UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule 14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

(Amendment No.     )

Filed by the Registrant    ☑                                  

Filed by a Party other than the Registrant ☐

Check the appropriate box:

Navigant Consulting, Inc.

(Name of Registrant as Specified In Its Charter)

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

Payment of Filing Fee (Check the appropriate box):

April 9, 2019

Dear Shareholder:

You are cordially invited to attend the Navigant Consulting, Inc. (the “Company”) 2019 Annual Meeting of Shareholders of (the “annual meeting”), which will be conducted via live audio webcast on Tuesday, May 14, 2019, at 10:00 a.m., Central time. This year’s annual meeting with be a completely “virtual” meeting of shareholders. You will be able to attend the virtual annual meeting, vote your shares and submit questions during the meeting via live audio webcast by visiting www.virtualshareholdermeeting.com/NCI2019. We are excited to embrace virtual annual meeting technology, which we believe provides expanded access, improved communications and cost and time savings for our shareholders and the Company. Hosting a virtual annual meeting enables increased stockholder attendance and participation from locations around the world.

During the virtual meeting, you may ask questions and vote electronically. To participate, you will need the 16-digit control number included in your proxy materials or on your proxy card. We encourage you to allow ample time for online check-in, which will begin at 9:45 a.m., Central time. Please note that there is no in-person meeting for you to attend.

Details about how to attend the meeting online, submit questions during the meeting, and the business to be conducted at the annual meeting are provided in the attached Notice of Annual Meeting and Proxy Statement. Please read the enclosed information and our 2018 Annual Report, which includes our Form 10-K for the year ended December 31, 2018, carefully before voting your proxy.

Your vote is important and we encourage you to vote your shares as soon as possible to ensure your shares are represented at the meeting. Even if you plan to attend the annual meeting via the live webcast, please authorize your proxy or direct your vote by following the instructions related to each of your voting options described in the Proxy Statement. You may vote your shares by Internet, telephone or mail pursuant to the instructions included on the enclosed proxy card or voting instruction card. We encourage you to use the first option and vote by Internet. Even if you submit a vote prior to the annual meeting, you will have an opportunity to change your earlier vote and vote again during the annual meeting.

We look forward to your attendance and participation in this year’s annual meeting.

Sincerely,

Julie M. Howard

Chairman and Chief Executive Officer

NAVIGANT CONSULTING, INC.

NOTICE OF ANNUAL MEETING OF SHAREHOLDERS

Whether or not you plan to attend the annual meeting via the live webcast, we urge you to vote your shares as promptly as possible. Please return your proxy card or voting instruction form promptly in the mail or vote via the Internet or phone using the instructions on the proxy card. If you receive more than one proxy card because your shares are registered in different names or addresses, each proxy card should be signed and returned if you are voting by mail, or voted separately if you are voting via the Internet or phone, to assure that all of your shares are represented at the annual meeting. If you mail the proxy card or voting instruction card in the envelope provided, no postage is required if mailed from within the United States. Even if you submit a vote prior to the annual meeting, you will have an opportunity to vote again during the annual meeting and automatically revoke your earlier proxy as further described in the enclosed Proxy Statement.

We have also enclosed the Proxy Statement and 2018 Annual Report to Shareholders, which includes our Form 10-K for the year ended December 31, 2018, with this Notice of Annual Meeting.

By Order of the Board of Directors,

Monica M. Weed

Secretary

Chicago, Illinois

April 9, 2019

You can find detailed information regarding voting in the section entitled “Questions and Answers” in the enclosed Proxy Statement.

NAVIGANT CONSULTING, INC.

PROXY STATEMENT FOR 2019 ANNUAL MEETING OF SHAREHOLDERS

This Proxy Statement and the accompanying proxy card are being mailed or otherwise furnished to our shareholders on or about April 9, 2019 in connection with the solicitation of proxies by our Board of Directors (the “Board”) for the 2019 Annual Meeting of Shareholders of Navigant Consulting, Inc. which will be held on May 14, 2019 at 10:00 a.m., Central time, via live webcast accessible at www.virtualshareholdermeeting.com/NCI2019.

The words “we,” “us,” “our” and the “Company” used throughout this Proxy Statement refer to Navigant Consulting, Inc.

Our principal executive offices are currently located at 150 North Riverside Plaza, Suite 2100, Chicago, Illinois 60606. Our telephone number is (312) 573-5600.

TABLE OF CONTENTS

QUESTIONS AND ANSWERS

A proxy statement is a document, such as this one, required by the Securities and Exchange Commission (“SEC”) that, among other things, explains the items on which you are asked to vote on the proxy card. This Proxy Statement and the accompanying proxy card for our 2019 Annual Meeting of Shareholders are being solicited by our Board.

You will be able to attend the annual meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/NCI2019. You will also be able to vote your shares electronically at the annual meeting. To participate, you will need your 16-digit control number included in your proxy materials, on your proxy card, or on the instructions that accompanied your proxy materials.

The meeting will begin promptly at 10:00 a.m., Central time. We encourage you to access the meeting prior to the start time. Online access will open at 9:45 a.m., Central time, and you should allow ample time to log in to the meeting webcast and test your computer audio system.

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We recommend that you carefully review the procedures needed to gain admission in advance. If you do not comply with the procedures described here for attending the annual meeting online, you will not be able to participate online.

You will be able to attend the annual meeting online and submit your questions during the meeting by visiting www.virtualshareholdermeeting.com/NCI2019. You will also be able to vote your shares electronically at the annual meeting. We encourage you to vote your shares prior to the annual meeting to ensure they are represented. Even if you submit a vote prior to the annual meeting, you will have an opportunity to vote again during the annual meeting and automatically revoke your earlier vote.

If you vote by mail, your proxy card must be received by the close of business on May 13, 2019.

If you vote by telephone, you must do so by 11:59 p.m. on May 13, 2019.

If you vote via the Internet, you must do so by 11:59 p.m. on May 13, 2019.

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If you are currently a shareholder sharing an address with another shareholder and are receiving multiple copies of our proxy materials and wish to receive only one copy of future proxy statements and annual reports for your household, please contact Broadridge at the above telephone number or address.

If you hold your shares in street name, you are strongly encouraged to cast your vote by instructing your broker, bank, or other nominee on how to vote if you want your vote to be counted at the annual meeting.

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Proposal 1: Each nominee for director will be elected if the total votes cast “FOR” the nominee’s election exceed the total votes cast “AGAINST” the nominee’s election.

Proposal 2: The compensation paid to our named executive officers, as disclosed in this Proxy Statement, will be approved, on an advisory basis, by our shareholders if a majority of the outstanding shares entitled to vote, present or represented by proxy at the annual meeting, vote “FOR” the proposal.

Proposal 3: The appointment of KPMG LLP as our independent registered public accounting firm for fiscal year 2019 will be ratified by our shareholders if a majority of the outstanding shares entitled to vote, present or represented by proxy at the annual meeting, vote “FOR” the proposal.

Abstentions will have no effect on the election of directors. Abstentions will have the same effect as a vote “against” the remaining proposals. Broker non-votes will have no effect on the proposals.

In addition, our officers, directors and employees may solicit proxies in person or by telephone, facsimile or other means of communication. They will not receive any additional compensation for, but they may be reimbursed for out-of-pocket expenses incurred in connection with, that solicitation. We will furnish copies of our proxy materials to brokerage firms, nominees, fiduciaries and custodians to forward to our street-name shareholders and will reimburse those brokerage firms and other nominees for their reasonable expenses in forwarding our solicitation materials to our street-name shareholders.

YOUR VOTE IS IMPORTANT. PLEASE RETURN YOUR MARKED, SIGNED AND DATED PROXY CARD PROMPTLY BY MAIL, OR VOTE BY TELEPHONE OR THE INTERNET, TO ENSURE THAT YOUR SHARES ARE REPRESENTED AT THE ANNUAL MEETING, EVEN IF YOU PLAN TO ATTEND THE ANNUAL MEETING VIA THE LIVE WEBCAST.

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PROPOSAL 1

ELECTION OF DIRECTORS

Pursuant to our Restated Certificate of Incorporation, all of our directors are subject to annual election. The size of our Board is currently fixed at nine directors. Kevin M. Blakely, Cynthia A. Glassman, Julie M. Howard, Stephan A. James, Rudina Seseri, Michael L. Tipsord, Kathleen E. Walsh, Jeffrey W. Yingling and Randy H. Zwirn have been nominated for election to the Board at the 2019 annual meeting of our shareholders. If elected at the annual meeting, they will serve for one-year terms and until their successors are elected and qualified. Their terms will expire at the 2020 annual meeting of our shareholders

The Board unanimously recommends that our shareholders vote “FOR” the election of each of the nominees.

Shares represented by executed proxy cards will be voted “FOR” the election of the nine nominees unless your proxy card is marked otherwise (if you are a registered shareholder) or you have provided a different instruction to your broker (if you are a street-name shareholder). We have no reason to believe that any of the nominees would be unable or unwilling to serve if elected. However, if any nominee becomes unable or unwilling to serve, proxies may be voted for the election of another person nominated as a substitute by the Board.

Under our By-Laws, in uncontested elections, each director nominee will be elected by vote of a majority of the votes cast with respect to such nominee’s election (in other words, the number of shares voted “FOR” a director nominee exceeds the number of shares voted “AGAINST” that director nominee, with abstentions and broker non-votes not counted as a vote cast either “FOR” or “AGAINST” that nominee’s election).

If an incumbent director is not elected, the director is required to promptly tender his or her resignation to the Board. The nominating and governance committee (or another committee designated by the Board) will then make a recommendation to the Board as to whether to accept or reject the resignation of the director, or whether other action should be taken. The Board will act on the resignation and publicly disclose (in the manner provided in our By-Laws) its decision regarding the tendered resignation of the director and the rationale behind the decision within 90 days following certification of the election results. The Board may extend that 90-day period by an additional period of up to 90 days if it determines that the extension is in the best interests of the Company and our shareholders. The director who has tendered his or her resignation may not participate in the recommendation of the nominating and governance committee or the decision of the Board with respect to his or her resignation. If the incumbent director’s resignation is not accepted by the Board, the director will continue to serve until his or her successor is elected and qualified.

Certain biographical information for each of the nominees is set forth in the following section. Also set forth therein is a description of the specific experience, qualifications, attributes and skills of each nominee for director that were considered by the Board, in light of the Company’s current business needs and long-term operating strategy, in concluding that these individuals should serve on the Board.

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Nominees for Election at the 2019 Annual Meeting for One-Year Terms Expiring at the 2020 Annual Meeting

Consistent with the Company’s ongoing effort to maintain a highly qualified, independent board with relevant expertise to guide the Company going forward, the nominating and governance committee and the Board believe a broad range of characteristics, including skills and experience, as well as diversity and demographic factors are important considerations in selecting director nominees. As part of that effort, the Company has added five new Board members over the last five years. The nominees, whose information appears below, reflect those efforts.

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CORPORATE GOVERNANCE

Committees of the Board of Directors

The following table sets forth the current members of each of the committees of the Board.

Charters for the audit committee, compensation committee and nominating and governance committee are available on our website at www.navigant.com/about under “Corporate Governance.”

Audit Committee.    The audit committee monitors the integrity of our financial statements, financial reporting process and systems of internal controls regarding finance and accounting; monitors our compliance with legal and regulatory requirements (particularly with respect to securities, financial and accounting related matters); reviews any related party transactions; monitors the qualifications, independence and performance of our independent public accountants; monitors the performance of our internal audit function; provides an avenue of communication among the independent public accountants, internal audit function, management and the Board; and monitors significant litigation and enterprise risk exposure with respect to finance, accounting and securities related matters. In addition, the audit committee is directly responsible for the appointment, retention, compensation and oversight over the work of our independent public accountants. The audit committee also has responsibility for reviewing and approving the hiring or dismissal of the employee or outsourced entity responsible for leading our internal audit function, as well as the scope, performance and results of our internal audit function’s internal audit plans. The audit committee has the authority to conduct any investigation appropriate to fulfilling its responsibilities, and it has direct access to the independent public accountants as well as anyone in the Company. The audit committee has the ability to retain, at our expense, special legal, accounting, or other consultants or experts it deems necessary in the performance of its duties and is entitled to receive appropriate funding from the Company, as the audit committee determines, for payment of compensation to the independent public accountants and any other consultants or experts retained by the audit committee as well as ordinary administrative expenses of the audit committee that are necessary or appropriate in carrying out its duties. Each of the members of the audit committee is “independent” as defined by the listing standards of the NYSE and satisfies the additional audit committee independence requirements set forth therein and under applicable SEC rules. The Board has determined that each of the members of the audit committee meets the NYSE financial literacy requirements and that Mr. Blakely qualifies as an “audit committee financial expert” as defined by applicable SEC rules. None of the members of the audit committee serves on more than two other public company audit committees. The audit committee met six times during 2018.

Compensation Committee.    The compensation committee reviews and monitors matters related to management development and succession; reviews and approves executive compensation policies and pay for

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performance criteria for the Company; reviews and approves corporate goals and objectives relevant to the compensation of our Chief Executive Officer and evaluates our Chief Executive Officer’s performance in light of those goals and objectives; reviews and approves base salaries, annual incentive awards and all long-term incentive awards for our executive officers; makes recommendations to the Board regarding new or amended incentive compensation and equity-based compensation plans and administers and exercises all powers of the Board under such plans (other than the power to amend those plans); reviews and provides input on such other matters concerning our employee compensation and benefit plans as the compensation committee deems appropriate; reviews and assesses the risks arising from our compensation policies and practices; reviews and evaluates our policies on recovery (or “clawback”) of excess compensation; reviews and assesses our stock ownership guidelines and holding period requirements for our directors and executive officers and oversees compliance with those guidelines; evaluates and recommends to the Board the form and amount of director compensation; and otherwise carries out the responsibilities that have been delegated to the compensation committee under the Company’s various compensation and benefit plans. The compensation committee also reviews and discusses with management the compensation discussion and analysis included in our annual proxy statement, prepares the compensation committee report included in our annual proxy statement, reviews the results of the advisory “say-on-pay” vote, and considers whether any adjustments to the Company’s executive compensation policies and practices are necessary or appropriate in light of such vote. In fulfilling its duties and responsibilities, the compensation committee has the authority, in its sole discretion, to retain the advice of a compensation consultant, legal counsel or other adviser(s). With respect to any adviser so retained, the compensation committee is directly responsible for appointing, setting the compensation for and overseeing the work of the adviser and is entitled to receive appropriate funding from the Company, as the compensation committee determines, for payment of reasonable compensation to such adviser(s). To the extent required by the NYSE or other relevant listing authority rules, the compensation committee evaluates the independence of its advisers (other than in-house legal counsel) prior to its being selected by, or providing advice to, the compensation committee, after taking into consideration all factors relevant to the adviser’s independence from management, including the factors specified by the applicable NYSE rules. Each of the members of the compensation committee is “independent” as defined by the listing standards of the NYSE, satisfies the additional compensation committee independence requirements set forth therein, is a “non-employee director” as defined by applicable SEC rules and is an “outside director” for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). The compensation committee met ten times during 2018.

Nominating and Governance Committee.    The nominating and governance committee identifies and evaluates individuals qualified to become members of the Board and recommends that the Board appoint those individuals as directors or selects (or recommends that the Board select) the director nominees to stand for election at the next annual meeting of our shareholders at which directors will be elected. The nominating and governance committee monitors and reviews new SEC rules and NYSE listing standards as they are proposed, adopted and revised and reviews and assesses, at least annually, the adequacy of our Corporate Governance Guidelines as well as compliance with applicable SEC rules and NYSE listing standards. Based on this review, the nominating and governance committee develops and makes recommendations to the Board regarding our Corporate Governance Guidelines. The nominating and governance committee also reviews and makes recommendations to the Board regarding shareholder proposals properly submitted for inclusion in our proxy statement and reviews and approves our Code of Business Standards and Ethics. Our Corporate Governance Guidelines and Code of Business Standards and Ethics are each posted on our website at www.navigant.com/about under “Corporate Governance.” Any waiver granted to a director or executive officer or substantive amendments related to our Code of Business Standards and Ethics will be promptly disclosed to the extent and in the manner required by the SEC or the NYSE and posted on our website. Each of the members of the nominating and governance committee is “independent” as defined by the listing standards of the NYSE. The nominating and governance committee met eleven times during 2018.

Executive Committee.    The executive committee has the authority to act in lieu of the Board when necessary between meetings as permitted by Delaware law. The executive committee did not meet during 2018.

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Board Meetings; Annual Meetings of Shareholders

The Board met twenty-five times during 2018. Each of our directors attended at least seventy-five percent of the meetings of the Board held during their respective tenures and the Board committees on which he or she served that were held during 2018. (Mr. Yingling joined the Board in February 2018 and Ms. Seseri joined in June 2018.) Our non-management directors meet in regularly scheduled executive sessions with our Lead Director (see “— Board Leadership Structure” below). Mr. Tipsord currently serves as our Lead Director. While we have no formal policy regarding attendance by our directors at the annual meetings of our shareholders, we encourage all of our directors to attend. All of our directors attended the 2018 annual meeting of our shareholders.

Board Leadership Structure

The Board believes the leadership of the Board is a matter that should be evaluated and determined by the Board from time to time, based on all of the then-relevant facts and circumstances. Ms. Howard, our Chief Executive Officer, has served as Chairman of the Board since May 2014, following the retirement of our previous Chairman, and as a member of the Board since March 2012. The Board continues to believe that vesting leadership of the Board in Ms. Howard provides a clear and efficient leadership structure for the Company, with a single person setting the “tone at the top” and having primary responsibility for managing the overall business and strategy of the Company. Ms. Howard is supported in her role as Chairman by our Lead Director, a position currently held by Mr. Tipsord, who is “independent” under NYSE listing standards. As described in more detail below, our Lead Director serves as a liaison between the Chairman and the independent members of the Board. Given the Lead Director’s clearly-delineated governance responsibilities, the Board believes its current leadership structure provides an appropriate balance between strong Company leadership and oversight by the independent directors on the Board.

Our Corporate Governance Guidelines require that if the Chairman of the Board is not independent, the Board will appoint an independent lead director and that the Board meet in regularly scheduled executive sessions without management. The Lead Director serves as the conduit for the independent members of the Board to relay any concerns about governance or management issues. At any time, he has authority to call meetings of the independent directors. Management, as well as the internal audit function and enterprise risk management committee, also have unfettered access to the Lead Director’s counsel. The Lead Director leads all executive sessions of the independent directors and presides at any meetings of the Board at which the Chairman is not present. Further, the Lead Director reviews and approves information sent to the Board, including meeting agendas and meeting schedules. To the extent requested, the Lead Director is available for consultation and serves as a line of direct communication with our shareholders and other interested parties (see the section entitled “Other Information” below).

Risk Oversight

The Board is ultimately responsible for overseeing our risk management processes. The Board receives regular reports from our Chief Executive Officer and other members of our executive management team regarding the strategic and operational risks facing the Company. Through this process, our Board reviews and assesses information regarding cybersecurity risks with management. In addition, certain Board committees oversee risk within their respective areas of responsibility. For example, the audit committee has been delegated with primary oversight of financial, accounting and securities related risk. The Company’s internal audit function conducts an annual risk assessment and reports directly to the audit committee. The compensation committee regularly assesses potential risks associated with the Company’s executive compensation program. In addition, the Company has an enterprise risk management committee (which reports directly to the Board) to evaluate enterprise risks affecting our business.

Specifically, with respect to potential risks arising from the Company’s compensation policies and practices for all of our employees, including our executive officers, management presented the Board with an overview of

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all of the Company’s compensation programs, including the risk mitigation features embedded in those programs. Based on its review, the Board has concluded that the risks arising from our compensation policies and practices are not reasonably likely to have a material adverse effect on the Company.

Independence Determinations

On an annual basis, the nominating and governance committee reviews and makes recommendations to the Board as to whether individual directors are “independent” for purposes of the applicable SEC rules and NYSE listing standards relating to corporate governance. The nominating and governance committee also makes this determination for new director nominees. This review is based on all relevant facts and circumstances, as well as criteria set forth in the applicable SEC rules and NYSE listing standards. In addition, the nominating and governance committee considers certain categorical standards approved by the Board to assist it in making independence recommendations. These categorical standards describe certain relationships that are considered immaterial and do not preclude a finding of independence.

Under our Standards for Director Independence, the following relationships are considered immaterial and therefore do not preclude a finding of independence:

A copy of these categorical standards is posted on our website at www.navigant.com/about under “Corporate Governance.”

Based on the review and recommendation of the nominating and governance committee, the Board affirmed that, except for Ms. Howard, all of the Company’s directors (that is, Mr. Blakely, Dr. Glassman, Mr. James, Ms. Seseri, Mr. Tipsord, Ms. Walsh, Mr. Yingling and Mr. Zwirn), are “independent” within the meaning of the NYSE listing standards, applicable SEC rules and our Standards for Director Independence. In addition, the Board affirmed that all of the members of the audit committee satisfy the NYSE’s and SEC’s requirements for audit committee independence and that all of the members of the compensation committee satisfy the NYSE’s and the SEC’s requirements for compensation committee independence. In addition, Samuel K. Skinner and Governor James R. Thompson, each of whom served on the Board until June 15, 2018, were independent.

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Shareholder Rights Plan Policy

The Board has adopted a policy stating that we will submit the adoption or extension of any shareholder rights plan to a shareholder vote, unless the Board, in an exercise of its fiduciary responsibilities, believes that it is in the best interests of the Company and our shareholders to adopt or extend (for one year) a shareholder rights plan without the delay that would come from the time required to seek a shareholder vote.

Director Nomination Procedures

After considering the evaluation criteria outlined below, the nominating and governance committee recommended to the Board that each of the nine nominees for director identified in this Proxy Statement be nominated for election to the Board to serve one-year terms. Each of the nominees currently serves on the Board.

The nominating and governance committee is generally tasked with evaluating and recommending to the Board nominees for election to the Board at each annual meeting. The nominating and governance committee works with the Board to determine the appropriate characteristics, skills, and experiences for individual directors and for the Board as a whole with the objective of having a board of directors with diverse backgrounds and experience. In considering the qualifications of incumbent directors as well as future candidates for election to the Board, the nominating and governance committee considers all relevant factors, including judgment, character, reputation, education, and experience in relation to the qualifications of any alternate candidates and the particular needs of the Board, its committees and the Company as they exist at the time of the candidate’s consideration. Characteristics expected of all our directors include independence, integrity, high personal and professional ethics, sound business judgment, and the ability and willingness to commit sufficient time to the Board. Although the Company does not have a formal policy on diversity, the Company seeks directors who represent a mix of backgrounds and experiences. The nominating and governance committee discusses each candidate’s diversity of background and experience in the context of the Board as a whole, with the objective of recommending a candidate for nomination to the Board who can best perpetuate the success of our business and represent our shareholders’ interests through the exercise of sound judgment. The nominating and governance committee evaluates each incumbent director to determine whether he or she should be nominated to stand for re-election, based on the types of criteria outlined above as well as the director’s contributions to the Board during his or her current term. The nominating and governance committee also considers each candidate’s relationships, if any, with the Company and its directors, officers, employees and shareholders, as well as any applicable criteria set forth in SEC rules, NYSE listing standards and Delaware law.

The nominating and governance committee will consider director candidates recommended by the Company’s shareholders. Once the nominating and governance committee receives a recommendation from a shareholder, it may request additional information from the candidate about the candidate’s independence, qualifications and other information that would assist the nominating and governance committee in evaluating the candidate, as well as certain information that must be disclosed about the candidate in the Company’s proxy statement, if nominated.

Shareholders may also directly nominate a candidate for director pursuant to the advance notice provisions of the Company’s By-laws. Nominations must be received within the time frame established by the Company’s By-laws and otherwise comply with requirements set forth in our By-laws (see the section entitled “Shareholder Proposals for the 2020 Annual Meeting” below). All candidates for director, including those who have been properly recommended or nominated by a shareholder, are evaluated using the same criteria as described above.

Corporate Citizenship, Diversity & Inclusion and Environmental Sustainability

The Company strives to foster an environment that is inclusive, socially conscious, environmentally mindful and committed to giving back to the communities where our employees work and live.

Corporate Citizenship. The Company is committed to being a responsible corporate citizen, which we view as a key to our long-term success. We seek opportunities to address the needs of the communities where we work

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and live, strive to empower our employees’ skill-based volunteering efforts, provide charitable giving programs to directly support, and to encourage and facilitate our employees to support, non-profit organizations, and promote thought leadership to effectively drive positive change within our local communities. Our efforts are guided by a commitment to educate and empower tomorrow’s leaders through mentorship, community welfare programs, board memberships, and sponsorships. Over the past 5 years, we’ve donated millions of dollars and thousands of hours in time to non-profit organizations in our communities. Key accomplishments of our corporate citizenship program are highlighted on our website at www.navigant.com/about/corporate-citizenship. In 2018, these accomplishments included:

Diversity & Inclusion. Our Diversity & Inclusion program seeks to help employees forge new mentoring relationships, share expertise and advice, and receive valuable feedback and insights. It allows our professionals to grow their internal and external networks, develop a greater affinity for different experiences, and enhance cultural competency—a vital leadership skill in today’s global business environment. The mission of our Diversity & Inclusion Program is to create a welcoming, inclusive and equitable environment that respects, values and celebrates the unique attributes, characteristics and perspectives that make each person who they are. The program is committed to building awareness, fostering professional development, building connections, attracting and retaining top talent, and developing relationships to ensure that diversity, in its many forms, is understood, respected and valued. We believe we are in a better position to address our client’s needs through a workforce that is diverse in experience and perspective. The program’s highlights include:

Our most recent report on our Diversity & Inclusion program is available at https://www.navigant.com/-/media/www/site/downloads/corporate/2018/hr2017annualreportinfographicstyleinfo0218rev07.pdf.

Environmental Sustainability. We seek to identify, promote and facilitate sustainable business practices to reduce the environmental impact of our operations. Through firmwide coordination and local office involvement, we aim to efficiently leverage our shared resources, raise awareness of environmentally responsible practices, reduce our carbon footprint and promote a culture of environmental stewardship. In 2018, the Company laid the foundation for its sustainability assurance through:

The Company is committed to setting science-based emissions reduction targets through the Science Based Targets Initiative (“SBTi”). By committing to SBTi, companies agree to set emissions reduction targets

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consistent with the global effort to keep temperatures well below the 2-degree Celsius threshold. The Company is committed to a 100% renewable energy goal and to purchasing renewable energy credits to offset the impact of our global electricity use. We are also working to implement reduction measures to reduce our use of natural gas.

You can learn more about our current commitments to the environment at

https://www.navigant.com/about/environmental-sustainability.

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AUDIT COMMITTEE REPORT

The audit committee has reviewed and discussed with management the audited financial statements of the Company as of and for the year ended December 31, 2018 (the “Audited Financial Statements”). In addition, the audit committee has discussed with KPMG LLP, the independent registered public accounting firm for the Company, the matters required to be discussed by Standard No. 1301, Communications with Audit Committees, as adopted by the Public Company Accounting Oversight Board. The audit committee also has received the written disclosures and the letter from KPMG LLP required by the applicable requirements of the Public Company Accounting Oversight Board regarding its communications with the audit committee concerning independence, and has discussed with KPMG LLP its independence from the Company and management. The audit committee also has discussed with management, the Company’s internal audit function and KPMG LLP such other matters, and has received such assurances from them, as it deemed appropriate. Based on the foregoing review and discussions and relying thereon, the audit committee has recommended to the Board (and the Board has approved) the inclusion of the Audited Financial Statements in the Company’s Annual Report on Form 10-K for the year ended December 31, 2018.

AUDIT COMMITTEE

Kevin M. Blakely, Chair

Cynthia A. Glassman

Stephan A. James

Kathleen E. Walsh

Jeffrey W. Yingling

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COMPENSATION DISCUSSION AND ANALYSIS

This section contains a discussion and analysis of the 2018 compensation program for our named executive officers (“NEOs”). The compensation committee determines and approves the compensation of our NEOs. For 2018, our NEOs were:

Executive Summary

2018 Performance Highlights

2018 was a transformational year for the Company, marked by several strategic actions intended to enhance the Company’s value and competitive positioning, including:

In addition to these strategic actions, for 2018 the Company also delivered:

(See Appendix A for a reconciliation of each non-GAAP financial measure to the most directly comparable GAAP measure.)

2018 Compensation Highlights

We believe that the results and accomplishments described above are directly reflected in the compensation our NEOs earned for the year. At the beginning of 2018, as in prior years, the compensation committee established the elements of our 2018 executive compensation program. The table below shows the elements of

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our 2018 annual executive compensation program and how they fit into our overall compensation philosophy and program objectives. This table does not include the compensation actions taken in connection with the Sale Transaction, which were outside of our standard executive compensation program. See “Compensation Related to the Sale Transaction” below for further information regarding those compensation actions.

		Component		Key Characteristics		Objectives and Purpose		2018 Decisions
		Annual Base Salary		•  Fixed compensation payable in cash   •  Reviewed annually for market competitiveness		•  Attract and retain   •  Provide a base level of fixed and predictable income		•  None of our NEOs received base salary increases for 2018 (see page 30)
		Annual Performance-Based Incentive		•  Variable incentive compensation payable in cash   •  Payouts based on the achievement of pre-established annual financial goals related to revenues, Adjusted EBITDA and adjusted EPS as well as individual performance goals		•  Attract and retain   •  Motivate and reward financial and individual performance in line with the Company’s annual operating plan and short-term operating objectives		•  None of our NEOs received target increases for 2018 (see page 31)   •  Based on actual performance relative to the financial and individual performance goals established at the beginning of the year, cash incentive payouts under our 2018 annual incentive plan ranged between 129% and 144% of target (see page 34)
		Performance-Based Restricted Stock Units		•  Variable equity incentive compensation   •  Vest based on relative TSR (as defined below) percentile rank and cumulative Adjusted EBITDA (as defined below) performance over a three-year performance period		•  Attract and retain   •  Promote long-term retention   •  Align NEOs’ interests with our shareholders’ interests on a long-term basis   •  Motivate and reward the creation of shareholder value and achievement of long-term financial and strategic objectives		•  Represented 65% of the awards (excluding the one-time Transaction Bonuses (as defined below)) granted under our 2018 long-term incentive compensation program (see page 36)   •  2016 PBRSU Awards (as defined below) vested at 80.3% of target based on the Company’s relative TSR and Adjusted EBITDA performance during the three-year performance period ended December 31, 2018 (see pages 35-36)
		Time-Based Restricted Stock Units		•  Vest annually over three-year service period		•  Attract and retain   •  Promote long-term retention   •  Align NEOs’ interests with our shareholders’ interests on a long-term basis		•  Represented 35% of the awards (excluding the one-time Transaction Bonuses) granted under our 2018 long-term incentive compensation program (see page 36)

The compensation committee’s standard practice for determining our NEOs’ compensation for each year has been based on the annual executive compensation elements described above. In 2018, however, the compensation committee made an exception to its standard practice to recognize the significant value realized through the completion of the Sale Transaction, as the Sale Transaction was not factored into any of the performance measures or compensation elements established at the beginning of the year. As described in more detail under “Compensation Related to the Sale Transaction” below, the Sale Transaction was valued at $470 million and represented an 11.9x Adjusted EBITDA multiple, which we believe far exceeded market expectations and median multiples for similar historical transactions. (“Adjusted EBITDA” is defined as

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EBITDA – earnings before interest, taxes, depreciation and amortization – excluding the impact of severance expense and other operating costs (benefit), as applicable.) With the successful completion of the Sale Transaction, the Company believes it has repositioned itself as a streamlined management consulting and managed services company with distinctive capabilities and offerings for clients in industries undergoing significant market, regulatory and technological change. In addition, the Sale Transaction provided the Company with the financial flexibility to return capital to shareholders and invest in the business to drive future growth and return

The compensation committee determined that the performance metrics approved at the beginning of the year as part of the 2018 executive compensation program did not reflect the NEOs’ contributions and performance with respect to the significant value derived from the Sale Transaction. Accordingly, after reviewing the prevalence and design of special compensation awards in connection with similar transactions included in an analysis provided by its independent compensation consultant, Frederic W. Cook & Co. (“FW Cook”), the compensation committee approved one-time transaction bonuses (the “Transaction Bonuses”) in the form of cash and equity to recognize the NEOs’ respective contributions and performance with respect to the Sale Transaction.

In addition, the compensation committee determined that the Sale Transaction created a disconnect between certain performance measures that the compensation committee had previously established for the Company’s executive compensation program and the Company’s overall results for the performance periods. This disconnect existed because, while the established performance targets assumed SaleCo would contribute to the Company’s results for the full year, its actual contributions ceased on August 24, 2018. Accordingly, the compensation committee took several actions to realign the applicable performance measures with the Company’s new structure following the Sale Transaction. These were:

Although the above actions result in disclosure of additional compensation in the “2018 Summary Compensation Table,” the compensation committee does not believe that they represent incremental compensation to the participants. Rather, (i) the SaleCo Adjustment Payment reflects the estimated additional value the participants would have received for the 2016 PBRSU Award had the Sale Transaction not been completed, and (ii) the modifications represent required disclosure related to the adjustments made to performance goals underlying the outstanding awards, which were intended to maintain the previously anticipated level of rigor of the performance hurdles by excluding the originally anticipated performance contribution of SaleCo from the date of divestiture through the end of each applicable performance period. Had the compensation committee not exercised its discretion as noted above, the compensation of our NEOs would not have fairly recognized their contributions to the Company—a result which would have run counter to the intentions of the compensation committee.

The compensation committee determined that these actions were appropriate because the performance metrics for those awards had been established with the assumption that SaleCo would remain part of the Company for the entirety of each applicable performance period. These modifications generated one-time impacts on compensation and are described, together with the Transaction Bonuses, in more detail under “Compensation Related to the Sale Transaction” below.

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2018 Compensation Governance Highlights

The compensation committee engages in an ongoing review of the Company’s executive compensation program, which includes the input of FW Cook, to evaluate whether it remains consistent with the Company’s pay-for-performance philosophy and, as a whole, reflects what the compensation committee believes to be best practices among the Company’s peer group and the broader market. The chart that follows summarizes certain features of our executive compensation program, each of which the compensation committee believes reinforces our pay-for-performance philosophy.

The compensation committee believes the features of our executive compensation program are consistent with many of the views that have been expressed by our top shareholders over the years and appropriately incentivize our NEOs to create value for our shareholders.

Executive Compensation Philosophy

The overall objective of our executive compensation program is to attract, retain and motivate highly qualified and effective executive officers in order to positively impact the Company strategically, operationally, financially and culturally, and to ultimately create long-term value for our shareholders. We designed our executive compensation program to meet this objective by:

How is pay aligned with performance?

Performance-based compensation represented a significant portion of our NEOs’ total direct compensation (“TDC”) opportunity for 2018 as established at the beginning of the year. TDC opportunity is comprised of base

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salary, annual performance-based cash incentive, performance-based restricted stock units and time-based restricted stock units. In particular:

As discussed in the “Executive Summary” above and further described in “Compensation Related to Sale Transaction” below, because the Sale Transaction was not factored into the Company’s 2018 executive compensation program and the NEOs’ 2018 TDC opportunity, for 2018, the compensation committee granted each NEO a Transaction Bonus and a SaleCo Adjustment Payment in addition to compensation through the regular elements of the 2018 executive compensation program.

How do we establish the market competitiveness of our executive compensation program?

To enhance retention and strengthen the focus of our executive management team, we designed our executive compensation program to provide our NEOs with TDC opportunities that are competitive with comparable positions at companies within our peer group. The compensation committee assesses the market competitiveness of our executive compensation program based on peer group proxy data and utilizes “median market” ranges that are computed based on peer group proxy data when targeting the compensation opportunities for our NEOs (as discussed in further detail below). In limited circumstances, the compensation committee will review general industry survey data as a supplement to the peer group proxy data, but that data does not represent the primary benchmark used by the compensation committee in determining compensation levels for our NEOs. FW Cook compiles and analyzes peer group proxy data and provides survey data for this purpose.

On an annual basis, the compensation committee evaluates and, if appropriate, adjusts the composition of the peer group. In reviewing the composition of the peer group, the compensation committee considers the following general criteria:

Based on these criteria, as well as input from management and FW Cook, the compensation committee approved the peer group for purposes of evaluating 2018 executive compensation decisions. This peer group of companies remained the same as the peer companies used for purposes of evaluating 2017 executive compensation decisions. The following companies comprised the peer group for 2018:

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For 2018, and consistent with prior years, we targeted the TDC of our NEOs at a “median market” range, which we define as within 10% of the peer group median for base salaries, within 15% of the peer group median for annual cash incentive award targets, and within 20% of the peer group median for long-term equity incentive targets and targeted TDC. Individual target compensation opportunities, however, may vary depending on the relative level of experience and tenure of the executive or clearly differentiated individual performance.

After the 2018 compensation targets were already established, during 2018, three of the above-listed peers (The Advisory Board Company, CEB, Inc. and TRC Companies) were removed due to mergers or acquisition activity, and three companies (Evolent Health, Inc., HMS Holdings Corp. and Perficient, Inc.) were added. The new peers were selected following the announcement of the Sale Transaction and thus were chosen with the disposition of SaleCo in mind. These changes did not impact our NEOs’ compensation for 2018 but were used in evaluating TDC opportunities beginning in 2019.

How do we discourage excessive risk-taking and promote sound corporate governance?

We have designed our executive compensation program and adopted certain compensation policies to discourage excessive risk-taking. The design features of our program that we believe mitigate risk include the following:

How did we consider the results of the 2018 advisory shareholder vote on executive compensation?

At our 2018 annual shareholders meeting, our shareholders overwhelmingly voted to approve the 2017 compensation paid to our NEOs as disclosed in the 2018 proxy statement (commonly referred to as a “say-on-pay” proposal), with approximately 98% of the votes cast in favor of the say-on-pay proposal. Considering the results of this advisory vote, the compensation committee decided to retain our overall executive compensation philosophy and did not make any changes to our executive compensation program in response to the 2018 “say-on-pay” vote. We believe our executive compensation program for 2018 continues to emphasize performance-based and retention-based annual and long-term incentive compensation opportunities that are designed to reward our NEOs for the creation of shareholder value. We believe the performance metrics

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established by the compensation committee as part of our 2018 executive compensation program are consistent with this philosophy. Additionally, our management team, including our NEOs, regularly engage with our top shareholders on a broad range of issues. During 2018, management was particularly engaged with shareholders in light of the Sale Transaction and other strategic events that occurred during the year.

2018 Executive Compensation Program

How was the 2018 executive compensation program designed to pay the NEOs based on performance for the year?

At the beginning of 2018, following the compensation committee’s evaluation of the Company’s and each NEO’s performance for 2017, the compensation committee established each NEO’s TDC opportunity and related compensation performance metrics for 2018. Performance-based incentive compensation represented a significant percentage of our NEOs’ 2018 TDC opportunity (which includes annual base salary, annual cash incentive award target and the target value of equity incentive awards) as established at the beginning of 2018. For 2018 and consistent with prior years, more than half (65%) of our NEOs’ TDC opportunity established at the beginning of 2018 was tied to the achievement of pre-established performance goals aligned with the Company’s financial performance, individual performance against strategic priorities and total shareholder return (“TSR”). This program was not designed to take the Sale Transaction into account.

How were each of the components of our 2018 executive compensation program determined?

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Annual performance-based incentive targets, which are expressed as a percentage of the NEO’s base salary, are reviewed and set annually by the compensation committee based on peer group data and other factors such as the respective executive’s expected relative contribution to the organization and internal pay equity. Annual incentive targets for 2018 did not change from the target opportunities established for 2017 and were 120%, 75%, 100%, and 75% of base salary for Ms. Howard, Mr. Lieberman, Mr. Spirer, and Ms. Weed, respectively. Awards payable under our annual incentive plan may range from 0% to a maximum cap of 200% of an NEO’s annual cash incentive award target, based on actual performance.

Our 2018 annual incentive plan is designed to reward our NEOs based on the Company’s RBR, Adjusted EBITDA and adjusted EPS. (See “— How was annual incentive compensation tied to performance for the year?” and “— How were the Individual Performance Factors used in determining annual performance-based incentive awards for each NEO” below, respectively, for a discussion of how the Company’s performance resulted in the annual performance-based incentive payouts for 2018, including how the Company Performance Factor was used and how the Individual Performance Factors for each NEO were determined. In addition, for a discussion of how the Sale Transaction was taken into account for the 2018 annual performance-based incentive awards, see “Compensation Related to the Sale Transaction – Determination of Results for the 2018 Annual Performance-Based Incentive Awards” below.

Target equity award values under our 2018 long-term incentive compensation program were determined by the compensation committee based on the median market ranges developed by FW Cook. The aggregate grant date values of the long-term incentive compensation awards, granted effective March 15, 2018, are shown in the table below:

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The target equity award value for each of the NEOs was the same for 2018 as for the prior year except for Mr. Lieberman, whose target equity award value was reduced to 100% of his base salary, in line with the target values, as a percentage of base salary, for the other NEOs other than the CEO.

In 2018, two award types were granted under our 2018 long-term incentive compensation program (not including the Transaction Bonuses):

Performance-Based Restricted Stock Units — Similar to prior years, the performance-based restricted stock units granted to our NEOs under our 2018 long-term equity incentive program vest if and only to the extent that specified quantitative performance goals with respect to the Company’s TSR, relative to companies classified in the Global Industry Classification Standard (“GICS”) Professional Services Industry Group 2020 that are also part of the Russell 3000 Index (the “GICS Industry Group”), and cumulative Adjusted EBITDA are met during a three-year performance period. Cumulative Adjusted EBITDA is weighted at 75% and relative TSR performance is weighted at 25%, consistent with the weighting of each performance goal for the awards granted to our NEOs under our 2017 long-term equity incentive program. Both performance goals have threshold, target and maximum performance levels. If the threshold level of performance is not met for a particular performance goal, the portion of the award related to that performance goal will not vest. Vesting will be determined following December 31, 2020, the last day of the performance period for these awards.

The vesting percentages applicable to the TSR performance goal are set forth below.

The target performance level for the cumulative Adjusted EBITDA goal (which would result in a 100% payout for this tranche of the performance-based restricted stock unit award) was designed to be achievable with sustained strong business performance, while the maximum performance level (which would result in a 150% payout for this tranche of the award) was designed to be more difficult to achieve and would require stronger business performance and significantly higher Adjusted EBITDA performance over the three-year performance period. (See “— How was long-term incentive compensation tied to performance for the year?” below for a discussion of how the Company’s performance resulted in vesting of the 2016 PBRSU Awards.)

Time-Based Restricted Stock Units — The time-based restricted stock units granted to our NEOs under our 2018 long-term incentive compensation program vest in one-third increments on each of the first three anniversaries of the grant date, subject to the NEO’s continued employment with the Company on the applicable vesting date (except as otherwise set forth in the underlying award agreement).

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How was annual incentive compensation tied to performance for the year?

Our 2018 annual incentive plan is designed to reward our NEOs based on the achievement of financial targets with respect to the Company’s RBR, Adjusted EBITDA and adjusted EPS. As outlined in the table below, we exceeded our 2018 financial performance targets under the 2018 annual incentive plan. The Company’s actual performance relative to the financial performance goals established by the compensation committee at the beginning of the year for our 2018 annual incentive plan are shown in the following table, as adjusted to account for the impact of the Sale Transaction as set forth in footnote 2:

The majority (70%) of our NEOs’ annual cash incentive opportunity for 2018, as established at the beginning of 2018, was based on the Company’s 2018 financial performance as defined by the three performance measures summarized in the preceding table. The balance (30%) of their annual cash incentive opportunity for 2018 was based on the achievement of individual qualitative performance goals tied to strategic and operating initiatives at the Company. Based on the Company’s actual financial performance (as shown in the preceding table) and the compensation committee’s assessment of the relative achievement by each NEO of his or her

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respective individual qualitative performance goals for 2018, the cash incentives paid to our NEOs under our 2018 annual incentive plan ranged between approximately 129% and 144% of their respective annual cash incentive award targets, as summarized in the following table:

How were the financial measures for the 2018 annual performance-based incentive awards established?

The compensation committee selected these financial measures because it believed that they collectively: (i) were consistent with the Company’s long-term strategic initiatives; (ii) motivated our NEOs to focus on both revenue growth and profitability; and (iii) would drive the creation of shareholder value. Each performance goal’s target performance level was the same as the Company’s 2018 financial and operating plan metrics established at the beginning of the year. Company performance between the threshold, target and maximum performance levels is determined using straight line interpolation between these performance levels.

How were the Individual Performance Factors used in determining 2018 annual performance-based incentive awards for each NEO?

Individual performance goals for each NEO were established early in 2018 and were designed to generally align with the Company’s strategic and operating initiatives (both short-term and long-term) that had been established at the time, and did not include the potential divestiture of SaleCo. The compensation committee reviews and approves the individual performance goals (including the goals’ relative weighting) for the CEO and, based on the CEO’s recommendations, reviews and approves the individual performance goals (including the goals’ relative weighting) for the other NEOs. In early 2019, the compensation committee evaluated the NEOs’ individual performance, with input from the CEO on the individual performance of the NEOs other than herself. Based on this evaluation, the compensation committee certified the achievement by each NEO of his or her individual performance goals and assigned each NEO an Individual Performance Factor (ranging from 0% to 200%), which is weighted 30% in the cash incentive payout formula. Each individual NEO’s contributions with respect to the Sale Transaction were determined by the compensation committee independently of the goals established at the beginning of the year.

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The following table contains a high-level summary of the individual performance goals of each NEO, not including the Sale Transaction, as approved by the compensation committee at the beginning of 2018.

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How was long-term incentive compensation tied to performance for the year?

65% of the long-term incentive awards granted to our NEOs under our 2018 long-term incentive program consisted of performance-based restricted stock units. The performance-based restricted stock units granted to our NEOs in 2018 will vest if and only to the extent that specific performance goals are met with respect to TSR and Adjusted EBITDA during a three-year performance period ending December 31, 2020. The remaining 35% of the aggregate target value of the awards consisted of time-based restricted stock units that vest in one-third increments over the three-year period following the grant date.

The 2016 PBRSU Awards vested on March 15, 2019 (except in the case of the units granted to Mr. Lieberman, whose 2016 PBRSU Award is expected to vest on April 18, 2019, the third anniversary of the grant date of his award and his first day of employment with the Company), based on performance from January 1, 2016 through December 31, 2018. The performance goals applicable to these awards, as established at the beginning of 2016, were to increase Adjusted EBITDA and to deliver stockholder returns that exceeded those of the companies in our benchmark index over the three-year performance period.

25% of the 2016 PBRSU Awards vest if and only to the extent that the Company’s TSR, relative to companies in the GICS Industry Group, met or exceeded specified targets during the three-year performance period ended December 31, 2018, with the vesting percentages for this tranche of the award determined as follows (using straight-line interpolation between performance levels):

As the table above indicates, the Company’s actual TSR rank for the three-year performance period ended December 31, 2018 was at the 62nd percentile of companies in the GICS Industry Group, which resulted in a payout level equal to 124.0% of the target shares underlying this tranche of the award.

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The remaining 75% percent of the 2016 PBRSU Awards vest if and only to the extent that the Company’s cumulative Adjusted EBITDA for the three-year performance period ended December 31, 2018 met or exceeded the threshold, target or maximum level for this performance goal. The following table outlines the cumulative Adjusted EBITDA goals for the three-year performance period, along with our actual performance and the corresponding payout as a percentage of target shares.

As the table above indicates, the Company’s actual Adjusted EBITDA for the three-year performance period ended December 31, 2018 was $378.6 million, which resulted in a payout level equal to 65.7% of the target shares underlying this tranche of the award.

Compensation Related to the Sale Transaction

The Sale Transaction was valued at $470 million and represented an 11.9x Adjusted EBITDA multiple, which we believe far exceeded market expectations and median multiples for similar historical transactions. We realized approximately $370 million in net cash proceeds from the transaction, after taxes and transaction and separation-related costs. We plan to use these proceeds to (a) return up to $175 million in capital to shareholders over a one-year period ending in August 2019 (of which over $150 million has been returned to shareholders from August 2018 through March 2019) through our previously announced increased share repurchase program and the payment of dividends, which were initiated in the third quarter of 2018, (b) repay debt, and (c) pursue strategic growth opportunities.

We believe the success of the Sale Transaction was an extraordinary achievement for the Company, both financially and strategically. The Sale Transaction allowed us to return meaningful cash to shareholders and significantly enhance our balance sheet flexibility for growth and investments. SaleCo included approximately 900 professionals and, prior to the Sale Transaction, contributed nearly one-third of our RBR. Strategically, the transaction represented a major milestone in the continued execution of our long-term strategy to focus the Company on higher-growth, more specialized management consulting and managed services offerings with a concentration in industries undergoing significant market, regulatory and technological change.

As discussed above, the Sale Transaction was not figured into the compensation elements or performance measures established for our NEOs at the beginning of the year. Had the compensation committee not exercised its discretion to deviate from its standard compensation practices to recognize the significant value and return realized through the completion of the Sale Transaction, the compensation of our NEOs would not have fairly recognized their contributions to the Company—a result which would have run counter to the intentions of the compensation committee. Accordingly, to recognize our NEOs’ significant contributions to the Sale Transaction, the compensation committee made the following compensation-related decisions:

Transaction Bonuses. The management team, led by the NEOs, was responsible for the success of the Sale Transaction. This milestone accomplishment required the significant efforts of the NEOs in identifying, developing, executing and maximizing shareholder value through the strategic divestiture of an undervalued asset. They accomplished this while also maintaining focus on their regular management responsibilities and overseeing the Company’s delivery of solid results, within guidance range for the year for our continuing

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operations. In connection with the closing of the Sale Transaction, the compensation committee reviewed the NEOs’ respective contributions and, after reviewing the prevalence and design of special compensation awards in connection with similar transactions included in an analysis prepared by FW Cook, determined that it was important to recognize the NEOs accordingly. In light of the fact that the Sale Transaction was not factored into any element of the Company’s 2018 executive compensation program (described above under “2018 Executive Compensation Program”), the compensation committee awarded one-time, special Transaction Bonuses in the aggregate amount of $3.8 million to the four NEOs. This aggregate amount was determined as a percentage of the estimated proceeds from the transaction, which percentage was deemed consistent with the bonuses disclosed for similar precedent transactions the compensation committee reviewed with FW Cook. The compensation committee wanted to reward the NEOs for their completed performance with respect to the Sale Transaction, and also felt that it was important to pay a portion of the Transaction Bonuses in equity to create additional alignment with the interests of our shareholders. Accordingly, half of each award was paid in cash and half in restricted stock subject to a six-month holding requirement. The Transaction Bonuses were as follows:

Modification of Outstanding Adjusted EBITDA Performance-Based Restricted Stock Units. The three-year cumulative Adjusted EBITDA performance goals for the 2016 PBRSU Awards, 2017 PBRSU Awards and 2018 PBRSU Awards were set assuming SaleCo would remain part of the Company for all three years of each performance period. As a result of the Sale Transaction, this assumption was no longer valid for over four of the 36 months of the 2016 PBRSU Award performance period, 16 of the 36 months of the 2017 PBRSU Award performance period, and 28 of the 36 months of the 2018 PBRSU Award performance period. Accordingly, the compensation committee determined that these performance goals were no longer aligned with the remaining portion of the Company such that they would appropriately incentivize and reward the NEOs for the Company’s or their individual performance. To reflect appropriate performance goals and outcomes that fairly take the Sale Transaction into account, the compensation committee took the following one-time actions regarding those awards:

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The compensation committee does not consider the SaleCo Adjustment Payments to represent any additional benefit or incremental compensation to the NEOs beyond what would have been paid to the NEOs pursuant to the original terms of the awards had the Sale Transaction not occurred during the year. The Sale Transaction was completed on August 24, 2018, at which time there were approximately four months remaining in the 36-month performance period for the 2016 PBRSU Awards. Because the SaleCo Adjustment Payments were intended to compensate the NEOs for the compensation they would have earned based on the formulaic achievement of the performance goals if the Sale Transaction had not occurred during the performance period, the compensation committee did not view the SaleCo Adjustment Payment as a grant of new compensation. Although the 2016 PBRSU Award was an equity award, the compensation committee elected to grant the SaleCo Adjustment Payment in cash rather than as a new equity award. Such an equity award would have been subject to a new vesting or holding period that would extend beyond the vesting period for the 2016 PBRSU Award. Therefore, cash was considered to be most closely aligned with the vesting period applicable to the 2016 PBRSU Awards, which vested at approximately the same time the SaleCo Adjustment Payments were determined.

The award agreement provisions of the 2017 PBRSU Awards and 2018 PBRSU Awards allowing for adjustments in the event of certain corporate actions did not include adjustments to the underlying goals upon a divestiture of a significant business. Therefore, the compensation committee’s adjustment of the performance goals to reflect the Sale Transaction was determined to be an equity modification under GAAP. Under the proxy disclosure rules for the Summary Compensation Table, modified awards are required to be disclosed, in full, in the year of modification, despite the fact that the expense of the original award is reversed. Notwithstanding the amounts shown in the 2018 Summary Compensation Table below, the values disclosed for the modifications do not represent a new equity award, nor do they reflect actual realized compensation. Rather, it represents a required disclosure to reflect that the adjustment to the performance goals was required to be accounted for as an equity modification under GAAP. Without contributions from SaleCo, the probability that the Company would achieve the threshold level of Adjusted EBITDA or higher for the 2017 PBRSU Awards and 2018 Awards was determined to be zero, resulting in the incremental fair value of the modification being equivalent to the total fair value of that tranche of the awards. The 2017 PBRSU Awards and 2018 PBRSU Awards will vest, if at all, in 2020 and 2021, respectively, based on performance against the Adjusted EBITDA (modified as noted above) and TSR performance goals (which remain unchanged) during the applicable performance periods and the NEOs’ continued service.

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Although these adjustments could have been made after the end of the year, the compensation committee determined that it was important to make these adjustments during 2018, so that the awards would again provide meaningful incentives for the NEOs to drive Company performance going forward.

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Comparison of 2018 Target TDC to the 2018 Summary Compensation Table

Using the CEO as an example, the following table reconciles 2018 target TDC with the compensation disclosed for 2018 in the 2018 Summary Compensation Table. This table provides supplemental disclosure and should not be viewed as a substitute for the 2018 Summary Compensation Table.

2018 CEO Target TDC vs. 2018 Summary Compensation Table Compensation

Post-Termination Compensation

We have entered into severance arrangements with our NEOs that provide, among other things, for certain payments and benefits in the event that an NEO’s employment is terminated under certain circumstances, such as being terminated by the Company without “cause” or resigning for “good reason” or within a specified period following a “change in control.” These severance arrangements are described in further detail in the section entitled “Executive Compensation — Employment Arrangements” below.

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The compensation committee believes that the severance arrangements provided to our NEOs are an important part of our overall executive compensation program because they help us ensure the continued focus and dedication of our NEOs, notwithstanding any concern that they may have at any given time regarding their continued employment prior to or following a change in control transaction. The compensation committee also believes that offering severance benefits is an important recruiting and retention tool, as the majority of companies with which we compete for executive talent have similar arrangements in place for their executive officers.

Prior to 2016, we had a practice of entering into employment agreements with each of our NEOs for finite terms. In early 2016, following a review of peer group and market practice, the compensation committee decided to discontinue the practice of entering into employment agreements for our executive officer positions (excluding the CEO) commencing with the then-new CFO hire (Mr. Lieberman) and upon expiration of the term of each NEO’s employment agreement. Ms. Howard’s employment agreement provides for one-year extensions past the initial five-year term ending on March 1, 2017, unless we provide notice of our intent not to continue her employment after the expiration of that agreement on terms (other than contract length) at least equivalent to the terms of the agreement. Because the five-year term ended on March 1, 2017, Ms. Howard’s employment agreement is currently subject to the annual extension provisions set forth in the agreement.

None of the employment arrangements with our NEOs contain excise tax gross-up provisions related to a change in control of the Company, and in order for our NEOs to be entitled to severance benefits in connection with a change in control transaction, a qualifying termination event (or “double trigger”) is required.

Other Compensation Policies

Stock Ownership Guidelines and Holding Period Requirements

To reinforce the importance of stock ownership and further align our NEOs’ interests with those of our shareholders, the compensation committee has adopted stock ownership guidelines which also include holding period requirements that apply to equity incentive awards granted to our NEOs. Consistent with the prevailing practice in our current peer group, our stock ownership guidelines require the CEO to own shares of our common stock valued at a minimum of four times (4x) annual base salary and the other NEOs to own shares of our common stock valued at a minimum of three times (3x) annual base salary. In addition to shares owned outright by the NEO, shares that count toward the achievement of the ownership guidelines include the net in-the-money, after-tax value of vested, but unexercised, stock options, as well as vested and unvested time-based restricted stock units. Shares that do not count towards the achievement of the ownership guidelines include shares underlying unvested stock options and unvested performance-based restricted stock units. Until these ownership guidelines are achieved, each NEO must retain at least 50% (75% in the case of the CEO) of the net shares received upon the vesting of equity awards or the exercise of stock options.

Even after meeting the applicable stock ownership guideline, our NEOs must comply with holding period requirements with respect to their equity incentive awards. Under these holding period requirements, our CEO is required to hold at least 75%, and the other NEOs are required to hold at least 50%, of the net shares received from the vesting of equity awards or the exercise of stock options for at least one year following the vesting or exercise date.

At the end of 2018, all of our NEOs were in compliance with these stock ownership guidelines (either because they achieved the applicable ownership guideline or had complied with the applicable retention ratios if such guideline had not been achieved) including the holding period requirements contained therein.

Clawback Policy

The Board has adopted a clawback policy requiring the reimbursement of excess annual cash or long-term incentive compensation paid to the Company’s executive officers in the event of certain restatements of the Company’s financial statements.

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Insider Trading Policies

Our insider trading policies prohibit all of our employees, including our NEOs, from selling short our common stock, engaging in hedging or offsetting transactions, or pledging our common stock. Our insider trading policies also prohibit our employees from holding shares of our common stock in a margin account or pledging shares of our common stock as collateral for a loan.

Role of Independent Compensation Consultant and Management

Role of Independent Compensation Consultant

The compensation committee has engaged FW Cook to serve as its independent compensation consultant. FW Cook works directly for the compensation committee (and not on behalf of management) and assists the compensation committee in evaluating our executive and non-employee director compensation programs, including peer group composition, competitive benchmarking, program design, and staying abreast of market practices and trends. FW Cook performed no other work for the Company in 2018.

In connection with its engagement of FW Cook, the compensation committee assessed the independence of FW Cook, taking into account such factors as FW Cook’s policies and procedures designed to prevent conflicts of interest and the existence of any business or personal relationship that could impact FW Cook’s independence. The compensation committee identified no conflicts of interests with respect to its engagement of FW Cook and concluded that FW Cook was independent.

Role of Management in Compensation Decisions

As part of its annual compensation review, the compensation committee reviews the performance of each NEO. For our NEOs other than the CEO, the compensation committee receives performance assessments and compensation recommendations from our CEO. Except for our CEO, none of the other NEOs is present when these assessments and recommendations are made, and they do not otherwise play any role in decisions affecting their compensation, except for discussing their annual, individual performance goals (and their self-assessment of their respective achievement of those goals) with our CEO. Our CEO, in turn, makes recommendations to the compensation committee based on these discussions. Our CEO does not participate in her own performance review and does not recommend her own compensation (other than completing a self-assessment of her annual, individual performance achievements against pre-established goals).

COMPENSATION COMMITTEE REPORT

The compensation committee has reviewed and discussed the foregoing Compensation Discussion and Analysis, required by Item 402(b) of Regulation S-K, with management of the Company. Based on this review and discussion, the compensation committee recommends to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement, the Company’s Annual Report on Form 10-K for the year ended December 31, 2018 and such other filings with the SEC as may be appropriate.

Stephan A. James, Chairman

Rudina Sesari

Michael L. Tipsord

Randy H. Zwirn

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EXECUTIVE COMPENSATION

2018 Summary Compensation Table

The table below summarizes the total compensation paid to or earned by each of our NEOs for 2018, and to the extent required by SEC disclosure rules, 2017 and 2016.

The Transaction Bonuses were paid to the NEOs on August 29, 2018 and were granted as extraordinary items of compensation outside of our standard executive compensation program for the year to recognize the significant contributions of our NEOs to the Sale Transaction and the significant value it created for the Company, as described above under “Compensation Discussion and Analysis —Compensation Related to the Sale Transaction — Transaction Bonuses.” The SaleCo Adjustment Payments were paid on March 22, 2019 to compensate the NEOs for the loss of the contribution of SaleCo to the Company’s performance against the pre-established targets of the 2016 PBRSU Awards. Those targets had been established in 2016 with the assumption that SaleCo would remain a part of the Company through the end of the performance period on December 31, 2018. SaleCo’s actual contributions ceased on August 24, 2018, resulting in a smaller portion of the shares underlying the 2016 PBRSU Awards vesting than would have vested had the Sale Transaction not been completed during the performance period. (See Compensation Discussion and Analysis —Compensation Related to the Sale Transaction — Modification of Outstanding Adjusted EBITDA Performance-Based Restricted Stock Units – SaleCo Adjustment Payments.”) For each NEO, the amount of the SaleCo Adjustment Payment was determined based on the closing price of one share of our stock on March 15, 2019 ($19.68) multiplied by the estimated number of additional shares underlying the 2016 PBRSU Award that would have vested had the Sale Transaction not been completed during the performance period of the award.

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With respect to the 2018 PBRSU Awards, the amounts reported are based on the probable outcome of the performance-based vesting conditions at the time of grant. Assuming the highest level of performance is achieved, the 2018 PBRSU Awards would have been as follows: $2,460,498 for Ms. Howard; $492,124 for Mr. Lieberman; $639,743 for Mr. Spirer; and $442,887 for Ms. Weed.

The 2017 PBRSU Award Modification and 2018 PBRSU Award Modification are more fully described under “Compensation Discussion and Analysis – Compensation Related to the Sale Transaction – Modification of Outstanding Adjusted EBITDA Performance-Based Restricted Stock Units – Adjustments to 2017 PBRSU Awards and 2018 PBRSU Awards” above. These amounts do not reflect the grant of new awards, but instead represent the accounting cost of the modification of the performance targets reflected in outstanding awards to reflect the fact that SaleCo was divested on August 24, 2018 and would thereafter not contribute to the Company’s achievements with respect to those performance targets. Although the accounting charges of these modifications are required to be reported in this table, the modification of these awards does not reflect any incremental grants to the NEOs. The 2017 PBRSU Awards will vest, if at all, based on the Company’s achievement with respect to the applicable performance measures for the three-year period ending on December 31, 2019. The 2018 PBRSU Awards will vest, if at all, based on the Company’s achievement with respect to the applicable performance measures for the three-year period ending on December 31, 2020. The adjustments were intended to maintain the previously anticipated level of rigor of performance hurdles as originally established for each award but exclude the Adjusted EBITDA contributions from SaleCo from the date of the divestiture through the end of the applicable performance period.

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2018 Grants of Plan-Based Awards