Scott M. Shaw
LINCOLN EDUCATIONAL SERVICESAbout Scott M. Shaw
Scott M. Shaw (age 62) is President & Chief Executive Officer of Lincoln Educational Services and serves on the Board of Directors; he joined the company in 2001 and has served on the Board from 2001–2006 and since July 2015. He holds a B.A. from Duke University and an M.B.A. from the Wharton School of Business . Under his leadership, 2024 results included revenue of $440.1 million (+16.4% YoY), adjusted EBITDA of $42.3 million (up from $26.5 million), net income of $9.9 million, student starts +15.2%, and year-end cash of nearly $60 million with no debt; 2024 “say-on-pay” support was ~93% . Pay-versus-performance disclosures show cumulative TSR value of a $100 investment moving from $89 (2022) to $154 (2023) to $212 (2024) and net income of $12.6 million (2022), $26.0 million (2023), and $9.9 million (2024) .
Past Roles
| Organization | Role | Years | Strategic impact |
|---|---|---|---|
| Lincoln Educational Services | President & CEO; previously President & COO; EVP & CAO; SVP Strategic Planning & BD | 2001–present | Led growth initiatives; operational scaling; capital allocation and program expansion |
| Stonington Partners, Inc. | Partner | Since 1994 (end date not disclosed) | Led investment sourcing, oversight as board participant, strategy, acquisitions, refinancing, exits |
| Merrill Lynch Capital Partners Inc. | Consultant | 1994–2000 | Advised private equity affiliate on investments and portfolio strategy |
External Roles
No current public company directorships for Mr. Shaw are disclosed in the proxy biographies .
Fixed Compensation
| Metric | 2023 | 2024 |
|---|---|---|
| Base Salary ($) | 500,000 | 650,000 (raised 30% effective 2024) |
| Target Bonus (% of salary) | 100% | 100% |
| Actual MIC Payout ($) | 740,000 | 688,629 |
| Payout vs Target (%) | 148.0% | 105.9% |
Notes:
- Annual incentive is under the Management Incentive Compensation Plan (MIC) with target based solely on adjusted EBITDA for 2023–2024, capped at 200% of target .
- Company maintains clawback policies covering performance-based cash and equity compensation .
Performance Compensation
Annual cash and equity incentives are tied predominantly to adjusted EBITDA, with equity split between time-based and performance-based restricted stock, and performance equity vesting in thirds over three years upon annual target attainment determined each March .
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Annual cash bonus metric/structure (MIC):
- Metric: Adjusted EBITDA (weighting 100%) .
- 2023 payout: 148.0% of target; 2024 payout: 105.9% of target .
- Cap: 200% of target .
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Long-term equity (restricted stock):
- 50% time-based RS; 50% performance-based RS; both vest ratably over 3 years (performance portion contingent on annual adjusted EBITDA targets; determinations each March) .
- “Catch-up” vesting eliminated for awards issued after Dec 31, 2023; Compensation Committee retains discretion to reduce vesting .
| Incentive Element | Metric | Weighting | Performance Period | 2023 Outcome | 2024 Outcome | Vesting |
|---|---|---|---|---|---|---|
| MIC (cash) | Adjusted EBITDA | 100% | FY | 148.0% of target | 105.9% of target | Annual cash payout |
| Performance RS | Adjusted EBITDA | 100% of performance RS | 3-year cycles (annual tests) | FY23 target achieved (triggering vest for 2021/2022/2023 cycles) | FY24 target achieved (one-third vest in 2022/2023/2024 cycles) | 1/3 per year if target met; determinations in March |
Equity Ownership & Alignment
| Ownership detail | Amount |
|---|---|
| Total beneficial ownership (shares) | 1,096,973 (3.5% of outstanding) |
| Common shares (direct) | 826,419 |
| Unvested restricted stock (counts toward beneficial ownership) | 270,554 |
| Shares outstanding (record date basis) | 31,592,807 (as of Mar 20, 2025) |
| Hedging/pledging policy | Prohibits holding in margin accounts, hedging, or pledging; Board may grant exceptions |
| Stock ownership guidelines | Company annually reviews executive stock holdings; specific multiples not disclosed |
Unvested Equity and Year-End Value (12/31/2024, $15.82 close):
| Award Date | Unvested Shares | Market Value ($) | Vesting Terms |
|---|---|---|---|
| 2022-02-23 (50% time-based/50% perf) | 50,294 | 795,651 | Ratable over 3 years; perf portion if targets met |
| 2023-02-23 (50% time-based/50% perf) | 130,070 | 2,057,707 | Ratable over 3 years; perf portion if targets met |
| 2024-02-22 (50% time-based/50% perf) | 124,740 | 1,973,387 | Ratable over 3 years; perf portion if targets met |
Insider selling pressure assessment:
- Three concurrent RS cycles vest one-third annually (subject to performance), with performance determinations each March—this can cluster potential saleable share availability around March/April windows, subject to trading policies and any 10b5-1 plans (not disclosed) .
Employment Terms
| Term | Details |
|---|---|
| Employment agreement | Dated Dec 13, 2022; runs through Dec 31, 2025 |
| Base salary floor in agreement | Minimum $500,000 (agreement baseline) |
| Annual bonus eligibility | MIC Plan (performance-based) |
| Perquisites | Company vehicle (business/personal use), insurance/parking/fuel; exec pays taxes on benefit; supplemental life insurance |
| Non-compete | During employment and 2 years post-termination (waived if involuntary termination) |
| Non-solicit | During employment and 1 year post-termination |
| Confidentiality | Unlimited duration |
| Change-in-control (CoC) | Employment continued for 2 years post-CoC; all RS/options vest in full at CoC (single-trigger for equity) |
| 280G/4999 | No excise tax gross-ups; best-net cutback provision |
| Clawbacks | Policy covers performance-based cash and equity compensation |
Potential Payments (as of 12/31/2024, stock at $15.82):
| Scenario | Aggregate Severance ($) | Equity Vesting Value ($) | Benefits ($) | Total ($) |
|---|---|---|---|---|
| Involuntary Termination | 2,600,000 | 4,826,745 | 24,068 | 7,450,813 |
| Change in Control | — | 4,826,745 | — | 4,826,745 |
| Death/Disability | 650,000 | 4,826,745 | — | 5,476,745 |
Definitions and mechanics: “Involuntary Termination” includes good reason or termination without cause; CoC extends term 2 years and accelerates equity; prorated MIC award is paid based on actual performance upon involuntary termination; target MIC upon death/disability .
Board Governance (including Shaw’s directorship)
- Role: President & CEO and Director; only non-independent director on a majority-independent board .
- Board leadership: separated roles with a Non-Executive Chair (John A. Bartholdson since May 2, 2024), enhancing independent oversight and mitigating CEO/Chair dual-role concerns .
- Committees: Shaw is not a member of Audit, Compensation, or Nominating & Governance committees; all committee members are independent .
- Attendance: Board met 6 times in 2024; all directors attended Board and committee meetings except one N&G meeting missed by Mr. Burke, implying full attendance by Mr. Shaw .
- Insider trading and pledging: Code prohibits hedging/margin/pledging for directors and officers, with limited Board exceptions .
Director compensation for non-employee directors (context): annual retainers and RS grants; not applicable to Shaw as an employee director .
Performance & Track Record
Company operating and shareholder outcomes disclosed during Mr. Shaw’s tenure:
- Operating highlights (FY2024): revenue $440.1m (+16.4%), adjusted EBITDA $42.3m (vs $26.5m in 2023), net income $9.9m, student starts +15.2%, cash ~ $60m and no debt at year-end .
- Strategic execution: new East Point, GA campus (exceeded projections by ~$6m revenue and ~$2m EBITDA in 2024); relocations/expansions and new campuses planned (Houston late 2025; Hicksville, NY late 2026), >10 program expansions in 2024–2025 .
Pay-versus-performance summary:
| Metric | 2022 | 2023 | 2024 |
|---|---|---|---|
| Cumulative TSR – $100 initial investment (value) | 89 | 154 | 212 |
| Net Income ($ thousands) | 12,634 | 25,997 | 9,891 |
Say-on-pay and compensation governance:
- 2024 say-on-pay approval ~93%; governance “what we do” includes pay-for-performance, independent consultant, caps, clawbacks, ownership reviews; “what we don’t do” includes no excise tax gross-ups and no backdating/spring-loading .
Compensation Structure Analysis
- Mix and risk: High variable pay with 100% EBITDA-based annual bonus and 50% of equity in performance RS aligns with profitability focus; cap at 200% limits windfalls .
- Trend: CEO salary uplift to $650k in 2024 (first increase since 2016) to align closer to market; still maintains heavy at-risk component via MIC and performance RS .
- Metric calibration: 2023 payout at 148% and 2024 at 105.9% indicate goals that are demanding but achievable; removal of “catch-up” vesting starting 2024 tightens performance linkage and reduces retroactive vesting .
- Equity design: No recent stock options and a shift to RS/PRSUs lowers leverage versus options but reduces risk of option repricing; explicit policy against backdating/spring-loading .
- Consultant/peer benchmarking: 2024 engaged Grant Thornton; peers included Adtalem, Laureate, APEI, Perdoceo, Coursera, Strategic Education, Franklin Covey, Universal Technical Institute, GCE, Udemy; intent is to position around market 50th percentile adjusted for performance .
Risk Indicators & Red Flags
- Hedging/pledging: Prohibited by Code (exceptions only by Board), which supports alignment and reduces downside-protection behaviors .
- Excise tax gross-ups: None; uses best-net cutback—shareholder-friendly .
- Option repricing: No current option grants; no backdating/spring-loading .
- Related party transactions: None in 2023–2024; historical preferred stock investors’ conversion disclosed and handled under standard registration rights .
- Say-on-pay: High approval (~93% in 2024; 86% in 2023) lowers governance risk .
Board Service Details for Shaw (Director)
- Service on this Board: 2001–2006; 2015–present .
- Committees: None (management director only) .
- Independence: Not independent; Board and all committees otherwise independent .
- Leadership/independence safeguard: Separate Non-Executive Chair since May 2, 2024 .
- Attendance: Attended all Board meetings in 2024; no missed committee meetings reported for Shaw .
Investment Implications
- Alignment and retention: Shaw owns 3.5% of shares (including restricted), with significant unvested equity value ($4.83m at 12/31/24), a 2-year non-compete (waived upon involuntary termination), and severance equal to 2x salary+target bonus upon involuntary termination—supportive of retention and alignment while avoiding excessive CoC cash awards (single-trigger equity only) .
- Performance tie-ins: 100% EBITDA-based annual bonus and performance RS tied to annual EBITDA support line-of-sight execution; 2024 operating outperformance (revenue +16.4%, adjusted EBITDA +$15.8m YoY) and high say-on-pay indicate investor alignment, though 2024 net income declined from 2023, suggesting mix of growth and investment effects .
- Trading/overhang dynamics: Three overlapping RS cycles vest in March determinations, potentially creating periodic supply; pledging and hedging prohibitions mitigate adverse signaling from risk-transfer behavior .
- Governance comfort: Separation of Chair/CEO, independent committees, clawbacks, no gross-ups, and elimination of catch-up vesting for new awards reduce governance risk and pay inflation concerns; peer benchmarking with an independent consultant re-anchored pay levels in 2024 .