icfi20180417_def14a.htm

Table of Contents

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

SCHEDULE 14A

 

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934 (Amendment No. )

 

 Filed by the Registrant

 Filed by a Party other than the Registrant

 

Check the appropriate box:

☐ Preliminary Proxy Statement

 Confidential, for Use of the Commission Only (as permitted by Rule 14a-6(e)(2))

☒ Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material under §240.14a-12


 

ICF INTERNATIONAL, INC.

 

 

(Name of Registrant as Specified In Its Charter)

 

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

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NOTICE OF ANNUAL MEETING OF STOCKHOLDERS TO BE HELD ON MAY 31, 2018

 

 

Date:

Time:

Place:

May 31, 2018

8:00 a.m.

ICF International’s Corporate Headquarters

9300 Lee Highway

Fairfax, Virginia 22031

 

AGENDA:

 

 

To elect three (3) directors for a term expiring in 2021 (Proposal 1);

 

 

To vote, on an advisory basis, on say on pay regarding the overall pay for performance program for ICF International, Inc.’s (“ICF International” or “ICF”) named executive officers as disclosed in the proxy statement (Proposal 2);

 

 

Approval of the ICF International, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”) (Proposal 3);

 

 

To ratify the selection of Grant Thornton LLP as our independent registered public accounting firm for fiscal year 2018 (Proposal 4); and

 

 

To transact any other business that is properly brought before the meeting or any adjournment or postponement.

 

Pursuant to the Delaware General Corporation Law and ICF International’s Amended and Restated Bylaws, stockholders of record at the close of business on April 10, 2018 are entitled to notice of, and to vote at, the annual meeting. This notice of annual meeting, the Proxy Statement, and form of proxy or voting instruction form are being distributed and made available on or about April 20, 2018.

 

We are pleased to utilize the U.S. Securities and Exchange Commission rule that allows companies to furnish their proxy materials to stockholders over the Internet. As a result, we are mailing to many of our stockholders a notice instead of a paper copy of our Proxy Statement and 2017 Annual Report. This notice contains instructions on how to access those documents over the Internet. We direct your attention to the attached Proxy Statement for more information, including instructions on how stockholders can receive a paper copy of our proxy materials, including our Proxy Statement, our 2017 Annual Report and a form of proxy or voting instruction form. All stockholders who do not receive a notice, including stockholders who have previously requested to receive paper copies of proxy materials, will receive a paper copy of the proxy materials by mail unless they have previously requested delivery of proxy materials electronically. Employing an electronic distribution process will conserve natural resources and reduce the costs of printing and distributing our proxy materials.

 

We cordially invite you to attend this year’s annual meeting of stockholders. It is important that your shares of ICF International common stock be represented at this meeting in order to help ensure the presence of a quorum. Even if you plan to attend the annual meeting of stockholders in person, please vote your shares of ICF International common stock by mailing your completed proxy or voting instruction form, or voting electronically or telephonically, as doing so will ensure your representation at the annual meeting regardless of whether you attend in person. Thank you for your cooperation and continued support of ICF International.

 

 

By Order of the Board of Directors,

 

Sudhakar Kesavan

Chairman and Chief Executive Officer

Fairfax, Virginia

April 20, 2018

 

 

CAST YOUR VOTE RIGHT AWAY

 

 

We hope you will exercise your rights and fully participate in our annual meeting as a stockholder. It is very important that you vote to play a part in the future of our company. You do not need to attend the annual meeting of stockholders to vote your shares.

 

If you hold your shares through a broker, bank or nominee, your broker, bank or nominee is not permitted to vote on your behalf on the election of directors and other matters to be considered at the annual meeting of stockholders (except on ratification of the selection of Grant Thornton LLP as the independent registered public accounting firm for 2018), unless you provide specific instructions by completing and returning the voting instruction form or following the instructions provided to you to vote your shares via telephone or the internet. For your vote to be counted, you will need to communicate your voting decisions to your broker, bank or nominee before the date of the stockholder meeting.

 

Even if you plan to attend our annual meeting of stockholders in person, please read the Proxy Statement with care and vote right away using any of the following methods. In all cases, have your proxy card or voting instruction form in hand and follow the instructions.

 

BY INTERNET USING YOUR

COMPUTER

BY TELEPHONE

BY MAILING YOUR PROXY CARD

     

     

Visit 24/7

www.proxyvote.com

Registered Owners dial

toll-free 24/7

1-800-690-6903

Cast your ballot,

sign your proxy card

and send by free post

 

Admission:

 

All (1) stockholders of record as of the record date; (2) beneficial holders of ICF International common stock held by a broker, bank, or other nominee (i.e., in “street name”) as of the record date; and (3) authorized representatives of entities who are record or beneficial holders as of the record date may attend the annual meeting of stockholders. Attendees must present, in addition to valid photo identification or other satisfactory proof of identification, the following materials in order to be admitted to the meeting:

 

 

1.

For stockholders of record, the top portion of their proxy card, which will serve as an admission ticket;

 

 

2.

For beneficial holders, proof of stock ownership such as a recent brokerage statement or letter from a bank or broker. If you want to vote your shares of ICF International common stock held in street name in person at the meeting, you must obtain a written proxy in your name from the broker, bank or other nominee who is the record holder of your shares; and

 

 

3.

For authorized representatives, a letter from the entity certifying as to their status as an authorized representative.

 

 

PROXY SUMMARY

 

To assist you in reviewing the proposals to be acted upon at the annual meeting of stockholders, we call your attention to the following information about ICF International, Inc.’s (“ICF International,” “ICF,” the “Company,” “we,” “our” or “us”) 2017 financial performance, key executive compensation actions and decisions, and corporate governance highlights. The following description is only a summary. For more complete information about these topics, please review the Company’s Annual Report on Form 10-K for the year ended December 31, 2017, filed with the U.S. Securities and Exchange Commission on February 28, 2018 (the “2017 Form 10-K”), and the complete Proxy Statement that follows.

 

Proposals Which Require Your Vote

 

       

More Information

 

Board Recommendation

 

Votes Required for Approval

                 

PROPOSAL 1

 

Election of three (3) directors to serve for a term expiring at our annual meeting in 2021

 

Page 5

 

FOR each Director Nominee

 

Majority of the votes entitled to be cast with respect to each director in the election of directors.

                 

PROPOSAL 2

 

Advisory say on pay vote regarding ICF International’s overall pay-for-performance named executive officer compensation program

 

Page 15

 

FOR

 

Majority of the votes entitled to be cast for this advisory vote. Note that this is an advisory vote and, while not bound by it, the Board will seriously consider the outcome.

                 

PROPOSAL 3

 

Approval of the ICF International, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”)

 

Page 16

 

FOR

 

Majority of the votes entitled to be cast for the proposal.

                 

PROPOSAL 4

 

Ratification of the selection of Grant Thornton LLP as our independent registered public accounting firm

 

Page 23

 

FOR

 

Majority of the votes entitled to be cast for this advisory vote. Note that this is an advisory vote and, while not bound by it, the Board will seriously consider the outcome.

 

 

About ICF International

 

ICF provides professional services and technology-based solutions to government and commercial clients, including management, technology, and policy consulting and implementation services. We help our clients conceive, develop, implement, and improve solutions that address complex business, natural resource, social, technological, and public safety issues. Our more than 5,500 employees serve clients from more than 82 offices worldwide. ICF’s website is www.icf.com.

 

As of December 31, 2017, ICF had total annual revenue of $1.23 billion, total consolidated assets of approximately $1.1 billion and total consolidated stockholders’ equity of approximately $616.0 million.

 

ICF International is a Delaware corporation and our principal executive offices are located at 9300 Lee Highway, Fairfax, Virginia 22031.

 

Proxy Summary - 1

 

2017 Business Highlights

 

Financial Performance. All financial numbers referenced below were previously reported in the 2017 Form 10-K.

 

 

 

Revenue was $1.23 billion in 2017, up 3.7% over $1.19 billion in 2016:

  Net income was $62.9 million in 2017, up 35.0% over $46.6 million in 2016:
           
       
           
           
           
  Operating cash flow was $117.2 million in 2017, up 46.4% over $80.1 million in 2016:   Diluted earnings per share (“EPS”) was $3.27 in 2017, up 36.3% over $2.40 in 2016:
           
       

 

Proxy Summary - 2

 

Compensation Highlights 

 

The Compensation Committee (the “Compensation Committee”) of the Board of Directors (the “Board”) of the Company approved the following actions during fiscal year 2017 and at the beginning of fiscal year 2018 to maintain and improve the pay-for-performance nature of our executive compensation program:

 

 

Reviewed the 2010 Incentive Plan, as amended, (the “2010 Incentive Plan”), against key institutional investors’ voting policies on equity plans and proxy advisory firms’ equity plan evaluation criteria, which resulted in recommendations for implementing the new 2018 Incentive Plan, as described in this Proxy Statement and which includes the following features: no dividends on unvested equity awards, non-employee director awards being issued under the 2018 Incentive Plan, changes to reflect the Tax Cuts and Jobs Act (the “TCJA”), and a limit on director compensation. Approval of the 2018 Incentive Plan will be voted on at the 2018 annual meeting of stockholders.

 

 

Supported the continuation of an annual, non-binding, advisory vote of the Company’s stockholders regarding the Company’s overall pay-for-performance executive compensation programs. ICF’s advisory vote regarding overall pay-for-performance at the 2018 annual meeting of stockholders will be the eighth consecutive annual vote by stockholders on this matter.

 

 

Continued utilizing performance-based share awards (“PSAs”) as a key component of ICF’s long-term incentive program. PSAs are performance contingent awards where executives may earn zero to maximum shares depending on the Company’s actual performance against pre-established performance measures. The performance periods of the PSAs are long-term and, therefore, align executives’ interests with the interests of long-term stockholders. PSAs were first granted to members of ICF’s executive leadership team in 2015, and again in 2016, 2017 and 2018 as a part of the annual equity award program.

 

 

Continued adherence to the Company’s Executive Stock Ownership Policy, as amended in May 2014 (the “Executive Stock Ownership Policy”), which limits the sale, transfer or disposition of shares of the Company’s common stock by designated executives (including the named executive officers (the “NEOs”)) until the executive has met the requisite stock ownership level. As noted below, as of April 10, 2018, each of our NEOs either met the stock ownership guidelines or is expected to meet the stock ownership guidelines within the specified time period, assuming that PSAs are paid at target.

 

 

Continued the performance focus in the Company’s annual bonus program rigorously linking pay to performance. Annual threshold, target and maximum performance goals were established with incentive payouts at each level.

 

 

Continued to utilize a peer group, which encompasses a range of companies that reflects the evolution of ICF’s business strategy. This peer group provides a relevant basis for benchmarking executive pay level, components of executive compensation, mix of compensation components and metrics used to determine awards. The peer group is reviewed and adjusted annually to remove companies no longer on a public exchange and to add companies, as needed, for robust data.

 

 

Extensively reviewed external executive compensation trends to ensure that the Company’s executive compensation practices align with market best practices.

 

For additional information on compensation related matters, see the Compensation Discussion & Analysis (the “CD&A”) section of this Proxy Statement, beginning on Page 39.

 

The compensation of our NEOs in the following table reflects our 2017 performance:

 

 

 

 

 

 

Stock Awards ($)(1)

 

 

   

 

   

 

 

 

 
NEO   Salary ($)    

Annual Equity

Grant

   

Annual Bonus

Paid in Cash ($)

   

All Other

Compensation ($)

    Total ($)  

Sudhakar Kesavan

  $ 866,091     $ 1,597,714     $ 766,924     $ 16,441     $ 3,247,170  

John Wasson

    653,550       739,255       465,564       11,548       1,869,917  

James C. Morgan

    527,511       572,787       328,804       10,503       1,439,605  

Ellen Glover

    399,866       217,098       190,839       12,376       820,179  

Sergio Ostria

    399,866       217,098       187,922       11,548       816,434  
 

(1)

Represents the grant date fair value computed in accordance with FASB ASC Topic 718.

 

Proxy Summary - 3

 

2017 Executive Total Compensation Mix

 

Under our executive compensation program, a significant portion (75% and 61%, respectively) of the Chief Executive Officer’s (the “CEO”) and other NEOs’ annual total compensation opportunity is variable, based on our operating performance and/or our stock price.

 

SOURCES OF TARGET TOTAL COMPENSATION: SHORT TERM vs. LONG-TERM INCENTIVE

 

               

 

 

Response to Advisory Vote

 

Approximately 97% of the votes cast at the 2017 annual meeting of stockholders on the non-binding advisory vote on our NEO compensation were voted in support of our executive compensation program. Consistent with its strong commitment to engagement, communication, and transparency, the Compensation Committee continues to regularly review our executive compensation program to ensure alignment between the interests of our senior executives and our stockholders.

 

Proxy Summary - 4

 

Corporate Governance Highlights

 

ICF has a longstanding commitment to effective governance of its business and affairs for the benefit of stockholders. The Board’s Governance and Nominating Committee (the “Governance and Nominating Committee”) periodically reviews our Corporate Governance Guidelines to maintain effective and appropriate standards of corporate governance.

 

Board Leadership Structure

 

Our Board leadership structure currently consists of a Chairman of the Board (the “Chairman”), who also serves as our CEO, a Lead Independent Director, and independent committee chairs. The Board believes that ICF is currently best served in combining the CEO and Chairman positions, complemented by a strong and effective Lead Independent Director.

 

Lead Independent Director

 

Ms. Eileen O’Shea Auen was re-elected to serve as ICF’s Lead Independent Director as of June 2, 2017. Both the Board and management believe that strong, independent Board leadership is a critical aspect of effective corporate governance.

 

Lead Independent Director responsibilities include, but are not limited to:

 

 

Chairing any meeting of the independent directors in executive session;

 

 

Facilitating communications between other members of the Board and the Chairman and CEO; however, each director is free to communicate directly with the Chairman and CEO;

 

 

Working with the Chairman and CEO in the preparation of the agenda for each Board meeting and in determining the need for special meetings of the Board;

 

 

Consulting with the Chairman and CEO on matters relating to corporate governance and Board performance;

 

 

Leading the deliberation and action by the Board or a Board committee regarding any offer, proposal or other solicitation or opportunity involving a possible acquisition or other change of control of the Company, including by merger, consolidation, asset or stock sale or exchange, or recapitalization;

 

 

In conjunction with the Chair of the Governance and Nominating Committee, overseeing and participating in the annual board evaluation and succession planning process;

 

 

Participating in the Compensation Committee’s annual performance evaluation of, and succession planning for, the Chairman and CEO; and

 

 

Meeting with any director whom the Lead Independent Director deems is not adequately performing his or her duties as a member of the Board or any committee.

 

Board Committees

 

The three (3) standing committees established by the Board meet on a regular basis and operate under written charters approved by the Board. Each committee performs an annual self-evaluation to determine whether the committee is functioning effectively and fulfilling its duties as prescribed by its charter. All members of the Audit Committee of the Board (the “Audit Committee”), the Compensation Committee and the Governance and Nominating Committee are independent, and each committee has the ability to hire and terminate its own outside advisors.

 

Board Risk Oversight

 

Management is responsible for the day-to-day management of the risks we face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our Company. Our Board provides guidance to management regarding our strategy, including in connection with our results of operations and related trends and factors contributing to or affecting our results, long-term strategy, financial reporting, and risks associated with these aspects of the Company’s business. The involvement of the Board in setting our business strategy is an important part of determining the types and appropriate levels of risk undertaken by the Company. Management conducts regular enterprise risk assessments that include feedback from the Board, to ascertain and define the most significant risks facing the Company. After assessments are complete, management reports regularly to the Board and Board committees on the status and completion of actions associated with the most significant risks.

 

We have also established a Code of Business Ethics and Conduct (the “Code of Ethics”) that establishes standards of conduct and expectations for our employees and the overall manner in which we conduct business. The Code of Ethics, along with our other policies and business standards, and our overall risk and compliance programs are components of mitigating the risks associated with the operation of our business.

 

Continuing Education

 

ICF’s Corporate Governance Guidelines encourage all directors to receive continuing education in areas that will assist them in discharging their duties.

 

Stock Ownership and Holding Period Requirements

 

The Board believes that designated executives of the Company should have a financial stake in ICF so that their interests are aligned with those of the stockholders, which will cause them to more effectively represent ICF’s stockholders. The Executive Stock Ownership Policy requires executives to own ICF common stock in a value equal to, or in excess of the multiple of their annual base salary as shown below:

 

CEO: 4x
Other NEOs: 2x
Other designated executives: 1x

                                 

Proxy Summary - 5

 

For designated executives (including NEOs) as of January 1, 2015, ownership levels are to be achieved within five (5) years of that date. For executives appointed after such date, such levels, if not achieved by their fifth anniversary of becoming such an executive, are to be achieved no later than December 31 of that year.

 

The Board also believes that its members should share stockholders’ focus on the Company’s long-term value. As such, the Board adopted a Board member stock ownership policy establishing, as a guideline (but not an absolute requirement), that non-employee directors of the Company be expected to own shares of Company common stock valued at five (5) times such director’s annual cash meeting retainer, which may include shares of unvested restricted stock (i.e., directors are strongly encouraged to hold common stock valued at $300,000). Such ownership level is to be achieved over a period of four (4) years after becoming a member of the Board.

 

As of April 10, 2018, each of our NEOs and non-employee directors either met the above stock ownership guidelines or is expected to meet the applicable ownership guidelines within the specified time period assuming that, for the NEOs, their PSAs are paid at target.

 

Anti-Hedging and Anti-Pledging

 

Pursuant to the Company’s Policy on Insider Information and Securities Trading (“Policy on Insider Information”) the Company considers it improper and inappropriate for any employee, officer or director of the Company to engage in short-term or speculative transactions in the Company’s securities. The Policy on Insider Information specifically prohibits directors, officers and other employees from engaging in short sales of the Company’s securities and transactions in puts, calls or other derivative securities (sometimes referred to as “hedging”). Each of the NEOs and directors complied with the Policy on Insider Information during fiscal year 2017.

 

Individual stock grant agreements prohibit the pledging or assignment of stock grants.

 

Good Governance Practices

 
       
    As of the end of 2017, the Board was 88% independent, 25% female, 38% minority and included a female Lead Independent Director.
       
    The Board reflects a range of talents, ages, skills, diversity, and expertise.
       
    Each director attended over 75% of applicable Board/committee meetings in 2017.
       
    The Board has three (3) independent standing committees, each operating under a written charter, chaired by an independent director, and composed entirely of independent directors: Audit, Compensation, and Governance and Nominating.
       
    The Board has adopted comprehensive Corporate Governance Guidelines to guide its oversight and leadership.
       
    The Board conducts an annual evaluation of the CEO.
       
    ICF has stock ownership guidelines for directors and executive officers.  We have policies restricting hedging and short sales of ICF International equity securities by directors and executive officers.  Individual stock grant agreements prohibit the pledging or assignment of stock grants.
       
    The Board reviews management talent and succession planning annually.
       
    No stockholder rights plan or "poison pill" has been adopted.
       
    The Compensation Committee, in conjunction with an independent compensation consultant, routinely reviews our pay-for-performance executive compensation program.
       
    Neither the Board nor management has engaged in related party transactions.
       
    The CEO's and Chief Operating Officer's severance agreements have a "double trigger" in connection with any compensation, equity or benefits paid in the event of a change of control.
       
    The Board has a strong, Lead Independent Director with clearly articulated responsibilities.
       
    All directors are independent, except the Chairman and CEO.
       
    The Company has a majority voting standard in uncontested director elections.
       
    The Board and committees conduct an annual self-evaluation process.
       

 

Proxy Summary - 6

 

Board Evaluation

 

The Directors participate in an annual evaluation of the full Board and each committee on which they serve, in order to assess the performance and effectiveness of the Board and its committees. The responses and comments are presented to and discussed with the Board and each committee of the Board. The Lead Independent Director and the Chair of the Governance and Nominating Committee periodically supplement the annual evaluation process with individual meetings and peer evaluations with each Director. These supplemental discussions are intended to enhance the existing Board evaluation process and foster even greater discussion regarding the adequacy and effectiveness of the Board and such committees.

 

Compensation Recoupment Policy

 

The Company’s recoupment policy is set forth in the 2010 Incentive Plan. Under this policy, if any of the Company’s financial statements are required to be restated due to errors, omissions, or fraud, the Compensation Committee may direct that the Company recover all or a portion of any award (cash or equity) granted or paid to a participant with respect to such fiscal year which is negatively affected. If so directed, the amount to be recovered from the participant shall be the amount by which the award exceeded the amount that would have been payable to the participant had the financial statements been initially filed as restated, or any greater or lesser amount (including, but not limited to, the entire award) that the Compensation Committee shall determine. In no event shall the amount to be recovered by the Company be less than the amount required to be repaid or recovered as a matter of law (including but not limited to amounts that are required to be recovered or forfeited under Section 304 of the Sarbanes-Oxley Act of 2002).

 

The proposed new 2018 Incentive Plan will maintain this compensation recoupment policy.

 

Proxy Summary - 7

 

Stockholder Actions

 

Election of Three Directors to Serve for a Term Expiring at our Annual Meeting in 2021 (Proposal 1)

 

You will find important information in the proxy statement about the qualifications and experience of each of the director nominees whom you are being asked to elect. The Governance and Nominating Committee performs an annual assessment to evaluate whether ICF’s directors have the skills and experience to effectively oversee the Company. All of our directors have proven leadership ability, sound judgment, integrity and a commitment to the success of our Company.

 

Director Nominees

 

Name

 

Director

Since

 

Age

 

Independent

 

Principal Occupation

 

Other Public

Boards

 

ICF International Board

Committees

Ms. Eileen

O’Shea Auen

 

2008

 

55

 

Yes

 

Chief Executive Officer, Deep Run Consulting, LLC

 

AngioDynamics, Inc.

 

Governance &

Nominating (Chair)

Compensation

                         

Ms. Cheryl W. Grisé

 

2012 

 

65

 

Yes

 

Retired Executive Vice President, Eversource Energy (f/k/a Northeast Utilities), a public utility holding company 

 

MetLife, Inc. and PulteGroup, Inc.

 

Compensation (Chair)

Governance & Nominating

                         

Mr. Randall Mehl

 

2017

 

50

 

Yes

 

President, Stewardship Capital Advisors, LLC

 

Kforce Inc. and Insperity, Inc.

 

Compensation

 

Advisory Say on Pay Vote Regarding ICF International’s Overall Pay-For-Performance Named Executive Officer Compensation Program (Proposal 2)

 

Stockholders are being asked to cast a non-binding, advisory say on pay (“Say on Pay”) vote on our NEO compensation program. Last year, approximately 97% of the votes cast by our stockholders regarding the Say on Pay proposal were in support of our NEO compensation program. In evaluating this year’s Say on Pay proposal, we recommend that you carefully review the Compensation Discussion and Analysis section of the proxy statement, which explains how and why the Compensation Committee arrived at its executive compensation actions and decisions for 2017.

 

Approval of the ICF International, Inc. 2018 Omnibus Incentive Plan (Proposal 3)

 

Stockholders are being asked to vote in favor of the 2018 Incentive Plan. The primary changes to the 2018 Incentive Plan from the 2010 Incentive Plan include:

 

Setting the number of shares available for issuance under the 2018 Incentive Plan at 1,185,000. After adoption of the 2018 Incentive Plan, no further awards will be issued under the 2010 Omnibus Incentive Plan;

 

providing that equity awards to non-employee members of the Board will be issued under the 2018 Incentive Plan, rather than outside the 2018 Incentive Plan as has been our practice with respect to the 2010 Incentive Plan, and the 2018 Incentive Plan will establish a limitation on awards that may be granted during any year to non-employee members of the Board;

 

incorporating certain other changes that we believe are desirable, including changes resulting from the adoption in late 2017 of the TCJA; and

 

dividends will only be paid on issued shares, and not on unvested equity grants.

 

The proposal was approved by the Board on April 4, 2018. If approved by the stockholders at the 2018 annual meeting, the 2018 Incentive Plan will become effective upon such approval.

 

Detailed information on Proposal 3 can be found on pages 16 through 22 in the Proxy Statement.

 

Proxy Summary - 8

 

Ratification of the Selection of Grant Thornton as Our Independent Registered Public Accounting Firm (Proposal 4)

 

The Audit Committee has appointed, and the Board has approved the appointment of, Grant Thornton LLP (“Grant Thornton”) as the Company’s independent registered public accounting firm (“independent auditor”) for 2018. While we are not required to have stockholders ratify the selection of Grant Thornton as the Company’s independent auditor, we are doing so because we believe it is good corporate governance practice. If stockholders do not ratify the selection, the Audit Committee will reconsider the appointment, but may nevertheless retain Grant Thornton as the Company’s independent auditor. Even if the selection is ratified, the Audit Committee may, at its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such change is in the best interests of the Company and its stockholders.

 

 

Submission of Stockholder Proposals or Nominations for 2019 Annual Meeting of Stockholders

 

Stockholder proposals submitted for inclusion in our 2019 proxy statement pursuant to Rule 14a-8 under the Securities Exchange Act of 1934, as amended, must be received by us by December 21, 2018. Notice of stockholder proposals to nominate a person for election as a Director or to introduce an item of business at the 2019 annual meeting of stockholders outside Rule 14a-8 must be received by us no earlier than January 31, 2019 and no later than March 2, 2019.

 

Proxy Summary - 9

 

Table of Contents

 

VOTING AND MEETING INFORMATION

1

PROPOSAL 1

5
ELECTION OF DIRECTORS 5

PROPOSAL 2

15
ADVISORY SAY ON PAY VOTE REGARDING ICF’S OVERALL PAY-FOR-PERFORMANCE NAMED EXECUTIVE OFFICER COMPENSATION PROGRAM 15

PROPOSAL 3

16
APPROVAL OF THE ICF INTERNATIONAL, INC. 2018 OMNIBUS INCENTIVE PLAN 16

PROPOSAL 4

23
RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANT 23

AUDIT COMMITTEE REPORT

25

CORPORATE GOVERNANCE AND BOARD MATTERS

27

Board and Committee Meetings in 2017

27

Corporate Governance Guidelines

27

Director Independence

27

Board Leadership Structure; Lead Independent Director

27

Risk Oversight

28

Board Evaluation

28

Board Committees

28

Compensation Committee Interlocks and Insider Participation

30

Process for Selecting and Nominating Directors

31

Executive Stock Ownership Policy

32

Board Stock Ownership Guidelines

32

Director Continuing Education

32

Prohibitions on Derivatives Trading, Hedging and Pledging

32

Stockholder Communications with the Board

32

Director Compensation Table for 2017

33

Director Compensation

33

Code of Ethics

34

Environmental, Social and Governance – Corporate Commitment to Corporate Social Responsibility

34

Certain Relationships and Transactions with Related Persons

35

Other Transactions Considered for Independence Purposes

35

EXECUTIVE OFFICERS OF THE COMPANY

35

CEO PAY RATIO

36

SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS

38

EXECUTIVE COMPENSATION

40

Compensation Discussion and Analysis

40

Fiscal 2017 – Financial Highlights

40

Compensation Highlights

40

Stockholder-Aligned Executive Compensation Practices

41

Compensation Philosophy and Objectives

41

Guidelines for ICF’s Executive Officer Compensation Program

42

 

 

Implementing Our Objectives

43

Annual Compensation Practice Review

44

Effect of 2017 Say on Pay Vote

45

Executive Compensation Components

45

2017 Base Salary

45

2018 Base Salary

45

Annual Incentive Compensation

46

Retirement and Other Benefits

51

Compensation Practices and Risk

51

Summary Compensation Table

52

Grants of Plan-Based Awards in 2017

53

Option Exercises and Stock Vested During 2017

55

Deferred Compensation Plan

55

Employment Agreement

56

Potential Payments upon Termination or Change of Control

56

Payments Pursuant to Employment Agreement

56

Payments Pursuant to Severance Letter Agreements

57

Payments in the Event of Death or Disability

58

Payments in the Event of Retirement

58

Payments in the Event of a Change of Control

58

COMPENSATION COMMITTEE REPORT

60

SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE

61

STOCKHOLDERS’ PROPOSALS FOR THE 2019 ANNUAL MEETING

61

SOLICITATION BY BOARD; EXPENSES OF SOLICITATION

61

ANNEX A

62

ANNEX B

63

 

VOTING AND MEETING INFORMATION 

 

PROXY STATEMENT

 

This Proxy Statement is furnished in connection with the solicitation of proxies by the Board of Directors (the “Board”) of ICF International, Inc. (“ICF International,” “ICF,” the “Company,” “we,” “our,” or “us”) to be used at the annual meeting of stockholders of the Company (the “Annual Meeting”). The Annual Meeting will be held at our principal executive office, 9300 Lee Highway, Fairfax, Virginia 22031, on May 31, 2018, at 8:00 a.m., local time. This Proxy Statement and enclosed proxy form are being made available over the Internet or delivered by mail on or about April 20, 2018, to stockholders of record.

 

VOTING AND MEETING INFORMATION

 

What is the purpose of the annual meeting?

 

At our annual meeting, you will be asked to:

 

       

More Information

 

Board Recommendation

 

Votes Required for Approval

PROPOSAL 1

 

Elect three (3) directors to serve for a term expiring at our annual meeting in 2021

 

Page 5

 

FOR each Director Nominee

 

Majority of the votes entitled to be cast with respect to each director in the election of directors.

PROPOSAL 2

 

Provide an advisory say on pay vote regarding ICF International’s overall pay-for-performance named executive officer compensation program (the “Say on Pay” vote)

 

Page 15

 

FOR

 

Majority of the votes entitled to be cast for this advisory vote. Note that this is an advisory vote and, while not bound by it, the Board will seriously consider the outcome.

PROPOSAL 3

 

Approve the ICF International, Inc. 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”)

 

Page 16

 

FOR 

 

Majority of the votes entitled to be cast for this proposal.

PROPOSAL 4

 

Ratify the selection of Grant Thornton LLP (“Grant Thornton”) as our independent registered public accounting firm

 

Page 23

 

FOR

 

Majority of the votes entitled to be cast for this advisory vote. Note that this is an advisory vote and, while not bound by it, the Board will seriously consider the outcome.

Transact any other business that properly comes before the meeting or any adjournment or postponement.

 

VOTING AND MEETING INFORMATION 

 

How does the Board recommend that I vote?

 

Our Board recommends that you vote your shares FOR: (i) the nominees for election to the Board; and (ii) Proposals 2, 3 and 4.

 

Who is entitled to vote?

 

Holders of record of our common stock as of the close of business on April 10, 2018, are entitled to vote at the Annual Meeting. At that time, we had 18,795,188 outstanding shares of common stock. We have no other outstanding classes of stock that are entitled to vote at the annual meeting. Voting stockholders are entitled to one (1) vote per share.

 

Why did I receive a notice in the mail regarding the Internet availability of the proxy materials instead of a paper copy of the proxy materials?

 

We are pleased to utilize the U.S. Securities and Exchange Commission (the “SEC”) rule that allows companies to furnish their proxy materials over the Internet. As a result, we are mailing to many of our stockholders a notice about the Internet availability of the proxy materials instead of a paper copy of such materials. All stockholders receiving the notice will have the ability to access the proxy materials over the Internet and to request a paper copy of the proxy materials by mail.

 

To reduce the expenses of delivering duplicate notices to stockholders, we are relying upon SEC rules that permit us to deliver only one (1) notice about the Internet availability of the proxy materials to multiple stockholders who share an address, unless we receive contrary instructions from any stockholder at that address. Upon request, whether oral or written, we will deliver a separate copy of the notice about the Internet availability of the proxy materials to any stockholder at a shared address who requests his or her own copy. Requests should be made to ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, Attention: Corporate Secretary.

 

How can I access the proxy materials over the Internet?

 

Your notice about the Internet availability of the proxy materials, proxy form, or voting instruction form will contain instructions on how to view our proxy materials for the Annual Meeting on the Internet. Our proxy materials are also publicly available, free of charge, at www.proxyvote.com. Our proxy materials will be available at this website through the conclusion of the Annual Meeting.

 

Your notice of Internet availability of proxy materials, proxy form, or voting instruction form will contain instructions on how you may request access to proxy materials electronically on an ongoing basis. Choosing to access your proxy materials electronically will help us conserve natural resources and reduce the costs of printing and distributing our proxy materials.

 

How may I obtain a paper copy of the Company’s proxy materials, 2017 Annual Report, and/or other financial information?

 

Stockholders receiving a notice about the Internet availability of the proxy materials will find instructions regarding how to obtain a paper copy of the proxy materials on their notice. Stockholders also may request a free copy of our Proxy Statement and/or our Annual Report on Form 10-K for the year ended December 31, 2017, filed with the SEC on February 28, 2018 (the “2017 Form 10-K”), by writing to: ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, Attention: Corporate Secretary. Alternatively, stockholders can access our 2017 Form 10-K on our Investor Relations website at: http://investor.icf.com. We will also furnish any exhibit to the 2017 Form 10-K, if specifically requested.

 

How do I vote?

 

You may vote in person at the Annual Meeting, on the Internet, by telephone, or through a proxy or voting instruction form. Stockholders who have received a notice of the availability of the proxy materials by mail may submit proxies over the Internet by following the instructions on the notice. Stockholders who have received a paper copy of a proxy form or a voting instruction form by mail may either:

 

 

(i)

submit their proxy over the Internet using their computer or by telephone by following the instructions on the proxy form or voting instruction form; or

 

 

(ii)

submit their proxy by mail by signing and dating the proxy form or voting instruction form received and returning it in the prepaid envelope.

 

What if I hold shares indirectly?

 

If you hold shares in a stock brokerage account, or through a bank or other nominee, you are considered to be the beneficial owner of shares held in “street name” and these proxy materials are being forwarded to you by your broker or nominee. As the beneficial owner, you have the right to direct your broker how to vote. If you do not direct your broker how to vote, your broker is permitted to vote your shares on the ratification of the selection of the independent registered public accounting firm, even if you do not furnish voting instructions. However, your broker will not be able to vote on other matters.

 

If your shares are held in “street name,” your broker or other nominee may have procedures that will permit you to vote by telephone or electronically through the Internet.

 

Can I change my vote?

 

You have the right to revoke your proxy at any time before votes are counted at the Annual Meeting by:

 

 

notifying us at our corporate offices by writing to ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, Attention: Corporate Secretary;

 

 

entering a new vote by using the Internet or the telephone, or by mailing a new proxy form or new voting instruction form bearing a later date, which will automatically revoke your earlier voting instructions; or

 

 

voting in person at the Annual Meeting.

 

Attendance at the Annual Meeting will not in itself constitute revocation of your proxy. 

 

VOTING AND MEETING INFORMATION 

 

Attending the Annual Meeting

 

Attendance at the Annual Meeting is limited to stockholders who, as of the record date, are:

 

 

stockholders of record;

 

 

beneficial holders of ICF International common stock held by a broker, bank, or other nominee; or

 

 

authorized representatives of entities who are record or beneficial holders.

 

In order to be admitted to the Annual Meeting, a stockholder must present a valid photo identification or other satisfactory proof of identification, and the following materials:

 

 

stockholders of record must present the top portion of their proxy card, which will serve as an admission ticket;

 

 

beneficial holders will need proof of stock ownership. A recent brokerage statement or letter from a bank or broker is an example of proof of stock ownership. If you want to vote your shares of ICF common stock held in street name in person at the Annual Meeting, you must obtain a written proxy in your name from the broker, bank or other nominee who is the record holder of your shares; and

 

 

in addition to any evidence required above for record or beneficial holders, authorized representatives must present a letter from the entity certifying as to their status as an authorized representative.

 

Cameras, recording devices and other electronic devices, and the use of cellular phones or tablets will not be permitted at the Annual Meeting. Representatives will be at the entrance to the Annual Meeting and these representatives will have the authority, on the Company’s behalf, to determine whether the admission policies and procedures are being followed and whether you will be granted admission to the Annual Meeting.

 

What are the requirements and procedures for a quorum, abstentions, and broker non-votes?

 

Your shares are counted as present at the Annual Meeting if you attend the meeting, if you properly return a proxy by mail, or you vote by telephone or electronically, or if you hold your shares in street name and your broker, bank or other nominee votes your shares on Proposal 4. In order for us to vote on matters at the Annual Meeting, a majority of our outstanding shares of common stock as of April 10, 2018 and entitled to vote must be present in person or by proxy at the Annual Meeting. This is referred to as a quorum. Abstentions will be counted for purposes of establishing a quorum at the meeting and will be counted as voting (but not for or against) on the affected proposal. Broker non-votes will be counted for purposes of establishing a quorum, but will not be counted as voting. A broker non-vote occurs when a broker, bank, or other nominee holding shares for a beneficial owner does not vote on a particular proposal because the nominee does not have discretionary voting power with respect to that item and/or has not received voting instructions from the beneficial owner. If a quorum is not present, the Annual Meeting will be adjourned or postponed until a quorum is present.

 

How many votes are needed to approve each item?

 

For the election of three (3) directors, each for a term of three (3) years:   

 

 

You may vote in favor of the nominees or withhold votes as to the nominees.

 

 

There is no cumulative voting for the election of directors.

 

 

For uncontested director elections, directors must be elected by a majority of the votes entitled to be cast with respect to each director in the election of directors, which means that nominee(s) receiving more “for” votes than “withheld” or “against” votes cast will be elected.

 

 

Abstentions will have no effect on the outcome of the election.

 

 

Election of directors is a non-routine proposal, which means that brokers or other nominees do not have discretion to vote any uninstructed shares. Broker non-votes represent votes not entitled to be cast on this matter and thus will have no effect on the result of the vote.

 

The Say on Pay vote is only an advisory vote to the Board regarding the compensation of the Company’s named executive officers.

 

 

You may vote in favor of or against the Company’s compensation system, or you may abstain from voting.

 

 

Since this an advisory vote only, there are no minimum stockholder approval requirements. However, in order for the resolution to pass, a majority of the votes entitled to be cast for this advisory vote must be received. While this is an advisory vote and it is not bound by it, the Board will seriously consider the outcome.

 

 

Abstentions will have the same effect as voting against this proposal.

 

 

The approval of this proposal is a non-routine proposal which means that brokers or other nominees do not have discretion to vote any uninstructed shares. Broker non-votes represent votes not entitled to be cast on this matter and thus will have no effect on the result of the vote.

 

VOTING AND MEETING INFORMATION 

 

In voting on the 2018 Incentive Plan:

 

 

You may vote in favor of or against the proposal, or you may abstain from voting.

 

 

Approval of the 2018 Incentive Plan requires the affirmative vote of a majority of the shares entitled to vote thereon present in person or by proxy at the annual meeting.

 

 

Abstentions will have the same effect as voting against this proposal.

 

 

The approval of this proposal is a non-routine proposal, which means that brokers or other nominees do not have discretion to vote any uninstructed shares. Broker non-votes represent votes not entitled to be cast on this matter and thus will have no effect on the result of the vote.

 

In voting on the ratification of the selection of Grant Thornton as the independent registered public accounting firm:

 

 

You may vote in favor of the proposal, against the proposal, or abstain from voting.

 

 

The ratification of the selection of Grant Thornton as the independent registered public accounting firm is an advisory vote only that is performed as a means of good corporate governance, and as such, there are no minimum stockholder approval requirements. However, in order for ratification to occur, a majority of the votes entitled to be cast for this advisory vote must be received. While this is an advisory vote and it is not bound by it, the Board will seriously consider the outcome.

 

 

Abstentions will have the same effect as voting against the proposal.

 

 

Broker non-votes will have no effect on the voting, although no broker non-votes are expected to exist in connection with this vote as ratification of the independent registered public accounting firm is considered a routine matter under applicable rules.

 

In order to minimize the number of broker non-votes, the Company encourages you to provide voting instructions to the organization that holds your shares by carefully following the instructions provided in the Notice of Internet Availability of Proxy Materials or voting instruction form and by the organization that holds your shares.

 

How will voting on any other business be conducted?

 

We currently do not know of any business to be considered at the Annual Meeting other than the four (4) proposals described in this Proxy Statement. If any other business is properly presented at the Annual Meeting, your signed proxy form gives authority to the named proxies to vote your shares on such matters, including any adjournment or postponement of the meeting, in their discretion.

 

Who will count the vote?

 

Representatives of American Election Services, LLC will tabulate the votes and act as inspectors of election.

 

Where can I find the voting results of the Annual Meeting?

 

The preliminary voting results will be announced at the Annual Meeting. The final voting results will be tallied by the inspector of election and published within four (4) business days following the conclusion of the Annual Meeting via a Form 8-K current event filing.

 

VOTING AND MEETING INFORMATION 

 

PROPOSAL 1

ELECTION OF DIRECTORS

 

Our authorized number of directors is presently fixed at eight (8), divided into three (3) classes, Class I, which contains three (3) members, Class II, which contains two (2) members, and Class III, which contains three (3) members.

 

Our directors are elected to serve three-year terms, so that the term of office of one (1) class of directors expires at each annual meeting.

 

The Board has nominated the following individuals, each of whom is currently a Class III director, for election as directors for terms expiring at our annual meeting in 2021 or until their respective successors have been elected and qualified.

 

 

Ms. Eileen O’Shea Auen

 

 

Ms. Cheryl W. Grisé

 

 

Mr. Randall Mehl

 

If any of these nominees becomes unavailable for election, the accompanying proxy may be voted for a substitute, or in favor of holding a vacancy to be filled by the directors. We have no reason to believe that any nominee will be unavailable. The uncontested director nominees will be elected by a majority of the votes entitled to be cast at the Annual Meeting with respect to each director. For the Company’s purposes, “a majority of the votes cast” with respect to each director means that the number of votes for the director exceed the number of votes against or withheld from the director. You may vote for up to the number of nominees named.

 

Each of the nominees and each continuing director is a seasoned business leader who contributes an array of experience, qualifications, attributes, and skills to the Board. The following pages regarding each nominee and each continuing director provide background information and a summary of some of each person’s key qualifications to serve as a director. Please also see the chart below summarizing how each nominee and each continuing director reflects Board selection criteria adopted by our Governance and Nominating Committee. The age indicated for each individual is as of December 31, 2017.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE DIRECTOR NOMINEES

 

VOTING AND MEETING INFORMATION 

 

Nominees for Election as Directors for a Term Expiring in 2021—Class III Directors

 


EILEEN O’SHEA AUEN

Lead Independent Director

Age 55

Director Since: 2008

Committees: Governance and Nominating (Chair) and Compensation

Other Current Public Directorships: AngioDynamics, Inc.

Current Occupation: CEO, Deep Run Consulting, LLC

 

Career and Education Highlights:

 

 

Chief Executive Officer, Deep Run Consulting, LLC (2016 to present).

 

 

Former Executive Chairman of Helios (the resulting company in the merger of PMSI, Inc. and Progressive Medical, Inc.) (2013 to 2016).

 

 

Director of AngioDynamics, Inc., a medical device manufacturer (NASDAQ: ANGO) (2016 to present).

 

 

o

Compensation Committee Member (2016 to present)

 

 

Chairman and Chief Executive Officer of PMSI, Inc. (2008 to 2013).

 

 

Head of Healthcare Management, Aetna (2007 to 2008).

 

 

Chief Executive Officer, APS Healthcare, Inc. (2005 to 2007).

 

 

Managing Partner, Chapterhouse, LLC (2004 to 2005).

 

 

President, Health Net of the Northeast (2003 to 2004).

 

 

President, Southeast Region, Cigna Healthcare (2000 to 2003).

 

 

B.A., in Economics and Finance, Towson University.

 

 

M.B.A., University of Virginia.

 

SELECTED DIRECTOR QUALIFICATIONS:
     
  Experience as director of another publicly traded company
  Prior experience as a chief executive officer, providing significant management experience in the areas of finance, accounting, business operations, management, risk oversight, executive decision making and corporate governance
  Substantial expertise in healthcare
  Meaningful experience in the services sector, including the sale and integration of a services business
  Experienced ICF board member whose tenure provides a thorough understanding of ICF’s business and corporate governance and its values and culture

 

VOTING AND MEETING INFORMATION 

 


CHERYL W. GRISÉ

Independent Director

Age 65

Director Since: 2012

Committees: Compensation (Chair) and Governance and Nominating

Other Current Public Directorships: MetLife, Inc. and PulteGroup, Inc.

Current Occupation: Retired

 

Career and Education Highlights:

 

 

Executive Vice President, Eversource Energy (f/k/a Northeast Utilities), a public utility holding company (2005 to 2007).

 

 

Various senior management positions at Northeast Utilities, after her employment in 1980, including President-Utility Group, General Counsel and Chief Executive Officer of all Northeast Utilities operating subsidiaries.

 

 

Director, MetLife, Inc. (NYSE: MET), a major multi-line insurance carrier (2004 to present). Lead Director (2010 to 2017).

 

 

o

Audit Committee Member (2007 to present)

 

 

o

Compensation Committee Member (2004 to present)

 

 

o

Executive Committee (2010 to present)

 

 

o

Governance and Corporate Responsibility Committee (2004 to present) Chair (2007 to present)

 

 

Director, PulteGroup, Inc. (f/k/a Pulte Homes, Inc.) (NYSE: PHM), a large commercial home builder (2008 to present).

 

 

o

Compensation and Management Development Committee (2008 to present)

 

 

o

Nominating and Governance Committee (2008 to present), Chair (2012 to present)

 

 

Former Director, Pall Corporation (NYSE: PLL), a manufacturer of fluid purification devices (2007 to 2015).

 

 

Former Director, Dana Holding Corporation (f/k/a Dana Corporation) (NYSE: DAN) (2002 to 2008).

 

 

Trustee Emeritus, University of Connecticut Foundation (2011 to present) and former Board Chair.

 

 

Former Member, Board of Trustees, Kingswood-Oxford School (2005 to 2015).

 

 

B.A. in Education, University of North Carolina.

 

 

J.D., Thomas Jefferson School of Law.

 

 

Executive Management Program, Yale University School of Organization and Management.

 

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Director experience serving on boards of other public companies, including service as a Lead Director and serving as a member of the Audit Committee and chairing Compensation or Governance Committees of those boards

 

Demonstrated business and financial acumen and experience

 

Governance experience as general counsel

 

Extensive management experience in the electric and natural gas utility industry

 

Experienced ICF Board member whose tenure provides a thorough understanding of ICF’s business and corporate governance and its values and culture

 

VOTING AND MEETING INFORMATION 

 


RANDALL MEHL

Independent Director

Age 50

Director Since: 2017

Committees: Compensation

Other Current Public Directorships: Kforce Inc. and Insperity, Inc.

Current Occupation: President, Stewardship Capital Advisors, LLC

 

Career and Education Highlights:

 

 

President, Stewardship Capital Advisors, LLC (2017 to present).

 

 

Partner & Managing Director, Baird Capital Partners (2005 to 2016):

 

 

o

Leader, Business and Technology Services Sector.

 

 

Managing Director, Robert W. Baird & Co. (1996 to 2005):

 

 

o

Senior Equity Research Analyst.

 

 

Director, Kforce Inc., a professional staffing provider (NASDAQ: KFRC), (2017 to present).

 

 

o

Audit Committee Member (2017 to present)

 

 

o

Corporate Governance Committee Member (2017 to present)

 

 

Director, Insperity, Inc., a professional employer organization (NYSE: NSP), (2017 to present).

 

 

o

Finance, Risk Management and Audit Committee Member (2017 to present)

 

 

o

Audit Committee member (2017 to present)

 

 

Director, Stowell, Inc., a provider of in-home care management (2017 to present).

 

 

Former Director, Workforce Insight LLC, a provider of workforce optimization solutions (2014 to 2016).

 

 

Former Director, Myelin Communications, a marketing services business (2010 to 2016).

 

 

Former Director, MedData (now a subsidiary of MEDNAX), a provider of revenue cycle management solutions (2007 to 2014).

 

 

B.S. in Business Administration and Management, Bowling Green State University

 

 

M.B.A., University of Chicago Graduate School of Business

 

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Experience as a director of other publicly traded companies

 

Extensive experience in financial management and risk oversight at global financial services and other public companies

 

Expertise in mergers and acquisitions, treasury, financial planning and analysis, and SEC reporting

 

Demonstrated business and financial acumen and experience

 

VOTING AND MEETING INFORMATION 

 

Directors Whose Term Expires in 2020—Class II Directors

 


SUDHAKAR KESAVAN

Management

Age 63

Director since: 1999

Committees: None

Other Current Public Directorships: ABM Industries, Inc.

Current Occupation: Chairman and Chief Executive Officer, ICF International

 

Career and Education Highlights:

 

 

ICF International:

 

 

o

Chairman and Chief Executive Officer of ICF International and its wholly owned subsidiary, ICF Consulting Group, Inc. (“ICF Consulting”) (1999 to present).

 

 

o

President of ICF Consulting when it was a subsidiary of ICF Kaiser (“Kaiser”) (1997 to 1999). In 1999, ICF Consulting was divested from Kaiser and became a wholly owned subsidiary of the Company through a joint effort of the management of ICF Consulting and CM Equity Partners.

 

 

Director, ABM Industries, Inc., a facility management provider (NYSE: ABM) (2012 to present). Appointed non-Executive Chairman of the Board in March 2017.

 

 

Director Emeritus, Rainforest Alliance, a New York-based non-profit environmental organization (2011 to present).

 

 

Member, Board of Trustees of the Inova Health System, a not-for-profit healthcare system in Northern Virginia (2014 to present).

 

 

Member, Board of Trustees of the Shakespeare Theater Company, Washington, D.C. (2015 to present).

 

 

Chair of the Northern Virginia Technology Council (2013 to 2015).

 

 

Bachelor’s in Technology (chemical engineering) from the Indian Institute of Technology, Kanpur.

 

 

Postgraduate diploma in Management from the Indian Institute of Management, Ahmedabad.

 

 

M.S. Technology and Policy Program at the Massachusetts Institute of Technology.

 

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Chief Executive Officer since the Company was purchased in 1999

 

Chief Executive Officer who has overseen the Company’s very substantial growth while maintaining a stable, professional workforce

 

Experience leading both organic growth and acquisition activities

 

Service as Chairman of the Board of another public company

 

Experienced ICF Board member and executive whose tenure provides a thorough understanding of ICF’s business and corporate governance and its values and culture

 

 

VOTING AND MEETING INFORMATION 

 


MICHAEL J. VAN HANDEL

Independent Director

Age 58

Director Since: 2017

Committees: Audit

Other Current Public Directorships: ManpowerGroup Inc.

Current Occupation:  Retired

 

Career and Education Highlights:

 

 

Director, BMO Financial Corporation, a U.S. bank and financial holding company, and wholly-owned subsidiary of Bank of Montreal, with over $100 billion in assets (2006 to present):

 

 

o

Audit Committee member (2006 to present) Chair (2012 to present)

 

 

o

Nominating & Governance Committee Member (2012 to present) Chair (2017)

 

 

o

Risk Oversight Committee Member (2006 to 2017)

 

 

Director, ManpowerGroup Inc. (NYSE: MAN), a leading global workforce solutions company (2017 to present):

 

 

o

Senior Executive Vice President (2016 to 2017).

 

 

o

Executive Vice President, Chief Financial Officer (1998 to 2016).

 

 

o

Vice President, Chief Accounting Officer and Treasurer (1992 to 1998).

 

 

o

Director of Internal Audit (1989 to 1992).

 

 

Director, Milwaukee Youth Symphony Orchestra (2007 to present).

 

 

Leadership Council Member for Marquette University College of Business Administration (2007 to 2017).

 

 

Former Director of Milwaukee Public Museum (2004 to 2007).

 

 

Former Director of Cellular Dynamics International, leading developer and manufacturer of human cells used in drug discovery, toxicity testing, stem cell banking and cell therapy development (2010 to 2015).

 

 

Audit Manager, Arthur Andersen & Co. (1982 to 1989).

 

 

B.S. in Accounting, Marquette University.

 

 

M.B.A. in Banking and Finance, University of Wisconsin - Madison.

 

  

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Experience as a director of other publicly traded companies

 

Experience as a senior executive of a publicly traded company

 

Extensive experience in financial management and risk oversight at global financial services and other public companies

 

Expertise in mergers and acquisitions, treasury, financial planning and analysis, and SEC reporting

 

Qualifies as an “audit committee financial expert” within the meaning of the SEC regulations

 

VOTING AND MEETING INFORMATION 

 

Directors Whose Term Expires in 2019—Class I Directors

 


DR. SRIKANT M. DATAR

Independent Director

Age 64

Director Since: 2006

Committees: Audit (Chair) and Governance and Nominating

Other Current Public Directorships: Novartis AG; T-Mobile US, Inc.; and Stryker Corporation

Current Occupation: Arthur Lowes Dickinson Professor at the Graduate School of Business Administration at Harvard University

 

Career and Education Highlights:

 

 

Arthur Lowes Dickinson Professor at the Graduate School of Business Administration, Harvard University (1996 to present).

 

 

Faculty Chair, Harvard Innovation Labs (2015 to present).

 

 

Chartered accountant.

 

 

Professor, Stanford University (1989 to 1996).

 

 

Professor, Carnegie Mellon University (1983 to 1989).

 

 

Director, Novartis AG, a holding company organized under Swiss law and publicly traded on the SWX Swiss Stock Exchange and the NYSE (NYSE: NVS), in the form of American Depositary Shares (2003 to present).

 

 

o

Audit and Compliance Committee Member (2005 to present), Chair (2009 to 2016)

 

 

o

Compensation Committee Member (2008 to present)

 

 

o

Risk Committee (2011 to present) Chair (2016 to present)

 

 

Director, Stryker Corporation, a medical technologies firm (NYSE: SYK) (2009 to present).

 

 

o

Compensation Committee Member (2016 to present)

 

 

o

Governance and Nominating Committee Member (2016 to present)

 

 

Director, T-Mobile US, Inc., a U.S. based wireless network operator (NYSE: TMUS) (2013 to present).

 

 

o

Audit Committee Member and Chair (2013 to present)

 

 

Former Board member, HCL Technologies Limited, a public company under Indian law with shares publicly traded on the Mumbai Stock Exchange (2012 to 2014).

 

 

Former Director, KPIT Technologies (2007 to 2012).

 

 

Published papers in several leading academic journals and is the co-author of “Rethinking the MBA: Business Education at a Crossroads.”

 

 

Consulted with, and conducted field-based research with, many corporations and has presented his research to managers and executives in North and South America, Europe, Asia, Australia and Africa.

 

 

Received gold medals upon his graduation from the Indian Institute of Management, Ahmedabad, and the Institute of Cost and Works Accountants of India.

 

 

Masters in Statistics and Economics, Stanford University.

 

 

Ph.D. in Business, Stanford University.

 

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Service on boards of other international businesses, including as director of a leading global pharmaceutical company, director of a leading global medical technology company and director of a leading U.S. telecommunications company

 

Substantial teaching and practical experience in strategy, design thinking and innovation, data analytics, implementation, accounting and related issues, as a tenured professor of a leading U.S. university

 

Both academic and broad-based experience in strategy, finance, management, and accounting

 

Experienced ICF Board member whose tenure provides a thorough understanding of ICF’s business and corporate governance and its values and culture

 

Qualifies as an “audit committee financial expert” within the meaning of the SEC regulations

 

VOTING AND MEETING INFORMATION 

 


SANJAY GUPTA

Independent Director

Age 49

Director Since: 2015

Committees: Audit

Other Current Public Directorships: None

Current Occupation: Director

Career and Education Highlights:

 

 

Executive Vice President of Marketing, Innovation and Corporate Relations for Allstate (2012 to 2017).

 

 

Chief Marketing Officer, Ally Financial Inc. (formerly GMAC, Inc.) (2008 to 2012).

 

 

Bank of America Corp.:

 

 

o

Senior Vice President, Global Consumer and Small Business Marketing Executive (2007 to 2008).

 

 

o

Senior Vice President, e-Commerce and ATM Executive (2003 to 2007).

 

 

o

Senior Vice President, e-Commerce Marketing (2001 to 2003).

 

 

Chief Marketing Officer, Sciquest.com, Inc. (1999 to 2001).

 

 

Federal Express, serving in various marketing positions (1992-1999).

 

 

Director, Mobile Marketing Association, a nonprofit association (2015-present).

 

 

o

Global Chair (2017 to present)

 

 

Former Director, Association of National Advertisers, a nonprofit association (2015-2017).

 

 

Former Director, Prana Technology/docBeat (healthcare messaging system) (2012 to 2014).

 

 

Former Director, Charlotte Ballet (2010 to 2012).

 

 

B.A., in Electronic Engineering, University of Mumbai.

 

 

M.B.A., University of Texas.

 

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Substantial expertise in Marketing, including Digital Marketing

 

Substantial experience in the engagement of customers, consumers, employees, agency owners and key stakeholders through a variety of media and events

 

Demonstrated business and financial acumen and experience

 

VOTING AND MEETING INFORMATION 

 


PETER M. SCHULTE

Independent Director

Age 60

Director Since: 1999

Committees: Audit and Compensation

Other Current Public Directorships: None

Current Occupation: Managing Partner and Founder, CM Equity Partners

 

Career and Education Highlights:

 

 

Managing Partner and Founder, CM Equity Partners, a private equity firm which invests in established middle market companies and manages private equity funds and investments through its management company, CM Equity Management, L.P. (1995 to present).

 

 

President, Secretary and Chief Financial Officer, Federal Services Acquisition Corporation, a public special purpose acquisition company, and predecessor of ATS Corporation (“ATS”), a former publicly traded information technology services firm serving U.S. federal, state, and local government agencies (2005 to 2007). ATS was subsequently acquired by Salient Federal Solutions, Inc., a Delaware corporation, effective March 30, 2012:

 

 

o

Board member, ATS (2005 to 2012).

 

 

Director of several private companies, including: The Level Playing Field Corporation; Systems Planning and Analysis, Inc.; Preferred Systems Solutions, Inc.; Citizant, Inc.; and Xebec Global Corporation.

 

 

A.B. in Government, Harvard College.

 

 

Masters in Public and Private Management, Yale School of Management.

 

 

SELECTED DIRECTOR QUALIFICATIONS:
 
 

Managing partner of the private equity firm that joined with management to purchase the Company in 1999

 

Service as the lead person responsible for the acquisition and oversight of various companies in both the public and private sector, including serving in the position of Chairman

 

Substantial experience in leading and financing acquisitions in, and experience on Boards and Audit/Compensation Committees of other companies within, the government services sector

 

Service on an Informational Roundtable Group for the Department of Defense

 

Experienced ICF Board member whose tenure provides a thorough understanding of ICF’s business and corporate governance and its values and culture

 

VOTING AND MEETING INFORMATION 

 

The Governance and Nominating Committee maintains, and periodically updates, non-exclusive “Board membership criteria” to assist the committee in evaluating candidates for the Board. These criteria, and an indication of which of the criteria are particularly satisfied by each nominee and continuing director, are summarized below:

 

Guideline Criteria

 

Eileen O’Shea

Auen

Srikant M.

Datar

Cheryl W.

Grisé

Sanjay

Gupta

Sudhakar

Kesavan

Randall

Mehl

Peter M.

Schulte

Michael J.

Van Handel

Reputation for integrity, honesty and adherence to high ethical standards

X

X

X

X

X

 

X

X

X

Demonstrated business and financial acumen and experience

X

X

X

X

X

 

X

X

X

Willingness and ability to contribute positively to the collegial decision-making process of the Board

X

X

X

X

X

X

X

X

Prominence within professional discipline and/or industry relevant to the Company’s strategy

X

X

X

X

X

X

X

X

Current or past experience as a board member of another mid-cap or large public company

X

X

X

 

X

X

X

X

Commitment to attend and participate in Board and Board Committee meetings regularly

X

X

X

X

X

 

X

X

X

No conflict of interest that would impair ability to represent the interests of all Company stockholders and fulfill responsibilities of a director

X

X

X

X

X

X

X

X

Contribute to Board diversity (in terms of race, gender, national origin, etc.)

X

X

X

X

X

     

Strengths and experience that contribute to ability to serve effectively on one (1) or more Board Committees (audit, compensation, governance)

X

X

X

X

X

X

X

X

Significant experience in mergers and acquisitions and/or integration

X

X

X

X

X

 

X

X

X

Familiarity with capital markets, financing transaction strategy, and investor relations

X

X

X

X

X

 

X

X

X

Experience identifying, evaluating and managing corporate risk

X

X

X

X

X

 

X

X

X

 

VOTING AND MEETING INFORMATION 

 

PROPOSAL 2

ADVISORY SAY ON PAY VOTE REGARDING ICF’S

OVERALL PAY-FOR-PERFORMANCE NAMED EXECUTIVE OFFICER COMPENSATION PROGRAM

 

In June of 2017, the Board approved a resolution providing that the Company would hold an annual stockholder advisory vote on executive compensation, as advised by the Company’s stockholders at the 2017 Annual Meeting. Pursuant to that resolution, this proposal, commonly known as a “Say on Pay” proposal gives you as a stockholder the opportunity to endorse or not endorse the Company’s named executive officer (the “NEOs”) compensation program through the following resolution:

 

“Resolved, that the stockholders approve ICF International’s overall pay-for-performance executive compensation program, as described in the Compensation Discussion and Analysis, the compensation tables and the related narratives and other materials in the Proxy Statement.”

 

Approval of the Say on Pay proposal requires the affirmative vote of a majority of the votes entitled to vote thereon present in person or by proxy at the Annual Meeting.

 

The Compensation Committee of the Board (the “Compensation Committee”) and the full Board believe that the Company’s executive compensation program, as described in the Compensation Discussion and Analysis and other sections noted in the resolution set forth above, reflects a pay-for-performance culture at the Company that is rooted in our values. The Compensation Committee and the Board believe that the executive compensation program is rational and effective in that it aligns the interests of the named executive officers with both the short-term and long-term interests of stockholders, while reducing incentives for unnecessary and excessive risk taking.

 

In 2015, the Compensation Committee adopted a performance-based equity program (the “Performance Program”) that provides for the award of performance-based shares (“PSAs”) from time to time pursuant to the 2010 Omnibus Incentive Plan, as amended (the “2010 Incentive Plan”). The Performance Program is designed to provide an incentive compensation opportunity that takes into account both the Company’s internal financial objectives and external market performance. The first PSA awards made under the Performance Program were granted to the Company’s NEOs in 2015, and vested in December 2017. The goal achievement was certified by the Compensation Committee and the vested awards were released in January 2018. The Compensation Committee continued to grant performance-based equity awards to the NEOs in 2016, 2017 and 2018.

 

In making a decision on the Say on Pay proposal the Board asks that stockholders consider the following:

 

 

ICF’s NEO compensation is competitive and in line with its market peers.

 

 

ICF’s executive compensation program is incentive-based and reflects a pay-for-performance culture.

 

 

ICF’s executive compensation program relies heavily on stock-based awards vesting over a period of time.

 

 

PSAs vest over three (3) years, contingent on achievement of certain performance thresholds.

 

 

Restricted stock units (“RSUs”) vest over a period of three (3) years with a vesting term of 25% vesting on each of the first anniversary and second anniversary, and 50% vesting on the third anniversary.

 

 

The Performance Program further emphasizes ICF’s commitment to a pay-for-performance culture that links compensation to positive results.

 

 

ICF offers only limited perquisites.

 

In addition, at the Company’s 2017 Annual Meeting, approximately 97% of the votes cast on the Say on Pay proposal were voted in favor of the Company’s compensation program. The Compensation Committee and the Board believe this affirms the stockholders’ strong support of the Company’s approach to named executive compensation.

 

In accordance with applicable law, this vote is “advisory,” meaning it will serve as a recommendation to the Board, but will not be binding. The Compensation Committee will seriously consider the outcome of this vote when determining future compensation arrangements for named executive officers.

 

It is expected that the next Say-on-Pay vote will occur at the 2019 annual meeting of stockholders.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE ADVISORY VOTE REGARDING ICF

INTERNATIONAL’S OVERALL PAY-FOR-PERFORMANCE NAMED EXECUTIVE OFFICER COMPENSATION PROGRAM..

 

VOTING AND MEETING INFORMATION 

 

PROPOSAL 3

APPROVAL OF THE ICF INTERNATIONAL, INC. 2018 OMNIBUS INCENTIVE PLAN

 

 

Background and Purpose of the Proposal

 

The Company currently utilizes its 2010 Incentive Plan for the purpose of issuing certain incentive awards to key employees. The 2010 Incentive Plan is set to expire in 2020, and in order to implement the changes set forth below, on April 4, 2018, the Board adopted a new 2018 Omnibus Incentive Plan (the “2018 Incentive Plan”) that will replace the 2010 incentive Plan. The Board’s action is subject to the approval of stockholders and at the 2018 annual meeting stockholders will be asked to approve the 2018 Incentive Plan.

 

The 2018 Incentive Plan is substantially similar to the 2010 Incentive Plan. The primary changes to the 2010 Incentive Plan for the new 2018 Incentive Plan are:

 

 

i.

set the number of shares available for issuance under the 2018 Incentive Plan at 1,185,000. After adoption of the 2018 Incentive Plan, no further awards will be issued under the 2010 Incentive Plan;  

 

 

ii.

provide that equity awards to non-employee members of the Board will be issued under the 2018 Incentive Plan, rather than outside the 2018 Incentive Plan as has been our practice, and establish a limitation on awards that may be granted during any year to non-employee members of the Board under the 2018 Incentive Plan;

 

 

iii.

incorporate certain other changes that we believe are desirable, including changes resulting from the adoption in late 2017 of the Tax Cuts and Jobs Act (the “TCJA”); and

 

 

iv.

dividends will only be paid on issued shares, and not on unvested equity grants.

 

 

The full text of the 2018 Incentive Plan is attached as Exhibit A to this Proxy Statement, and the following description is qualified in its entirety by reference to that exhibit.

 

With respect to (i) above, it is the Board’s strong belief that it is necessary for the Company to have sufficient shares available to allow the Company to grant interests in the Company’s common stock in the form of stock options (both incentive stock options (“ISOs”) and nonqualified stock options (“NQSOs”)), stock appreciation rights (“SARs”), restricted stock, restricted stock units (“RSUs”), cash settled restricted stock units (“CSRSUs”), performance shares (“PSAs”), performance units, cash-based awards, and other stock-based awards permitted under the 2018 Incentive Plan in order to attract and retain qualified non-employee directors and officers and other key employees. The number of shares and share equivalents available under the 2018 Incentive Plan will help the Company achieve this goal.

 

With respect to (ii) above, the Board believes that it is a preferred governance practice to make grants to non-employee directors under a plan rather than outside a plan. Among other things, this approach gives stockholders greater input as to the framework for director compensation. Consideration by stockholders of the 2018 Incentive Plan, which includes provision for, and a limitation on, awards to non-employee directors, gives stockholders an opportunity to either approve or disapprove of the proposed limit on director compensation, which the Board, its consultants and others believe is meaningful. Under Section 4.2 of the 2018 Incentive Plan, the average of the aggregate total compensation (including equity) paid to non-employee directors for any fiscal year shall not exceed $400,000. Current director compensation is well below this limit. We also refer stockholders to the section of this Proxy Statement entitled “Director Compensation”, which provides further details regarding our director compensation program.

 

With respect to (iii) above, the primary change reflected in the 2018 Incentive Plan in response to the TCJA relates to the TCJA’s elimination of the exception to the $1 million tax deductibility limit for “performance-based compensation” under Section 162(m) of the Internal Revenue Code (the “Code”). Provisions of the 2010 Incentive Plan that are specifically related to former Section 162(m) are not included in the 2018 Incentive Plan. However, the Board anticipates that some awards to executives under the 2018 Incentive Plan will be based on performance goals, and the 2018 Incentive Plan allows awards with such features.

 

Also as a result of the TCJA, the annual limits previously required by the Code as to various forms of awards that may be granted have been eliminated from the 2018 Incentive Plan. However, there is a limit on the value of annual awards to non-employee directors.

 

VOTING AND MEETING INFORMATION 

 

Stockholder Friendly Features of the 2018 Incentive Plan

 

The 2018 Incentive Plan authorizes the granting of equity-based compensation in the form of stock options (both ISOs and NQSOs), SARs, restricted stock, RSUs, CSRSUs, PSAs, performance units, cash-based awards, and other stock-based awards. The 2018 Incentive Plan and our other related governance practices and policies have a number of features that are designed to protect stockholder interests. Some of these features are set forth below and are described more fully below under the heading “Summary of the 2018 Incentive Plan.” The description of these features and the summary provided below do not provide a complete description of all the provisions of the 2018 Incentive Plan. The full text of the proposed 2018 Incentive Plan is attached as Exhibit A to this Proxy Statement, and the following description is qualified in its entirety by reference to that exhibit.

 

 

Awards subject to Compensation Recovery Policy. Awards under the 2018 Incentive Plan will be subject to recoupment under certain circumstances.

 

 

Double-trigger” change of control vesting. Two (2) events are needed for outstanding equity awards to vest on an accelerated basis: (i) consummation of a change of control event; and (ii) termination of employment/non-employee director service, other than for cause, within two (2) years following the change of control (except for pre-existing employment or severance agreements).

 

 

Administered by an independent committee. The 2018 Incentive Plan will be administered by the Compensation Committee, which is made up entirely of independent directors.

 

 

Minimum Vesting. Equity awards are subject to a minimum of one (1) year vesting/restriction/performance period, with the exception that up to 5% of the available shares (including any new additional shares) may be subject to award without such minimum vesting/restriction/performance period. In practice, under the 2010 Incentive Plan, RSUs granted to employees have vested over four (4) years until 2017 when RSUs moved to a three (3) year vesting schedule. All PSAs have had a three (3) year performance period.

 

 
 

No repricing or cash-buyout of stock options or SARs. The 2018 Incentive Plan prohibits the direct or indirect repricing of stock options or SARs without stockholder approval. The Plan permits the Compensation Committee to authorize replacement equity grants in certain situations following a change of control. No cash buybacks of underwater stock options are permitted without stockholder approval.

 

 

No discounted stock options or SARs. All stock options and SARs must have an exercise price or base price equal to or greater than the fair market value of the underlying common stock on the date of grant.

 

 

No “Evergreen” Provision. The 2018 Incentive Plan does not contain an “evergreen” provision. The number of shares available is capped and there is no formula providing for any automatic increase in the number of shares available.

 

 

No liberal acceleration of outstanding equity awards. The Compensation Committee may only accelerate vesting or exercisability of an award upon death or disability of a participant or after a qualified form of termination following a Change of Control.

 

 

No tax gross-ups. Awards will not contain tax gross-up provisions per the terms of the 2018 Incentive Plan.

 

 

No dividends on unvested equity awards. The 2018 Incentive Plan prohibits dividends on unvested equity awards.

 

The Stockholder Friendly Features are augmented by the following:

 

 

Hedging and Pledging Policies. Our insider trading guidelines prohibit our directors, executive officers and employees from selling our common stock “short,” and entering into any puts or calls relating to our common stock or hedging. Stock grant agreements prohibit the pledging or assignment of stock grants.

 

 

Director and Executive Stock Ownership Policy. Directors and designated executives of the Company are subject to minimum stock ownership levels of Company common stock. Under the policy, the executive may not sell, transfer or dispose of shares of common stock if he or she does not meet the requisite stock ownership policy.

 

 

Strong Stockholder Support for Executive Compensation Program. At last year’s annual meeting of stockholders, approximately 97% of the votes cast by our stockholders supported our executive compensation program.

 

VOTING AND MEETING INFORMATION 

 

Historical Burn Rate 

 

The burn rate refers to how fast a company uses the supply of shares authorized for issuance under its stock plan. Although long-term incentive awards are a key element of our executive compensation program, we are mindful when making long-term incentive awards to ensure that our burn rate does not have a materially negative impact to our stockholders. Our historical three (3) year burn rate has been trending downwards since 2015, as noted below. In addition, certain factors accentuate the burn rate. For example, we have increased our share repurchase activity in the past three (3) years. While share repurchases by the Company benefit stockholders, a lower number of common shares outstanding generates a higher burn rate for a company. Adjusting for repurchase activity, cancellations and forfeitures, ICF’s annual burn rate is significantly lower, as shown below.

 

  

2015

2016

2017

Awards Issued under 2010 Incentive Plan

  

  

  

All Stock Options Granted

             —

             —

             —

All Restricted Stock Units (RSUs) & Awards

     250,159

     240,868

       94,227

Weighted Common Shares Outstanding

19,334,629

18,988,598

18,766,371

Annual Burn Rate*

              1.29%

              1.27%

               1.03%

Three-year Average Burn Rate

(2015 – 2017)            

 

  

              1.20%

Considerations

  

  

  

       

Cancellations & Forfeitures

     (104,243)

         (74,412)

         (58,664)

Share Repurchases

    638,654

       317,493

       684,335

  

  

  

  

Alternate Burn Rate Calculations*

     

Burn Rate adding back Share Repurchases

              1.25%

               1.25%

              1.00%

Three-year Average Burn Rate

(2015 – 2017) 

   

              1.17%

Burn Rate excluding Cancellations & Forfeitures and adding back Share Repurchases

              0.73%

              0.86%

              0.70%

Three-year Average Burn Rate

(2015 – 2017) 

   

              0.76%

 

Share Repurchase

 

ICF has increased its share buyback activity in the past five (5) years. A primary purpose of the share buybacks is to mitigate the potential dilutive impact of employee stock-based compensation and to return wealth to stockholders.

 

Year

Number of Shares

Repurchased

Dollar Value of Shares

Repurchased

% of Weighted Common

Shares Outstanding

2017

684,335

$ 30,710,754

3.65%

2016

317,493

$ 11,924,040

1.67%

2015

638,654

$ 22,339,165

3.30%

2014

665,868

$ 24,400,502

3.40%

2013

160,043

$ 5,355,272

0.81%

 

Dilution

 

Upon the approval of the 2018 Incentive Plan, the overall dilution of our equity awards would be approximately 10.1%, based on 18,776,186 shares outstanding (as of March 21, 2018).

 

As of March 21, 2018

Total Shares

Basic Dilution (2)

Fully Diluted

Dilution (3)

Basic Dilution

(adding back share

repurchase) (4)

Stock Options Issued and Outstanding

334,535

1.8%

1.8%

1.5%

RSUs and Performance Shares (at Target) Outstanding

587,749

3.1%

3.0%

2.7%

Total Stock Awards Outstanding

922,284

4.9%

4.7%

4.2%

New Additional Shares (1)

1,185,000

6.3%

5.9%

5.5%

Total Stock Awards Outstanding Including New Shares

2,107,284

11.2%

10.1%

9.7%

__________________

 (1)

Subject to approval.

 (2)

Denominator is equal to the shares outstanding on March 21, 2018 of 18,776,186.

 (3)

Denominator is equal to the sum of the numerator and shares outstanding on March 21, 2018 of 18,776,186.

 (4)

Denominator is equal to the sum of total shares repurchased in 2015, 2016 and 2017 and shares outstanding on March 21, 2018 of 18,776,186.

 

VOTING AND MEETING INFORMATION 

 

Approval of the 2018 Incentive Plan requires the affirmative vote of a majority of the shares of the Company’s outstanding common stock present, in person or by proxy, and entitled to vote at the annual meeting. If approved by the stockholders, the 2018 Incentive Plan will become effective upon such approval. If the 2018 Incentive Plan is not approved by stockholders: (i) the 2010 Incentive Plan will continue in effect under its current terms; (ii) a new plan will need to be voted upon at the 2019 Annual Meeting of Stockholders or risk the Company having no stockholder approved equity compensation plan; and (iii) the Company may not have sufficient shares available to issue further grants of the Company’s common stock in future years in accordance with current practice.

 

 

 

THE BOARD OF DIRECTORS RECOMMENDS A VOTE FOR THE APPROVAL OF THE ICF INTERNATIONAL INC. 2018

OMNIBUS INCENTIVE PLAN UNDER PROPOSAL 3.

 

 

SUMMARY OF THE 2018 INCENTIVE PLAN

 

Administration and Duration. The 2018 Incentive Plan is administered by the Compensation Committee. The Compensation Committee will have the authority to interpret the 2018 Incentive Plan, and to make any other determinations it believes necessary or advisable for the administration of the 2018 Incentive Plan. Subject to the terms of the 2018 Incentive Plan, the Compensation Committee may determine, among other items: the selection of those to be granted awards under the 2018 Incentive Plan out of those eligible for participation; the level of participation of each participant; when and how each award under the 2018 Incentive Plan shall be granted; and what type or combination of types of awards shall be granted. Each member of the Compensation Committee must be a “non-employee director” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and meet the requirements of Nasdaq Rule 5605(d)(2)(A). Currently, the Compensation Committee is comprised of four (4) independent directors who fit each of these definitions. The Compensation Committee may delegate any or all of its authority to administer the 2018 Incentive Plan, as it deems appropriate, to one or more of its members; to one (1) or more officers of the Company; or, to one (1) or more agents or advisors. By resolution, the Compensation Committee may authorize one (1) or more officers of the Company to (i) designate employees to be award recipients under the 2018 Incentive Plan; and/or (ii) determine the size of any such awards; provided, however, that (x) the Compensation Committee shall not delegate such responsibilities to any officer for awards granted to an employee who is a NEO; (y) the resolution sets forth the total number of shares such officer may grant in awards; and (z) the officer shall periodically report to the Compensation Committee regarding the nature and scope of the awards granted pursuant to such delegated authority.

 

The 2018 Incentive Plan will remain in effect, subject to the right of the Board of Directors to amend or terminate the 2018 Incentive Plan at any time, until all shares subject to it shall have been purchased or acquired according to the 2018 Incentive Plan’s provisions. However, in no event may an award be granted under the 2018 Incentive Plan on or after ten (10) years from the date of the stockholder approval of the 2018 Incentive Plan.

 

Eligibility. All officers and all employees of the Company determined by the Committee to be key employees (including employees who are members of the Board and employees who are members of senior management of entities acquired by the Company) and its affiliates, as well as the Company’s non-employee directors, will be eligible to participate in the 2018 Incentive Plan. From time to time, the Compensation Committee will determine who will be granted awards and the number of shares granted, and all such awards are at the sole discretion of the Compensation Committee. The Compensation Committee may also delegate authority to grant awards, subject to the limitations described above. Any employee determined to be a key employee may be a participant in the plan. That determination is made by the Committee upon the recommendations of senior management. Such recommendations take into account factors such as performance (currently and over time), long-term potential, contributions to the Company’s success, effort level, and desire to retain the employee, as well as other relevant factors determined on a case-by-case basis.

 

As of December 31, 2017, the Company had 754 officers and employees (including one (1) employee Director) and seven (7) non-employee directors who could be eligible to participate in the 2018 Incentive Plan. However, nearly all participants are employees at the Director and Senior Director level or above, with the higher levels including Vice President, Senior Vice President, and Executive Vice President (including CEO and COO). As of December 31, 2017, the Company had 507, 169, 67, and 11 employees, respectively, at those levels. The number of employees who had received equity awards under the 2010 Incentive Plan through the same date was 1,085, and the number of employees holding outstanding equity awards was 668.

 

Shares and Amounts Available for Awards. The aggregate number of shares of common stock that may be issued under all stock-based awards made under the 2018 Incentive Plan will be 1,185,000. Shares that are related to awards under the 2018 Incentive Plan that are forfeited or expire unexercised shall be added back and shall be available again under the 2018 Incentive Plan.

 

VOTING AND MEETING INFORMATION 

 

Non-Employee Director Awards. Annual awards to non-employee directors are limited. The average of the aggregate total compensation paid to non-employee directors in any year cannot exceed $400,000.

 

Types of Awards

 

Stock Awards. The 2018 Incentive Plan provides for granting restricted stock, RSUs, PSAs, performance units, and other stock-based awards. A performance award may include any of the performance measures, or a combination thereof, set forth in the 2018 Incentive Plan attached as Exhibit A to this Proxy Statement. Performance goals may be based on the achievement of specified levels of Company performance (or performance of an applicable subsidiary, affiliate or unit of the Company, or any combination thereof) under one (1) or more of the performance measures set forth in the 2018 Incentive Plan. Performance goals may be defined in absolute terms or measured relative to the performance of companies or against a predefined index that the Compensation Committee deems appropriate, or, if utilizing the performance measure of share price, a comparison to various stock market indices. Performance goals may be adjusted for material business events. The performance goals will be set by the Compensation Committee and may include:

 

 

 ● 

Net earnings or net income (before or after taxes);

 

 ●

Earnings per share;

 

 ●

Gross or net sales or revenue growth;

 

 ●

Product invoice;

 

 ●

Net operating profit;

 

 ●

Return measures (including, but not limited to, return on assets, capital, invested capital, equity, sales, or revenue);

 

 ●

Cash flow (including, but not limited to, operating cash flow, free cash flow, cash flow return on equity, and cash flow return on investment);

 

 ●

Earnings before or after taxes, interest, depreciation, and/or amortization;

 

 ●

Gross or operating margins;

 

 ●

Productivity ratios;

 

 ●

Share price (including, but not limited to, growth measures and total stockholder return);

 

 ●

Expense targets;

 

 ●

Cost reduction or savings;

 

 ●

Performance against operating budget goals;

 

 ●

Margins;

 

 ●

Operating efficiency;

 

 ●

Funds from operations;

 

 ●

Market share;

 

 ●

Customer satisfaction;

 

 ●

Working capital targets;

 

 ●

Gross Revenue;

 

 ●

Revenue after subcontractor costs;

 

 ●

Service Sales;

 

 ●

Contract Backlog;

 

 ●

Business Pipeline;

 

 ●

Economic value added or EVA (net operating profit after tax minus the product of capital multiplied by the cost of capital);

 

 ●

Debt levels;

 

 ●

Days Sales Outstanding; and

 

 ●

Contract Awards/Book-to-Bill.

 

Stock Options. Stock options granted under the 2018 Incentive Plan may be either NQSOs or ISOs qualifying under Section 422 of the Code. Under the Code, the aggregate fair market value (determined at the grant date) of the stock with respect to which ISOs are first exercisable by any individual during any calendar year shall not exceed $100,000. Stock options in excess of this limit are treated as NQSOs. The stock option price may not be less than the fair market value of the stock on the date the stock option is granted. The stock option price is payable in cash or, if the grant provides, in common stock or other equity instruments. The Compensation Committee shall determine the expiration of stock options, although no stock option may be exercisable later than the tenth anniversary date of the grant. The Compensation Committee determines the terms of each stock option award at the time of grant.

 

Stock Appreciation Rights. SARs may, but need not, be granted in conjunction with options or other equity awards. The Compensation Committee determines the terms of each SAR at the time of the grant. Any freestanding SAR (that is, a SAR not granted in conjunction with another equity award) may not be granted at less than the fair market value of the stock on the date the SAR is granted and cannot have a term longer than ten (10) years. Distributions to the recipient may be made in common stock, in cash, or in a combination of both as determined by the Compensation Committee at the time of grant.

 

Cash-Based and Other Stock-Based Awards. Cash-based and other stock-based awards granted under the 2018 Incentive Plan entitle each participant to receive a specified payment amount or payment range, in the form of cash or shares of common stock or other equity awards, as determined at the time of the award, upon the attainment of specified performance goals during a performance period, which may be one (1) or more years, as determined by the Compensation Committee at the time of the award.

 

VOTING AND MEETING INFORMATION 

 

Amendment and Revocation. The Board may terminate the 2018 Incentive Plan or an outstanding award agreement at any time, and the Compensation Committee may amend the 2018 Incentive Plan or an outstanding award agreement at any time. However, an amendment will be contingent upon stockholder approval to the extent required by law or the rules of any stock exchange on which the Company’s stock is traded. The 2018 Incentive Plan prohibits the terms of outstanding awards from being amended to reduce the exercise price of outstanding options or SARs and prohibits, without stockholder approval, the cancellation of outstanding options or SARs in exchange for cash, other awards, or new options or SARs with an exercise price that is less than the exercise price of the original options or SARs.

 

Certain Adjustments. In the event of a corporate event or transaction, the Compensation Committee, in its sole discretion and in order to prevent unintended dilution or enlargement of a participant’s rights under the 2018 Incentive Plan, shall substitute or adjust, subject to the Compensation’s Committee’s sole discretion in determining the methodology and manner of such substitution or adjustment, among other things:

 

 

 ●

the number and kind of shares that may be issued under the 2018 Incentive Plan or under particular forms of awards;

 

 ●

the number and kind of shares subject to outstanding awards;

 

 ●

the option or grant price applicable to outstanding awards; and

 

 ●

any other value determinations applicable to outstanding awards.

 

A corporate event or transaction (including, but not limited to, a change in the shares or capitalization of the Company) encompasses a merger, consolidation, reorganization, recapitalization, separation, partial or complete liquidation, stock dividend, stock split, reverse stock split, split up, spin-off, or other distribution of stock or property of the Company, combination of shares, exchange of shares, dividend in-kind, or other like change in capital structure or distribution (other than normal cash dividends) to stockholders of the Company, or any similar corporate event or transaction.

 

Transferability. Unless otherwise determined by the Compensation Committee, awards granted under the 2018 Incentive Plan may not be transferred except by will or the laws of descent and distribution or, subject to the consent of the Compensation Committee, pursuant to a domestic relations order entered into by a court of competent jurisdiction. During an employee’s lifetime, any options or awards may be exercised only by the employee. Notwithstanding the above, no award may be transferred for value without stockholder approval.

 

Other Provisions. Except for 5% of the shares available for equity awards, there is a one (1) year minimum vesting/restriction/performance period requirement for equity awards. In addition, upon a change of control of the Company, equity awards will not have accelerated vesting unless the employee or non-employee director has a termination of employment or board service, without cause, within twenty-four (24) months following the change of control of the Company.

 

 U.S. Tax Treatment of Options and Awards

 

Incentive Stock Options. An ISO results in no taxable income to the optionee or deduction to the Company at the time it is granted or exercised. However, the excess of the fair market value of the shares acquired over the option price is an item of adjustment in computing the alternative minimum taxable income of the optionee. If the optionee holds the stock received as a result of an exercise of an ISO for at least two (2) years from the date of the grant and one (1) year from the date of exercise, then the gain realized on disposition of the stock is treated as a long-term capital gain. If the shares are disposed of prior to the end of this period, however (i.e., a “disqualifying disposition”), then the optionee will include in income, as compensation for the year of the disposition, an amount equal to the excess, if any, of the fair market value of the shares upon exercise of the option over the option price (or, if less, the excess of the amount realized upon disposition over the option price). In that event, the excess, if any, of the sale price over the fair market value on the date of exercise will be a short-term capital gain. In addition, the Company will be entitled to a deduction, in the year of such a disposition, for the amount includible in the optionee’s income as compensation. The optionee’s basis in the shares acquired upon exercise of an ISO is equal to the option price paid, plus any amount includible in his or her income as a result of a disqualifying disposition.

 

Nonqualified Stock Options. An NQSO results in no taxable income to the optionee or deduction to the Company at the time it is granted. An optionee exercising such an option will, at that time, realize compensation income taxable at ordinary income tax rates in the amount of the difference between the then market value of the shares and the option price. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to the Company in the year of exercise in an amount equal to the taxable compensation realized by the optionee.

 

The optionee’s basis in such shares is equal to the sum of the option price plus the amount includible in his or her income as compensation upon exercise. Any gain (or loss) upon subsequent disposition of the shares will be a long-term or short-term gain (or loss), depending upon the holding period of the shares.

 

If an NQSO is exercised by tendering previously owned shares of the Company’s common stock in payment of the option price, then, instead of the treatment described above, the following will apply: a number of new shares equal to the number of previously owned shares tendered will be considered to have been received in a tax-free exchange; the optionee’s basis and holding period for such number of new shares will be equal to the basis and holding period of the previously owned shares exchanged. The optionee will have compensation income taxable at ordinary income tax rates equal to the fair market value on the date of exercise of the number of new shares received in excess of such number of exchanged shares; the optionee’s basis in such excess shares will be equal to the amount of such compensation income; and the holding period in such shares will begin on the date of exercise.

 

VOTING AND MEETING INFORMATION 

 

Stock Appreciation Rights. Generally, the recipient of an SAR will not recognize taxable income at the time the SAR is granted. Upon the exercise of an SAR, if an employee receives the appreciation inherent in the SAR in cash, the cash will be taxed as compensation income to the employee at the time it is received. If an employee receives the appreciation inherent in the SAR in stock, the fair market value of the stock will be taxed as compensation income to the employee at the time such stock is received.

 

In general, there will be no federal income tax deduction allowed to the Company upon the grant or termination of SARs. However, upon the exercise of an SAR, the Company will be entitled to a deduction equal to the amount of ordinary income the recipient is required to recognize as a result of the exercise.

 

Restricted Stock/RSU Awards/Performance Awards. No income will be recognized at the time of grant by the recipient of a restricted stock, RSU, or PSA if such award is subject to a substantial risk of forfeiture. Generally, at the time the substantial risk of forfeiture terminates with respect to a stock award, the then fair market value of the stock will constitute ordinary income to the employee. Subject to the applicable provisions of the Code, a deduction for federal income tax purposes will be allowable to the Company in an amount equal to the compensation realized by the employee.

 

Tax Treatment of Awards to Non-Employee Directors and to Employees Outside of the United States

 

The grant and exercise of options and awards under the 2018 Incentive Plan to non-employee directors and to employees outside of the United States may be taxed on a different basis.

 

Interests of Certain Persons in Certain Proposals

 

Our executive officers and directors have interests in matters that will be acted upon at the annual meeting that may be different from the interests of our stockholders generally. At the annual meeting, stockholders will be asked to vote on a proposal to approve the 2018 Incentive Plan. If the proposal is adopted, each of our executive officers and directors will be eligible to receive a portion of their compensation for services in the form of stock option grants, awards of restricted stock or other equity or equity-based awards. The Board was aware of these interests and took them into account when determining whether to recommend that the stockholders vote in favor of the proposal to approve the 2018 Incentive Plan. Ultimately, the Board determined that the benefits to the Company and stockholders of adoption of the 2018 Incentive Plan outweigh any potential conflict of interest with stockholders.

 

EQUITY COMPENSATION PLAN INFORMATION

 

The following table gives information as of our fiscal year end about our common stock that may be issued upon the exercise of options, warrants and rights under the 2010 Incentive Plan:

 

Plan Category

(a)

Number of Securities to

be Issued Upon Exercise Of

Outstanding Options, Warrants

And Rights

(b)

Weighted-Average Exercise

Price Of Outstanding

Options, Warrants and

Rights(2)

(c)

Number of Securities

Remaining Available For

Future Issuance Under Equity

Compensation Plans

(Excluding Securities

Reflected in Column (a))

Equity Compensation Plans Approved By Security Holders(1)

1,062,107

$30.71

1,864,735

Equity Compensation Plans Not Approved By Security Holders

--

--

--

Total

1,062,107

$30.71

1,864,735

(1) Includes 411,498 shares of outstanding stock options, 463,587 restricted stock units and 187,022 performance shares outstanding under the 2010 Incentive Plan.

 

(2) Exercise price is for outstanding stock options only; restricted stock units and performance shares have no exercise price.

 

 

As of March 21, 2018, 1,632,004 shares remain available for issuance of future awards under the 2010 Incentive Plan, until such plan terminates, including if replaced by the 2018 Incentive Plan. A total of 334,535 stock options remain outstanding with a weighted average exercise price of $32.40 and weighted remaining term of 5.2 years. Stock awards totaling 587,749 (including shares of restricted stock units and performance shares) are outstanding under the 2010 Incentive Plan.

 

VOTING AND MEETING INFORMATION 

 

PROPOSAL 4

RATIFICATION OF THE SELECTION OF THE INDEPENDENT REGISTERED PUBLIC ACCOUNTANT

 

 

The Audit Committee of the Board (the “Audit Committee”) has appointed Grant Thornton to serve as our independent registered public accounting firm (“independent auditor”) for fiscal year 2018 and requests that stockholders ratify such appointment. For a discussion of factors considered by the Audit Committee in connection with the appointment of Grant Thornton, see “Audit Committee Report – Auditor Selection.”

 

Grant Thornton audited our consolidated financial statements for 2017 and 2016. Representatives of Grant Thornton will be present at the Annual Meeting, will have an opportunity to make a statement if they so desire, and will be available to respond to appropriate questions by stockholders. Ratification of the appointment of Grant Thornton as our independent registered public accounting firm requires a majority of the votes entitled to vote thereon present in person or by proxy at the Annual Meeting. If our stockholders do not ratify Grant Thornton as our independent registered public accounting firm, the Audit Committee will reconsider its decision. Even if stockholders vote in favor of the appointment, the Audit Committee may, in its discretion, and without re-submitting the matter to the Company’s stockholders, direct the appointment of a different independent registered public accounting firm at any time during the year if it determines that such a change would be in the best interests of the Company and stockholders.

 

THE BOARD OF DIRECTORS RECOMMENDS THAT YOU VOTE FOR THE RATIFICATION OF THE SELECTION OF GRANT

THORNTON LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 2018.

 

DESCRIPTION OF PRINCIPAL ACCOUNTANT FEES AND SERVICES

 

The following table sets forth the fees for professional audit services provided by Grant Thornton for the audit of our annual financial statements for the fiscal years ended December 31, 2017 and 2016, and fees billed for other services provided by Grant Thornton during those periods:

 

Type of Fees

2017

2016

Audit fees

$1,773,678

$1,374,762

Audit-related fees

Tax fees

All other fees

4,908

20,242

Total fees

$1,778,586

$1,395,004

 

Audit Fees

 

These are fees for professional services rendered by Grant Thornton for the audits of our annual consolidated financial statements, the audit of internal controls over financial reporting, the review of consolidated financial statements included in our quarterly reports on Form 10-Q, and the audit of our compliance with OMB Circular A-133. The audit fees provided by Grant Thornton also include services that were provided in connection with certain non-U.S. statutory audits. The 2017 audit fees include additional services rendered as a result of our adoption of the Accounting Standard Codification 606 (ASC 606) and the 2017 tax reform totaling $155,596 and $85,376, respectively.

 

Audit-Related Fees

 

Audit-related fees comprise fees for professional services rendered by Grant Thornton that are reasonably related to the performance of the audit or review of our consolidated financial statements and internal controls over financial reporting that are not reported in “Audit Fees.”

 

Tax Fees 

 

These are fees for professional services rendered by Grant Thornton with respect to tax compliance, tax advice and tax planning. Additional professional services with respect to tax compliance, tax advice and tax planning were performed by other tax service providers. There were no services rendered by Grant Thornton in 2017 or 2016 that met the above category description.

 

All Other Fees 

 

These are fees for professional services rendered by Grant Thornton for products and services other than the services reported in “Audit Fees”, “Audit-Related Fees” or “Tax Fees”. There were $4,908 in such services rendered by Grant Thornton in 2017 that met the above category description. Additionally, $20,242 in such services rendered by Grant Thornton in 2016 met the above category description, which included statutory filings and related fees for the Company’s international business.

 

VOTING AND MEETING INFORMATION 

 

Pre-Approval of Audit and Non-Audit Services

 

The Audit Committee is authorized by its charter to pre-approve all audit and permitted non-audit services to be performed by our independent registered public accounting firm. The Audit Committee reviews and approves the independent registered public accounting firm’s retention to perform audit services, including the associated fees. The Audit Committee also evaluates other known potential engagements of the independent registered public accounting firm, including the scope of the proposed work and the proposed fees, and approves or rejects each service, taking into account whether the services are permissible under applicable law and the possible impact of each non-audit service on the independent registered public accounting firm’s independence from management. At subsequent meetings, the Audit Committee will receive updates on the services actually provided by the independent registered public accounting firm, and management may present additional services for approval. The Audit Committee has delegated to the Chair of the Audit Committee the authority to evaluate and approve engagements on behalf of the Audit Committee in the event that a need arises for pre-approval between Audit Committee meetings. If the Chair so approves any such engagement, he will report that approval to the full Audit Committee at its next meeting.

 

Approval of Fees

 

Our Audit Committee has reviewed all of the fees described above. In connection with the Committee’s review and approval of the amount of fees paid to the independent auditor for audit, audit-related and other services, the Committee considers, among other factors:

 

 

The independent auditor’s qualifications and quality control procedures;

 

 

The quality of the independent auditor’s overall performance;

 

 

The complexity of the audit and related services in a particular year;

 

 

Publicly available information concerning audit fees paid by peer companies; and

 

 

The impact, if any, of the level of audit and non-audit fees on the auditor’s independence.

 

The Audit Committee believes that such fees are compatible with maintaining the independence of Grant Thornton.

 

AUDIT COMMITTEE REPORT 

 

AUDIT COMMITTEE REPORT

 

The Company’s Audit Committee is appointed by the Board, and each of the members of the Audit Committee has been determined by the Board to be “independent” under the applicable NASDAQ standards. The Board has also determined that all of the members of the Audit Committee are “financially literate” under the NASDAQ rules. The Audit Committee’s Chairman, Dr. Srikant Datar and Committee member Mr. Michael Van Handel each qualify and are designated as “audit committee financial experts”, as defined by the SEC.

 

Audit Committee Duties

 

Under the Audit Committee’s Charter, the committee’s duties and responsibilities include, among others:

 

 

Oversight of the relationship with the independent auditor, including being directly responsible for the appointment and compensation of the Company’s independent auditor;

 

 

Assessing the qualifications, performance and independence of the Company’s independent auditor;

 

 

Reviewing the activities, qualifications and performance of the Company’s internal audit function;

 

 

Monitoring financial reporting and disclosure and related matters;

 

 

Reviewing and evaluating the Company’s overall risk profile, the procedures and policies adopted to identify and manage such risks and related disclosures;

 

 

Retaining independent external advisors as the Audit Committee determines necessary or appropriate;

 

 

Annually reviewing the adequacy of the Audit Committee’s charter and the Audit Committee’s own performance; and Preparing this report to the Company’s stockholders.

 

 

The Audit Committee also periodically reviews the Company’s Code of Business Ethics and Conduct and receives reports from the Company’s Compliance Committee, which is charged with the implementation of the Code of Business Ethics and Conduct. In this connection, the Audit Committee oversees the Company’s procedures for the receipt, retention and treatment, on a confidential basis, of any complaints received by the Compliance Committee. The Company encourages employees and third-party individuals and organizations to report concerns about our accounting, internal accounting controls, auditing matters or other matters that may or appear to involve financial or any other wrongdoing.

 

Audit Committee Oversight Role

 

In performing its functions, the Audit Committee acts in an oversight capacity. In that role the Audit Committee relies on the work and assurances of: the Company’s management, which has the primary responsibility for financial statements and reports, internal controls and financial reporting processes; the internal audit function; and the independent auditor that, in its reports, expresses opinions on the conformity of the Company’s financial statements to United States generally accepted accounting principles (“US GAAP”) and on the effectiveness of the Company’s internal control over financial reporting.

 

Audit Committee Activities

 

During the year, the Audit Committee meets with management and representatives of the independent auditor and the internal audit function to review and discuss the Company’s quarterly financial statements before the Company’s results are released to the public. Members of the Committee also review the Company’s quarterly reports on Form 10-Q and the annual report on Form 10-K. In the course of these activities, the Audit Committee:

 

 

Reviews the scope of, overall plans for and status of the annual audit and internal audit program;

 

 

Consults with management, the internal audit function and the independent auditor on topics such as the Company’s processes for risk assessment and risk management and related disclosures;

 

 

Reviews and approves the Company’s policy for preapproval of audit and permitted non-audit services by the independent auditor;

 

 

Reviews with management, the internal audit function and the independent auditor the scope and effectiveness of the Company’s disclosure controls and procedures, including for purposes of evaluating the accuracy and fair presentation of the Company’s financial statements in connection with the certifications made by the Company’s Chief Executive Officer and Chief Financial Officer;

 

 

Receives advice on critical accounting policies and the impact of new accounting principles and guidance; and

 

 

Reviews significant legal and other developments in the Company’s processes for monitoring compliance with law and Company policies, and oversees the activities of the Company’s Chief Ethics and Compliance Officer and management’s Compliance Committee.

 

The Audit Committee meets, not less than annually, with the independent auditor, in each case with and without members of management present, to discuss the results of the auditor’s examinations and evaluations of the Company’s internal controls and the overall quality and integrity of the Company’s financial reporting.

 

AUDIT COMMITTEE REPORT  

 

Review of Fiscal 2017 Financial Statements

 

The Audit Committee reviewed and discussed with our management and with our independent auditor, Grant Thornton, the consolidated financial statements of ICF and its subsidiaries and related notes, the disclosures under the headings “Management’s Discussion and Analysis” and “Management’s Report on Internal Controls”, and other financial disclosures as set forth in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017. In connection with this review, the Audit Committee:

 

 

Discussed with Grant Thornton those matters required to be discussed by Auditing Standard No. 1301 (Communications with Audit Committees), issued by the Public Company Accounting Oversight Board (“PCAOB”), and Rule 2-07 (Communication with Audit Committees) of SEC Regulations S-X; and

 

 

Received from Grant Thornton the written communications required by Ethics and Independence Standard No. 3526 (Communication with Audit Committees Concerning Independence), issued by the PCAOB, as to Grant Thornton’s compliance with all rules, standards, and policies of the PCAOB and SEC governing auditor independence.

 

 

Based on the activities, reviews and discussions outlined above, the Audit Committee recommended to the Board that the audited consolidated financial statements for the fiscal year ended December 31, 2017 be included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2017 as filed with the SEC.

 

Auditor Selection

 

As described under the heading, “Proposal 4: Ratification of the Selection of Independent Registered Public Accountant”, the Audit Committee also approved the selection of Grant Thornton as the Company’s independent auditor for the fiscal year ending December 31, 2018 as being in the best interest of the Company. Grant Thornton has served as the Company’s independent auditor since the Company went public in 2006.

 

In connection with the appointment of the independent auditor, the Audit Committee discusses and considers factors such as the following:

 

 

The independent auditor’s historical and recent performance on the audit, taking into account the views of management and the internal audit function;

 

 

External data relating to audit quality and performance, including recent PCAOB reports on the independent auditor and its peer firms;

 

 

The familiarity of the independent auditor, and the team assigned to the Company’s audit and related work, with the government services industry;

 

 

The independent auditor’s tenure as the Company’s independent auditor and its familiarity with the Company’s accounting policies and practices and internal control over financial reporting;

 

 

The independent auditor’s capacity, capability and expertise in handling the breadth and complexity of the Company’s global operations;

 

 

The independent auditor’s independence and objectivity and the quality and candor of communications within management and the Audit Committee; and

 

 

The appropriateness of the auditor’s fees for audit and non-audit services.

 

For a discussion of factors considered by the Audit Committee in reviewing the amount of fees paid to Grant Thornton for audit and other services, see “Proposal 4: Ratification of the Selection of the Independent Registered Public Accountant – Approval of Fees”.

 

The Audit Committee also reviews and considers the performance of the lead audit partner. Under applicable law, the lead audit partner must rotate after five (5) years, and the Company’s current lead audit partner has served in that capacity for three (3) years. The process for selection of the Company’s lead audit partner pursuant to this rotation policy will involve meetings between the chair of the Audit Committee and the candidate for the role, as well as discussions and meetings with the Audit Committee and, of course, management.

 

 

 

Audit Committee

 

/s/ Dr. Srikant Datar

Dr. Srikant Datar,

Audit Committee Chairperson

 

/s/ Sanjay Gupta

Sanjay Gupta

 

/s/ Peter M. Schulte

Peter M. Schulte

 

/s/ Michael Van Handel

Michael Van Handel

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

CORPORATE GOVERNANCE AND BOARD MATTERS

 

Board and Committee Meetings in 2017

 

The table below shows the number of Board and Committee meetings held in 2017. Our Board has seven (7) regularly scheduled meetings per year and special meetings are called as the need arises. These meetings are usually held at our headquarters in Fairfax, Virginia.

 

Number of

Meetings Held

 

Board of Directors

    8       

Audit Committee

    7       

Compensation Committee

    6       

Governance and Nominating Committee

    4       

 

Directors are expected to attend Board meetings, our annual stockholders’ meeting, and the meetings of the committees on which they serve. During 2017, each director attended at least 75% of the total meetings of the Board and those committees on which he or she served. Each director who was on the Board at the time attended our annual meeting of stockholders held in 2017. Mr. Mehl was not appointed to the Board until September 2017, and therefore was not present at the annual meeting of stockholders.

 

Corporate Governance Guidelines

 

Our Board has established a set of Corporate Governance Guidelines that addresses such matters as, among other things, the roles of the Board and management (including the role of the Lead Independent Director), Board and director responsibilities, Board composition, selection of directors, operations of the Board (including meetings), and functions of the Board committees. The Board believes such guidelines, which are reviewed from time to time, are appropriate for the Company in its effort to maintain “best practices” as to corporate governance.

 

Director Independence

 

The Board has affirmatively determined that Ms. Eileen O’Shea Auen, Ms. Cheryl W. Grisé, Dr. Srikant M. Datar, and Messrs. Sanjay Gupta, Randall Mehl, Peter M. Schulte and Michael Van Handel, are independent directors in accordance with the requirements of NASDAQ and the rules of the SEC. We believe we comply with all applicable requirements of the SEC and NASDAQ relating to director independence and the composition of the committees of our Board.

 

Board Leadership Structure; Lead Independent Director

 

The Board’s leadership structure, includes a lead independent director and Mr. Kesavan serving as both Chairman of the Board (“Chairman”) and Chief Executive Officer (“CEO”). Based on the Company’s favorable experience with this Board leadership structure and the factors outlined below, the Board continues to believe that the current leadership structure serves the Company well and there is no need to alter that structure at the present time.

 

The Board believes that when there is a combined Chairman and CEO, it is in the best interests of the Company and its stockholders to designate a Lead Independent Director who is an independent director and, among other duties:

 

 

presides over executive sessions of the independent directors;

 

 

consults with the Chairman and CEO regarding scheduling and agendas for Board meetings;

 

 

chairs Board meetings in the Chairman’s absence;

 

 

acts as a liaison between the independent directors and management;

 

 

meets with any director whom the Lead Independent Director deems is not adequately performing his or her duties as a member of the Board or any committee;

 

 

consults with the Chairman and CEO on matters relating to corporate governance and Board performance;

 

 

in conjunction with the Chair of the Governance and Nominating Committee, oversees and participates in the annual board evaluation and succession planning process;

 

 

participates in the Compensation Committee’s annual performance evaluation of, and succession planning for, the CEO; and

 

 

leads the deliberation and action by the Board or a Board committee regarding any offer, proposal, or other solicitation or opportunity involving a possible acquisition or other change of control of the Company.

 

The charter of the Governance and Nominating Committee calls for the annual review of the Lead Independent Director position. The Company believes that having a Lead Independent Director, particularly in presiding over executive sessions of independent directors, effectively encourages full engagement of all directors. Eileen O’Shea Auen was appointed to serve as our lead director as of June 5, 2015.

 

Each of our directors other than Mr. Kesavan is independent, and the Board believes that the independent directors provide effective oversight of management. The Board has complete access to the Company’s management team, and the Board and its committees regularly receive reports from management on the Company’s business affairs and the issues it faces.

 

The Board believes that its programs for overseeing risk, as described under “Risk Oversight” below, would be effective under a variety of leadership frameworks; therefore, this factor does not materially affect its choice of structure.

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

Risk Oversight

 

Our business is subject to various types of risk. Some of the Company’s most significant risks are outlined in our 2017 Form 10-K under Item 1A, “Risk Factors.” Management is responsible for the day-to-day management of the risks we face, while the Board, as a whole and through its committees, has responsibility for the oversight of risk management. Our Board meets regularly to discuss the strategic direction and the issues and opportunities facing our Company. Our Board provides guidance to management regarding our strategy, including in connection with our results of operations and related trends and factors contributing to or affecting our results, long-term strategy, financial reporting, and risks associated with these aspects of the Company’s business. The involvement of the Board in setting our business strategy is an important part of determining the types and appropriate levels of risk undertaken by the Company. Management conducts regular enterprise risk assessments to ascertain and define the most significant risks facing the Company, which incorporates feedback from the Board. After assessments are complete, management reports regularly to the Board on the status and completion of actions associated with the most significant risks.

 

The Board, as a whole, regularly reviews information and reports from members of senior management on areas of material risk, including risks related to the markets served by the Company and contract execution risks. The full Board also considers the risks associated with potential acquisitions. The Audit Committee reviews and evaluates the Company’s overall risk profile, and the procedures and policies implemented by management to identify and manage such risks. The Compensation Committee is responsible for overseeing the management of risks relating to our compensation plans and arrangements. The Governance and Nominating Committee manages risks associated with the independence of the Board and potential conflicts of interest.

 

Board Evaluation

 

Each year, the directors undertake an evaluation for the Board and each committee on which they serve, that elicits feedback on the performance and effectiveness of the Board and its committees. As part of this evaluation, the directors are asked to consider the role of the Board and its committees, relations with management, composition and meetings. The responses and comments are compiled by the Corporate Secretary and presented to the Governance and Nominating Committee for initial review. The responses and comments are then presented to each committee and the full Board. Where appropriate, the Governance and Nominating Committee may consider feedback received from the evaluation process as part of the Director nominations the Governance and Nominating Committee submits to the full Board (and, where applicable, recommendations for assignments of Board members to various committees). In addition, as part of the Board evaluation process, the Lead Independent Director and the Governance and Nominating Committee Chair periodically meet individually and hold peer evaluations with each Director. These supplemental discussions are intended to enhance the existing Board evaluation process and foster even greater discussion regarding the adequacy and effectiveness of the Board and such committees.

 

 

Board Committees

 

The Board has three (3) designated standing committees: Audit Committee, Compensation Committee and Governance and Nominating Committee. Each committee is composed entirely of independent directors, as defined by NASDAQ. Each committee has a charter, and a current copy of each committee charter can be found in the “Investor Relations – Corporate Governance” portion of our website (www.icf.com).

 

Name

Audit

Compensation

Corporate Governance

& Nominating

Eileen O’Shea Auen (I)(L)

 

Dr. Srikant M. Datar   (I)

▲*

 

Cheryl W. Grisé (I)

 

Sanjay Gupta (I)

   

Sudhakar Kesavan

     

Randall Mehl (I)

 

 

Peter M. Schulte (I)

 

Michael J. Van Handel (I)

●*

   

 

▲ – Chair ● – Member * – Audit Committee Financial Expert (I) – Independent   (L) – Lead Independent Director

 

Audit Committee

 

The Board has a designated standing Audit Committee, as defined in Section 3(a)(58)(A) of the Exchange Act.

 

 

The Audit Committee is expected to meet at least four (4) times per year.

 

 

Each member of the Audit Committee is “independent” as defined by Rule 10A-3 of the Exchange Act and in accordance with the listing standards of NASDAQ Each Audit Committee member is financially literate.

 

 

Dr. Datar and Mr. Van Handel are each an “audit committee financial expert” as defined under SEC rules.

 

 

Dr. Datar and Mr. Van Handel also qualify as financial experts in accordance with the listing standards of NASDAQ applicable to Audit Committee members.

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

 

The report of the Audit Committee required by the rules of the SEC is included in this Proxy Statement under “Audit Committee Report.”

 

 

     
Audit Committee Responsibilities:  

 

appoint the Company’s independent registered public accounting firm;  
       
Dr. Srikant M. Datar review the financial reports and related financial information provided by the Company to governmental agencies and the general public;   
Sanjay Gupta      
Peter M. Schulte monitor compliance with the Company’s Code of Business Ethics and Conduct (the “Code of Ethics”);   
Michael J. Van Handel      
  review the Company’s system of internal and disclosure controls and the effectiveness of its control structure;  
       
  review the Company’s accounting, internal and external auditing, and financial reporting processes;   
       
  review other matters with respect to our accounting, auditing, and financial reporting practices and procedures as it may find appropriate or may be brought to its attention;  
       
  approve the engagement of other firms engaging in audit services for the Company, such as in an acquisition capacity;  
       
  approve all of the non-audit services provided by the independent registered public accounting firm in accordance with the Committee’s pre-approval procedures; and  
       
Meetings held in 2017:   7 after each meeting, report to the full Board regarding its activities.  
     

 

Compensation Committee

 

 

The Board has a designated standing Compensation Committee.

 

 

The Compensation Committee is expected to meet at least three (3) times per year.

 

 

Each member of the Compensation Committee qualifies as a “non-employee director” under Rule 16b-3 promulgated under the Exchange Act, and meets the requirements of NASDAQ Rule 5605(d)(2)(A).

 

 

See “Compensation Discussion and Analysis” for more information regarding the role of the Compensation Committee, management, and compensation consultants in determining and/or recommending the amount and form of executive compensation.

 

 

The report of the Compensation Committee required by the rules of the SEC is included in this Proxy Statement under “Compensation Committee Report.”

 

     
Compensation Committee Responsibilities:  

 

assist the Board in its responsibilities related to management, organization, performance, and compensation;  
Cheryl W. Grisé      
Eileen O’Shea Auen consider and authorize the Company’s compensation philosophy;   
Randall Mehl      
Peter M. Schulte evaluate senior management’s performance and approve all material elements of executive officer compensation;   
       
 

review administration of the Company’s incentive compensation, retirement, and equity-based plans; and

 
       
Meetings held in 2017:   6 after each meeting, report to the full Board regarding its activities.  
     

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

Governance and Nominating Committee

 

 

The Board has a designated standing Governance and Nominating Committee.

 

 

The Governance and Nominating Committee is expected to meet at least three (3) times per year.

 

     
Governance and Nominating Responsibilities:  

Committee

identify and recommend candidates to be nominated for election as directors at the Company’s Annual Meeting, consistent with criteria approved by the full Board;  
       
Eileen O’Shea Auen annually evaluate and report to the Board on its performance and effectiveness;   
Dr. Srikant M. Datar      
Cheryl W. Grisé annually review the composition of each Board committee and present recommendations for committee membership to the full Board as needed;   
       
  research, evaluate, and make recommendations regarding director compensation;  
       
  consider and advise the Board on matters relating to the affairs or governance of the Board;  
       
  consider matters relating to senior management succession;  
       
  review and approve all potential “related person transactions” as defined under SEC rules; and  
       
Meetings held in 2017:   4 after each meeting, report to the full Board regarding its activities.  
     

 

Compensation Committee Interlocks and Insider Participation

 

Ms. Auen, Ms. Grisé, and Messrs. Mehl and Schulte were the members of our Compensation Committee during the year ended December 31, 2017. None of them is or was an officer or employee of the Company. None of our executive officers served as a member of the Board or the Compensation Committee of any entity that has one (1) or more executive officers serving as a member of our Board or Compensation Committee.

 

 

 

Director Selection Criteria

Established/Scheduled

Governance and Nominating Committee and Board of Directors establish the membership criteria

 

 

Director Selection

Candidate Recommendations

From: Directors, Stockholders, professional search firms or other persons

 

 
     
  Governance and Nominating Committee  
  ●          Evaluates candidates for the Board
  ●          Reviews qualifications, background, and diversity of potential candidates
  ●          Interviews potential candidates
  ●          Recommends nominees to the Board
     
 
 
     
  Board of Directors  
  ●          Interviews potential candidates
  ●          Recommends nominees to the Board
  ●          Selects final nominations
     
   
     
  Stockholders  
  ●          Vote on candidates at Annual Meeting

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

Process for Selecting and Nominating Directors

 

As noted in the prior chart, we will consider candidates for director who are recommended by stockholders. Stockholder recommendations should be submitted in writing to: ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, Attention: Corporate Secretary. Such stockholder’s notice shall set forth, for each nominee, all information relating to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A under the Exchange Act and pursuant to the Company’s Bylaws (including such person’s written consent to being named as a nominee and to serving as a director if elected). Among other information, the notice shall also include, as to the stockholder giving notice: (i) the name and address of the stockholder; (ii) the class or series and number of shares of the Company which are, directly or indirectly, owned by such stockholder, as well as options, warrants, convertible securities, SARs, and similar instruments of the Company (“Derivative Instruments”) that are held by the stockholder; (iii) any proxy, contract, arrangement, understanding, or relationship pursuant to which such stockholder has a right, directly or indirectly, to vote any shares of any security of the Company; (iv) any short interest in any security of the Company directly or indirectly owned by such stockholder; (v) any rights to dividends on the shares of the Company owned beneficially by such stockholder that are separated or separable from the underlying shares of the Company; (vi) any proportionate interest in shares of the Company or Derivative Instruments held, directly or indirectly, by a general or limited partnership in which such stockholder is a general partner or, directly or indirectly, beneficially owns an interest in a general partner; and (vii) any performance-related fees (other than an asset-based fee) to which such stockholder is entitled based on any increase or decrease in the value of shares of the Company or Derivative Instruments.

 

To be eligible to be a nominee for election or reelection as a director of the Company, a person must submit to the Corporate Secretary (in accordance with the time periods prescribed for delivery of notice under the Company’s Bylaws) at the above address a written response to a questionnaire with respect to the background and qualification of such person (which questionnaire shall be provided by the Corporate Secretary upon written request) and a written representation and agreement (in the form provided by the Corporate Secretary upon written request) that such person: (i) is not and will not become a party to (x) any agreement, arrangement, or understanding with, and has not given any commitment or assurance to, any person or entity as to how such person, if elected as a director of the Company, will act or vote on any issue or question (a “Voting Commitment”) that has not been disclosed to the Company or (y) any Voting Commitment that could limit or interfere with such person’s ability to comply, if elected as a director of the Company, with such person’s fiduciary duties under applicable law; (ii) is not and will not become a party to any agreement, arrangement, or understanding with any person or entity other than the Company with respect to any direct or indirect compensation, reimbursement, or indemnification in connection with service or action as a director that has not been disclosed therein; and (iii) would be in compliance, if elected as a director of the Company, and will comply with all applicable publicly disclosed corporate governance, conflict of interest, confidentiality, and stock ownership and trading policies and guidelines of the Company.

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

Executive Stock Ownership Policy 

 

The Company strives to ensure alignment with stockholder interests by means of ensuring that Company executives have an equity stake in the Company that is consistent with the long-term performance of the Company. In 2014, the Compensation Committee adopted a revised Executive Stock Ownership Policy (the “Executive Stock Ownership Policy”) that became effective on January 1, 2015, which: (i) expanded the group of executives who would be subject to the policy; (ii) increased the levels of stock ownership executives are required to hold; and (iii) clarified the types of equity that would be considered for purposes of complying with the updated policy.

 

The Executive Stock Ownership Policy requires executives to own ICF common stock in a value equal to, or in excess of, the multiple of their annual base salary as shown below:

 

CEO:

4x

 

Other NEOs: 2x

 

Other designated executives: 1x

 

The following types of equity count toward satisfying the stock ownership requirement: (i) any shares held outright as a result of vested RSUs or PSAs, (ii) shares acquired through the exercise of stock options or purchased through the Company’s employee stock purchase plan qualified pursuant to Section 423 of the Code (“Employee Stock Purchase Plan”) or through the open market, (iii) unvested RSUs, and (iv) vested in-the-money stock options. In addition, designated executives are required to hold all shares acquired from vested RSUs, vested PSAs and stock option exercises, net of shares withheld for taxes, until they meet the Executive Stock Ownership Policy requirements.

 

For designated executives (including NEOs) as of January 1, 2015, ownership levels are to be achieved within five (5) years of that date, and for executives appointed after such date, such levels, if not achieved by their fifth anniversary of becoming such an executive, are to be achieved no later than December 31 of that year. As of April 10, 2018, each of our NEOs either met these stock ownership guidelines or is expected to meet the applicable ownership guidelines within the specified time period, assuming that the PSAs are paid at target.

 

Board Stock Ownership Guidelines

 

The Board believes that its members should be incentivized to focus on the Company’s long-term stockholder value. As such, the Board adopted a Board member stock ownership policy establishing, as a guideline (but not an absolute requirement), that non-employee members of the Board are expected to own shares of Company common stock valued at five (5) times such director’s annual cash meeting retainer, which may include shares of unvested restricted stock (i.e., directors are strongly encouraged to hold common stock valued at $300,000). Such ownership level is to be achieved over a period of four (4) years after becoming a member of the Board. As of April 10, 2018, each of our non-employee directors either met these stock ownership guidelines or is expected to meet the ownership guidelines within the specified time period.

 

Director Continuing Education

 

The Board believes that director continuing education is important for maintaining a current and effective Board, and has adopted a Director Continuing Education Policy. The Company’s policy encourages directors to participate in continuing education and accredited director education programs, with the intent of becoming and remaining well informed about the Company, its industry and business, its relative performance to its competitors and regulatory issues and economic trends affecting the Company.

 

Prohibitions on Derivatives Trading, Hedging and Pledging 

 

Pursuant to the Company’s Policy on Insider Information and Securities Trading (“Policy on Insider Information”) the Company considers it improper and inappropriate for any employee, officer or director of the Company to engage in short-term or speculative transactions in the Company’s securities. The policy specifically prohibits directors, officers and other employees from engaging in short sales of the Company’s securities and transactions in puts, calls or other derivative securities (sometimes referred to as “hedging”). In addition, stock grant agreements prohibit the pledging or assignment of awards. Each of the NEOs and directors complied with this policy during fiscal year 2017.

 

Stockholder Communications with the Board

 

You may contact the Board by sending a letter marked “Confidential” and addressed to the Board, ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, Attention: Corporate Secretary. In accordance with instructions from the Board, the Corporate Secretary reviews all correspondence, organizes the communications for review by the Board, and posts communications to the full Board, specific committees or individual directors, as appropriate. Communications that are intended specifically for the Lead Independent Director, the independent directors, or non-management directors should be marked as such.

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

Director Compensation Table for 2017

 

The following table provides the compensation earned by individuals who served as non-employee directors of the Company during 2017.

 

Name(1)

Fees Earned

Paid in Cash 

($)(2)

Stock

Awards

($)

Option

Awards

($)

Non-Equity

Incentive Plan

Compensation

($)

Changes in

Pension Value

and

Nonqualified

Deferred

Compensation

Earnings

($)

All Other

Compensation

($)

Total

Compensation

($)(4)

Eileen O’Shea Auen

  $221,000(3)

$ —

$ —

$ —

$ —  

$ —  

$221,000  

Dr. Edward H. Bersoff(5)

110,000

 —

 —

 —

110,000

Dr. Srikant M. Datar

   209,000(3)

 —

 —

 —

209,000

Cheryl W. Grisé

   206,000(3)

 —

 —

 —

206,000

Sanjay Gupta

   192,000(3)

 —

 —

 —

192,000

Leslye G. Katz(5)

   100,000(3)

 —

 —

 —

100,000

Peter M. Schulte

   200,000(3)

 —

 —

 —

200,000

Michael Van Handel(6)

   126,000(3)

 —

 —

 —

126,000

Randall Mehl(6)

     50,141(3)

 —

 —

 —

   50,141 

____________________

(1)

Sudhakar Kesavan is not included in this table because during 2017 he was an employee of the Company and therefore received no compensation for his director service. The compensation received by Mr. Kesavan as an employee of the Company is shown in the 2017 Summary Compensation Table below.

 

(2)

Represents the meeting retainers and annual payment earned in 2017. Pursuant to our Annual Equity Election program, each director receives an annual payment of $120,000 paid in arrears in quarterly installments, which the Director may elect to receive in cash, unregistered stock, or a combination thereof. Directors may elect to receive their meeting retainer fees in the form of cash, unregistered stock or a combination thereof. With the exception of Dr. Bersoff, each director elected to receive all or a portion of his or her payment under the Annual Equity Election program in the form of unregistered stock, with the grant date fair value for such unregistered stock computed in accordance with FASB ASC Topic 718.

 

(3) Includes quarterly retainer payments and/or annual payment made in the form of unregistered stock in lieu of cash at the election of the director, representing the grant date fair value for such unregistered stock computed in accordance with FASB ASC Topic 718. The total value of stock issued for the Annual Equity Election program and the retainer fees was $670,958. 

 

(4)  Total Compensation for each director may differ from the sum of the individual components due to changes in roles and/or committee assignments during 2017. 

 

(5)

Dr. Bersoff and Ms. Katz served on the Board until the 2017 Annual Meeting of Stockholders on June 1, 2017, so their respective compensation reflects only a partial year.

 

(6)

Mr. Van Handel joined the Board in June 2017, and Mr. Mehl joined the Board in September 2017, so their respective compensation only reflects a partial year.

 

 

Director Compensation

 

The following discussion outlines the compensation that was earned by our non-employee directors during 2017, as well as our anticipated director compensation structure for 2018. The compensation of our Board is evaluated from time to time by our Governance and Nominating Committee.

 

Directors who are employed by us do not receive additional compensation for their service on the Board. All directors are entitled to reimbursement of expenses for attending each meeting of the Board and each committee meeting.

 

For 2017, each director had the option to choose to receive a $120,000 annual payment in the form of cash, unregistered stock or a combination of the two, issued on a pro rata basis quarterly. Shares issued in 2017 pursuant to this annual payment were issued from treasury stock.

 

In addition to the $120,000 annual payment for 2017, the annual cash meeting retainer was $60,000, covering the six (6) regular Board meetings during the year, one (1) annual meeting, and a reasonable number of special Board meetings. The chair of the Audit Committee received a retainer of $32,000 (including the additional member fee) and each other Audit Committee member received a retainer of $12,000. The chair of the Compensation Committee received a retainer of $18,000 (including the additional member fee) and each other Compensation Committee member received $8,000. The chair of the Governance and Nominating Committee received a retainer of $18,000 (including the additional member fee) and each other Governance and Nominating Committee member received $8,000. Retainer for the Lead Independent Director is an annual fee of $20,000.

 

Our non-employee directors receive compensation quarterly, based upon the aggregate annual payment that they each are entitled to receive based on each director’s committee Chair and/or membership roles. Board members may elect to receive their quarterly cash compensation in the form of common stock at the fair value of our common stock on the first business day of the quarter.

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

For 2018, the Governance and Nominating Committee recommended several changes to Board compensation following its 2017 evaluation, which included input from consultants and others. Changes recommended for the 2018 director compensation plan begin on July 1, 2018, subject to the approval by stockholders of the 2018 Incentive Plan, and include:

 

 

Directors will receive their annual equity grant in the form of RSUs, based upon an award amount of $120,000, and vesting quarterly over a one-year period.

 

 

All other Director compensation will be paid in cash, on the first business day of each fiscal quarter.

 

 

Cash fees will be pro-rated based upon the date of a Director’s departure from the Board for the upcoming quarter, provided that a Director who serves until the annual meeting of stockholders shall receive the full amount of cash fees for such fiscal quarter.

 

 

Cash fees for new Directors will be pro-rated based upon the date of the Director’s appointment to the Board.

 

 

The average of the aggregate of all fees (including equity) paid to directors during any year will be limited to $400,000.

 

Code of Ethics

 

The Company has a Code of Ethics that is designed to promote the highest standards of ethical conduct by the Company’s directors, executive officers and employees. The Code of Ethics requires that the Company’s directors, executive officers and employees avoid conflicts of interest, comply with all laws and other legal requirements, conduct business in an honest and ethical manner, and otherwise act with integrity and in the Company’s best interest. Under the terms of the Code of Ethics, directors, executive officers and employees are required to report any conduct that they believe in good faith to be an actual or apparent violation of the Code of Ethics. The Code of Ethics is updated from time to time to reflect changes in laws, best practices and the Company’s business.

 

The Code of Ethics and all Board committee charters are posted in the “Investors – Corporate Governance” portion of our website (www.icf.com). A copy of any of these documents is available in print (free of charge) to any stockholder who requests a copy by writing to: ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031, Attention: Corporate Secretary. The Company will disclose on its website at www.icf.com, to the extent and in the manner permitted by Item 5.05 of Form 8-K, the nature of any amendment to the Code of Ethics (other than technical, administrative, or other non-substantive amendments) and our approval of any material departure from a provision of the Code of Ethics that has been made known to any of our executive officers.

 

Environmental, Social and Governance – Corporate Commitment to Corporate Social Responsibility

 

ICF is committed to good corporate citizenship. Our corporate responsibility is to:

 

●     Invest in our employees

●     Serve our clients with integrity

●     Minimize our impact on the planet

●     Give back to our communities and society

●     Create long-term value for our stockholders

 

Below are some highlights of our 2017 corporate citizenship performance. Please read our most recent corporate responsibility report posted on the “Company – Corporate Responsibility” portion of our website (www.icf.com).

 

* Confirmed by 2 external audits

 

CORPORATE GOVERNANCE AND BOARD MATTERS 

 

Certain Relationships and Transactions with Related Persons

 

Our Code of Ethics, which applies to all directors, executive officers and employees, emphasizes the importance of avoiding situations or transactions in which personal interests interfere with the best interests of us and/or our stockholders. In addition, the Board has a policy and process for reviewing and evaluating interested director transactions designed to alert the Board, and in particular the Governance and Nominating Committee, of material transactions involving the Company and directors and their affiliates so that the Board may be aware of and consider such transactions in advance, on a case-by-case basis. As to matters coming before the Board in which individual directors may have a personal interest, the Board has adopted procedures to ensure that all directors voting on such a matter disclose any personal interest, abstain from voting on the matter, and discuss the transaction with counsel if necessary. The Board has delegated the task of discussing, reviewing, and approving transactions between the Company and any of our executive officers or Board members to the Governance and Nominating Committee.

 

There have not been any transactions during the last fiscal year to which we have been a party, in which the amount involved in the transaction exceeded $120,000, and in which any of our directors, executive officers or holders of more than five percent (5%) of our capital stock had or will have a direct or indirect material interest other than equity and other compensation, termination, change-in-control and other arrangements, which are described in the section captioned “Executive Compensation—Potential Payments upon Termination or Change of Control.”

 

Other Transactions Considered for Independence Purposes

 

For each director and nominee for director who is identified as independent, the SEC rules require the description of transactions, relationships or arrangements that are not required to be disclosed as related person transactions, but that were considered by the Board in determining that the director is independent. There were no transactions that the Company believes are related person transactions. There were, however, transactions with independent directors that did not rise to the level of a related person transaction, but that were considered for independence purposes. The Board affirmatively determined that each of such transactions did not impair the applicable director’s independence.

 

 

EXECUTIVE OFFICERS OF THE COMPANY 

 

The following table includes information with respect to the individuals who served as our executive officers as of April 10, 2018.

 

The age indicated for each individual is as of December 31, 2017. The biographical information for Mr. Kesavan is found under “Nominees for Election as Directors for a Term Expiring in 2020—Class II Directors.”

 

Name

Age

Title

Sudhakar Kesavan

63

Chairman and Chief Executive Officer

John Wasson

56

President and Chief Operating Officer

James C. Morgan

52

Executive Vice President and Chief Financial Officer

Ellen Glover

62

Executive Vice President – Transformation & Resiliency Solutions

Sergio Ostria

55

Executive Vice President – Business & Infrastructure Solutions

Richard Taylor

52

Senior Vice President and Principal Accounting Officer – Controller

 

John Wasson serves as President and Chief Operating Officer (“COO”) of ICF International and has been with the Company since 1987. Mr. Wasson has served the Company in various capacities over the last thirty-one (31) years, joining the Company as an associate in 1987, becoming an officer of the Company in 1994, COO in 2003, and adding the title of President in 2010. He is responsible for the day-to-day management of the Company’s client facing operating groups and corporate business development. He plays a key leadership role in setting ICF’s strategic direction, managing P&L, overseeing high level business development and recruiting, managing the Company’s culture, and ensuring the successful integration of acquisitions into the Company. Mr. Wasson previously worked as a staff scientist at the Conservation Law Foundation of New England and as a researcher at the Massachusetts Institute of Technology Center for Technology, Policy and Industrial Development. Mr. Wasson holds a Master of Science degree in Technology and Policy from the Massachusetts Institute of Technology and a Bachelor of Science in Chemical Engineering from the University of California, Davis.

 

James C. Morgan serves as the Company’s Executive Vice President and Chief Financial Officer (“CFO”). He joined the Company in 2012. From 2011 until his employment by the Company, Mr. Morgan served as a member of the Board and as the Executive Vice President and Chief Financial Officer of Serco, Inc., a division of Serco Group PLC. From 1993 until 2011, Mr. Morgan held a number of positions at Science Applications International Corporation (“SAIC”); in particular, Senior Vice President and Senior Financial Officer, Strategic and Operational Finance from 2005 until 2011 and Senior Vice President, Business Transformation Officer from 2008 until 2011. Previously, Mr. Morgan was an Experienced Senior Consultant in the Special Services and Contracting Group at Arthur Andersen & Company. Mr. Morgan received his Bachelor of Science in Accounting from North Carolina State University and his Masters in Business Administration from George Washington University. Mr. Morgan has been a Certified Public Accountant; his license is currently inactive.   

 

EXECUTIVE OFFICERS OF THE COMPANY 

 

Ellen Glover joined the Company in 2005 and currently serves as Executive Vice President of the Health, Environment, Analytics, Resiliency and Social Policy (“HEARS”) Group. Prior to joining the Company, Ms. Glover served as the Vice President and General Manager of Dynamics Research Corporation, a former publicly traded professional and technical services contractor to government agencies. Dynamics Research Corporation had previously acquired Impact Innovations Group, a provider of information technology services to federal and commercial markets, where Ms. Glover served as President from 2002 to 2004. From 1983 to 2002, Ms. Glover was an officer of Advanced Technology Systems, a provider of information technology services to the U.S. Department of Defense and civilian agencies, including serving as President and Chief Operating Officer from 1994 to 2002. Ms. Glover has served on the Professional Services Council Board since 2010, was the Chair of that board for two terms from 2014-2016, and continues to serve on the Executive Committee of that board. Ms. Glover was the Chair of the American Technology Council/Industry Advisory Council from 2005 to 2006, and Executive Vice Chair from 2004 to 2005. Ms. Glover was awarded the 2007 Janice K. Mendenhall Spirit of Leadership Award, as well as the 2001 Federal Computer Week Federal 100 Eagle Award. Ms. Glover is a fellow in the National Academy of Public Administration and was the 2017 University of Pittsburgh Graduate School Alumni of the Year. Ms. Glover holds a Master of Science in Urban Planning and a Bachelor of Arts in History and Political Science from the University of Pittsburgh.

 

Sergio Ostria serves as an Executive Vice President and leads the Company’s Energy, Aviation Infrastructure (“EAI”) Group, which houses over 1,400 professionals specializing in energy markets consulting, energy efficiency program design and implementation, environmental planning and assessment of infrastructure investments, and aviation industry consulting. He joined ICF International in 1999 and brings nearly 30 years of experience developing and leading multidisciplinary teams servicing government and commercial clients in North America, Latin America, Europe, and Asia. Prior to leading the Company’s energy, environment and aviation businesses, Mr. Ostria led the Company’s following businesses: from 2011 to 2015, the Energy, Environment & Transportation Group; from 2008 to 2011, the Energy, Climate and Transportation group; from 2006 to 2008, the Company’s Environment, Transportation and Regulation group, and from 1999 to 2006, the Company’s Transportation practice. Prior to joining the Company, from 1997 to 1999, Mr. Ostria served as a Principal with Hagler Bailly, Inc., an energy, environmental, and transportation consultancy; and from 1996 to 1997 he served as a Vice President with Apogee Research, Inc., a transportation and environmental consultancy that was acquired by Hagler Bailly in 1997. Prior to these positions, Mr. Ostria was a Senior Associate with DRI/McGraw-Hill, a Senior Analyst with Jack Faucett Associates, Inc., and an Analyst with Energy and Environmental Analysis. Throughout his consulting career, Mr. Ostria has specialized in the design, implementation, and evaluation of integrated, systems-oriented approaches to solving challenges that transcend the energy, environment, and transportation fields. Mr. Ostria has a Master of Arts in Economics from The George Washington University and a Bachelor of Arts in Economics from University of Maryland.

 

Richard Taylor joined ICF in January 2017 as Senior Vice President and Controller. On February 23, 2017, he was appointed as the Company’s Principal Accounting Officer (“PAO”), effective March 1, 2017. Prior to joining the Company, Mr. Taylor served in several senior level accounting positions at SAIC, including as Vice President and Assistant Corporate Controller from 2013 to 2016, and as Vice President and Business Unit Controller of the Enterprise and Mission Support Business Unit, a unit of SAIC, from 2005 to 2013. Mr. Taylor is a Certified Public Accountant, a Certified Management Accountant and a Certified Internal Auditor. Mr. Taylor has over twenty (20) years of business and leadership experience in accounting, including experience in financial and business transformation, controls and change management, financial planning and analysis, management reporting, and technical accounting, as well as preparing formal and periodic reports required by the SEC for publicly-listed registrants.

 

 

CEO PAY RATIO

 

Following is a reasonable estimate, prepared under applicable SEC rules, of the ratio of the annual total compensation of our CEO, Sudhakar Kesavan, to the median of the annual total compensation of our other employees.

 

For the fiscal year ended on December 31, 2017, the median of the annual total compensation of all employees of our company (other than our CEO) was $71,095. The annual total compensation of our CEO, as reported in the Summary Compensation Table in this proxy statement, was $3,247,170. Based on this information for 2017, we reasonably estimate that the ratio of our CEO's annual total compensation to the annual total compensation of our median employee was 46:1. Our pay ratio estimate has been calculated in a manner consistent with Item 402(u) of Regulation S-K.

 

Median of the

Annual Total

Compensation of All

Employees (except

CEO)

Annual Total

Compensation of

CEO

Ratio of CEO

Pay to Median

Employee Pay

(A)

(B)

(C) = (B)/(A)

$71,095

$3,247,170

46

 

 

(A)

Median employee’s compensation plus Company’s 401K contribution is used for the calculation. Note: due to an even number of employees, we identified the two employees whose earning comprise the middle pair of numbers, and then selected the employee with the lower total earnings.

 

 

(B)

Data from the 2018 Proxy – Total Compensation Table disclosed for 2017.

 

CEO PAY RATIO

 

To identify the median of the annual total compensation of all our employees, as well as to determine the annual total compensation of our median employee, the methodology and the material assumptions, adjustments, and estimates that we used are set out below.

 

We determined that, as of December 31, 2017, our employee population consisted of 6,585 individuals (including full-time and part time employees, other than the CEO). Of these individuals, 5,741 were located in the U.S. and U.S. territories and 844 were located in 12 other countries around the world1.

 

The scale of our operations in many of these foreign countries is smaller and we employ less than 20 employees in 8 of these 12 countries.

 

We chose to exclude all 47 of our employees in the 8 countries that follow:

 

 

China: 6 employees

 

Congo, The Democratic Republic: 15 employees

 

Ghana: 11 employees

 

Kenya: 4 employees

 

Madagascar: 2 employees

 

Mali: 5 employees

 

Singapore: 3 employees

 

South Africa: 1 employee

 

Additionally, we excluded 126 flexible, part-time employees in the United States that worked zero (0) hours during 2017 and therefore had $0 earnings.

 

In total, we excluded 2.63% of our workforce from the identification of the 'median employee', as permitted by SEC rules.

 

Our population, after taking into consideration the permitted adjustments described above, consisted of 6,412 employees. This includes employees who were hired in 2017, but did not work for us for the entire twelve month period. Our adjusted employee population consisted of 5,615 employees in the U.S. and 797 international employees located collectively in Canada (176), Belgium (221), the United Kingdom (209) and India (191).

 

We identified our median employee based on the total taxable earnings paid during the twelve month period ended December 31, 2017. For purposes of determining the total compensation actually paid, the main items we included are: the amount of base salary (or, in the case of hourly workers, base wages including overtime pay) the employee received during the twelve months ended December 31, 2017, and the amount of any cash incentives paid to the employee in such period, as reflected in our payroll records. We did not annualize the total cash compensation of any permanent employee employed for less than the full year.

 

Except as described in this section, we did not rely on any material assumptions, adjustments (e.g. cost of living adjustments) or estimates (e.g. statistical sampling) to identify our median employee or determine annual total compensation or any elements of annual total compensation for our median employee or our CEO.

 

For purposes of identifying the median employee, we applied the average of 12 exchange rates we used for financial statement conversion purposes for the period of January 2017 through December 2017, which are:

 

 

-

1 CAD = 0.77077 USD

 

 

-

1 EUR = 1.12832 USD

 

 

-

1 GBP = 1.28749 USD

 

 

-

1 INR = 0.01534 USD

 

Once we identified our median employee, we then determined that employee's total compensation, including any perquisites and other benefits, in the same manner that we determine the total compensation of our named executive officers for purposes of the Summary Compensation Table disclosed in the Compensation Discussion & Analysis (“CD&A”) section of this Proxy Statement. The identified median employee is located in Canada, and thus, was paid in Canadian dollars. All currency calculations used the exchange rate provided above. The elements included in the CEO's total compensation are fully discussed in the footnotes to the Summary Compensation Table.

 

The SEC’s pay ratio disclosure rules provide reporting companies with a great deal of flexibility in determining the methodology used to identify the median employee and the pay ratio. Our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures. In addition, the percentage of employees outside of the United States may vary substantially from company to company. Factors such as these may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our sector.

 


1 We treat employee as being designated in the country where they perform their work, not in the country where their payroll location is.

 

SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE 

OFFICERS AND CERTAIN BENEFICIAL OWNERS 

 

SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE OFFICERS AND CERTAIN BENEFICIAL OWNERS

 

The following table sets forth certain information regarding beneficial ownership of our common stock as of April 10, 2018, by:

 

 

each person, or group of affiliated persons, known to us to beneficially own more than 5% of the outstanding shares of our common stock;

 

 

each of our directors and nominees for director;

 

 

each person who was a NEO; and

 

 

all of our directors and executive officers as a group.

 

The percentages shown in the following table are based on 18,795,188 shares of common stock outstanding as of April 10, 2018. Beneficial ownership is determined in accordance with the rules of the SEC, and includes voting and investment power with respect to shares. The number of shares beneficially owned by a person includes shares subject to options, RSUs and PSAs held by that person that were exercisable as of April 10, 2018, or within 60 days of that date. The shares issuable under those options, RSUs and PSAs are treated as if they were outstanding for computing the percentage ownership of the person holding those options, RSUs or PSAs, but are not treated as if they were outstanding for the purposes of computing the percentage ownership of any other person. Unless otherwise indicated below, to our knowledge, all persons named in the table have sole voting and investment power with respect to their shares of common stock, except to the extent authority is shared by spouses under applicable law.

 

The following table sets forth the number of shares of our common stock beneficially owned by the indicated parties. Unless otherwise indicated, the address of each person is: c/o ICF International, Inc., 9300 Lee Highway, Fairfax, Virginia 22031.

 

 

 

Shares beneficially owned

Name and Address of Beneficial Owner

Number

Percentage

     

Directors, Nominee & Executive Officers

   

Sudhakar Kesavan(1)

365,115

1.92%

John Wasson(2)

73,091

*

James C. Morgan(3)

41,912

*

Ellen Glover(4)

39,600

*

Sergio Ostria(5)

22,391

*

Eileen O’Shea Auen

35,072

*

Dr. Srikant M. Datar(6)

35,868

*

Cheryl W. Grisé

18,509

*

Sanjay Gupta

8,009

*

Randall Mehl

947

*

Peter M. Schulte(7)

243,924

1.30%

Michael J. Van Handel

3,590

*

Directors, Director Nominees and Executive Officers as a group (13 persons)

888,632

4.67%

 

 

Beneficial Owners Holding More Than 5%

   

FMR LLC(8)

245 Summer Street

Boston, MA 02210

2,438,265

13.08%

Dimensional Fund Advisors LP (9)

Building One, 6300 Bee Cave Road

Austin, TX 78746

1,582,027

8.49%

Wellington Management Company LLP (10)

280 Congress Street 

Boston, MA 02210

1,566,169

8.40%

BlackRock, Inc. and subsidiaries as a group (11) 

55 East 52nd Street

New York, NY 10055

1,189,384

6.4%

____________________

*

Represents beneficial ownership of less than 1%.

 

SECURITY OWNERSHIP OF DIRECTORS, EXECUTIVE 

OFFICERS AND CERTAIN BENEFICIAL OWNERS 

 

(1)

The total number of shares listed as beneficially owned by Sudhakar Kesavan includes options to purchase 197,745 shares of common stock.

 

(2)

The total number of shares listed as beneficially owned by John Wasson includes options to purchase 14,468 shares of common stock.

 

(3)

The total number of shares listed as beneficially owned by James C. Morgan includes options to purchase 14,559 shares of common stock.

 

(4)

The total number of shares listed as beneficially owned by Ellen Glover includes options to purchase 8,369 shares of common stock.

 

(5)

The total number of shares listed as beneficially owned by Sergio Ostria includes options to purchase 15,276 shares of common stock.

 

(6)

The total number of shares listed as beneficially owned by Dr. Srikant M. Datar includes 33,428 shares of common stock held in an estate planning limited liability company of which Dr. Datar is a co-manager.

 

(7)

The total number of shares listed as beneficially owned by Peter Schulte includes 1,138 shares of common stock that are held indirectly as a result of gifts to immediate family members in his household.

 

(8)

Based upon information contained in the Schedule 13G/A filed by FMR LLC (“FMR”) with the SEC on February 13, 2018, FMR beneficially owned 2,438,265 shares of common stock as of December 31, 2017, with sole voting power over 1,411,237 shares, shared voting power over no shares, sole dispositive power over 2,438,265 shares and shared dispositive power over no shares.

 

(9)

Based upon information contained in the Schedule 13G/A filed by Dimensional Fund Advisors LP (“Dimensional Funds”) with the SEC on February 9, 2018, Dimensional Funds beneficially owned 1,582,027 shares of common stock as of December 31, 2017, with sole voting power over 1,516,512 shares, shared voting power over no shares, sole dispositive power over 1,582,027 shares and shared dispositive power over no shares.

 

(10)

Based upon information contained in the Schedule 13G filed by Wellington Management Company LLC (Wellington) with the SEC on February 8, 2018, in its capacity as an investment adviser, Wellington may be deemed to beneficially own 1,566,169 shares of common stock as of December 31, 2017, with sole voting power over 0 shares, shared voting power over 1,154,443 shares, sole dispositive power over 0 shares and shared dispositive power over 1,566,169 shares.

 

(11)

Based upon information contained in the Schedule 13G/A filed by BlackRock, Inc. (“BlackRock”) with the SEC on January 25, 2018, BlackRock beneficially owned 1,189,384 shares of common stock as of December 31, 2017, with sole voting power over 1,140,126 shares, shared voting power over no shares, sole dispositive power over 1,189,384 shares and shared dispositive power over no shares.

 

EXECUTIVE COMPENSATION 

 

 

EXECUTIVE COMPENSATION 

 

Compensation Discussion and Analysis 

 

In this section, we describe the material components of the Company’s executive compensation program for our NEOs, whose compensation is set forth in the 2017 Summary Compensation Table and other compensation tables contained in this Proxy Statement.

 

   
  NEOs
 

Sudhakar Kesavan, Chairman and CEO

  John Wasson, President and COO
  James C. Morgan, Executive Vice President and CFO
  ●  Ellen Glover, Executive Vice President
  ●  Sergio Ostria, Executive Vice President
     

                

We also provide an overview of our executive compensation philosophy and executive compensation program. In addition, we explain how and why the Compensation Committee of our Board (for purposes of this CD&A, the “Committee”) arrived at the specific compensation decisions regarding our NEOs for fiscal year 2017.

 

The Committee has responsibility for establishing, implementing, and monitoring adherence to the Company’s compensation philosophy. The Committee strives to ensure that the total compensation paid to the Company’s executives is fair, reasonable, and competitive. Generally, the types of compensation and benefits provided to the Company’s NEOs are similar to those provided to other members of the Company’s executive leadership team.

 

Fiscal 2017 – Financial Highlights

 

Fiscal 2017 was a year of progressive improvement for ICF. During fiscal year 2017, ICF received contract awards of $1.3 billion, with more than 100 U.S. federal contracts and task orders and more than 250 additional contracts from state, local and international governments. Our full year 2017 organic revenue growth and Adjusted EPS performance was in line with our expectations. In 2017, the majority of our contract wins represented new business. We ended the year with a strong backlog, as well as a robust pipeline of $4.2 billion, providing positive momentum heading into 2018. Financial highlights for 2017 included the following:

 

 

Total revenues increased 3.7% to $1.23 billion.

 

 

Net income increased 35.0% to $62.9 Million, or 0.1%’–2 and $46.6 million1 excluding the effects of the TCJA.

 

 

Diluted earnings per shares (“EPS”) increased 36.3% to $3.27, or 1.0%1 and $2.421, excluding the effects of the TCJA.

 

Compensation Highlights

 

The Committee took the following actions in fiscal year 2017 and at the beginning of fiscal year 2018 to maintain and improve the pay-for-performance nature of our executive compensation program:

 

 

Reviewed the 2010 Incentive Plan against key institutional investors’ voting policies on equity plans and proxy advisory firms’ equity plan evaluation criteria, which resulted in recommendations for implementing the new 2018 Incentive Plan, as described in this proxy statement and which includes the following features: no dividends on unvested equity awards, non-employee director awards being issued under the 2018 Incentive Plan, changes to reflect the TCJA, and a limit on director compensation. Approval of the 2018 Incentive Plan will be voted on at the 2018 annual meeting of stockholders.

 

 

Supported the continuation of an annual, non-binding advisory vote regarding the Company’s overall pay-for-performance executive compensation program. ICF’s advisory vote regarding overall pay-for-performance at the 2018 annual meeting of stockholders will be the eighth consecutive annual vote by stockholders on this matter.

 

 

Continued utilizing PSAs as a key component of ICF’s long-term incentive program. PSAs are performance contingent awards where executives may earn zero to maximum shares depending on the Company’s actual performance against pre-established performance measures. The performance periods of the PSAs are long-term, and therefore, align executives’ interests with the interests of long-term stockholders. PSAs were first granted to members of ICF’s executive leadership team in 2015, and again in 2016, 2017 and 2018 as a part of the annual equity award program.

 

 

Continued adherence to the Executive Stock Ownership Policy, which limits the sale, transfer or disposition of shares of the Company’s common stock by designated executives (including the NEOs) until the executive has met the requisite stock ownership level. As noted above, as of April 10, 2018, each of our NEOs either met the stock ownership guidelines or is expected to meet the stock ownership guidelines within the specified time period, assuming that PSAs are paid at target.

 

 


1 Refer to Annex A for a discussion of the effects of the TCJA and Management’s Discussion and Analysis – Non-GAAP Disclosures in our recently filed 2017 Form 10-K.

 

EXECUTIVE COMPENSATION 

 

 

Continued the performance focus in the Company’s annual bonus program (the “Annual Incentive Program”) rigorously linking pay to performance. Annual threshold, target and maximum performance goals were established with appropriate incentive payouts at each level.

 

 

Continued to utilize a peer group which encompasses a range of companies that reflect the evolution of ICF’s business strategy. This peer group provides a relevant basis for benchmarking executive pay level, components of executive compensation, mix of compensation components and metrics used to determine awards. The peer group is reviewed and adjusted annually to remove companies no longer on a public exchange and to add companies, as needed, for robust data.

 

 

Extensively reviewed external executive compensation trends to ensure that the Company’s executive compensation practices align with market best practices.

 

Stockholder-Aligned Executive Compensation Practices

 

The Company implements and maintains leading practices in its executive compensation programs as outlined below:

 

What We Do

 

 

Target compensation is analyzed and compared against regressed peer data. Actual compensation may increase or decrease depending on performance.

 

 

Our selection of peer companies is balanced so that the Company’s revenue is close to the median of the peer group.

 

 

The Committee has engaged an independent compensation consultant.

 

 

We require one (1) year minimum vesting for our equity awards, except for grants totaling no more than a maximum of five percent (5%) of the shares available for grant.

 

 

Our annual equity award grants provide for vesting over three (3) years for RSUs and PSAs.

 

 

All NEOs and other designated executive officers are subject to stock ownership requirements which further align their interests with stockholders.

 

 

In accordance with their severance agreements, the CEO and COO have a “double-trigger” in connection with any benefits paid under those agreements in the event of a change of control.

 

 

Our 2010 Incentive Plan includes, and our 2018 Incentive Plan, if approved, will include “double trigger” accelerated vesting for equity awards in the event of a change of control of the Company plus termination within twenty-four (24) months following the change of control for our NEOs.

 

 

We do not issue dividend payments on unvested equity awards.

 

 

Our clawback policy covers cash and equity awards and applies to all employees.

 

 

We have limited perquisites.

 

What We Don’t Do

 

 

Our executive officers and directors are prohibited from hedging Company shares.

 

 

Individual equity grant agreements prohibit the pledging or assignment of stock grants.

 

 

Our 2010 Incentive Plan prohibits, and our 2018 Incentive Plan, if approved, will prohibit the repricing of equity awards or cash-buyout of underwater stock options and PSAs.

 

 

Our 2010 Incentive Plan does not allow, and our 2018 Incentive Plan, if approved, will not allow, the recycling of shares used to exercise options or sold to pay withholding taxes.

 

 

We do not provide tax gross-ups.

 

 

Compensation Philosophy and Objectives

 

The fundamental objectives of the Company’s compensation philosophy remain:

 

Reward performance and contribution to our business. Our compensation programs are designed to reward extraordinary performance with higher compensation. Likewise, where individual performance falls short of expectations and/or Company performance lags behind budgeted plan performance, the programs deliver lower payouts.

 

Pay-for-performance and retention must be balanced. Although performance is a key element of the Company’s compensation philosophy, in order to attract and retain a highly skilled work force we must remain competitive with the pay of our peer companies with which we compete for talent. We assess competitiveness using a peer group methodology that factors in ICF’s relative size compared to the size of our peer group companies through regression analysis.

 

EXECUTIVE COMPENSATION 

 

Compensation should be aligned with stockholder interests. Key employees should receive a substantial proportion of their compensation as equity in order to align their individual financial interests with the financial interests of our stockholders.

 

The relationship between overall Company goals and each individual’s personal goals should be clear. Employees should be able to easily understand how their efforts can affect their pay, both directly through individual performance and indirectly by contributions to the business unit and Company achieving strategic and operational goals.

 

Provide reasonable perquisites for NEOs. Our compensation programs include only those perquisites commonly provided to attract and retain the NEOs and/or improve the NEO’s ability to carry out his or her responsibilities safely and effectively.

 

Guidelines for ICF’s Executive Officer Compensation Program

 

Development of Financial/Strategic Performance Goals. Each year, Company management presents its budget, revenue forecast, and strategy to the Board in the November/December timeframe, allowing the Board and management to develop a consensus on financial and strategic goals for the following year. These goals are reflected in the compensation program for the following year and the metrics that will drive individual performance goals, total compensation targets and actual compensation levels.

 

 

Elements of Compensation Program. Consistent with prior years, the principal components of our NEOs’ 2017 compensation included: (i) base salary, (ii) incentive compensation in the form of cash bonuses and (iii) equity awards. The following table outlines the key components of our compensation program for our NEOs (excluding health and similar benefits, which are generally available to all employees).

 

 

Compensation Element

Purpose

Design

       

Fixed Component

Base Salary

Provides a pay opportunity that is generally competitive with the companies with which we compete for talent

Based on performance, length of time in position and pay relative to market

 

       

 

Annual

Incentive Compensation

Optimize the profitability and growth of the Company through incentives consistent with the Company’s goals

 

Link and align the personal interests of participants with an incentive for excellence in individual performance

 

Promote teamwork

Financial performance targets are established at the beginning of each fiscal year

 

Actual awards will be based on the performance of the Company and the executive against the fiscal year’s goals

 

80% of award based on financial targets and 20% at the discretion of the Committee

Performance-Based

Component

Long-Term Incentive

Equity Awards

Enhance the link between the creation of stockholder value and long-term executive incentive compensation

 

Encourage participants to focus on long-term Company performance

 

Provide an opportunity for increased equity ownership by executives

 

Provide a retention tool for key talent

 

Grants to be made based on performance and service-based as follows:

 

50% performance

50% retention

 

 

50% of award = performance shares with 3 year cliff vesting based on performance metrics

●   2 year adjusted EPS goal

●   3 year rTSR goal as a modifier

50% of award = RSUs with 3 year vesting at 25%, 25%, 50% per year

 

 

EXECUTIVE COMPENSATION 

 

The actual amount of incentive compensation is based on the performance of the Company and the NEOs, meaning the actual mix of pay may be different each year, based on the identified targets for each pay component. This provides the Committee flexibility in awarding incentive compensation and making pay adjustments to maintain competitive levels of total compensation. For each NEO, the Committee reviews a tally sheet which assigns a dollar amount to each identified compensation element as well as current and potential wealth accumulation based on outstanding equity awards. The Committee believes the tally sheet is a useful tool to ensure there is sufficient retention capability built into existing pay packages and that the NEOs have a stake in the Company’s performance, consistent with the interests of Company stockholders.

 

 

CEO and COO Total Compensation Relationship. The Committee has determined that the President and COO’s total targeted annual compensation should generally approximate 60% of the CEO’s total targeted annual compensation, based on consistent, competitive market data for peer companies.

 

Assessment of Annual Performance. For purposes of compensation awards:

 

 

The CEO’s performance is assessed by the Committee and recommendations are submitted to the Board for final determination.

 

 

The President and COO’s performance and the CFO’s performance are assessed by the CEO, and recommendations are submitted to the Committee for final determination.

 

 

The performance of the other NEOs is assessed by the CEO, President and COO, and the CFO, and recommendations are submitted to the Committee for final determination.

 

Impact of Acquisitions. Because strategic merger and acquisition transactions have historically been an integral element of the Company’s growth strategy, our executive compensation structure reflects the time and effort needed to successfully identify, negotiate and integrate acquisitions. Typically, our executives are rewarded for this element through share price appreciation in the long-term incentive component rather than receiving an explicit cash award tied to merger and acquisition transactions. However, should a transaction exceed 10% of the Company’s prior year’s gross revenue, then based on the timing and size of the acquisition, executives may be given an opportunity to earn an extra incentive with no change in previously established performance targets.

 

Implementing Our Objectives 

 

Use of Market Data

 

The Committee annually reviews our peer group and the methodology for choosing participating companies. The five (5) guiding principles used for the selection of peer companies are:

 

 

Size: We aim for the overall peer group median to approximate our revenue. We generally select peers between 0.5x to 2.5x of our revenue. In some instances a peer may fall outside this range if it is otherwise deemed a strong business and talent comparator.

 

 

Similar business characteristics: Selected peer companies either compete with us or have similar market demands.

 

 

Talent pool: Selected peer companies compete with us for talent.

 

 

External constituents: Some selected peer companies were named by our equity research analysts as peers, or other companies that identify ICF as a peer.

 

 

Sectors: In addition to focusing on Professional Services (our designated Global Industry Classification Standard GICs), other relevant sectors, including IT Services, Health Care Technology and Commercial Services were also reviewed.

 

EXECUTIVE COMPENSATION 

 

We believe the companies selected for our 2017 peer group (the “2017 Peer Group”) continue to reflect our current mix of services. However, Leidos Holdings Inc., Gartner Inc., CDI Corp., Corporate Executive Board Co, the Advisory Board Company, and NCI, Inc. were removed due to merger and acquisition activities, and Engility Corporation, a defense contractor, was added during 2017. IHS Corp. was included in our peer group used in 2016 to assist with 2017 pay decisions, but was removed from the 2017 Peer Group, due to acquisition. The companies comprising the 2017 Peer Group are as follows:

 

Number

Company Name

2017 Revenue (1)

(millions)

1

Booz Allen Hamilton Holding

$5,804

2

Science Applications International Corp.

$4,450

3

CACI International Inc.

$4,355

4

Convergys Corp.

$2,792

5

Tetra Tech Inc.

$2,753

6

Unisys Corp.

$2,742 

7

Maximus Inc.

$2,451

8

Engility Corporation

$1,932

9

FTI Consulting Inc.

$1,808

10

Mantech International Corp.

$1,717

 

ICF International, Inc.

$1,229

11

Navigant Consulting Inc.

$1,032

12

Cbiz Inc.

$   855

13

Huron Consulting Group Inc.

$   808

14

VSE Corp.

$   760

15

Resources Connection Inc.

$   583

16

GP Strategies Corp.

$   509

17

CRA International Inc.

$   370

18

Exponent Inc.

$   348

19

Leidos Holdings, Inc.

*

20

Gartner Inc.

*

21

CDI Corp.

*

22

Corporate Executive Board Co.

*

23

The Advisory Board Company

*

24

NCI, Inc.

*

________

*Removed from the 2017 Peer Group due to merger and acquisition activities.

 

(1) Based on the most recent completed fiscal year-end.

 

Annual Compensation Practice Review

 

In anticipation of the upcoming executive compensation review cycle, the Committee continued its engagement of Aon Hewitt as its independent compensation consultant (“Aon Hewitt”) to assist the Committee in reviewing the Company’s compensation policies and practices for 2017. In particular, the Committee asked Aon Hewitt to discuss current executive compensation trends and provide feedback regarding management’s competitive assessment for executive positions. For additional information regarding Aon Hewitt and its relationship with the Committee see “Role of Compensation Consultants in Compensation Decisions” below.

 

In making its compensation determinations, the Committee reviewed and assessed the analysis and recommendations of Company management. The Committee also requested the views of Aon Hewitt and obtained an assessment of management’s analysis from management’s executive compensation consultant, Semler Brossy Consulting Group, LLC (“Semler Brossy”). Based on a combination of management’s assessment and discussions with Aon Hewitt and Semler Brossy, the Committee determined that the Company’s executive compensation opportunities are generally aligned with the market. This conclusion was reflected in the Committee’s compensation decisions. In connection with its evaluation of management’s recommendations, as well as its discussions with Aon Hewitt and Semler Brossy, the Committee determined that while the peer group compensation data was the appropriate primary focus, the Company does compete with many other companies for top executive-level talent. Thus, the peer group assessment is just one of many inputs into the Committee’s decisions.

 

Role of Management in Compensation Decisions. In early 2017, the Committee made compensation determinations for all NEOs. In the case of executives other than the CEO, the CEO annually reviews the performance of the executive team, provides a summary of the fiscal year accomplishments by the executive team and Company as a whole to the Committee, and then makes recommendations to the Committee based on these reviews and an analysis of competitive market data. The Committee considers these CEO recommendations when making its determinations as to the President and COO and CFO, and takes into account input from the CEO, President and COO, and CFO with respect to other NEOs.

 

In developing its recommendations on 2017 target total compensation, the Committee reviewed the short-term incentive design framework, and found that, like the Company, most members of the 2017 Peer Group use a combination of measures to evaluate performance for the calculation of incentive awards, such as earnings per share and revenue, as well as including a discretionary component. In the review of the competitive pay assessment, the Committee determined that long-term incentive compensation for Messrs. Kesavan, Wasson, Morgan, and Ostria, was near the peer group median. Ms. Glover’s target grant value for long term equity was increased to align with market practice for comparable positions considering her expanded role, as discussed in the “2018 Equity Awards” section.

 

EXECUTIVE COMPENSATION 

 

Role of Compensation Consultants in Compensation Decisions. In retaining Aon Hewitt in 2017, the Committee determined, and periodically re-assesses such determination, that Aon Hewitt’s engagement does not present any conflicts of interest. In making this determination, the Committee considered the following factors, consistent with SEC requirements:

 

 

(i)

the provision of other services to the Company by Aon Hewitt (including without limitation, the engagement of Aon Hewitt by the Governance and Nominating Committee);

 

 

(ii)

the fees to be paid to Aon Hewitt by the Committee and by the Governance and Nominating Committee;

 

 

(iii)

the policies and procedures of Aon Hewitt that are designed to prevent conflicts of interest;

 

 

(iv)

any business or personal relationship between Aon Hewitt and a member of the Committee;

 

 

(v)

any stock of the Company owned by Aon Hewitt or the Aon Hewitt personnel providing services to the Committee; and

 

 

(vi)

any business or personal relationships between the executive officers of the Company and Aon Hewitt or the Aon Hewitt personnel providing services to the Committee.

 

The Committee’s charter provides the Committee with sole authority to retain, terminate and approve fees of a compensation consultant to the Committee and that all such fees, as determined by the Committee, shall be paid by the Company.

 

In 2017, Aon Hewitt continued to serve in an advisory capacity to review and discuss with the Committee and/or the Committee Chair the competitive assessment performed by the Company’s management, offer suggestions and provide insight into market compensation trends.

 

In addition, as noted above, management retained Semler Brossy to assist in developing its recommendations to the Committee regarding compensation benchmarking, compensation practices, short-term incentive design, and long term incentive design, particularly the Performance Program.

 

The Committee considered management’s assessment and recommendations, as well as the information provided by both Aon Hewitt and Semler Brossy (with respect to management’s assessment), in making its compensation determinations. Pursuant to its charter, however, the Committee retains final approval of all material elements of executive compensation, with the exception of CEO compensation, which is approved by the Board of Directors.

 

Effect of 2017 Say on Pay Vote

 

At the Company’s 2017 annual meeting, stockholders cast an advisory vote regarding the Company’s executive compensation. Approximately 97% of the votes cast on the Say on Pay proposal were voted in favor of the Company’s executive compensation program. Given this significant level of support from the Company’s stockholders, the Committee and the Board believe that the Company is taking a measured, informed and responsible approach to executive compensation which incorporates all of the Company’s objectives and policies set forth above, including, but not limited to, a pay-for-performance culture that retains executives who perform strongly. For 2017, and as set forth below, the Board and the Committee considered this substantial affirmation as one of many factors in crafting its compensation program.

 

Executive Compensation Components 

 

For the fiscal year ended December 31, 2017, the principal components of compensation for our NEOs included: (i) base salary; (ii) incentive compensation in the form of cash bonuses; and (iii) equity awards.

 

For the NEOs, the Committee has discretion with respect to the size, types, amounts, and principal components of compensation, and, in the case of cash bonuses and equity awards, whether to make any available. For incentive compensation, the Committee establishes pre-determined percentage weights for each component of the annual bonus, and pre-determined percentage weights for equity awards. The following section summarizes the role of each compensation component and how decisions are made for the NEOs.

 

2017 Base Salary

 

Taking into account; (i) management’s assessment that the base salary paid to our NEOs for 2017 was generally consistent with the 2016 Peer Group; (ii) management’s recommendation; and (iii) the Committee’s discussions with Aon Hewitt, the Committee decided to increase the base salary levels of the Company’s executive officers by 3%, except for Mr. Kesavan. The Committee decided to keep Mr. Kesavan’s base salary at the 2016 level, but increase his annual equity award level to achieve a comparable total compensation mix related to our 2017 Peer Group. Therefore, the base salary for Mr. Kesavan continued to be $866,091. The base salary for Mr. Wasson was $657,218; Mr. Morgan’s was $530,483; Ms. Glover’s was $402,106; and Mr. Ostria’s was $402,106. Such salaries were effective as of March 4, 2017.

 

2018 Base Salary

 

Taking into account; (i) management’s assessment that the proposed base salary paid to our NEOs for 2018 is generally consistent with the 2017 Peer Group; (ii) management’s recommendation; and (iii) the Committee’s discussions with Aon Hewitt, the Committee decided to increase the base salary levels of the Company’s executive officers by 3% except for Ms. Glover, who received a 6% increase to better align with her expanded role with the Company and market practice for comparable positions. Therefore, the base salary for Mr. Kesavan was increased to $892,074; Mr. Wasson’s to $676,956; Mr. Morgan’s to $546,398; Ms. Glover’s to $426,254; and Mr. Ostria’s to $414,190. Such increases were effective as of March 3, 2018.

 

EXECUTIVE COMPENSATION 

 

Annual Incentive Compensation 

 

Both our cash bonuses and equity awards are made pursuant to our 2010 Incentive Plan. The 2010 Incentive Plan is, and the 2018 Incentive Plan, if approved, will be designed to: (i) optimize the profitability and growth of the Company through incentives consistent with the Company’s goals; (ii) link and align the personal interests of participants with an incentive for excellence in individual performance; and (iii) promote teamwork.

 

Annual Incentive Program for 2017. The Committee established threshold, target and maximum levels for each of the 2017 performance goals. The threshold level ranges from 80% to 90% of the goal. The maximum level ranges from 110% to 120% of the goal. The payouts for achieving at the various performance levels are:

 

 

Threshold              50%

 

 

Target                  100%

 

 

Maximum           175%

 

Performance between threshold and maximum levels will be determined by straight-line interpolation between the targeted amounts. Performance below any threshold level results in no bonus amount for that performance goal.

 

For each award granted under the Annual Incentive Program for 2017, an executive receives eighty percent (80%) of the award in the form of a “performance-based” bonus opportunity tied to financial and strategic goals. Twenty percent (20%) of the award is in the form of a discretionary bonus opportunity based on specific business challenges faced by the executive during the fiscal year. The discretionary bonus amount is contingent on achievement of non-financial goals previously identified for each executive when set by the Committee. The Committee sets each of the goals at levels that it believes are attainable but which still require consistently high level performance by each executive.

 

Based on the same factors used to determine base salary, the Committee concluded that target cash incentive awards as a percentage of base salary would be as follows: Mr. Kesavan, 100%; Mr. Wasson, 80%; Mr. Morgan, 70%; Ms. Glover, 50%; and Mr. Ostria 50%. Target cash incentive awards as a percentage of base salary remained the same as the prior year.

 

The performance factors to be taken into account in defining each NEO’s eligibility for an incentive award also remained largely consistent with 2016.

 

The underlying financial goals that make up these performance factors are meant to challenge our NEOs. For this reason, the target financial goals and the actual results used for calculating incentive awards may differ from our publicly disclosed financial results. The 2017 performance goals were set based on the 2016 actual results and anticipated 2017 performance.

 

The 2017 Company performance goals and actual results applicable to each of the NEOs, as described herein, are shown in the table below.

 

Performance

 

2017 (2)

 
Factors  

Minimum

Threshold

   

Target

   

Maximum

   

Actual

 

Gross Revenue

    1,098.0       1,220.0       1,342.0       1,229.2  

Adjusted EPS (1)

    2.66       3.13       3.60       2.99  

Total Govt. Contract Backlog

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