UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 28, 2015
CONNECTURE, INC.
(Exact name of registrant as specified in its charter)
| Delaware | 001-36778 | 58-2488736 | ||
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S Employer Identification No.) |
18500 West Corporate Drive, Suite 250
Brookfield, WI 53045
(Address of principal executive offices, including zip code)
(262) 432-8282
(Registrant’s telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):
| ¨ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| ¨ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| ¨ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| ¨ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
| Item 5.02 | Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers. |
Approval of 2015 Compensation, Bonus Plan and Equity Grants
On April 28, 2015, the Compensation Committee (the “Committee”) of the Board of Directors (the “Board”) of Connecture, Inc. (the “Company”) approved base salaries for the Company’s named executive officers for the fiscal year ending December 31, 2015. In addition, the Committee approved 2015 target bonus payment percentages for each of the named executive officers under the Company’s 2015 Bonus Plan (the “Plan”).
On April 29, 2015, the Board approved the Plan. The Plan provides for the payment to certain of the Company’s employees and executive officers, including the Company’s named executive officers, of cash bonuses based upon the achievement of certain performance measures and payout formulas. For Robert Douglas Schneider and James P. Purko, the Company’s President and Chief Executive Officer and Chief Financial Officer and Secretary, respectively, achievement of the performance measures will be determined by reference to the Company’s consolidated bookings, revenue and adjusted EBITDA. For Mark E. Granville, Senior Vice President and General Manager, InsureAdvantage, achievement of the performance measures will be determined by reference both to the Company’s consolidated bookings, revenue and adjusted EBITDA and to the revenue and gross margin of the business unit of which Mr. Granville is a general manager. Targets for the foregoing performance measures will be determined by the Committee or the Board in connection with its annual budgeting process. The foregoing description of the Plan does not purport to be complete and is qualified in its entirety by reference to the full text of the Plan, which is filed as Exhibit 10.1 to this Current Report on Form 8-K and is incorporated herein by reference.
In addition, on April 29, 2015, the Board approved equity-based incentives to the Company’s named executive officers that were granted on such date pursuant to the Company’s 2014 Equity Incentive Plan and its related agreements, copies of which have been previously filed with the Securities and Exchange Commission (the “Commission”).
The following table sets forth the foregoing 2015 base salaries, target bonus payments and equity incentive grants for each of the Company’s named executive officers:
| Named Executive Officer |
2015 Base Salary | 2015 Target Bonus(3) |
Stock Options(4) |
Restricted Stock Units(5) |
||||||||||||
| Robert Douglas Schneider President and Chief Executive Officer |
$ | 400,000 | (1) | 125 | % | 60,000 | 20,000 | |||||||||
| James P. Purko Chief Financial Officer and Secretary |
$ | 280,000 | (1) | 50 | % | 37,500 | 12,500 | |||||||||
| Mark E. Granville Senior Vice President and General Manager, InsureAdvantage |
$ | 240,000 | (2) | 50 | % | 30,000 | 10,000 | |||||||||
| (1) | Effective as of January 1, 2015. |
| (2) | Effective as of April 1, 2015. |
| (3) | The target bonus is a percentage of base salary. |
| (4) | All stock options granted have an exercise price equal to the closing price per share of the Company’s common stock on the date of grant. One third (1/3rd) of the options vest on the first anniversary of July 1, 2015, the vesting commencement date, and an additional one thirty-sixth (1/36th) of the options vest on the corresponding day of each month thereafter, such that the options will be fully vested as of the three year anniversary of the vesting commencement date. |
| (5) | Represents the right to receive one share of the Company’s common stock per restricted stock unit. One third (1/3rd) of the restricted stock units will vest on each anniversary of July 1, 2015, the vesting commencement date, such that the restricted stock units will be fully vested as of the three year anniversary of the vesting commencement date. |
Amendment of Employment Agreements with James P. Purko and Mark E. Granville
On April 29, 2015, the Company and Messrs. Purko and Granville entered into amendments to their existing separation pay agreements to provide that in the event that either Mr. Purko or Mr. Granville is terminated without cause, he will be entitled to receive his then current base salary for a period of nine months from the date of such termination and the premium for his and his dependents’ group health care continuation coverage for nine months (the “Amendments”). The foregoing description of the Amendments does not purport to be complete and is qualified in its entirety by reference to the full text of the Amendments, which were filed as Exhibits 10.14.3 and 10.13.3, respectively, to the Company’s Amendment No. 1 on Form 10-K/A for the fiscal year ended December 31, 2014, filed with the Commission on April 29, 2015, and incorporated herein by reference.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits |
| Exhibit |
Description | |
| 10.1 | 2015 Bonus Plan | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| CONNECTURE, INC. | ||||
| Date: May 1, 2015 | /s/ James P. Purko | |||
| James P. Purko Chief Financial Officer | ||||
EXHIBIT 10.1
CONNECTURE, INC.
2015 Bonus Plan
Overview
The purpose of this 2015 Bonus Plan (this “Plan”) is to encourage the participating employees of Connecture, Inc. (the “Company”) to contribute to the achievement of the Company’s goals and to share in the rewards of the Company’s success. The term of this Plan is for the 2015 calendar year.
Eligible Employees
To be eligible to participate in the Plan, a person must be a regular full-time employee of the Company or one of its wholly-owned subsidiaries. Each participant’s aggregate annual target bonus shall be communicated to such participant in a separate supplement to this Plan.
Bonus Calculation and Components
Bonus Calculation
Bonuses under the Plan will be largely determined by the Company’s performance with respect to the following components: bookings, revenue, adjusted EBITDA and gross margin. Adjustments may be made from time to time at the sole discretion of the Compensation Committee of the Company’s Board of Directors (the “Compensation Committee”) (or its designee) to include or exclude certain items. Bonus amounts will generally be paid during the first calendar quarter following the end of the year following approval of the Company’s annual financial statements.
Except as otherwise set forth herein or to the extent that an employee receives written notice from our Chief Executive Officer that different bonus criteria is applicable to such employee, such employee shall be eligible to receive an aggregate bonus based on a specific percentage of such employee’s base salary. The amount of the bonus will be determined by the applicable percentage of completion of each target, the applicable target’s associated weight and such employee’s percentage payout. The percent achievement of a target within the percentage payout range is to bear a direct relationship to the percentage payout ranges for such employee.
Bookings
The bookings component consists of monthly bookings based on committed or contracted levels in the Company’s customer agreements. Bookings may be measured on a consolidated basis or by reference to a particular segment or business unit, or a weighted combination thereof. The targets for this component will be determined by the Compensation Committee or the Board of Directors in connection with its annual budgeting process.
Revenue
The revenue component may consist of the Company’s consolidated revenue or the revenue of a particular segment or business unit of the Company, or a weighted combination thereof. The targets for this component will be determined by the Compensation Committee or the Board of Directors in connection with its annual budgeting process.
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Adjusted EBITDA
The Adjusted EBITDA component consists of the Company’s Adjusted EBITDA, which the Company defines as net loss before net interest, other expense, taxes, depreciation and amortization expense, adjusted to eliminate stock-based compensation and non-cash impairments of goodwill, intangible and long-lived assets. Adjusted EBITDA may be measured on a consolidated basis or by reference to a particular segment or business unit, or a weighted combination thereof. The targets for this component will be determined by the Compensation Committee or the Board of Directors in connection with its annual budgeting process.
Gross Margin
The gross margin component may consist of the Company’s consolidated gross margin or the gross margin of a particular segment or business unit of the Company, or a weighted combination thereof. The targets for this component will be determined by the Compensation Committee or the Board of Directors in connection with its annual budgeting process.
Payout Formula
Executive Officers
Certain executive officers of the Company shall be eligible to receive an aggregate target bonus equal to a percentage of such officer’s base salary, as agreed to between the executive officer and the Company. The performance components of each executive officer’s bonus calculation shall be determined on the basis of consolidated Company performance. The percentage payout ranges and target weights for executive officers are as follows:
| Target |
Relative Weight | |
| Company Consolidated Bookings |
33.33% | |
| Company Consolidated Revenue |
33.33% | |
| Company Consolidated Adjusted EBITDA |
33.34% | |
| Total: |
100% |
| Percent Achievement of Bookings, Revenue and Adjusted EBITDA Targets |
Percentage Payout | |
| 0% – 79.9% |
0% | |
| 80% – 89.9% |
50% – 74.99% | |
| 90% – 99.9% |
75% – 99.99% | |
| 100% – 109.9% |
100% – 109.9% | |
| 110% – 119.9% |
110% – 119.9% | |
| 120% – 130% |
120% – 135% |
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General Managers
Certain employees with a title of “general manager” shall be eligible to receive an aggregate target bonus equal to a percentage of such general manager’s base salary, as agreed to between the general manager and the Company. The performance components of each general manager’s bonus calculation shall be determined on the basis of both consolidated Company performance and the performance of such general manager’s business unit or segment, with the segment-related target bonus only payable in the event the Company achieves its consolidated objectives for the year. The percentage payout ranges and target weights for general managers are as follows:
| Target |
Relative Weight | |
| Company Consolidated Bookings |
16.66% | |
| Company Consolidated Revenue |
16.67% | |
| Company Consolidated Adjusted EBITDA |
16.67% | |
| Segment or Business Unit Revenue |
25% | |
| Segment or Business Unit Gross Margin |
25% | |
| Total: |
100% |
| Percent Achievement of Consolidated Bookings, Revenue and Adjusted EBITDA Targets |
Percentage Payout | |
| 0% – 79.9% |
0% | |
| 80% – 89.9% |
50% – 74.99% | |
| 90% – 99.9% |
75% – 99.99% | |
| 100% – 109.9% |
100% – 109.9% | |
| 110% – 119.9% |
110% – 119.9% | |
| 120% – 130% |
120% – 135% |
| Percent Achievement of Segment or Business Unit Bookings, Revenue and Adjusted EBITDA Targets |
Percentage Payout | |
| 0% – 79.9% |
0% | |
| 80% – 89.9% |
50% – 74.99% | |
| 90% – 99.9% |
75% – 99.99% | |
| 100% – 109.9% |
100% – 139.9% | |
| 110% – 119.9% |
110% – 119.9% | |
| 120% – 130% |
120% – 135% |
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FINAL
General Provisions
| • | Bonuses are subject to all applicable taxes and other required deductions. |
| • | The Plan will not be available to employees subject to the laws of any jurisdiction which prohibits any provisions of this Plan or in which tax or other business considerations make participation impracticable in the judgment of the Board of Directors. |
| • | The Plan does not constitute a guarantee of employment nor does it restrict the Company’ rights to terminate employment at any time or for any lawful reason. |
| • | The Plan does not create vested rights of any nature nor does it constitute a contract of employment or a contract of any other kind. The Plan does not create any customary concession or privilege to which there is any entitlement from year-to-year, except to the extent required under applicable law. Nothing in the Plan entitles an employee to any remuneration or benefits not set forth in the Plan nor does it restrict the Company’ rights to increase or decrease the compensation of any employee, except as otherwise required under applicable law. |
| • | The Plan shall not become a part of any employment condition, regular salary, remuneration package, contract or agreement, but shall remain gratuitous in all respects. Bonuses are not to be taken into account for determining severance pay, termination pay, “extra months” bonuses or payments, or any other form of pay or compensation. |
| • | The Plan is provided at the Company’s sole discretion and the Company may modify or eliminate it at any time, individually or in the aggregate, prospectively or retroactively, without notice or obligation. In addition, there is no obligation to extend or establish a similar plan in subsequent years. |
| • | The Plan shall not be pre-funded. The Company shall not be required to establish any special or separate fund or to make any other segregation of assets to assure the payment of bonuses. |
| • | This Plan constitutes the entire arrangement regarding the Plan, supersedes any prior oral or written description of the Plan and may not be modified except by a written document that specifically references this Plan and is signed by the Company’s Chief Executive Officer. |
| • | Employees who resign or are terminated prior to the actual payment of a bonus shall not receive a bonus. |
| • | Eligible employees who begin employment with the Company after the first day of the fiscal year for which a bonus is paid shall be eligible to receive a pro-rated bonus for such year. Employees are not eligible to participate for the year of hire if employment begins on or after October 1st. |
| • | Employees who are separated from employment with the Company due to divestiture, closure, or dissolution of a business are not eligible to receive a bonus. |
| • | Independent contractors, consultants, individuals who have entered into an independent contractor or consultant agreement, temporary employees, contract employees and interns are not eligible to participate in the Plan. |
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