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TABLE OF CONTENTS
UNITED STATES SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14AProxy Statement Pursuant to Section 14(a) of
the Securities Exchange Act of 1934
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☑ DefinitiveProxyStatement
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CHARAHSOLUTIONS,INC.(NameofRegistrantasSpecifiedInItsCharter)
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CHARAH SOLUTIONS, INC.
Notice of Annual Meeting and
Proxy Statement
2020 Annual Meeting of Stockholders June 5, 2020
TABLE OF CONTENTS
CHARAH SOLUTIONS, INC. 12601PlantsideDrive
Louisville,Kentucky40299
April24,2020
DearStockholder:
OnbehalfoftheBoardofDirectorsandthemanagementofCharahSolutions,Inc.,Iinviteyoutothe2020AnnualMeetingofStockholders(the“AnnualMeeting”)tobeheldat10:00a.m.,EasternTime,onFriday,June5,2020.Thisyear’sAnnualMeetingwillbeheldexclusivelyvialivewebcast.Asaresultoftheonlineformat,weareabletoexpandparticipantaccess,improvecommunicationwithourstockholders,andreducecosts,allwhileprovidingourstockholdersthesameopportunitiestovoteandaskquestionsthattheywouldhavehadatanin-personmeeting.Thisapproachalsoenablesparticipationbyournationalcommunityandalignswithourstrategicgoaltoleadwithbroadersustainabilitygoals.
DetailsregardinghowtoparticipateintheAnnualMeetingvialivewebcastandthebusinesstobeconductedaredescribedintheaccompanyingNoticeof2020AnnualMeetingofStockholdersandProxyStatement.
Yourvoteisimportant.IhopethatyouwillparticipateintheAnnualMeeting,butevenifyouareplanningtoparticipate,Istronglyencourageyoutovoteassoonaspossibletoensurethatyoursharesarerepresentedatthemeeting.TheaccompanyingProxyStatementexplainsmoreaboutvoting.Pleasereaditcarefully.
Thankyouforyourcontinuedsupport.
Sincerely,
StephenR.TritchChairman of the Board
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CHARAH SOLUTIONS, INC. 12601PlantsideDrive
Louisville,Kentucky40299 (502)245-1353
Notice of 2020 Annual Meeting of Stockholders
The2020AnnualMeetingofStockholders(the“AnnualMeeting”)ofCharahSolutions,Inc.(the“Company”)willbeheldat10:00a.m.,EasternTime,onFriday,June5,2020vialivewebcastatwww.virtualshareholdermeeting.com/CHRA2020.AlthoughweplantoholdtheAnnualMeetingvialivewebcastonJune5,2020,werecognizethatthechallengingandrapidlychangingenvironmentcausedbytheCOVID-19pandemicmaynecessitatethatwere-evaluateourplansfortheAnnualMeetingatsomepointinthefuture.ShouldthetimeordateoftheAnnualMeetingchange,wewillannouncethechangebyissuingapressreleaseandfilingadditionalproxymaterialswiththeSecuritiesandExchangeCommission.
ThepurposeoftheAnnualMeetingistoconsiderandtakeactiononthefollowingmatters:
1. ElectionofthethreeClassIIdirectorsnominatedbytheBoardofDirectors;2. RatificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregistered
publicaccountingfirmforfiscal2020;and3. SuchotherbusinessasmayproperlycomebeforetheAnnualMeetingoranyadjournmentorpostponement
thereof.
The Board of Directors recommends that you vote “FOR ALL” for Item 1 and “FOR” for Item 2. The proxyholders will use their discretion to vote on other matters that may properly arise at the Annual Meeting or anyadjournment or postponement thereof.
StockholdersofrecordasofthecloseofbusinessonApril13,2020willbeentitledtovoteduringtheAnnualMeetingbyvisitingwww.virtualshareholdermeeting.com/CHRA2020.ToparticipateintheAnnualMeetingvialivewebcast,youwillneedthe16-digitcontrolnumber,whichcanbefoundontheproxycardorNoticeofInternetAvailabilityofProxyMaterialsprovidedortheinstructionsthatyoureceivebye-mail.TheAnnualMeetingwillbeginpromptlyat10:00a.m.,EasternTime.Onlinecheck-inwillbeginat9:30a.m.,EasternTime.Pleaseallowampletimefortheonlinecheck-inprocess.
HoldingtheAnnualMeetingvialivewebcastallowsustocommunicatemoreeffectivelywithmoreofourstockholders.
Yourvoteisimportant.WhetherornotyouplantoparticipateintheAnnualMeeting,youareencouragedtovoteassoonaspossibletoensurethatyoursharesarerepresentedatthemeeting.Ifyouareastockholderofrecordandreceivedapapercopyoftheproxymaterialsbymail,youmayvoteyoursharesbyproxyusingoneofthefollowingmethods:(i)votebytelephone;(ii)voteviatheInternet;or(iii)complete,sign,dateandreturnyourproxycardinthepostage-paidenvelopeprovided.IfyouareastockholderofrecordandreceivedonlyaNoticeofInternetAvailabilityofProxyMaterialsbymail,youmayvoteyoursharesbyproxyattheInternetsiteaddresslistedonyourNotice.Ifyouholdyoursharesthroughanaccountwithabank,brokerorsimilarorganization,pleasefollowtheinstructionsyoureceivefromthestockholderofrecordtovoteyourshares.
ByOrderoftheBoardofDirectors,
StevenA.BrehmCorporate Secretary
April24,2020
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders To Be Held on June 5, 2020:
TheNoticeofAnnualMeetingandProxyStatementandthe2019AnnualReporttoStockholdersareavailableatwww.proxyvote.com.
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Table of Contents
Page
General Information 1
Security Ownership of Certain Beneficial Owners and Management 5
Proposal 1: Election of Directors 7
DirectorNominees 7
ContinuingDirectors 8
Corporate Governance 11
TheBoardofDirectors 11
DocumentsAvailable 11
DirectorIndependence 11
BoardLeadershipStructure 12
BoardCommittees 12
DirectorMeetingAttendance 14
DirectorNominationProcess 14
StockholderRecommendationsofDirectorCandidates 15
AnnualEvaluationofDirectorsandBoardCommitteeMembers 16
PolicyforReviewofRelatedPartyTransactions 16
RelatedPartyTransactions 17
TheBoard’sRoleinRiskOversight 20
CompensationCommitteeAdvisors 20
CommunicationswiththeBoardofDirectors 20
Director Compensation 21
Executive Compensation 22
SummaryCompensationTable 22
OutstandingEquityAwardsatFiscalYear-End 23
AdditionalNarrativeDisclosures 23
Equity Compensation Plan Information 26
Section 16(a) Beneficial Ownership Reporting Compliance (Delinquent Section 16(a) Reports) 26
Compensation Committee Report 26
Audit Committee Report 27
Proposal 2: Ratification of the Appointment of Independent Registered Public Accounting Firm 28
FeesPaidtoIndependentRegisteredPublicAccountingFirm 28
AuditCommitteePre-ApprovalofAuditandNon-AuditServices 28
Additional Information 29
StockholderProposalsforthe2021AnnualMeetingofStockholders 29
2019AnnualReporttoStockholders 29
AnnualReportonForm10-K 29
Householding 30
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PROXY STATEMENT
TheBoardofDirectors(the“BoardofDirectors”orthe“Board”)ofCharahSolutions,Inc.(“CharahSolutions,”the“Company,”“we,”“us”or“our”)isprovidingthesematerialstoyouinconnectionwiththe2020AnnualMeetingofStockholders(the“AnnualMeeting”).TheAnnualMeetingwillbeheldat10:00a.m.,EasternTime,onFriday,June5,2020vialivewebcastatwww.virtualshareholdermeeting.com/CHRA2020.
General Information
Why did I receive these materials?
YoureceivedthesematerialsbecausetheBoardofDirectorsissolicitingyourproxytovoteyoursharesattheAnnualMeeting.ThisProxyStatementincludesinformationthatCharahSolutionsisrequiredtoprovideyouundertheSecuritiesandExchangeCommissionrulesandregulations(the“SECrules”)andisdesignedtoassistyouinvotingyourshares.
What is a proxy?
TheBoardisaskingforyourproxy.ThismeansyouauthorizepersonsselectedbytheCompanytovoteyoursharesattheAnnualMeetinginthewaythatyouinstruct.AllsharesrepresentedbyvalidproxiesreceivedandnotrevokedbeforetheAnnualMeetingwillbevotedinaccordancewiththestockholder’sspecificvotinginstructions.
Why did I receive a one-page notice regarding Internet availability of proxy materials instead of a full set ofproxy materials?
TheSECrulesallowcompaniestochoosethemethodfordeliveryofproxymaterialstostockholders.Formoststockholders,theCompanyhaselectedtomailanoticeregardingtheavailabilityofproxymaterialsontheInternet(the“NoticeofInternetAvailability”),ratherthansendingafullsetofthesematerialsinthemail.TheNoticeofInternetAvailability,orafullsetoftheproxymaterials(includingtheProxyStatementandformofproxy),asapplicable,wassenttostockholdersbeginningApril24,2020,andtheproxymaterialswerepostedontheinvestorsportionoftheCompany’swebsite,www.charah.com,andonthewebsitereferencedintheNoticeofInternetAvailabilityonthesameday.UtilizingthismethodofproxydeliveryexpeditesreceiptofproxymaterialsbytheCompany’sstockholdersandlowersthecostoftheAnnualMeeting.Ifyouwouldliketoreceiveapaperore-mailcopyoftheproxymaterials,youshouldfollowtheinstructionsintheNoticeofInternetAvailabilityforrequestingacopy.
What is included in these materials?
Thesematerialsinclude:
• theNoticeofAnnualMeetingandProxyStatement;and
• the2019AnnualReporttoStockholders,whichcontainstheCompany’sauditedconsolidatedandcombinedfinancialstatements.
Ifyoureceivedapapercopyofthesematerialsbymail,thesematerialsalsoincludetheproxycardorvotinginstructionformfortheAnnualMeeting.
What items will be voted on at the Annual Meeting?
TherearetwoproposalsscheduledtobevotedonattheAnnualMeeting:
• theelectionofthethreeClassIIdirectorsnominatedbytheBoardofDirectors;and
• theratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020.
TheBoardisnotawareofanyothermatterstobebroughtbeforetheAnnualMeeting.IfothermattersareproperlyraisedattheAnnualMeeting,theproxyholdersmayvoteanysharesrepresentedbyproxyintheirdiscretion.
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What are the Board’s voting recommendations?
TheBoardrecommendsthatyouvoteyourshares:
• “FOR ALL”fortheelectionofeachofthethreeClassIIdirectorsnominatedbytheBoardofDirectors;and
• “FOR”fortheratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020.
Who can participate in the Annual Meeting?
TheAnnualMeetingwillbeheldexclusivelyvialivewebcast.ParticipationintheAnnualMeetingislimitedto:
• stockholdersofrecordasofthecloseofbusinessonApril13,2020;
• holdersofvalidproxiesfortheAnnualMeeting;and
• invitedguests.
ToparticipateintheAnnualMeetingvialivewebcast,youwillneedthe16-digitcontrolnumber,whichcanbefoundontheproxycardorNoticeofInternetAvailabilityprovidedortheinstructionsthatyoureceivebye-mail.TheAnnualMeetingwillbeginpromptlyat10:00a.m.,EasternTime,onFriday,June5,2020.Onlinecheck-inwillbeginat9:30a.m.,EasternTime.Pleaseallowampletimefortheonlinecheck-inprocess.
When is the record date and who is entitled to vote?
TheBoardsetApril13,2020astherecorddate.Asoftherecorddate,30,085,535shares(whichincludes197,350sharesofrestrictedstockthathavevotingrightsbutremainsubjecttocertainvestingconditions)ofcommonstock,parvalue$0.01pershare,ofCharahSolutions(the“CommonStock”)wereissuedandoutstandingand26,000sharesofSeriesAPreferredStock,parvalue$0.01pershare,ofCharahSolutions(the“PreferredStock”and,togetherwiththeCommonStock,collectively,the“VotingStock”)wereissuedandoutstanding.StockholdersareentitledtoonevotepershareofCommonStockand364votespershareofPreferredStockoutstandingontherecorddateonanymatterproperlypresentedattheAnnualMeeting.
What is a stockholder of record?
AstockholderofrecordorregisteredstockholderisastockholderwhoseownershipofVotingStockisreflecteddirectlyonthebooksandrecordsofCharahSolutions’transferagent,AmericanStockTransfer&TrustCompany,LLC.IfyouholdVotingStockthroughanaccountwithabank,brokerorsimilarorganization,youareconsideredthebeneficialownerofsharesheldinstreetnameandarenotastockholderofrecord.Forsharesheldinstreetname,thestockholderofrecordisyourbank,brokerorsimilarorganization.CharahSolutionsonlyhasaccesstoownershiprecordsfortheregisteredshares.
How do I vote?
Youmayvotebyanyofthefollowingmethods:
• Remotely.StockholdersofrecordandbeneficialownersofsharesheldinstreetnamemayparticipateintheAnnualMeetingvialivewebcastandcasttheirvoteonlineduringthemeetingpriortotheclosingofthepollsbyvisitingwww.virtualshareholdermeeting.com/CHRA2020.
• By telephone or via the Internet.Stockholdersofrecordmayvotebyproxy,bytelephoneorviatheInternet,byfollowingtheinstructionsincludedintheproxycardorNoticeofInternetAvailabilityprovidedortheinstructionsthatyoureceivebye-mail.Ifyouareabeneficialownerofsharesheldinstreetname,yourabilitytovotebytelephoneorviatheInternetdependsonthevotingproceduresofthestockholderofrecord(e.g.,yourbank,brokerorothernominee).PleasefollowtheinstructionsincludedinthevotinginstructionformorNoticeofInternetAvailabilityprovidedtoyoubythestockholderofrecord.
• By mail.Stockholdersofrecordandbeneficialownersofsharesheldinstreetnamemayvotebyproxybycompleting,signing,datingandreturningtheproxycardorvotinginstructionformprovided.
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How can I revoke my proxy or change my vote?
Stockholders of record.YoumayrevokeyourproxyorchangeyourvoteatanytimepriortothetakingofthevoteattheAnnualMeetingby(i)submittingawrittennoticeofrevocationtotheCompany’sCorporateSecretaryatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299;(ii)deliveringaproxybearingalaterdateusinganyofthevotingmethodsdescribedintheimmediatelyprecedingQ&A,includingbytelephoneorviatheInternet,anduntiltheapplicabledeadlineforeachmethodspecifiedintheaccompanyingproxycardortheNoticeofInternetAvailability;or(iii)participatingintheAnnualMeetingvialivewebcastandvotingonlineduringthemeetingpriortotheclosingofthepolls.ParticipationintheAnnualMeetingwillnotcauseyourpreviouslygrantedproxytoberevokedunlessyouvoteonlineduringthemeetingpriortotheclosingofthepolls.Forallmethodsofvoting,thelastvotecastwillsupersedeallpreviousvotes.
Beneficial owners of shares held in street name.Youmayrevokeorchangeyourvotinginstructionsbyfollowingthespecificinstructionsprovidedtoyoubythestockholderofrecord(e.g.,yourbank,brokerorothernominee).
What happens if I vote by proxy and do not provide specific voting instructions?
Stockholders of record.Ifyouareastockholderofrecordandyouvotebyproxy,bytelephone,viatheInternetorbyreturningaproperlyexecutedanddatedproxycardbymail,withoutprovidingspecificvotinginstructions,thentheproxyholderswillvoteyoursharesinthemannerrecommendedbytheBoardonallmatterspresentedinthisProxyStatementandastheproxyholdersmaydetermineintheirdiscretionforanyothermattersproperlypresentedforavoteattheAnnualMeeting.
Beneficial owners of shares held in street name.Ifyouareabeneficialownerofsharesheldinstreetnameandyoudonotprovidetheorganizationthatholdsyourshareswithspecificvotinginstructions,undertherulesofvariousnationalandregionalsecuritiesexchanges,theorganizationthatholdsyoursharesmaygenerallyvoteon“routine”mattersbutcannotvoteon“non-routine”matters.Iftheorganizationthatholdsyoursharesdoesnotreceiveinstructionsfromyouonhowtovoteyoursharesona“non-routine”matter,theorganizationthatholdsyourshareswillinformtheinspectorofelectionsthatitdoesnothavetheauthoritytovoteonthatmatterwithrespecttoyourshares.Thisisreferredtoasa“brokernon-vote.”
Proposal1,theelectionofdirectors,isa“non-routine”matter.Consequently,withoutyourvotinginstructions,theorganizationthatholdsyoursharescannotvoteyoursharesonthisproposal.Proposal2,theratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020,isconsidereda“routine”matter.
What is the voting requirement to approve each of the proposals?
• Proposal 1, Election of Directors.Directorsshallbeelectedbyapluralityofthevotescast(meaningthatthethreeClassIIdirectornomineeswhoreceivethehighestnumberofvotescast“for”theirelectionwillbeelectedasdirectors).
• Proposal 2, Ratification of the Appointment of Independent Registered Public Accounting Firm.RatificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020requirestheaffirmativevoteofamajorityofthevotingpoweroftheoutstandingsharesofVotingStockpresentorrepresentedbyproxyandentitledtovoteontheproposal(meaningthatofthetotalvotesofallsharesofVotingStockpresentorrepresentedbyproxyattheAnnualMeetingandentitledtovote,amajorityofthemmustbe“for”theproposalforittobeapproved).
• Other Items.ApprovalofanyothermattersrequirestheaffirmativevoteofamajorityofthevotingpoweroftheoutstandingsharesofVotingStockpresentorrepresentedbyproxyandentitledtovoteontheitem(meaningthatofthetotalvotesofallsharesofVotingStockpresentorrepresentedbyproxyattheAnnualMeetingandentitledtovote,amajorityofthemmustbe“for”theitemforittobeapproved).
What is the quorum for the Annual Meeting? How are “withhold” votes, abstentions and broker non-votestreated?
Thepresence,byparticipatingremotelyvialivewebcastorbyproxy,oftheholdersofamajorityofthevotingpowerofalloftheoutstandingsharesentitledtovoteisnecessaryforthetransactionofbusinessattheAnnual
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Meeting.Yoursharesarecountedasbeingpresentifyouparticipateremotelyvialivewebcastorvotebytelephone,viatheInternetorbyreturningaproperlyexecutedanddatedproxycardorvotinginstructionformbymail.“Withhold”votes,abstentionsandbrokernon-votesarecountedaspresentforthepurposeofdeterminingaquorumfortheAnnualMeeting.
WithrespecttoProposal1,theelectionofdirectors,only“for”and“withhold”votesmaybecast.Brokernon-votesarenotconsideredvotescastfortheforegoingpurposeandwillthereforehavenoeffectontheelectionofdirectornominees.“Withhold”voteswillalsohavenoeffectontheelectionofdirectornominees.
WithrespecttoProposal2,theratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020,youmayvote“for”or“against”thisproposal,oryoumay“abstain”fromvotingonthisproposal.Anabstentionwillbecountedasavotepresentorrepresentedandentitledtovoteonthisproposalandwillhavethesameeffectasavote“against”thisproposal,andabrokernon-votewillnotbeconsideredentitledtovoteonthisproposalandwillthereforehavenoeffectonitsoutcome.Asdiscussedabove,becauseProposal2,theratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020,isconsidereda“routine”matter,wedonotexpectanybrokernon-voteswithrespecttothisproposal.
Who are the proxy holders and how will they vote?
Thepersonsnamedasattorneys-in-factintheproxies,ScottA.Sewell,RogerD.ShannonandStevenA.Brehm,wereselectedbytheBoardandareofficersand,withrespecttoMr.Sewell,adirectoroftheCompany.Ifyouareastockholderofrecordandyoureturnaproperlyexecutedanddatedproxycardbutdonotprovidespecificvotinginstructions,yourshareswillbevotedontheproposalsasfollows:
• “FOR ALL”fortheelectionofeachofthethreeClassIIdirectorsnominatedbytheBoardofDirectors;and
• “FOR”fortheratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020.
IfothermattersproperlycomebeforetheAnnualMeetingandyoudonotprovidespecificvotinginstructions,yourshareswillbevotedonsuchmattersinthediscretionoftheproxyholders.
Who pays for solicitation of proxies?
TheCompanyispayingthecostofsolicitingproxiesandwillreimbursebrokeragefirmsandothercustodians,nomineesandfiduciariesfortheirreasonableout-of-pocketexpensesforsendingproxymaterialstostockholdersandobtainingtheirproxies.InadditiontosolicitingtheproxiesbymailandtheInternet,certainoftheCompany’sdirectors,officersandemployees,withoutcompensation,maysolicitproxiespersonallyorbytelephone,facsimileande-mail.
What if I have difficulties locating my 16-digit control number prior to the day of the Annual Meeting on June 5,2020?
PriortothedayoftheAnnualMeetingonJune5,2020,ifyouneedassistancewithyour16-digitcontrolnumberandyouareastockholderofrecord,pleasecallore-mailStevenA.Brehm,theCompany’sCorporateSecretary,at(502)245-1353orsbrehm@charah.comforassistance.Ifyouareabeneficialownerofsharesheldinstreetname,youwillneedtocontactthestockholderofrecord(e.g.,yourbank,brokerorothernominee)forassistancewithyour16-digitcontrolnumber.
What if during the check-in time or during the Annual Meeting I have technical difficulties or trouble accessingthe live webcast of the meeting?
IfyouencounteranydifficultiesaccessingthelivewebcastoftheAnnualMeetingduringtheonlinecheck-inprocessorduringthemeetingitself,pleasecallthetechnicalassistancenumberavailableatwww.virtualshareholdermeeting.com/CHRA2020.Technicianswillbereadytoassistyoubeginningat9:30a.m.,EasternTime,withanydifficulties.
Where can I find the voting results of the Annual Meeting?
TheCompanywillannouncepreliminaryorfinalvotingresultsattheAnnualMeetingandpublishfinalresultsinaCurrentReportonForm8-KfiledwiththeSecuritiesandExchangeCommission(the“SEC”)withinfourbusinessdaysofthecompletionofthemeeting.
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Security Ownership of Certain Beneficial Owners and Management
ThetablebelowprovidesinformationaboutthebeneficialownershipoftheVotingStockasofApril13,2020,byeachpersonknownbytheCompanytobeneficiallyownmorethan5%oftheoutstandingsharesofanyclassorseriesoftheVotingStockaswellasbyeachdirector,directornomineeandnamedexecutiveofficerandbyalldirectorsandexecutiveofficersasagroup.Incomputingthenumberofsharesbeneficiallyowned,sharesdeemedoutstandingincludesharesofrestrictedCommonStock,givensuchshareshavevotingrights.Theownershippercentageisbasedon30,085,535sharesofCommonStockand26,000sharesofPreferredStock,ineachcase,outstandingasofApril13,2020.Exceptasotherwiseindicatedinthefootnotesbelow,eachofthepersonsnamedinthetablehassolevotingandinvestmentpowerwithrespecttothesecuritiesindicatedasbeneficiallyownedbysuchperson,subjecttocommunitypropertylawswhereapplicable.Unlessotherwiseindicatedinthefootnotesbelow,theaddressforeachofthebeneficialownersisc/oCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299.
Untilconversion,theholdersofthePreferredStockvotetogetherwiththeCommonStockonanas-convertedbasisandalsohaverightstovoteasaseparateclassoncertaincustomarymattersimpactingthePreferredStock.
Name
Number of Shares of
Common Stockand
Nature of Beneficial Ownership
Percentageof
Common Stock
Numberof
Shares of Preferred
Stock
Percentage of
Preferred Stock
Percentageof Voting
Stock
Principal Stockholders:
BCPEnergyServicesFund-A,LP 7,277,549(1) 24.2% — — 18.4%
BCPEnergyServicesFund,LP 5,252,369(1) 17.5% — — 13.3%
CharahHoldingsLP 2,926,003(1) 9.7% — — 7.4%
CharahPreferredStockAggregator,LP — — 26,000 100.0% 23.9%
CEPHoldings,Inc. 4,376,178(2) 14.5% — — 11.1%
AmericanCenturyInvestmentManagement,Inc.andrelatedentities 3,027,491(3) 10.1% — — 7.7%
Directors, Director Nominees and Named ExecutiveOfficers:
ScottA.Sewell 385,934 1.3% — — 1.0%
Dorsey“Ron”McCall 391,260 1.3% — — 1.0%
RogerD.Shannon 145,274 * — — *
CharlesE.Price 4,376,178(4) 14.5% — — 11.1%
JackA.Blossman,Jr. 34,886 * — — *
MignonL.Clyburn 21,552 * — — *
BrianK.Ferraioli 38,236 * — — *
RobertC.Flexon 42,386 * — — *
MarkSpender — — — — *
StephenR.Tritch 42,841 * — — *
Directorsandexecutiveofficersasagroup(9persons) 1,102,369 3.7% — — 2.8%
* Lessthan1%.(1) BernhardCapitalPartnersManagement,LP’s(“BCP’s”)interestisheldthroughCharahHoldingsLP(“CharahHoldings”),BCP
EnergyServicesFund-A,LPandBCPEnergyServicesFund,LP(collectively,the“BCPEnergyServicesFunds”)andCharahPreferredStockAggregator,LP.ThegeneralpartnerofCharahHoldingsisCharahHoldingsGPLLC.CharahHoldingsGPLLCisownedbytheBCPEnergyServicesFunds.ThegeneralpartnerofCharahPreferredStockAggregator,LPisCharahPreferredStockAggregatorGP,LLC.ThegeneralpartnerofboththeBCPEnergyServicesFundsandCharahPreferredStockAggregatorGP,LLCisBCPEnergyServicesFundGP,LP,andthegeneralpartnerofBCPEnergyServicesFundGP,LPisBCPEnergyServicesFundUGP,LLC.BCPEnergyServicesFundUGP,LLCismanagedbyJ.M.Bernhard,Jr.andJeffJenkins.EachoftheBCPentitiesandMessrs.BernhardandJenkinsmaybedeemedtobeneficiallyownsuchsharesdirectlyorindirectlycontrolled,buteachdisclaimsbeneficialownershipofsuchsharesinexcessofitsorhispecuniaryinteresttherein.TheaddressofeachoftheBCPentitiesandMessrs.BernhardandJenkinsis400ConventionStreet,Suite1010,BatonRouge,Louisiana70802.
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(2) CharlesE.Price,theCompany’sformerPresidentandChiefExecutiveOfficer,isthesolestockholderanddirectorofCEPHoldings,Inc.(“CEPHoldings”)and,insuchcapacities,hemaybedeemedtobeabeneficialowneroftheCommonStockheldbyCEPHoldings.
(3) ThisinformationisbaseduponaSchedule13G/AfiledwiththeSEConFebruary11,2020jointlybyAmericanCenturyCapitalPortfolios,Inc.,AmericanCenturyCompanies,Inc.,AmericanCenturyInvestmentManagement,Inc.andStowersInstituteforMedicalResearch,eachofwhoseaddressis4500MainStreet,9thFloor,KansasCity,Missouri64111.TheSchedule13G/AreportsthateachofAmericanCenturyCompanies,Inc.,AmericanCenturyInvestmentManagement,Inc.andStowersInstituteforMedicalResearchhassolevotingpowerover2,830,544shares,sharedvotingpowerovernosharesandsoledispositivepoweroverallofsuchshares;andAmericanCenturyCapitalPortfolios,Inc.hassolevotinganddispositivepowerover2,005,000sharesandsharedvotinganddispositivepowerovernoshares.
(4) Consistsof4,376,178sharesheldbyCEPHoldings.Mr.Pricehassolevotinganddispositivepoweroverallofsuchshares.
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Proposal 1: Election of Directors
Thenumberofdirectorsiscurrentlyfixedateight.TheCompany’sAmendedandRestatedCertificateofIncorporationprovidesforaclassifiedBoardofDirectorsunderwhichtheBoardisdividedintothreeclassesofdirectors,designatedClassI,ClassIIandClassIII,witheachclassasnearlyequalinnumberasisreasonablypossible.ThethreenomineesstandingforelectionasClassIIdirectorsattheAnnualMeetingare:JackA.Blossman,Jr.,Dorsey“Ron”McCallandScottA.Sewell.
Ifelected,eachnomineewillserveforathree-yeartermexpiringatthe2023AnnualMeetingofStockholdersoruntilhissuccessorisdulyelectedandqualified.AllofthenomineesarecurrentlyservingasdirectorsandhaveagreedtobenamedinthisProxyStatementandtoserveifelected.
AlthoughtheCompanyknowsofnoreasonwhyanyofthenomineeswouldnotbeabletoserve,ifanynomineeisunavailableforelection,theproxyholdersintendtovoteyoursharesforanysubstitutenomineeproposedbytheBoard.
The Board of Directors recommends that you vote “FOR ALL” for the election of the three nominees listedbelow. Unlessotherwisespecified,proxieswillbevoted“FOR ALL”fortheelectionofthethreenomineeslistedbelow.
Director Nominees
ListedbelowarethethreepersonsnominatedforelectiontotheBoardofDirectors.Thefollowingparagraphsincludeinformationabouteachdirectornominee’sbusinessbackground,asfurnishedtotheCompanybythenominee,andadditionalexperience,qualifications,attributesorskillsthatledtheBoardofDirectorstoconcludethatthenomineeshouldserveontheBoard.
Nominees for Election as Class II Directors – Term to Expire in 2020
Jack A. Blossman, Jr.
Mr.Blossman,55,hasbeenamemberoftheBoardsinceJune2018.Mr.Blossmanhasbeenapracticingattorneyformorethan25years,primarilyfocusinghispracticeontheutilityregulatoryfield.HeisOfCounselattheNewOrleanslawfirmofMillingBensonWoodwardLLP,whichhejoinedin2017.Priortohiscurrentrole,Mr.Blossmanworkedasasolopractitionerandgeneralconsultant.HewasamemberoftheLouisianaPublicServiceCommissionfrom1996to2008,andservedtwotermsasitsChairmanfrom2002to2003andfrom2007to2008.From1993to2008,Mr.BlossmanservedontheboardofdirectorsofParishNationalBankbeforeitwasacquiredbyWhitneyHoldingCorporation.Mr.BlossmancurrentlysitsontheBoardofTrusteesofLouisianaStateUniversity.Mr.Blossmanholdsabachelor’sdegreeingeneralstudiesfromLouisianaStateUniversityandaJ.D.fromSouthernUniversitySchoolofLaw.
Becauseofhisenergy,regulatoryandfinancialexperienceandlegalbackground,theBoardofDirectorsbelievesthatMr.BlossmaniswellqualifiedtoserveontheBoard.Mr.BlossmanwasrecommendedtotheBoardofDirectorsbyBCPand,ifelected,willbedesignatedasaBCPDirector(asdefinedintheStockholders’Agreement,asdiscussedbelow)bytheBoardpursuanttotheStockholders’Agreement.
Dorsey “Ron” McCall
Mr.McCall,72,hasbeenamemberoftheBoardsinceJanuary2018.Mr.McCallhasservedasSeniorVicePresidentofCharahSolutionssince2018andasChiefExecutiveOfficerofAlliedPowerManagement,LLC,asubsidiaryofCharahSolutions(“AlliedPowerManagement”),sincehejoinedtheCompanyinJune2017.FromJanuary2016toJune2017,Mr.McCallworkedasanindependentconsultant.Priortothat,Mr.McCallservedasPresidentofthePlantServicesDivisionatChicagoBridge&IronCompanyN.V.(formerlyTheShawGroupInc.),alargeengineering,procurementandconstructioncompanyacquiredbyMcDermottInternational,Inc.inFebruary2018,from2002toJanuary2016andasSeniorVicePresidentofTurnerIndustries’WesternDivisionfornearly25years.Mr.McCallhasextensiveknowledgeinallaspectsofprojectmanagement,includingnuclearoutages,refineryturnarounds,andmajorconstructionandmaintenanceprojects,bothdomesticandinternational.Mr.McCallreceivedhisbachelor’sdegreeineducationfromMcNeeseStateUniversity.
Becauseofhisbroadknowledgeofthepowergenerationindustry,theBoardofDirectorsbelievesMr.McCalliswellqualifiedtoserveontheBoard.
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Scott A. Sewell
Mr.Sewell,40,hasbeenamemberoftheBoardsinceJanuary2019.Mr.SewellhasservedasPresidentandChiefExecutiveOfficerofCharahSolutionssinceJanuary2019.Priortothat,Mr.SewellheldseveralotherleadershippositionswithCharahSolutions,includingChiefOperatingOfficerfrom2013toJanuary2019,SeniorVicePresidentofOperationsfrom2012to2013,VicePresidentofOperationsfrom2010to2012,andOperationsManagerfrom2008to2010.PriortojoiningCharahSolutions,heworkedforBechtelCorporationfrom2002to2007.HeisaSixSigmaYellowBeltandholdsprofessionalaffiliationsasamemberoftheProjectManagementInstitute,theAssociationofEquipmentManagementProfessionalsandtheInternationalErosionControlAssociation.Mr.Sewellholdsabachelor’sdegreeininternationalbusinessfromtheCollegeofCharlestoninSouthCarolina.
Becauseofhisbroadknowledgeofthepowergenerationindustry,theBoardofDirectorsbelievesMr.SewelliswellqualifiedtoserveontheBoard.
Continuing Directors
Thefollowingparagraphsincludeinformationabouteachcontinuingdirector’sbusinessbackground,asfurnishedtotheCompanybythedirector,andadditionalexperience,qualifications,attributesorskillsthatledtheBoardofDirectorstoconcludethatthedirectorshouldserveontheBoard.
Class III Directors – Term to Expire in 2021
Brian K. Ferraioli
Mr.Ferraioli,64,hasbeenamemberoftheBoardsinceJune2018.Mr.FerraiolihasservedasChairmanoftheboardofdirectorsofAtlasTechnicalConsultants,Inc.,aleadingproviderofprofessionaltesting,inspection,engineering,programmanagementandconsultingservices,sinceFebruary2020.HeisalsoanoperatingpartneratBCP,aprivateequitymanagementfirmwhichdirectlyandindirectlythroughcertainaffiliatesownsapproximately63%ofthetotalvotingpoweroftheoutstandingsharesoftheVotingStock,includingthePreferredStockonanas-convertedbasis.Mr.FerraioliservedasExecutiveVicePresidentandChiefFinancialOfficerofKBR,Inc.,aglobalengineering,constructionandservicescompanysupportingthehydrocarbonsandgovernmentservicesindustries,from2013to2017.PriortoKBR,hewasExecutiveVicePresidentandChiefFinancialOfficeratTheShawGroupInc.(nowpartofMcDermottInternational,Inc.),thenanengineering,constructionandfabricationcompanyservingtheelectricpowergeneration,hydrocarbonsandgovernmentservicesindustries,from2007to2013,whenthecompanywasacquiredbyChicagoBridge&IronCompanyN.V.PriortojoiningTheShawGroup,Mr.Ferraioliworked28yearsinvariousexecutivefinanceandaccountingfunctionswithFosterWheelerAG(nowpartoftheJohnWoodGroup),thenaSwissglobalconglomeratethatprovideddesign,engineering,construction,manufacturing,developmentandplantoperationsfortheelectricpowergenerationandhydrocarbonsindustries.Mr.FerraiolialsoservesontheboardsofdirectorsofVistraEnergyCorp.,anintegratedretailandpowergenerationcompany,andTeam,Inc.,aproviderofspecialtyindustrialservices,includingheattreatingandinspectionservices.Previously,hewasadirectorofBabcock&WilcoxEnterprises,Inc.anditspredecessorcompany,Babcock&Wilcox,Inc.HeisalsoaNationalAssociationofCorporateDirectorsGovernanceFellow.Mr.Ferraioliholdsabachelor’sdegreeinaccountingfromSetonHallUniversityandanM.B.A.fromColumbiaUniversity.
Becauseofhisextensivebackgroundinthepowergenerationindustryandwithpubliclytradedcompanies,theBoardofDirectorsbelievesMr.FerraioliiswellqualifiedtoserveontheBoard.Mr.FerraiolihasbeendesignatedasaBCPDirectorbytheBoardofDirectorspursuanttotheStockholders’Agreement.
Mark Spender
Mr.Spender,42,hasbeenamemberoftheBoardsinceJanuary2018.Mr.SpenderisaManagingDirectorandmemberoftheInvestmentCommitteeatBCP,aprivateequitymanagementfirmwhichdirectlyandindirectlythroughcertainaffiliatesownsapproximately63%ofthetotalvotingpoweroftheoutstandingsharesoftheVotingStock,includingthePreferredStockonanas-convertedbasis.SincejoiningBCPinOctober2015,Mr.Spenderhasledthefirm’sinvestmentsintheenvironmentalandutilityservicesindustries.PriortohisrolesatBCP,Mr.SpenderwasaManagingDirectorintheGlobalIndustrialsGroupintheInvestmentBankingDepartmentatCreditSuisse,aleadingfinancialservicescompany,wherehebeganhiscareerin2000.
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Mr.SpenderalsoheldvariousrolesintheInvestmentBankingDepartmentatUBSfrom2004to2011.Duringhismorethan15yearsininvestmentbanking,Mr.Spenderfocusedonavarietyofindustrialsubsectors,includingengineeringandconstruction,buildingproductsandconstructionmaterials,andindustrialdistribution.Mr.SpenderholdsaB.B.A.infinancewithhighestdistinctionfromtheUniversityofMichigan’sRossSchoolofBusiness.
Becauseofhisextensiveknowledgeofthepowergenerationindustryandhisinvolvementanddirectorshipwithourpredecessorcompanies,theBoardofDirectorsbelievesMr.SpenderiswellqualifiedtoserveontheBoard.Mr.SpenderhasbeendesignatedasaBCPDirectorbytheBoardofDirectorspursuanttotheStockholders’Agreement.
Stephen R. Tritch
Mr.Tritch,70,hasbeenamemberoftheBoardsinceJune2018.Mr.TritchhasalsoservedasChairmanoftheBoardsinceJune2018.Mr.TritchpreviouslyservedastheChairmanofWestinghouseElectricCompany,LLCfromMarch2004toJuly2010.HealsoservedasChiefExecutiveOfficerandPresidentofWestinghousefromJuly2002toJune2008.Mr.Tritch’spreviousmanagementexperienceatWestinghousealsoincludesservingasSeniorVicePresidentofNuclearFuelandasSeniorVicePresidentofNuclearServices.HebeganhisWestinghousecareerin1971asaProductEngineerinthePowerCircuitBreakDivision.Mr.TritchhasservedasadirectorofKoppersHoldingInc.sinceMay2009,includingservingasitsChairmansinceNovember2018.Mr.TritchservedasadirectorofPaRSystems,Inc.fromNovember2010toNovember2017.HealsoservedasadirectorofTheShawGroupInc.fromApril2009toFebruary2013.Heholdsabachelor’sdegreeinmechanicalengineeringandanM.B.A.fromtheUniversityofPittsburgh.
Becauseofhisbroadknowledgeofthenuclearservicesandpowerindustries,theBoardofDirectorsbelievesMr.TritchiswellqualifiedtoserveontheBoard.Mr.TritchhasbeendesignatedasaBCPDirectorbytheBoardofDirectorspursuanttotheStockholders’Agreement.
Class I Directors — Term to Expire in 2022
Mignon L. Clyburn
Ms.Clyburn,58,hasbeenamemberoftheBoardsinceMarch2019.Ms.ClyburnisPresidentofMLCStrategies,LLC,aWashington,D.C.-basedconsultingfirm,apositionshehasheldsinceJanuary2019.Previously,Ms.ClyburnservedasaCommissioneroftheU.S.FederalCommunicationsCommission(the“FCC”)from2009to2018,includingasactingchair.WhileattheFCC,shewascommittedtoclosingthedigitaldivideandchampionedthemodernizationoftheagency’sLifelineProgram,whichassistslow-incomeconsumerswithvoiceandbroadbandservice.Inaddition,Ms.Clyburnpromoteddiversityinmediaownership,initiatedInmateCallingServicesreforms,supportedinclusioninSTEMopportunitiesandfoughtforanOpenInternet.Priortoherfederalappointment,sheserved11yearsonthePublicServiceCommissionofSouthCarolinaandworkedfornearly15yearsaspublisheroftheCoastalTimes,aCharlestonweeklynewspaperfocusedontheAfricanAmericancommunity.Ms.Clyburnholdsabachelor’sdegreeinbanking,financeandeconomicsfromtheUniversityofSouthCarolina.
Becauseofherexperienceasastateregulatorofinvestor-ownedutilitiesandasafederalcommissionerinthetechnologyandtelecommunicationsfieldsandherbackgroundasasuccessfulbusinessexecutive,theBoardofDirectorsbelievesMs.ClyburniswellqualifiedtoserveontheBoard.Ms.ClyburnwasrecommendedtotheBoardofDirectorsbyBCPandhasbeendesignatedasaBCPDirectorbytheBoardpursuanttotheStockholders’Agreement.
Robert C. Flexon
Mr.Flexon,61,hasbeenamemberoftheBoardsinceJune2018.Mr.FlexonmostrecentlyretiredfromhisroleasPresidentandChiefExecutiveOfficerofDynegyInc.,anelectriccompanybasedinHouston,TexasuntilmergingwithVistraEnergyCorp.inApril2018,apositionheheldfromJune2011toJune2018.PriortojoiningDynegy,Mr.FlexonservedasPresidentandChiefExecutiveOfficerofFosterWheelerUSACorporationfromNovember2009toMay2010.HeservedasChiefFinancialOfficerofNRGEnergy,Inc.fromMarch2009toNovember2009andfromMarch2004toMarch2008aswellasitsChiefOperatingOfficerfromMarch2008toMarch2009.PriortojoiningNRG,Mr.FlexonservedasaVicePresidentinvariouscapacitiesatHercules
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Inc.,whichhejoinedin2000.Previously,Mr.FlexonservedwithAtlanticRichfieldCompanyformorethan10years,includingasGeneralAuditorfrom1998to2000,FranchiseManagerofARCOProductsfrom1996to1998andControllerofARCOProductsfrom1995to1996.HebeganhiscareerwiththeformerCoopers&Lybrandpublicaccountingfirmin1980.HehasservedasadirectorofCapstoneTurbineCorporationsinceApril2018andTransAltaCorporationsinceApril2019.Mr.FlexonservedasadirectorofDynegyInc.from2011to2018,FosterWheelerAGfromMay2006toNovember2009andfromMay2010toOctober2010andWestmorelandCoalCompanyfrom2016to2019.Mr.Flexonisacertifiedpublicaccountant(inactive)andholdsabachelor’sdegreeinaccountingfromVillanovaUniversity.
Becauseofhisbroadknowledgeofthepowergenerationindustry,theBoardofDirectorsbelievesMr.FlexoniswellqualifiedtoserveontheBoard.
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Corporate Governance
The Board of Directors
TheCompanyisgovernedbytheBoardofDirectorsanditsvariouscommittees.TheBoardanditscommitteeshavegeneraloversightresponsibilityfortheaffairsoftheCompany.Inexercisingitsfiduciaryduties,theBoardrepresentsandactsonbehalfoftheCompany’sstockholders.TheBoardhasadoptedwrittencorporategovernancepolicies,principlesandguidelines,knownastheCorporateGovernanceGuidelines.TheBoardalsohasadopted(i)aFinancialCodeofEthics,whichappliestotheCompany’sprincipalexecutiveofficer,principalfinancialofficerandprincipalaccountingofficerorcontrollerandallpersonsperformingsimilarfunctionsfortheCompany;and(ii)aCodeofBusinessConductandEthics,whichappliestothedirectors,officers,employeesandagentsoftheCompanyanditssubsidiaries,andmembersoftheirimmediatefamily.TheFinancialCodeofEthicsandtheCodeofBusinessConductandEthicsincludeguidelinesrelatingtotheethicalhandlingofactualorpotentialconflictsofinterest,compliancewithlaws,accuratefinancialreportingandotherrelatedtopics.
Documents Available
AlloftheCompany’scorporategovernancematerials,includingthechartersfortheAuditCommittee,theCompensationCommitteeandtheNominatingandCorporateGovernanceCommittee,aswellastheCorporateGovernanceGuidelines,theFinancialCodeofEthicsandtheCodeofBusinessConductandEthics,arepublishedontheinvestorsportionoftheCompany’swebsite,www.charah.com.ThesematerialsarealsoavailableinprintfreeofchargetoanystockholderuponrequestbycontactingtheCompanyinwritingatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299,Attention:InvestorRelations,orbytelephoneat(502)245-1353.Anymodificationstothesecorporategovernancematerialswillbereflected,andtheCompanyintendstopostanyamendmentsto,orwaiversfrom,theFinancialCodeofEthics(totheextentrequiredtobedisclosedpursuanttoForm8-K)ontheinvestorsportionoftheCompany’swebsite,www.charah.com.ByreferringtotheCompany’swebsite,www.charah.com,oranyportionthereof,includingtheinvestorsportionoftheCompany’swebsite,theCompanydoesnotincorporateitswebsiteoritscontentsintothisProxyStatement.
Director Independence
BecauseBCP,directlyandindirectlythroughcertainaffiliates,beneficiallyowns(orotherwisehastherighttovoteordirectthevoteof)morethan50%oftheoutstandingsharesoftheVotingStock,theCompanyqualifiesasa“controlledcompany”forpurposesoftheNewYorkStockExchangerules(the“NYSErules”)and,therefore,isnotrequiredtocomplywithalloftherequirementsofthoserules,includingtherequirementthatalistedcompanyhaveamajorityofindependentdirectors.Nevertheless,CharahSolutionsdoesnotavailitselfoftheexceptionsfromsuchrequirements.
TheBoardbelievesthatamajorityofitsmembersareindependentundertheapplicableNYSErulesandSECrules.TheNYSErulesprovidethatadirectordoesnotqualifyas“independent”unlesstheboardofdirectorsaffirmativelydeterminesthatthedirectorhasnomaterialrelationshipwiththecompany(eitherdirectlyorasapartner,stockholderorofficerofanorganizationthathasarelationshipwiththecompany).TheNYSErulesrecommendthataboardofdirectorsconsideralloftherelevantfactsandcircumstancesindeterminingthematerialityofadirector’srelationshipwithacompany.
InMarch2020,theBoardofDirectors,withtheassistanceoftheNominatingandCorporateGovernanceCommittee,conductedanevaluationofdirectorindependencebasedontheNYSErulesandtheSECrules.TheBoardconsideredallrelationshipsandtransactionsbetweeneachdirector(andhisorherimmediatefamilymembersandaffiliates)andeachofCharahSolutions,itsmanagementanditsindependentregisteredpublicaccountingfirm,aswellasthetransactionsdescribedbelowunder“—RelatedPartyTransactions.”Asaresultofthisevaluation,theBoarddeterminedthateachofMessrs.Blossman,Ferraioli,Flexon,SpenderandTritchandMses.Babineaux-Fontenot(whoservedasadirectoruntilhertermexpiredattheCompany’s2019AnnualMeetingofStockholders)andClyburnisanindependentdirectorundertheNYSErulesandtheSECrules.TheBoardalsodeterminedthateachmemberoftheAudit,Compensation,andNominatingandCorporateGovernanceCommittees(seemembershipinformationbelowunder“—BoardCommittees”)isindependent,includingthateachmemberoftheAuditCommitteeis“independent”asthattermisdefinedunderRule10A-3(b)(1)(ii)oftheSecuritiesExchangeActof1934,asamended(the“ExchangeAct”).
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Board Leadership Structure
TheBoardbelievesthattheexistingleadershipstructure,underwhichMr.StephenR.TritchservesasChairmanoftheBoardandMr.ScottA.SewellservesasPresidentandChiefExecutiveOfficer,isthemostappropriateandinthebestinterestsofCharahSolutionsanditsstockholdersatthistime.GiventheCompany’scurrentneeds,theBoardbelievesthisstructureisoptimalasitallowsMr.Sewelltofocusonprovidingtheday-to-dayleadershipoftheCompany,whileallowingMr.TritchtofocusonprovidingguidancetoMr.SewellandsettingtheagendaforBoardmeetingsandpresidingovermeetingsoftheBoard.AlthoughtheBoardbelievesthatthisleadershipstructureiscurrentlyinthebestinterestsofCharahSolutionsanditsstockholders,theBoardhastheflexibilitytoelectthesameindividualtothepositionofChairmanoftheBoardandChiefExecutiveOfficerif,inthefuture,theBoarddeterminesthatreturningtosuchaleadershipstructurewouldbeappropriate.
Board Committees
TheBoardofDirectorshasastandingAuditCommittee,CompensationCommittee,andNominatingandCorporateGovernanceCommittee.CommitteemembersandcommitteechairsareappointedbytheBoard.Themembersandchairsofthesecommitteesareidentifiedinthefollowingtable:
NameAudit
CommitteeCompensation
Committee
Nominatingand
Corporate Governance Committee
JackA.Blossman,Jr. Chair
MignonL.Clyburn Member Member
BrianK.Ferraioli Chair
RobertC.Flexon Member Chair
Dorsey“Ron”McCall
ScottA.Sewell
MarkSpender Member Member
StephenR.Tritch Member
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EachcommitteeoftheBoardofDirectorsfunctionspursuanttoawrittencharteradoptedbytheBoard.Thefollowingtableprovidesinformationabouttheoperationandkeyfunctionsofthesecommittees:
Committee Key Functions and Additional Information
Number of Meetings in Fiscal 2019
Audit Committee • AssiststheBoardinitsoversightof(i)theintegrityoftheCompany’sfinancialstatementsandfinancialreportingprocess,(ii)thesystemsofinternalaccountingandfinancialcontrols,(iii)theperformanceoftheCompany’sinternalauditfunctionandtheCompany’sindependentregisteredpublicaccountingfirm,(iv)thequalificationsandindependenceoftheCompany’sindependentregisteredpublicaccountingfirmand(v)theCompany’scompliancewithlegalandregulatoryrequirements.
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• Appoints,compensates,retains,evaluatesandoverseestheCompany’sindependentregisteredpublicaccountingfirm.
• ReviewsanddiscusseswithmanagementandtheCompany’sindependentregisteredpublicaccountingfirmtheannualandquarterlyfinancialstatements.
• Reviewsanddiscusseswithmanagementthequarterlyearningsreleases.
• Pre-approvesallauditandpermissiblenon-auditservicesproposedtobeperformedbytheCompany’sindependentregisteredpublicaccountingfirm.
• Reviewsand,ifappropriate,approvesorratifiesrelatedpartytransactions.
• Discusseswithmanagement,theCompany’sindependentregisteredpublicaccountingfirmandCompanypersonnelresponsiblefortheCompany’sinternalauditfunctiontheadequacyandeffectivenessoftheCompany’saccountingandfinancialcontrols.
• ReviewsanddiscusseswithmanagementtheCompany’spoliciesandguidelineswithrespecttoriskassessmentandriskmanagement.
• TheBoardofDirectorshasdeterminedthatMr.Ferraioliisan“auditcommitteefinancialexpert”withinthemeaningoftheSECrulesandthateachofMessrs.Ferraioli,FlexonandTritchis“financiallyliterate”andhasaccountingorrelatedfinancialmanagementexpertise,ineachcaseasdeterminedbytheBoard,initsbusinessjudgment.
CompensationCommittee
• ApprovesthecorporategoalsandobjectivesrelevanttotheChiefExecutiveOfficer’scompensationandevaluatestheChiefExecutiveOfficer’sperformanceagainstthegoals.
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• ApprovesthecompensationoftheotherseniorexecutiveofficersoftheCompany.
• RecommendstotheBoardforapprovalthetotalcompensationfordirectors.
• Approvesemploymentagreements,severanceagreementsandchangeofcontrolagreementswiththeseniorexecutiveofficersoftheCompany.
• Overseesregulatorycomplianceregardingcompensationmatters.
• DevelopsandreviewsperiodicallysuccessionplansoftheChiefExecutiveOfficerandtheotherseniorexecutiveofficersoftheCompany,andscreensandrecommendstotheBoardforapprovalcandidate(s)forChiefExecutiveOfficerandotherseniorexecutiveofficersoftheCompany.
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Committee Key Functions and Additional Information
Number of Meetings in Fiscal 2019
Nominating andCorporateGovernanceCommittee
• Identifies,evaluatesandrecommendsdirectorcandidatestotheBoard. 6
• DeterminesthequalificationsformembershipontheBoardanditscommitteesandreviewsthesequalificationswiththeBoardperiodically.
• MakesrecommendationstotheBoardconcerningcommitteememberappointmentsandcommitteeleadership.
• MakesrecommendationstotheBoardwithrespecttodeterminationsofdirectorindependence.
• OverseesannualperformanceevaluationoftheBoardandthecommitteesoftheBoard.
• Developsandoverseesdirectoreducationandnewdirectoronboarding.
• ConsidersandrecommendstotheBoardotheractionsrelatingtocorporategovernance.
TheBoardmayalsoestablishothercommitteesfromtimetotimeasitdeemsnecessary.Duringfiscal2019,theBoardestablishedanadhocspecialcommittee(the“SpecialCommittee”)toconsiderpotentialstrategictransactions,includingtheissuanceofthePreferredStocktoanaffiliateofBCP.TheSpecialCommitteeconsistedofMessrs.Flexon,TritchandBlossmanandMs.Clyburnandmetthreetimesduringfiscal2019.ThemembersoftheSpecialCommitteearenotofficersoftheCompanyoraffiliatedwith,oremployedby,anymemberofBCPoritsaffiliatesandreceivednoadditionalcompensationforservingontheSpecialCommittee.
Director Meeting Attendance
TheBoardofDirectorsheldthirteenmeetingsduringfiscal2019.Eachincumbentdirectorattended75%ormoreoftheaggregatenumberofmeetingsoftheBoardandcommitteesoftheBoardonwhichthedirectorservedduringfiscal2019.ItistheBoard’spolicythatthedirectorsshouldattendtheCompany’sannualmeetingofstockholders.AlleightoftheCompany’sdirectorsattendedthe2019AnnualMeetingofStockholders.
PursuanttotheCompany’sCorporateGovernanceGuidelines,theindependentdirectorsmeetinregularlyscheduledexecutivesessionswithoutmanagementinconnectionwitheachregularlyscheduledBoardmeetingorasisotherwiserequiredbytheNYSErules,andatothertimesasnecessary.Mr.Tritch,asChairmanoftheBoard,presidesovertheseexecutivesessions.
Director Nomination Process
TheNominatingandCorporateGovernanceCommitteeisresponsibleforidentifyingandevaluatingindividualsqualifiedtobecomemembersoftheBoardandforrecommendingtotheBoardtheindividualsfornominationasmembers,includingnomineesrecommendedbystockholdersoftheCompany.WhenformulatingitsBoardmembershiprecommendations,theNominatingandCorporateGovernanceCommitteeconsidersadviceandrecommendationsfromstockholders,managementandothersasitdeemsappropriate,andalsotakesintoaccounttheperformanceofincumbentdirectorsindeterminingwhethertorecommendthemtostandforre-electionattheannualmeetingofstockholders.Afterthecompletionofinterviews(including,asappropriate,withotherBoardmembers,theChiefExecutiveOfficerandothermembersofseniormanagement)andreferencechecksofidentifiedcandidates,theNominatingandCorporateGovernanceCommitteewillmeetinpersonorbyconferencecalltodiscussandmakerecommendationstotheBoardwithrespecttothecandidates.ThefullBoardwillthenvoteonthecommittee’srecommendations.ThosecandidatesapprovedbyamajorityoftheBoardshallbenominatedforelectionbytheCompany’sstockholdersatthenextannualmeeting.
TheCompanyseekstoalignBoardcompositionwiththeCompany’sstrategicdirectionsothatBoardmembersbringskills,experienceandbackgroundsthatarerelevanttothekeystrategicandoperationalissuesthattheywilloverseeandapprove.Directorcandidatesaretypicallyselectedfortheirintegrityandcharacter,sound,independentjudgment,trackrecordofaccomplishmentinleadershiproles,aswellastheirprofessionalandcorporateexpertise,skillsandexperience.Inconsideringwhethertorecommendanyparticularcandidatefor
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inclusionintheBoard’sslateofrecommendeddirectornominees,theNominatingandCorporateGovernanceCommitteeconsidersthefollowingcriteria,inadditiontootherfactorsitmaydetermineappropriate:(i)theindependence,judgment,strengthofcharacter,reputationinthebusinesscommunity,ethicsandintegrityoftheindividual;(ii)thebusinessorotherrelevantexperience,skillsandknowledgethattheindividualmayhavethatwillenablehimorhertoprovideeffectiveoversightoftheCompany’sbusiness;(iii)thefitoftheindividual’sskillsetandpersonalitywiththoseoftheotherBoardmemberssoastobuildaBoardthatworkstogethereffectivelyandconstructively;and(iv)theindividual’sabilitytodevotesufficienttimetocarryouthisorherresponsibilitiesasadirectorinlightofhisorheroccupationandthenumberofboardsofdirectorsofotherpubliccompaniesonwhichheorsheserves.
NeithertheNominatingandCorporateGovernanceCommitteenortheBoardhasaspecificpolicywithregardtotheconsiderationofdiversityinidentifyingdirectornominees.However,theBoardbelievesthatmenandwomenofdifferentages,races,andethnicandculturalbackgroundscancontributedifferentandusefulperspectives,andcanworkeffectivelytogethertofurthertheCompany’sobjectives,andacandidate’sdiversityisoneofthecriteriathattheNominatingandCorporateGovernanceCommitteeconsidersinevaluatingpotentialdirectornominees.
TheNominatingandCorporateGovernanceCommitteemay,atitsdiscretion,hirethirdpartiestoassistintheidentificationandevaluationofdirectornominees.
Stockholder Recommendations of Director Candidates
Recommendationsbystockholdersfordirectorcandidatestobeconsideredforthe2021AnnualMeetingofStockholdersmustbeinwritingandreceivedbytheCompany’sCorporateSecretaryatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299notearlierthanFebruary5,2021andnotlaterthanMarch7,2021.However,intheeventthatthedateofthe2021AnnualMeetingofStockholdersisscheduledforadatethatismorethan30daysbeforeormorethan60daysafterJune5,2021,noticebythestockholdertobetimelymustbesoreceivednolaterthanthe10thdayfollowingthedayonwhichpublicannouncementofthedateofsuchmeetingisfirstmadebytheCompany.
ThenoticemustcontaincertaininformationaboutthenomineeandthestockholdersubmittingthenominationassetforthintheCompany’sAmendedandRestatedBylaws.Withrespecttothenominee,thenoticemustcontain,amongotherthings,(i)acompletedandsignedquestionnaire,representationandagreementinaformprovidedbytheCompany,whichformthestockholdersubmittingthenominationmustrequestfromtheCompany’sCorporateSecretaryinwritingwithnolessthansevendaysadvancenotice;(ii)awrittenrepresentationandagreement(intheformprovidedbytheCompany’sCorporateSecretaryuponwrittenrequest)thatsuchnominee(A)isnotandwillnotbecomeapartyto(1)anyagreement,arrangementorunderstandingwith,andhasnotgivenanycommitmentorassuranceto,anypersonorentityastohowsuchnominee,ifelectedasadirectoroftheCompany,willactorvoteonanyissueorquestion(a“VotingCommitment”)thathasnotbeendisclosedtotheCompanyor(2)anyVotingCommitmentthatcouldlimitorinterferewithsuchnominee’sabilitytocomply,ifelectedasadirectoroftheCompany,withsuchnominee’sfiduciarydutiesunderapplicablelaw,(B)isnotandwillnotbecomeapartytoanyagreement,arrangementorunderstandingwithanypersonorentityotherthantheCompanywithrespecttoanydirectorindirectcompensation,reimbursementorindemnificationinconnectionwithserviceoractionasadirectorthathasnotbeendisclosedtotheCompanyand(C)insuchnominee’sindividualcapacityandonbehalfofanypersonorentityonwhosebehalfthenominationisbeingmade,wouldbeincompliance,ifelectedasadirectoroftheCompany,andwillcomplywithallapplicablepubliclydisclosedcorporategovernance,conflictofinterest,confidentialityandstockownershipandtradingpoliciesandguidelinesoftheCompany;and(iii)anyotherinformationregardingthenomineethatwouldberequiredtobedisclosedinaproxystatementorotherfilingsrequiredtobemadeinconnectionwithacontestedsolicitationofproxiesfortheelectionofdirectorsorthattheCompanymayreasonablyrequiretodeterminetheeligibilityofthenomineetoserveasadirectoroftheCompany.Withrespecttothestockholdersubmittingthenomination,thenoticemustcontain:(i)thenameandaddress,astheyappearontheCompany’sbooks,ofsuchstockholderandanyStockholderAssociatedPerson(asdefinedintheCompany’sAmendedandRestatedBylaws);(ii)theclassorseriesandnumberofsharesoftheCompanyownedofrecordorbeneficiallybysuchstockholderoranyStockholderAssociatedPerson;(iii)anyderivativepositionsheldofrecordorbeneficiallybysuchstockholderoranyStockholderAssociatedPersonrelatedto,orthevalueofwhichisderivedinwholeorinpartfrom,thevalueofanyclassorseriesoftheCompany’sshares;(iv)acompleteandaccuratedescriptionofanyagreement,arrangementorunderstandingbetweenoramongsuchstockholderandsuchstockholder’sStockholderAssociatedPersonandanyotherperson(s)inconnectionwithsuchstockholder’sdirectornominationandthenameand
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addressofanyotherperson(s)orentityorentitiesknowntothestockholdertosupportsuchnomination;(v)adescriptionofanyproxy,contract,arrangement,understandingorrelationshippursuanttowhichsuchstockholderoranyStockholderAssociatedPersonhasarighttovote,directlyorindirectly,anysharesofanysecurityoftheCompany;(vi)anyshortinterestinanysecurityoftheCompanyheldbysuchstockholderoranyStockholderAssociatedPerson;(vii)anyrightstodividendsonthesharesoftheCompanyownedbeneficiallybysuchstockholderorbyanyStockholderAssociatedPersonthatareseparatedorseparablefromtheunderlyingsharesoftheCompany;(viii)anyproportionateinterestinsharesoftheCompanyorderivativepositionsheld,directlyorindirectly,byageneralorlimitedpartnershipinwhichsuchstockholderoranyStockholderAssociatedPersonisageneralpartneror,directlyorindirectly,beneficiallyownsaninterestinageneralpartner;(ix)anyperformance-relatedfees(otherthananasset-basedfee)thatsuchstockholderoranyStockholderAssociatedPersonisentitledtobasedonanyincreaseordecreaseinthevalueofsharesoftheCompanyorderivativepositions,ifany,asofthedateofsuchnotice,including,withoutlimitation,anysuchinterestsheldbymembersofsuchstockholder’soranyStockholderAssociatedPerson’simmediatefamilysharingthesamehousehold;(x)anyotherinformationregardingsuchstockholderoranyStockholderAssociatedPersonthatwouldberequiredtobedisclosedinaproxystatementorotherfilingsrequiredtobemadeinconnectionwithacontestedsolicitationofproxiesfortheelectionofdirectors;(xi)arepresentationthatsuchstockholderisaholderofrecordofstockoftheCompanyentitledtovoteatthemeetingandintendstoappearinpersonorbyproxyatthemeetingtobringsuchnominationbeforethemeeting;and(xii)arepresentationastowhethersuchstockholderoranyStockholderAssociatedPersonintendsto,orispartofagroupwhichintendsto,deliveraproxystatementand/orformofproxytoholdersofatleastthepercentageoftheCompany’soutstandingcapitalstockrequiredtoelectthenomineeand/orotherwisetosolicitproxiesfromstockholdersinsupportofsuchnomination.
AstockholderwhoisinterestedinrecommendingadirectorcandidateshouldrequestacopyoftheCompany’sAmendedandRestatedBylawsbywritingtotheCompany’sCorporateSecretaryatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299.RecommendedcandidateswillbesubjecttoabackgroundcheckbyaqualifiedfirmoftheCompany’schoosing.Appropriatesubmissionofarecommendationbyastockholderdoesnotguaranteetheselectionofthestockholder’scandidateortheinclusionofthecandidateintheCompany’sproxymaterials;however,theNominatingandCorporateGovernanceCommitteewillconsideranysuchcandidateinaccordancewiththedirectornominationprocessdescribedabove.
Annual Evaluation of Directors and Board Committee Members
TheBoardofDirectorsevaluatestheperformanceofeachdirector,eachcommitteeoftheBoard,theChairmanandtheBoardofDirectorsasawholeonanannualbasis.Inconnectionwiththisannualself-evaluation,eachdirectorrecordshisorherviewsontheperformanceofeachdirectorstandingforre-election,eachcommitteeoftheBoard,theChairmanandtheBoardofDirectorsasawhole.TheentireBoardofDirectorsreviewstheresultsofthesereportsanddetermineswhat,ifany,actionsshouldbetakenintheupcomingyeartoimproveitseffectivenessandtheeffectivenessofeachdirectorandcommittee.
Policy for Review of Related Party Transactions
PursuanttotheCompany’sRelatedPartyTransactionsPolicy,theAuditCommitteereviewsalloftherelevantfactsandcircumstancesofrelatedpartytransactionsandeitherapprovesordisapprovesentryintotherelatedpartytransaction,subjecttocertainlimitedexceptions.Indeterminingwhethertoapproveordisapproveentryintoarelatedpartytransaction,theAuditCommitteetakesintoaccount,amongotherfactors,thefollowing:
• thepositionwithinorrelationshipoftherelatedpartywiththeCompany;• thematerialityofthetransactiontotherelatedpartyandtheCompany,includingthedollarvalueofthe
transaction,withoutregardtoprofitorloss;• thebusinesspurposeforandreasonablenessofthetransaction(includingtheanticipatedprofitorlossfrom
thetransaction),takeninthecontextofthealternativesavailabletotheCompanyforattainingthepurposesofthetransaction;
• whetherthetransactioniscomparabletoatransactionthatcouldbeavailablewithanunrelatedparty,orisontermsthattheCompanyoffersgenerallytopersonswhoarenotrelatedparties;
• whetherthetransactionisintheordinarycourseoftheCompany’sbusinessandwasproposedand
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consideredintheordinarycourseofbusiness;• theeffectofthetransactionontheCompany’sbusinessandoperations,includingontheCompany’sinternal
controloverfinancialreportingandsystemofdisclosurecontrolsorprocedures;and• anyadditionalconditionsorcontrols(includingreportingandreviewrequirements)thatshouldbeappliedto
suchtransaction.
Furthermore,theCompany’sRelatedPartyTransactionsPolicyrequiresthatallrelatedpartytransactionsshallbepubliclydisclosedtotheextentandinthemannerrequiredbyapplicablelegalrequirementsandlistingstandards.
Related Party Transactions
Master Reorganization Agreement
Inconnectionwiththeinitialpublicoffering(the“IPO”),weenteredintoaMasterReorganizationAgreement(the“MasterReorganizationAgreement”),datedJune13,2018,amongtheCompanyandtheotherpartiesnamedtherein,pursuanttowhich:(i)(A)CharahHoldings,aDelawarelimitedpartnership,contributedallofitsinterestsinCharahManagementLLC,aDelawarelimitedliabilitycompany(“CharahManagement”),andAlliedPowerHoldings,LLC,aDelawarelimitedliabilitycompany(“AlliedPowerHoldings”),totheCompanyinexchangefor17,514,745sharesofCommonStock,(B)CEPHoldings,aKentuckycorporation,contributedallofitsinterestsinCharahManagementandAlliedPowerHoldingstotheCompanyinexchangefor4,605,465sharesofCommonStock,(C)CharahManagementHoldingsLLC,aDelawarelimitedliabilitycompany(“CharahManagementHoldings”),contributedallofitsinterestsinCharahManagementandAlliedPowerHoldingstotheCompanyinexchangefor907,113sharesofCommonStockand(D)AlliedManagementHoldings,LLC,aDelawarelimitedliabilitycompany(“AlliedManagementHoldings”),contributedallofitsinterestsinCharahManagementandAlliedPowerHoldingstotheCompanyinexchangefor409,075sharesofCommonStock;(ii)eachofCharahManagementHoldingsandAlliedManagementHoldingsdistributedthesharesofCommonStockreceivedbyitpursuanttoclause(i)abovetoitsrespectivemembersinaccordancewiththerespectivetermsofitslimitedliabilitycompanyagreement;and(iii)CharahHoldingsdistributedaportionofthesharesofCommonStockitreceivedinclause(i)abovetocertaindirectandindirectblockerentitieswhichmergedintotheCompany,withtheCompanysurviving,andBCPEnergyServicesFund,LP,aDelawarelimitedpartnershipownedbyBCPandcertainrelatedaffiliates,andBCPEnergyServicesFund-A,LP,aDelawarelimitedpartnershipownedbyBCPandcertainrelatedaffiliates,received14,020,861sharesofCommonStockasconsiderationinthemergers.
InadditionandpursuanttotheMasterReorganizationAgreement,inexchangeforthecontributionoftheirprofitsinterestsinCharahManagementHoldingsandAlliedManagementHoldings,theCompanyissued,pursuanttoarestrictedstockawardagreement,tocertainofthethen-currentofficersandemployeeswhoownedequityinterestsinCharahManagementandAlliedPowerHoldings,includingthroughCharahManagementHoldingsandAlliedManagementHoldings,1,215,956sharesofCommonStockattheclosingoftheIPO,ofwhich197,350sharesremainsubjecttotime-basedvestingconditionsaswellasperformancevestingconditionsthatincludemetricsbasedonspecifiedEBITDAtargetsandachievementofcertainsafetymetrics.Furthermore,theCompanyissuedawardsofCommonStockinanaggregateamountof316,199sharesofCommonStocktocertainoftheCompany’snon-executiveemployees,whichwereunvestedatthetimeoftheawardandhavesinceeithervestedorbeenforfeited.
InconnectionwiththeMasterReorganizationAgreement,weagreedtoindemnifyCharahHoldings,CEPHoldingsandanyoftheirrespectiveaffiliatesanddirectors,officers,partners,employees,members,managers,equityholders,agentsandrepresentativestothefullestextentpermittedbyapplicablelawagainstliabilitiesthattheymayincurasaresultofactingasadirectorindirectdirector,officer,partner,employee,member,manager,equityholder,agent,representativeoraffiliateofCharahManagement,AlliedPowerHoldingsoranyoftheirrespectivesubsidiaries.
Registration Rights Agreement
InconnectionwiththeclosingoftheIPO,theCompanyenteredintoaRegistrationRightsAgreement(the“RegistrationRightsAgreement”)withcertainstockholdersidentifiedonthesignaturepagestheretoastheHolders.
Pursuantto,andsubjecttothelimitationssetforthin,theRegistrationRightsAgreement,datedJune13,2018,
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filedbytheCompanywiththeSEConJune15,2018,BCPhastherighttorequiretheCompanybywrittennoticetoprepareandfilearegistrationstatementregisteringtheofferandsaleofanumberofBCP’ssharesofCommonStock.TheCompanyisrequiredtouseallcommerciallyreasonableeffortstomaintaintheeffectivenessofanysuchregistrationstatementuntilallsharescoveredbysuchregistrationstatementhavebeensold.
Inaddition,pursuanttotheRegistrationRightsAgreement,BCPhastherighttorequiretheCompany,subjecttocertainlimitationssetforththerein,toeffectadistributionofanyorallofBCP’ssharesofCommonStockbymeansofanunderwrittenoffering.Further,subjecttocertainexceptions,ifatanytimetheCompanyproposestoregisteranofferingofitsequitysecuritiesortoconductanunderwrittenoffering,whetherornotforitsaccount,thentheCompanymustnotifyBCPofsuchproposalbeforetheanticipatedfilingdateorcommencementoftheunderwrittenoffering,asapplicable,toallowBCPtoincludeaspecifiednumberofitssharesinthatregistrationstatementorunderwrittenoffering,asapplicable.Additionally,CEPHoldingshastherighttorequiretheCompany,subjecttocertainlimitationssetforththerein,toeffectadistributionofanyorallofitssharesofCommonStockbymeansofanunderwrittenofferingononeoccasion.
Theseregistrationrightsaresubjecttocertainconditionsandlimitations,includingtherightoftheunderwriterstolimitthenumberofsharestobeincludedinaregistrationorofferingandtheCompany’srighttodelayorwithdrawaregistrationstatementundercertaincircumstances.TheCompanywillgenerallypayallregistrationexpensesinconnectionwithitsobligationsundertheRegistrationRightsAgreement,regardlessofwhetheraregistrationstatementisfiledorbecomeseffective.
OnMarch16,2020,theCompanyamendedtheRegistrationRightsAgreementinordertogranttoCharahPreferredStockAggregator,LPtheregistrationrightsapplicabletotheotherBCP-affiliatedpartiestheretowithrespecttotheCommonStockintowhichthePreferredStockisconvertible.
Stockholders’ Agreement
InconnectionwiththeclosingoftheIPO,theCompanyenteredintoaStockholders’Agreement(the“Stockholders’Agreement”),datedasofJune18,2018,withCEPHoldings,BCPandcertainmembersofmanagement.Amongotherthings,theStockholders’AgreementprovidesBCPwiththerighttonominateanumberofdirectorstotheBoardinaproportionateamounttothenumberofsharesofCommonStockthatitholds,asfollows:(i)amajorityofthedirectorsaslongasBCPownsatleast50%oftheCommonStock;(ii)atleast40%ofthedirectorsaslongasBCPownsatleast40%butlessthan50%oftheCommonStock;(iii)atleast30%ofthedirectorsaslongasBCPownsatleast30%butlessthan40%oftheCommonStock;(iv)atleast20%ofthedirectorsaslongasBCPownsatleast20%butlessthan30%oftheCommonStock;and(v)atleast10%ofthedirectorsaslongasBCPownsatleast5%butlessthan20%oftheCommonStock.PursuanttoitsrightundertheStockholders’Agreement,BCPhasnominatedand/ortheBoardofDirectorshasdesignated,asapplicable,Messrs.Blossman,Ferraioli,SpenderandTritchandMs.ClyburnasBCPDirectors.
TheStockholders’AgreementalsoprovidesCEPHoldingswiththerighttonominateCharlesE.Priceasadirector,solongasCEPHoldingsownsatleast10%oftheoutstandingsharesoftheCommonStockorCharlesE.PriceholdsthetitleoftheCompany’sChiefExecutiveOfficer.
Information Rights Agreement
OnOctober9,2018,CharahSolutionsenteredintoanInformationRightsAgreement(the“InformationRightsAgreement”)withBCP,pursuanttowhichtheCompanywillprovideBCPwithcertainfinancialandotherinformationandotherrights.Specifically,theInformationRightsAgreementprovidesthat(i)theCompanywilldeliver,orcausetobedelivered,toBCP,uponwrittenrequest,certainmonthly,quarterlyandannualfinancialinformationaswellastheCompany’sannualbudget,businessplan,andfinancialforecastsandprojectionsforsolongasBCPanditsaffiliatesbeneficiallyownatleast10%oftheoutstandingsharesoftheCommonStock;(ii)theCompanywilldelivertoBCP,uponwrittenrequest,suchotherinformationabouttheCompanyanditssubsidiariesandprovideaccesstotheCompany’smanagement,ineachcase,asmaybereasonablyrequestedbyBCPforsolongasBCPanditsaffiliatesbeneficiallyownatleast20%oftheoutstandingsharesoftheCommonStock;(iii)BCPwillhavetherighttoappointonenon-votingobservertotheBoard,providedthattheobserverwillnotbeconsideredadirectoroftheCompanyorotherwiseconstituteamemberoftheBoardandwillinnoeventbeentitledtovoteonanymatterspresentedtotheBoard,forsolongasBCPanditsaffiliatesbeneficiallyownatleast10%oftheoutstandingsharesoftheCommonStock;(iv)BCPanditsaffiliates,employees,agents
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andrepresentativeswillbeboundbycertainconfidentialityanduserestrictionsregardinganyinformationobtainedpursuanttotheInformationRightsAgreement;and(v)BCPwillnotifytheChairmanoftheBoardifBCPoritsaffiliateshaveagreedtopurchaseorbeneficiallyown10%ormoreoftheequityofacompetitoroftheCompany,insuchevent,theCompanywillnotcomplywiththeprovisionsoftheInformationRightsAgreementrequiringit(A)todeliver,orcausetobedelivered,toBCPcertainmonthlyfinancialinformationaswellastheCompany’sannualbudget,businessplan,andfinancialforecastsandprojections,(B)todelivertoBCPsuchotherinformationabouttheCompanyanditssubsidiariesandtoprovideaccesstotheCompany’smanagement,ineachcase,asmaybereasonablyrequestedbyBCPand(C)toprovideBCPtherighttoappointanon-votingobservertotheBoard,ineachcase,iftheBoarddeterminesthatdoingsocouldhaveanadverseimpactontheCompany.TheCompany’senteringintotheInformationRightsAgreementwasapprovedbytheAuditCommitteeoftheBoardaswellastheBoard.
Preferred Stock Purchase Agreement
OnMarch5,2020,weenteredintoaSeriesAPreferredStockPurchaseAgreement(the“PreferredStockPurchaseAgreement”),byandbetweenusandCharahPreferredStockAggregator,LP(the“PreferredStockInvestor”),anaffiliateofBCP,whichbeneficiallyownsapproximately63%ofthetotalvotingpoweroftheoutstandingsharesoftheVotingStock,includingthePreferredStockonanas-convertedbasis,wherebyweagreedtoissueandselltothePreferredStockInvestor26,000sharesofPreferredStockinexchangeforapproximately$25.2million.AsaconditiontoenteringintothePreferredStockPurchaseAgreement,weagreedtoamendtheRegistrationRightsAgreementtogivethePreferredStockInvestorcertainregistrationrightswithrespecttothePreferredStock.
Brown & Root Industrial Services, LLC Subcontract
OnDecember19,2017,weenteredintoaSubcontractMasterAgreement(the“MasterAgreement”)withBrown&RootIndustrialServices,LLC(“B&R”).BCP,whichbeneficiallyownsapproximately63%ofthetotalvotingpoweroftheoutstandingsharesoftheVotingStock,includingthePreferredStockonanas-convertedbasis,hasagreaterthan10%equityinterestinB&R.ThepartiesagreedtooneworkauthorizationundertheMasterAgreementintheamountof$19.3millionforwaterredirectionworkconstructionforoneoftheCompany’scustomers.ExpensespaidtoB&Rinfiscal2019wereapproximately$1.6million.Allworkundertheissuedworkauthorizationwascompletedinfiscal2019andtheMasterAgreementhasbeenterminated.
ATC Group Services LLC Service Contract
ATCGroupServicesLLC(“ATC”),anentityownedbyBCP,whichbeneficiallyownsapproximately63%ofthetotalvotingpoweroftheoutstandingsharesoftheVotingStock,includingthePreferredStockonanas-convertedbasis,providedenvironmentalconsultingandengineeringservicesatcertainservicesites.ExpensespaidtoATCinfiscal2019were$184,000.
Historical Transactions with Affiliates
Amended and Restated Office Lease Agreement
WepreviouslyrentedourcorporateofficeandacondofromPriceRealEstate,LLC(“PriceRealEstate”),anentityindirectlyownedbyCharlesE.Price,ourformerPresidentandChiefExecutiveOfficer.InOctober2019,PriceRealEstatesoldtheCompany’scorporateofficetoanindependentthirdparty.TheleasefortheCompany’scorporateofficeisatriplenetlease,requiringmonthlypaymentsof$38,550(increasingbytheconsumerpriceindexeachyearcommencingJune1,2013)throughMay31,2020.TheCompanyterminatedtherentalofthecondoinMarch2020.Rentalexpensesof$390,850toPriceRealEstatewereincurredduringfiscal2019.
Aircraft Lease Agreement
PriceFlight,LLC(“PriceFlight”),anentityindirectlyownedbyCharlesE.Price,ourformerPresidentandChiefExecutiveOfficer,providedflightservicestousinfiscal2019.ExpensestoPriceFlightforflightservicesamountedto$85,250forfiscal2019.ThearrangementwithPriceFlightwasterminatedinMarch2019.
Employment Arrangement with Charles W. Price
CharlesW.Price,thesonofCharlesE.Price,ourformerPresidentandChiefExecutiveOfficer,wasan
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employeeoftheCompanyfrom2005toMay2019,whenhisemploymentended.CharlesW.Price’stotalcashandequitycompensationforfiscal2019was$237,156.Weseektofillpositionswithqualifiedemployees,whetherornottheyarerelatedtoourexecutiveofficersordirectors.Wecompensateemployeeswhohavesuchrelationshipswithinwhatwebelievetobethecurrentmarketratefortheirpositionandprovidebenefitsconsistentwithourpoliciesthatapplytosimilarlysituatedemployees.
The Board’s Role in Risk Oversight
TheBoardofDirectorsoverseestheCompany’sriskprofileandmanagement’sprocessesforassessingandmanagingrisk,bothasawholeBoardandthroughitscommittees.ThefullBoardreviewsstrategicrisksandopportunitiesfacingtheCompany.Amongotherareas,theBoardisinvolvedinoverseeingrisksrelatedtotheCompany’soverallstrategy,businessresults,capitalstructure,capitalallocationandbudgeting,andexecutiveofficersuccession.CertainotherimportantcategoriesofriskareassignedtodesignatedBoardcommittees(whicharecompromisedsolelyofindependentdirectors)thatreportbacktothefullBoard.Ingeneral,thecommitteesoverseethefollowingrisks:
• TheAuditCommitteeoverseesrisksrelatedtointernalfinancialandaccountingcontrols,legal,regulatoryandcompliancerisks,workperformedbytheCompany’sindependentregisteredpublicaccountingfirmandtheCompany’sinternalauditfunction,relatedpartytransactions,andtheoverallriskmanagementgovernancestructureandriskmanagementfunction;
• TheCompensationCommitteeoverseestheCompany’scompensationprogramsandpractices;and
• TheNominatingandCorporateGovernanceCommitteeoverseesissuesthatmaycreategovernancerisks,suchasBoardcompositionandstructure,directorselectionanddirectorsuccessionplanning.
TheBoardleadershipstructuresupportstheCompany’sgovernanceapproachtoriskoversightastheChiefExecutiveOfficerisinvolveddirectlyinriskmanagementasamemberoftheCompany’smanagementteam,whiletheChairmanoftheBoardandthecommitteechairpersons,intheirrespectiveareas,maintainoversightrolesasindependentmembersoftheBoard.
Compensation Committee Advisors
TheCompensationCommitteehassoleauthorityunderitschartertoretaincompensationconsultantsandotheradvisorsandtoapprovesuchconsultants’andadvisors’feesandretentionterms.TheCompensationCommitteehasretainedMeridianCompensationPartners,LLC(“Meridian”)toserveasitsindependentadvisorandtoprovideitwithadviceandsupportonexecutivecompensationissues.
TheCompensationCommitteehasreviewedandconfirmedtheindependenceofMeridianastheCompensationCommittee’scompensationconsultant.NeitherMeridiannoranyofitsaffiliatesprovidesanyservicestoCharahSolutionsexceptforservicesprovidedtotheCompensationCommittee.InadditiontoMeridian,theCompensationCommitteehasreviewedtheindependenceofeachotheroutsideadvisorinadvanceofreceivingadvicefromsuchperson.
Communications with the Board of Directors
StockholdersandotherinterestedpartiescancommunicatedirectlywithanyoftheCompany’sdirectors,bysendingawrittencommunicationtoadirectoratCharahSolutions,Inc.c/oCorporateSecretary,12601PlantsideDrive,Louisville,Kentucky40299.StockholdersandotherinterestedpartieswishingtocommunicatewithMr.Tritch,astheChairmanoftheBoard,orwiththeindependentdirectorsasagroupmaydosobysendingawrittencommunicationtoMr.Tritchattheaboveaddress.
AllcommunicationsreceivedassetforthintheprecedingparagraphwillbeopenedbytheCorporateSecretaryforthesolepurposeofdeterminingwhetherthecontentsrepresentamessagetotheCompany’sdirectors.TheCorporateSecretarywillforwardcopiesofallcorrespondencethat,intheopinionoftheCorporateSecretary,dealswiththefunctionsoftheBoardoritscommitteesorthatheorsheotherwisedeterminesrequirestheattentionofanymember,grouporcommitteeoftheBoard.TheCorporateSecretarywillnotforwardothercorrespondence.
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Director Compensation
Thetablebelowsetsforththecompensationpaidtoeachnon-employeedirector(otherthandirectorswhoareemployeesofBCP)whoservedontheBoardinfiscal2019.DirectorswhoareemployeesoftheCompanyorBCP(currentlyMessrs.Sewell,McCallandSpender)donotreceivecompensation(otherthantheircompensationasemployeesoftheCompanyorBCP)fortheirserviceontheBoardofDirectors.
2019 Director Compensation Table
Name
Fees Earnedor
Paid in Cash ($)
StockAwards
($)(1)Total
($)
ClaireBabineaux-Fontenot 16,250 — 16,250
JackA.Blossman,Jr. 75,000 100,000 175,000
MignonClyburn 48,750 100,000 148,750
BrianK.Ferraioli 80,000 100,000 180,000
RobertC.Flexon 77,500 100,000 177,500
StephenR.Tritch 85,000 140,000 225,000
(1) Representsthefullgrantdatefairvalueofrestrictedstockunit(“RSU”)awardsgrantedonMay17,2019,computedinaccordancewithFinancialAccountingStandardsBoardAccountingStandardsCodificationTopic718,Compensation–StockCompensation(“FASBASCTopic718”).Generally,thefullgrantdatefairvalueistheamountthattheCompanywouldexpenseintheconsolidatedandcombinedfinancialstatementsovertheaward’svestingschedule.Foradditionalinformationregardingtheassumptionsmadeincalculatingtheseamounts,seeNote2totheconsolidatedandcombinedfinancialstatementsincludedintheCompany’sAnnualReportonForm10-KforthefiscalyearendedDecember31,2019.Theseamountsreflecttheaccountingexpenseanddonotcorrespondtotheactualvaluethatwillberecognizedbythedirectors.
Eachnon-employeedirector(otherthandirectorswhoareemployeesofBCP)receivesanannualretainerof$65,000paidinquarterlyinstallments.ThechairpersonsoftheAuditCommittee,theCompensationCommitteeandtheNominatingandCorporateGovernanceCommitteereceiveadditionalannualcompensationof$15,000,$12,500and$10,000,respectively,paidinquarterlyinstallments.Eacheligiblenon-employeedirectorreceivesanannualequitygrantwithatargetvalueof$100,000madeintheformofRSUs.TheRSUsvestonthefirstanniversaryofthegrantdateandwillbepaidinsharesofCommonStockonthevestingdate.TheChairmanoftheBoardreceivesadditionalannualcompensationof$60,000,one-thirdofwhichispaidincashandtwo-thirdsofwhichispaidinstockgrants.
Thefiscal2019annualequitygrantoccurredonMay17,2019.Onthatdate,eacheligiblenon-employeedirector(otherthanMr.Tritch)receivedanawardof21,552RSUsandMr.Tritchreceivedanawardof30,173RSUs,whichincludedtheadditionalequitycompensationpayabletohimasChairmanoftheBoard.ThenumberofRSUsincludedintheawardwasdeterminedbydividingthetargetvaluebytheIPOpriceoftheCommonStockof$4.64pershare.
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Executive Compensation
Weareprovidingcompensationdisclosurethatsatisfiestherequirementsapplicabletoemerginggrowthcompanies,asdefinedintheJumpstartOurBusinessStartupsAct.
Summary Compensation Table
Thefollowingtablesummarizes,withrespecttoournamedexecutiveofficers,informationrelatingtocompensationearnedforservicesrenderedinallcapacitiesduringthefiscalyearsendedDecember31,2019and2018.
Name and Principal Position YearSalary
($)Bonus ($)(1)
Stock Awards
($)(2)
Non-Equity Incentive PlanCompensation
($)
All Other Compensation
($)(3)Total
($)
ScottA.Sewell 2019 514,423 — 1,056,838 — 27,531 1,598,792
President and Chief Executive Officer
Dorsey“Ron”McCall 2019 750,006 — — 750,000 34,004 1,534,010
Senior Vice President 2018 750,000 375,000 — — 26,255 1,151,255
RogerD.Shannon 2019 255,166 148,250 914,998 — 56,387 1,374,801
Chief Financial Officer and Treasurer
CharlesE.Price(4) 2019 70,769 — — — 805,733 876,502
Former President and Chief Executive Officer 2018 773,077 — — — 22,041 795,118
(1) Amountsshownrepresentthepaymentofannualbonusesfortheapplicableyear.Foradescriptionofannualbonusesforfiscal2019,see“—AdditionalNarrativeDisclosures—2019BonusPlan”below.
(2) Theamountsinthe“StockAwards”columndonotreflecttheactualvaluethenamedexecutiveswillrealizefromtheRSUsandtheperformanceshareunits(“PSUs”)awardedtotheexecutives.TheamountspresentedinthetablearethegrantdatefairvaluesoftheawardscomputedinaccordancewithFASBASCTopic718basedontheprobableoutcomeofanyapplicableperformanceconditions(determinedasoftheapplicabledateofgrant)andexcludingtheeffectofestimatedforfeitures.TheCompanywillrecognizethegrantdatefairvaluesoftheawardsascompensationexpenseoverthevestingperiodoftheawards.Thiscolumnincludesthegrantdatefairvaluesof$422,734for68,293PSUsawardedtoMr.SewellonApril4,2019and$165,998for29,537PSUsawardedtoMr.ShannononJune17,2020.ThePSUswillvestonApril1,2022(the“PerformancePeriodEndDate”)ifthevolume-weightedaveragepriceofashareoftheCommonStockequalsorexceeds$12.00forany20-consecutivetradingdayperiodendingonorpriortothePerformancePeriodEndDate.ThegrantdatefairvaluesofthePSUsassumeallofthePSUswouldbeearnedattheendofthethree-yearperformanceperiod.Note13totheCompany’sconsolidatedandcombinedfinancialstatementsincludedinitsAnnualReportonForm10-KforthefiscalyearendedDecember31,2019containsmoreinformationabouttheCompany’saccountingforstock-basedcompensationarrangements,includingtheassumptionsusedtodeterminethegrantdatefairvaluesofthestockawards.
(3) Thefollowingtablereflectsthetypesandamountsofallowancesandreimbursementsincludedinthiscolumn:
Scott A. Sewell
Dorsey“Ron” McCall
Roger D. Shannon
Charles E. Price
VehicleAllowanceorValueofVehicleLeaseReimbursement($) 5,625 16,800 9,875 1,646
ClubMembershipDuesReimbursement($) 13,506 2,545 — 1,325
EmployerContributionsto401(k)Plan($) 8,400 14,659 6,521 2,762
HousingAllowance($) — — 10,181 —
RelocationBonus($) — — 20,000 —
TaxGross-UponRelocationBonus($) — — 9,810 —
SeveranceBenefits($) — — — 800,000
Total($) 27,531 34,004 56,387 805,733
(4) Mr.PriceceasedtobeemployedbytheCompanyonJanuary23,2019.
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Outstanding Equity Awards at Fiscal Year-End
Stock Awards
Name
Number of Shares or Units of Stock That
Have NotVested
(#)(1)
Market Value of Shares or Units ofStock That Have
Not Vested ($)(2)
Equity Incentive Plan Awards:
Number of UnearnedShares,
Units or Other Rights That
Have Not Vested
(#)(3)
Equity Incentive Plan Awards:
Market or Payout Value of UnearnedShares, Units or
Other Rights ThatHave Not Vested
($)(4)
ScottA.Sewell 102,440 249,954 134,667 328,587
Dorsey“Ron”McCall — — 30,159 73,588
RogerD.Shannon 133,274 325,189 29,537 72,070
CharlesE.Price — — — —
(1) TheRSUs(payableinsharesofCommonStock)showninthiscolumnwillbecomevestedasfollows:
Number of RSUs
Becoming Vested On:
Name April 1, 2020 April 1, 2021 April 1, 2022 April 1, 2023
ScottA.Sewell 34,146 34,146 34,148 —
RogerD.Shannon 37,011 37,011 37,010 22,242(2) MarketvalueisbasedontheclosingmarketpriceoftheCommonStockonDecember31,2019of$2.44pershare.(3) 66,374and30,159ofthePSUsshowninthiscolumnforMr.SewellandMcCall,respectively,wereawardedattheclosingoftheIPO
andwillvestingbasedontheCompany’sachievementofspecifiedEBITDAtargetsandcertainsafetymetrics.TheremainingPSUsshowninthiscolumn(68,293forMr.Sewelland29,537forMr.Shannon)willvestonthePerformancePeriodEndDateifthevolume-weightedaveragepriceofashareoftheCommonStockequalsorexceeds$12.00forany20-consecutivetradingdayperiodendingonorpriortothePerformancePeriodEndDate.
(4) TheamountsinthiscolumnequalthenumberofunearnedPSUsshowninthecolumntotheleftmultipliedby,ineachcase,theclosingmarketpriceoftheCommonStockonDecember31,2019of$2.44pershare.Theamountsshownarenotnecessarilyindicativeoftheamountsthatmayactuallyberealizedbythenamedexecutiveofficers.TheactualamountsrealizedwillbebasedonwhetherthePSUsareearnedandthemarketvalueoftheCommonStockonthePerformancePeriodEndDate.
Additional Narrative Disclosures
Base Salary
Eachnamedexecutiveofficer’sbasesalaryisafixedcomponentofcompensationthatdoesnotvarydependingonthelevelofperformanceachieved.Basesalariesaredeterminedforeachnamedexecutiveofficerbasedonhispositionandresponsibility.TheBoardofDirectorsreviewsthebasesalariesforeachnamedexecutiveofficerannuallyaswellasatthetimeofanypromotionorsignificantchangeinjobresponsibilitiesand,inconnectionwitheachreview,theBoardconsidersindividualandCompanyperformanceoverthecourseoftheapplicablefiscalyear.Asofthemostrecentannualrevieworpromotion,theannualbasesalaryrateforMessrs.Sewell,McCall,ShannonandPriceforfiscal2019was$525,000,$750,000,$415,000and$800,000,respectively.
2019 Bonus Plan
Messrs.SewellandShannonparticipatedinour2019bonusplan,underwhichtheymayearnabonuscalculatedasapercentageoftheirbasesalarybasedontheachievementofacombinationofCompany-wide,site-specificandindividualperformancegoals,including,butnotlimitedto,profitability,engagementimprovement,safety,environmentalcomplianceandcustomerservice.ActualpaymentofthebonusesunderthisplanisatthediscretionoftheBoardofDirectors.PursuanttothetermsofMessrs.Sewell’sandShannon’semploymentagreements,thetargetannualbonuswas100%and70%ofhisannualbasesalary,respectively.Mr.Shannon’semploymentagreementprovidedaminimumbonusof$148,250forfiscal2019.Pursuanttothetermsofhisemploymentagreement,Mr.McCallearnedanannualbonusbasedonCompany-specificperformancegoalsandtheperformanceoftheCompany’snuclearservicesofferings.Messrs.McCallandShannonhaveagreedtodeferpaymentofthebonusestheyearnedforfiscal2019.
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Long-Term Incentive Awards
TheCompanybelievesthatequity-basedcompensationisessentialtoaligntheinterestsoftheCompany’smanagementanditsstockholdersinenhancingthelong-termvalueoftheCommonStockandtoencourageexecutivestoremainemployedwiththeCompany.AmongthetypesofequityawardstheCompanyisauthorizedtoissueundertheCharahSolutions,Inc.2018OmnibusIncentivePlan(the“IncentivePlan”),theCompensationCommitteeoftheBoardhasdeterminedthatamixoftime-vestedRSUandPSUawardssatisfiestheretentionandincentivepurposesoftheequity-basedawards.
Other Benefits
WecurrentlymaintaintwoplansintendedtoprovidebenefitsunderSection401(k)oftheInternalRevenueCode.OneforAlliedPowerManagement(the“AlliedPowerManagement401(k)Plan”)andoneforCharah,LLC(the“Charah401(k)Plan”).Each401(k)Planpermitsemployeestocontributeportionsoftheirbasecompensationintoaretirementaccount.UndertheAlliedPowerManagement401(k)Plan,wematchemployeecontributionsforthefirst3.0%andmatchat50%forthenext2.0%contributed(foracombinedmaximummatchof4.0%ofeachemployee’sannualbasesalary).UndertheCharah401(k)Plan,wemakeaflatcontributiontoeachemployee’s401(k)accountequalto3.0%ofeachemployee’sannualbasesalary.
Employment, Severance or Change in Control Agreements
Wearepartytoemploymentagreementswiththefollowingnamedexecutiveofficers:Messrs.Sewell,McCallandShannon(each,an“Executive”).Pursuanttothetermsoftheemploymentagreements,iftheemploymentofMr.SewellorMr.Shannonisterminatedbyusfor“cause”(asdefinedintheemploymentagreements)orbytheExecutivewithout“goodreason”(asdefinedintheemploymentagreements),wewillpaytheterminatedExecutiveanyaccruedandunpaidportionofhisbasesalary,provideanybenefitstowhichtheExecutivewasentitled(includingpaidtimeoffthroughthedateofhisterminationofemployment)aswellaspayanyunreimbursedexpenses(collectively,the“AccruedObligations”).
UpontheterminationofanExecutive’semploymentduetohisdeathor“disability”(asdefinedintheemploymentagreements),wewillpaytheterminatedExecutive,ortheExecutive’sestate,asapplicable,theAccruedObligations,aswell,inthecaseofMr.SewellorMr.Shannon,theannualbonushewouldhaveearnedforthefiscalyearinwhichhisdeathordisabilityoccurredbasedonactualperformance.
UpontheterminationoftheemploymentofMr.SewellorMr.ShannonbyuswithoutcauseorbytheExecutivewithgoodreason,theterminatedExecutivewillbeentitledtotheAccruedObligations,andsubjecttotheterminatedExecutive’sexecuting(andnotrevoking)ageneralreleaseofclaims,thefollowingpaymentsandbenefits:
• SeveranceinatotalamountequaltotheSeveranceMultiple(asdefinedbelow)timesthesumofhisannualbasesalaryandtargetannualbonus;
• COBRAcontinuationcoverageunderourgrouphealthplanatthesamecostapplicabletoouractiveemployeesfor18months(inthecaseofMr.Sewell)or12months(inthecaseofMr.Shannon)followingsuchterminationofemployment(or,ifearlier,thedatethattheterminatedExecutivebecomeseligibletoreceivehealthbenefitsasaresultofsubsequentemployment);and
• Apro-rataportionoftheannualbonushewouldhaveearnedforthefiscalyearinwhichtheterminationofemploymentoccurredbasedonactualperformance(or,iftheterminationofemploymentoccursduringthe12-monthperiodfollowinga“changeincontrol”(asdefinedintheIncentivePlan)(the“CICProtectionPeriod”),thegreateroftargetoractualperformance).
TheSeveranceMultipleis2.0forMr.Sewelland1.0forMr.Shannon,providediftheterminationofemploymentoccursduringtheCICProtectionPeriod,theSeveranceMultipleis2.5forMr.Sewelland1.5forMr.Shannon.
IfMr.McCallisterminatedforcause,wewillpayhimtheAccruedObligations,aswellas(i)anyannualbonusaccruedanddeterminedbutnotyetpaidforapriorfiscalyear,(ii)anybenefitsaccruedandvestedunderanyplanorarrangementmaintainedbyAlliedPowerManagementand(iii)anyclaimsarisingbutnotyetpaidunderanywelfarebenefitplansmaintainedbyAlliedPowerManagementasofthedateoftermination.UponterminationofMr.McCall’semploymentbyhimwithoutgoodreason,wewillpayMr.McCalltheAccrued
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Obligationsnolaterthan15daysfollowingthedateofterminationandhewillnotbeentitledtoanysalary,compensation,severanceorotherbenefitsfromusthereafter,exceptasotherwiseprovidedunderthetermsofanyapplicablebenefitplanorarrangementwithrespecttowhichMr.McCallhasbeenaparticipant.UponaterminationofMr.McCall’semploymentbyuswithoutcauseorbyMr.McCallwithgoodreason,wewillpaytoMr.McCall,inadditiontotheaforementionedpayments,(i)anamountequalto(A)twotimeshisthen-currentbasesalary,(B)twotimesthehigherof(1)histhen-targetbonusor(2)theannualbonuspaidforthefiscalyearimmediatelyprecedingthefiscalyearinwhichhisterminationofemploymentoccurs,ifany,(C)apro-ratedportionoftheannualbonusMr.McCallwouldhavebeenentitledtoforthefiscalyearinwhichtheterminationoccurs,ifany,and(D)aproratedportionoftheamountMr.McCallwouldhavereceivedundertheAlliedPowerHoldingsIncentiveUnitPlanrelatedtocertaindistributionsoccurringafterthedateofterminationhadsuchterminationnotoccurred,eachsuchpost-terminationdistributiontobecalculatedbymultiplyingtheamountMr.McCallwouldhavereceivedhadhisterminationnotoccurredmultipliedbyafraction,thenumeratorofwhichisthenumberofdaysbetweentheawarddateandthedateofterminationandthedenominatorofwhichisthenumberofdaysbetweentheawarddateandthedateofsuchpost-terminationdistribution(theamountsinclauses(A),(B),(C)and(D)collectively,the“McCallSeverance”).UponMr.McCall’sdeathordisability,Mr.McCallwillbepaidtheMcCallSeverance,providedthatpaymentof(A)and(B)shallonlybecalculatedatone-timesthosestatedamounts.
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Equity Compensation Plan Information
ThetablebelowprovidesinformationasofDecember31,2019,withrespecttothesecuritiesauthorizedforissuancetoemployees,directorsandconsultantsoftheCompanyanditsaffiliatesundertheIncentivePlan.TheIncentivePlan,whichwasadoptedbytheBoardofDirectorsupontheclosingoftheIPO,providesforthegrantofstockoptions,stockappreciationrights,restrictedstock,RSUs,bonusstock,dividendequivalents,otherstock-basedawards,substituteawards,annualincentiveawardsandperformanceawards.TheCompanyhasreserved3,006,582sharesofCommonStockforissuanceundertheIncentivePlan,andallfutureequityawardsdescribedabovewillbeissuedpursuanttotheIncentivePlan.
Plan Category(1)
Number of Securities to
be Issued Upon Exercise of
Outstanding Options,
Warrants and Rights
(#) (a)
Weighted-Average Exercise Price of
Outstanding Options, Warrants and
Rights ($) (b)
Number ofSecurities Remaining
Available for Future Issuance Under Equity Compensation
Plans (Excluding Securities
Reflected in Column (a))
(#) (c)
Equitycompensationplansnotapprovedbysecurityholders 752,479(2) —(3) 1,350,373(4)
(1) TheCompanydoesnothaveanyequitycompensationplansapprovedbysecurityholders.(2) RepresentsthenumberofunvestedRSUsandunearnedPSUsawardedtotheCompany’skeyemployeesandnon-employeedirectors
undertheIncentivePlan.(3) Therearenooutstandingstockoptionsorotherequityawardshavinganexerciseprice.(4) RepresentssharesavailableforawardinthefutureundertheIncentivePlan.
Section 16(a) Beneficial Ownership Reporting Compliance (Delinquent Section 16(a) Reports)
Section16(a)oftheExchangeActrequirestheCompany’sexecutiveofficersanddirectorsandpersonswhobeneficiallyownmorethan10%oftheoutstandingsharesofCommonStock(collectively,the“reportingpersons”)tofilewiththeSECinitialreportsoftheirbeneficialownershipofCommonStockandreportsofchangesintheirbeneficialownershipofCommonStock.BasedsolelyonareviewofsuchreportsandwrittenrepresentationsmadebytheCompany’sexecutiveofficersanddirectorswithrespecttothecompletenessandtimelinessoftheirfilings,theCompanybelievesthatthereportingpersonscompliedwithallapplicableSection16(a)filingrequirementsonatimelybasisduringfiscal2019,exceptforMessrs.Blossman,Ferraioli,FlexonandTritchandMs.Clyburn,directorsoftheCompany,who,duetoanadministrativeerror,eachfiledalateForm4toreportanawardofRSUsgrantedundertheIncentivePlan.
Compensation Committee Report
TheCompensationCommitteehasreviewedanddiscussedthe“ExecutiveCompensation”sectionincludedinthisProxyStatementwithmanagementand,basedonsuchreviewanddiscussions,recommendedtotheBoardthatthe“ExecutiveCompensation”sectionbeincludedinthisProxyStatementandintheCompany’sAnnualReportonForm10-KforthefiscalyearendedDecember31,2019.
RespectfullysubmittedbytheCompensationCommitteeoftheBoard,
RobertC.Flexon,ChairMignonL.ClyburnMarkSpender
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Audit Committee Report
TheprimarypurposeoftheAuditCommitteeistoassisttheBoardinitsoversightofallmaterialaspectsoftheaccountingandfinancialreportingprocesses,internalcontrolsandinternalauditfunctionsoftheCompany,includingitscompliancewithSection404oftheSarbanes-OxleyActof2002.ManagementhasprimaryresponsibilityfortheCompany’sconsolidatedandcombinedfinancialstatementsandreportingprocesses,includingitsinternalcontrolsanddisclosurecontrolsandprocedures.TheCompany’sindependentregisteredpublicaccountingfirm,Deloitte&ToucheLLP,isresponsibleforperforminganindependentauditoftheconsolidatedandcombinedfinancialstatementsinaccordancewiththestandardsofthePublicCompanyAccountingOversightBoardandexpressinganopinionontheconformityofthoseauditedconsolidatedandcombinedfinancialstatementswithgenerallyacceptedaccountingprinciples.
Infulfillingitsoversightresponsibilities,theAuditCommitteereviewedanddiscussedwithmanagementtheauditedconsolidatedandcombinedfinancialstatementsincludedintheCompany’sAnnualReportonForm10-KforthefiscalyearendedDecember31,2019.ThisreviewincludedadiscussionofthequalityandacceptabilityoftheCompany’sfinancialreportingandinternalcontrols.Duringthepastfiscalyear,theAuditCommitteediscussedwiththeCompany’sindependentregisteredpublicaccountingfirmthemattersrequiredtobediscussedbyapplicablerequirementsofthePublicCompanyAccountingOversightBoardandtheSEC.TheAuditCommitteealsoreceivedduringthepastfiscalyearthewrittendisclosuresandtheletterfromtheindependentregisteredpublicaccountingfirmrequiredbyapplicablerequirementsofthePublicCompanyAccountingOversightBoardregardingtheindependentregisteredpublicaccountingfirm’scommunicationswiththeAuditCommitteeconcerningindependence,andhasdiscussedwiththeindependentregisteredpublicaccountingfirmitsindependence.
Basedonthereviews,discussionsanddisclosuresreferredtoabove,theAuditCommitteerecommendedtotheBoardthattheauditedconsolidatedandcombinedfinancialstatementsoftheCompanyforthefiscalyearendedDecember31,2019beincludedinitsAnnualReportonForm10-Kforsuchfiscalyear.
RespectfullysubmittedbytheAuditCommitteeoftheBoard,
BrianK.Ferraioli,ChairRobertC.FlexonStephenR.Tritch
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Proposal 2: Ratification of the Appointment of
Independent Registered Public Accounting Firm
TheAuditCommitteeoftheBoardofDirectorshasappointedDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020.Deloitte&ToucheLLPhasservedastheCompany’sindependentregisteredpublicaccountingfirmsince2017.TheAuditCommitteereviewedanddiscussedtheperformanceofDeloitte&ToucheLLPforfiscal2019priortoitsappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020.
TheCompanyexpectsthatrepresentativesofDeloitte&ToucheLLPwillparticipateintheAnnualMeeting,andtherepresentativeswillhaveanopportunitytomakeastatementiftheydesiretodoso.TheCompanyalsoexpectsthatrepresentativeswillbeavailabletorespondtoappropriatequestionsfromstockholders.
StockholderratificationoftheAuditCommittee’sappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020isnotrequiredbytheCompany’sAmendedandRestatedBylawsorotherwise.Nevertheless,theBoardissubmittingtheappointmentofDeloitte&ToucheLLPtotheCompany’sstockholdersforratificationasamatterofgoodcorporategovernance.IftheCompany’sstockholdersfailtoratifytheappointment,theAuditCommitteewillreconsideritsappointmentofDeloitte&ToucheLLP.Evenifthisappointmentisratified,theAuditCommittee,initsdiscretion,maydirecttheappointmentofadifferentindependentregisteredpublicaccountingfirmatanytimeduringthefiscalyeariftheAuditCommitteedeterminesthatsuchachangewouldbeinthebestinterestsoftheCompanyanditsstockholders.
The Board of Directors recommends that you vote “FOR” the ratification of the appointment of Deloitte &Touche LLP to serve as the Company’s independent registered public accounting firm for fiscal 2020. Unlessotherwisespecified,proxieswillbevoted“FOR”theratificationoftheappointmentofDeloitte&ToucheLLPtoserveastheCompany’sindependentregisteredpublicaccountingfirmforfiscal2020.
Fees Paid to Independent Registered Public Accounting Firm
ThefollowingtablepresentsfeesforprofessionalauditservicesrenderedbyDeloitte&ToucheLLPfortheauditoftheCompany’sconsolidatedandcombinedfinancialstatementsforthefiscalyearsendedDecember31,2019and2018andfeesbilledforotherservicesrenderedbyDeloitte&ToucheLLPduringthoseperiods.
Fiscal 2019
($)Fiscal 2018
($)
AuditFees(1) 891,223 3,467,166
Audit-RelatedFees — —
TaxFees(2) 241,715 293,359
AllOtherFees(3) 1,895 1,895
Total 1,134,833 3,762,420
(1) AuditFeesconsistsoffeesbilledforprofessionalservicesrenderedinconnectionwithourregistrationstatementonFormS-1andamendmentsthereto,andourregistrationstatementonFormS-8,relatedtotheIPOandassociatedwiththeannualfinancialstatementauditandquarterlyfinancialstatementreviews,servicesrelatedtocompliancewithSection404oftheSarbanes-OxleyActof2002andconsultationsinconnectionwithstatutoryandregulatoryfilingsorengagements.
(2) TaxFeesconsistsoffeesbilledfortaxcompliance,consultationandrelatedmatters.(3) AllOtherFeesconsistsoflicensingfeespaidforaccesstoanonlineaccountingresearchprogramprovidedbytheCompany’s
independentregisteredpublicaccountingfirm.
Audit Committee Pre-Approval of Audit and Non-Audit Services
TheAuditCommitteehasimplementedprocedurestoensurethatallauditandpermittednon-auditservicestobeprovidedtotheCompanyhavebeenpre-approvedbytheAuditCommittee.Specifically,theAuditCommitteepre-approvestheuseoftheCompany’sindependentregisteredpublicaccountingfirmforspecificauditandnon-auditservices,withinpre-approvedmonetarylimits.Ifaproposedservicehasnotbeenpre-approved,thenitmustbespecificallypre-approvedbytheAuditCommitteebeforetheservicemaybeprovidedbytheCompany’sindependentregisteredpublicaccountingfirm.Anypre-approvedservicesexceedingthepre-approvedmonetary
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limitsrequirespecificapprovalbytheAuditCommittee.Forfiscal2019,alloftheauditfeeswereapprovedbytheAuditCommitteeinaccordancewiththeaboveprocedures.AlloftheotherfeesbilledbyDeloitte&ToucheLLPtotheCompanyforfiscal2019wereapprovedbytheAuditCommitteebymeansofspecificpre-approvals.Allnon-auditservicesprovidedinfiscal2019werereviewedwiththeAuditCommittee,whichconcludedthattheprovisionofsuchservicesbyDeloitte&ToucheLLPwascompatiblewiththemaintenanceofthatfirm’sindependenceintheconductofitsauditingfunctions.
Additional Information
Stockholder Proposals for the 2021 Annual Meeting of Stockholders
AnystockholderproposalintendedtobeincludedintheCompany’sproxystatementandformofproxyrelatingtothe2021AnnualMeetingofStockholdersmustbeinwritingandreceivedbytheCompanynolaterthanDecember25,2020.AnysuchstockholderproposalmustalsocomplywithRule14a-8oftheExchangeAct,whichliststherequirementsfortheinclusionofstockholderproposalsincompany-sponsoredproxymaterials.StockholderproposalsshouldbeaddressedtotheattentionoftheCompany’sCorporateSecretaryatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299.PursuanttotheSECrules,submittingaproposalwillnotguaranteethatitwillbeincludedintheCompany’sproxymaterials.
Inaddition,anystockholderproposalintendedtobepresentedatthe2021AnnualMeetingofStockholders,butthatwillnotbeincludedintheCompany’sproxystatementandformofproxyrelatingtothe2021AnnualMeetingofStockholders(i.e.,anyproposalotherthanaproposalsubmittedpursuanttoRule14a-8oftheExchangeAct),mustbeinwritingandreceivedbytheCompany’sCorporateSecretaryatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299notearlierthanFebruary5,2021andnotlaterthanMarch7,2021.However,intheeventthatthedateofthe2021AnnualMeetingofStockholdersisscheduledforadatethatismorethan30daysbeforeormorethan60daysafterJune5,2021,noticebythestockholdertobetimelymustbesoreceivednotlaterthanthe10thdayfollowingthedayonwhichpublicannouncementofthedateofsuchmeetingisfirstmadebytheCompany.StockholderproposalsmustincludethespecifiedinformationconcerningtheproposalandthestockholdersubmittingtheproposalassetforthintheCompany’sAmendedandRestatedBylaws.AcopyoftheCompany’sAmendedandRestatedBylawsmaybeobtainedbywritingtotheCompany’sCorporateSecretaryatCharahSolutions,Inc.,12601PlantsideDrive,Louisville,Kentucky40299.
2019 Annual Report to Stockholders
ThisProxyStatementisaccompaniedbythe2019AnnualReporttoStockholders,andthesematerialsarealsoavailableatwww.proxyvote.comandtheinvestorsportionoftheCompany’swebsite,www.charah.com.The2019AnnualReporttoStockholders,whichcontainstheauditedconsolidatedandcombinedfinancialstatementsandotherinformationabouttheCompany,isnotincorporatedinthisProxyStatementandisnottobedeemedapartoftheproxysolicitingmaterial.
Annual Report on Form 10-K
The Company will provide without charge to each person solicited pursuant to this Proxy Statement, upon thewritten request of any such person, a copy of the Company’s Annual Report on Form 10-K for the fiscal yearended December 31, 2019, including the financial statements and the financial statement schedules, required tobe filed with the SEC, or any exhibit thereto. Requests should be in writing and addressed to the attention ofSteven A. Brehm, the Company’s Corporate Secretary, at Charah Solutions, Inc., 12601 Plantside Drive,Louisville, Kentucky 40299.
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Householding
TheSEChasadoptedrulespermittingcompaniestomailoneproxystatementandannualreport,ornoticeofinternetavailabilityofproxymaterials,asapplicable,inoneenvelopetoallstockholdersresidingatthesameaddressifcertainconditionsaremet.Thisiscalled“householding”andcanresultinsignificantsavingsofpaperandmailingcosts.TheCompanyhasnotimplementedhouseholdingwithrespecttoitsstockholdersofrecord;however,anumberofbrokeragefirmshaveinstitutedhouseholdingthatmayimpactcertainbeneficialownersofsharesheldinstreetname.IfmembersofyourhouseholdhavemultipleaccountsthroughwhichtheyholdVotingStock,youmayhavereceivedahouseholdingnotificationfromthestockholderofrecord(e.g.,yourbank,brokerorothernominee).
PleasecontactthestockholderofrecorddirectlyifyouhaveanyquestionsorwishtorevokeyourdecisiontohouseholdortoreceiveanadditionalcopyofthisProxyStatement,the2019AnnualReporttoStockholdersortheNoticeofInternetAvailabilityformembersofyourhousehold.
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