ENERNOC, INC. FOURTH AMENDED AND RESTATED NON-EMPLOYEE DIRECTORCOMPENSATION POLICY
Exhibit 10.14
ENERNOC, INC.
FOURTH AMENDED AND RESTATED NON-EMPLOYEE DIRECTOR COMPENSATION POLICY
The Board of Directors of EnerNOC, Inc. (the “Company”) has approved the following policy which establishes compensation to be paid to non-employee directors of the Company, to provide an inducement to obtain and retain the services of qualified persons to serve as members of the Company’s Board of Directors (the “Board of Directors”). Each such director will receive as compensation for his or her services (i) an equity grant upon his or her initial appointment or election to the Board of Directors, (ii) an annual equity grant for his or her continued service on the Board of Directors and (iii) annual cash fees , all as further set forth herein.
Applicable Persons
This Policy shall apply to each director of the Company who (a) is not an employee of the Company or any Affiliate, (b) is not associated with the Company’s principal stockholders, and (c) does not receive compensation as a consultant to the Company or any Affiliate unless such compensation is received solely for services provided as a member of the Strategic Advisory Board (each, an “Outside Director”). Affiliate shall mean a corporation which is a direct or indirect parent or subsidiary of the Company, as determined pursuant to Section 424 of the Internal Revenue Code of 1986, as amended.
Equity Grant upon Initial Appointment or Election as a Director
Number of Shares
Each new Outside Director on or after the date of his or her initial appointment or election to the Board of Directors, shall be granted such number of restricted shares of the Company’s common stock, restricted stock units and/or a non-qualified stock option to purchase such number of shares of the Company’s common stock as determined by the Compensation Committee of the Board of Directors (the “Compensation Committee”) on the date of grant in accordance with the fair value model, as further described under “Equity Grant Valuation Methodology” in the “Compensation Discussion and Analysis” of the Company’s proxy statement for the 2013 annual meeting of stockholders and using the average closing price of the Company’s common stock, as quoted on such exchange or market on which the Company’s common stock is listed, for the thirty trading days preceding the date of grant (the “Fair Value Methodology”).
Vesting Provision
The restricted shares, restricted stock units and/or options shall vest over a three-year period, at a rate of 8.33% per quarter.
Exercise Price and Term of Option
Each option granted shall have an exercise price per share equal to the Fair Market Value (as defined in the Company’s then applicable stockholder approved stock plan (the “Stock Plan”)) of the shares of common stock of the Company on the date of grant of the option, have a term of seven (7) years and shall be subject to the terms and conditions of the Stock Plan. Each such option grant shall be evidenced by the issuance of a non-qualified stock option agreement.
Effect on Restricted Shares or Restricted Stock Unit Grants of Early Termination of Service
If an Outside Director:
| a. | ceases to be a member of the Board of Directors for any reason other than death or disability, all restricted shares or restricted stock units that remain subject to forfeiture provisions shall be immediately forfeited to the Company; or |
| b. | ceases to be a member of the Board of Directors by reason of his or her death or disability, all restricted shares or restricted stock units that remain subject to forfeiture provisions shall be immediately forfeited to the Company; provided, however, that in the event such forfeiture provisions lapse periodically, such provisions shall lapse to the extent of a pro rata portion of the restricted shares or restricted stock units subject to such grant through the date of his or her death or disability as would have lapsed had he or she not died or become disabled. |
Effect on Options of Early Termination of Service
If an Outside Director:
| a. | ceases to be a member of the Board of Directors for any reason other than death or disability, any then vested and unexercised options granted to such Outside Director may be exercised by the director within a period of three (3) months after the date the director ceases to be a member of the Board of Directors and in no event later than the expiration date of the option; or |
| b. | ceases to be a member of the Board of Directors by reason of his or her death or disability, any then vested and unexercised options granted to such director may be exercised by the director (or by the director’s personal representative, or the director’s survivors) within a period of one (1) year after the date the director ceases to be a member of the Board of Directors and in no event later than the expiration date of the option. |
Change of Control
In the event of a Change of Control (as defined below), the vesting of all outstanding restricted shares restricted stock units and/or options granted to each Outside Director shall be accelerated in full. For purposes of this Policy, a “Change of Control” shall mean the occurrence of any of the following events:
| (i) | Ownership. Any “Person” (as such term is used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended) becomes the “Beneficial Owner” (as defined in Rule 13d-3 under said Act), directly or indirectly, of securities of the Company representing 50% or more of the total voting power represented by the Company’s then outstanding voting securities (excluding for this purpose the Company or its Affiliates or any employee benefit plan of the Company) pursuant to a transaction or a series of related transactions which the Board of Directors does not approve; or |
| (ii) | Merger/Sale of Assets. A merger or consolidation of the Company whether or not approved by the Board of Directors, other than a merger or consolidation which would result in the voting securities of the Company outstanding immediately prior thereto continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or the parent of such corporation) at least 50% of the total voting power represented by the voting securities of the Company or such surviving entity or parent of such corporation outstanding immediately after such merger or consolidation, or the stockholders of the Company approve an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets; or |
| (iii) | Change in Board Composition. A change in the composition of the Board of Directors, as a result of which fewer than a majority of the directors are Incumbent Directors. “Incumbent Directors” shall mean directors who either (A) are directors of the Company as of the Company’s 2013 annual meeting of stockholders, or (B) are elected, or nominated for election, to the Board of Directors with the affirmative votes of at least a majority of the Incumbent Directors at the time of such election or nomination (but shall not include an individual whose election or nomination is in connection with an actual or threatened proxy contest relating to the election of directors to the Company). |
Annual Equity Grant and Fees
Each Outside Director shall be compensated on an annual basis for providing services to the Company and will receive each year he or she is in office:
| • | An equity award in the form of: |
| • | a fully vested stock award of the Company’s common stock as determined by the Compensation Committee on the date of grant in accordance with the Fair Value Methodology; and/or |
| • | a fully vested non-qualified stock option to purchase such number of shares of the Company’s common stock as determined by the Compensation Committee on the date of grant in accordance with the Fair Value Methodology . Each such stock option will terminate on the earlier of seven (7) years from the date of grant or three (3) months after the recipient ceases to serve as a director, except in the case of death or disability, in which event the option will terminate one (1) year from the date of the director’s death or disability. The exercise price per share of these options will be equal to the Fair Market Value of the shares of common stock of the Company on the date of grant of the option. |
| • | a $50,000 annual cash retainer fee (the “Basic Retainer Fee”) payable in arrears in equal installments on a quarterly basis, provided that if an Outside Director dies, resigns or is removed during any quarter, he or she will be entitled to a cash payment on a pro rata basis through his or her last day of service as an Outside Director. |
Board Committee and Lead Director Compensation
The (i) chairman and members of the Company’s audit, compensation, nominating and governance, mergers and acquisition and technology committees and (ii) the lead independent director will receive annual cash fees (the “Additional Retainer Fees” and collectively with the Basic Retainer Fee, the “Retainer Fees”) payable in arrears in equal installments on a quarterly basis, provided that if an Outside Director dies, resigns or is removed during any quarter, he or she will be entitled to a cash payment on a pro rata basis through his or her last day of service as an Outside Director:
| Chairman | Other Members | |||||||
| Audit committee: | $ | 20,000 | $ | 10,000 | ||||
| Compensation committee: | $ | 15,000 | $ | 7,500 | ||||
| Nominating and Governance committee: | $ | 10,000 | $ | 5,000 | ||||
| Mergers and Acquisitions committee: | $ | 10,000 | $ | 5,000 | ||||
| Technology committee: | $ | 10,000 | $ | 5,000 | ||||
Lead Independent Director: $20,000
Share Retention and Ownership Guidelines
In February 2013, the Compensation Committee approved the Share Retention and Ownership Guidelines for members of the Company’s Board of Directors. The Share Retention and Ownership Guidelines provide that within four years of the date the policy became effective, or within four years after becoming a director, each director shall own a minimum of 4x the Basic Retainer Fee. The ownership guideline for each director will be converted into a number of shares on the first day of each fiscal year based on the average closing price of a share of the Company’s stock for the previous fiscal year. The Compensation Committee is responsible for monitoring compliance with the Share Retention and Ownership Guidelines. Shares that count toward the ownership target include all shares directly or beneficially owned by the director, unvested restricted stock granted under the Stock Plan (restricted stock will be applied toward the ownership requirements based on the value of restricted stock after taking into account any required share withholding) and shares purchased on the open market.
Expenses
Upon presentation of documentation of such expenses reasonably satisfactory to the Company, each Outside Director shall be reimbursed for his or her reasonable out-of-pocket business expenses incurred in connection with attending meetings of the Board of Directors, Committees thereof or in connection with other Board related business.
Amendments
The Board of Directors shall review this Policy from time to time to assess whether any amendments in the type and amount of compensation provided herein should be adjusted in order to fulfill the objectives of this Policy.
