UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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CORELOGIC, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
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March 21, 201819, 2019
Dear Fellow Stockholders,
You are cordially invited to attend our annual meeting of stockholders at 2:00 p.m. Pacific timeTime on Tuesday, May 1, 2018,April 30, 2019, at the executive offices of CoreLogic, Inc., located at 40 Pacifica, Irvine, California 92618. We have included a map and directions to our executive offices on the inside back cover of this proxy statement for your convenience.
Details regarding admission to the meeting and the business to be conducted are described in the accompanying notice of annual meeting and proxy statement. We have also made available a copy of our 20172018 Annual Report to Stockholders (the "Annual Report"“Annual Report”) with this proxy statement. We encourage you to read the Annual Report, which includes our audited financial statements and provides information about our business.
As in prior years, we have elected to provide access to our proxy materials over the Internet by mailing our stockholders a Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”). The Notice provides information on how stockholders can obtain paper copies of our proxy materials if they so choose. This method expedites the receipt of your proxy materials, lowers the costs of our annual meeting and supports conservation of natural resources. If you would like more information, please see the Questions and Answers section of this proxy statement.
YOUR VOTE IS VERY IMPORTANT.Thank you very much for your continued interest in CoreLogic.
Paul F. Folino | Frank D. Martell | |
Chairman of the Board | President and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date and Time April 30, 2019 2:00 p.m. Pacific Time Place CoreLogic, Inc. 40 Pacifica, Irvine, CA 92618 | Matters to be voted on at the 2019 Annual Meeting of Stockholders 1. To elect the eleven persons named in the accompanying proxy statement to serve on our board of directors until the next annual meeting and until their respective successors are duly elected and qualified; 2. To approve, on an advisory basis, the compensation of our named executive officers; 3. To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; and 4. To transact such other business as may properly come before the meeting or any postponements or adjournments thereof. |
Record Date Only stockholders of record at the close of business on March 4, 2019 are entitled to notice of and to vote at the Annual Meeting.
How to Vote Your Shares | ||||||
By Internet: Visit the website listed on your proxy card, notice or voting instruction form | By Telephone: Call the phone number listed on your proxy card or voting instruction form | |||||
By Mail: Complete, sign, date, and return your proxy card or voting instruction form in the envelope provided | In Person:Attend our Annual Meeting and vote by ballot |
Your Vote is Very Important Even if you plan to attend the annual meeting of stockholders,Annual Meeting, we encourage you to vote via the Internet, by telephone or by mail as soon as possible to ensure that your vote is counted.shares are represented at the Annual Meeting. We look forward to seeing you at the meeting.Annual Meeting.
Thank you very much for your continued interest in CoreLogic.By Order of the Board of Directors,
Arnold A. Pinkston
Chief Legal Officer and
Corporate Secretary
Irvine, California
March 19, 2019
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 30, 2019 Our Notice of Annual Meeting of Stockholders, Proxy Statement and Annual Report to Stockholders for the |
TABLE OF CONTENTS |
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERSTo be Held on May 1, 2018
The annual meeting of stockholders of CoreLogic, Inc., a Delaware corporation (the "Company"), will be held at 2:00 p.m. Pacific time on Tuesday, May 1, 2018, at the executive offices of CoreLogic, Inc., located at 40 Pacifica, Irvine, California 92618, for the following purposes:
Only stockholders of record at the close of business on March 6, 2018 are entitled to notice of the annual meeting and an opportunity to vote at the annual meeting.
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact:
ALLIANCE ADVISORS, LLC200 Broadacres Drive, 3rd FloorBloomfield, New Jersey 07003Stockholders May Call Toll-Free: 855-325-6671
YOUR VOTE IS VERY IMPORTANT. Even if you plan to attend the annual meeting of stockholders, we encourage you to cast your vote and submit your proxy as soon as possible by one of the methods below to ensure that your vote is counted:
Registered stockholders. You may authorize your proxy:
Beneficial stockholders. If your shares are held by a broker, bank or other nominee, please follow the instructions they send to you regarding how you may vote your shares at the annual meeting.
Stockholders may also vote in person at the annual meeting. If you are a registered stockholder (that is, you hold your shares in your name as a holder of record with our transfer agent), you must present valid identification to vote at the meeting. If your shares are held by a broker, bank, or other nominee, you will also need to obtain a "legal proxy" from the holder of record to vote in person at the meeting. For specific instructions, please refer to the Questions and Answers section at the end of the proxy statement and the instructions on the proxy card or Notice of Internet Availability of Proxy Materials you receive.
Arnold A. PinkstonChief Legal Officer andCorporate Secretary
Irvine, CaliforniaMarch 21, 2018
Proposal 1 – Election of Directors
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Proposal 3 |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Corporate Governance and Board Matters |
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Director Compensation |
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Executive Officers |
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Compensation Discussion and Analysis |
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Compensation Committee Report |
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Compensation Committee Interlocks and Insider Participation |
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Executive Compensation Tables |
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Grants of Plan-Based Awards for |
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Employment Agreements |
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Outstanding Equity Awards at Fiscal Year-End |
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Nonqualified Deferred Compensation for |
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Potential Payments upon Termination or Change in Control |
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Questions and Answers about Voting |
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Stockholder Proposals |
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General Information |
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Corporate Social Responsibility |
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Appendix A: Unaudited Reconciliation of Non-GAAP Adjusted Numbers | A-1 | ||
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Map and Directions to Meeting Site |
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PROXY STATEMENT
SUMMARYSolicitation of Proxies by the Board of Directors
The board of directors (the "Board" or the "Board of Directors") of CoreLogic, Inc., a Delaware corporation ("CoreLogic," the "Company," "we," or "us"), is soliciting proxies from holders of our shares of common stock for use at the annual meeting of stockholders. This proxy statement and form of proxy are first being sent or made available to our stockholders on or about March 21, 2018.
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact:
ALLIANCE ADVISORS, LLC200 Broadacres Drive, 3rd FloorBloomfield, New Jersey 07003
Stockholders May Call Toll-Free: 855-325-6671
YOUR VOTE IS VERY IMPORTANT. Even if you plan to attend the annual meeting of stockholders, we encourage you to cast your vote and submit your proxy as soon as possible by one of the methods below to ensure that your vote is counted.
Registered stockholders. You may authorize your proxy:
Beneficial stockholders. If your shares are held by a broker, bank or other nominee, please follow the instructions they send to you regarding how you may vote your shares at the annual meeting.
Stockholders may also vote in person at the annual meeting. If you are a registered stockholder (that is, you hold your shares in your name as a holder of record with our transfer agent), you must present valid identification to vote at the meeting. If your shares are held by a broker, bank, or other nominee, you will also need to obtain a "legal proxy" from the holder of record to vote in person at the meeting. For specific instructions, please refer to the Questions and Answers section at the end of this proxy statement and the instructions on the proxy card or Notice of Internet Availability of Proxy Materials (the "Notice") you receive.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 1, 2018
Our Notice of Annual Meeting of Stockholders, 2018 Proxy Statement and Annual Report to Stockholders for the year ended December 31, 2017 are available at www.viewproxy.com/corelogic/2018. You are encouraged to access and review all of the important information contained in our proxy materials before voting.
This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider prior to casting your vote at the 2018 Annual Meeting2019 annual meeting of Stockholdersstockholders (the "Annual Meeting"“Annual Meeting”), and you should read the entire proxy statement carefully before voting.
ANNUAL MEETING INFORMATION AND STOCKHOLDER VOTING MATTERS
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Date & Time April 30, 2019 2:00 p.m. PT Place CoreLogic 40 Pacifica Irvine, CA 92618 Record Date March 4, 2019 | 1 | Election of the eleven persons named in this proxy statement to | FOR each nominee | |||||||
2 | Approval, on an advisory basis, of the | FOR | ||||||||
3 | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019 | FOR |
Mailing Date:This proxy statement and form of proxy are first being sent or made available to our stockholders on or about March 19, 2019.
CORELOGIC AT A GLANCE
We delivered strong operating and financial results in 2018 despite significant US mortgage market headwinds. In the face of these headwinds, we reduced our overall cost structure by more than $20 million through productivity initiatives and cost management, continued to invest in future growth and productivity initiatives, and completed targeted acquisitions to enhance our business mix by increasing ournon-mortgage and international footprints while driving higher technology platform revenues. We invested in next generation technology capabilities focusing on data structures and visualization, technology platforms, and advanced automation techniques, which we expect will set a foundation for future growth and margin expansion. Finally, we enhanced our infrastructure capabilities as we initiated our migration to the Google Cloud platform.
Notable financial accomplishments in 2018 include:
Significant market outperformance as our 2018 revenues were down 3%, as compared with a 15% estimated drop in overall US mortgage market unit volumes.
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1. | Election of the eleven persons named in this proxy statement to serve on our board of directors until the next annual meeting and until their successors are duly elected and qualified | FOR | 7 | |||||||||||||
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2. | Approval of the CoreLogic, Inc. 2018 Performance Incentive Plan | FOR | 14 | |||||||||||||
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3. | Approval, on an advisory basis, of the compensation of our named executive officers | FOR | 25 | |||||||||||||
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4. | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2018 | FOR | 28 | |||||||||||||
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5. | Transaction of such other business as may properly come before the meeting or any postponements or adjournments thereof | |||||||||||||||
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Since 2011, our first full year as a publicly traded company, we grew revenues at an annual compounded rate of 9%,Increased adjusted EBITDA by 12%3% and adjusted EPS by 25%.15%, supported by our productivity and cost initiatives.
We achieved exceptional results
Generated $258 million of free cash flow (“FCF”) while reinvesting to drive future growth and margin expansion.
Delivered more than $20 million in 2017. Our 2017 financial success is the direct result of our relentlesscost management and consistent focus on our vision of delivering unique property insights that connect and power the global real estate economy.productivity benefits.
We also invested for long-term growth, while returning substantial capital to stockholders and repurchasing
Repurchased approximately 5%3% of our outstanding common shares.
We accomplished key strategic goals in 2017. In addition to our strong financial results in 2017, we accomplished a number of key strategic goals that will enable future success:
Please seeAppendix A for a detailed reconciliation of adjusted EBITDA, and adjusted EPS and FCF to the most directly comparable GAAP financial measures.measures calculated in accordance with generally accepted accounting principles in the United States (“GAAP”).
BOARD OF DIRECTOR NOMINEES
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The following graphics and table providesprovide summary information about each director nominee. The Nominating and Corporate Governance Committee makes an annual recommendation to our Boardnominee as to whetherof the directors have the relevant skills and experience to oversee us and to stand for re-election, and the Nominating and Corporate Governance Committee and Board have recommended the nominees below.date of this proxy statement. All of the directors possess strength of character, inquiring and independent minds, mature judgment and a deep commitment to our success.
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Name | | | Age | | Director Since | | Principal Occupation | | AC | | SPC | | CC | | NCGC | | |||||||||||||||||
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J. David Chatham | 67 | 1989 | President and chief executive officer of Chatham Holdings Corporation and the Chatham family of real estate businesses | ✓ | C | ||||||||||||||||||||||||||||
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Douglas C. Curling | 63 | 2012 | Principal and managing director of New Kent Capital LLC | ✓ | ✓ | ||||||||||||||||||||||||||||
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John C. Dorman | 67 | 2012 | Former chairman of Online Resources Corporation | ✓ | C | ||||||||||||||||||||||||||||
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Paul F. Folino (Chairman of the Board) | 73 | 2011 | Former executive chairman of the board of directors of Emulex Corporation | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||
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Frank D. Martell | 58 | 2017 | President and Chief Executive Officer of CoreLogic, Inc. | ✓ | |||||||||||||||||||||||||||||
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Claudia Fan Munce | 58 | 2017 | Venture advisor at New Enterprise Associates | ✓ | |||||||||||||||||||||||||||||
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Thomas C. O'Brien | 64 | 2008 | Former chief executive officer and president of Insurance Auto Auctions Inc. | ✓ | C | ||||||||||||||||||||||||||||
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Vikrant Raina | 50 | 2017 | Managing Partner at BV Investment Partners | ✓ | |||||||||||||||||||||||||||||
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Jaynie Miller Studenmund | 63 | 2012 | Former chief operating officer of Overture Services, Inc. | ✓ | ✓ | ||||||||||||||||||||||||||||
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David F. Walker | 64 | 2010 | Chairman of the board of directors of Chico's FAS, Inc. | C | ✓ | ||||||||||||||||||||||||||||
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Mary Lee Widener | 79 | 2006 | Former president and chief executive officer of Neighborhood Housing Services of America, Inc. | ✓ | |||||||||||||||||||||||||||||
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All of our directors, other than our CEO, are independent, and our Audit, Compensation and Nominating and Corporate Governance Committees consist exclusively of independent directors. Our Board is composed of directors with a wide range of views and background, along with diverse ethnicities, age and gender. Our Board diversity reflects the diverse and complex businesses and markets in which we operate. Nine of our independent directors have served on other public company boards, 55% of our directors have been CEOs and eight have held C-suite positions. In addition, 73% of our directors have deep industry experience in data analytics, financial services, or real estate, averaging 18 years of industry experience. We are proud to be recognized as a "Winning Company 2017" by 2020 Women in Boards for our commitment to Board diversity and specifically for having women represent more than 20% of our Board membership.
Our Board composition also reflects a mix of tenure, which gives a balance of historical perspective and deep CoreLogic knowledge, together with fresh perspectives and insights. Currently, the median director tenure is eight years.
Table of ContentsIndependent Gender Age Tenure
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The following table summarizes some of our key governance practices:
Committee Membership | ||||||||||||||||||||||
Joined CLGX Board | ||||||||||||||||||||||
Company CEO/CFO | Technology | Real Estate/ Insurance | Financial/ M&A | Private Equity/ Investing | AC | SC | CC | NC | ||||||||||||||
Paul F. Folino Chairman of the Board | 2011 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
Frank D. Martell | 2017 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
J. David Chatham | 2010 | * | ✓ | ✓ | ✓ | ✓ | Chair | |||||||||||||||
Douglas C. Curling | 2012 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||
John C. Dorman | 2012 | ✓ | ✓ | ✓ | ✓ | Chair | ||||||||||||||||
Claudia Fan Munce | 2017 | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Thomas C. O’Brien | 2010 | * | ✓ | ✓ | ✓ | ✓ | Chair | |||||||||||||||
Vikrant Raina | 2017 | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Jaynie Miller Studenmund | 2012 | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
David F. Walker | 2010 | ✓ | ✓ | Chair | ✓ | |||||||||||||||||
Mary Lee Widener | 2010 | * | ✓ | ✓ |
* Denotes the year that director joined our board of directors (“Board”) pursuant to the separation from our predecessor, The First American Corporation (“FAC”), in 2010. Messrs. Chatham and O’Brien joined the predecessor FAC board in 1989 and 2008, respectively, and Ms. Widener joined the predecessor FAC board in 2006. |
AC Audit Committee
SC Strategic Planning and Acquisition Committee
CC Compensation Committee
NC Nominating & Corporate Governance Committee
Audit Committee Financial Expert
CORPORATE GOVERNANCE HIGHLIGHTS
We are committed to sound and effective corporate governance practices that serve the long-term interests of our stockholders. The Board diligently exercises its oversight responsibilities with respect to the Company’s business and affairs consistent with the highest principles of business ethics and corporate governance.
Board Independence | Ten of our eleven directors (91%) are independent. | |||||||
Independent Chairman | The offices of CEO and Chairman of the Board are separate, and our Chairman of the Board is an independent director. | |||||||
Annual Election of Directors | Our Amended and Restated Bylaws (“Bylaws”) mandate that directors be elected annually. | |||||||
Board Diversity | We have a diverse Board that includes the perspectives of three women, different professional and educational backgrounds, prior experience on other boards of directors, multiple political and social perspectives as well as directors of varying race and national origin. | |||||||
Board Refreshment | The Board regularly reviews the skills and experience of current and prospective Board members to | |||||||
Active Stockholder Engagement | We actively engage with our stockholders to discuss strategy, operational performance, financial results, corporate governance, compensation programs and related matters. | |||||||
Majority Voting Standard, with Resignation Policy | Our Bylaws mandate that directors be elected under a “majority of votes cast” standard in uncontested elections, and each incumbent director has submitted an irrevocable letter of resignation that becomes effective if he or she does not receive a majority of votes cast in accordance with our Corporate Governance Guidelines and the Board determines to accept the resignation. | |||||||
Director Overboarding Policy | Our Corporate Governance Guidelines provide that our directors may not serve on more than five public company boards (including our Board), and our Audit Committee members may not serve on more than three public company audit committees (including our audit committee) without prior Board approval. | |||||||
Annual Board and Committee Evaluations | The Board and each of its committees performs an annual | |||||||
Director Stock Ownership Guidelines | All directors receive annual equity grants and must meet equity ownership requirements during their service with us. | |||||||
Single Voting Class | ||||||||
We have only one class of voting securities. | ||||||||
Stockholder Right to Call Special Meetings | ||||||||
Stockholders holding 10% of more of our outstanding stock have the right to call a special | ||||||||
Stockholder Right to Act by Written Consent | Stockholders may act by written consent on matters that could otherwise be acted upon at a meeting of stockholders. | |||||||
No Poison Pill | We do not have a |
STOCKHOLDER ENGAGEMENT PROGRAM
The Board and executive management are committed to engaging with our stockholders. Throughout the year, executive management proactively and consistently meets with current and prospective stockholders to discuss our strategic priorities, operational performance, and financial results. Also, through these discussions or separate outreach efforts, we seek to engage our top stockholders to solicit feedback on corporate governance, our compensation program, and related matters. In 2018, we conducted such outreach to our top stockholders representing a majority of our outstanding shares; these stockholders did not express concerns over our corporate governance practices or compensation program design.
EXECUTIVE COMPENSATION
We Pay for Performance. Our philosophy is designed to:
attract, motivate and retainhighly-qualified executive officers critical to ourlong-term success;
align the interests of our executive officers with the interests of our stockholders;
reward executive officers for achievingpre-defined rigorous financial goals and strategic objectives that may not yieldcurrent-period financial results but are expected to position us for enhanced results in future periods;
encourage strategiclong-term development and profitable investment in the business;
motivate and reward appropriaterisk-taking to grow the business; and
support pay practices with strong corporate governance and independent board oversight.
We aligned annual incentives to rigorous financial targets. The Company’s underlyingpay-for-performance approach is intended to reward management appropriately in light of below- and above-expected performance results through use of a weighted combination of three performance metrics—revenue, adjusted EBITDA, and FCF.
We assessed and rewarded our most significant strategic accomplishments. Our decisions on ICP awards took into consideration a number of key accomplishments in 2018 across our three strategic areas of focus—growth and innovation, operational excellence, and high performing organization.
We did not make across-the-board increases in base salaries for the 6th consecutive year.Notwithstanding strong results, consistent with our practices in recent years, our Compensation Committee did not increase NEO base salaries for market trends. The Compensation Committee adjusted Mr. Martell’s salary in recognition of his strong leadership and management of the business through a challenging US mortgage market environment. Our Compensation Committee also adjusted the salary for Mr. Balas in recognition of his continued strong leadership in his CFO role. The new salaries for Mr. Martell and Mr. Balas move each of them to more competitive pay levels.
What We Do |
Review total compensation relative to the median of |
✓ | Tie annual incentives to achievement of multiple rigorous financial and operating goals |
✓ | Useperformance-based vesting for 50% oflong-term compensation, tied to achievement of stretch EPS targets and total stockholder return (“TSR”) relative to our peers |
✓ | Cap performance-based vesting of performance shares at 150% of target if3-year TSR ranks below 55th percentile |
✓ | Require achievement of threshold adjusted net income level to be eligible to vest in RSU awards |
✓ | Maintain robust stock ownership guidelines and require covered executives to retain 50% of netafter-tax shares earned until the guidelines are met |
✓ | Maintain a claw-back policy for incentive payments |
✓ | Use an independent compensation consultant retained directly by our Compensation Committee, in its sole discretion, who performs no consulting or other services for management |
✓ | Require double-trigger for accelerated vesting upon termination of employment following a change in control |
✓ | Assess annually potential risks relating to the Company’s compensation policies and practices |
What We Don’t Do |
× | Incentivize participants to take excessive risks |
× | Award bonuses to our executive officers outside of our incentive compensation plan (“ICP”) |
× | Allow margining, derivative, or speculative transactions, such as hedges, pledges, and margin accounts, by executive officers |
× | Provide excessive perquisites |
× | Provide excise taxgross-ups upon termination with a change in control or taxgross-ups for other compensation |
× | Allow for repricing of stock options without stockholder approval |
× | Pay “single-trigger”change-of-control cash payments or have “single-trigger” equity vesting |
OUR BOARD RECOMMENDS EACH OF THE DIRECTOR | ||||||||||||
GeneralOur Amended and Restated Bylaws (the "Bylaws") require that directors be elected annually, and our Amended and Restated Certificate of Incorporation provides that the Board shall consist of such number of directors, as is determined from time to time, exclusively by resolution adopted by the affirmative vote of a majority of the directors then in office. Pursuant to resolutions adopted by the Board, our Board consists of 11 directors.directors, all of whom, other than Frank D. Martell, our President and Chief Executive Officer, is “independent” pursuant to the applicable rules of the New York Stock Exchange (“NYSE”).
The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the 11 individuals set forth under "—Nominees"“Nominees” below for election at the Annual Meeting, to serve until the 20192020 annual meeting of stockholders and until the directors'their respective successors are duly elected and qualified.
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Under our Bylaws, in an uncontested election, each director nominee will be elected to the Board to serve until the next annual meeting and as soon thereafter as their successors areuntil his or her successor is duly elected and qualified, if the nominee receives a majority of votes cast (meaning the number of shares voted "for"“for” a nominee must exceed the number of shares voted "against"“against” such nominee) with respect to such director nominee'snominee’s election. Under our Corporate Governance Guidelines, each director nominee for director who was in office prior to the election (each, an "incumbent director"“incumbent director”) is required to submit, and has submitted, to the Board an irrevocable letter of resignation from the Board and all committees thereof, which will become effective if the director does not receive a majority of votes cast and the Board determines to accept the resignation. The Nominating and Corporate Governance Committee will make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action. The Board will act on the recommendation of the Nominating and Corporate Governance Committee within 90 days from the date the election results are certified and thereafter promptly disclose its decision in a Current Report onForm 8-K.
The majority voting standard does not apply, however, in a contested election, where the number of nominees for director exceeds the number of directors to be elected. In a contested election, directors are instead elected by a plurality of shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors (meaning that the number of director nominees who receive the highest number of shares voted "for"“for” their election are elected). The election of directors at the Annual Meeting will not be contested and each director nominee must receive a majority of votes cast in order to be elected to the Board.contested. Abstentions and brokernon-votes are not considered votes cast for the foregoing purpose and, therefore, will not be counted in determining the outcome of the election of the director nominees.
NomineesSet forth below is information concerning each person nominated and recommended to be elected as a director by our Board. The information set forth below is as of the date of this proxy statement. All of the nominees currently serve as our directors and were previously elected to the present term of office at our 2018 annual meeting of stockholders.
All of the director nominees listed below have consented to being named in this proxy statement and to serve as directors if elected. If any nominee should become unable or unwilling for good cause to serve as
a director, the proxies will be voted for such substitute nominee(s) as shall be designated by our Board or our Board may reduce the number of directors on our Board. Our Board currently has no knowledge that any of the nominees will be unable or unwilling to serve.
Set forth below is information concerning each person nominated and recommended to be elected by our Board. All of the nominees currently serve as our directors and, other than Ms. Munce and Mr. Raina, were previously elected to the present term of office by our stockholders. In 2017, the Nominating and Corporate Governance Committee of the Board engaged Egon Zehnder International to lead a search for up to two candidates to our Board. The search firm received recommendations from our CEO and members of the Board in connection with the search process and, following review and recommendation by the Nominating and Corporate Governance Committee, the Board determined to increase the size of the Board to eleven directors and elected Ms. Munce and Mr. Raina to fill the vacancies created thereby. Ms. Munce and Mr. Raina were introduced to Egon Zehnder by our CEO.
See the section entitled "Security“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters"Matters” for information pertaining to stock ownership of the nominees. There are no family relationships among any of the nominees or any of our executive officers. In addition, there were and are no arrangements or understandings between any director and any other person pursuant to which any director was or is to be selected as a director.
J. David Chatham | ||||||
Age
| Director since 2010 | |||||
Board Committees |Audit, Compensation (Chair) | ||||||
Biographical Information Mr. Chatham has served as President and Chief Executive Officer of Chatham Holdings Corporation and the Chatham family of real estate businesses, specializing in real estate development, building, brokerage, asset management, mortgage lending, valuation/ | ||||||
| Qualifications and Experience Through his significant experience in the real estate arena, Mr. Chatham enhances our | |||||
Douglas C. Curling | ||||||
Age
| Director since 2012 | |||||
Board Committees |Nominating and Corporate Governance, Strategic Planning & Acquisition Public Company Board |Aaron’s, Inc. | ||||||
Biographical Information Since 2010, Mr. Curling has been a principal and managing director of New Kent Capital LLC, afamily-run investment business, and a principal at New Kent Consulting LLC, a consulting business that he founded. From 1997 until 2008, Mr. Curling held various executive positions at ChoicePoint Inc., a provider of identification and credential verification services that was sold to Reed Elsevier, including serving as President from 2002 to 2008, as Chief Operating Officer from 1999 to 2008 and as Executive Vice President, Chief Financial Officer and Treasurer from 1997 to 1999. Mr. Curling also served as a director of ChoicePoint Inc. from 2000 to 2008. Prior to joining ChoicePoint Inc., Mr. Curling served in various financial roles at Equifax, Inc., a credit bureau, from 1989 to 1997. Mr. Curling currently serves as a director of | ||||||
| Qualifications and Experience Mr. Curling brings his experience operating a publicly traded data business and deep knowledge of the insurance industry to provide insight on data monetization and growth strategies. His operational background and board experience are particularly useful for his service as a member of the Nominating and Corporate Governance Committee and the Strategic Planning Committee. | |||||
John C. Dorman | ||||||
Age
| Director since 2012 | |||||
Board Committees |Audit, Strategic Planning and Acquisition (Chair) | ||||||
Biographical Information Mr. Dorman is a private investor. He previously served as the Chairman | ||||||
| Qualifications and Experience Mr. | |||||
Paul F. Folino, | ||||||
Chairman of the Board Age
| Director since 2011 | |||||
Board Committees |Audit, Compensation, Nominating and Corporate Governance, Strategic Planning and Acquisition Public Company Board |Lantronix, Inc. | ||||||
Biographical Information Mr. Folino was | ||||||
Mr. Folio previously served on the board of Microsemi Corporation, a provider of semiconductor solutions, from 2004 until its sale in 2018.
| Qualifications and Experience Mr. Folino brings significant expertise regarding information technology and intellectual property. With his strong executive background, Mr. Folino provides valued input on a variety of leadership, strategy, corporate governance and organizational matters. His extensive experience as a director of | |||||
Frank D. Martell | ||||||
Age
| Director since 2017 | |||||
Board Committee |Strategic Planning and Acquisition | ||||||
Biographical Information Mr. Martell has served as our President and Chief Executive Officer since March 2017. Prior to that he served as our Chief Financial Officer | ||||||
Qualifications and Experience Mr. Martell has worked with us in various executive leadership capacities for over | ||||||
Claudia Fan Munce | ||||||
Age
| Director since 2017 | |||||
Board Committees |Compensation, Strategic Planning and Acquisition Public Company Board |Best Buy Co., Inc. | ||||||
Biographical Information Ms. Munce has served as a Venture Advisor at New Enterprise Associates, | ||||||
| Qualifications and Experience Ms. Munce has been certified as a cybersecurity oversight director by the NACD and brings extensive experience in identifying emerging technologies and helping firms advance growth, and provides particular expertise in technology, innovation and strategy. This experience is particularly useful as a member of our Strategic Planning and Acquisition Committee. | |||||
Thomas C. | ||||||
O’Brien Age
| Director since 2010 | |||||
Board Committees |Compensation, Nominating and Corporate Governance (Chair) | ||||||
Biographical Information Mr. | ||||||
| Qualifications and Experience As a result of his experience as a Chief Executive Officer, Mr. | |||||
Vikrant Raina | ||||||
Age
| Director since 2017 | |||||
Board Committees |Nominating and Corporate Governance, Strategic Planning and Acquisition | ||||||
Biographical Information Mr. Raina has served as Managing Partner of BV Investment Partners, amiddle-market private equity firm focused on technology services and business services sectors, since 1999, where he currently manages the | ||||||
| Qualifications and Experience Mr. Raina brings extensive experience in identifying emerging technologies and helping firms advance growth, and contributes deep experience in technology services, business services, risk management and investment strategies. This experience is particularly useful as a member of our Strategic Planning and Acquisition Committee. | |||||
Jaynie Miller Studenmund | ||||||
Age
| Director since 2012 | |||||
Board Committees |Compensation, Nominating and Corporate Governance Public Company Boards |ExlService Holdings, Inc., Western Asset Management | ||||||
Biographical Information From January 2001 to January 2004, Ms. Studenmund was Chief Operating Officer of Overture Services, Inc., the creator of paid search advertising, which was acquired by Yahoo, Inc. From 1999 to 2001, Ms. Studenmund was President and Chief Operating Officer of PayMyBills.com, a leading online bill management company. Prior to this, Ms. Studenmund held senior positions in the financial services industry, serving as Executive Vice President and head of retail banking at Great Western Bank and Home Savings Bank (now part of JPMorgan Chase) from 1995 to 1997, and as Executive Vice President and head of retail banking and Chief Marketing Officer at First Interstate Bank (now part of Wells Fargo) from 1984 to 1995. Ms. Studenmund has served as a director of | ||||||
| Qualifications and Experience Ms. Studenmund has spent much of her career in financial services, including serving as the senior executive for some of the largest consumer and banking businesses, and in significant digital businesses. She is also a seasoned executive and director, having guided the growth and development of several technology and internet companies, including LifeLock, Orbitz Worldwide, ExiService, PayMyBills, | |||||
David | ||||||
Age
| Director since 2010 | |||||
Board Committees |Audit (Chair), Strategic Planning and Acquisition Public Company Boards |Chicos FAS, Inc., CommVault Systems, Inc. | ||||||
Biographical Information Mr. Walker served as the director of the Program of Accountancy at the University of South Florida in St. Petersburg from 2002 through June 2009, and also led the Program of Distinction in Social Responsibility and Corporate Reporting at the University during that time. From 1986 to 2002, Mr. Walker was a partner with Arthur Andersen LLP, an accounting firm, having led the | ||||||
| Qualifications and Experience Mr. Walker is a certified public accountant and certified fraud examiner. His extensive experience in public accounting and on corporate boards, including as | |||||
Mary Lee Widener | ||||||
Age
| Director since 2010 | |||||
Board Committee |Audit | ||||||
Biographical Information Ms. Widener is a community investment consultant. From 1974 until her retirement in 2009, Ms. Widener was President and Chief Executive Officer of Neighborhood Housing Services of America, Inc., a nonprofit housing agency. Ms. Widener joined the | ||||||
| Qualifications and Experience Given her extensive experience with organizations dedicated to revitalizing neighborhoods and increasing homeownership opportunities, Ms. Widener brings to our Board a valuable perspective on housing policy. She provides a strong understanding of the opportunities we have to improve home ownership in underserved communities and the challenges residents face in purchasing homes in those communities. Her executive experience is also particularly relevant background for her service as a member of our Audit Committee. | |||||
PROPOSAL 2 –ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION |
OUR BOARD RECOMMENDS THE | ||||||||||||
At the annual meeting, stockholders will be asked to approve the CoreLogic, Inc. 2018 Performance Incentive Plan (the "2018 Plan"), which was adopted, subject to stockholder approval, by the Board on March 7, 2018.
The Company believes that incentive and stock-based awards focus employees on the objectives of creating stockholder value and promoting the success of the Company, and that incentive compensation plans like the proposed 2018 Plan are an important tool to attract, retain and motivate Company employees.
The Company currently maintains the CoreLogic, Inc. Amended and Restated 2011 Performance Incentive Plan (the "2011 Plan"). As of March 9, 2018, a total of 2,954,255 shares of the Company's common stock were then subject to outstanding awards granted under the 2011 Plan, and an additional 8,213,668 shares of the Company's common stock were then available for new award grants under the 2011 Plan (which would permit the Company to grant a total of approximately 4,106,834 full-value awards under the 2 to 1 fungible share counting ratio currently contained in the 2011 Plan). Of the 2,954,255 shares subject to outstanding awards, 489,503 were subject to stock options, 1,324,076 were subject to restricted stock units (other than performance-based stock units such as PBRSUs) and 1,140,676 were subject to performance-based stock units (such as PBRSUs). The number of shares subject to outstanding awards and the number of shares available for new awards reported above both assume that the 1,140,676 outstanding performance-based stock units are paid out at the maximum performance level. If any of the 1,140,676 outstanding performance-based stock units are paid out below the maximum level (or fail to become payable at all) based on actual performance, the number of shares subject to outstanding awards would decrease and the number of shares available for new awards would increase by the same amount. Except as specifically noted, all of the share numbers reported in this paragraph are actual share amounts, and do not give effect to the 2 to 1 fungible share counting ratio currently contained in the 2011 Plan.
The Board of Directors believes that the number of shares currently available under the 2011 Plan does not give the Company sufficient authority and flexibility to adequately provide for future incentives. If stockholders approve the 2018 Plan, no new awards will be granted under the 2011 Plan after the Annual Meeting. In that case, the number of shares of the Company's common stock that remain available for award grants under the 2011 Plan immediately prior to the Annual Meeting will become available for award grants under the 2018 Plan. An additional 3,300,000 shares of the Company's common stock will also be made available for award grants under the 2018 Plan. In addition, if stockholders approve the 2018 Plan,
any shares of common stock subject to outstanding awards under the 2011 Plan or our legacy 2006 Incentive Compensation Plan (the "2006 Plan") that expire, are cancelled, or otherwise terminate after the Annual Meeting will also be available for award grant purposes under the 2018 Plan. Based solely on the closing price of the Company's common stock as reported by the NYSE on March 9, 2018, the maximum aggregate market value of the additional 3,300,000 new shares of common stock that could be issued under the 2018 Plan is approximately $154 million.
If stockholders do not approve the 2018 Plan, the Company will continue to have the authority to grant awards under the 2011 Plan. If stockholders approve the 2018 Plan, the termination of our grant authority under the 2011 Plan will not affect awards then outstanding under 2011 Plan.
Summary Description of the 2018 Performance Incentive Plan
The principal terms of the 2018 Plan are summarized below. The following summary is qualified in its entirety by the full text of the 2018 Plan, which appears asAppendix B to this proxy statement.
Purpose. The purpose of the 2018 Plan is to promote the success of the Company by providing an additional means for us to attract, motivate, retain and reward selected employees and other eligible persons through the grant of awards. Equity-based awards are also intended to further align the interests of award recipients and our stockholders.
Administration. Our Board of Directors or one or more committees appointed by our Board of Directors will administer the 2018 Plan. Our Board of Directors has delegated or will delegate general administrative authority for the 2018 Plan to the Compensation Committee. The Board of Directors or a committee thereof (within its delegated authority) may delegate different levels of authority to different committees or persons with administrative and grant authority under the 2018 Plan. (The appropriate acting body, be it the Board of Directors or a committee or other person within its delegated authority is referred to in this proposal as the "Administrator").
The Administrator has broad authority under the 2018 Plan, including, without limitation, the authority to:
number of shares deliverable pursuant to the award, by services rendered by the recipient of the award, by notice and third party payment or cashless exercise on such terms as the Administrator may authorize, or by any other form permitted by law;
No Repricing. In no case (except due to an adjustment to reflect a stock split or other event referred to under "Adjustments" below, or any repricing that may be approved by stockholders) will the Administrator (1) amend an outstanding stock option or stock appreciation right to reduce the exercise price or base price of the award, (2) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for cash or other awards for the purpose of repricing the award, or (3) cancel, exchange, or surrender an outstanding stock option or stock appreciation right in exchange for an option or stock appreciation right with an exercise or base price that is less than the exercise or base price of the original award.
Eligibility. Persons eligible to receive awards under the 2018 Plan include officers and employees of the Company or any of its subsidiaries, directors of the Company, and certain consultants and advisors to the Company or any of its subsidiaries. Currently, approximately 5,967 officers and employees of the Company and its subsidiaries (including all of the Company's named executive officers who remain employed), and each of the ten members of the Board who are not employed by the Company or any of its subsidiaries ("non-management directors"), are considered eligible under the 2018 Plan.
Aggregate Share Limit. The maximum number of shares of the Company's common stock that may be issued or transferred pursuant to awards under the 2018 Plan equals the sum of the following (such total number of shares, the "Share Limit"):
As of March 9, 2018, approximately 8,213,668 shares were available for additional award grant purposes under the 2011 Plan, approximately 489,503 shares were subject to stock options then outstanding under the 2011 Plan, approximately 107,050 shares were subject to stock options then outstanding under the
2006 Plan, approximately 1,324,076 shares were subject to restricted stock and restricted stock unit awards (other than performance-based stock units such as PBRSUs) then outstanding under the 2011 Plan, approximately 1,140,676 shares were subject to performance-based stock units, such as PBRSUs then outstanding under the 2011 Plan, and no shares were subject to restricted stock and restricted stock unit awards then outstanding under the 2006 Plan. The number of shares subject to outstanding awards under the 2011 Plan and the number of shares available for new awards reported above both assume that the 1,140,676 outstanding performance-based stock units are paid out at the maximum performance level. If any of the 1,140,676 outstanding performance-based stock units are paid out below the maximum level (or fail to become payable at all) based on actual performance, the number of shares subject to outstanding awards under the 2011 Plan would decrease and the number of shares available for new awards under the 2011 Plan would increase by the same amount. As noted above, no additional awards will be granted under the 2011 Plan if stockholders approve the 2018 Plan.
Shares issued in respect of any "full-value award" granted under the 2018 Plan will be counted against the Share Limit as two shares for every one share actually issued in connection with the award. For example, if the Company granted a bonus of 100 shares of its common stock under the 2018 Plan, 200 shares would be counted against the Share Limit with respect to that award. For this purpose, a "full-value award" generally means any award granted under the 2018 Plan other than a stock option or stock appreciation right.
Additional Share Limits. The following other limits are also contained in the 2018 Plan. These limits are in addition to, and not in lieu of, the Share Limit for the plan described above and, in the case of share-based limits, are applied on a one-for-one basis without applying the premium share-counting ratio for full-value awards discussed above.
Share-Limit Counting Rules. The Share Limit of the 2018 Plan is subject to the following rules:
shall be counted against the Share Limit. (For purposes of clarity, if a stock appreciation right relates to 100,000 shares and is exercised at a time when the payment due to the participant is 15,000 shares, 100,000 shares shall be charged against the Share Limit with respect to such exercise.)
In addition, the 2018 Plan generally provides that shares issued in connection with awards that are granted by or become obligations of the Company through the assumption of awards (or in substitution for awards) in connection with an acquisition of another company will not count against the shares available for issuance under the 2018 Plan. The Company may not increase the applicable share limits of the 2018 Plan by repurchasing shares of common stock on the market (by using cash received through the exercise of stock options or otherwise).
Types of Awards. The 2018 Plan authorizes stock options, stock appreciation rights, and other forms of awards granted or denominated in the Company's common stock or units of the Company's common stock, as well as cash bonus awards. The 2018 Plan retains flexibility to offer competitive incentives and to tailor benefits to specific needs and circumstances. Any award may be structured to be paid or settled in cash.
A stock option is the right to purchase shares of the Company's common stock at a future date at a specified price per share (the "exercise price"). The per share exercise price of an option generally may not
be less than the fair market value of a share of the Company's common stock on the date of grant. The maximum term of an option is ten years from the date of grant. An option may either be an incentive stock option or a nonqualified stock option. Incentive stock option benefits are taxed differently from nonqualified stock options, as described under "Federal Income Tax Consequences of Awards Under the 2018 Plan" below. Incentive stock options are also subject to more restrictive terms and are limited in amount by the U.S. Internal Revenue Code (the "Code") and the 2018 Plan. Incentive stock options may only be granted to employees of the Company or a subsidiary.
A stock appreciation right is the right to receive payment of an amount in cash or shares of common stock equal to the excess of the fair market value of a share of the Company's common stock on the date of exercise of the stock appreciation right over the base price of the stock appreciation right. The base price will be established by the Administrator at the time of grant of the stock appreciation right and generally may not be less than the fair market value of a share of the Company's common stock on the date of grant. Stock appreciation rights may be granted in connection with other awards or independently. The maximum term of a stock appreciation right is ten years from the date of grant.
The other types of awards that may be granted under the 2018 Plan include, without limitation, stock bonuses, restricted stock, performance stock, stock units or phantom stock (which are contractual rights to receive shares of stock, or cash based on the fair market value of a share of stock), dividend equivalents which represent the right to receive a payment based on the dividends paid on a share of stock over a stated period of time, or similar rights to purchase or acquire shares, and cash awards. The types of cash awards that may be granted include the opportunity to receive a payment for the achievement of one or more goals as well as discretionary cash awards.
Any awards under the 2018 Plan (including awards of stock options and stock appreciation rights) may be fully-vested at grant or may be subject to time- and/or performance-based vesting requirements.
Dividend Equivalents; Deferrals. The Administrator may provide for the deferred payment of awards, and may determine the other terms applicable to deferrals. The Administrator may provide that awards granted under the 2018 Plan (other than options or stock appreciation rights), and/or deferrals, earn dividends or dividend equivalents based on the amount of dividends paid on outstanding shares of common stock, provided that as to any dividend equivalent rights granted in connection with an award granted under the 2018 Plan that is subject to performance-based vesting requirements, no dividend equivalent payment will be made unless the related performance-based vesting conditions of the award are satisfied (or, in the case of a restricted stock or similar award where the dividend must be paid as a matter of law, the dividend payment will be subject to forfeiture or repayment, as the case may be, if the related performance-based vesting conditions are not satisfied).
Assumption and Termination of Awards. If an event occurs in which the Company does not survive (or does not survive as a public company in respect of its common stock), including, without limitation, a dissolution, merger, combination, consolidation, conversion, exchange of securities, or other reorganization, or a sale of all or substantially all of the business, stock or assets of the Company, awards then-outstanding under the 2018 Plan will not automatically become fully vested pursuant to the provisions of the 2018 Plan so long as such awards are assumed, substituted for or otherwise continued. However, if awards then-outstanding under the 2018 Plan are to be terminated in such circumstances (without being assumed or substituted for), such awards would generally become fully vested, subject to any exceptions that the Administrator may provide for in an applicable award agreement, and any award or portion thereof that, by its terms, does not accelerate and vest in the circumstances, will also terminate. The Administrator also has the discretion to establish other change in control provisions with respect to awards granted under the 2018 Plan. For example, the Administrator could provide for the acceleration of vesting or payment of an award in connection with a corporate event or in connection with a termination of the award holder's employment. For the treatment of outstanding equity awards held by the named executive officers in
connection with a termination of employment and/or a change in control of the Company, please see the "Potential Payments Upon Termination or Change in Control" section below.
Transfer Restrictions. Subject to certain exceptions contained in Section 5.6 of the 2018 Plan, awards under the 2018 Plan generally are not transferable by the recipient other than by will or the laws of descent and distribution and are generally exercisable, during the recipient's lifetime, only by the recipient. Any amounts payable or shares issuable pursuant to an award generally will be paid only to the recipient or the recipient's beneficiary or representative. The Administrator has discretion, however, to establish written conditions and procedures for the transfer of awards to other persons or entities, provided that such transfers comply with applicable federal and state securities laws and are not made for value (other than nominal consideration, settlement of marital property rights, or for interests in an entity in which more than 50% of the voting securities are held by the award recipient or by the recipient's family members).
Adjustments. As is customary in incentive plans of this nature, the Share Limit and the number and kind of shares available under the 2018 Plan and any outstanding awards, as well as the exercise or purchase prices of awards, are subject to adjustment in the event of certain reorganizations, mergers, combinations, recapitalizations, stock splits, stock dividends, or other similar events that change the number or kind of shares outstanding, and extraordinary dividends or distributions of property to the stockholders.
No Limit on Other Authority. Except as expressly provided with respect to the termination of the authority to grant new awards under the 2011 Plan if stockholders approve the 2018 Plan, the 2018 Plan does not limit the authority of the Board of Directors or any committee appointed by the Board to grant awards or authorize any other compensation, with or without reference to the Company's common stock, under any other plan or authority.
Termination of or Changes to the 2018 Plan. The Board of Directors may amend or terminate the 2018 Plan at any time and in any manner. Stockholder approval for an amendment will be required only to the extent then required by applicable law or deemed necessary or advisable by the Board of Directors. Unless terminated earlier by the Board of Directors and subject to any extension that may be approved by stockholders, the authority to grant new awards under the 2018 Plan will terminate on March 6, 2028. Outstanding awards, as well as the Administrator's authority with respect thereto, generally will continue following the expiration or termination of the 2018 Plan. Generally, outstanding awards may be amended by the Administrator (except for a repricing), but the consent of the award holder is required if the amendment (or any plan amendment) materially and adversely affects the holder.
U.S. Federal Income Tax Consequences of Awards under the 2018 Plan
The U.S. federal income tax consequences of the 2018 Plan under current federal law, which is subject to change, are summarized in the following discussion of the general tax principles applicable to the 2018 Plan. This summary is not intended to be exhaustive and, among other considerations, does not describe the deferred compensation provisions of Section 409A of the Code to the extent an award is subject to and does not satisfy those rules, nor does it describe state, local, or international tax consequences.
With respect to nonqualified stock options, the Company is generally entitled to deduct and the participant recognizes taxable income in an amount equal to the difference between the option exercise price and the fair market value of the shares at the time of exercise. With respect to incentive stock options, the Company is generally not entitled to a deduction nor does the participant recognize income at the time of exercise, although the participant may be subject to the U.S. federal alternative minimum tax.
The current federal income tax consequences of other awards authorized under the 2018 Plan generally follow certain basic patterns: nontransferable restricted stock subject to a substantial risk of forfeiture results in income recognition equal to the excess of the fair market value over the price paid (if any) only
at the time the restrictions lapse (unless the recipient elects to accelerate recognition as of the date of grant); bonuses, stock appreciation rights, cash and stock-based performance awards, dividend equivalents, stock units, and other types of awards are generally subject to tax at the time of payment; and compensation otherwise effectively deferred is taxed when paid. In each of the foregoing cases, the Company will generally have a corresponding deduction at the time the participant recognizes income.
If an award is accelerated under the 2018 Plan in connection with a "change in control" (as this term is used under the Code), the Company may not be permitted to deduct the portion of the compensation attributable to the acceleration ("parachute payments") if it exceeds certain threshold limits under the Code (and certain related excise taxes may be triggered). Furthermore, the aggregate compensation in excess of $1,000,000 paid in any calendar year to the Company's current or former named executive officers will not be permitted to be deducted by the Company unless certain grandfathering exceptions apply.
Specific Benefits under the 2018 Performance Incentive Plan
The Company has not approved any awards that are conditioned upon stockholder approval of the 2018 Plan. The Company is not currently considering any other specific award grants under the 2018 Plan, other than the annual grants of restricted stock units to our non-management directors described in the following paragraph. If the 2018 Plan had been in existence in fiscal 2017, the Company expects that its award grants for fiscal 2017 would not have been substantially different from those actually made in that year under the 2011 Plan. For information regarding stock-based awards granted to the Company's named executive officers during fiscal 2017, see the material under the heading "Executive Compensation" below.
As described under "Director Compensation" below, our current compensation policy for non-management directors provides for each non-management director to receive an annual award of restricted stock units, with the number of shares subject to each award to be determined by dividing $160,000 (for awards granted beginning in fiscal 2018) by the closing price of our common stock on the day of our annual meeting or, in the event of an out-of-cycle annual meeting, such earlier date approved by the Board as described below. Assuming, for illustrative purposes only, that the price of the common stock used for the conversion of the dollar amount set forth above into shares is $50.00, the number of shares that would be allocated to the Company's ten non-management directors as a group pursuant to the annual grant formula is approximately 32,000 per year for an aggregate ten-year total of 320,000. This figure represents the aggregate number of shares that would be subject to the annual grants under the director equity grant program for calendar years 2019 through 2028 (the ten remaining years in the term of the 2018 Plan, assuming the plan is approved) based on that assumed stock price. This calculation also assumes that there are no new eligible directors, there continue to be ten eligible directors seated and there are no changes to the awards granted under the director equity grant program.
The following paragraphs include additional information to help you assess the potential dilutive impact of the Company's equity awards and the 2018 Plan.
In order to help stockholders calculate the total number of shares of the Company's common stock subject to outstanding awards and available for the grant of new awards (what's commonly referred to as the Company's "overhang"), the following table shows the total number of shares of the Company's common stock that were subject to outstanding stock and stock unit awards granted under the 2011 Plan, that were subject to outstanding stock options granted under the 2011 Plan, and that were then available for new award grants under the 2011 Plan as of December 31, 2017 and as of March 9, 2018. In the table below, the number of shares subject to outstanding performance-based stock units such as PBRSUs and the number of shares available for new awards both assume that all outstanding performance-based stock units
are paid out at the maximum performance level. All of the share numbers reported in the table below are actual share amounts, and do not give effect to the 2 to 1 fungible share counting ratio contained in the 2011 Plan.
| | | | | | | | | | | | | | |
| | | As of December 31, 2017 | | | As of March 9, 2018 | | |||||||
| | | | | | | | | | | | | | |
Shares subject to outstanding restricted stock and restricted stock unit awards (excluding performance-based vesting awards) | 1,308,749 | 1,324,076 | ||||||||||||
| | | | | | | | | | | | | | |
Shares subject to outstanding performance-based vesting stock unit awards | 1,318,914 | 1,140,676 | ||||||||||||
| | | | | | | | | | | | | | |
Shares subject to outstanding stock options | 788,825 | 489,503 | ||||||||||||
| | | | | | | | | | | | | | |
Shares available for new award grants | 8,490,159 | 8,213,668 | ||||||||||||
| | | | | | | | | | | | | | |
In addition to the 2011 Plan, we also maintain the 2012 Employee Stock Purchase Plan (the "2012 ESPP") which generally provides for broad-based participation by employees of the Company (and certain of its subsidiaries) and affords employees who elect to participate an opportunity to purchase shares of the Company's common stock at a discount. Certain information regarding the number of shares of Company common stock available for issuance under the 2012 ESPP is included under the heading "Securities Authorized for Issuance under Equity Compensation Plans" below. The discussion that follows in this "Potential Dilution" section does not include any shares that have been purchased under, may be purchased in the current purchase period under, or remain available for issuance or delivery under the 2012 ESPP.
The Company also has outstanding awards under the 2006 Plan. There were zero (0) shares of the Company's common stock available for new award grants under the 2006 Plan as of December 31, 2017 and March 9, 2018. As of December 31, 2017 and March 9, 2018, there were zero (0) shares of stock subject to outstanding stock and stock unit awards and 397,573 and 107,050 shares of stock subject to outstanding options granted under the 2006 Plan.
Other than the 2011 Plan, the 2012 ESPP and the 2006 Plan, we do not have any other plans or arrangements in place under which shares of the Company's common stock are eligible to be awarded or under which there are outstanding awards with respect to shares of the Company's common stock.
As of December 31, 2017, the Company's outstanding stock options had a weighted average exercise price of $20.67 and a weighted average remaining term of 2.3 years.
The weighted-average number of shares of the Company's common stock issued and outstanding in each of the last three fiscal years was 89,070,035 shares issued and outstanding in 2015; 87,501,882 shares issued and outstanding in 2016; and 83,499,390 shares issued and outstanding in 2017. The number of shares of the Company's common stock issued and outstanding as of December 31, 2017 and March 9, 2018 was 83,499,390 and 81,539,072, respectively.
In order to help stockholders calculate the Company's share usage over the last three years (what's commonly referred to as the Company's "burn rate"), the total number of shares of the Company's common stock subject to awards that the Company granted under the 2011 Plan in each of the last three fiscal years, and to date (as of March 9, 2018) for 2018, are as follows. For purposes of the following disclosure, the number of shares granted subject to performance-based stock units such as PBRSUs is based on the maximum level of performance achieved, other than for 2015, for which the number of shares granted subject to performance-based stock units is based on the actual performance level achieved, which
was not the maximum level. All of the numbers reported below are actual share amounts, and do not give effect to the 2 to 1 fungible share counting ratio contained in the plan.
Thus, the total number of shares of the Company's common stock subject to awards granted under the 2011 Plan per year over the last three fiscal years (2015, 2016 and 2017) has been, on average, 1.6% of the weighted-average number of shares of the Company's common stock issued and outstanding. Performance-based vesting awards have been included above in the year in which the award was granted. The actual number of performance-based restricted stock unit awards such as PBRSUs that became eligible to vest each year because the applicable performance-based condition was satisfied in that year (subject to the satisfaction of any applicable time-based vesting requirements) was as follows: 246,050 in 2015, 340,047 in 2016, 216,471 in 2017, and 0 to date (as of March 9, 2018) in 2018.
The total number of shares of our common stock that were subject to awards granted under the 2011 Plan or 2006 Plan that terminated or expired, and thus became available for new award grants under the 2011 Plan, in each of the last three fiscal years, and to date (as of March 9, 2018) in 2018, are as follows: 198,269 in 2015, 227,349 in 2016, 232,069 in 2017, and 13,164 in 2018. The total number of shares of our common stock that were subject to awards granted under the 2011 Plan or 2006 Plan and that were withheld to cover tax withholding obligations arising with respect to the award (other than stock options and stock appreciation rights), and thus became available for new award grants under the 2011 Plan, in each of the last three fiscal years, and to date (as of March 9, 2018) in 2018, are as follows: 406,627 in 2015, 299,586 in 2016, 352,136 in 2017, and 100,414 in 2018. Shares subject to 2011 Plan or 2006 Plan awards that terminated or expired, or were withheld to cover tax withholding obligations arising with respect to the award (other than stock options and stock appreciation rights), and became available for new award grants under the 2011 Plan have been included when information is presented in this 2018 Plan proposal on the number of shares available for new award grants under the 2011 Plan.
The Compensation Committee anticipates that the 3,300,000 additional shares requested for the 2018 Plan (together with the shares available for new award grants under the 2011 Plan on the date of our annual meeting and assuming usual levels of shares becoming available for new awards as a result of forfeitures of
outstanding awards) will provide the Company with flexibility to continue to grant equity awards under the 2018 Plan through approximately the end of 2022 (reserving sufficient shares to cover potential payment of performance-based awards at maximum payment levels). However, this is only an estimate, in the Company's judgment, based on current circumstances. The total number of shares that is subject to the Company's award grants in any one year or from year-to-year may change based on a number of variables, including, without limitation, the value of the Company's common stock (since higher stock prices generally require that fewer shares be issued to produce awards of the same grant date fair value), changes in competitors' compensation practices or changes in compensation practices in the market generally, changes in the number of employees, changes in the number of directors and officers, whether and the extent to which vesting conditions applicable to equity-based awards are satisfied, acquisition activity and the need to grant awards to new employees in connection with acquisitions, the need to attract, retain and incentivize key talent, the type of awards the Company grants, and how the Company chooses to balance total compensation between cash and equity-based awards.
The closing market price for a share of the Company's common stock as of March 9, 2018 was $46.74 per share.
Vote Required for Approval of the 2018 Performance Incentive Plan
The Board believes that the adoption of the 2018 Plan will promote the interests of the Company and its stockholders and will help the Company and its subsidiaries continue to be able to attract, retain and reward persons important to our success.
All members of the Board and all of the Company's executive officers are eligible for awards under the 2018 Plan and thus have a personal interest in the approval of the 2018 Plan.
Approval of the 2018 Plan requires the affirmative vote of the holders of a majority of shares of common stock present in person or represented by proxy and entitled to vote on the matter (meaning that of the shares represented at the meeting and entitled to vote on the proposal, a majority of them must be voted "for" the proposal for it to be approved). Abstentions will have the same effect as a vote "against" this proposal, and broker-non votes will not be counted in determining the outcome of this proposal.
OUR BOARD RECOMMENDS THAT STOCKHOLDERS VOTE "FOR" APPROVAL OF THE 2018 PERFORMANCE INCENTIVE PLAN AS DESCRIBED ABOVE AND SET FORTH INAPPENDIX B HERETO.
OF OUR NAMED EXECUTIVE OFFICERS | ||||||||||||
We are providing our stockholders with the opportunity to cast anon-binding vote to approve, on an advisory basis, the compensation of our named executive officers, or NEOs, as disclosed pursuantNEOs. We urge stockholders to read the SEC's“Compensation Discussion and Analysis” section below, which describes in more detail how our executive compensation disclosure rulespolicies and set forth in this proxy statement (including inpractices are designed and operate to achieve our pay for performance compensation philosophy, as well as the “Summary Compensation Table” and other related compensation tables and narratives accompanying those tables as well as in the "Compensation Discussion and Analysis" section below).narratives.
As described more fully in the Compensation Discussion and Analysis section below, ourOur compensation program is heavily weighted towardperformance-based compensation that provides a direct link between rigorous goals for corporate performance and pay outcomes for our executive officers. Our annual incentive plan also ties pay outcomes to the achievement of key strategic objectives that we believe will drivelonger-term value to stockholders. We believe that our compensation program provides effective incentives for strong operating results by appropriately aligning pay and performance.
WeIn the advisory vote at our 2018 annual meeting, 98% of the votes cast by our stockholders supported our executive compensation policies and practices. While we have regularly received strong support for our executive pay for performance. Our philosophy is designed to:
Accordingly, the business;
| ||||||||
| ||||||||
|
We rewarded strong financial results. Our 2017 financial performance met or exceeded targets on all metrics other than revenue (impacted by market volume declines), and resulted in above-target payouts overall. Results for revenue, adjusted EBITDA and free cash flow generated funding of our annual cash bonus plan, the ICP, at 122.7% of target for NEOs.
We also considered and, as appropriate, rewarded our most significant strategic accomplishments. Our decisions on ICP awards took into consideration a number of key accomplishments in 2017 across our three strategic focus areas (growth and scale, operational excellence and high performing organization).
We did not make across the board increases in base salaries for the 5th consecutive year. Notwithstanding strong results, consistent with our practices in recent years, the Compensation Committee
did not increase NEO base salaries for 2017, except for Mr. Martell in consideration of his promotion to President and CEO.
Please seeAppendix A for a detailed reconciliation of adjusted EBITDA, adjusted EPS and FCF to the most directly comparable GAAP financial measures.
As required by Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related rules of the SEC, the Board of Directors requests your advisory vote to approve the following resolution at the Annual Meeting:
"“RESOLVED, that the compensation paid to the Company'sCompany’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 ofRegulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables), is hereby APPROVED."”
This proposal to approve the compensation paid to our NEOs is advisory only and will not be binding upon us or the Board, of Directors, and will not be construed as overruling a decision by us or the Board of Directors or creating or implying any additional fiduciary duty for us or our Board of Directors.Board. The Board of Directors and the Compensation Committee value the opinions of our stockholders. The Compensation Committee will consider the outcome of the vote when considering future executive compensation arrangements.
Our policy is to provide stockholders with an annual opportunity to approve the compensation of the NEOs. The next advisory vote on the compensation of our NEOs will occur at the 20192020 annual meeting of stockholders.
Voting StandardApproval, on an advisory basis, of the compensation of our NEOs requires the affirmative vote of the holders of a majority of shares of common stock present in person or represented by proxy and entitled to vote on the matter (meaning that of the shares represented at the meeting and entitled to vote on the proposal, a majority of them must be voted "for"“for” the proposal for it to be approved). Abstentions will have the same effect as a vote "against"“against” this proposal, andbroker-non votes will not be counted in determining the outcome of this proposal.
OUR BOARD | ||||||||||||
THE RATIFICATION OF THE SELECTION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Audit Committee of the Board of Directors (the "Audit Committee") is responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the Company'sCompany’s financial statements. The Audit Committee conducts an annual evaluation of the independent registered public accounting firm'sfirm’s qualifications, performance, and independence. The Audit Committee exercises sole authority to approve all audit engagement fees. In addition to ensuring the regular rotation of the lead audit engagement partner at least every five years as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit engagement partner.
The Audit Committee has selected PricewaterhouseCoopers LLP ("PwC"(“PwC”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2018.2019. PwC has audited the historical consolidated financial statements of our Company since June 2010, and of our predecessor, The First American Corporation,FAC, for all annual periods since 1954. To help ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm.
Representatives of PwC will be present at the Annual Meeting, will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions.
Selection of our independent registered public accounting firm is not required to be submitted for stockholder approval by our Bylaws, but the Audit Committee is seeking ratification of its selection of PwC from our stockholders as a matter of good corporate governance. If the stockholders do not ratify this selection, the Audit Committee willmay, in its discretion, reconsider its selection of PwC and will either continue to retain PwC or appoint a new independent registered public accounting firm. Even if the selection is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our and our stockholders'stockholders’ best interests.
Voting StandardRatification of the selection of PwC as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending December 31, 20182019 requires the affirmative vote of the holders of a majority of shares of common stock present in person or represented by proxy and entitled to vote on the matter (meaning that
of the shares represented at the meeting and entitled to vote on the proposal, a majority of them must be voted "for"“for” the proposal for it to be approved). Abstentions will have the same effect as a vote "against"“against” this proposal. We do not expect any brokernon-votes on this matter.
Report of the Audit Committee
|
The following report of the Audit Committee is not soliciting material, is not deemed filed with the U.S. Securities and Exchange Commission (the “SEC”) and is not incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the "Securities Act"“Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date of this proxy statement and irrespective of any general incorporation language in such filing.
The Audit Committee consists of fivenon-management directors: Messrs. Walker, Chatham, Dorman and Folino and Ms. Widener. All of the members meet the independence criteria and financial literacy requirements of the SEC and NYSE rules. The Audit Committee has certain duties and powers as described in its written charter adopted by the Board of Directors.Board. A copy of the charter can be found under "Investors-Leadership & Governance-Highlights" on the Company'sInvestors section of our website under Leadership & Governance—Highlights at www.corelogic.com.www.corelogic.com.
The Audit Committee reviews the Company'sCompany’s accounting policies and financial reporting and disclosure practices, system of internal controls, internal audit process and the process for monitoring compliance with laws, regulations and corporate policies on behalf of the Board of Directors.Board. The Company'sCompany’s management is responsible for establishing and maintaining adequate internal control over financial reporting, for preparing the financial statements and for the public reporting process. The Audit Committee has reviewed the Company'sCompany’s audited consolidated financial statements and discussed them with management, although the Audit Committee members are not the auditors or certifiers of the Company'sCompany’s financial statements.
PwC, the Company'sCompany’s independent registered public accounting firm for 2017,2018, is responsible for expressing opinions on the conformity of the Company'sCompany’s audited financial statements with generally accepted accounting principles and on the Company'sCompany’s internal control over financial reporting. The Audit Committee has discussed with PwC the matters required to be discussed by applicable auditing standards.standards, including Auditing Standard 1301,Communications with Audit Committees. The Audit Committee has received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm'sfirm’s communications with the Audit Committee, and has discussed with PwC its independence.
Based on the reviews and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company'sCompany’s Annual Report onForm 10-K for the fiscal year ended December 31, 20172018 and be filed with the U.S. Securities and Exchange Commission.SEC.
Audit Committee
David F. Walker (Chairman)
J. David Chatham
John C. Dorman
Paul F. Folino
Mary Lee Widener
Independent Auditor Information
Principal Accounting Fees and Services |
|
The Audit Committee oversees the audit andnon-audit services provided by PwC and receives periodic reports on the fees paid. The aggregate fees billed for each of the last two fiscal years for professional services rendered by PwC in the four categories of service set forth in the table below are as follows:
| | | | | | | | | | | | | | |
Aggregate fees billed in year | | | 2017 | | | 2016 | | |||||||
| | | | | | | | | | | | | | |
Audit Fees | $ | 3,088,466 | $ | 2,861,040 | ||||||||||
| | | | | | | | | | | | | | |
Audit-Related Fees(1) | 1,326,016 | 231,600 | ||||||||||||
| | | | | | | | | | | | | | |
Tax Fees(2) | 118,162 | 41,057 | ||||||||||||
| | | | | | | | | | | | | | |
All Other Fees(3) | 13,889 | 16,228 | ||||||||||||
| | | | | | | | | | | | | | |
Total Fees | $ | 4,546,534 | $ | 3,149,925 | ||||||||||
| | | | | | | | | | | | | | |
Aggregate fees billed in year | 2018 | 2017 | ||||||
Audit Fees | $ | 3,084,333 |
| $ | 3,088,466 |
| ||
Audit-Related Fees (1) |
| 1,430,496 |
|
| 1,326,016 |
| ||
Tax Fees (2) |
| 70,387 |
|
| 118,162 |
| ||
All Other Fees (3) |
| 15,901 |
|
| 13,889 |
| ||
Total Fees | $ | 4,601,117 |
| $ | 4,546,534 |
|
(1) |
|
(2) | Fees incurred for tax advice, compliance and planning over transfer pricing and acquisition of certain businesses. |
(3) | Fees primarily incurred for services related to the compilation of statutory financial statements. |
Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services of Independent Auditor
The Audit Committee retained PwC (along with other accounting firms) to providenon-audit services in 2017.2018. We understand the need for PwC to maintain objectivity and independence as the auditor of our financial statements and our internal control over financial reporting. Accordingly, the Audit Committee has established the following policies and processes related to audit andnon-audit services.
The Audit Committee'sCommittee’s policy is topre-approve all engagements of our independent registered public accounting firm for audit andnon-audit services. The Audit Committee's Committee’spre-approval policy identifies specific services and assignspre-approved spending thresholds for each group ofnon-audit services. This policy works in conjunction with our independent registered public accounting firm'sfirm’s annual audit services fee schedule, which is also approved by the Audit Committee. Any services notpre-approved or not covered by the policy or the audit services fee schedule are submitted to the Audit Committee'sCommittee’s chairman, as the Audit Committee'sCommittee’s designee, for review and approval and are subsequently ratified by the Audit Committee at its next meeting, as appropriate.
All services provided by PwC during the fiscal years ended December 31, 2018 and 2017 and 2016 werepre-approved by the Audit Committee or its designee.
The Audit Committee has concluded that PwC'sPwC’s provision of audit andnon-audit services to the Company is compatible with PwC'sPwC’s independence.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following table sets forth information regarding the ownership of our common stock as of December 31, 20172018 by the persons or groups of stockholders who are known to us to be the beneficial owners of 5% or more of our shares of common stock as of March 6, 20184, 2019 (using the number of shares outstanding on this date for calculating the percentage). The information regarding beneficial owners of 5% or more of our shares of common stock is based solely on public filings made by such owners with the SEC.
| | | | | | | | | | | | |
| Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class | | ||||||
| | | | | | | | | | | | |
| T. Rowe Price Associates, Inc.(1) | 11,417,907 | 14.0% | |||||||||
| | | | | | | | | | | | |
| The Vanguard Group(2) | 7,151,566 | 8.8% | |||||||||
| | | | | | | | | | | | |
| BlackRock, Inc.(3) | 6,974,865 | 8.5% | |||||||||
| | | | | | | | | | | | |
Name of Beneficial Owner
|
Amount and
| Percent of
| ||||||
T. Rowe Price Associates, Inc. (1)
|
|
13,841,628
|
|
|
17.3
|
%
| ||
The Vanguard Group (2)
|
|
7,641,666
|
|
|
9.5
|
%
| ||
BlackRock, Inc. (3)
|
|
7,208,307
|
|
|
9.0
|
%
| ||
Harris Associates L.P. and affiliates (4)
|
|
4,029,333
|
|
|
5.0
|
%
|
(1) |
|
(2) | According to a Schedule 13G/A filed February 11, 2019, as of December 31, 2018, these securities are owned by The Vanguard Group and twowholly-owned subsidiaries, Vanguard Fiduciary Trust Company (“VFTC”) and Vanguard Investments Australia, Ltd. (“VIA”), as investment managers of collective trust accounts and Australian investment offerings, respectively. The Schedule 13G/A reports that VFTC is the beneficial owner of 34,065 shares and VIA is the beneficial owner of 20,661 shares. The Vanguard Group is a registered investment adviser and has sole voting power with respect to 44,104 shares, shared voting power with respect to 10,622 shares, sole dispositive power with respect to 7,596,979 shares and shared dispositive power with respect to 44,687 shares. The address of the principal business office of the reporting entity is 100 Vanguard Boulevard, Malvern, PA 19355. |
(3) | According to a Schedule 13G/A filed February 4, 2019, as of December 31, 2018, BlackRock, Inc. is a parent holding company with sole voting power with respect to 6,892,909 shares and sole dispositive power with respect to 7,208,307 shares, reporting on behalf of certain related subsidiaries. The address of the principal business office of the reporting entity is 55 East 52nd Street, New York, New York 10055. |
(4) | According to a Schedule 13G filed February 14, 2019, as of December 31, 2018, Harris Associates L.P., and Harris Associates Inc. each have sole voting power with respect to 3,277,333 shares and sole dispositive power with respect to 4,029,333 shares. The Schedule 13G provides that by reason of advisory and other relationships giving it the power to vote the shares, Harris Associates L.P. may be deemed to be the beneficial owner of the shares reported therein. Harris Associates Inc. is the general partner of Harris Associates L.P. The address of the principal business office of the reporting entities is 111 S. Wacker Drive, Suite 4600, Chicago, Illinois 60606. |
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the total number of shares of our common stock beneficially owned and the percentage of the shares so owned as of March 6, 20184, 2019 by:
each director;
• | each executive officer named in the “Summary Compensation Table”; and |
all directors and current executive officers as a group.
Unless otherwise indicated in the notes following the table, the persons listed in the table below are the beneficial owners of the listed shares with sole voting and investment power (or, where applicable, shared power with such individual'sindividual’s spouse and subject to community property laws) over the shares listed. Shares vesting or subject to rights exercisable within 60 days after March 6, 20184, 2019 are treated as outstanding in determining the amount and percentage beneficially owned by a person or entity.
Stockholders
|
Number of
| Percent if greater than 1%
| ||||||||
Directors
| ||||||||||
J. David Chatham
|
|
43,063
|
|
|
—
|
| ||||
Douglas C. Curling
|
|
46,913
|
|
|
—
|
| ||||
John C. Dorman
|
|
13,190
|
|
|
—
|
| ||||
Paul F. Folino
|
|
11,002
|
|
|
—
|
| ||||
Frank D. Martell
|
|
410,869
|
|
|
—
|
| ||||
Claudia Fan Munce
|
|
4,945
|
|
|
—
|
| ||||
Thomas C. O’Brien
|
|
28,058
|
|
|
—
|
| ||||
Vikrant Raina
|
|
4,945
|
|
|
—
|
| ||||
Jaynie Miller Studenmund
|
|
27,014
|
|
|
—
|
| ||||
David F. Walker
|
|
43,280
|
|
|
—
|
| ||||
Mary Lee Widener
|
|
8,068
|
|
|
—
|
| ||||
Current NEOs who are not directors
| ||||||||||
James L. Balas
|
|
68,547
|
|
|
—
|
| ||||
Barry M. Sando
|
|
198,215
|
|
|
—
|
| ||||
Arnold A. Pinkston
|
|
1,936
|
|
|
—
|
| ||||
All directors and current executive officers as a group (14 persons)
|
|
910,045
|
|
|
1.1
|
%
|
| | | | | | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |
| Stockholders | | Number of shares of Common Stock | | Percent if greater than 1% | | ||||||
| | | | | | | | | | | | |
| Directors | |||||||||||
| | | | | | | | | | | | |
| J. David Chatham | 37,873 | — | |||||||||
| | | | | | | | | | | | |
| Douglas C. Curling | 43,723 | — | |||||||||
| | | | | | | | | | | | |
| John C. Dorman | 18,723 | — | |||||||||
| | | | | | | | | | | | |
| Paul F. Folino | 9,462 | — | |||||||||
| | | | | | | | | | | | |
| Frank D. Martell | 409,795 | — | |||||||||
| | | | | | | | | | | | |
| Claudia Fan Munce | 1,755 | — | |||||||||
| | | | | | | | | | | | |
| Thomas C. O'Brien | 24,868 | — | |||||||||
| | | | | | | | | | | | |
| Vikrant Raina | 1,755 | — | |||||||||
| | | | | | | | | | | | |
| Jaynie Miller Studenmund | 23,824 | — | |||||||||
| | | | | | | | | | | | |
| David F. Walker | 40,090 | — | |||||||||
| | | | | | | | | | | | |
| Mary Lee Widener | 7,552 | — | |||||||||
| | | | | | | | | | | | |
| Current NEOs who are not directors | |||||||||||
| | | | | | | | | | | | |
| James Balas | 56,671 | — | |||||||||
| | | | | | | | | | | | |
| Barry M. Sando | 207,446 | — | |||||||||
| | | | | | | | | | | | |
| Former NEO(1) | |||||||||||
| | | | | | | | | | | | |
| Stergios Theologides | 145,015 | — | |||||||||
| | | | | | | | | | | | |
| All directors and current executive officers as a group (14 persons) | 883,537 | 1.1% | |||||||||
| | | | | | | | | | | | |
The shares set forth in the table above include shares that the following directors and NEOs, as well as directors and current executive officers as a group, have the right to acquire within 60 days of March 6, 20184, 2019 pursuant to the vesting of restricted stock units (“RSUs”) or the exercise of stock options in the amounts set forth below:
|
| Number of | Percent | ||||||||||||
J. David Chatham
| | 3,190 | |||||||||||||
|
| — | |||||||||||||
Douglas C. Curling | |||||||||||||||
| | 3,190 | |||||||||||||
| | — | |||||||||||||
John C. Dorman
| | 3,190 | |||||||||||||
| | — | |||||||||||||
Paul F. Folino
| | 3,190 | |||||||||||||
| | — | |||||||||||||
Frank D. Martell
| | 242,763 | |||||||||||||
| | — | |||||||||||||
Claudia Fan Munce
| | 3,190 | |||||||||||||
| | — | |||||||||||||
Thomas C. O’Brien
| | 3,190 | |||||||||||||
|
| — | |||||||||||||
Vikrant Raina | 3,190 | — | |||||||||||||
Jaynie Miller Studenmund | 3,190 | — | |||||||||||||
David F. Walker | 3,190 | — | |||||||||||||
Mary Lee Widener | 3,190 | — | |||||||||||||
James L. Balas | 27,937 | — | |||||||||||||
Barry M. Sando | 75,711 | — | |||||||||||||
Arnold A. Pinkston | 0 | — | |||||||||||||
All directors and current executive officers as a group (14 persons) | 378,311 | — | |||||||||||||
|
Securities Authorized for Issuance under Equity Compensation Plans
We currently maintain two equity compensation plans: the 2011CoreLogic, Inc. 2018 Performance Incentive Plan (the “2018 Plan”) and the 2012 ESPP. As noted above, the 2006Employee Stock Purchase Plan was terminated and replaced by the 2011 Plan.(“2012 ESPP”). We currently have outstanding optionsawards under theThe CoreLogic, Inc. Amended and Restated 2011 Performance Incentive Plan, as amended (“2011 Plan”) and the 2006 Plan.Incentive Compensation Plan (the “2006 Plan”); however, we are no longer authorized to grant new awards under these plans. Each of the 2018 Plan, the 2011 Plan, the 2012 ESPP and the 2006 Plan was approved by our stockholders. Stockholders are also being asked to approve a new equity compensation plan, the 2018 Plan, as described above.
The following table sets forth, for each of our equity compensation plans, the number of shares of common stock subject to outstanding awards, theweighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants as of December 31, 2017.2018.
Plan category
| Number of
| Weighted-average
|
Number of securities
| |||||||||
Equity compensation plans approved by stockholders
|
| 3,204,731
| (1)
| $
| 20.17
| (2)
|
| 11,614,373
| (3)
|
(1) | ||||||||||||||||
Of these shares, 471,520 were subject to options still outstanding under the 2011 Plan, |
(2) | This | exercise price does not reflect the shares that will be issued upon the payment of outstanding restricted stock units and |
(3) | Represents 10,656,593 shares available for | |||||||||||||||
|
CORPORATE GOVERNANCE AND BOARD MATTERS
Committees of the Board; Committee Charters
There are currently four standing committees of the Board: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the Strategic Planning and Acquisition Committee. In addition to the four standing committees, the Board may approve, and has from time to time approved, the creation of special committees or subcommittees to act on behalf of the Board.
Each of the standing committees operates under a written charter adopted by the Board. The charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on the Investors section of our web sitewebsite under Leadership & Governance—Highlights atwww.corelogic.com. Each committee reviews and reassesses the adequacy of its charter annually, conducts annual evaluations of its performance with respect to its duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committee'scommittee’s activities.
Audit Committee | ||
Members | Committee Functions | |
David F. Walker*,Chairman J. David Chatham John C. Dorman* Paul F. Folino Mary Lee Widener Meetings in 2018: six * Our Board has determined that each of Messrs. Walker and Dorman is an “audit committee financial expert” within the meaning of the SEC’s rules and regulations and that each member of our Audit Committee is “independent” under applicable SEC rules and the listing standards of the NYSE and is “financially literate” under the listing standards of the NYSE. | • overseeing the integrity of our financial reporting processes in consultation with the independent auditor, management and our internal audit function; • reviewing internal auditing procedures and results; • appointing, compensating, retaining, evaluating and overseeing our independent registered public accounting firm; • engaging with our compliance and risk management executives to review the state of enterprise risk management and compliance programs with a view to understanding the steps management has taken to monitor and control our major risk exposures; • reviewing with internal counsel the state of litigation, claims and regulatory matters and overseeing our compliance with legal and regulatory matters; • discussing with management, internal audit and external advisors the state of internal controls and our practices with respect to financial disclosure; • directing and supervising investigations into matters within the scope of its duties; and • reviewing with the independent registered public accounting firm the plan and results of its audit and determining the nature of other services to be performed by, and fees to be paid to, such firm. The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters, and for the submission by our employees or third parties of concerns regarding questionable accounting or auditing matters or other ethics and compliance-related matters. Our24-hour, toll-free hotline is available for the submission of such concerns or complaints at1-888-632-5395 or concerns or complaints may also be reported online athttps://corelogic.alertline.com. To the extent required by applicable law, individuals wishing to remain anonymous or to otherwise express their concerns or complaints confidentially are permitted to do so. |
We have a standing Audit Committee of the Board of Directors. The current members of the Audit Committee are Messrs. Walker (Chairman), Chatham, Dorman, Folino and Ms. Widener. During 2017, our Audit Committee met six times.
Our Board has determined that each of Messrs. Walker and Dorman is an "audit committee financial expert" within the meaning of the SEC's rules and regulations and that each member of our Audit Committee is "independent" under applicable SEC rules and the listing standards of the NYSE and is "financially literate" under the listing standards of the NYSE.
The functions performed by the Audit Committee include, but are not limited to:
The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters, and for the submission by our employees or third parties of concerns regarding questionable accounting or auditing matters or other ethics and compliance-related matters. Our 24-hour, toll-free hotline is available for the submission of such concerns or complaints at 1-888-632-5395 or concerns or complaints may also be reported online athttps://corelogic.alertline.com. To the extent required by applicable law, individuals wishing to remain anonymous or to otherwise express their concerns or complaints confidentially are permitted to do so.
Compensation Committee | ||
Members | Committee Functions | |
J. David Chatham,Chairman Paul F. Folino Claudia Fan Munce Thomas C. O’Brien Jaynie Studenmund Meetings in 2018: six | • establishing and reviewing our compensation philosophy; • overseeing the design and reviewing the operation of all executive compensation and employee benefit plans and programs; • reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, including annual performance objectives, and evaluating our chief executive officer in light of those objectives; • reviewing and approving the compensation of our executive officers; • reviewing and approving awards of equity under the Company’sequity-based plans; • responsibility for review and approval of employment agreements with our chief executive officer and other executive officers; and • exercising oversight of the Company’s disclosures regarding executive compensation, including reviewing the Compensation Discussion and Analysis contained in our proxy statement and preparing the Compensation Committee Report for inclusion in our proxy statement. The Compensation Committee also has key oversight responsibilities in the following areas, all of which are described in more detail elsewhere in this proxy statement: • assessing risk in relation to the Company’s compensation policies and practices; • reviewing and making recommendations to the Board concerning development and succession planning; and • reviewing and recommending to the Board the form and level ofnon-management director compensation. |
The current members of the Compensation Committee are Messrs. Chatham (Chairman), Folino, O'Brien and Ms. Studenmund.
Our Board has determined that each member of our Compensation Committee is "independent" under applicable listing standards of the NYSE. In making its independence determination for each member of the Compensation Committee, our Board considered whether the director has a relationship with us that is material to the director's ability to be independent from management in connection with the duties of a compensation committee member. In addition, our Board has determined that each of Messrs. Chatham, Folino, O'Brien and Ms. Studenmund is a "non-employee director" for purposes of Rule 16b-3 under the Exchange Act and satisfies the requirements of an "outside director" for purposes of Section 162(m) of the Code. During 2017, the Compensation Committee met eight times.
The functions of the Compensation Committee include, but are not limited to:
The Compensation Committee also has key oversight responsibilities in the following areas, all of which are described in more detail later in this proxy statement:
For 2017, Advisors.Pay Governance LLC ("(“Pay Governance"Governance”) was retained as the Compensation Committee'sCommittee’s independent compensation consultant. The Compensation Committee also seeks input from our Chief Executive Officer, Chief Financial Officer, Chief PeopleHuman Resources Officer and Chief Legal Officer when making decisions regarding compensation matters. During 2017,2018, Pay Governance attended all eightsix Compensation Committee meetings.
During 2017, Pay Governance provided to the Compensation Committee, among other things, guidance as to:
Pay Governance did not perform any services for the Company and the Compensation Committee does not believe that the services performed by Pay Governance raised any conflict of interest. The Compensation Committee regularly reviews the services provided by its independent compensation consultant.
In addition, the Company
Committee Independence.Our Board has engaged Mercer LLC ("Mercer") to provide certain compensation-related services on behalfdetermined that each member of our Compensation Committee is “independent” under applicable listing standards of the Company and management.NYSE. In 2017, Mercer assisted us with the selection of a peer group of companies, advised on industry best practices and emerging trends in executive compensation, prepared pay survey data, made recommendations on the structuring of compensation programs and advised on our public disclosures regarding executive compensation. In connection withmaking its engagement, Mercer did not attend any meetingsindependence determination for each member of the Compensation Committee, our Board considered whether the director has a relationship with us that is material to the director’s ability to be independent from management in 2017. Mercer performed no servicesconnection with the duties of a compensation committee member. In addition, our Board has determined that each of Messrs. Chatham, Folino, O’Brien and Ms. Studenmund is a“non-employee director” for purposes ofRule 16b-3 under the Compensation Committee.Exchange Act and satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Code.
Additional information concerning the executive compensation policies and objectives established by the Compensation Committee, the Compensation Committee's processes and procedures for consideration and determination of executive compensation, and the role of executive officers and our and the Compensation Committee's compensation consultants in determining executive compensation is included in the "Compensation Discussion and Analysis" section below.
Equity Awards Committee.The Equity Awards Committee was created by the Board in 2016 and has been delegated limited authority to approve and establish the terms of equity awards granted to eligible participants under the 2011 Plan and, if approved by stockholders, the 2018 Plan.our equity incentive plans. Mr. Martell is the sole committee member.
Nominating and Corporate Governance Committee | ||
Members | Committee Functions | |
Thomas C. O’Brien,Chairman Douglas C. Curling Paul F. Folino Vikrant Raina Jaynie Studenmund Meetings in 2018: three | • identifying individuals qualified to become directors on our Board; • recommending to the Board candidates for election at annual meetings by the stockholders and candidates to fill vacancies andnewly-created directorships; • overseeing the evaluation of the Board; and • developing, recommending to the Board and periodically reviewing the corporate governance principles and policies applicable to us. |
Board Diversity.We do not have a formal policy for the consideration of diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and, as indicated above, considers diversity as a factor when identifying and evaluating candidates for membership on our Board. The current membersNominating and Corporate Governance Committee utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards of directors (both public and private), political and social perspectives as well as race, gender and national origin. Utilizing these factors, and the factors described below under “Evaluation of Director Nominees”, the Nominating and Corporate Governance Committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of the Nominating and Corporate Governance Committee are Messrs. O'Brien (Chairman), Curling and Folino and Ms. Studenmund. The Nominating and Corporate Governance Committee held seven meetings during 2017.
The Nominating and Corporate Governance Committee is responsible for, among other items:
Stockholder Recommendations for election at annual meetings by the stockholders and candidates to fill vacancies and newly-created directorships;
Director Nominees.The Nominating and Corporate Governance Committee has adopted procedures by which certain of our stockholders may recommend director nominees to the Board. In particular, the Nominating and Corporate Governance Committee has established a policy whereby it will accept and consider, in its discretion, director recommendations from any stockholder holding in excess of 5% of our outstanding common stock. Such recommendations must include the name and credentials of the recommended nominee and should be submitted to our Secretary at our address included in this proxy statement. The Nominating and Corporate Governance Committee will evaluate director candidates recommended by stockholders for election to our Board in the same manner and using the same criteria as used for any other director candidate (as described below). If the Nominating and Corporate Governance Committee determines that astockholder-recommended candidate is suitable for membership on our Board, it will include the candidate in the pool of candidates to be considered for nomination upon the occurrence of the next vacancy on our Board or in connection with the next annual meeting of stockholders.
Evaluation of Director Nominees.While the Nominating and Corporate Governance Committee has no specific minimum qualifications in evaluating a director candidate, it takes into account all factors it considers appropriate in identifying and evaluating candidates for membership on our Board, including some or all of the following: strength of character, an inquiring and independent mind, practical wisdom, mature judgment, career specialization, relevant industry experience, relevant technical skills, reputation in the community, diversity and the extent to which the candidate would fill a present need on the Board. The Nominating and Corporate Governance Committee makes recommendations to the full Board as to whether or not incumbent directors should stand forre-election. However, if we are legally required by contract or otherwise to provide third parties with the ability to nominate directors, the Nominating and Corporate Governance Committee may adjust its evaluation process for the designated candidates to reflect our contractual obligations with respect to their nomination. The Nominating and Corporate Governance Committee conducts all necessary and appropriate inquiries into the background and qualifications of possible candidates and may engage a search firm to assist in identifying potential candidates for nomination as it did in connection with the appointment of two new directors in 2017.nomination.
We do not have a formal policy for the consideration of diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and, as indicated above, considers diversity as a factor when identifying and evaluating candidates for membership on our Board. The Nominating and Corporate Governance Committee utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards of directors (both public and private), political and social perspectives as well as race, gender and national origin. Utilizing these factors, and the factors described above, the Nominating and Corporate Governance Committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of the Nominating and Corporate Governance Committee and of the Board may change from time to time to take into account changes in business and other trends and the portfolio of skills and experience of current and prospective Board members.
Strategic Planning and Acquisition Committee |
The current members of the Strategic Planning Committee are Messrs. Dorman (Chairman), Curling, Folino, Martell, Raina and Walker and Ms. Munce. The Strategic Planning Committee has the authority to oversee and provide counsel to management's development and execution of longer-term business and product strategies. The Strategic Planning Committee held three meetings during 2017.
Members | Committee Functions | |
John C. Dorman, Douglas C. Curling Paul F. Folino Frank D. Martell Claudia Fan Munce Vikrant Raina David F. Walker Meetings in 2018: three | • formulating, monitoring and revising a strategic plan for the Company, as well as product and business strategies; • considering market and industry trends that could impact the Company’s strategic plans; • ensuring the Board is presented with all necessary and desirable information and advice to assess, review, challenge and approve the Company’s strategic plan; • reviewing acquisition strategies and acquisition candidates with the Company’s management; • recommending acquisition strategies and candidates to the Board, as appropriate; and • overseeing and approving certain investment, merger, acquisition and divestiture transactions proposed by the Company’s management within the size and other limitations delegated by the Board from time to time. |
Independence of Directors
Pursuant to the corporate governancelisting rules of the NYSE, for listed companies, a majority of the Board must be independent. A director will not qualify as independent unless the Board affirmatively determines that the director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). To assist in its determination of director independence, the Board has adopted categorical director independence standards, which are contained in our Corporate Governance Guidelines. The Corporate Governance Guidelines are available to stockholders on the Investors section of our web sitewebsite under Leadership & Governance—Highlights atwww.corelogic.com.
In accordance with theapplicable NYSE listing rules and our categorical director independence standards, the Board has affirmatively determined that each of Messrs. Chatham, Curling, Dorman, Folino, O'Brien,O’Brien, Raina and Walker, and Mses. Munce, Studenmund and Widener is "independent" as that term is defined in the corporate governance rules of the NYSE for listed companies.“independent”. Mr. Martell is not considered an inside directorindependent because he is employed by us as a senior executive.
During 2017,2018, each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee was determined by the Board to be independent as defined in accordance with the corporate governanceapplicable NYSE listing rules of the NYSE for listed companies and in accordance with our categorical director independence standards. The Board further determined that each member of the Audit Committee and the Compensation Committee met the additional independence standards applicable to those committees under the corporate governanceNYSE listing rules ofand the NYSE and applicable SEC rules.SEC.
Board Leadership Structure
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The offices of Chief Executive Officer and Chairman are separate. Mr. Folino has served as Chairman of our Board since July 2014. Our Board believes that the separation of the offices of Chairman and Chief Executive Officer continues to be appropriate as it allows our Chief Executive Officer to focus primarily on his management responsibilities and the Chairman to oversee and manage the Board and its functions. Having an independent Chairman promotes the independence of our Board and provides appropriate oversight of management and ensures free and open discussion and communication among thenon-management members of our Board. In 2017, the non-management directors met seven times in executive session without management present. The Chairman also chairs and coordinates the agenda for these executive sessions of thenon-management directors.
Our Corporate Governance Guidelines provide that the Board shall annually elect a lead director by a majority vote of the independent directors unless the Chairperson of the Board is an independent director, in which case the Chairperson of the Board will perform the functions of a lead director and no lead director shall be elected. Mr. Folino, an independent director, is the Chairman and, as a result, we do not currently have a lead director.
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Directors are strongly encouraged to attend educational seminars regarding the Company’s business, corporate governance and other issues pertaining to their directorship. We also provide the Board with educational training from time to timetime-to-time on subjects applicable to the Board and the Company, including with regard to industry and regulatory developments, accounting, financial reporting, and corporate governance, using both internal and external resources.
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Among the Compensation Committee'sCommittee’s responsibilities described in its charter is to oversee development and succession planning for executive officers, and the Compensation Committee also oversees this for other key members of senior management. The Board plans for succession of the CEO and annuallyperiodically reviews
senior management selection and succession planning that is undertaken by the Compensation Committee. As part of this process, thenon-management directors annually review the Compensation Committee'sCommittee’s recommended candidates for senior management positions to see that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and qualifications of the candidates. The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic vision and leadership, operational excellence, financial management, executive officer leadership development, ability to motivate employees, and an ability to develop an effective working relationship with the Board. In 2017, the Board implemented its succession plan with Mr. Nallathambi's passing and appointed Frank D. Martell as our President and CEO.
Risk Oversight
To maximize long-term stockholder value, the Board’s responsibilities in overseeing our businesses include oversight of our key risks and management’s processes and controls to regulate them appropriately. Our management, in turn, is responsible for theday-to-day management of risk and implementation of appropriate risk management controls and procedures. Although risk oversight permeates many elements of the work of the full Board, the Board has delegated to certain committees specific risk oversight matters. |
To maximize long-term stockholder value, the Board's responsibilities in overseeing our businesses include oversight of our key risks and management's processes and controls to regulate them appropriately. Our management, in turn, is responsible for the day-to-day management of risk and implementation of appropriate risk management controls and procedures.
Audit Committee
The Audit Committee has the most direct and systematic responsibility for overseeing risk management. The Audit Committee charter provides for a variety of regular and recurring responsibilities relating to risk, including:
• having responsibility for the internal audit function, with that function having a direct line of communication to the
Audit Committee;
• receiving reports from management and the internal audit function regarding the adequacy and effectiveness of various internal controls;
• reviewing periodically with internal counsel legal and regulatory matters that could have a significant impact on us and could indicate emerging areas of risk;
• overseeing accounting and risk management processes, including receiving regular reports from our Chief Legal Officer; and
• discussing with management our guidelines and policies with respect to risk assessment and enterprise risk management, including our major risk exposures and the steps management has taken to monitor and control such exposures.
In performing these functions, the Audit Committee regularly receives reports from management (including the Chief Executive Officer, the Chief Financial Officer, the Controller and the Chief Legal Officer) and internal auditors regarding our risk management program (which incorporates our compliance, information & cyber security, and business continuity programs), extraordinary claims and losses, and significant litigation. The Board receives updates on risk oversight from the Audit Committee and members of management.
Compensation Committee
The Compensation Committee oversees our compensation policies and practices and has assessed whether our compensation policies encourage excessive risk-taking. The Compensation Committee has concluded that these policies and practices are not reasonably likely to have a material adverse effect on us. In arriving at that conclusion, the Compensation Committee considered, among other factors:
Although risk oversight permeates many elements of the work of the full Board and the committees, the Audit Committee has the most direct and systematic responsibility for overseeing risk management. The Audit Committee charter provides for a variety of regular and recurring responsibilities relating to risk, including:
In performing these functions, the Audit Committee regularly receives reports from management (including the Chief Executive Officer, the Chief Financial Officer, the Controller and the Chief Legal Officer) and internal auditors regarding our risk management program (including our compliance program, information and cyber security and business continuity programs), extraordinary claims and losses, and significant litigation. The Board receives updates on risk oversight from the Audit Committee and members of management.
Separately, the Compensation Committee oversees our compensation policies and practices and has assessed whether our compensation policies encourage excessive risk taking. The Compensation Committee has concluded that these policies and practices are not reasonably likely to have a material adverse effect on us. In arriving at that conclusion, the Compensation Committee considered, among other factors, the metrics used to determine variable compensation;
• the portion of variable compensation paid in equity, which is either time-vested or tied to the achievement of long-term Company objectives;
• the amount of compensation paid as sales commissions and the number of people to whom such compensation is paid; and
• controls, such as pricing limits, a recoupment policy and financial reconciliation processes for sales crediting, quality checks that we employ and the approval process for certain compensation-related activities.
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Board Meetings and Attendance
Our Board held eightsix meetings during 2017.2018 and ournon-management directors also met five times in executive session without management present. Each director attended 75% or more of the total number of meetings of the Board and meetings of the committees (if any) on which the director served during his or her respective tenure on the Board during 2017.2018. From time to time, our Board and committees also act by unanimous written consent as permitted by our Bylaws and the Delaware General Corporation Law.
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The Board and all of its committees have authority to retain outside advisors and consultants that they consider necessary or appropriate in carrying out their respective responsibilities. The independent accountants are retained by, and report directly to, the Audit Committee. In addition, the Audit Committee is responsible for the selection, assessment, and termination of the internal auditors to which we have outsourced our internal audit function. Similarly, the consultant retained by the Compensation Committee to assist in the evaluation of senior executive compensation reports directly to that committee.
Code of Conduct
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The Board has adopted a codeCode of ethicsConduct (the “Code”) that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller,directors, Chief Executive Officer, Chief Financial Officer, Controller, and persons performing similar functions. A copy of this code of ethics is posted on the Investors section of our web site under Leadership & Governance — Highlights atwww.corelogic.com. The Board also has adopted a broader code of ethics and conduct, applying to all employees, officers and directors,functions, which also has been posted under "Investors — “Investors—Leadership & Governance — Highlights"Governance—Highlights” on our web site at the address stated above.websitewww.corelogic.com. If we waive or amend any provisions of these codes of ethicsthe Code that apply to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer, or controllerChief Executive Officer, Chief Financial Officer, Controller and persons performing similar functions, we will disclose such waivers or amendments on our web site,website, at the address and location specified above, to the extent required by applicable SEC and NYSE Rules.rules.
Corporate Governance Guidelines
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The Board has adopted Corporate Governance Guidelines which have been posted under “Investors—Leadership & Governance—Highlights” on the Investors section of our web site under Leadership & Governance — Highlights atwebsitewww.corelogic.com. In addition to stating the standards that the Board applies in determining whether or not its members are independent, these guidelines stateaddress, among other items, the qualifications and responsibilities of our directors and describe fundamental aspects of our Board and certain of its committees.
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Our Corporate Governance Guidelines provide that our directors may not serve on more than five public company boards (including our Board), and our Audit Committee members may not serve on more than three public company audit committees (including our Audit Committee), in each case, without prior Board approval. In each case, in determining whether to grant such approval, the Board will consider the director'sdirector’s ability to devote sufficient time to the activities of the Board and/or Audit Committee and the director'sdirector’s qualifications and contribution, or potential contribution, to the Board and/or Audit Committee. AllAs of the date of this proxy statement, all of our directors are in compliance with the overboarding policy.
Board and Committee Evaluations
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To increase their effectiveness, the Board and each of its committees perform an annualself-evaluation under the direction of the Nominating and Corporate Governance Committee. The evaluation addresses, among other items, attendance, preparedness, participation, candor and other measures of performance selected by the Board.
Table of ContentsDirector Attendance at Annual Meetings
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We encourage our directors to attend the annual meetings of our stockholders, either in person or telephonically. All nineeleven directors who were members of our Board at the time of our 2017 annual meeting attended the 20172018 annual meeting.
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Stockholders and other interested parties may communicate directly with members of the Board, including the Chairman of the Board or any of the othernon-management directors of our Company (individually or as a group), by writing to such director(s) at:
CoreLogic, Inc.
c/o Chief Legal Officer and Secretary
40 Pacifica, Suite 900
Irvine, CA 92618
Our Corporate Secretary reviews and promptly forwards communications to the directors, as appropriate. Communications involving substantive accounting or auditing matters are forwarded to the Chair of the Audit Committee. Certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded such as: business solicitation or advertisements;product- orservice-related inquires; junk mail or mass mailings; resumes or otherjob-related inquires; and spam and overlyinappropriately hostile, threatening, potentially
illegal or similarly unsuitable communications. Directors receiving communications will respond as such directors deem appropriate, including the possibility of referring the matter to management of our Company, to the full Board or to an appropriate committee of the Board.
Transactions with Management and Others
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The Board has adopted a written policy regarding transactions with related persons that requires the approval or ratification by the Board or the Nominating and Corporate Governance Committee of any transaction exceeding $120,000 in which we are a participant and any related person has a direct or indirect material interest. A related person includes a director, nominee for election as a director, executive officer, person controlling over 5% of our common stock and the immediate family members of each of these individuals. Once a transaction has been determined to require approval, the transaction will be reviewed and approved by either the Board or the Nominating and Corporate Governance Committee. The Board or the Nominating and Corporate Governance Committee will review and consider the terms, business purpose and benefits of the transaction to the Company and the related person.
If a related party transaction is notpre-approved, then it must be brought to the Board or the Nominating and Corporate Governance Committee for ratification as promptly as possible. No member of the Board or the Nominating and Corporate Governance Committee may participate in the review or approval of a related party transaction in which he or she has a direct or indirect interest, unless the Chairman of the Board or the chairperson of the Nominating and Corporate Governance Committee requests such individual to participate.
The following types of transactions do not requirepre-approval:
compensatory arrangements for service as an officer or director of ours, provided such compensation is approved by the Compensation Committee;
transactions between us and our affiliates (other than directors and officers);
ordinary course transactions involving annual payments of $100,000 or less; or
transactions involving indebtedness between us and a beneficial owner of more than 5% of our common stock or an immediate family member of such beneficial owner, provided that the beneficial owner or family member is not an executive officer, director or director nominee of ours or an immediate family member thereof.
We have entered into the transactions discussed below, which have been approved or ratified in accordance with our related party transactions policy.
Price Associates beneficially owns greater than 5% of our common stock and is therefore a related party. During 2017, Price Associates or its affiliates purchased approximately $285,000 of data, analytics and other Company products. These transactions occurred pursuant to contracts entered into on an arm's-length basis and were ratified by the Nominating and Corporate Governance Committee in accordance with our related party transactions policy.
BlackRock, Inc. beneficially owns greater than 5% of our common stock and is therefore a related party. During 2017, BlackRock, Inc. or its affiliates purchased approximately $385,000 of data, analytics and other Company products. These transactions occurred pursuant to contracts entered into on an arm's-length basis and were ratified by the Nominating and Corporate Governance Committee in accordance with our related party transactions policy.
The following table sets forth certain information concerning the compensation of our directors other than Mr. Martell for the fiscal year ended December 31, 2017.2018.
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Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards (1)(2) ($) | | | Total ($) | | |||||||||
| | | | | | | | | | | | | | | | | | | |
J. David Chatham | 115,055 | 134,969 | 250,024 | ||||||||||||||||
Douglas C. Curling | 91,875 | 134,969 | 226,844 | ||||||||||||||||
John C. Dorman | 100,000 | 134,969 | 234,969 | ||||||||||||||||
Paul F. Folino | 211,000 | 134,969 | 345,969 | ||||||||||||||||
Claudia Fan Munce | 12,432 | 78,747 | 91,179 | ||||||||||||||||
Thomas C. O'Brien | 108,500 | 134,969 | 243,469 | ||||||||||||||||
Vikrant Raina | 12,432 | 78,747 | 91,179 | ||||||||||||||||
Jaynie Miller Studenmund | 98,320 | 134,969 | 233,289 | ||||||||||||||||
David F. Walker | 112,500 | 134,969 | 247,469 | ||||||||||||||||
Mary Lee Widener | 82,500 | 134,969 | 217,469 | ||||||||||||||||
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Name
|
Fees Earned or
|
Stock ($)
| Total ($)
| ||||||||||||
J. David Chatham
|
|
125,000
|
|
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159,978
|
|
|
284,978
|
| ||||||
Douglas C. Curling
|
|
96,500
|
|
|
159,978
|
|
|
256,478
|
| ||||||
John C. Dorman
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|
112,500
|
|
|
159,978
|
|
|
272,478
|
| ||||||
Paul F. Folino
|
|
223,500
|
|
|
159,978
|
|
|
383,478
|
| ||||||
Claudia Fan Munce
|
|
104,079
|
|
| 159,978
|
|
|
264,057
|
| ||||||
Thomas C. O’Brien
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|
113,500
|
|
|
159,978
|
|
|
273,478
|
| ||||||
Vikrant Raina
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|
102,417
|
|
| 159,978
|
|
|
262,395
|
| ||||||
Jaynie Miller Studenmund
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|
101,500
|
|
|
159,978
|
|
|
261,478
|
| ||||||
David F. Walker
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|
125,000
|
|
|
159,978
|
|
|
284,978
|
| ||||||
Mary Lee Widener
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|
95,000
|
|
|
159,978
|
|
|
254,978
|
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(1) | The amounts shown reflect the aggregate grant date fair value of stock awards granted in 2018 computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718,Compensation-Stock Compensation. We value the RSUs as of the grant date by multiplying the closing price of our common stock on that date by the number of RSUs awarded. The stock awards were granted on May 1, 2018 to eachnon-management director. |
(2) | The aggregate numbers of RSUs held by each currentnon-management director as of December 31, 2018 were as follows: |
Name | Restricted Stock Unit | |||||||||||||
J. David Chatham | 3,190 | |||||||||||||
Douglas C. Curling | 3,190 | |||||||||||||
John C. | 3,190 | |||||||||||||
Paul F. Folino | 3,190 | |||||||||||||
Claudia Fan Munce | 3,190 | |||||||||||||
Thomas C. O’Brien | 3,190 | |||||||||||||
Vikrant Raina | 3,190 | |||||||||||||
Jaynie Miller Studenmund | 3,190 | |||||||||||||
David F. Walker | 3,190 | |||||||||||||
Mary Lee Widener | ||||||||||||||
3,190 | ||||||||||||||
As described in the Compensation Discussion and Analysis, Pay Governance served as independent compensation consultant for the Compensation Committee for 20172018 and will continue to advise on the compensation of our directors for 2018.2019. During 2017,2018, as part of its engagement with the Committee, Pay Governance:
provided advice on the selection of a peer group of companies for director compensation comparison purposes;
provided guidance on industry best practices and emerging trends and developments in director compensation;
provided advice on determining the structure and amounts payable under our director compensation program.
The Compensation Committee reviews and recommends to the Board the form and level of director compensation. In December 2017,2018, the Compensation Committee reviewed and recommended to the Board changes to the Directors'Directors’ Compensation Policy and recommended no changes for 2019; the Board approved and adoptedaffirmed the updated Directors'recommendation of the Compensation Policy in December 2017.Committee.
The table below describes the components of thenon-management director compensation program in effect during 2017 and the compensation program that commenced effective January 1, 2018:
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Compensation Element | | 2017 | | | 2018 | | ||||||
| | | | | | | | | | | | |
Annual Retainer — Non-Management Director (1) | $ | 70,000 | $ | 80,000 | ||||||||
Annual Equity Compensation — RSUs (2) | $ | 135,000 | $ | 160,000 | ||||||||
Annual Retainer — Non-Management Board Chairman | $ | 100,000 | $ | 100,000 | ||||||||
Annual Retainer — Committee Chairs (1) | ||||||||||||
Audit Committee | $ | 25,000 | $ | 25,000 | ||||||||
Compensation Committee | $ | 20,000 | $ | 20,000 | ||||||||
Nominating and Corporate Governance Committee | $ | 15,000 | $ | 15,000 | ||||||||
Strategic Planning Committee (3) | $ | 12,500 | $ | 12,500 | ||||||||
Annual Retainer — Committee Members (1) | ||||||||||||
Audit Committee | $ | 12,500 | $ | 15,000 | ||||||||
Compensation Committee | $ | 10,000 | $ | 10,000 | ||||||||
Talent Development Committee (3) | $ | 12,500 | $ | n/a | ||||||||
Nominating and Corporate Governance Committee | $ | 7,500 | $ | 7,500 | ||||||||
Strategic Planning Committee (3) | $ | 5,000 | $ | 5,000 | ||||||||
Insurance Strategy Subcommittee (3) | $ | 12,500 | $ | n/a | ||||||||
Fee for attendance of Board and Committee Meetings in Excess of Designated Number (4) | $ | 2,000 | $ | 2,000 | ||||||||
| | | | | | | | | | | | |
Compensation Element | 2018 | |||
Annual Retainer —Non-ManagementDirector | $ | 80,000 | ||
Annual Equity Compensation — RSUs(2) | $ | 160,000 | ||
Annual Retainer —Non-Management Board Chairman | $ | 100,000 | ||
Annual Retainer — Committee Chairs(1) | ||||
Audit Committee | $ | 25,000 | ||
Compensation Committee | $ | 20,000 | ||
Nominating and Corporate Governance Committee | $ | 15,000 | ||
Strategic Planning and Acquisition Committee | $ | 12,500 | ||
Annual Retainer — Committee Members(1) | ||||
Audit Committee | $ | 15,000 | ||
Compensation Committee | $ | 10,000 | ||
Nominating and Corporate Governance Committee | $ | 7,500 | ||
Strategic Planning and Acquisition Committee | $ | 5,000 | ||
Fee for attendance of Board and Committee Meetings in Excess of Designated Number (3) | $ | 2,000 |
(1) | Committee chair retainer represents amounts paid to each committee chair for their service in addition to the committee member annual retainer. Fees are paid in cash in equal quarterly installments. Fees are paidpro-rata for directors joining the Board after the payment date. |
(2) | The award is granted and priced on the day of our annual meeting or, in the event of anout-of-cycle annual meeting, such earlier date as may be approved by the Board, and vest on the first anniversary of the grant date (or the day prior to the date of the annual meeting if earlier). Vesting of the award will accelerate upon death, disability, retirement from the Board or a change in control. Directors joining the Board after the date of the Annual Meeting will receive a pro rata annual RSU award on the date the director joins the Board, which will vest on the same terms as the other annual RSU awards. |
(3) | Meeting fees paid only for meetings in excess of eight meetings of the Board, Audit Committee and Compensation Committee, and in excess of four meetings of the Nominating and Corporate Governance Committee and Strategic Planning and Acquisition Committee. Fees are paid in cash in connection with each such additional meeting. |
Director Share Ownership Guidelines
We require ournon-management directors to own a fixed amount of Company stock. The guidelines are based on a multiple of the annual retainer and, beginning in 2018, require a value of at least $400,000 be held by each director. Directors have five years from their date of election to the Board to reach the ownership requirement. All Company securities owned outright or earned and subject only totime-based vesting restrictions, countincluding deferred awards, are credited toward the requirement.
Anti-Hedging and Pledging Policy
|
The Company maintains a policy that prohibits director transactions in put options, call options or other derivative securities on an exchange or in any other organized market, as well as holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Set forth below is information regarding our current executive officers. Our executive officers are appointed annually by the Board.
Frank D. Martell | ||||||||
President and Chief | Biography is set forth under the heading Proposal 1 — Election of Directors | |||||||
James L. Balas Age 48 | ||||||||
Chief Financial Officer | ||||||||
| Mr. Balas has served as the | |||||||
Barry M. Sando | ||||||||
Managing Director, Underwriting and Workflow Solutions
| Mr. Sando has served as the | FAC. | ||||||
Arnold A. Pinkston | ||||||
Chief Legal Officer and Corporate Secretary
| Mr. Pinkston has served as the | |||||
COMPENSATION DISCUSSION & ANALYSIS
This Compensation Discussion and Analysis (CD&A)(“CD&A”) describes our compensation program, including our compensation strategy, philosophy, polices, programs and practices (our compensation program) for our named executive officers (NEOs)NEOs and the positions they held in 2017.2018. For purposes of this CD&A, the Committee refers to the Compensation Committee of our Board of Directors.
Named Executive Officer | Position as of December 31, | |||||||
Frank D. Martell | President and Chief Executive Officer | |||||||
James L. Balas | Chief Financial Officer | |||||||
Barry M. Sando | Managing Director, Underwriting and Workflow Solutions | |||||||
Arnold A. Pinkston | ||||||||
|
Our compensation program is designed to align the interestinterests of our executive officers with those of our stockholders through execution in three areas of strategic focus:growth and scale,innovation, operational excellence, andhigh performing organization.organization. In 2017,2018, a majority of our NEOs'NEOs’ compensation continued to be based upon our financial performance and execution against these strategic priorities.
In settingAs we set our targets2018 performance goals early in the year, we anticipated the potential for 2017, we expected a very challenging markethigh degree of volatility and unpredictability based on expectations for the economic environment such as:
An increasing interest rate environment due to anticipated declinesa strong US economy.
A decline in overall US mortgage originations in aorigination unit volumes by approximately 10% compared to 2017 levels as the onset of rising interest rate environment. rates would unfavorably impact mortgage refinance activity.
Continuing impact on mortgage origination purchase volumes due to multiple factors such as tight inventory supply, insufficient supply of new housing stock, and affordability, all of which we expect to continue for the foreseeable future.
We set our performance targets to align withdelivered strong operating and financial results in 2018 despite significant US mortgage market headwinds. In the face of these expectations. Notwithstanding the challenges and headwinds, we successfully navigatedreduced our overall cost structure by more than $20 million through productivity initiatives and cost management, continued to invest in future growth and productivity initiatives, and completed targeted acquisitions to enhance our business mix by increasing ournon-mortgage and international footprints while driving higher technology platform revenues. We invested in next generation technology capabilities focusing on data structures and visualization, technology platforms, and advanced automation techniques, which we expect will set a foundation for future growth and margin expansion. Finally, we enhanced our infrastructure capabilities as we initiated our migration to the ongoing transition of the U.S.Google Cloud platform.
Notable financial accomplishments in 2018 include:
Significant market outperformance as our 2018 revenues were down 3%, as compared with a 15% estimated drop in overall US mortgage market towards a durable, purchase-driven cycle. unit volumes.
Increased adjusted EBITDA by 3% and adjusted EPS by 15%, supported by our productivity and cost initiatives.
Generated $258 million of free cash flow while reinvesting to drive future growth and margin expansion.
Delivered more than $20 million in cost management and productivity benefits.
Repurchased approximately 3% of our outstanding common shares.
We attribute these results to management'smanagement’s ability to navigate market volatility and maintain focus in a time of significant change, with strong leadership from Mr. Martell.
EXECUTIVE COMPENSATION HIGHLIGHTS
Since 2011, we have grown revenues at an annual compounded rate of 7%, operating margin by 821 bps and adjusted EPS by 24%.
We aligned annual incentives to Mr. Martell's leadershiprigorous financial targets. The Company’s underlyingpay-for-performance approach is intended to reward management appropriately in light of below- and above-expected performance as our President and CEO.
We delivered exceptional results in 2017. We strengthened our market leadership across our core mortgage businesses, advanced our strategic imperatives inthrough use of a weighted combination of three performance metrics. For 2018, the property valuations space, and delivered strong organic growth in our insurance & spatial and international operations. We also invested in product development, service quality, and expanded our data and technology innovation capabilities while returning substantial capital to stockholders through share repurchases representing 5% of total shares outstanding. We met orCompany exceeded expectations onits adjusted EBITDA adjusted EPS,target by 2.7%, but fell below target for revenue(-4.6%) and free cash flow (FCF) and delivered revenue just below targeted goals.
FCFTable of Contents(-2.4%).
Please seeAppendix A for a detailed reconciliation of adjusted EBITDA, adjusted EPS and FCF to the most directly comparable GAAP financial measures.
|
We rewarded strong financial results. Our 2017 financial performance met or exceeded targets on all metrics other than revenue (impacted by market volume declines), and resulted in above-target payouts overall. Results Combined results for revenue, adjusted EBITDA and FCF generated funding offor corporate participants in our annual cash bonus plan, the ICP, at 122.7%of 96.7% of target.
We also consideredassessed and as appropriate, rewarded our most significant strategic accomplishments.Our decisions on ICP awards took into consideration a number of key accomplishments in 20172018 across our three strategic focus areas includingas noted below. Based on overall strong strategic accomplishments in the following:
We did not make across the board increases in base salaries for the 5th consecutive year. Notwithstanding strong results, consistent with our practices in recent years,face of a challenging revenue environment, and individual contributions to those accomplishments, the Committee did not increase NEO base salariesawarded our four NEOs from 110% to 131% of target. Total resulting payouts for 2017, exceptour NEOs ranged from 95% to 100% of the overall ICP target for Mr. Martell in consideration of his promotion to President and CEO.
Table of Contents2018.
|
Strategic Focus | 2018 Accomplishments | |||
We engage with our major stockholders. As part of our stockholder engagement strategy, we conducted outreach to our top stockholders representing approximately 60% ownership in 2017. Our stockholder outreach includes ongoing discussions with many of our investors and we often solicit their feedback on a variety of topics, including executive compensation. These major stockholders did not express concerns over our compensation program design or practices. In addition to soliciting feedback from our stockholders, the Committee routinely assesses our compensation programs in connection with its independent compensation consultant, and seeks to maximize alignment between stockholder return and executive compensation while incentivizing and retaining a high-performing management team.
Growth and Innovation
|
✓ Expanded deployment of solutions bundling intended to secure significant market share gains ✓ Completed several acquisitions to expand and scale our | ||||
Operational Excellence | ✓ Exceeded productivity savings targets ✓ Invested in data technology enhancements, artificial intelligence, and visualization to enhance future growth and offering capabilities ✓ Launched migration to Google Cloud to further technology infrastructure capabilities and efficiencies ✓ Enhanced the vendor supply chain to improve quality, security, and IP protection ✓ Generated strong free cash flow, which was modestly below target, despite enhanced investment levels to support future growth and productivity | |||
High Performing Organization | ✓ Developed employee engagement action plans based on a global employee satisfaction survey (93% employee participation) ✓ Expanded the talent review process to emphasize the development of high-potential talent ✓ Continued transformation of shared services functions to enhance quality and reduce cost, and invested in automation and systems related to finance and human capital ✓ Initiated a focused, long-term incentive program for our top 40 business leaders (excluding the CEO) to accelerate growth and margins |
We continue to have strong support from stockholdersStrong Stockholder Support on Say on Pay.Pay
Our Board and management are committed to maintaining sound and effective compensation and governance policies and programs designed to build value for our stockholders. At our 20172018 Annual Meeting, 97.5%98% of the votes cast were in favor of the advisory vote to approve our executive compensation paid in 2016.2017. With this support in favor of our existing compensation program, absence of negative feedback from our stockholder outreach effort, and following its regular review of our practices, the Committee determined to maintaincontinue our 2017 compensation program in substantially2018 with only minor adjustments.
Active Engagement with Our Stockholders
The Board and executive management are committed to engaging with our stockholders. Throughout the same form.year, executive management proactively and consistently meets with current and prospective stockholders to discuss our strategic priorities, operational performance, and financial results. Also, through these discussions or separate outreach efforts, we seek to engage our top stockholders to solicit feedback on corporate governance, our compensation program, and related matters. In 2018, we conducted such outreach to our top stockholders representing a majority of our outstanding shares; these stockholders did not express concerns over our corporate governance practices or compensation program design.
We did not make across-the-board increases in base salaries for the 6th consecutive year.Notwithstanding strong results, consistent with our practices in recent years, the Committee did not increase NEO base salaries for market trends. The Committee adjusted Mr. Martell’s salary in recognition of his strong leadership and management of the business through a challenging US mortgage market environment. The Committee also adjusted the salary for Mr. Balas in recognition of his continued strong leadership in his CFO role. The new salaries for Mr. Martell and Mr. Balas move each of them to more competitive pay levels.
GOOD PAY GOVERNANCE PRACTICES
The Committee oversees the design and administration of our compensation program and evaluates it against competitive practices, legal and regulatory developments and corporate governance trends. The Committee has incorporated the following governance features into our compensation program:
What We Do |
✓ | Review total compensation relative to the median of a peer group ofindustry-aligned companies with similar executive talent needs |
✓ | Tie annual incentives to achievement of multiple rigorous financial and operating goals |
✓ | Useperformance-based vesting for 50% oflong-term compensation, tied to achievement of stretch EPS targets and TSR relative to our peers |
✓ | Cap performance-based vesting of performance shares at 150% of target if3-year TSR ranks below 55th percentile |
✓ | Require achievement of threshold adjusted net income level to be eligible to vest in RSU awards |
✓ | Maintain robust stock ownership guidelines and require covered executives to retain 50% of netafter-tax shares earned until the guidelines are met |
✓ | Maintain a claw-back policy for incentive payments |
✓ | Use an independent compensation consultant retained directly by the Committee, in its sole discretion, who performs no consulting or other services for management |
✓ | Require double-trigger for accelerated vesting upon termination of employment following a change in control |
✓ | Assess annually potential risks relating to the Company’s compensation policies and practices |
What We Don’t Do |
× | Incentivize participants to take excessive risks |
× | Award bonuses to our executive officers outside of our ICP |
× | Allow margining, derivative, or speculative transactions, such as hedges, pledges, and margin accounts, by executive officers |
× | Provide excessive perquisites |
× | Provide excise taxgross-ups upon termination with a change in control or taxgross-ups for other compensation |
× | Allow for repricing of stock options without stockholder approval |
× | Pay |
PAY PHILOSOPHY
We pay for performance.Our compensation program is heavily weighted towardperformance-based compensation that provides a direct link between rigorous goals for corporate performance and pay outcomes for our executive officers. Our annual incentive planICP also ties pay outcomes to the achievement of key strategic objectives that we believe will drivelonger-term value to stockholders. We believe that our compensation program provides effective incentives for strong operating results by appropriately aligning pay and performance. Our philosophy is designed to:
Compensation Philosophy | • Attract, motivate and retainhighly-qualified executive officers critical to ourlong-term success • Align the interests of our executive officers with the interests of our stockholders • Reward executive officers for achievingpre-defined rigorous financial goals and strategic objectives that may not yieldcurrent-period financial results but are expected to position us for enhanced results in future periods • Encourage strategiclong-term development and profitable investment in the business • Motivate and reward appropriaterisk-taking to grow the business • Support pay practices with strong corporate governance and independent board oversight | |
Compensation Program Primary Elements | 1 Base salary 2 Annual cash incentive compensation plan award 3 Long-term equity incentives 4 Other compensation (welfare, retirement, termination and other benefits) |
Our compensation program consists of four main elements:
Our program emphasizes performance-basedperformance-based incentives. 85%86% of our CEO compensation and 74%75% of the compensation for the other NEOs isperformance-based. The chart below illustrates our pay mix.
Compensation mix for Mr. Nallathambi was excluded from this exhibit.
We increase base salaries based on performance or promotion.Our practice is to benchmark compensation annually but to increase an NEO'sNEO’s base salary only when warranted by sustained performance, an increase in the scope of responsibilities or significant gaps to competitive pay levels. Only Mr.Messrs. Martell and Balas received a base salary increaseincreases in 2017 in consideration of his appointment as President2018 to recognize performance and CEO following the passing of Mr. Nallathambi.move their respective salaries to more competitive levels.
We set rigorous goals in our incentive plans. At the beginning of 2017, we expected U.S. We set challenging goals for both our annual incentive and long-term equity plan. We outperformed US mortgage origination volumes to be approximately 20% less than 2016 volumes. Our 2017 financial targets anticipated this decline, but included stretchmarket trends and delivered single-digit top line growth expectations above market trends. We significantly outperformed market volume trendsin our core operations, resulting in the U.S. mortgage marketachievement of our adjusted EBITDA target and grewnear-achievement of our insurance & spatialrevenue and international operations at significant rates, resulting in achieving or exceeding all targets except revenue, which was slightly below target.FCF targets.
We use strategic goals in our ICP.Results on strategic goals represent 25% of the annual ICP opportunity for our executive officers. We believe this approach rewards the accomplishment of key objectives that will drive future performance. In our ICP, the strategic goals portion is funded by the results on financial goals. The Committee separately determines the portion of the funded amount that should be paid as a result of
achievement of the assigned objectives. The Committee carefully evaluates management'smanagement’s accomplishments relative to the goals, as further described below.
We focus on long-termlong-term stockholder value.Nearly 70% of the total compensation opportunity for our CEO is based on achievement ofstockholder-aligned performance and the value of our shares. For other NEOs, over half of their total target compensation opportunities are tied to these stockholder results.
Our equity grants are tied to performance.In 2017,2018, 50% of the target value of ourlong-term incentive awards for our CEO and other NEOs was granted in the form ofperformance-based restricted stock units ("PBRSUs"(“PBRSUs”) that vest based on achievement of adjusted EPS results relative to target and TSR relative to the companies in our Peer Group (see description of the Peer Group(as described and defined later in this section). The remaining 50% of the target value of our long-term incentive awards was granted in the form of time-vested restricted stock units ("RSUs")RSUs that require us to achieve a threshold adjusted net income level in order to be eligible to vest. We set rigorous goals in our PBRSU awards, as reflected in the variability of payouts in the last three awards. The increasing payouts above target reflect improved performance. In addition, to further incentivize the expansion of adjusted EBITDA margin between 2018 and 2020, we granted certain key executives, including our NEOs but excluding our CEO, an additional performance-based long-term incentive award in 2018 (see the description of the A30 Award below).
3-Year PBRSU Payouts
Our CEO pay is aligned to stock price performance. The table below illustrates the alignment of CEO actual pay (base salary, ICP and LTI) with results for our stockholders. These pay amounts do not include change in pension value or "All Other Compensation" in the 2017 Summary Compensation Table. The lower total direct compensation for 2017 also reflects the lower base salary, ICP target bonus and LTI targets for Mr. Martell relative to his predecessor, Mr. Nallathambi.
CEO Compensation — TSR Alignment
2018 COMPENSATION PROGRAM OVERVIEW
|
We employ good governance practices. The Committee oversees the design and administration of our compensation program and evaluates it against competitive practices, legal and regulatory developments and corporate governance trends. The Committee has incorporated the following leading governance features into our compensation program:
|
The following table describes our pay program including the role and purpose for each aspect of it.
ELEMENT | ||||||||||||||||||
DESCRIPTION | ROLE AND PURPOSE | |||||||||||||||||
REWARDS STRATEGY | Review target total pay relative to market median and determine individual pay based on experience and performance Tie approximately 75% or more of target pay opportunity to operating results and share price performance | Provide Align compensation to results for our stockholders | ||||||||||||||||
BASE SALARY | | |||||||||||||||||
Competitive fixed compensation Base salary | Provide competitive level of fixed pay to attract, motivate and retainhighly-qualified executives Limited salary increases control fixed costs and emphasize pay for performance | |||||||||||||||||
ANNUAL INCENTIVE PROGRAM (ICP) | Base incentives on performance against rigorous targets for revenue, adjusted EBITDA, FCF and strategic goals | Motivate and reward achievement of key financial goals and strategic accomplishments that drive stockholder value | ||||||||||||||||
LONG-TERM EQUITY INCENTIVES | Performance- Based Restricted Stock Units (PBRSUs) | |||||||||||||||||
50% of Shares earned based on 3 years of adjusted EPS performance, modified by TSR relative to our peers | Focus and
Use of EPS growth historically has been highly aligned with our share price | |||||||||||||||||
50% of Grants vest ratably over three years Requires achievement of threshold | Enhance retention of key talent Value at vesting based on | |||||||||||||||||
RETIREMENT PROGRAMS | ||||||||||||||||||
401(k) program for all employees Legacy supplemental executive retirement plan frozen in 2010 with no new entrants allowed Limited benefits available | Provide
Focus executives on accumulating savings | |||||||||||||||||
Focus executives on rewards fromvalue-creating activities | ||||||||||||||||||
PERQUISITES |
Determining Pay
|
Generally, in determining base salary, target annual ICP and guidelines forlong-term equity awards, the Committee considers a number ofseveral factors including, but not limited to, the executive officer's:officer’s:
role, including the scope and complexity of responsibilities;
experience and capabilities, including institutional knowledge;
contributions or responsibilities beyond the typical scope of the role;
individual performance;
positioning relative to our other executive officers;
difficulty in recruiting a replacement; and
competitive compensation opportunities provided by our peers and other competitors for similar executive talent.
Our philosophy is to incentivize and reward executive officers for future performance. While the Committee regularly reviews executive officer equity grants and vesting, it does not consider prior stock compensation gains (option gains(PBRSU payouts or restricted stock awarded in prior years) in setting future compensation levels.
In order toTo monitor competitive compensation practices, the Committee relies primarily upon data compiled from public filings of selected companies (our Peer Group)“Peer Group”) that it considers to be competitors or appropriate comparators for executive talent. The Committee reviews and approves the Peer Group annually. Criteria for Peer Group selection include firms that operate in data, information and analytics and related businesses. Our 20172018 Peer Group is presented in the table below.
CORELOGIC 2018 PEER GROUP | ||||||||||||||||||||
Comparator Group Rationale | ||||||||||||||||||||
Company | Revenue | Market Value | EBITDA Margin | Comparable Revenue Size | Comparable Market Value | Data Analytics | Direct Talent Competitor | |||||||||||||
($MM) | ($MM) | (%) | ||||||||||||||||||
Fidelity National Financial, Inc. | $ | 7,875 | $ | 8,653 | 14 | % | ✓ | |||||||||||||
First American Financial Corporation | $ | 5,812 | $ | 4,990 | 14 | % | ✓ | ✓ | ✓ | |||||||||||
Broadridge Financial Solutions, Inc. | $ | 4,330 | $ | 11,237 | 19 | % | ✓ | |||||||||||||
Gartner, Inc. | $ | 3,901 | $ | 11,620 | 15 | % | ✓ | ✓ | ✓ | |||||||||||
Global Payments Inc. | $ | 3,540 | $ | 16,316 | 36 | % | ✓ | |||||||||||||
Equifax Inc. | $ | 3,415 | $ | 11,229 | 25 | % | ✓ | ✓ | ||||||||||||
Paychex, Inc. | $ | 3,381 | $ | 23,395 | 42 | % | ✓ | |||||||||||||
Euronet Worldwide, Inc. | $ | 2,492 | $ | 5,279 | 19 | % | ✓ | ✓ | ||||||||||||
FleetCor Technologies, Inc. | $ | 2,400 | $ | 16,464 | 54 | % | ✓ | |||||||||||||
Verisk Analytics, Inc. | $ | 2,352 | $ | 17,950 | 45 | % | ✓ | ✓ | ✓ | |||||||||||
Teradata Corporation | $ | 2,202 | $ | 4,534 | 7 | % | ✓ | ✓ | ✓ | ✓ | ||||||||||
Jack Henry & Associates, Inc. | $ | 1,537 | $ | 9,780 | 31 | % | ✓ | ✓ | ||||||||||||
Black Knight, Inc. | $ | 1,096 | $ | 6,732 | 34 | % | ✓ | ✓ | ✓ | ✓ | ||||||||||
Fair Isaac Corporation | $ | 1,032 | $ | 5,415 | 23 | % | ✓ | ✓ | ✓ | ✓ | ||||||||||
CSG Systems International, Inc. | $ | 833 | $ | 1,059 | 19 | % | ✓ | ✓ | ||||||||||||
75th Percentile | $ | 3,901 | $ | 16,316 | 36 | % | — | — | — | — | ||||||||||
50th Percentile | $ | 2,492 | $ | 9,780 | 23 | % | — | — | — | — | ||||||||||
25th Percentile | $ | 1,537 | $ | 5,279 | 15 | % | — | — | — | — | ||||||||||
CoreLogic, Inc. | $ | 1,839 | $ | 2,692 | 23 | % | — | — | — | — | ||||||||||
Notes:
Data above reflects most recent fiscal year (2018) results when available; if FY18 financial results not yet released at the time of this report, revenue and EBITDA data reflect12-month trailing results for Q4 of 2017 and Q1 - Q3 of 2018. |
| | | | | | | | | | | | | | | | | | | | | |
| CoreLogic 2017 Peer Group | | |||||||||||||||||||
|
| | | | Comparator Group Rationale | | |||||||||||||||
| Company | | Revenue | | Market Value | | EBITDA Margin | Comparable Revenue Size | Comparable Market Value | Data Analytics | Direct Talent Competitor | | |||||||||
|
| | ($MM) | | ($MM) | | (%) | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Fidelity National Financial | $ | 7,668 | $ | 9,235 | 14 | % | ✔ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| First American Financial | $ | 5,772 | $ | 4,023 | 11 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Broadridge Financial Solutions | $ | 4,143 | $ | 8,884 | 16 | % | ✔ | ✔ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Equifax | $ | 3,362 | $ | 14,159 | 33 | % | ✔ | ✔ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Gartner | $ | 3,311 | $ | 11,164 | 12 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| DST Systems | $ | 2,218 | $ | 3,738 | 21 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Teradata | $ | 2,156 | $ | 4,654 | 11 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Verisk Analytics | $ | 2,145 | $ | 15,810 | 49 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Dun & Bradstreet | $ | 1,743 | $ | 4,463 | 26 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Henry (Jack) & Associates | $ | 1,431 | $ | 8,066 | 35 | % | ✔ | ✔ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Black Knight Inc | $ | 1,052 | $ | 6,776 | 46 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Fair Isaac | $ | 932 | $ | 4,304 | 23 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| ACXIOM | $ | 880 | $ | 2,227 | 10 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| CSG Systems | $ | 790 | $ | 1,469 | 19 | % | ✔ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Ciber(1) | — | — | — | ✔ | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Neustar(2) | — | — | — | ✔ | ✔ | ✔ | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| 75th Percentile | $ | 3,350 | $ | 9,148 | | 31 | % | — | — | — | — | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| 50th Percentile | $ | 2,151 | $ | 5,715 | | 20 | % | — | — | — | — | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| 25th Percentile | $ | 1,146 | $ | 4,093 | | 12 | % | — | — | — | — | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| CoreLogic | $ | 1,851 | $ | 3,807 | 23 | % | — | — | — | — | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Notes: | ||||||||||||||||||||
| Data above reflects end of the most recently disclosed fiscal year. | ||||||||||||||||||||
| (1) Ciber was acquired by HTC Global Services in May 2017. | ||||||||||||||||||||
| (2) Neustar was acquired by a private investment group led by Golden Gate Capital in August 2017. | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
The Committee reviews executive officer pay relative to the median pay of comparable positions in Peer Group companies and, as appropriate, relevant survey data fromnationally-recognized consulting and data firms such as Willis Towers Watson, Mercer and Equilar, scoped to a comparable revenue size for us, from both general industry and the high technology sector.
2019 Peer Group Considerations
Historically, the Company’s peer group has been challenging to construct as there are few firms that operate with highly comparable business mixes. Peers have generally been information and service providers, with some financial technology firms also included. For 2019, the Company refreshed its peer group to provide greater alignment with businesses that are sensitive to mortgage origination volumes and interest rates. As was evident in 2018, despite our diversification efforts, there continues to be a strong relationship between the Company’s stock performance and these volatile demand factors.
The following organizations will be added to the 2019 compensation peer group:
Fidelity National Information Services, Inc.
Realogy Holdings Corporation
Mr. Cooper Group, Inc. (Formerly Nationstar Mortgage Holdings)
Radian Group, Inc.
PennyMac Financial Services, Inc.
Zillow Group, Inc.
MGIC Investment Corporation
Altisource Portfolio Solutions
Furthermore, four peers in the 2018 compensation peer group were acquired in 2018 and, therefore, will be removed:
DST Systems
Dunn & Bradstreet
Convergys Corporation
Acxiom Corporation
The new 2019 compensation peer group is intended to better reflect the Company’s business portfolio and provide greater alignment with mortgage origination volumes and interest rate movements.
Base Salary
The Committee reviews base salaries annually and adjusts them, if appropriate, to recognize performance, changes to roles andpromotions, expansion in scope of responsibilities, and gaps relative to base salaries of similar individuals in the Peer Group and survey data described above. In an effort toTo increase the weighting of variable, performance-
Table of Contentsperformance-based
based pay in the compensation mix, in recent years the Committee has in recent years not increased salaries for executive officers, except where there has been a promotion, or an expansion of role and responsibilities.responsibilities, or to recognize performance.
In 2017,2018, the Committee increased the base salarysalaries for Mr. Martell and Mr. Balas, as both made major contributions to the successful execution of the Company’s strategic plan in recognition of his promotion to President2018. In addition, there were significant gaps between their salaries and CEO. However, Mr. Martell's 2017 base salary remained significantly below that earned by Mr. Nallathambi, our prior CEO.the competitive market rate. No other NEOsNEO received a base salary increase in 2017.2018.
Annualized base salaries of the executive officers for 20162017 and 20172018 are set forth in the table below:
| | | | | | | | |
| Named Executive Officer | 2016 | 2017 | | ||||
| | | | | | | | |
| ||||||||
| Frank D. Martell | $650,000 | $725,000 | |||||
| James L. Balas | $425,000 | $425,000 | |||||
| Barry M. Sando | $550,000 | $550,000 | |||||
| Stergios Theologides(1) | $425,000 | $425,000 | |||||
| Anand Nallathambi(1) | $800,000 | $800,000 | |||||
| | | | | | | | |
Named Executive Officer | 2017 | 2018 | ||||||
Frank D. Martell | $ | 725,000 | $ | 780,000 | ||||
James L. Balas | $ | 425,000 | $ | 450,000 | ||||
Barry M. Sando | $ | 550,000 | $ | 550,000 | ||||
Arnold A. Pinkston (1) | — | $ | 425,000 |
(1) |
|
Annual Incentives (ICP)
The ICP rewards executive officers for financial and operating performance relative to rigorous, predetermined financial goals and strategic objectives. As part of our business planning process, management prioritizes a range of value drivers based on anticipated market demand including estimated mortgage origination volumes, prior year performance, business strategy and risk factors. The Committee then evaluates management'smanagement’s recommendations in light of stockholder expectations and establishes final ICP financial and strategic goals, including performance and payout range.ranges.
20172018 Target Incentives.The Committee established the following 20172018 target bonus opportunities for our NEOs:
| | | | | | | | | | | | | | |
| ICP Bonus | | ||||||||||||
| Name | Title | Base Salary ($000s) | % of Salary | Target ($000s) | Maximum ($000s) | | |||||||
| | | | | | | | | | | | | | |
| Frank D. Martell | President and CEO | $725 | 125% | $906 | $1,812 | ||||||||
| James L. Balas | Chief Financial Officer | $425 | 90% | $383 | $765 | ||||||||
| Barry M. Sando | Managing Director, Underwriting and Workflow Solutions | $550 | 100% | $550 | |||||||||
| $1,100 | |||||||||||||
| Stergios Theologides | Former General Counsel and Secretary | $425(1) | 80% | $340 | $680 | ||||||||
| Anand Nallathambi | Former President and Chief Executive Officer | $800(1) | 125% | $1,000 | $2,000 | ||||||||
| | | | | | | | | | | | | | |
ICP Bonus | ||||||||||||||||||||||||
Name | Title | Base Salary ($000s) | % of Salary | Target ($000s) | Maximum ($000s) | |||||||||||||||||||
Frank D. Martell | President and CEO | $ | 780 | 140 | % | $ | 1,092 | $ | 2,184 | |||||||||||||||
James L. Balas | Chief Financial Officer | $ | 450 | 100 | % | $ | 450 | $ | 900 | |||||||||||||||
Barry M. Sando | Managing Director, Underwriting and Workflow Solutions | $ | 550 | 100 | % | $ | 550 | $ | 1,100 | |||||||||||||||
Arnold A. Pinkston | Chief Legal Officer and Corporate Secretary | $ | 425 | 80 | % | $ | 340 | $ | 680 |
ICP Performance Metrics.For 2017,2018, the Committee selected the following three performance measures for the ICP:
Revenue (GAAP metric)
Adjusted EBITDA — anon-GAAP — a non-GAAP metric calculated as net income from continuing operations adjusted for interest, taxes, depreciation and amortization, stock compensation,non-operating gains/losses and other adjustments, as set forth in the Performance Unit Agreement
Free Cash Flow (FCF)— anon-GAAP — a non-GAAP metric calculated as net cash provided by continuing operating activities less capital expenditures for purchases of property and equipment, capitalized data and other intangible assetsassets.
The Committee selected these measures in order to reflect a balanced perspective on performance including growth, profitability and cash management. The Committee believes these measures drive the valuation of our stock. Please seeAppendix A for a detailed reconciliation of adjusted EBITDA and free cash flowFCF to the most directly comparable GAAP financial measures.
For 2017, results2018, 75% of the ICP opportunity was based on our financial performance goals and 25% on established strategic objectives for each executive officer. Results for achievement of revenue, adjusted EBITDA, and FCF goals were weighted as follows in determining ICP funding, with 75% of the ICP opportunity based on our financial performance goals and 25% on established strategic objectives for each executive officer described further below:funding:
Revenue | ||||
Adjusted EBITDA | ||||
Free Cash Flow |
Threshold Performance Requirement.For 2017,2018, no award was payable unless our 20172018 adjusted net income exceeded $57.5$62.5 million.
Funding Formula for Financial Results.At least 80% of targeted performance (threshold) for a metric must be achieved to generate any funding for that metric. The funding formula is set out in the table below. For performance levels between threshold and target or between target and maximum, the funding is determined by linear interpolation. Notwithstanding the actual ICP funding results, the Committee retains the discretion to decrease the actual payment for an ICP participant.
| | | | | | | | | | | | | | | | | | | | |
| Performance Level | | Less than Threshold | | Threshold | | Target | | Maximum and Above | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Performance as % of Target | < 80% | 80% | 100% | 120% | ||||||||||||||||
Payout as a % of Target | 0% | 34% | 100% | 200% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
Performance Level | Less than Threshold | Threshold | Target | Maximum and Above | ||||||||||||
Performance as % of Target | < 80% | 80% | 100% | 120% | ||||||||||||
Payout as a % of Target | 0% | 34% | 100% | 200% |
The sum of the weighted results of the three financial metrics funds the ICP awards. For 2017,2018, NEOs received 75% of the funded amount based on financial results. Awards for the remaining 25% of the funded amount were based on an evaluation of performance on strategic goals. For outstanding performance on strategic objectives, the ICP structure permits the strategic goal payment percentage of up to 200% of target.
Financial results were measured at the corporate level for NEOs except for Mr. Sando, whose financial results were equally weighted between33.3% on the corporate metrics previously outlined and 66.7% onsegment-level revenue and adjusted EBITDA results for the segment he manages. Funding for his strategic objectives component was determined by corporate results alone in alignment with the other NEOs.
Determining Awards for Strategic Goal Achievement.The Committee determined that three major areas of our business strategy should be used for ICP strategic goals: (1) growth and scale,innovation, (2) operational excellence, and (3) high performing organization. The Committee believed that these were the critical strategic initiativesfocal areas for accelerating achievement of ourlong-strategy which are not otherwise measurable through annual financial performance metrics.
The CEO provides the Committee with his assessment of individual results on strategic goals for the other executive officers and the Committee assesses the achievement level of the CEO. Based on these assessments, the Committee determines strategic goal achievement awards for each of the NEOs.
20172018 Financial Results and Funding.As set out in the table below, 20172018 corporate financial performance resulted in 122.7%96.7% of target funding.
Financial Performance Metric | Weight | Target ($000) | Actual 2018 Results ($000) | Percentage Achieved | Funding Percentage | ||||||||||||||||||||
2018 Revenue | 34% | $ | 1,875 | $ | 1,788 | 95.4% | 84.7% | ||||||||||||||||||
2018 Adjusted EBITDA | 33% | $ | 480 | $ | 493 | 102.7% | 113.5% | ||||||||||||||||||
2018 Free Cash Flow | 33% | $ | 264 | $ | 258 | 97.6% | 92.1% | ||||||||||||||||||
Total | 100% | 96.7% |
| | | | | | | | | | | | | | | |
| Financial Performance Metric | Weight | | Target ($000) | Actual 2017 Results ($000) | Percentage Achieved | Funding Percentage | | |||||||
| | | | | | | | | | | | | | | |
| 2017 Revenue | 34% | $1,895 | $1,851 | 97.7% | 92.3% | |||||||||
| 2017 Adjusted EBITDA | 33% | $480 | $480 | 100.0% | 100.0% | |||||||||
| 2017 Free Cash Flow | 33% | $264 | $304 | 115.2% | 176.7% | |||||||||
| | | | | | | | | | | | | | | |
| Total | 100% | 122.7% | ||||||||||||
| | | | | | | | | | | | | | | |
Strategic Goal Results and Awards.For Messrs. Nallathambi and Theologides, the Committee determined that their performance during their time with the Company during the year was aligned with the level of financial results achieved, and set their funding level at 122.7% of target. Their awards were then prorated for days served with the company in 2017 per the terms of their employment agreements. For Messrs.Martell, Balas, Sando and Martell,Pinkston, the Committee determined that each of these executive officers demonstrated extraordinary performance with regard toabove a targeted expectation on the achievement of strategic objectives. The Committee therefore determined that each executive officer achieved his strategic objectives atAn overarching factor was management’s success in achieving strong financial results against the backdrop of a level that exceeded the formulaic financial payout value, and set their funding level at approximately 138% of target for Mr. Martell, 137% of target for Mr. Balas, and 125% of target for Mr. Sando. The table below summarizes the target and actual incentive bonus awards for each executive officer.
| | | | | | | | | | | | | | | | | | |
| | ICP Target | Financial Results | Individual Strategic Results | ICP Award | | ||||||||||||
| Name | ($000) | % of Target | 75% Weight | % of Target | 25% Weight | % of Target | Award ($000) | | |||||||||
| | | | | | | | | | | | | | | | | | |
| Frank D. Martell | $906 | 122.7% | 92.0% | 183.6% | 45.9% | 137.9% | $1,250 | ||||||||||
| James L. Balas | $383 | 122.7% | 92.0% | 180.9% | 45.2% | 137.3% | $525 | ||||||||||
| Barry M. Sando | $550 | 115.4% | 86.5% | 154.7% | 38.7% | 125.2% | $690 | ||||||||||
| Stergios Theologides (1) | $240 | 122.7% | 92.0% | 122.7% | 30.7% | 122.7% | $295 | ||||||||||
| Anand Nallathambi (1) | $167 | 122.7% | 92.0% | 122.7% | 30.7% | 122.7% | $205 | ||||||||||
| | | | | | | | | | | | | | | | | | |
Table of Contentsmore difficult economic environment than had been anticipated.
ICP Target | Financial Results | Individual Strategic Results | ICP Award | ||||||||||||||||||||||||||||||||||||||||||
Name | ($000) | % of Target | 75% Weight | % of Target | 25% Weight | % of Target | Award ($000) | ||||||||||||||||||||||||||||||||||||||
Frank D. Martell | $ | 1,092 | 96.7 | % | 72.5 | % | 110 | % | 27.5 | % | 100.0 | % | $ | 1,092 | |||||||||||||||||||||||||||||||
James L. Balas | $ | 450 | 96.7 | % | 72.5 | % | 110 | % | 27.5 | % | 100.0 | % | $ | 450 | |||||||||||||||||||||||||||||||
Barry M. Sando (1) | $ | 550 | 83.2 | % | 62.4 | % | 131 | % | 32.6 | % | 95.0 | % | $ | 523 | |||||||||||||||||||||||||||||||
Arnold A. Pinkston | $ | 340 | 96.7 | % | 72.5 | % | 110 | % | 27.5 | % | 100.0 | % | $ | 340 |
(1) |
|
Long-Term Incentives (LTI)
Our LTI program is designed to motivate and reward profitable growth and stockholder value creation through awards ofperformance-based andtime-vested equity. The Committee believes that usingperformance-based andtime-vesting equity vehicles reinforces both performance and retention of key executives while aligning their interests with those of our stockholders and encouraging an appropriate level ofrisk-taking.
Long-term incentives represent the largest component of executive officer compensation. In 2017,2018, we granted 50% of total LTI value in PBRSUs, and 50% in RSUs. As outlined in more detail below, we also granted a special performance-based incentive ofone-times base salary for Messrs. Balas, Sando, and Pinkston, the A30 Awards, focused on achievement of aggressive EBITDA margin expansion from 2018 to 2020.
In determining the amount of the equity compensation awarded to each executive officer, the Committee primarily considered company and individual performance. However, the Committee may also evaluate any factor it considers relevant including competencies, skills, prior experiences, scope of responsibility and accountability within the organization, and the long-term incentiveLTI awards made by Peer Group companies tosimilarly-situated executive officers.
LTI Targets.The Committee established the following 20172018 LTI targets for our NEOs:
Base Salary | Target LTI | ||||||||||||||||
Name | Title | ($000s) | % of Salary | ($000s) | |||||||||||||
Frank D. Martell | President and CEO | $ | 780 | 475 | % | $ | 3,705 | ||||||||||
James L. Balas | Chief Financial Officer | $ | 450 | 200 | % | $ | 900 | ||||||||||
Barry M. Sando | MD, Underwriting and Workflow Solutions | $ | 550 | 200 | % | $ | 1,100 | ||||||||||
Arnold A. Pinkston | Chief Legal Officer and Corporate Secretary | $ | 425 | 200 | % | $ | 850 |
| | | | | | | | | | | | |
|
| Base Salary | Target LTI | | ||||||||
| Name | Title | ($000s) | % of Salary | ($000s) | | ||||||
| | | | | | | | | | | | |
| Frank D. Martell | President and CEO | $725 | 450% | $3,263 | |||||||
| James L. Balas | Chief Financial Officer | $425 | 200% | $850 | |||||||
| Barry M. Sando | Managing Director, Underwriting and Workflow Solutions | $550 | 200% | $1,100 | |||||||
| Stergios Theologides(1) | Former General Counsel and Secretary | $425 | 200% | $850 | |||||||
| Anand Nallathambi(1) | Former President and Chief Executive Officer | $800 | 535% | $4,280 | |||||||
| | | | | | | | | | | | |
The following chart summarizes our LTI components for 2017:2018:
LTI VEHICLE | ||||||||||
PBRSUs | ||||||||||
50% | ||||||||||
| • Earn the greater number of shares from:
• Annual measurement against1-year targets and banking of earned shares
• 3-year measurement against3-year targets • Shares earned also subject to3-year vesting requirement • Shares earned from adjusted EPS performance subject to modification based on TSR relative to our peers for1-year and3-year measurement periods | |||||||||
RSUs | 50% | |||||||||
• Vests in equal annual installments over 3 years | ||||||||||
• Vesting subject to achievement of threshold level of adjusted net income |
PBRSUs Granted in 2017.2018.The 20172018 PBRSUs are earned based on adjusted EPS achieved relative to annual targets for each of the three years of the performance period 20172018 through 2019. Please seeAppendix A for a detailed reconciliation of adjusted EPS to the most directly comparable GAAP financial measures.2020.
Shares earned are calculated as followsdescribed below. Participants earn the greater number of PBRSUs resulting from Step 1 or Step 2 (as provided(described in Step 3).
Step 1: Calculate PBRSUs Earned Annually
As illustrated in the graphic below, adjusted EPS and relative TSR results determine the portion of the PBRSUs that are earned each year.
(A) | For the PBRSUs granted in 2018, 30% of the PBRSUs may be earned based on 2018 performance, 50% based on 2019 performance, and 20% based on 2020 performance. |
(A) PBRSUs Eligible to be Earned Based on Annual Adjusted EPS Results (% of Total PBRSUs Granted) | ||||
2018 | 2019 | 2020 | ||
30% | 50% | 20% |
(B) | The number of PBRSUs earned is based on a schedule that provides for 50% of PBRSUs to be earned for annual adjusted EPS results at 80% of target (threshold), 100% of PBRSUs to be earned for results at 100% of target (target), and 200% of PBRSUs to be earned for results at 120% of target (maximum). |
(B) PBRSUs Earned Based on Adjusted EPS Results | ||||||||
Performance Level | Adjusted Annual EPS Results (% of Target) | Accrued PBRSUs Earned (% of Target) | ||||||
Less than Threshold | < 80% | 0% | ||||||
Threshold | 80% | 50% | ||||||
Target | 100% | 100% | ||||||
Maximum+ | 120% | 200% |
| | | | | | | | | | | | |
| (A) PBRSUs Eligible to be Earned Based on Annual Adjusted EPS Results (% of Total PBRSUs Granted) | | ||||||||||
| | | | | | | | | | | | |
| 2017 | 2018 | 2019 | |||||||||
| | | | | | | | | | | | |
| 30% | 50% | 20% | |||||||||
| | | | | | | | | | | | |
| | | | | | | | |
| (B) PBRSUs Earned Based on Adjusted EPS Results | | ||||||
| | | | | | | | |
| Performance Level | Adjusted Annual EPS Results (% of Target) | Accrued PBRSUs Earned (% of Target) | |||||
| | | | | | | | |
| Less than Threshold | < 80% | 0% | |||||
| Threshold | 80% | 50% | |||||
| Target | 100% | 100% | |||||
| Maximum+ | 120% | 200% | |||||
| | | | | | | | |
(C) | The number of PBRSUs earned is then subject to modification based on our relative total stockholder return compared to our 2018 Peer Group (“TSR Modifier”). The TSR Modifier ensures alignment of PBRSU payouts and results for stockholders. |
(C) TSR Modifier | ||||||||||||||||
|
| |||||||||||||||
PBRSUs Earned from | ||||||||||||||||
Annual TSR Performance (Relative | Modifier | |||||||||||||||
150% to 200% of Target | 55 Percentile | No modification | ||||||||||||||
Below | 55 Percentile | Earnout capped at 150% of target | ||||||||||||||
50% to 150% of Target | — | No modifications | ||||||||||||||
0% |
| Above Peer median | Earnout is 50% of target | |||||||||||||
Below Peer median | No earnout |
(D) | ||||||||||||
PBRSUs earned each year are accrued until the end of thethree-year performance period. |
Step 2: Calculate PBRSUs Earned at End of3-Year Performance Period
Calculations of PBRSUs earned at the end of the3-year performance period use the same schedules as for annual calculations:
Adjusted EPS earnout schedule (calculation B above) measured using cumulative adjusted EPS over 3 years relative to the3-year EPS target
TSR modifierModifier schedule (calculation C above) measured over 3 years
Step 3: PBRSUs earned equals the greater of cumulative PBRSUs earned in the 3 annual calculations during the grant cycle (from Step 1) or the3-year calculation (from Step 2)
2018 Performance for 2018 PBRSU Grant.We achieved strong target financial and operating results in 2017,2018 despite the macro-economic headwinds, as evidenced by adjusted EPS outcomes at targetabove-target performance levels. As adjusted EPS performance did not trigger a payout above 150%, there was no modification from the TSR modifier was not applied.Modifier.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PBRSUs Earned for 2017 Performance | | % of Award Subject to Crediting in 2017 | | Adjusted EPS Target | | Adjusted EPS Results | | Adjusted EPS Performance | | % of Award Credited for Adjusted EPS Results | | % of Award Credited Adjusted for TSR Modifier | | |||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2017 | 30% | $2.35 | $2.37 | 102.3% | 30.64% | 30.64% | ||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
PBRSUs | % of Award Subject to Crediting in 2018 | Adjusted EPS Target | Adjusted EPS Results | Adjusted EPS Performance | % of Award Credited for Adjusted EPS Results | % of Award Credited Adjusted for TSR Modifier | ||||||||||||||||||||||||
2018 | 30 | % | $ | 2.50 | $ | 2.72 | 109 | % | 43.20 | % | 43.20 | % |
Restricted Stock Units Granted in 2017.
RSUs vest in three equal installments on the first, second, and third anniversaries of the grant date. These awards encourage executive officer retention and align the interests of executive officers with those of stockholders.
2017
2018 Annual LTI Awards.2018long-term 2017 long-term incentive awards were made at targeted grant value for each of the NEOs. 20172018 grant awards are presented in the table below (with award amounts rounded to the nearest hundred).
| | | | | | | | |
| | 2017 Grant Values | | |||||
Named Executive Officer | RSUs | PBRSUs (1) | | |||||
| | | | | | | | |
Frank D. Martell | $1,631,250 | $1,631,250 | ||||||
James L. Balas | $425,000 | $425,000 | ||||||
Barry M. Sando | $550,000 | $550,000 | ||||||
Stergios Theologides | $425,000 | $425,000 | ||||||
Anand Nallathambi | $2,140,000 | $2,140,000 | ||||||
| | | | | | | | |
2018 Annual Grant Values | ||||||||
Named Executive Officer | RSUs | PBRSUs (1) | ||||||
Frank D. Martell | $ | 1,852,500 | $ | 1,852,500 | ||||
James L. Balas | $ | 450,000 | $ | 450,000 | ||||
Barry M. Sando | $ | 550,000 | $ | 550,000 | ||||
Arnold A. Pinkston | $ | 425,000 | $ | 425,000 |
(1) | PBRSU amount shown at target performance level. Based on 2018 performance, the portion of the PBRSUs tied to 2018 performance will be eligible to vest contingent upon continued employment through December 31, 2020. |
PBRSUs Settled After 2017.2018.PBRSUs granted in 20152016 were paid out after the end of the 2015-20172016-2018 performance period. The calculation of the payout is presented in the table below.Three-year adjusted EPS resulted in maximum payoutsabove-target performance on both anthe annual and3-year calculation basis. However, relative TSR results were below the top quartile for both calculation methods, so payouts were capped atAs performance did not trigger a payout above 150% of target.target, there was no modification from the TSR Modifier and the payout was set at the3-year cumulative result of 141.07%.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2015-2017 PBRSU Performance Period | | % of Award Subject to Crediting for Annual Performance | | Adjusted EPS Target | | Adjusted EPS Results | | % of Adjusted EPS Target Achieved | | Adjusted EPS Performance | | % of Award Subject to Credited for Adjusted EPS Results | | % Vesting- Adjusted for TSR Modifier | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2015 | 30% | $1.45 | $1.90 | 131% | 200% | 60% | 45% | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2016 | 60% | $1.54 | $2.42 | 157% | 200% | 120% | 90% | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2017 | 10% | $1.63 | $2.37 | 145% | 200% | 20% | 15% | |||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total of 3 1-Year Results | 100% | 150% | ||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
3- Year Results | 100% | $4.62 | 6.68 | 145% | 200% | 150% | ||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2016-2018 PBRSU Performance Period | % of Award Subject to Crediting for Annual Performance | Adjusted EPS Target | Adjusted EPS Results | % of Adjusted EPS Target Achieved | Adjusted EPS Performance | % of Award Subject to Credit for Adjusted EPS Results | % Vesting- Adjusted for TSR Modifier | ||||||||||||||||||||||||||||
2016 | 30 | % | $ | 2.18 | $ | 2.42 | 111.01 | % | 155.05 | % | 46.5 | % | 45.0 | % | |||||||||||||||||||||
2017 | 50 | % | $ | 2.31 | $ | 2.37 | 102.60 | % | 112.99 | % | 56.5 | % | 56.5 | % | |||||||||||||||||||||
2018 | 20 | % | $ | 2.45 | $ | 2.72 | 111.02 | % | 155.10 | % | 31.0 | % | 30.0 | % | |||||||||||||||||||||
Total of 31-Year Results | 100 | % | 134.0 | % | 131.5 | % | |||||||||||||||||||||||||||||
3-Year Results | 100 | % | $ | 6.94 | $ | 7.51 | 108.21 | % | 141.07 | % |
The number of shares earned from the 20152016 PBRSU award is presented in the table below.
| | | | | | | | |
| | 2015 PBRSU Grant (2017 Vesting) | | |||||
Name | Target | Earned | | |||||
| | | | | | | | |
Frank D. Martell | 24,210 | 36,315 | ||||||
James L. Balas | 3,873 | 5,809 | ||||||
Barry M. Sando | 16,388 | 24,582 | ||||||
Stergios Theologides(1) | 9,497 | — | ||||||
Anand Nallathambi | 55,125 | 59,718 | ||||||
| | | | | | | | |
2016 PBRSU Grant — 2018 Vesting | ||||||||||
Name | Target | Earned | ||||||||
Frank D. Martell | 32,555 | 45,925 | ||||||||
James L. Balas | 9,129 | 12,878 | ||||||||
Barry M. Sando | 15,741 | 22,205 |
Timing of Equity Awards.After Committee approval, we generally issue annual equity awards to executive officers on the second day on which the NYSE is open for trading following the filing of our Annual Report onForm 10-K, using the last sale price reported for a share of our common stock on the NYSE on that date. Grants to new hires or other grants outside the annual grant cycle follow the same methodology, except that awards are generally issued on the 20th day (or the next succeeding business day if the market is closed on the 20th day) of the third month of the calendar quarter that follows the date on which the Committee approved the awards.
SpecialOne-Time A30 Award. In 2018, the Compensation Committee approved a specialone-time award (the “A30 Award”) to provide a focused incentive for achievement of an aggressive adjusted EBITDA margin expansion between 2018 and 2020. The award is also intended to enhance executive retention and promote the achievement of major strategic initiatives (e.g., workflow automation and adoption of related technologies). The specialone-time award was granted to senior leaders (including our NEOs but excluding the CEO) and leaders of our centers of excellence. For each of the NEO recipients, the target award value was equal to 1.0x the executive’s 2018 salary. The awards are presented in the table below for the NEO recipients.
Name | 2018 A30 Special Award Target Value | ||||
James L. Balas | $ | 450,000 | |||
Barry M. Sando | $ | 550,000 | |||
Arnold A. Pinkston | $ | 425,000 |
A30 Award Performance Metric and Targets. The A30 Award consists of units that are settled and vest at the end of 2020. Each unit converts to one share. The units have a target grant value equal to 100% of base salary and are earned based on achievement ofpre-determined 2020 adjusted EBITDA margin targets.
Retirement and Employee Benefit Plans
Executive officers are entitled to the same benefits generally available to allfull-time employees (subject to fulfilling any minimum service requirement) including the 401(k) plan, healthcare, life insurance and other welfare benefit programs. In designing these benefits, we seek to provide an overall level of benefits that is competitive with those offered by similar companies in the markets in which we operate. We believe that these employee benefits provide a valuable recruiting and retention mechanism for our executive officers and enable us to compete more successfully for qualified executive talent.
Executive Supplemental Benefit Plan and the Pension Restoration Plan. Two of our executive officers — Messrs. Nallathambi andMr. Sando — became participantsa participant in our Executive Supplemental Benefit Plan (the "Executive“Executive Supplemental Benefit Plan"Plan”) prior to its closure to new participants in 2010. On November 18, 2010, we amended the Executive Supplemental Benefit Plan to freeze benefits effective as of December 31, 2010. As a result, compensation earned after 2010 is not taken into accountconsidered in determining covered compensation and final average compensation; service after 2010 is not recognized, except for vesting purposes. Mr. Sando is also a participant in the Pension Restoration Plan, which is limited to individuals who became participants before 1995. Explanation of these plans can be found in the Pension Benefits table below.
Deferred Compensation Plan.The Deferred Compensation Plan is anon-qualified retirement plan that allows eligible participants to defer up to 80% of their salary and annual incentive bonus. Participation is limited to executive officers and certain other key employees. In 2010, we amended the Deferred Compensation Plan to provide additional Company contributions in the form of 401(k) restoration contributions and discretionary retirement savings contributions to a limited number of executive officers who were not eligible to participate in the Executive Supplemental Benefit Plan.restoration.
Other Benefits.We also maintain an executive life insurance program for executive officers and other key employees. This program provides the participant with up to two times their annualized base salary (up to a maximum of $1 million) in group universal life insurance.
Further details regarding perquisites are found in the 20172018 Summary Compensation Table and accompanying footnotes.
Role of the Committee and the Chief Executive Officer
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The Committee is composed solely of independent members of our Board. The Committee reviews and approves executive officer base salaries, annual incentive bonus programs,long-term incentive compensation and other incentive and executive benefit plans. The Committee, in consultation with its independent compensation consultant, analyzes the reasonableness of executive officer compensation, in part by reviewing compensation data from comparable companies and from relevant other industry sources.
Decisions regarding compensation of the CEO are made solely by the Committee based on its deliberations with input from its independent compensation consultant. Decisions regarding other executive officers are made by the Committee after considering recommendations from the CEO as appropriate, as well as input from the Committee'sCommittee’s independent compensation consultant. Our CEO and, as appropriate, Chief Legal Officer, Chief Financial Officer and Chief PeopleHuman Resources Officer, may attend the portion of the Committee'sCommittee’s meetings where individual executive officer performance is discussed. Only Committee members may vote on executive officer compensation decisions.
The Committee regularly meets in executive session with its independent compensation consultant.
Role of Independent Compensation Consultant
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The Committee retained Pay Governance LLC as its independent compensation consultant to advise on the executive officer compensation for 2017.2018. The consultant generally advises the Committee on all aspects of the executive compensation program design and governance process. During 2017,2018, as part of its engagement with the Committee, the independent compensation consultant:
advised on the selection of a peer group of companies for executive officer compensation comparison purposes;
provided guidance on industry best practices, and emerging trends and developments in executive officer compensation;
consulted on incentive design;
advised on determining the total compensation of each of our executive officers and the material elements of total compensation, including (1) annual base salaries, (2) target cash bonus amounts, and (3) the structure and target amount oflong-term incentive awards.awards;
Consulted onnon-employee director compensation; and,
Assisted on a compensation risk assessment.
The Committee retained its independent compensation consultant directly, although in carrying out assignments, the consultant also interacted with Company management on behalf of the Committee. Pay Governance performed no services for the Company, and the Committee does not believe the independent compensation consultants'consultant’s work has raised any conflict of interest. The Committee has the sole authority to select, retain, and terminate the independent compensation consultants.
Adjustment or Recovery of Awards(Claw-backs)
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The Company maintains a recoupment policy that enables recovery ofperformance-based compensation to the extent that it is later determined that applicable performance goals were not actually achieved taking into account a financial restatement or ethical misconduct. We also addedclaw-backs in termination agreements for all executive officers. This policy applies to allperformance-based incentive plans including but not limited to the annual incentive cash bonus andperformance-based equity awards described above.
Anti-Hedging and Pledging Policy
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The Company maintains a policy that prohibits executive officer transactions in put options, call options or other derivative securities, on an exchange or in any other organized market as well as holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Table of ContentsExecutive Stock Ownership Guidelines and Retention Requirements
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We require our executive officers to own a fixed amount of our stock. The rigorous guidelines are based on a multiple of base salary as outlined below:
Position | Ownership Guidelines | |||||||
Chief Executive Officer | 6x base salary | |||||||
Chief Financial Officer | 3x base salary | |||||||
Managing Directors | 3x base salary | |||||||
Other Executive Officers | 1x base salary | |||||||
Covered officers have five years from their date of hire or promotion to the covered position to reach the ownership requirement. All Company securities owned outright or earned and subject only totime-based vesting restrictions count toward the requirement; stock options do not count toward the ownership requirement. Furthermore, we have adopted a share retention requirement which provides that all covered executives must hold at least 50% of net (after tax) shares until the stock ownership guidelines described above are achieved. All NEOs have met their ownership requirements.
Actual Share Ownership vs. Minimum Share Ownership Requirement
(As multiple of base salary)
President and CEO 1x 2x 3x 4x 5x 6x 7x 8x 9x 10x >10x F. Martell CFO J. Balas Managing Director, UWS B. Sando Other Named Executive Officers A. Pinkston Holdings as of December 31, 2018 as a multiple of base salary using stock price of $33.42 Minimum ownership requirement Current actual holdings as of December 31, 2018 Employment Agreements and Severance Arrangements |
Each currently employed executive officer is party to an employment agreement with us. The Committee believes that offering employment agreements to key executive officers is consistent with peer practices and serves as an effective retention tool. Each agreement is individually negotiated and terms may vary. For additional information regarding the terms of the employment agreements, including severance arrangements that we have entered into with our executive officers and the severance benefits actually paid to Mr. Theologides, see "Employment Agreements"“Employment Agreements” below.
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All equityEquity awards are currently grantedissued under the 2018 Plan, which was approved by our stockholders at our annual meeting held in May 2018. Prior to the approval of the 2018 Plan, we issued share-based awards under the 2011 Performance Incentive Plan, (the "2011 Plan"), as amended. However, at the annual meeting, stockholders will be asked to approve the new 2018 Performance Incentive Plan (the "2018 Plan"). If the 2018 Plan is approved by stockholders, future equity awards will be granted under the 2018 Plan. The 2011 Plan and 2018 Plan do not include an automatic "single trigger"“single trigger” change in control vesting provision. Instead, both plans include a change in control provision where automatic
accelerated vesting of an award in connection with a change in control will only occur if an acquirer or successor to us fails to assume or continue the awards or the awards otherwise do not survive the transaction. Additionally, award agreements include "double-trigger"“double-trigger” severance protections
and provide for accelerated vesting of awards that remain outstanding following a change in control transaction in the event of a termination without cause following a change in control.
The Deferred Compensation Plan generally provides for accelerated vesting of awards or benefits, as the case may be, in the event of a change in control of the Company. In addition, the Executive Supplemental Benefit Plan provides that when a participant incurs an involuntary separation from service without good cause subsequent to a change in control, payment of benefits will commence in the same manner and in the same amount as if the participant had attained his or her normal retirement age on the date of termination.
In addition to the plan and award agreement provisions described above, we have entered into a change in control agreement (a "Change“Change in Control Agreement"Agreement”) with each of our executive officers who remain employed.NEOs. Under the Change in Control Agreement, a "change“change in control"control” means the consummation of any one of the following:
a merger or consolidation of the Company in which our stockholders end up owning less than 50% of the voting securities of the surviving entity;
the sale, transfer or other disposition of all or substantially all of our assets or the complete liquidation or dissolution of the Company;
a change in the composition of our Board of Directors over atwo-year period as a result of which fewer than a majority of the directors are incumbent directors, as defined in the agreement; or
the acquisition or accumulation by any person or group, subject to certain limited exceptions, of at least 30% of our voting securities.
If the termination of a coveredour executive officer'sofficer’s employment occurs without cause or if the executive officer terminates his employment for good reason within thetwenty-four-month period following a change in control, we will pay the following benefits in one lump sum in the month following the month in which the date of the termination occurs:
the executive officer'sofficer’s base salary through and including the date of termination and any accrued but unpaid annual incentive bonus;
between two and three times the executive officer'sofficer’s target annual cash bonus amount established for the fiscal year in which the termination occurs; and
between two and three times the executive officer'sofficer’s annual base salary in effect immediately prior to the date of termination.
Furthermore, under the Change in Control Agreement, for a period ranging fromtwenty-four tothirty-six months and subject to the covered executive officer'sofficer’s continued payment of the same percentage of the applicable premiums as the executive officer was paying immediately prior to the date of termination or, if more favorable to the executive officer, at the time at which the change in control occurred, we will provide medical and dental coverage pursuant to COBRA for the executive officer (and if applicable, the executive officer'sofficer’s dependents). To the extent that the executive officer cannot participate in the plans previously available, we will provide such benefits on the sameafter-tax basis as if they had been available. These obligations are reduced by any welfare benefits made available to the executive officer from subsequent employers.
The Change in Control Agreement provides that if any excise tax imposed by Section 4999 of the Code (or any similar tax), applies to the payments, benefits or other amounts payable under the agreement or
otherwise, including without limitation, any acceleration of the vesting of outstanding stock options, restricted stock or performance shares (collectively, the "Total Payments"“Total Payments”), then the Total Payments will be reduced (but not below zero) so that the maximum amount of the Total Payments (after reduction) will be $1.00 less than the amount which would cause the Total Payments to be subject to the excise tax; provided that such reduction to the Total Payments will be made only if theafter-tax benefit to the executive officer is greater after giving effect to such reduction than if no such reduction had been made. This type of provision is often referred to as a "modified “modifiedcut-back,"” and is included because the Change in Control Agreement does not provide for any type of "gross up"“gross up” or similar benefit.
The Change in Control Agreement had an initial term through December 31, 2011 and is automatically extended for additionalone-year periods unless either party notifies the other not later than the preceding January 1 that it does not wish to extend the term for an additional year. All agreements with current executive officers have since been extended through December 31, 2018.2019. For a description of the calculations and further explanation of the payments due to the executive officers upon termination of employment and/or a change in control, see Potential Payments upon Termination or Change in Control tables below.
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As a general matter, the Committee takes into accountconsiders the various tax and accounting implications of the compensation vehicles we employ. When determining amounts oflong-term incentive grants to executive officers and employees, the Committee examines the accounting cost associated with the grants. Under accounting guidance, grants of stock options, RSUs and PBRSUs result in an accounting charge for the Company. The accounting charge is equal to the fair value of the instruments being issued. For RSUs, the cost is generally equal to the fair value of the stock on the date of grant times the number of shares granted. This expense is amortized over the requisite service period. With respect to stock options, we calculate the fair value of the option and take that value into account as an expense over the vesting period, after adjusting for possible forfeitures. For PBRSUs, we calculate the fair value of the award upon grant and adjust the value to be expensed on a quarterly basis over the performance period based on expected award payouts, after adjusting for possible forfeitures.
Section 162(m) of the Code generally prohibits apublicly-held company from deducting compensation paid to a current or former NEO that exceeds $1.0 million during the tax year. Certain awards granted before November 2, 2017 that were based upon attainingpre-established performance measures that were set by the Committee under a plan approved by the Company'sCompany’s stockholders, as well as amounts payable to former executive officers pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the $1.0 million deductibility limit.
As one of the factors in its consideration of compensation matters, the Committee noted this deductibility limitation. However, the Committee has the flexibility to take anycompensation-related actions that it determines are in the best interests of the Company and our stockholders, including awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation will in fact be deductible.
The Compensation Committee has reviewed and discussed the foregoing CD&A with management. Based on its review and discussions, the Compensation Committee has recommended to the Board that the CD&A be included in the Company'sCompany’s Annual Report onForm 10-K for the year ended December 31, 20172018 and in the Company'sCompany’s proxy statement for its 20182019 Annual Meeting of stockholders.
Members of the Compensation Committee J. David Chatham, Chair Paul F. Folino Claudia Fan Munce Thomas C. O’Brien Jaynie Miller Studenmund |
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Chatham (Chair), Folino, O'BrienO’Brien and Ms.Mmes. Munce and Studenmund served on the Compensation Committee during 2017.2018. No person who served as a member of the Compensation Committee during 20172018 was or is an officer or employee of the Company. No executive officer of the Company serves or served as a director or member of the compensation committee of another company who employed or employs any member of the Company'sCompany’s Compensation Committee or the Board.
20172018 Summary Compensation Table
The following table sets forth certain information concerning compensation of each named executive officer who served as such during the fiscal years ended December 31, 2018, 2017 2016 and 2015,2016, other than for Mr. Balas,Pinkston, for whom compensation information is provided only for the fiscal yearsyear ended December 31, 2017 and 2016,2018, the yearsonly year in which he was a named executive officer. The positions listed below are as of December 31, 2017.2018.
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Name and Principal Position | | | Year | | | Salary | | | Stock Awards | | | Option Awards | | | Non-Equity Incentive Plan Compensation | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | | All Other Compensation | | | Total | ||||||||||||||||||||
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(4) | (5) | (6) | (7) | (8) | (9) | |||||||||||||||||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||||
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Frank D. Martell | | | 2017 | | | 710,577 | | | 3,262,445 | | | — | | | 1,250,000 | | | — | | | 61,177 | | | 5,284,199 | | |||||||||||||||||||
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President and Chief | | | 2016 | | | 650,000 | | | 2,274,943 | | | — | | | 1,129,400 | | | — | | | 61,490 | | | 4,115,833 | | |||||||||||||||||||
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| Executive Officer(1) | | | 2015 | | | 650,000 | | | 1,624,975 | | | — | | | 1,200,400 | | | — | | | 74,139 | | | 3,549,514 | | ||||||||||||||||||
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James Balas | 2017 | 425,000 | 849,992 | — | 525,000 | — | 31,411 | 1,831,403 | ||||||||||||||||||||||||||||||||||||
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Chief Financial Officer(2) | 2016 | 396,538 | 637,935 | — | 531,700 | — | 24,714 | 1,590,887 | ||||||||||||||||||||||||||||||||||||
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Barry M. Sando | | | 2017 | | | 550,000 | | | 1,099,985 | | | | | | 690,000 | | | 634,144 | | | 52,523 | | | 3,026,652 | | |||||||||||||||||||
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Managing Director, | | | 2016 | | | 550,000 | | | 1,099,981 | | | — | | | 740,000 | | | 378,594 | | | 51,503 | | | 2,820,078 | | |||||||||||||||||||
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Underwriting & Workflow Solutions | | | 2015 | | | 540,192 | | | 1,099,963 | | | — | | | 730,000 | | | — | | | 63,949 | | | 2,434,104 | | |||||||||||||||||||
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Anand Nallathambi | 2017 | 153,846 | 4,279,979 | — | 205,078 | — | 48,734 | 4,687,637 | ||||||||||||||||||||||||||||||||||||
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Former President and Chief | 2016 | 800,000 | 4,279,940 | — | 1,390,030 | 386,990 | 78,609 | 6,935,569 | ||||||||||||||||||||||||||||||||||||
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Executive Officer | 2015 | 800,000 | 3,699,990 | — | 1,477,400 | — | 89,197 | 6,066,587 | ||||||||||||||||||||||||||||||||||||
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Stergios Theologides | | | 2017 | | | 320,385 | | | 849,992 | | | — | | | 294,905 | | | — | | | 790,951 | | | 2,256,233 | | |||||||||||||||||||
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Former General Counsel & | | | 2016 | | | 425,000 | | | 849,950 | | | — | | | 450,000 | | | — | | | 115,500 | | | 1,840,450 | | |||||||||||||||||||
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Secretary(3) | | | 2015 | | | 410,000 | | | 637,439 | | | — | | | 502,400 | | | — | | | 125,511 | | | 1,675,350 | | |||||||||||||||||||
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Name and Principal Position | Year | Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||||
(3) ($) | (4) ($) | (5) ($) | (6) ($) | (7) ($) | (8) ($) | ($) | ||||||||||||||||||||||||||
Frank D. Martell | 2018 | 778,942 | 3,704,964 | — | 1,092,000 | — | 65,748 | 5,641,654 | ||||||||||||||||||||||||
President and Chief Executive Officer (1) | 2017 | 710,577 | 3,262,445 | — | 1,250,000 | — | 61,177 | 5,284,199 | ||||||||||||||||||||||||
2016 | 650,000 | 2,274,943 | — | 1,129,400 | — | 61,490 | 4,115,833 | |||||||||||||||||||||||||
James L. Balas | 2018 | 449,519 | 1,349,905 | — | 450,000 | — | 30,856 | 2,280,280 | ||||||||||||||||||||||||
Chief Financial Officer | 2017 | 425,000 | 849,992 | — | 525,000 | — | 31,411 | 1,831,401 | ||||||||||||||||||||||||
2016 | 396,538 | 637,935 | — | 531,700 | — | 24,714 | 1,590,887 | |||||||||||||||||||||||||
Barry M. Sando | 2018 | 550,000 | 1,649,903 | — | 522,500 | — | 50,556 | 2,772,959 | ||||||||||||||||||||||||
Managing Director, Underwriting & Workflow Solutions | 2017 | 550,000 | 1,099,985 | — | 690,000 | 634,144 | 52,523 | 3,026,652 | ||||||||||||||||||||||||
| 2016
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| 550,000 | 1,099,981 | — | 740,000 | 378,594 | 51,503 | 2,820,078 | |||||||||||||||||||||||
Arnold A. Pinkston Chief Legal Officer & Corporate Secretary (2) | 2018 | 415,192 | 1,274,903 | — | 340,000 | — | 12,847 | 2,042,943 |
upon satisfaction of certain performance criteria and continued employment through December 31, 2019. If the highest performance target is met or exceeded, the value of the awards at grant date would be as follows: Mr. Nallathambi — $6,419,969; Mr. Martell — $4,893,667; Mr, Balas — $1,274,988; Mr. Sando — $1,649,977; and Mr. Theologides — $1,274,988.
(1) | Effective March 6, 2017, the Board appointed Mr. Martell to the position of President and Chief Executive Officer and principal executive officer. |
(2) | Arnold A. Pinkston was appointed Chief Legal Officer & Corporate Secretary on January 2, 2018. |
(3) | Amounts include any amounts electively deferred by the NEO under the Deferred Compensation Plan. |
(4) | For 2018, reflects the aggregate grant date fair value of stock awards, consisting of RSUs and PBRSUs, computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718,Compensation-Stock Compensation. We valued the RSUs as of the grant date by multiplying the closing price of our common stock on that date by the number of RSUs awarded. We valued the PBRSUs as of the grant date by multiplying the closing price of our common stock on that date by the target number of PBRSUs that will vest upon achievement of the target performance. The RSUs were granted and vest contingent upon the satisfaction of certain performance criteria through December 31, 2018, which criteria were satisfied, and thereafter vest based on continued employment through December 31, 2020. The PBRSUs were granted and vest contingent upon satisfaction of certain performance criteria and continued employment through December 31, 2020. If the highest performance target is met or exceeded, the value of the awards at grant date would be as follows: Mr. Martell $3,704,964; Mr. Balas $1,799,880; Mr. Sando $2,199,861; and Mr. Pinkston $1,699,856. |
(5) | The Company did not grant stock options in 2016, 2017 or 2018. |
(6) | For 2018, represents the annual incentive bonus that was paid to each NEO and includes any amounts electively deferred by the NEO under the Deferred Compensation Plan. |
(7) | For 2018, the change in the present value of the life annuity from the end of fiscal year 2017 to the end of fiscal year 2018 for the Executive Supplemental Benefit Plan and the Pension Restoration Plan with respect to Mr. Sando only decreased due to an increase in the interest rate assumptions and is therefore excluded The actual change in the present values is as follows: ($411,002) under the Executive Supplemental Benefit Plan and ($8,715) under the Pension Restoration Plan. The amounts in this column do not include earnings under the Deferred Compensation Plan as such earnings were neitherabove-market nor preferential. See the Pension Benefits table below under “Pension Benefits for 2018” for assumptions used in calculating these amounts.
Grants ofPlan-Based Awards for 2018 The following table sets forth information
Effective March 6, 2017, we entered into a new employment agreement with
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The undersigned stockholder(s) of CoreLogic, Inc. hereby revoke(s) all previously granted proxies and appoint(s) Frank D. Martell and Arnold A. Pinkston, and each of them, as proxies for the undersigned, with power to act without the other and with power to each of substitution, and hereby authorize(s) them to attend the annual meeting of the stockholders of said corporation to be held May 1, 2018,April 30, 2019, at 2:00 p.m. Pacific Time, at the executive offices of CoreLogic, Inc., 40 Pacifica, Irvine, California 92618, and any postponements or adjournments thereof, and to vote all of the shares of common stock of CoreLogic, Inc. that the undersigned is/are entitled to vote at such meeting as indicated on the reverse side hereof, with all powers that the undersigned would have if acting in person, and with discretionary authority to act on such other matters as may properly come before said meeting or any postponements or adjournments thereof.
THE SHARES OF COMMON STOCK REPRESENTED HEREBY SHALL BE VOTED SPECIFICALLY ON THE PROPOSALS LISTED ON THE REVERSE SIDE HEREOF AS THERE SPECIFIED. WHERE NO SPECIFICATION IS MADE, SAID SHARES OF COMMON STOCK SHALL BE VOTED “FOR” EACH OF THE DIRECTOR NOMINEES NAMED IN PROPOSAL 1 AND “FOR” PROPOSALS 2 3 AND 4.3.
YOUR VOTE IS IMPORTANT – PLEASE VOTE TODAY
Continued and to be signed and dated on reverse side
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Important Notice Regarding the Availability of Proxy Materials for the Annual
Meeting of Stockholders to be held May 1, 2018.April 30, 2019.
The Notice of Annual Meeting and Proxy Statement and our 20172018 Annual Report
to Stockholders are available at:http://www.viewproxy.com/CoreLoqic/2018CoreLogic/2019
TO VOTE BY MAIL AS THE BOARD OF DIRECTORS RECOMMENDS ON EACH OF THE ITEMS BELOW, SIMPLY SIGN, DATE, AND RETURN THIS PROXY CARD. The Board of Directors Recommends a Vote FOR each of the Nominees in Proposal 1 and FOR Proposals 2 | Please mark your votes like this |
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1. Election of directors: | FOR | AGAINST | ABSTAIN |
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01 J. David Chatham | ☐ | ☐ | ☐ | |||||
02 Douglas C. Curling | ☐ | ☐ | ☐ | |||||
03 John C. Dorman | ☐ | ☐ | ☐ | |||||
04 Paul F. Folino | ☐ | ☐ | ☐ | |||||
05 Frank D. Martell | ☐ | ☐ | ☐ | |||||
06 Claudia Fan Munce | ☐ | ☐ | ☐ | |||||
07 Thomas C. O’Brien | ☐ | ☐ | ☐ | |||||
08 Vikrant Raina | ☐ | ☐ | ☐ | |||||
09 Jaynie Miller Studenmund | ☐ | ☐ | ☐ | |||||
10 David F. Walker | ☐ | ☐ | ☐ | |||||
11 Mary Lee Widener | ☐ | ☐ | ☐ |
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☐ FOR ☐ AGAINST ☐ ABSTAIN
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☐ FOR ☐ AGAINST ☐ ABSTAIN
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any postponements or adjournments thereof.
I plan on attending the meeting☐
Please sign exactly as your name(s) appears on this proxy card. If held in joint tenancy, all persons should sign. Trustees, administrators, etc. should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing this proxy card.
oFORoAGAINSToABSTAIN
In their discretion, the proxies are authorized to vote upon such other business as may properly come before the meeting or any postponements or adjournments thereof.
I plan on attending the meeting o
Please sign exactly as your name(s) appears on this proxy card. If held in joint tenancy, all persons should sign. Trustees, administrators, etc. should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing this proxy card.
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Vote by Internet, Telephone or Mail
24 Hours a Day, 7 Days a Week
CONTROL NUMBER
PROXY VOTING INSTRUCTIONS
Please have your 11 digit control number ready when voting by Internet or Telephone.
Internet and telephone voting is available through 11:59 P.M. Eastern Daylight Time on April 30, 2018.29, 2019.
INTERNET |
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Vote Your Proxy on the Internet:
Go towww.AALvote.com/CLGX | Vote Your Proxy by Phone: Call 1 (866)804-9616 | Vote Your Proxy by Mail: | |||||||
Have your proxy card available when you access the above website. Follow the prompts to vote your shares. |
| Use any touch-tone telephone to vote your proxy. Have your proxy card available when you call. Follow the voting instructions to vote your shares. |
| Mark, sign, and date your proxy card, then detach it, and return it in the postage-paid envelope provided. |
If you vote your proxy by Internet or by Telephone, you do NOT need to mail back your proxy card.