UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) November 17, 2017

 

BENEFITFOCUS, INC.

(Exact name of registrant as specified in its charter)

 

 

100 Benefitfocus Way, Charleston, South Carolina 29492

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code (843) 849-7476

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this Chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this Chapter).

Emerging Growth Company ☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☒

 

 

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(b), (c), (e)  On November 17, 2017, Shawn A. Jenkins stepped down as Chief Executive Officer of Benefitfocus, Inc. (the “Company”), effective December 31, 2017.  Beginning January 1, 2018, he will assume the role of Senior Advisor for Innovation of the Company.  Mr. Jenkins’ transition is not related to any disagreement with the Company on any matter relating to Company’s operations, but is for personal reasons.  

 

Pursuant to a new employment agreement between Mr. Jenkins and the Company, effective January 1, 2018, Mr. Jenkins’ employment as Senior Advisor for Innovation of the Company will be “at will” during its term, which will end on June 30, 2020.  As Senior Advisor for Innovation, Mr. Jenkins will be paid a salary of $100,000 per year. In addition, on the first calendar day of each quarter during the term of his new employment agreement, Mr. Jenkins will be granted an equity award of fully vested restricted stock valued at $50,000.  If the Company terminates Mr. Jenkins for “cause” (as such term is defined in the new employment agreement) or Mr. Jenkins resigns, he will be paid his salary and equity compensation under the new employment agreement up to the termination date.  If Mr. Jenkins’ employment terminates due to his death, the Company terminates Mr. Jenkins without “cause,” or Mr. Jenkins’ employment ends due to the expiration of the new employment agreement’s term, Mr. Jenkins will receive his salary and equity compensation under the new employment agreement until June 30, 2020 and all of Mr. Jenkins’ outstanding unvested equity awards will accelerate in full.  The material terms of Mr. Jenkins’ previously granted equity awards otherwise remain unchanged. Pursuant to the new employment agreement, Mr. Jenkins will be subject to a confidentiality covenant and one year non-competition covenant.

 

On November 17, 2017, the Company’s Board of Directors (the “Board”) appointed Raymond A. August to the additional role of Chief Executive Officer (principal executive officer) of the Company, effective January 1, 2018.  Mr. August will remain President of the Company.  Pursuant to an amendment to Mr. August’s employment agreement, Mr. August will be paid an annual salary of $500,000 beginning January 1, 2018.  He will be eligible to participate in the Company’s Management Incentive Bonus Program with a target bonus of 100% of his base salary.  Mr. August also will receive a one-time grant of restricted stock units (“RSUs”) valued at $1,500,000, vesting in five equal annual installments beginning on the first anniversary of the date of grant, subject to continued employment.  Under the amendment, Mr. August will receive an annual equity grant valued at $2,000,000.  Half of this grant will be made in RSUs vesting in four equal annual installments beginning on the first anniversary of the date of grant, subject to continued employment.  The other half of the grant will be made in performance-based RSUs, the maximum number of which will vest upon the achievement of annual Company targets to be determined by the Board’s Compensation Committee, such vesting to occur in four equal annual installments beginning on first anniversary of the date of grant if the performance metrics are met and subject to continued employment.  Pursuant to the amendment, if Mr. August is terminated by the Company without “cause” (as such term is defined in the amendment), then the time-based portion of any outstanding equity awards granted pursuant to the amendment that would have vested in the following twelve months will accelerate.  The material terms of Mr. August’s employment agreement and outstanding equity awards otherwise remain unchanged.

 

Information regarding Mr. August’s business experience is included in the Company’s Form 8-K filed with the SEC on April 8, 2015 and is incorporated herein by reference.  Mr. August, age 56, has no familial relationships with any executive officer or director of the Company.  Other than his employment by the Company, there have been no transactions in which the Company has participated and in which Mr. August had a direct or indirect material interest that would be required to be disclosed under Item 404(a) of Regulation S-K.  

 

The foregoing summary of the material terms of Mr. Jenkins’ new employment agreement and the amendment to Mr. August’s employment agreement are subject to the full and complete terms of the

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agreements which will be filed with the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017.  A copy of the press release regarding the above matters is attached hereto as Exhibit 99.1 and incorporated herein by reference.

 

 

 

 

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SIGNATURE

 

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

 

 

 

 

Exhibit 99.1

Benefitfocus Promotes Ray August to Chief Executive Officer

 

 

 

Charleston, S.C. – Nov. 20, 2017 – Benefitfocus, Inc. (NASDAQ: BNFT), a leading provider of cloud-based benefits management software, announced today that its Board of Directors has appointed Ray August to the position of Chief Executive Officer, effective January 1, 2018. August will also retain the title of President.  As part of the transition, the Board also appointed Benefitfocus Founder and current CEO, Shawn Jenkins, to the new position of Senior Advisor for Innovation, beginning January 1, 2018.

August joined the Company in 2014 and since his arrival has led a number of major operational and technical initiatives across Benefitfocus that have strengthened the Company’s financial performance.  Over the last three years, Benefitfocus’ quarterly revenue run rate has increased by over 80%, while GAAP gross margin improved by over 1,750 basis points.  During his tenure as President and Chief Operating Officer, the company’s customer community has increased to 903 large employers and 54 insurance carriers.  Prior to Benefitfocus, August served as President and General Manager of the multi-billion dollar Financial Services Division of CSC.

“As Ray and I have worked together during the last three years, he has demonstrated an ability to lead Benefitfocus as evidenced by our strong financial and operational performance,” stated Shawn Jenkins. “Now, with our most successful open enrollment underway, and a deep leadership bench in place, I have decided to focus my time on shaping the long-term technology and strategic vision for Benefitfocus.”

As part of the transition, Jenkins will assume a new role as Senior Advisor for Innovation and continue as a member of the Board of Directors. In this newly formed role supporting August and the rest of the executive team, Jenkins will devote his time to exploring the application of emerging technologies such as artificial intelligence, voice recognition and bots as they apply to the personalization of benefits. Jenkins will also continue to advocate on behalf of Benefitfocus and what we believe has become the largest benefits community.

“Under Shawn’s leadership and vision Benefitfocus has grown from a start-up into a successful public company by building a scalable platform capable of powering the entire benefits ecosystem, which has helped reshape the benefits administration market,” August said. “A big part of my job going forward will be to build on this strong foundation, accelerate our ability to bring innovative products to market, deliver an amazing customer experience and foster our unique company culture.”

“Shawn and I founded Benefitfocus together and the company’s success would not have been possible without his dedication and passion over the past 17 years.” said Mason Holland, Co-Founder and Executive Chairman of the Board for Benefitfocus. “Because of his vision, millions of employees now rely

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on Benefitfocus to help them make better health care decisions and lead better lives.  Through his new role, I am excited that Shawn will continue to work closely with management and the Board to remain intimately involved in the development of our long-term technology and product strategy here at Benefitfocus.”

About Benefitfocus

Benefitfocus (NASDAQ:BNFT) provides a leading cloud-based benefits management platform that simplifies how organizations and individuals shop for, enroll in, manage and exchange benefits. Every day leading employers, insurance companies and the consumers they serve rely on our platform to manage, scale and exchange benefits data seamlessly. In an increasingly complex benefits landscape, we bring order to chaos so our clients and their employees have access to better information, make better decisions and lead better lives. Learn more at www.benefitfocus.com, LinkedIn and Twitter.

Safe Harbor Statement

Except for historical information, all of the statements, expectations, and assumptions contained in this press release are forward-looking statements. Actual results might differ materially from those explicit or implicit in the forward-looking statements. Important factors that could cause actual results to differ materially include: reliance on key personnel; our ability to maintain our culture, recruit and retain qualified personnel and effectively expand our sales force; our continuing losses and need to achieve profitability; fluctuations in our financial results; risks related to changing healthcare and other applicable regulations; general economic risks;  the immature and volatile market for our products and services; the need to innovate and provide useful products and services; our ability to compete effectively; privacy, security and other risks associated with our business; and the other risk factors set forth from time to time in our SEC filings,  copies of which are available free of charge within the Investor Relations section of the Benefitfocus website at http://investor.benefitfocus.com/sec.cfm or upon request from our Investor Relations Department. Benefitfocus assumes no obligation and does not intend to update these forward-looking statements, except as required by law.