric Target
Achievement

 

Metric Target Payout

Zero payout < 88%
88%   50%
92%   75%
96%   90%
100%   100%
103%   150%
106%   175%

Example: 90.1% Achievement = 63.1% Payout Factor; 92.3% Achievement = 76.1% Payout Factor

Calculation Guidelines

In addition to the Company targets, the bonus calculation is dependent upon individual performance as determined by an employee’s direct manager.

 

Target bonus is the product of eligible earnings * target % * 50% * GAAP Revenue Payout Factor, plus the product of eligible earnings * target % * 50% * Adjusted EBITDA Payout Factor. Final Bonus Payment is adjusted based on individual performance.

Performance

   Individual Performance Adjustment

Exceeded goals

   100% ++

Met goals

   100%

Did not meet all goals

   < 100%

Off Track

   0%;  i.e.,  not bonus eligible
 

 

Example

 

Eligible Earnings:

   $25,000

Target %:

   10% or $2,500

GAAP Revenue Payout Factor (weighted 50%, based on 90.1% Achievement):

   63.1% or $789.06

Adjusted EBITDA Payout Factor (weighted 50%, based on 92.3% Achievement):

   76.1% or $951.56

Target Bonus:

   $1,740.63

Individual Performance Adjustment:

   110% or $1,914.69

Final Bonus Payment

   $1,914.69

Payment Timing

Payments are made via payroll following the 4 th Quarter earnings release. All payments and program funding are at Board discretion.

Definitions

GAAP Revenue means revenue recognized for the year ended December 31, 2017 in accordance with U.S. Generally Accepted Accounting Principles (GAAP), as reported in the Company’s publicly filed financial statements.

Adjusted EBITDA means net (loss) income for the year ended December 31, 2017, excluding the impact of interest expense (net), income tax expense (benefit), depreciation, amortization of other intangible assets, stock-based compensation, restructuring expenses, transaction expenses and charges, (gain) loss of unconsolidated entities, and impairment of other long-lived assets.

 

2017    MIP     Page 2 | 2