|
GRANTS OF PLAN-BASED AWARDS FOR 2015
|
The
following table summarizes the payouts which our named executive officers could have received upon the achievement of certain performance objectives under the Annual
Incentive Program and the grants of PRSUs and RSUs made under the Omnibus Plan in 2015. We did not grant any option awards in 2015.
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|
Estimated Future Payouts
under Non-Equity Incentive
Plan Awards(1)
|
|
Estimated Future Payouts
under Equity Incentive
Plan Awards(2)
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|
|
|
|
|
Name
(a)
|
|
Grant
Date
(b)
|
|
Threshold
($)(c)
|
|
Target
($)(d)
|
|
Maximum
($)(e)
|
|
Threshold
(#)(f)
|
|
Target
(#)(g)
|
|
Maximum
(#)(h)
|
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Number of
Securities
Underlying
Restricted
Stock
Units
(#)(3)(i)
|
|
Grant Date
Fair Value
of Stock
Awards
($)(4)(l)
|
|
Jim Hallett
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|
|
|
|
450,000
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900,000
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1,350,000
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2/20/2015
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|
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28,940
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|
|
57,879
|
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115,758
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|
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2,142,681
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2/20/2015
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19,293
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|
714,227
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Eric Loughmiller
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|
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168,750
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337,500
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506,250
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|
|
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|
|
2/20/2015
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|
|
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|
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|
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13,398
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26,796
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53,592
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991,988
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2/20/2015
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8,932
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330,663
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Don Gottwald
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275,000
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550,000
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|
825,000
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|
|
2/20/2015
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|
|
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|
|
|
|
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7,369
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14,738
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29,476
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|
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545,601
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2/20/2015
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|
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4,913
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181,879
|
|
Stéphane St-Hilaire(5)
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225,000
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450,000
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675,000
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2/20/2015
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4,824
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|
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9,647
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|
|
19,294
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|
|
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|
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357,132
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|
|
2/20/2015
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|
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3,216
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|
|
119,056
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John Kett
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|
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|
225,000
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|
450,000
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|
675,000
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|
|
|
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|
|
2/20/2015
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|
|
|
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|
|
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4,824
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|
9,647
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|
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19,294
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|
|
|
|
|
357,132
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|
2/20/2015
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|
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3,216
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119,056
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|
-
(1)
-
Columns (c),
(d) and (e) include the potential awards for performance at the threshold, target and maximum ("superior") levels, respectively, under
the Annual Incentive Program. See, "Compensation Discussion and AnalysisElements Used to Achieve Compensation Philosophy and ObjectivesAnnual Cash Incentive Programs" for
further information on the terms of the Annual Incentive Program.
-
(2)
-
Columns (f),
(g) and (h) include the potential number of PRSUs which may be earned for performance at the threshold, target and maximum levels,
respectively. These awards vest if and to the extent that the Company's Cumulative Adjusted Net Income Per Share exceeds certain levels over the three-year period beginning on January 1, 2015.
-
(3)
-
Column (i)
includes the number of RSUs granted in 2015. These awards vest ratably on each of the first three anniversaries of the grant date subject
to the executive's continued employment with the Company and provided that the Company achieves $100 million in adjusted net income in its 2015 fiscal year (as reported by the Company and which
condition was satisfied).
-
(4)
-
The
amounts reported in this column represent the grant date fair value of awards granted on February 20, 2015, computed in accordance with ASC 718.
See Note 4 to our financial statements for 2015 regarding the assumptions made in determining the grant date fair value.
-
(5)
-
Mr. St-Hilaire's
base salary and annual incentive award is denominated in U.S. dollars. For 2015, his annual incentive award was paid partially in
Canadian dollars and partially in U.S. dollars, because he moved onto our U.S. payroll mid-year.
Additional
information concerning our cash and equity incentive plans may be found in the sections titled "Compensation Discussion and AnalysisElements Used to Achieve Compensation
Philosophy and ObjectivesAnnual Cash Incentive Programs" and "Long-Term Incentive Opportunities," respectively.
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|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
62
|
Table of Contents
|
OUTSTANDING EQUITY AWARDS
AT FISCAL YEAR-END 2015
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Option Awards
|
|
Stock Awards
|
|
Name
(a)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Exercisable
(b)
|
|
Number of
Securities
Underlying
Unexercised
Options (#)
Unexercisable
(c)
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options (#)
(d)
|
|
Option
Exercise
Price ($)
(e)
|
|
Option
Expiration
Date
(f)
|
|
Equity
Incentive
Plan
Awards:
Number of
Unearned
Shares,
Units or
Other Rights
that have
Not Vested
(#)
(i)
|
|
Equity
Incentive
Plan
Awards:
Market or
Payout
Value of
Unearned
Shares,
Units or
Other Rights
that have
Not Vested
($)
(j)
|
|
Jim Hallett
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37,500
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13.46
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03/01/2020
|
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112,500
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13.46
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|
03/01/2020
|
|
|
|
|
|
|
|
|
|
|
48,601
|
|
|
145,803
|
(1)
|
|
|
|
|
30.89
|
|
|
02/27/2024
|
|
|
|
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|
|
|
|
|
|
|
|
|
|
|
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|
|
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|
|
|
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|
|
268,818(2)
|
|
|
9,954,331(2)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,832(3)
|
|
|
1,623,099(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
43,832(4)
|
|
|
1,623,099(4)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
115,758(5)
|
|
|
4,286,519(5)
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|
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,293(6)
|
|
|
714,420(6)
|
|
Eric Loughmiller
|
|
|
24,301
|
|
|
72,903(1)
|
|
|
|
|
|
30.89
|
|
|
02/27/2024
|
|
|
|
|
|
|
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|
|
|
|
|
|
|
|
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|
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|
|
|
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|
134,410(2)
|
|
|
4,977,202(2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,916(3)
|
|
|
811,549(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
21,916(4)
|
|
|
811,549(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
53,592(5)
|
|
|
1,984,512(5)
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|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,932(6)
|
|
|
330,752(6)
|
|
Don Gottwald
|
|
|
165,000
|
|
|
|
|
|
|
|
|
10.00
|
|
|
05/06/2019
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
29,476(5)
|
|
|
1,091,496(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
4,913(6)
|
|
|
181,928(6)
|
|
Stéphane St-Hilaire
|
|
|
59,355
|
|
|
|
|
|
|
|
|
10.00
|
|
|
08/20/2017
|
|
|
|
|
|
|
|
|
|
|
5,598
|
|
|
|
|
|
|
|
|
13.46
|
|
|
03/01/2020
|
|
|
|
|
|
|
|
|
|
|
67,170
|
|
|
|
|
|
|
|
|
13.46
|
|
|
03/01/2020
|
|
|
|
|
|
|
|
|
|
|
9,721
|
|
|
29,163(1)
|
|
|
|
|
|
30.89
|
|
|
02/27/2024
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,768(3)
|
|
|
324,679(3)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
8,766(4)
|
|
|
324,605(4)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,294(5)
|
|
|
714,457(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,216(6)
|
|
|
119,088(6)
|
|
John Kett
|
|
|
28,661
|
|
|
|
|
|
|
|
|
10.00
|
|
|
08/20/2017
|
|
|
|
|
|
|
|
|
|
|
56,585
|
|
|
|
|
|
|
|
|
10.00
|
|
|
08/20/2017
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
19,294(5)
|
|
|
714,457(5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
3,216(6)
|
|
|
119,088(6)
|
|
-
(1)
-
These
service options were granted on February 27, 2014 and vest ratably on each of the first four anniversaries of the date of grant.
-
(2)
-
The
total amounts and values in columns (i) and (j) equal the total number of PRSUs granted on December 13, 2013 that may be earned and
vest based on the extent to which the Company's total stockholder return relative to that of
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
63
|
Table of Contents
companies
within the S&P 500 Index exceeds certain levels over a three-year period, at the maximum level, held by each named executive officer multiplied by the market price of Company common
stock at the close of the last trading day in 2015, which was $37.03 per share. In calculating the number of PRSUs and their value, we are required by SEC rules to compare our performance through 2015
under the PRSU grants against the threshold, target and maximum performance levels for the grant and report in these columns the applicable potential share number and payout amount. If the performance
is between levels, we are required to report the potential payout at the next highest level. Through December 31, 2015, we exceeded
target levels of total stockholder return relative to that of companies within the S&P 500 Index and have accordingly reported the PRSUs at the maximum award level.
-
(3)
-
The
total amounts and values in columns (i) and (j) equal the total number of PRSUs granted on February 27, 2014 that may be earned and
vest based on the extent to which the Company's total stockholder return relative to that of companies within the S&P 500 Index exceeds certain levels over a three-year period, at the maximum
level, held by each named executive officer multiplied by the market price of Company common stock at the close of the last trading day in 2015, which was $37.03 per share. In calculating the number
of PRSUs and their value, we are required by SEC rules to compare our performance through 2015 under the PRSU grants against the threshold, target and maximum performance levels for the grant and
report in these columns the applicable potential share number and payout amount. If the performance is between levels, we are required to report the potential payout at the next highest level. Through
December 31, 2015, we exceeded target levels of total stockholder return relative to that of companies within the S&P 500 Index and have accordingly reported the PRSUs at the maximum
award level.
-
(4)
-
The
total amounts and values in columns (i) and (j) equal the total number of PRSUs granted on February 27, 2014 that may be earned and
vest based on the Company's Cumulative Adjusted Net Income Per Share performance over a three-year period, at the maximum level, held by each Named Executive Officer multiplied by the market price of
Company common stock at the close of the last trading day in 2015, which was $37.03 per share. In calculating the number of PRSUs and their value, we are required by SEC rules to compare our
performance through 2015 under the PRSU grants against the threshold, target and maximum performance levels for the grant and report in these columns the applicable potential share number and payout
amount. If the performance is between levels, we are required to report the potential payout at the next highest level. Through December 31, 2015, we exceeded target levels of Cumulative
Adjusted Net Income Per Share performance and have accordingly reported the PRSUs at the maximum award level.
-
(5)
-
The
total amounts and values in columns (i) and (j) equal the total number of PRSUs granted on February 20, 2015 that may be earned and
vest based on the Company's Cumulative Adjusted Net Income Per Share performance over a three-year period, at the maximum level, held by each named executive officer multiplied by the market price of
Company common stock at the close of the last trading day in 2015, which was $37.03 per share. In calculating the number of PRSUs and their value, we are required by SEC rules to compare our
performance through 2015 under the PRSU grants against the threshold, target and maximum performance levels for the grant and report in these columns the applicable potential share number and payout
amount. If the performance is between levels, we are required to report the potential payout at the next highest level. Through December 31, 2015, we exceeded target levels of Cumulative
Adjusted Net Income Per Share performance and have accordingly reported the PRSUs at the maximum award level.
-
(6)
-
The
total amounts and values in columns (i) and (j) equal the total number of RSUs granted on February 20, 2015 that vest ratably on
each of the first three anniversaries of the grant date during the named executive officer's continued employment with the Company through each such anniversary, multiplied by the market price of
Company common stock at the close of the last trading day in 2015, which was $37.03 per share.
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
64
|
Table of Contents
|
OPTION EXERCISES DURING FISCAL YEAR 2015
|
|
|
|
|
|
|
|
|
|
|
Option Awards
|
|
Name
(a)
|
|
Number of Shares
Acquired on
Exercise (#)
(b)
|
|
Value Realized
on Exercise ($)
(c)
|
|
Jim Hallett
|
|
|
|
|
|
|
|
Eric Loughmiller
|
|
|
|
|
|
|
|
Don Gottwald
|
|
|
28,270
|
|
|
780,414
|
|
Stéphane St-Hilaire
|
|
|
|
|
|
|
|
John Kett
|
|
|
75,000
|
|
|
2,066,000
|
|
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
65
|
Table of Contents
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
|
The
following is a discussion of the treatment of equity-based awards held by our named executive officers and annual cash incentive awards due to our named executive
officers upon certain types of employment terminations or the occurrence of a change in control of the Company. For a discussion of our named executive officers' severance payments and the treatment
of their annual cash incentive awards that may become due upon certain types of employment terminations pursuant to their employment agreements, see "Employment Agreements with Named Executive
Officers" below.
|
EQUITY-BASED AWARDSSTOCK INCENTIVE PLAN AND OMNIBUS PLAN
|
To
the extent a named executive officer's employment agreement does not provide otherwise, the Stock Incentive Plan and the Omnibus Plan (and the related award agreements
thereunder) provide for the following treatment of stock options and other equity awards issued pursuant to the plans upon the termination of employment scenarios or a change in control, as set forth
below. As a result of the Stock Incentive Plan being frozen by the Company on December 10, 2009, no additional stock options will be granted under this plan. Since December 10, 2009, all
grants of stock options and other equity awards have been and will be made pursuant to the terms of the Omnibus Plan. For RSU and PRSU awards granted on and after January 1, 2016, participants
who achieve an Early Retirement Date will receive pro rata vesting of RSUs and PRSUs (subject to achievement of performance conditions) based on the number of months worked through their Early
Retirement Date plus a credit of an additional 12 months (i.e., "pro rata plus 12 months"). "Early Retirement Date" will mean the date of the executive's voluntary termination of
employment after attaining a combination of years of age and service with the Company and its affiliates of at least 70, with a minimum age of 60.
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or Change in Control Scenario
|
Award Type
|
|
Voluntary
Termination
|
|
Termination
by the Company
for Cause
|
|
Death, Disability
or Retirement
|
|
Termination
without Cause or
for Good Reason
|
|
Effect of
Change in Control
or Exit Event
|
Unless otherwise specified in an award agreement, all unvested equity-based awards under the Stock Incentive Plan and the Omnibus Plan will be forfeited upon a termination of employment for any reason.
|
Options
|
|
Omnibus Plan:
Voluntary resignation: vested options remain exercisable for 90 days (or until earlier expiration date).
For Cause: all vested and unvested options are cancelled.
Stock Incentive Plan:
All vested and unvested options are cancelled.
|
|
All vested options remain exercisable for one year (or until earlier expiration date).
In the event of death or disability, all unvested options vest in full, with
performance awards remaining subject to achievement of goals.
|
|
Unless otherwise specified in an award agreement, vested options remain exercisable for 90 days (or until earlier expiration date).
|
|
Single trigger vesting with committee discretion to cash out or substitute with successor company awards.
|
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
66
|
Table of Contents
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination or Change in Control Scenario
|
Award Type
|
|
Voluntary
Termination
|
|
Termination
by the Company
for Cause
|
|
Death, Disability
or Retirement
|
|
Termination
without Cause or
for Good Reason
|
|
Effect of
Change in Control
or Exit Event
|
2013 PRSUs
2014 TSR PRSUs
2014 CANIPS PRSUs
2015
PRSUs
|
|
Automatic forfeiture.
|
|
Without Cause, for Good Reason, Retirement:
Prorated portion of the PRSUs based on the Company's actual performance during the performance period and the number of full months he/she was employed during such performance
period.
Death or Disability:
Full vesting of PRSU award based on the Company's actual performance during the
performance period.
|
|
2013 PRSUs, 2014 TSR PRSUS:
Double trigger vesting based on actual performance through date of Change in Control.
2014 CANIPS PRSUs:
Double
trigger vesting at target.
2015 PRSUs:
Single trigger vesting at target.
|
2015 RSUs
|
|
Voluntary Termination (with or without Good Reason), Retirement or Termination by the Company (for Cause or without Cause):
Forfeiture of any unvested 2015 RSUs.
Death or Disability:
Full vesting of any unvested 2015 RSUs.
|
|
Single trigger vesting if adjusted net income goal is attained.
|
Unless
specified otherwise in a named executive officer's employment agreement, the termination of a named executive officer's employment with the Company or any subsidiary shall be deemed to be for
"cause" under the Omnibus Plan and the Stock Incentive Plan upon any of the following events: (i) the refusal or neglect of the named executive officer to perform substantially his
employment-related duties; (ii) the named executive officer's personal dishonesty, incompetence, willful misconduct, or breach of fiduciary duty; (iii) the named executive officer's
indictment for, conviction of, or entering a plea of guilty or
nolo contendere
to a crime constituting a felony or his willful violation of any
applicable law; (iv) the named executive officer's failure to reasonably cooperate, following a request to do so by the Company or any subsidiary, in any internal or governmental investigation;
or (v) the named executive officer's material breach of any written covenant or agreement not to disclose any information pertaining to the Company or any subsidiary or not to compete or
interfere with the Company or any subsidiary.
Unless
specified otherwise in a named executive officer's employment agreement, the termination of a named executive officer's employment with the Company or any subsidiary shall be deemed to be for
"good reason" under the Stock Incentive Plan if such named executive officer voluntarily terminates his or her employment with the Company or any subsidiary as a result of (i) the Company or
any subsidiary significantly reducing the named executive officer's current salary without the named executive officer's prior written consent; or (ii) the Company or any subsidiary taking any
action that would substantially diminish the aggregate value of the benefits provided to the named executive officer under the Company's or such subsidiary's accident, disability, life insurance, or
any other employee benefit plans in which the named executive officer participates. The Omnibus Plan does not provide a default "good reason" definition in the event such term is not specified in a
named executive officer's employment agreement.
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
67
|
Table of Contents
|
ANNUAL CASH INCENTIVE AWARDSOMNIBUS PLAN
|
|
|
|
|
|
|
|
|
|
Termination or Change in Control Scenario
|
Voluntary
Termination
|
|
Termination
by the Company
for Cause
|
|
Death, Disability or
Retirement
|
|
Termination without
Cause or for Good
Reason
|
|
Effect of
Change in Control
or Exit Event
|
Death, Disability, Voluntary Termination (with or without Good Reason) or Termination by the Company (for Cause or without Cause):
Annual cash incentive awards are treated as described in
the executive's employment agreement with the Company, to the extent applicable. See "Employment Agreements with Named Executive Officers" above for more information.
Retirement:
Unless otherwise specified in an employment agreement, executive receives pro-rated amount of incentive award based on actual performance for the performance period.
|
|
Unless otherwise determined by the administrator of the Omnibus Plan or as evidenced in an award agreement, pro rata payment based on actual performance, in the administrator's discretion.
|
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
68
|
Table of Contents
|
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROLTABLE
|
The
amounts in the table below assume that the termination and/or change in control, as applicable, was effective as of December 31, 2015, the last business day of
the prior fiscal year, and that the respective named executive officers exercised all options and/or received cash in exchange for vested PRSUs and RSUs at such time. The table is merely an
illustrative example of the impact of a hypothetical termination of employment or change in control. The amounts that would actually be paid upon a termination of employment can only be determined at
the time of such termination, based on the facts and circumstances then prevailing.
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Named Executive Officer and Triggering Event
|
|
Cash
Severance
|
|
Non-
Equity
Incentive
Pay(1)
|
|
Stock
Options(2)
|
|
PRSUs(3)
|
|
RSUs(4)
|
|
Excise
Tax
Gross-
Up(5)
|
|
Life
Insurance(6)
|
|
Total
|
|
Jim Hallett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
|
|
|
$
|
1,023,613
|
|
$
|
895,230
|
|
$
|
9,273,962
|
|
$
|
714,420
|
|
|
|
|
$
|
800,000
|
|
$
|
12,707,225
|
|
Disability(7)
|
|
|
|
|
$
|
1,023,613
|
|
$
|
895,230
|
|
$
|
9,273,962
|
|
$
|
714,420
|
|
|
|
|
|
|
|
$
|
11,907,225
|
|
Retirement(8)
|
|
|
|
|
$
|
1,023,613
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$
|
1,023,613
|
|
Voluntary / for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o Cause or
for Good Reason
|
|
$
|
3,600,000
|
(9)
|
$
|
1,023,613
|
|
|
|
|
$
|
5,398,808
|
|
|
|
|
|
|
|
|
|
|
$
|
10,022,421
|
|
CIC (single trigger)
|
|
|
|
|
$
|
1,023,613
|
|
$
|
895,230
|
|
$
|
2,207,591
|
|
$
|
714,420
|
|
|
|
|
|
|
|
$
|
4,840,854
|
|
Termination after CIC (double trigger)
|
|
$
|
3,600,000
|
(9)
|
$
|
1,023,613
|
|
$
|
895,230
|
|
$
|
9,273,962
|
|
$
|
714,420
|
|
$
|
4,085,563
|
|
|
|
|
$
|
19,592,788
|
|
Eric Loughmiller
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
13,560
|
(10)
|
$
|
383,855
|
|
$
|
447,624
|
|
$
|
4,555,245
|
|
$
|
330,752
|
|
|
|
|
$
|
800,000
|
|
$
|
6,531,056
|
|
Disability(7)
|
|
$
|
13,560
|
(10)
|
$
|
383,855
|
|
$
|
447,624
|
|
$
|
4,555,245
|
|
$
|
330,752
|
|
|
|
|
|
|
|
$
|
5,731,036
|
|
Retirement(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary / for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o Cause or
for Good Reason
|
|
$
|
801,060
|
(9)
|
$
|
383,855
|
|
|
|
|
$
|
2,419,991
|
|
|
|
|
|
|
|
|
|
|
$
|
3,604,906
|
|
CIC (single trigger)
|
|
|
|
|
$
|
383,855
|
|
$
|
447,624
|
|
$
|
1,022,039
|
|
$
|
330,752
|
|
|
|
|
|
|
|
$
|
2,184,270
|
|
Termination after CIC (double trigger)
|
|
$
|
801,060
|
(9)
|
$
|
383,855
|
|
$
|
447,624
|
|
$
|
4,555,245
|
|
$
|
330,752
|
|
|
|
|
|
|
|
$
|
6,518,536
|
|
Don Gottwald
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
19,644
|
(10)
|
$
|
625,541
|
|
|
|
|
$
|
562,129
|
|
$
|
181,928
|
|
|
|
|
$
|
800,000
|
|
$
|
2,189,242
|
|
Disability(7)
|
|
$
|
19,644
|
(10)
|
$
|
625,541
|
|
|
|
|
$
|
562,129
|
|
$
|
181,928
|
|
|
|
|
|
|
|
$
|
1,389,242
|
|
Retirement(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary / for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o Cause or
for Good Reason
|
|
$
|
1,119,644
|
(9)
|
$
|
625,541
|
|
|
|
|
$
|
187,376
|
|
|
|
|
|
|
|
|
|
|
$
|
1,932,561
|
|
CIC (single trigger)
|
|
|
|
|
$
|
625,541
|
|
|
|
|
$
|
562,129
|
|
$
|
181,928
|
|
|
|
|
|
|
|
$
|
1,369,598
|
|
Termination after CIC (double trigger)
|
|
$
|
1,119,644
|
(9)
|
$
|
625,541
|
|
|
|
|
$
|
562,129
|
|
$
|
181,928
|
|
|
|
|
|
|
|
$
|
2,489,242
|
|
Stéphane St-Hilaire
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
13,560
|
(10)
|
$
|
553,145
|
|
$
|
179,061
|
|
$
|
713,356
|
|
$
|
119,088
|
|
|
|
|
$
|
800,000
|
|
$
|
2,378,210
|
|
Disability(7)
|
|
$
|
13,560
|
(10)
|
$
|
553,145
|
|
$
|
179,061
|
|
$
|
713,356
|
|
$
|
119,088
|
|
|
|
|
|
|
|
$
|
1,578,210
|
|
Retirement(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary / for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o Cause or
for Good Reason
|
|
$
|
913,560
|
(9)
|
$
|
553,145
|
|
|
|
|
$
|
343,324
|
|
|
|
|
|
|
|
|
|
|
$
|
1,810,029
|
|
CIC (single trigger)
|
|
|
|
|
$
|
553,145
|
|
$
|
179,061
|
|
$
|
367,951
|
|
$
|
119,088
|
|
|
|
|
|
|
|
$
|
1,219,245
|
|
Termination after CIC (double trigger)
|
|
$
|
913,560
|
(9)
|
$
|
553,145
|
|
$
|
179,061
|
|
$
|
713,356
|
|
$
|
119,088
|
|
|
|
|
|
|
|
$
|
2,478,210
|
|
John Kett
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Death
|
|
$
|
19,366
|
(10)
|
$
|
481,030
|
|
|
|
|
$
|
367,951
|
|
$
|
119,088
|
|
|
|
|
$
|
800,000
|
|
$
|
1,787,435
|
|
Disability(7)
|
|
$
|
19,366
|
(10)
|
$
|
481,030
|
|
|
|
|
$
|
367,951
|
|
$
|
119,088
|
|
|
|
|
|
|
|
$
|
987,435
|
|
Retirement(8)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Voluntary / for Cause
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Termination w/o Cause or
for Good Reason
|
|
$
|
919,366
|
(9)
|
$
|
481,030
|
|
|
|
|
$
|
122,650
|
|
|
|
|
|
|
|
|
|
|
$
|
1,523,046
|
|
CIC (single trigger)
|
|
|
|
|
$
|
481,030
|
|
|
|
|
$
|
367,951
|
|
$
|
119,088
|
|
|
|
|
|
|
|
$
|
968,069
|
|
Termination after CIC (double trigger)
|
|
$
|
919,366
|
(9)
|
$
|
481,030
|
|
|
|
|
$
|
367,951
|
|
$
|
119,088
|
|
|
|
|
|
|
|
$
|
1,887,435
|
|
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
69
|
Table of Contents
Footnotes to Potential Payments Upon
Termination or Change in Control Table
-
(1)
-
The
amounts reported are equal to the full amount of the named executive officer's 2015 annual bonus (a December 31, 2015 termination results in a
100% payout, whereas a termination on any other date would result in a prorated amount, assuming payment upon a change in control), payable under the terms of such officer's employment agreement or
the Omnibus Plan, as applicable.
-
(2)
-
The
amounts reported assume a Company common stock price of $37.03, which was the closing price on December 31, 2015. Messrs. Kett and
Gottwald did not have any outstanding, unvested options as of such date.
-
(3)
-
The
amounts reported assume a Company common stock price of $37.03, which was the closing price on December 31, 2015. In the event that a named
executive officer is terminated without Cause or resigns for Good Reason (each as defined in the applicable employment agreement), or such officer terminates employment due to his death, Disability or
Retirement (each as defined in the Omnibus Plan), he would be entitled to receive, at the same time as active Company employees, a prorated portion of the 2013, 2014 and/or 2015 PRSUs based on the
Company's actual performance during each performance period and the number of full months he was employed during each such performance period. Therefore, assuming a termination without Cause,
resignation for Good Reason, or the named executive officer's death, Disability or Retirement as of December 31, 2015, (i) Messrs. Hallett and Loughmiller would be entitled to
24/36ths of the 2013 PRSUs and 2014 CANIPS PRSUs, 22/36ths of the 2014 TSR PRSUs and 12/36ths of the 2015 PRSUs; (ii) Mr. St-Hilaire would be entitled to 24/36ths of the 2014 CANIPS
PRSUs, 22/36ths of the 2014 TSR PRSUs and 12/36ths of the 2015 PRSUs; and (iii) Messrs. Kett and Gottwald would be entitled to 12/36ths of the 2015 PRSUs; in each case, based on actual
performance. The amounts disclosed in the table assume performance at the target level.
If
a Change in Control (as defined in the Omnibus Plan) occurs prior to the termination of such officer's employment, assuming a Change in Control date of December 31, 2015, he would be
entitled to receive immediate vesting and payout of the target number of 2015 PRSUs, without proration.
If
Messrs. Hallett, Loughmiller or St-Hilaire are terminated without Cause or resign for Good Reason after the consummation of a Change in Control but before the 2013 and/or 2014 PRSUs vest,
then, assuming performance at the target level: (i) Messrs. Hallett and Loughmiller would be entitled to receive (a) the full number of 2013 PRSUs earned based on actual
performance from December 13, 2013 until the Change in Control date of December 31, 2015, (b) the full number of 2014 TSR PRSUs earned based on actual performance from
January 1, 2014 until the Change in Control date of December 31, 2015, and (c) the target number of 2014 CANIPS PRSUs; and (ii) Mr. St-Hilaire would be entitled to
receive (a) the full number of 2014 TSR PRSUs earned based on actual performance from January 1, 2014 until the Change in Control date of December 31, 2015, and (b) the
target number of 2014 CANIPS PRSUs.
-
(4)
-
The
amounts reported assume a Company common stock price of $37.03, which was the closing price on December 31, 2015. In the event a named executive
officer's employment is terminated for any reason prior to a Change in Control, such officer would forfeit the unvested portion of his 2015 RSU award. Therefore, assuming a termination date of
December 31, 2015 prior to a Change in Control, each named executive officer would forfeit his entire 2015 RSU award, because no portion of such award would be vested as of such date. If a
Change in
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
70
|
Table of Contents
Control
occurs prior to the termination of such officer's employment, assuming a Change in Control date of December 31, 2015, he would be entitled to receive immediate vesting and payout of the
unvested portion of his 2015 RSU award as of the Change in Control.
-
(5)
-
This
calculation was made using conservative assumptions, not taking into account any reductions in parachute payments attributable to reasonable
compensation payable before or after a Change in Control and not assigning any value to Mr. Hallett's non-compete obligations. Actual excise tax amounts and tax gross-up payments, if any, would
be calculated at the time of an actual Change in Control based on all factors and assumptions applicable at that time. No other named executive officer is entitled to an excise tax gross-up.
-
(6)
-
Under
the Group Term Life Policy, each named executive officer's designated beneficiary is entitled to a payment in an amount equal to two times his annual
salary, not exceeding $800,000.
-
(7)
-
Long-term
disability is a Company-paid benefit for all employees and only paid after six months on short-term disability. The benefit is 66.67% of base pay
capped at $15,000 per month.
-
(8)
-
Pursuant
to the terms of his employment agreement, Mr. Hallett would be entitled to a prorated payout of his 2015 annual bonus (the full bonus for a
termination date of December 31, 2015) upon his "retirement" (i.e., a voluntary termination of his employment, provided that he announces his retirement at least 12 months prior to such
termination). Assuming a "retirement" date of December 31, 2015, Mr. Hallett would not have been entitled to receive accelerated vesting of any equity awards, because he had not met the
requirements for a Retirement under the Omnibus Plan as of such date (he had not reached the age of 65).
Messrs. Loughmiller,
St-Hilaire and Kett had not satisfied the Retirement requirements under the Omnibus Plan as of December 31, 2015 (i.e., none had reached the age of 65), and thus,
they would not have been entitled to a prorated payout of their annual bonuses or accelerated vesting of their equity for a Retirement as of such date.
-
(9)
-
These
amounts are equal to (i) for Mr. Hallett, (a) two times the sum of Mr. Hallett's current annual base salary ($900,000 as
of December 31, 2015) and 2015 target bonus amount; and (b) COBRA premium payments for 18 months (because Mr. Hallett did not participate in our group health plans as of
December 31, 2015, no COBRA premium amount is included in the figures above); and (ii) for all other named executive officers, (a) one times the sum of the officer's current
annual base salary ($450,000 for each of Messrs. Loughmiller, St-Hilaire and Kett; $550,000 for Mr. Gottwald) and 2015 target bonus amount; and (b) COBRA premium payments for
12 months.
-
(10)
-
Under
the terms of each named executive officer's employment agreement, he (or his estate) would be entitled to COBRA premium payments for 12 months
in the event of his death or Disability. Mr. Hallett (or his estate) would be entitled to COBRA premium payments for 18 months in the event of his death or Disability, but would not have
received this benefit with respect to a termination occurring on December 31, 2015 because he did not participate in our group health plans as of such date.
|
|
KAR AUCTION SERVICES 2016 PROXY STATEMENT
71
|
Table of Contents
|
EMPLOYMENT AGREEMENTS WITH NAMED EXECUTIVE OFFICERS
|
Each
of our named executive officers has an employment agreement with the Company. A summary of each of the agreements is provided below.
CEO
Mr. Hallett's employment agreement, which became effective as of February 27, 2012, provides for the following
severance and change of control payments:
Termination Due to Mr. Hallett's Death or Disability.
If Mr. Hallett's employment is terminated as a result of his death or disability, we will pay
Mr. Hallett, or in the case of his death, Mr. Hallett's estate or beneficiaries, an amount equal to the sum of (i) any accrued but unpaid base salary and accrued but unused
vacation days; (ii) any earned and vested benefits and payments pursuant to the terms of any benefit plan (collectively, the amounts described in (i) and (ii) above are, the
"Accrued Obligations"); and (iii) subject to Mr. Hallett or his estate executing a general release of any claims that he may have against the Company (the "Release"), any annual bonus
for a prior completed calendar year that has not yet been calculated or paid to Mr. Hallett (the "Earned but Unpaid Bonus").
In
addition, if Mr. Hallett is participating in the health plans of the Company at the time of his termination, we will pay him, or in the case of his death, his estate or beneficiaries, his or
their premiums attributable to maintaining insurance coverage under COBRA for the shorter of (i) 18 months; or (ii) until Mr. Hallett becomes eligible for comparable
coverage under the health plans of another employer (the "Continued Benefits"). Subject to receipt and effectiveness of the Release, we also will pay Mr. Hallett, or his estate or
beneficiaries, a prorated bonus based upon the portion of the year during which Mr. Hallett was employed by us (the "Prorated Bonus").
For
purposes of Mr. Hallett's employment agreement, "disability" means a "Total Disability" (or equivalent) as defined in the Company's long term disability plan in effect at the time of the
disability.
Termination by the Company for Cause.
Following a majority vote of the Board of Directors (excluding Mr. Hallett or any other employee of the Company), we
may terminate Mr. Hallett's
employment at any time for "Cause." In such event, our only obligation to Mr. Hallett would be the payment, in a lump sum, of Mr. Hallett's Accrued Obligations.
"Cause"
is defined in the employment agreement to mean (i) Mr. Hallett's willful, continued and uncured failure to perform substantially his duties under the employment agreement for a
period of 14 days following notice to Mr. Hallett of such failure; (ii) Mr. Hallett engaging in illegal conduct or gross misconduct that is demonstrably likely to lead to
material injury to the Company; (iii) Mr. Hallett's indictment or conviction of, or plea of
nolo contendere
to, a crime constituting a
felony or any other crime involving moral turpitude; or (iv) Mr. Hallett's failure to comply with the provisions of the employment agreement relating to confidential information,
intellectual property, non-competition and non-solicitation which is not cured within the 14 day period following written notice to Mr. Hallett of such failure.
Termination by the Company Without Cause.
Mr. Hallett's employment may be terminated without Cause at any time upon 30 days' prior written notice. In
the event of a termination without Cause, the Company will pay Mr. Hallett the following "Severance Benefits": (i) two times the sum of Mr. Hallett's (a) annual base salary
and (b) target bonus for the year in which termination occurs which, for this purpose, shall not equal less than 100% of Mr. Hallett's base salary; (ii) a Prorated
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Bonus
in a lump sum; and (iii) the Continued Benefits. In addition to the Severance Benefits described above, we will also pay Mr. Hallett the Accrued Obligations and any Earned but
Unpaid Bonus.
Termination by Mr. Hallett for Good Reason.
Mr. Hallett may terminate his employment for "Good Reason" within 90 days following the occurrence
of an event constituting "Good Reason," if such event remains uncured for a period of 30 days following notice of the event by Mr. Hallett to the Company. Upon such termination, the
Company will pay Mr. Hallett the sum of the Severance Benefits, the Accrued Obligations and any Earned but Unpaid Bonus.
"Good
Reason" is defined in the employment agreement to mean the occurrence of any of the following:
-
-
A material reduction of Mr. Hallett's authority, duties and responsibilities, or the assignment to Mr. Hallett of duties
materially inconsistent with Mr. Hallett's position as Chief Executive Officer;
-
-
A requirement by the Company that Mr. Hallett relocate his principal business location to a location more than 50 miles from
the Company's executive offices as of the effective date of the employment agreement;
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-
Any material failure by the Company to comply with any of the terms and conditions of the employment agreement;
-
-
Any failure to timely pay or provide Mr. Hallett's base salary, or any reduction in Mr. Hallett's base salary below
$816,000, other than in connection with across-the-board salary reductions;
-
-
Any material reduction in Mr. Hallett's base salary or annual bonus opportunity; or
-
-
A "Change of Control," defined by reference to the term "Change in Control" used the Omnibus Plan, occurs and, if applicable, the
Company fails to cause its successor to assume or reaffirm the Company's obligations under the employment agreement without change.
Termination by Mr. Hallett without Good Reason.
Mr. Hallett may terminate his employment under the employment agreement at any time without Good
Reason upon 30 days' prior written notice. In such event, we will pay Mr. Hallett a lump sum amount equal to the Accrued Obligations.
Termination by Mr. Hallett upon Retirement.
Mr. Hallett may voluntarily terminate his employment under the employment agreement due to retirement by
announcing his retirement at least 12 months prior to such termination. In the event of such a termination, we will pay Mr. Hallett a lump sum amount equal to the Accrued Obligations and
a Prorated Bonus.
Excise Tax Gross-Up.
As described above in "Compensation Policies and Other InformationTax and Accounting ConsiderationsEmployment
Agreements," Mr. Hallett's employment agreement provides that in the event that any payment or benefit in connection with his employment is or becomes subject to an excise tax under Code
Section 4999, the Company will make a cash payment to Mr. Hallett, which after the imposition of all income, employment, excise and other taxes thereon as well as any penalty and
interest assessments associated therewith, will be sufficient to place Mr. Hallett in the same after-tax position as he would have been in had such excise tax not applied. However, in the event
that a reduction of the total payments due to Mr. Hallett would avoid the application of the excise tax, then the total payments will be reduced to the extent necessary to avoid the excise tax,
but in no event by more than 10% of the original amount of the total payments due.
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Requirements With Respect to Non-Competition and Non-Solicitation.
Upon a termination of employment for any reason, Mr. Hallett is subject to the following
two year post-termination restrictive covenants (except in the case of retirement): (i) non-competition restrictions; and (ii) non-solicitation of Company employees and customers.
Other Named Executive Officers
The Company has entered into substantially similar employment agreements with Messrs. Loughmiller, Gottwald St-Hilaire and
Kett, providing for their at-will employment and the following severance and change of control payments.
Termination Due to Death or Disability.
If Messrs. Loughmiller, Gottwald, St-Hilaire or Kett terminates his employment due to death or disability, the
Company will be obligated to pay to the executive (or his legal representatives) an amount equal to the sum of (i) any earned but unpaid base salary; (ii) accrued but unpaid vacation
earned through the date of termination; (iii) unreimbursed business expenses; and (iv) any vested employee benefits. The aggregate of the foregoing is referred to as the "Accrued
Obligations." In addition, the executive or his estate/beneficiaries would be entitled to receive (i) COBRA premium payments for 12 months or until the executive becomes eligible for
coverage under another employer's health plan, if the executive is participating in the Company's health plans on the date of such termination of employment, (the "Continued Benefits");
(ii) the prorated portion of his annual bonus for the calendar year in which such termination of employment occurred, calculated based on the executive's actual performance and based on the
number of days the executive was employed by the Company during such calendar year; and (iii) a payment equal to the amount of any annual bonus which has been earned in a prior year but which
has not yet been paid to the executive (the "Earned but Unpaid Bonus").
For
purposes of their employment agreements, "disability" means a "Total Disability" (or equivalent) as defined in the Company's long term disability plan in effect at the time of the disability.
Voluntary Termination or Termination for Cause.
If Messrs. Loughmiller, Gottwald, St-Hilaire or Kett voluntarily terminates his employment or if the Company
terminates his employment for Cause, the Company's sole obligation will be to pay him the Accrued Obligations. For purposes of their employment agreements, "Cause" means the (i) executive's
willful, continued and uncured failure to perform substantially their duties under the agreement (other than any such failure resulting from incapacity due to medically documented illness or injury)
for a period of 14 days following written notice by the Company to the executive of such failure; (ii) executive engaging in illegal conduct or gross misconduct that is demonstrably
likely to lead to material injury to the Company, monetarily or otherwise; (iii) executive's indictment or conviction of, or plea of
nolo
contendere
to, a crime constituting a felony or any other crime involving moral turpitude; or (iv) executive's violation of the restrictive covenants under the agreement
or any other covenants owed to the Company by executive.
Termination Without Cause or Resignation for Good Reason.
In the event Messrs. Loughmiller, Gottwald, St-Hilaire or Kett is terminated by the Company
without Cause or such executive resigns for Good Reason, the executive would be entitled to receive, subject to execution and non-revocation of a release of claims, (i) a lump sum cash payment
equal to the sum of his annual base salary plus target annual bonus for the year in which such termination of employment occurs; (ii) the Continued Benefits; and (iii) the Earned but
Unpaid Bonus. For purposes of their employment agreements, "Good Reason" means (i) any material reduction of the executive's authority, duties and responsibilities; (ii) any material
failure by the Company to comply with any of the terms and conditions of the agreement; (iii) any failure to timely pay or provide the executive's base salary, or any reduction in the
executive's base salary, excluding any base salary reduction made in
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connection
with across the board salary reductions; (iv) the requirement by the Company that the executive relocate his principal business location to a location more than 50 miles from the
executive's principal base of operation as of the effective date of the agreement; or (v) a Change of Control occurs and, if applicable, the Company fails to cause its successor (whether by
purchase, merger, consolidation or otherwise) to assume or reaffirm the Company's obligations under the agreement without change. For purposes of the foregoing, "Change of Control" has the same
meaning as the term "Change in Control" under the Omnibus Plan.
Requirements With Respect to Non-Competition and Non-Solicitation.
Upon a termination of employment for any reason, Messrs. Loughmiller, Gottwald,
St-Hilaire and Kett are subject to the following one year post-termination restrictive covenants: (i) non-competition restrictions; and (ii) non-solicitation of Company employees and
customers.
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CERTAIN RELATED PARTY RELATIONSHIPS
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REVIEW AND APPROVAL OF TRANSACTIONS
WITH RELATED PERSONS
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Pursuant
to our written related party transactions policy, the Company reviews relationships and transactions in which the Company, or one of its business units, and our
directors and executive officers or their immediate family members are participants to determine whether such persons have a direct or indirect material interest.
In
the course of the review and approval of a related party transaction, the Board of Directors or the Audit Committee may consider the following
factors:
-
-
the nature of the related person's interest in the transaction;
-
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the material terms of the transaction, including, without limitation, the amount and type of transaction;
-
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the importance of the transaction to the related person;
-
-
the importance of the transaction to the Company;
-
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whether the transaction would impair the judgment of a director or executive officer to act in our best interest; and
-
-
any other matters that we deem appropriate.
Transactions
in which the amount involved exceeds $120,000 in which the Company, or one of its business units, was a participant and a related person had a direct or indirect material interest are
required to be disclosed in this proxy statement. There were not any such related party transactions identified for 2015.
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REQUIREMENTS, INCLUDING DEADLINES, FOR SUBMISSION OF PROXY PROPOSALS
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NOMINATION OF DIRECTORS AND OTHER BUSINESS OF STOCKHOLDERS
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In
order to submit stockholder proposals for the 2017 annual meeting of stockholders for inclusion in the Company's proxy statement pursuant to SEC Rule 14a-8,
materials must be received by the Secretary at the Company's principal office in Carmel, Indiana, no later
than , 2016.
The
proposals must comply with all of the requirements of SEC Rule 14a-8. Proposals should be addressed to: Rebecca C. Polak, Executive Vice President, General Counsel and Secretary, KAR
Auction Services, Inc., 13085 Hamilton Crossing Boulevard, Carmel, Indiana 46032. As the SEC's shareholder proposal rules make clear, simply submitting a proposal does not guarantee its inclusion.
The
Company's By-Laws also establish an advance notice procedure with regard to director nominations and stockholder proposals that are not submitted for inclusion in the proxy statement, but that a
stockholder instead wishes to present directly at an annual meeting. To be properly brought before the 2016 annual meeting, a notice of the nomination or the matter the stockholder wishes to present
at the meeting must be delivered to the Secretary at the Company's principal office in Carmel, Indiana (see above), not less than 90 or more than 120 days prior to the first anniversary of the
date of this year's annual meeting. As a result, any notice given by or on behalf of a stockholder pursuant to these provisions of the Company's By-Laws (and not pursuant to SEC Rule 14a-8)
must be received no earlier than February 8, 2017, and no later than March 10, 2017. All director nominations and stockholder proposals must comply with the requirements of the Company's
By-Laws, a copy of which may be obtained at no cost from the Secretary of the Company.
Other
than the proposals described in this proxy statement, KAR Auction Services does not expect any matters to be presented for a vote at the annual meeting. If you grant a proxy, the persons named
as proxy holders on the proxy card will have the discretion to vote your shares on any additional matters properly presented for a vote at the annual meeting. If for any unforeseen reason, any one or
more of KAR Auction Services' nominees is not available as a candidate for director, the persons named as proxy holders will vote your proxy for such other candidate or candidates as may be nominated
by the Board of Directors.
The
chairman of the meeting may refuse to allow the transaction of any business not presented beforehand, or to acknowledge the nomination of any person not made in compliance with the foregoing
procedures.
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QUESTIONS AND ANSWERS ABOUT THE PROXY
MATERIALS AND THE ANNUAL MEETING
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Q:
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Why am I receiving these materials?
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A:
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We are providing these proxy materials to you in connection with the solicitation, by the Board of Directors of KAR Auction Services, of proxies to be voted at the Company's 2016 annual meeting of stockholders and at
any adjournments or postponements thereof. Stockholders are invited to attend the annual meeting to be held on June 8, 2016 beginning at 9:00 a.m., Eastern Daylight Time, at the Conrad Indianapolis, 50 West Washington Street, Indianapolis,
Indiana 46204. Our proxy materials are first being distributed to stockholders on or about April , 2016.
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Q:
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What proposals will be voted on at the annual meeting?
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A:
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There are three proposals scheduled to be voted on at the annual meeting:
To elect nine directors to the Board of Directors;
To amend and restate the Amended and Restated Certificate of Incorporation to provide that the Company's stockholders may remove any director from office, with or without cause, and
other ministerial changes; and
To ratify the
appointment of KPMG as our independent registered public accounting firm for 2016.
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Q:
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What is the Board of Directors' voting recommendation?
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A:
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The Company's Board of Directors recommends that you vote your shares:
"FOR"
each of the nominees to the Board of Directors;
"FOR"
the amendment and restatement of the
Amended and Restated Certificate of Incorporation; and
"FOR"
the ratification of the appointment of KPMG as our independent registered public accounting firm for 2016.
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Q:
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Who is entitled to vote?
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A:
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All shares owned by you as of the record date, which is the close of business on April 13, 2016, may be voted by you. You may cast one vote per share of common stock that you held on the record date.
These shares include shares that are:
held directly in your name as the stockholder of record; and
held for you as the beneficial owner through a broker, bank or other nominee, including shares purchased under the KAR Auction Services, Inc. Employee Stock Purchase Plan (the
"Employee Stock Purchase Plan").
On the record date, KAR Auction Services
had shares of common stock issued and outstanding.
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Q:
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What is the difference between holding shares as a stockholder of record and as a beneficial owner?
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A:
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Many of our stockholders hold their shares through a broker, bank or other nominee rather than directly in their own name. As summarized below, there are some differences between shares held of record and those owned beneficially.
Stockholder of Record
.
If your shares are registered directly in your name with the Company's
transfer agent, American Stock Transfer & Trust Company, LLC, you are considered, with respect to those shares, the stockholder of record, and these proxy materials are being sent to you directly by the Company. As the stockholder of record,
you have the right to grant your voting proxy directly to the Company or to vote in person at the annual meeting. You may vote on the Internet, by telephone or by mail, as described below under the heading "How can I vote my shares without attending
the annual meeting?"
Beneficial Owner
.
If your shares are held in a brokerage account or
by a bank or other nominee, you are considered the beneficial owner of shares held in "street name" and these proxy materials are being forwarded to you by your broker or nominee who is considered, with respect to those shares, the stockholder of
record. As the beneficial owner, you have the right to direct your broker on how to vote your shares and are also invited to attend the annual meeting. To vote these shares in person at the annual meeting, you must obtain a signed proxy from the
stockholder of record giving you the right to vote the shares. You may also vote by Internet, by telephone or by mail, as described below under "How can I vote my shares without attending the annual meeting?"
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Q:
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How can I vote my shares in person at the annual meeting?
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A:
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Stockholder of Record
.
Shares held directly in your name as the stockholder of record may be voted in person at the annual meeting. If you choose to vote
your shares in person at the annual meeting, please bring proof of identification. Even if you plan to attend the annual meeting, the Company strongly recommends that you vote your shares in advance as described below so that your vote will be
counted if you later decide not to attend the annual meeting. See "How can I vote my shares without attending the annual meeting?"
Beneficial
Owner
.
Shares held in street name may be voted in person by you only if you obtain an account statement or letter from your bank, broker or other nominee indicating that you are the beneficial
owner of the shares and a legal proxy from the stockholder of record giving you the right to vote the shares. The account statement or letter must show that you were the beneficial owner of shares on April 13, 2016, the record date.
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Q:
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How can I vote my shares without attending the annual meeting?
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A:
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Whether you hold your shares directly as the stockholder of record or beneficially in street name, you may direct your vote
without attending
the annual meeting by voting in one of the following
manners:
Internet
.
Go to
www.proxyvote.com
and follow the instructions. You will need the control number included on your proxy card or
voting instruction form;
Telephone
.
Dial 1-800-579-1639. You will need the control number included on your proxy card or voting instruction form; or
Mail
.
Complete, date and sign your proxy card or voting instruction card and mail it using the enclosed, pre-paid envelope.
If you vote on the Internet or by telephone, you do not need to return your proxy card or voting instruction card. Internet and telephone voting for stockholders will be available 24 hours a day, and will close at 11:59 p.m.,
Eastern Daylight Time, on June 7, 2016.
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Q:
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If I am an employee holding shares pursuant to the Employee Stock Purchase Plan, how will my shares be voted?
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A:
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Employees holding stock acquired through the Employee Stock Purchase Plan will receive a voting instruction card covering all shares held in their individual account from Computershare, the plan record keeper. The
voting instruction cards have an earlier return date than proxy cards. The record keeper for the Employee Stock Purchase Plan will vote your shares (i) in accordance with the specific instructions on your returned voting instruction card; or
(ii) in its discretion, if you return a signed voting instruction card with no specific voting instructions.
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Q:
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What is the quorum requirement for the annual meeting?
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A:
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A quorum is necessary to hold the annual meeting. A quorum at the annual meeting exists if the holders of a majority of the Company's capital stock issued and outstanding and entitled to vote at the annual meeting
are present in person or represented by proxy. Abstentions and broker non-votes are counted as present for establishing a quorum. A broker non-vote occurs when a broker does not vote on some matter on the proxy card because the broker does not have
discretionary voting power for that particular item and has not received instructions from the beneficial owner.
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Q:
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What happens if I do not give specific voting instructions?
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A:
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Stockholder of Record
.
If you are a stockholder of record and you sign and return a proxy card without giving specific voting instructions, then the proxy
holders will vote your shares in the manner recommended by the Board of Directors on all matters presented in this proxy statement and as the proxy holders may determine in their discretion with respect to any other matters properly presented for a
vote at the annual meeting.
Beneficial Owners
.
If you are a beneficial owner of shares
held in street name and do not provide the organization (e.g., broker or bank) that holds your shares in "street name" with specific voting instructions, the organization that holds your shares may generally vote on routine matters (Proposal
No. 3 (ratification of independent registered public accounting firm)) but cannot vote on non-routine matters (Proposal No. 1 (election of directors) and Proposal No. 2 (amendment and restatement of the Amended and Restated Certificate
of Incorporation)). If the organization that holds your shares does not receive instructions from you on how to vote your shares on Proposal No. 1 and/or Proposal No. 2, such organization will inform the inspector of election that it does
not have the authority to vote on these matters with respect to your shares. This is generally referred to as a "broker non-vote." Therefore, we urge you to give voting instructions to your broker. Shares represented by such broker non-votes will be
counted in determining whether there is a quorum. Because broker non-votes are not considered shares entitled to vote, they will have no effect on the outcome of any proposal other than reducing the number of shares present in person or by proxy and
entitled to vote from which a majority is calculated.
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Q:
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Which proposals are considered "routine" or "non-routine?"
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A:
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The ratification of the appointment of KPMG as our independent registered public accounting firm for 2016 (Proposal No. 3) is considered a routine matter under applicable rules. A broker or other nominee may generally vote on routine matters,
and therefore no broker non-votes are expected to exist in connection with Proposal No. 3.
The election of directors (Proposal No. 1) and the amendment and
restatement of the Amended and Restated Certificate of Incorporation (Proposal No. 2) are considered non-routine matters under applicable rules. A broker or other nominee cannot vote without instructions on non-routine matters, and therefore
there may be broker non-votes on Proposal No. 1 and Proposal No. 2.
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Q:
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What is the voting requirement to approve each of the proposals?
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A:
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Nine director nominees have been nominated for election at the annual meeting. Because this is an uncontested election, the director nominees will be elected by a majority of the votes cast in the election of directors at the annual meeting, either
in person or represented by a properly authorized proxy. This means that a director nominee will be elected to the Company's Board of Directors if the votes cast "FOR" such director nominee exceed the votes cast "AGAINST" him or her. Abstentions and
broker non-votes will have no effect on the outcome of the election of directors.
The amendment and restatement of the Amended and Restated Certificate of Incorporation
(Proposal No. 2) and the ratification of the appointment of our independent registered public accounting firm (Proposal No. 3) require the affirmative vote of a majority of the votes represented at the annual meeting and entitled to vote on
the proposal. In accordance with Delaware law, only votes cast "FOR" a matter constitute affirmative votes. A properly executed proxy marked "ABSTAIN" with respect to the ratification of the appointment of our independent registered public accounting
firm will not be voted, although it will be counted for purposes of determining whether there is a quorum. Accordingly, with respect to Proposal No. 2 and Proposal No. 3, abstentions will have the same effect as negative votes or votes
"AGAINST" that matter.
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Q:
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What does it mean if I receive more than one proxy or voting instruction card?
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A:
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It means your shares are registered differently or are in more than one account. Please provide voting instructions for all proxy and voting instruction cards you receive.
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Q:
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Who will count the vote?
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A:
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The votes will be counted by the inspector of election appointed for the annual meeting.
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Q:
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Can I revoke my proxy or change my vote?
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A:
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Yes. You may revoke your proxy or change your voting instructions at any time prior to the vote at the annual meeting by:
providing written notice of revocation to the Secretary of the Company at 13085 Hamilton Crossing Boulevard, Carmel, Indiana 46032;
delivering a valid, later-dated proxy or a later-dated vote on the Internet
or by telephone; or
attending the annual meeting and voting in
person.
Please note that your attendance at the annual meeting in person will not cause your previously granted proxy to be revoked unless you vote in person at the annual
meeting. If you wish to revoke your proxy, you must do so in sufficient time to permit the necessary examination and tabulation of the subsequent proxy or revocation before the vote is taken. Shares held in street name may be voted in person by you
at the annual meeting only if you obtain a signed proxy from the record holder giving you the right to vote the shares.
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Q:
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Who will bear the cost of soliciting votes for the annual meeting?
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A:
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The Board of Directors of the Company is soliciting your proxy to vote your shares of common stock at the annual meeting. KAR Auction Services will pay the entire cost of preparing, assembling, printing, mailing and
distributing these proxy materials. In addition to the distribution of these proxy materials, the solicitation of proxies or votes may be made in person, by telephone or by electronic and facsimile transmission by our directors, officers and
employees, who will not receive any additional compensation for such solicitation activities. The Company also may reimburse brokerage firms and other persons representing beneficial owners of shares of KAR Auction Services' common stock for their
expenses in forwarding solicitation material to such beneficial owners.
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Q:
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I share an address with another stockholder, and we received only one paper copy of the proxy materials. How may I obtain an additional copy of the proxy materials?
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A:
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The Company has adopted a procedure called "householding" which the SEC has approved. Under this procedure, the Company is delivering a single copy of this proxy statement and the Company's Annual Report to multiple stockholders who share the same
address unless the Company has received contrary instructions from one or more of the stockholders. This procedure reduces the Company's costs and reduces our impact on the environment. Stockholders who participate in householding will continue to be
able to access and receive separate proxy cards. Upon written or oral request, a separate copy of this proxy statement and the Company's Annual Report will be promptly delivered to any stockholder at a shared address to which the Company delivered a
single copy of any of these documents. If you prefer to receive separate copies of the proxy statement or Annual Report, contact Broadridge Financial Solutions, Inc. by calling 1-800-542-1061 or in writing at 51 Mercedes Way, Edgewood, New York
11717, Attention: Householding Department.
In addition, if you currently are a stockholder who shares an address with another stockholder and would like to receive only one
copy of future notices and proxy materials for your household, you may notify your broker if your shares are held in a brokerage account or you may notify us if you hold registered shares. Registered stockholders may notify us by contacting
Broadridge Financial Solutions, Inc. at the above telephone number or address.
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Q:
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Why did I receive a notice regarding the internet availability of the proxy materials instead of a paper copy of the proxy materials?
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A:
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We are making the proxy materials available to stockholders electronically via the Internet under the Notice and Access regulations of the SEC. Most of our stockholders will receive a Notice of Electronic
Availability in lieu of receiving a full set of proxy materials in the mail. The notice includes information on how to access and review the proxy materials, and how to vote via the Internet. We believe this method of delivery will decrease costs,
expedite distribution of proxy materials to you, and reduce our impact on the environment. Stockholders who receive a notice but would like to receive a printed copy of the proxy materials in the mail should follow the instructions in the notice for
requesting such materials.
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Q:
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How can I obtain a copy of KAR Auction Services' Annual Report on Form 10-K?
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A:
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Copies of the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2015, as filed with the SEC, are available to stockholders free of charge on KAR Auction Services' website at
www.karauctionservices.com
or by writing to KAR Auction Services, Inc., Investor Relations, 13085 Hamilton Crossing Boulevard, Carmel, Indiana 46032.
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Q:
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Where can I find the voting results of the annual meeting?
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A:
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KAR Auction Services will announce preliminary voting results at the annual meeting and publish preliminary, or final results if available, in a Current Report on Form 8-K within four business days of the annual
meeting.
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Annex I
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
KAR
AUCTION SERVICES, INC.
The undersigned, Rebecca C. Polak, certifies that she is the Executive Vice President
and
,
General Counsel
and Secretary
of KAR Auction Services, Inc., a corporation organized and existing under the
laws of the State of Delaware (the "Corporation"), and does hereby further certify as follows:
-
(1)
-
The
name of the Corporation is KAR Auction Services, Inc.
-
(2)
-
The
name under which the Corporation was originally incorporated was KAR Holdings, Inc. and the original
Certificate of
Incorporation
certificate of incorporation
of the Corporation was filed with the Secretary of State of the State of Delaware on November 9, 2006
and amended pursuant to that certificate of amendment filed with the Secretary of State of the State of Delaware on December 19, 2006
(the "Original Certificate of
Incorporation")
. Pursuant to a certificate of amendment filed with the Secretary of State of the State of Delaware on November 3, 2009
,
the
Corporation changed its name to KAR Auction Services, Inc.
On December 9, 2009, the Corporation filed its amended and restated certificate of incorporation with the
Secretary of State of the State of Delaware (the "Certificate of Incorporation").
-
(3)
-
In
lieu of
At
a meeting of the Board of Directors of the Corporation (the "Board of
Directors")
on February 10, 2016
, the Board of Directors
has, by unanimous written consent dated December 9, 2009,
authorized the amendment and restatement of the
Corporation's Original
Certificate of Incorporation as set forth herein in accordance with
the provisions of
Sections
141(f),
242 and 245 of the General Corporation Law of the State of Delaware.
In lieu of a
At the annual
meeting
and vote of the
of stockholders of the
Corporation held on June 8, 2016, the
stockholders of the Corporation
, the Corporation's sole stockholder has, by unanimous written consent dated
December 9, 2009,
approved the amendment and restatement of the
Corporation's Original
Certificate of Incorporation as set forth
herein in accordance with the provisions of Section 228 of the General Corporation Law of the State of Delaware
, and such consent has been filed with the minutes of the
proceedings of stockholders of the Corporation
.
-
(4)
-
This
Amended and Restated Certificate of Incorporation
restates and integrates and
further amends
and
restates
the
Original
Certificate of Incorporation
of the Corporation, as heretofore amended or
supplemented
.
The
text of the
Original
Certificate of Incorporation
of the Corporation
is hereby amended and restated to read in its
entirety, as follows:
FIRST
: The
name of the Corporation is KAR Auction Services, Inc. (hereinafter, the "Corporation").
SECOND
: The
address of the registered office of the Corporation in the State of Delaware is 160 Greentree Drive, Suite 101, in the City of Dover,
County of Kent. The name of its registered agent at that address is National Registered Agents, Inc.
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THIRD
: The
purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of
the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL").
FOURTH
:
-
(a)
-
Authorized
Capital Stock
. The total number of shares of stock which the Corporation shall have authority to issue
is 500,000,000 of which the Corporation shall have authority to issue 400,000,000 shares of common stock, each having a par value of one cent per share ($0.01) (the "Common Stock"), and 100,000,000
shares of preferred stock, each having a par value of one cent per share ($0.01) (the "Preferred Stock"). The number of authorized shares of Common Stock or Preferred Stock may be increased or
decreased (but not below the number of shares thereof then outstanding) by the affirmative vote of the holders of a majority in voting power of the stock of the Corporation entitled to vote thereon
irrespective of the provisions of Section 242(b)(2) of the GCL (or any successor provision thereto), and no vote of the holders of any of the Common Stock or the Preferred Stock voting
separately as a class shall be required therefor.
-
(b)
-
Common
Stock
. The powers, preferences and rights, and the qualifications, limitations and restrictions, of the
Common Stock are as follows:
-
(1)
-
Each
holder of record of shares of Common Stock shall be entitled to one vote for each share of Common Stock held on all matters submitted to a vote of
stockholders of the Corporation on which holders of Common Stock are entitled to vote.
-
(2)
-
The
holders of shares of Common Stock shall not have cumulative voting rights (as defined in Section 214 of the GCL).
-
(3)
-
Subject
to the rights of the holders of Preferred Stock, and subject to any other provisions of this Amended and Restated Certificate of Incorporation, as
it may be amended from time to time, holders of shares of Common Stock shall be entitled to receive such dividends and other distributions in cash, stock or property of the Corporation if, as and when
declared thereon by the Board of Directors from time to time out of assets or funds of the Corporation legally available therefor.
-
(4)
-
In
the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, after payment or provision for the payment
of the debt and liabilities of the Corporation and subject to the prior payment in full of the preferential amounts, if any, to which any series of Preferred Stock may be entitled, the holders of
shares of Common Stock shall be entitled to receive the assets and funds of the Corporation remaining for distribution in proportion to the number of shares held by them, respectively.
-
(5)
-
No
holder of shares of Common Stock shall be entitled to preemptive or subscription rights.
-
(c)
-
Preferred
Stock
. The Board of Directors is expressly authorized to provide for the issuance of all or any shares
of the Preferred Stock in one or more classes or series, and to fix for each such class or series such voting powers, full or limited, or no voting powers, and such distinctive designations,
preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated and expressed in the resolution or
resolutions adopted by the Board of Directors providing for the issuance of such class or series and as may be permitted by the GCL, including, without limitation, the authority to provide that any
such class or series may be (i) subject to redemption at such time or times and at such price or prices; (ii) entitled to receive dividends (which may be cumulative or non-cumulative) at
such rates, on such conditions, and at such times, and payable in preference
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to,
or in such relation to, the dividends payable on any other class or classes or any other series; (iii) entitled to such rights upon the dissolution of, or upon any distribution of the
assets of, the Corporation; or (iv) convertible into, or exchangeable for, shares of any other class or classes of stock, or of any other series of the same or any other class or classes of
stock, of the Corporation at such price or prices or at such rates of exchange and with such adjustments; all as may be stated in such resolution or resolutions.
-
(d)
-
Power
to Sell and Purchase Shares
. Subject to the requirements of applicable law, the Corporation shall have the
power to issue and sell all or any part of any shares of any class of stock herein or hereafter authorized to such persons, and for such consideration, as the Board of Directors shall from time to
time, in its discretion, determine, whether or not greater consideration could be received upon the issue or sale of the same number of shares of another class, and as otherwise permitted by law.
Subject to the requirements of applicable law, the Corporation shall have the power to purchase any shares of any class of stock herein or hereafter authorized from such persons, and for such
consideration, as the Board of Directors shall from time to time, in its discretion, determine, whether or not less consideration could be paid upon the purchase of the same number of shares of
another class, and as otherwise permitted by law.
-
(e)
-
Stock
Split
.
Effective upon the filing of this Amended and Restated Certificate of Incorporation with the Secretary of State of the State
of Delaware, a 10-for-1 stock split of the Corporation's Common Stock shall become effective, pursuant to which 10,685,366 shares of Common Stock outstanding or held in treasury immediately prior to
such time shall automatically and without any action on the part of the holders thereof be reclassified and split into and thereafter represent 106,853,660 shares of Common Stock (the "Stock Split").
All certificates representing shares of Common Stock outstanding immediately prior to the filing of this Amended and Restated Certificate of Incorporation shall immediately after the filing of this
Amended and Restated Certificate of Incorporation represent instead the number of shares of Common Stock as provided above. Notwithstanding the foregoing, any holder of Common Stock shall surrender
his, her or its stock certificate or certificates to the Corporation, and upon such surrender the Corporation will issue a certificate for the correct number of shares of Common Stock to which the
holder is entitled under the provisions of this Amended and Restated Certificate of Incorporation.
FIFTH
: The
following provisions are inserted for the management of the business and the conduct of the affairs of the Corporation, and for further definition,
limitation and regulation of the powers of the Corporation and of its directors and stockholders:
-
(a)
-
The
business and affairs of the Corporation shall be managed by, or under the direction of, the Board of Directors. In addition to the powers and authority
expressly conferred upon the Board of Directors by applicable law, this Amended and Restated Certificate of Incorporation or the
Bylaws
By-Laws
of the Corporation, the directors are hereby empowered to exercise all such powers and do all such acts and things as
may be exercised or done by the Corporation, subject to the provisions of the GCL and this Amended and Restated Certificate of Incorporation.
-
(b)
-
The
Board of Directors shall consist of not less than two or more than fifteen members, the exact number of which shall be fixed from time to time by
resolution adopted by the affirmative vote of a majority of the entire Board of Directors.
-
(c)
-
Subject
to the terms of any one or more classes or series of Preferred Stock, any vacancy on the Board of Directors that results from an increase in the
number of directors may be filled by a majority of the Board of Directors then in office, provided that a quorum is present, and any
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other
vacancy occurring on the Board of Directors may be filled by a majority of the Board of Directors then in office, even if less than a quorum, or by a sole remaining director. The right of
stockholders to fill vacancies on the Board of Directors is hereby specifically denied. Any director elected to fill a vacancy not resulting from an increase in the number of directors shall have the
same remaining term as that of his or her predecessor.
-
(d)
-
Except
as otherwise required by applicable law and subject
Subject
to the rights, if any,
of the holders of shares of Preferred Stock then outstanding, any director or the entire Board of Directors may be removed from office at any time
, but only for cause, and
only
by the affirmative vote of the holders of
shares representing a majority of the votes entitled to be cast by the Voting Stock;
provided
,
however
, that prior to the Trigger Date, a director may be removed with or
without cause, such removal to be by the affirmative vote of the holders of shares representing a majority of the votes entitled to be cast by the Voting Stock.
at
least a majority in voting power of the issued and outstanding capital stock of the Corporation entitled to vote in the election of directors.
-
(e)
-
Notwithstanding
the foregoing, the election, term, removal and filling of vacancies with respect to directors, if any, elected separately by the holders of
one or more series of Preferred Stock shall not be governed by this Article FIFTH, but rather shall be as provided for in the resolutions adopted by the Board of Directors creating and establishing
such series of Preferred Stock.
-
(f)
-
In
addition to the powers and authority hereinbefore or by statute expressly conferred upon them, the directors are hereby empowered to exercise all such
powers and do all such acts and things as may be exercised or done by the Corporation, subject, nevertheless, to the provisions of the GCL and this Amended and Restated Certificate of Incorporation.
-
(g)
-
For
the purposes of this Amended and Restated Certificate of
Incorporation:
-
(1)
-
"Trigger
Date" shall mean the first date on which (x) KAR Holdings
II, LLC (or its successor) ceases, or (y) in the event of a liquidation of KAR Holdings II, LLC, the Equity Sponsors (as defined below) and their affiliates, collectively, cease,
to beneficially own (directly or indirectly) shares representing thirty-five percent (35%) or more of the Voting Stock (it being understood that the retention of either direct or indirect beneficial
ownership of thirty-five percent (35%) or more of the Voting Stock by KAR Holdings II, LLC (or its successor) or the Equity Sponsors and their affiliates, as applicable, shall mean that the
Trigger Date has not occurred); and
-
(2)
-
"Voting
Stock" shall mean the shares of the then outstanding capital stock of the
Corporation entitled to vote generally in the election of directors.
SIXTH
: No
director shall be personally liable to the Corporation or any of its stockholders for monetary damages for breach of fiduciary duty as a director,
except to the extent such exemption from liability or limitation thereof is not permitted under the GCL as the same exists or may hereafter be amended. If the GCL is amended hereafter to authorize the
further elimination or limitation of the liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent authorized by the GCL, as so
amended. Any repeal or modification of this Article SIXTH shall not adversely affect any right or protection of a director of the Corporation existing at the time of such repeal or modification with
respect to acts or omissions occurring prior to such repeal or modification.
SEVENTH
.
:
The
Corporation shall indemnify its directors and officers to the fullest extent
authorized or permitted by law, as now or hereafter in effect, and such right to indemnification shall continue as to a person who has ceased to be a director or officer of the Corporation and shall
inure to the benefit of his or her heirs, executors and personal and legal representatives; provided,
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however,
that, except for proceedings to enforce rights to indemnification, the Corporation shall not be obligated to indemnify any director or officer (or his or her heirs, executors or personal or
legal representatives) in connection with a proceeding (or part thereof) initiated by such person unless such proceeding (or part thereof) was authorized or consented to by the Board of Directors. The
right to indemnification conferred by this Article SEVENTH shall include the right to be paid by the Corporation the expenses incurred in defending or otherwise participating in any proceeding in
advance of its final disposition.
The
Corporation may, to the extent authorized from time to time by the Board of Directors, provide rights to indemnification and to the advancement of expenses to employees and agents of the
Corporation similar to those conferred in this Article SEVENTH to directors and officers of the Corporation.
The
rights to indemnification and to the advance of expenses conferred in this Article SEVENTH shall not be exclusive of any other right which any person may have or hereafter acquire under this
Amended and Restated Certificate of Incorporation, the By-Laws of the Corporation, any statute or other law, by agreement, vote of stockholders or approval of the directors of the Corporation or
otherwise.
Any
repeal or modification of this Article SEVENTH shall not adversely affect any rights to indemnification and to the advancement of expenses of a director or officer of the Corporation existing at
the time of such repeal or modification with respect to any acts or omissions occurring prior to such repeal or modification.
EIGHTH
.
:
Any
action required or permitted to be taken by the stockholders of the
Corporation may be effected only at a duly called annual or special meeting of the stockholders of the Corporation
;
provided that
, prior to the Trigger Date, any action required or permitted
to be taken by the stockholders of the Corporation may be effected by a consent in writing signed by the holders of shares representing the lowest requisite number of votes entitled to be cast by the
Voting Stock that are permitted to approve any action by written consent under the GCL (provided that, prior to the Trigger Date, in no event shall stockholders holding less than a majority of the
shares of Voting Stock be permitted to act by written consent)
. The ability of stockholders of the Corporation to consent in writing to the taking of any action is hereby
specifically denied
from and after the Trigger Date
.
NINTH
.
:
Meetings
of stockholders may be held within or without the State of Delaware, as
the By-Laws
of the Corporation
may provide. The books of the Corporation may be kept (subject to any provision contained in the GCL) outside the State of Delaware at such
place or places as may be designated from time to time by the Board of Directors or in the By-Laws of the Corporation.
TENTH
.
:
Except
as otherwise required by law, special meetings of stockholders of the
Corporation for any purpose or purposes may be called at any time only by (i) the Chief Executive Officer of the Corporation
,
or
(ii) the Board of Directors pursuant to a resolution duly adopted by a majority of the total number of authorized directors then in office which states the
purpose or purposes thereof
, or (iii) any stockholders who beneficially own thirty-five percent (35%) or more of the Voting Stock. Other than as set forth in
clause (iii) of the preceding sentence, any
. Any
power of the stockholders to call a special meeting of stockholders is hereby specifically
denied. No business other than that stated in the notice of such meeting (or any supplement thereto) shall be transacted at any special meeting.
ELEVENTH
:
-
(a)
-
To
the fullest extent permitted by applicable law (including, without limitation,
Section 122(17) of the GCL (or any successor provision), the Corporation, on behalf of itself and its subsidiaries,
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renounces
any interest or expectancy of the Corporation and its subsidiaries in, or in being offered an opportunity to participate in, business opportunities that are from time to
time presented to any of the Equity Sponsors or any of their respective officers, directors, agents, stockholders, members, partners, affiliates and subsidiaries (other than the Corporation and its
subsidiaries), even if the opportunity is one that the Corporation or its subsidiaries might reasonably be deemed to have pursued or had the ability or desire to pursue if granted the opportunity to
do so, and, except as set forth in the exception at the end of this sentence, even if the opportunity is presented to any such person in part or in whole in his capacity as an officer or director of
the Corporation, and none of the foregoing persons shall have any duty to communicate or offer such corporate opportunity to the Corporation and, to the fullest extent permitted by applicable law,
shall be liable to the Corporation or any of its subsidiaries for breach of any fiduciary or other duty, as a director or officer or otherwise, by reason of the fact that such person pursues or
acquires such business opportunity, directs such business opportunity to another person or fails to present such business opportunity, or information regarding such business opportunity, to the
Corporation or its subsidiaries unless, in the case of any such person who is a director or officer of the Corporation, such business opportunity is expressly offered to such director or officer in
writing solely in his or her capacity as a director or officer of the Corporation. Any person purchasing or otherwise acquiring any interest in any shares of stock of the Corporation shall be deemed
to have notice of and consented to the provisions of this Article ELEVENTH. Neither the alteration, amendment or repeal of this Article ELEVENTH nor the adoption of any provision of this Amended and
Restated Certificate of Incorporation inconsistent with this Article ELEVENTH shall eliminate or reduce the effect of this Article ELEVENTH in respect of any matter occurring, or any cause of action,
suit or claim that, but for this Article ELEVENTH, would accrue or arise, prior to such alteration, amendment, repeal or adoption. Nothing in this Article ELEVENTH shall in any way alter, modify or
otherwise amend any of the provisions of Section 3.8 of the Second Amended and Restated Limited Liability Company Agreement of KAR Holdings
II, LLC.
-
(b)
-
For
purposes of this Article ELEVENTH
only:
-
(1)
-
The
term "Corporation" shall mean the Corporation and its subsidiaries; and
-
(2)
-
The
term "the Equity Sponsors" shall mean each of GS Capital Partners VI
Fund, L.P., GS Capital Partners VI Parallel, L.P., GS Capital Partners VI GmbH & Co. KG, GS Capital Partners VI Offshore Fund, L.P., Kelso Investment
Associates VII, L.P., KEP VI, LLC, Axle Holdings II, LLC, ValueAct Capital Master Fund, L.P. and PCap KAR LLC and their respective affiliates and subsidiaries (other
than the Corporation and its subsidiaries).
TWELFTH
.
ELEVENTH:
The
Corporation expressly elects
not to be governed by Section 203 of the GCL.
THIRTEENTH
.
TWELFTH:
In
furtherance and not in
limitation of the powers conferred upon it by the laws of the State of Delaware, the Board of Directors shall have the power without the assent or vote of the stockholders to adopt, amend, alter or
repeal the By-Laws of the Corporation. The affirmative vote of at least a majority of the entire Board of Directors shall be required to adopt, amend, alter or repeal the By-Laws of the Corporation.
FOURTEENTH
.
THIRTEENTH:
If any provision or provisions of this Amended and Restated
Certificate of Incorporation shall be held to be invalid, illegal or unenforceable as applied to any circumstance for any reason whatsoever: (i) the validity, legality and enforceability of
such provisions in any other circumstance and of the remaining provisions of this Amended and Restated Certificate of Incorporation (including, without limitation, each portion of any paragraph of
this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or
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unenforceable
that is not itself held to be invalid, illegal or unenforceable) shall not in any way be affected or impaired thereby and (ii) to the fullest extent possible, the provisions of
this Amended and Restated Certificate of Incorporation (including, without limitation, each such portion of any
paragraph of this Amended and Restated Certificate of Incorporation containing any such provision held to be invalid, illegal or unenforceable) shall be construed so as to permit the Corporation to
protect its directors, officers, employees and agents from personal liability in respect of their good faith service to or for the benefit of the Corporation to the fullest extent permitted by law).
IN
WITNESS WHEREOF, the Corporation has caused this Amended and Restated Certificate of Incorporation to be executed on its behalf this
9th
day of
December
June
,
2009
2016
.
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KAR AUCTION SERVICES, INC.
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By:
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By:
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Name:
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Rebecca C. Polak
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Title:
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Executive Vice President
and
General Counsel
,
General Counsel and Secretary
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*** Exercise Your Right to Vote *** Important Notice Regarding the Availability of Proxy Materials for the Stockholder Meeting to Be Held on June 08, 2016 KAR AUCTION SERVICES INC Date: June 08, 2016 Time: 9:00 AM EDT 50 West Washington Street You are receiving this communication because you hold shares in the above named company. This is not a ballot. You cannot use this notice to vote these shares. This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. You may view the proxy materials online at www.proxyvote.com or easily request a paper copy (see reverse side). We encourage you to access and review all of the important information contained in the proxy materials before voting. 1234567 1234567 Envelope # # of # Sequence # 1 OF 2 12 15 0000283475_1 R1.0.1.25 Broadridge Internal Use Only Job # Sequence # See the reverse side of this notice to obtain proxy materials and voting instructions. KAR AUCTION SERVICES, INC. 13085 HAMILTON CROSSING BLVD. CARMEL, IN 46032 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 John Sample 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 1234567 1234567 1234567 234567 Meeting Information Meeting Type: Annual Meeting For holders as of: April 13, 2016 Location: The Conrad Indianapolis Indianapolis, Indiana 46204 B A R C O D E
Before You Vote How to Access the Proxy Materials Proxy Materials Available to VIEW or RECEIVE: Have the information that is printed in the box marked by the arrow (located on the by the arrow (located on the following page) in the subject line. How To Vote Please Choose One of the Following Voting Methods marked by the arrow available and follow the instructions. Only 0000283475_2 R1.0.1.25 Vote In Person: Many stockholder meetings have attendance requirements including, but not limited to, the possession of an attendance ticket issued by the entity holding the meeting. Please check the meeting materials for any special requirements for meeting attendance. At the meeting, you will need to request a ballot to vote these shares. Vote By Internet: To vote now by Internet, go to www.proxyvote.com. Have the information that is printed in the box Vote By Mail: You can vote by mail by requesting a paper copy of the materials, which will include a proxy card. Internal Use 1. Combined Document How to View Online: following page) and visit: www.proxyvote.com. How to Request and Receive a PAPER or E-MAIL Copy: If you want to receive a paper or e-mail copy of these documents, you must request one. There is NO charge for requesting a copy. Please choose one of the following methods to make your request: 1) BY INTERNET:www.proxyvote.com 2) BY TELEPHONE:1-800-579-1639 3) BY E-MAIL*:sendmaterial@proxyvote.com * If requesting materials by e-mail, please send a blank e-mail with the information that is printed in the box marked Requests, instructions and other inquiries sent to this e-mail address will NOT be forwarded to your investment advisor. Please make the request as instructed above on or before May 25, 2016 to facilitate timely delivery.
THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR" PROPOSALS 2 and 3. 1. Election of Directors Nominees Todd F. Bourell To ratify the Audit Committee's appointment of KPMG LLP as the Company's independent registered public accounting firm for 2016. 3. 1A 1B Donna R. Ecton 1C James P. Hallett 1D Mark E. Hill 1E J. Mark Howell 1F Lynn Jolliffe 1G Michael T. Kestner 1H John P. Larson 1I Stephen E. Smith 2. To approve the amendment and restatement of the Company's Amended and Restated Certificate of Incorporation to provide that the Company's Stockholders may remove any director from office, with or without cause, and other ministerial changes. xxxxxxxxxx Job # Sequence # 0000283475_3 R1.0.1.25 Broadridge Internal Use Only xxxxxxxxxx Cusip Envelope # # of # Sequence # B A R C O D E 23456789012 2 2 2 2 12345678901 12345678901 12345678901 12345678901 12345678901 12345678901 12345678901 12345678901 12345678901 12345678901 Voting items
THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS C 123,456,789,012.12345 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS F 123,456,789,012.12345 Envelope # # of # Sequence # 0000283475_4 R1.0.1.25 Broadridge Internal Use Only THIS SPACE RESERVED FOR SIGNATURES IF APPLICABLE Job # Sequence # NAME THE COMPANY NAME INC. - COMMON 123,456,789,012.12345 THE COMPANY NAME INC. - CLASS B123,456,789,012.12345 THE COMPANY NAME INC. - CLASS D123,456,789,012.12345 THE COMPANY NAME INC. - CLASS E123,456,789,012.12345 THE COMPANY NAME INC. - 401 K123,456,789,012.12345 Reserved for Broadridge Internal Control Information
If you would like to reduce the costs incurred by our company in mailing proxy 1234567 VOTE BY MAIL 123,456,789,012.12345 TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. THE BOARD OF DIRECTORS RECOMMENDS A VOTE "FOR" ALL NOMINEES AND "FOR" PROPOSALS 2 and 3. 1. Election of Directors Nominees Todd F. Bourell For 0 0 0 0 0 0 0 0 Yes 0 Against 0 0 0 0 0 0 0 0 No 0 Abstain 0 0 0 0 0 0 0 0 0 1A For 0 For 0 Against 0 Against 0 Abstain 0 Abstain 0 1B Donna R. Ecton 1I Stephen E. Smith 1C James P. Hallett 1D Mark E. Hill 2. To approve the amendment and restatement of the Company's Amended and Restated Certificate of Incorporation to provide that the Company's Stockholders may remove any director from office, with or without cause, and other ministerial changes. 1E J. Mark Howell 1F Lynn Jolliffe 0 0 0 1G Michael T. Kestner 3. To ratify the Audit Committee's appointment of KPMG LLP as the Company's independent registered public accounting firm for 2016. 1H John P. Larson For address change/comments, mark here. (see reverse for instructions) Please indicate if you plan to attend this meeting Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 02 0000000000 1 OF 1 1 2 0000283476_1 R1.0.1.25 SHARES CUSIP # JOB #SEQUENCE # VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 John Sample 234567P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. 1234567 Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. NAME THE COMPANY NAME INC. - COMMON THE COMPANY NAME INC. - CLASS A THE COMPANY NAME INC. - CLASS B THE COMPANY NAME INC. - CLASS C THE COMPANY NAME INC. - CLASS D THE COMPANY NAME INC. - CLASS E THE COMPANY NAME INC. - CLASS F THE COMPA N Y NAME INC. - 401 K CONTROL # SHARES123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 123,456,789,012.12345 x PAGE1 OF 2 KAR AUCTION SERVICES, INC. 13085 HAMILTON CROSSING BLVD. CARMEL, IN 46032 Investor Address Line 1 Investor Address Line 2 Investor Address Line 3 Investor Address Line 4 Investor Address Line 5 8 8 8 1 1234 ANYWHERE STREET ANY CITY, ON A1A 1A1 234567 234567 234567 234567
PROXY KAR AUCTION SERVICES, INC. ANNUAL MEETING OF STOCKHOLDERS - JUNE 8, 2016 PROXY SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS The undersigned hereby appoints Eric M. Loughmiller and Rebecca C. Polak, and each of them, as true and lawful agents and proxies with full power of substitution in each, to attend and represent the undersigned on all matters to come before the Annual Meeting of Stockholders and to vote as designated on the reverse side, all the shares of common stock of KAR Auction Services, Inc., held of record by the undersigned on April 13, 2016, during or at any adjournment or postponement of the Annual Meeting of Stockholders to be held at 9:00 a.m., EDT, at the Conrad Indianapolis, 50 West Washington Street, Indianapolis, Indiana 46204 on Wednesday, June 8, 2016. I hereby acknowledge receipt of the Notice of Annual Meeting of Stockholders and the accompanying Proxy Statement, the terms of which are incorporated by reference, and revoke any proxy previously given by me with respect to such meeting. This proxy will be voted as directed, or if no direction is indicated, the proxy holders will vote the shares represented by this proxy "FOR"each of the nominees listed in Proposal 1 and "FOR" Proposals 2 and 3, and in the discretion of the proxy holders on any other matter that may properly come before the meeting. Address change/comments: (If you noted any Address Changes and/or Comments above, please mark corresponding box on the reverse side.) Continued and to be signed on reverse side 0000283476_2 R1.0.1.25