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Cardtronics plc
3250 Briarpark Drive, Suite 400
Houston, Texas 77042
PROXY STATEMENT
PROXY STATEMENT
These proxy materials are furnished to you in connection with the solicitation of proxies by the Board of Directors (our “Board”"Board") of Cardtronics plc, an English public limited company (“Cardtronics”("Cardtronics"), for use at our 20172018 Annual General Meeting of Shareholders and any adjournments or postponements of the meeting (the “Annual Meeting”"Annual Meeting"). The Annual Meeting will be held on Wednesday, May 10, 2017,16, 2018 at 5:00 pm5 p.m. BST at Weil, Gotshal & Manges, 100 Fetter Lane, London time, at KPMG Number Twenty, 20 Grosvenor St, Mayfair, London W1K 4QJ,EC4A 1AY, United Kingdom.
On or about March 31, 2017,April 2, 2018, we mailed a Notice of Internet Availability to our shareholders of record and beneficial owners who owned our Class A ordinary shares at the close of business on March 15, 2017.21, 2018 (the "Record Date"). The Notice of Internet Availability contains information on how to access the proxy materials and vote online. The Notice of Annual General Meeting of Shareholders, this proxy statement and our Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 are available to you in the Investor Relations section of our website atwww.cardtronics.com or, upon your request, paper versions of these materials will be delivered to you by mail.
On July 1, 2016, the location of incorporation of the parent company of the Cardtronics group of companies was changed from Delaware to the United Kingdom, whereby Cardtronics plc became the new publicly traded corporate parent of the Cardtronics group of companies following the completion of the merger between Cardtronics, Inc. (“("Cardtronics Delaware”Delaware") and one of its subsidiaries (the “Merger”"Merger"). The Merger was completed pursuant to the Agreement and Plan of Merger, dated April 27, 2016, the adoption of which was approved by Cardtronics Delaware’sDelaware's shareholders on June 28, 2016 (collectively, the “Redomicile Transaction”"Redomicile Transaction"). Pursuant to the Redomicile Transaction, each issued and outstanding share of common stock of Cardtronics Delaware held immediately prior to the Merger was effectively converted into one Class A ordinary share, nominal value $0.01 per share, of Cardtronics plc. Upon completion, the Class A ordinary shares were listed and began trading on The NASDAQ Stock Market LLC (“NASDAQ”("NASDAQ") under the symbol “CATM,”"CATM," the same symbol under which shares of common stock of Cardtronics Delaware were formerly listed and traded.
As a result of the Redomicile Transaction, unless the context indicates otherwise, in this proxy statement all references to “shares”"shares" relating to a date prior to July 1, 2016 refer to shares of common stock of Cardtronics Delaware, while all references to “shares”"shares" relating to a date on or after July 1, 2016 refer to Class A ordinary shares of Cardtronics plc.
ABOUT THE ANNUAL MEETING
What is the purpose of the 20172018 Annual General Meeting of Shareholders?
At the Annual Meeting, our shareholders will be asked to: (i) re-elect twothree Class III directors, Jorge M. DiazJ. Tim Arnoult, Dennis F. Lynch and G. Patrick Phillips,Juli C. Spottiswood, each by separate ordinary resolution, to our Board to serve until the 20202021 Annual General Meeting of Shareholders; (ii) ratify our Audit Committee’sCommittee's selection of KPMG LLP (U.S.) as our U.S. independent registered public accounting firm for the fiscal year ending December 31, 2017;2018; (iii) re-appoint KPMG LLP (U.K.) as our U.K. statutory auditors under the U.K. Companies Act 2006, to hold office until the conclusion of the next annual general meeting of shareholders at which accounts are presented to our shareholders; (iv) authorize our Audit Committee to determine our
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U.K. statutory auditors’auditors' remuneration; (v) approve, on an advisory basis, the compensation of the Named Executive Officers as disclosed in this proxy statement; (vi) determine, on an advisory basis, the frequency of future advisory votes on the compensation of the Named Executive Officers; (vii) approve the directors’ remuneration policy; (viii) approve, on an advisory basis, the directors’directors' remuneration report; (ix)(vii) receive our U.K. statutory accounts together with our U.K. statutory
reports, including the directors’directors' report, the strategic report, the directors’directors' remuneration report and the auditors’auditors' report for the fiscal year ended December 31, 20162017 (our “U.K."U.K. Annual Reports and Accounts”Accounts"); (x) authorize our Board to allot shares for the purpose of capitalizing the merger reserve of Cardtronics and enable potential future dividends or share repurchases; and (xi) approve the form of a share repurchase contract produced at the Annual Meeting to be entered into with certain counterparties in relation to the convertible note hedge transactions.. Each of the above matters that will be submitted to shareholders for their approval is described in more detail herein.
Resolutions in the proposals will be proposed as ordinary resolutions which means that, assuming a quorum is present, each such resolution will be approved if a simple majority of votes cast (whether in person or by proxy) for or against a resolution are cast in favor of the resolution.
With respect to the non-binding advisory votes in Proposal 2 (ratification of our Audit Committee’sCommittee's selection of KPMG LLP (U.S.) as our U.S. independent registered public accounting firm for the fiscal year ending December 31, 2017)2018), Proposal 5 (approval, on an advisory basis, of the compensation of the Named Executive Officers as disclosed in this proxy statement), and Proposal 6 (determination, on an advisory basis, of the frequency of future advisory votes on the compensation of Named Executive Officers) and Proposal 8 (approval, on an advisory basis, of the directors’directors' remuneration report), the result of the vote for each proposal will not require our Board to take any action. Our Board values the opinions of our shareholders as expressed through advisory votes and other communications and will carefully consider the outcome of the advisory vote on each proposal.
Certain proposals are items that are required to be approved by shareholders periodically in accordance with the U.K. Companies Act 2006 and may not have an analogous requirement under U.S. laws or regulations. As such, while these proposals may be familiar to shareholders accustomed to being shareholders of companies incorporated in England and Wales, other shareholders may be less familiar with these proposals and should review and consider each proposal carefully.
Who may vote at the Annual Meeting?
Our Board has fixed March 15, 201721, 2018 as the record date for the Annual Meeting (the “record date”).Meeting. If you are a shareholder of Cardtronics as of the close of business on the record date, you are qualified to receive notice of and to vote at the Annual Meeting.
As of the record date there were 45,608,07445,920,908 shares outstanding and entitled to vote at the Annual Meeting. As of the record date, our directors and executive officers beneficially owned, in the aggregate, approximately 534,767282,225 of such shares, representing beneficial ownership of 1.2%0.6% of the outstanding shares as of that date, and these shares are included in the number of shares entitled to vote at the Annual Meeting.
Subject to disenfranchisement in accordance with applicable law and/or our Articles of Association, each share is entitled to one vote on each matter properly brought before the Annual Meeting. No other class of securities will be entitled to vote at the Annual Meeting. Pursuant to our Articles of Association, cumulative voting rights are prohibited.
A complete list of shareholders of record entitled to vote will be open to the examination of any shareholder for any purpose germane to the Annual Meeting for a period of 10 days prior to the Annual Meeting at our offices in Houston, Texas during ordinary business hours. Such list shall also be open to the examination of any shareholder present at the Annual Meeting.
When and where is the Annual Meeting?
Our Annual Meeting will take place on Wednesday, May 10, 2017,16, 2018 at 5:00 pm5 p.m. BST at Weil, Gotshal & Manges, 100 Fetter Lane, London time, at KPMG Number Twenty, 20 Grosvenor St, Mayfair, London W1K 4QJ,EC4A 1AY, United Kingdom. Only shareholders of record on the record date (i.e., March 15, 2017)21, 2018) are invited to attend the Annual Meeting and are requested to vote on the proposals described in this proxy statement.
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What is a proxy?
A proxy is your legal designation of another person to vote the shares that you own. That other person is called a proxy. If you designate someone as your proxy in a written document, that document is also called a proxy or a proxy card. Our Board has appointed the individuals indicated on the enclosed proxy card (the “Proxy Holders”"Proxy Holders") to serve as proxies for the Annual Meeting.
If you are a shareholder of record (as discussed in more detail below) and you properly complete and submit a proxy, your shares will be voted by the Proxy Holders in accordance with your instructions on this proxy. If you complete and submit a proxy, but do not indicate how you wish to vote, the Proxy Holders will vote in accordance with the recommendations of our Board. See “What are the recommendations of our Board?” below for additional information.Board as set forth after each proposal.
If you hold shares in “street name”"street name" through a broker, in some cases your shares may be voted even if you do not provide your broker, bank or other nominee with voting instructions. At the Annual Meeting, a broker will not have discretionary authority to vote on any of the proposals in the absence of timely instructions from the beneficial owners, except for Proposal 2 (ordinary resolution to ratify our Audit Committee’sCommittee's selection of KPMG LLP (U.S.) as our U.S. independent registered public accounting firm for the fiscal year ending December 31, 2017)2018), Proposal 3 (ordinary resolution to re-appoint KPMG LLP (U.K.) as our U.K. statutory auditors under the U.K. Companies Act 2006), Proposal 4 (ordinary resolution to authorize our Audit Committee to determine our U.K. statutory auditors’auditors' remuneration) and Proposal 97 (ordinary resolution to receive our U.K. Annual Reports and Accounts). See “What"What is the effect of abstentions and broker non-votes and what vote is required to approve each proposal discussed in this proxy statement?”" below for additional information.
What does it mean if I receive more than one proxy card?
If you receive more than one proxy card, then you own shares through multiple accounts with our transfer agent and/or your broker, bank or other nominee. Please sign and return all proxy cards to ensure that all of your shares are voted at the Annual Meeting.
What is the difference between holding shares as a “shareholder"shareholder of record”record" and holding shares in “street name”"street name"?
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·Shareholder of RecordRecord.. If your shares are registered directly in your name with our transfer agent, Computershare Trust Company, N.A., you are considered a “shareholder"shareholder of record”record" with respect to those shares, and you are receiving these proxy materials directly from us. As the shareholder of record, you have the right to mail your proxy directly to us or to vote in person at the Annual Meeting.·
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- Street Name
ShareholderShareholder.. If your shares are held in a stock brokerage account, by a bank or other holder of record (commonly referred to as being held in “street name”"street name"), you are the “beneficial owner”"beneficial owner" with respect to those shares and these proxy materials are being forwarded to you by that custodian, which is considered, with respect to those shares, the shareholder of record. As the beneficial owner, you have the right to direct your broker, bank or other nominee how to vote and you are also invited to attend the Annual Meeting. However, since you are not the shareholder of record, you may not vote these shares in person at the Annual Meeting unless you obtain a signed proxy from the shareholder of record giving you the right to vote the shares. Your broker, bank or other nominee has provided voting instructions for you to use in directing the broker, bank or other nominee how to vote your shares. If you fail to provide sufficient instructions to your broker, bank or other nominee, the shareholder of record may be prohibited from voting your shares as discussed elsewhere in this proxy statement.How many votes must be present to hold the Annual Meeting?
There must be a quorum present for any business to be transacted at the Annual Meeting. A quorum is the presence at the Annual Meeting, in person or by proxy, of shareholders who together are entitled to cast at least the majority of the voting rights of Cardtronics as of the record date. Abstentions and broker non-votes will be counted
for purposesTable of establishing a quorum at the Annual Meeting. As of the record date, there were Contents45,608,074 shares issued outstanding and entitled to vote at the Annual Meeting. Consequently, the presence of the holders of at least 22,804,038shares, in person or by proxy, is required to establish a quorum for the Annual Meeting.
If less than a quorum is represented at the Annual Meeting, the meeting will be adjourned by the chairman of the meeting, or as otherwise provided in our Articles of Association, to such other day and such other time and/or place as determined in accordance with our Articles of Association.
How many votes do I have?
You are entitled to one vote for each share that you owned on the record date on all proposals considered at the Annual Meeting.
How do I vote my shares?
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·Shareholder of RecordRecord.. Shares held directly in your name as the shareholder of record can be voted in person at the Annual Meeting or you can provide a proxy to be voted at the Annual Meeting by signing and dating the enclosed proxy card and returning it in the enclosed postage-paid envelope. If you plan to vote in person at the Annual Meeting, please bring proof of identification. Even if you currently plan to attend the Annual Meeting, we recommend that you also submit your proxy as described above so that your vote will be counted if you later decide not to attend the Annual Meeting.·
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- Street Name
ShareholderShareholder.. If you hold your shares in “street"street name,”" please follow the instructions provided by your broker, bank or other holder of record (the record holder). Shares held in street name may be voted in person by you at the Annual Meeting only if you obtain a signed proxy from the record holder giving you the right to vote the shares. If you hold your shares in street name and wish to simply attend the Annual Meeting, please bring proof of ownership and identification.
What are the recommendations of our Board?
Our Board recommends that you vote your shares as follows:
·FOR each of the ordinary resolutions to re-elect two Class I directors, Jorge M. Diaz and G. Patrick Phillips, to our Board to serve until the 2020 Annual General Meeting of Shareholders;
·FOR the ordinary resolution to ratify our Audit Committee’s selection of KPMG LLP (U.S.) as our U.S. independent registered public accounting firm for the fiscal year ending December 31, 2017;
·FOR the ordinary resolution to re-appoint KPMG LLP (U.K.) as our U.K. statutory auditors under the U.K. Companies Act 2006,How many votes must be present to hold office until the conclusion of the next annual general meeting of shareholders at which accounts are presented to our shareholders;Annual Meeting?
·FORThere must be a quorum present for any business to be transacted at the ordinary resolution to authorize our Audit Committee to determine our U.K. statutory auditors’ remuneration;
·FORAnnual Meeting. A quorum is the ordinary resolution to approve, on an advisory basis, the compensation of the Named Executive Officers as disclosed in this proxy statement;
·FOR the frequency of one year with respect to the ordinary resolution to determine, on an advisory basis, the frequency of future advisory votes on the compensation of the Named Executive Officers;
·FOR the ordinary resolution to approve the directors’ remuneration policy;
·FOR the ordinary resolution to approve, on an advisory basis, the directors’ remuneration report;
·FOR the ordinary resolution to receive our U.K. Annual Reports and Accounts;
·FOR the ordinary resolution to authorize our Board to allot shares for the purpose of capitalizing the merger reserve of Cardtronics and enable potential future dividends or share repurchases; and
·FOR the ordinary resolution to approve the form of a share repurchase contract producedpresence at the Annual Meeting, in person or by proxy, of shareholders who together are entitled to cast at least the majority of the voting rights of Cardtronics as of the record date. Abstentions and broker non-votes will be entered into with certain counterpartiescounted for purposes of establishing a quorum at the Annual Meeting. As of the record date, there were 45,920,908 shares issued outstanding and entitled to vote at the Annual Meeting. Consequently, the presence of the holders of at least 22,960,454 shares, in relationperson or by proxy, is required to establish a quorum for the convertible note hedge transactions.Annual Meeting.
If less than a quorum is represented at the Annual Meeting, the meeting will be adjourned by the chair of the meeting, or as otherwise provided in our Articles of Association, to such other day and such other time and/or place as determined in accordance with our Articles of Association.
How many votes do I have?
You are entitled to one vote for each share that you owned on the record date on all proposals considered at the Annual Meeting.
Can I change my vote after I return my proxy card?
Yes.Yes. Even after you have returned your proxy card, you may revoke your proxy at any time before it is exercised by: (i) submitting a written notice of revocation to our Company Secretary, M. Dilshad Kasmani,Aimie Killeen, by mail to Cardtronics plc, 3250 Briarpark Drive, Suite 400, Houston, Texas 77042 or by facsimile at (832) 308-4770 no later than May 9, 2017;15, 2018; (ii) mailing in a new proxy card bearing a later date, but received by us no later than May 9, 2017;15, 2018; or (iii) attending the Annual Meeting and voting in person, which suspends the powers of the Proxy Holders.
If you hold your shares in “street"street name,”" you may change your vote by submitting new voting instructions to your broker, bank or nominee in accordance with that entity’sentity's procedures.
Could other matters be decided at the Annual Meeting?
At the time this proxy statement was filed, we did not know of any matters to be raised at the Annual Meeting other than those proposals referenced in this proxy statement. With respect to any other matter that properly comes before the Annual Meeting, the Proxy Holders will vote the proxies as recommended by our Board or, if no recommendation is given, in their own discretion.
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What is the effect of abstentions and broker non-votes and what vote is required to approve each proposal discussed in this proxy statement?
Proposal 1.The affirmative vote Each of the holders ofproposed directors will be re-elected if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, isproposed director as required for the uncontested re-election of each of the proposed directors. This means that each of the Class III director nominees must receive the majority of all votes cast for that Class III director nominee to be electedre-elected to our Board. You may vote “FOR,” “AGAINST”"FOR," "AGAINST" or “ABSTAIN”"ABSTAIN" for each Class III director nominee. If you “ABSTAIN,”"ABSTAIN," your votes will be counted for purposes of establishing a quorum, but will not be taken into account in determining the outcome of the proposal. Broker non-votes are not treated as entitled to cast a vote and therefore will have no impact on the proposal.
Proposals 2, 3, 4 and 96.. The affirmative vote of the holders of Each proposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve each of these proposals.resolution. You may vote “FOR,” “AGAINST”"FOR," "AGAINST" or “ABSTAIN”"ABSTAIN" on each of these proposals. If you “ABSTAIN,”"ABSTAIN," your votes will be counted for purposes of establishing a quorum, but will not be taken into account in determining the outcome of the proposal. These proposals are considered “routine”"routine" matters, so if you are a street name shareholder, your broker, bank, or other nominee is permitted to vote your shares on each of these proposals even if your broker does not receive voting instructions from you.
Proposal 5.Proposals 5, 6, 7, 8, 10 and 11. The affirmative vote of the holders ofproposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve each of these proposals.resolution. You may vote “FOR,” “AGAINST”"FOR," "AGAINST" or “ABSTAIN”"ABSTAIN" on each of these proposals. If you “ABSTAIN,”"ABSTAIN," your votes will be counted for purposes of establishing a quorum, but will not be taken into account in determining the outcome of the proposal. Broker non-votes are not treated as entitled to cast a vote and therefore will have no impact on the proposals.
Who is participating in this proxy solicitation and who will pay for its cost?
We will bear the entire cost of soliciting proxies, including the cost of the preparation and distribution of this proxy statement, the proxy card and any additional information furnished to our shareholders. In addition to this solicitation, our directors, officers and other employees may solicit proxies by use of mail, telephone, facsimile, electronic means, in person or otherwise. These persons will not receive any additional compensation for assisting in the solicitation, but may be reimbursed for reasonable out-of-pocket expenses in connection with the solicitation.
We have retained Broadridge Investor Communication Solutions, Inc. (“Broadridge”) to aid in the distribution of proxy materials and to provide voting and tabulation services for the Annual Meeting. For these services, we will pay Broadridge a fee of approximately $40,000 and reimburse it for certain expenses. In addition, we will reimburse brokerage firms, nominees, fiduciaries, custodians and other agents for their expenses in distributing proxy materials to the beneficial owners of our shares.
May I propose actions for consideration at the next annual general meeting of shareholders or nominate individuals to serve as directors?
Yes. You may submit proposals for consideration at future shareholder meetings, including director nominations. See “Corporate Governance - "Corporate Governance—Our Board - Board—Director Selection and Nomination Process”Process" and “Proposals"Proposals for the 2018 Annual General Meeting of Shareholders”Shareholders" for more details.
What is “householding”"householding" and how does it affect me?
We participate, and some brokers, banks, trustees, custodians and other nominees may be participating, in the practice of “householding”"householding" proxy materials. This procedure allows multiple shareholders residing at the same address the convenience of receiving a single proxy statement and Annual Report on Form 10-K and Notice of Internet Availability. You may request a separate copy of this proxy statement by calling 1-800-579-16391-866-540-7095 or by writing us at Cardtronics plc, c/o Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717.
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Whom should I contact with questions about the Annual Meeting?
If you have any questions about this proxy statement or the Annual Meeting, please contact our Company Secretary M. Dilshad Kasmani,Aimie Killeen, at 3250 Briarpark Drive, Suite 400, Houston, Texas 77042 or by telephone at (832) 308-4484.308-4518.
Where may I obtain additional information about Cardtronics plc?
We refer you to our Annual Report on Form 10-K filed with the Securities and Exchange Commission (“SEC”("SEC") on February 21, 2017.March 1, 2018. Our Annual Report on Form 10-K, including audited financial statements, is available on our website atwww.cardtronics.com.
IF YOU WOULD LIKE TO RECEIVE ADDITIONAL INFORMATION ABOUT CARDTRONICS PLEASE CONTACT OUR COMPANY SECRETARY, M. DILSHAD KASMANI,AIMIE KILLEEN, AT 3250 BRIARPARK DRIVE, SUITE 400, HOUSTON, TEXAS 77042.
On the following pages, we have set forth the proposals that are being submitted to the shareholders for their approval. Following each proposal is a summary of the proposal as well as our Board’sBoard's recommendation in support thereof.
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PROPOSAL 1:
ORDINARY RESOLUTIONS TO RE-ELECT CLASS III DIRECTORS
Our Class III Director Nominees
Our Board currently has nine director positions that are divided into three classes, with one class to be elected at each annual general meeting of shareholders to serve for a three-year term. The term of our Class III directors expires at the Annual Meeting, the term of our Class IIIII directors expires at the 20182019 Annual General Meeting of Shareholders, and the term of our Class IIII directors expires at the 20192020 Annual General Meeting of Shareholders, with each director to hold office until his or her successor is duly elected and qualified or until the earlier of his or her death, resignation, retirement or removal. Our Class I directors are Jorge M. Diaz and G. Patrick Phillips; our Class II directors are J. Tim Arnoult, Dennis F. Lynch and Juli C. Spottiswood; and our Class III directors are Julie Gardner, Steven A. RathgaberEdward H. West and Mark Rossi. Our Board currently has one vacant director position.
Effective March 9, 2017, actingActing upon the recommendation of our Nominating & Governance Committee, our Board nominated Jorge M. DiazJ. Tim Arnoult, Dennis F. Lynch and G. Patrick PhillipsJuli C. Spottiswood for re-election as Class III directors at the Annual Meeting. Each nominee is currently a director, has consented to being named a nominee in this proxy statement, and has indicated a willingness to serve if elected. Class III directors electedre-elected at the Annual Meeting will serve for a term to expire at the 20202021 Annual General Meeting of Shareholders, with each director to hold office until his or her successor is duly elected and qualified or until his or her earlier death, resignation, retirement or removal. We did not pay any third-party fees to assist in the process of identifying or evaluating these candidates.
Unless authority to vote for a particular nominee is withheld, the shares represented by the enclosed proxy will be votedFOR the re-election of each of Jorge M. DiazJ. Tim Arnoult, Dennis F. Lynch and G. Patrick PhillipsJuli C. Spottiswood as Class III directors. In the event that any nominee becomes unable or unwilling to serve, the shares represented by the enclosed proxy will be voted for the re-election of such other person as our Board may recommend in his or her place. We have no reason to believe that any nominee will be unable or unwilling to serve as a director.
The affirmative vote of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to re-elect each nominee as a Class I director.
Shareholders may not cumulate their votes in the re-election of our directors.
The names and certain information about the Class III director nominees, including their ages as of the Annual Meeting date, positions with Cardtronics, as well as the specific experience, qualifications, attributes and skills that led our Board to the conclusion that the director should be nominated to serve on our Board in light of our business, are set forth below:
| | | | | |
| | Age |
|
| | Position |
|---|
| J. Tim Arnoult | | | 69 | | Class II Director |
Jorge M. Diaz
Dennis F. Lynch | | 52
| 69 | | Class III Director |
G. Patrick Phillips
Juli C. Spottiswood | | 67
| 51 | | Class III Director |
Jorge M. Diaz has served as a director of our company since December 2004. Mr. Diaz is the Division President and Chief Executive Officer of Fiserv Output Solutions, a division of Fiserv, Inc. (NASDAQ:FISV), a global technology provider to banks, credit unions, lenders and investment firms (“Fiserv”), and has held that position since April 1994. Fiserv Output Solutions provides card production services, statement processing and electronic document distribution services. In January 1985, Mr. Diaz co-founded National Embossing Company, a predecessor company to Fiserv Output Solutions. Mr. Diaz sold National Embossing Company to Fiserv in April 1994. Mr. Diaz serves as a director for the local chapter of the Boys and Girls Club, a national non-profit organization.
Mr. Diaz’ extensive experience in the electronic funds transfer processing industry, as well as his long-standing association with our company, makes him uniquely qualified to serve on our Board, our Compensation Committee and our Nominating & Governance Committee.
G. Patrick Phillips has served as a director of our company since February 2010. Mr. Phillips retired from Bank of America in 2008, after a 35-year career, most recently serving as President of Bank of America’s Premier Banking and Investments group from August 2005 to March 2008. During his tenure at Bank of America, Mr. Phillips led a variety of consumer, commercial, wealth management and technology businesses. Mr. Phillips also serves on the board of directors of USAA Federal Savings Bank (“USAA FSB”) where he serves as Chairman of the Finance and Audit Committee and Chairman of the Compensation Committee. He also is a member of the board of Novant Health, a non-profit healthcare company operating in North Carolina, South Carolina, Georgia and Virginia. In addition, Mr. Phillips serves as an adviser to the financial services practice of Bain & Company, a global management consulting firm. Mr. Phillips previously served as a director of Visa USA and Visa International from 1990 to 2005 and 1995 to 2005, respectively. Mr. Phillips received a Masters of Business Administration from the Darden School of Business at the University of Virginia in 1973 and graduated from Presbyterian College in Clinton, South Carolina in 1971.
Mr. Phillips’ extensive experience in the banking industry and the electronic payments industry makes him uniquely qualified to serve on our Board, our Audit Committee and as Chairman of our Compensation Committee.
* * *
Recommendation and Required Vote
The affirmative vote of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to approve these proposals. Our Board believes that the re-election of each Class I director nominee identified above is advisable and in the best interests of Cardtronics and our shareholders. ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” EACH OF THE CLASS I DIRECTOR NOMINEES IDENTIFIED ABOVE.
Continuing Directors
In addition to the Class I directors to be elected at the Annual Meeting, the directors who will continue to serve on our Board after the Annual Meeting, their ages as of the Annual Meeting date, positions with Cardtronics, as well as the specific experience, qualifications, attributes and skills that led our Board to the conclusion that the director should serve on our Board in light of our business are set forth below:
Name
|
| Age
|
| Position
|
J. Tim Arnoult
| | 68
| | Class II Director
|
Dennis F. Lynch
| | 68
| | Class II Director
|
Juli C. Spottiswood
| | 50
| | Class II Director
|
Julie Gardner
| | 59
| | Class III Director
|
Steven A. Rathgaber
| | 63
| | Class III Director
|
Mark Rossi
| | 60
| | Class III Director
|
J. Tim Arnoult has served as a director of our company since January 2008. Mr. Arnoult provides over 30 years of banking, payments and information technology experience to our Board. From 1979 to 2006, Mr. Arnoult served in various positions at Bank of America, N.A., including President of Global Treasury Services in 2005 and 2006, President of Global Technology and Operations from 2000 to 2005, President of Central U.S. Consumer and Commercial Banking from 1996 to 2000, and President of Private Banking from 1992 to 1996. Mr. Arnoult also serves on the board of directors of Stellus Capital Investment Corporation and AgileCraft, LLC. Mr. Arnoult is experienced in the integration of complex mergers including NationsBank and Bank of America in 1998 and Bank of America and Fleet Boston in 2004. Since 2006 Mr. Arnoult has worked as a consultant and corporate director. Mr. Arnoult holds a Bachelor of Arts and Masters of Business Administration degrees from the University of Texas at Austin.
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Mr. Arnoult has experience serving as a director for public and private companies as well as significant nonprofit and industry association boards, including the board of Visa USA. We believe Mr. Arnoult’sArnoult's broad financial services background, including international responsibilities, past directorship experience and active community involvement make him well-qualified to serve on our Board, as ChairmanChair of our Nominating & Governance Committee, on our Audit Committee and on our Finance Committee.
Dennis F. Lynch has served as a director of our company since January 2008 and ChairmanChair of our Board since November 2010. Mr. Lynch has over 30 years of experience in the payments industry and has led the introduction and growth of various card products and payment solutions. Mr. Lynch is currently a director on the board of Fiserv.Fiserv, Inc. (NASDAQ:FISV), a global technology provider to banks, credit unions, lenders and investment firms ("Fiserv"). Mr. Lynch is also currently a director and was previously the chairperson (from 2009 through 2011) of the Secure Remote Payments Council, a cross-industry group dedicated to accelerating more secure methods of conducting consumer payments in the internet/mobile marketplace. From 2005 to 2008, Mr. Lynch served as ChairmanChair and Chief Executive Officer of RightPath Payments Inc., a company providing business-to-business payments via the internet. From 1994 to 2004, Mr. Lynch served in various positions with NYCE Corporation, including serving as President and Chief Executive Officer from 1996 to 2004, and as a director from 1992 to 2004. Prior to joining NYCE Corporation, Mr. Lynch served in a variety of information technology and products roles, ultimately managing Fleet Boston’sBoston's consumer payments portfolio. Mr. Lynch has served on a number of boards, including the board of Open Solutions, Inc., a publicly-traded company delivering core banking products to the financial services market, from 2005 to 2007. Mr. Lynch was also a founding director of YANKEE24 Network, an electronic payments network serving the New England region and served as its ChairmanChair from 1988 to 1990. Additionally, Mr. Lynch has served on the Executive Committee and the board of the Electronic Funds Transfer Association. Mr. Lynch received his Bachelors and Masters degrees from the University of Rhode Island.
Mr. Lynch’sLynch's extensive experience in the payment industry and his leading role in the introduction and growth of various card products and payment solutions make him a valuable asset to our Board. We leverage Mr. Lynch’sLynch's knowledge of card products and payment solutions in developing our strategies for capitalizing on the proliferation of prepaid debit cards. Additionally, Mr. Lynch’sLynch's service on a number of corporate boards and his experience as the Chief Executive Officer of NYCE Corporation, provide him with the background and leadership
skills necessary to serve as ChairmanChair of our Board and as a member of our Nominating & Governance Committee and our Finance Committee.
Juli C. Spottiswood has served as a director of our company since May 2011. From October 2014 to July 2015, Ms. Spottiswood served as Senior Vice President of Blackhawk Network Holdings Inc. (NASDAQ: HAWK), a leading prepaid and payments network (“Blackhawk”("Blackhawk"), and General Manager of Blackhawk Engagement Solutions (“BES”("BES"), a division of Blackhawk. BES provides customized engagement and incentive programs for consumers, employees and sales channels. She was previously an Independent Advisor to Blackhawk. Ms. Spottiswood was also previously President, Chief Executive Officer and a member of the board at Parago, Inc., a marketing services company, which was sold in October 2014 to Blackhawk. Ms. Spottiswood co-founded Parago in 1999, originally serving as the company’scompany's Chief Financial Officer. Ms. Spottiswood also brings to our Board significant experience within the prepaid card industry; previously serving as a board member and treasurer of the Network Branded Prepaid Card Association, a nonprofit association formed to promote the use of prepaid cards as an alternative payment vehicle. In October 2017, Ms. Spottiswood joined a newly formed private equity backed holding company—Syncapay, Inc. as Chair & CEO. Syncapay's mission is to acquire and consolidate high-growth, leading edge payments companies. In 2009, Ms. Spottiswood was the recipient of the Ernst & Young Entrepreneur of the Year award in the Southwest region. Ms. Spottiswood holds a Bachelors of Business Administration in Accounting from the University of Texas.
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Ms. Spottiswood has expansive business and financial services experience, which includes experience as an accountant with Arthur Andersen. Her knowledge of the payment industry and innovation makes her a well-qualified asset to our Board, to our Finance Committee and as ChairmanChair of our Audit Committee.
Recommendation and Required Vote
Each proposed director will be elected if a simple majority of votes cast at the Annual Meeting (whether in person or by proxy) for or against the proposed director are cast in favor of the proposed director to serve as a Class II director. Our Board believes that the re-election of each Class II director nominee identified above is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE "FOR" EACH OF THE CLASS II DIRECTOR NOMINEES IDENTIFIED ABOVE.
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Continuing Directors
In addition to the Class II directors to be elected at the Annual Meeting, the directors who will continue to serve on our Board after the Annual Meeting, their ages as of the Annual Meeting date, positions with Cardtronics, as well as the specific experience, qualifications, attributes and skills that led our Board to the conclusion that the director should serve on our Board in light of our business are set forth below:
| | | | | |
Name | | Age | | Position |
|---|
| Jorge M. Diaz | | | 53 | | Class I Director |
| G. Patrick Phillips | | | 68 | | Class I Director |
| Julie Gardner | | | 60 | | Class III Director |
| Edward H. West | | | 51 | | Class III Director |
| Mark Rossi | | | 61 | | Class III Director |
Jorge M. Diaz has served as a director of our company since December 2004. Mr. Diaz has served as vice chair of strategy and business development of Fiserv since February 2017, where he supports the billings and payments group, and had previously held the position of Division President and Chief Executive Officer of Fiserv Output Solutions, a division of Fiserv. In January 1985, Mr. Diaz co-founded National Embossing Company, which he sold to Fiserv in April 1994. Mr. Diaz serves as a director for the local chapter of the Boys and Girls Club, a national non-profit organization.
Mr. Diaz' extensive experience in the electronic funds transfer processing industry, as well as his long-standing association with our company, makes him uniquely qualified to serve on our Board, our Compensation Committee and our Nominating & Governance Committee.
G. Patrick Phillips has served as a director of our company since February 2010. Mr. Phillips retired from Bank of America in 2008, after a 35-year career, most recently serving as President of Bank of America's Premier Banking and Investments group from August 2005 to March 2008. During his tenure at Bank of America, Mr. Phillips led a variety of consumer, commercial, wealth management and technology businesses. Mr. Phillips also serves on the board of directors of USAA Federal Savings Bank ("USAA FSB") where he served as Chair of the Finance and Audit Committee and Chair of the Compensation Committee through March 2018 and now serves as Chair of the Risk Committee. He also is Chair of the board of Novant Health, a non-profit healthcare company operating in North Carolina, South Carolina, Georgia and Virginia. In addition, Mr. Phillips serves as an adviser to the financial services practice of Bain & Company, a global management consulting firm. Mr. Phillips previously served as a director of Visa USA and Visa International from 1990 to 2005 and 1995 to 2005, respectively. Mr. Phillips received a Masters of Business Administration from the Darden School of Business at the University of Virginia in 1973 and graduated from Presbyterian College in Clinton, South Carolina in 1971.
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Mr. Phillips' extensive experience in the banking industry and the electronic payments industry makes him uniquely qualified to serve on our Board, our Audit Committee and as Chair of our Compensation Committee.
Julie Gardner has served as a director of our company since October 2013. Ms. Gardner has over 25 years of marketing experience in the retail industry and was cited by Forbes in 2012, as the 11th most influential Chief Marketing Officer in the world. Ms. Gardner currently serves as the North American Chairwoman of the Bonial International Group’sGroup's Advisory Board. Ms. Gardner retired from her retail career in 2012, after most recently serving as Executive Vice President and Chief Marketing Officer for Kohl’sKohl's Department Stores. During her 14 year tenure at Kohl’s,Kohl's, 887 new stores were opened and 25 new brands were launched to the portfolio of private, exclusive and national brands. She has been credited for the successful launch of numerous exclusive brands including Simply Vera Wang, Elle, Food Network, Chaps, Dana Buchman, Candies, Lauren Conrad, Jennifer Lopez and Tony Hawk. While at Kohl’s,Kohl's, Ms. Gardner created the Kohl’sKohl's Cares program, the first philanthropic strategy for the company, which raised over $200 million between 2000 and 2012 for children’schildren's health and educational programs, and lead the funding and development of the TED educational program with the TED organization. From 1985 to 1999, Ms. Gardner served in a number of positions for Eckerd Corporation, a retail drug store company operating over 3,000 stores in the Southeast and Southwest, serving as Chief Marketing Officer from 1994 to 1999. Prior to joining Eckerd Corporation, Ms. Gardner served in Account Management with two advertising firms. Her vast success has led to numerous awards, including 20 Addy Awards, 30 RACie awards and an Emmy Award from the Arts and Sciences.
Ms. Gardner has expansive marketing and advertising experience in the retail industry and we believe her experience and her background with rapid business expansion, as well as her insights with drugstore chains, a key retailer constituent of Cardtronics, make her well-qualified to serve on our Board, our Nominating & Governance Committee and our Compensation Committee.
Edward H. WestSteven A. Rathgaber has beenserved as our Chief Executive Officer since January 1, 2018. Mr. West joined Cardtronics in January 2016 and hasbecame our Chief Financial Officer, replacing J. Chris Brewster, our former Chief Financial Officer, effective February 23, 2016. In July 2016, Mr. West also assumed the role of Chief Operations Officer. Prior to joining Cardtronics, Mr. West served as a director of our company since February 1, 2010. From January 1991 to January 2010, Mr. Rathgaber was employed by NYCE Payments Network, LLC (“NYCE”), a wholly-owned subsidiary of Fidelity National Information Services, Inc., which is an electronic funds transfer and debit card processing business. Mr. Rathgaber most recently served as the President and Chief OperatingExecutive Officer of NYCE, a role he assumedEducation Management Corporation, joining that company initially as Chief Financial Officer in September 2004. From April 19892006. Prior to January 1991,2006, Mr. RathgaberWest held various executive positions within Internet Capital Group, including serving as Chief Executive Officer of ICG Commerce, the largest subsidiary of the group from 2002-2006. Prior to his time at Internet Capital Group, Mr. West served as Chief Financial Officer for Delta Air Lines. Mr. West began his career as a founding partner of Veritas Venture,banker at SunTrust. Mr. West received a start-up software development company. From May 1981 to March 1989, Mr. Rathgaber servedBBA in a number of executive-level roles within Automatic Data Processing, Inc., andFinance from January 1977 to April 1981, Mr. Rathgaber held numerous positions within Citibank. Mr. Rathgaber served on the board of Everlink Payment Services, a joint venture between the U.S.-based NYCE and Celero Solutions, Inc., a Canadian credit union processing company, from the company’s inception in September 2003 until December 2009. Mr. Rathgaber presently serves on the Advisory Board of a private equity firm, Platform Partners
LLC, based in Houston, Texas. Mr. Rathgaber also served as Chairman of the Everlink board from June 2004 until May 2006. Mr. Rathgaber holds a Bachelor of Science degree in Accounting from St. John’sEmory University.
Mr. Rathgaber’sWest's current position as our Chief Executive Officer enables him to bring invaluable operational, financial, regulatory and governance insights to our Board; and his considerable role in the management of our company enables him to continually educate and advise our Board on our business, industry and related opportunities and challenges.
Mark Rossi has served as a director of our company since November 2010. Mr. Rossi is a founder and Senior Managing Director of Cornerstone Equity Investors, L.L.C. (“Cornerstone”("Cornerstone"), a Connecticut based private equity firm. The investment principals of Cornerstone have funded approximately 100 companies in a variety of industries butfirm with a particular emphasis on technology and telecommunications, health care services and products and business services. Cornerstone and its predecessor firm have provided financing to a large number of successful companies including Dell Computer, Health Management Associates, Linear Technology, Micron Technology, Novatel Wireless, Inc. and Equitrac, Inc. Prior to the formation of Cornerstone in 1996, Mr. Rossi was President of Prudential Equity Investors, Inc., the private equity arm of Prudential Insurance Company of America. Mr. Rossi’sRossi's industry focus is on business services and technology companies. After graduating with highest honors from Saint Vincent College in 1978 with a Bachelor of Arts Degree in Economics, Mr. Rossi earned a Master of Business Administration Degree from the J.L. Kellogg School of Management at Northwestern University where he was an F.C. Austin Scholar.
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Mr. Rossi has extensive financial services experience, is a member of the board of directors of several companies and previously served as ChairmanChair of the board of directors of Maxwell Technologies Inc. (a publicly traded company)(NASDAQ: MXWL), which makes him well-qualified to serve on our Board, our Audit Committee, our Compensation Committee and as ChairmanChair of our Finance Committee.
PROPOSAL 2:
AN ORDINARY RESOLUTION TO RATIFY THE SELECTION OF KPMG LLP (U.S.)
AS OUR U.S. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
Our Audit Committee has selected KPMG LLP (U.S.) as our U.S. independent registered public accounting firm to conduct our audit for the year ending December 31, 2017.2018.
We engaged KPMG LLP (U.S.) to serve as our U.S. independent registered public accounting firm and to audit our consolidated financial statements beginning with the fiscal year ended December 31, 2001. The engagement of KPMG LLP (U.S.) for the fiscal year ending December 31, 20172018 has been approved by our Audit Committee. Our Audit Committee has reviewed and discussed the audited consolidated financial statements included in our Annual Report on Form 10-K and has approved their inclusion therein. See “Audit Matters — "Audit Matters—Report of our Audit Committee”Committee" for more details.
Although shareholder ratification of the selection of KPMG LLP (U.S.) is not required, our Audit Committee considers it desirable for our shareholders to vote upon this selection. If the selection is not ratified, our Audit Committee will consider whether it is appropriate to select another independent registered public accounting firm. Even if the selection is ratified, our Audit Committee may, in its discretion, direct the appointment of a different independent registered public accounting firm at any time during the year if it believes that such a change would be in the best interests of Cardtronics and our shareholders.
A representative of KPMG LLP (U.S.) is expected to be present at the Annual Meeting and will have an opportunity to make a statement if the representative desires to do so and will be available to respond to appropriate questions from shareholders at the Annual Meeting.
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Recommendation and Required Vote
The affirmative vote of the holders ofproposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve this proposal.resolution. Our Board believes that the ratification of the selection of KPMG LLP (U.S.) as our U.S. independent registered public accounting firm for the fiscal year ending December 31, 20172018 is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”"FOR" THE RATIFICATION OF THE SELECTION OF KPMG LLP (U.S.) AS OUR U.S. INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM.
PROPOSAL 3:
AN ORDINARY RESOLUTION TO RE-APPOINT KPMG LLP (U.K.) AS OUR
U.K. STATUTORY AUDITORS UNDER THE U.K. COMPANIES ACT 2006
In accordance with the U.K. Companies Act 2006, our U.K. statutory auditors must be re-appointed at each meeting at which the U.K. Annual Reports and Accounts are presented to our shareholders. KPMG LLP (U.K.) has served as Cardtronics’Cardtronics' U.K. statutory auditors since June 29, 2016.
If this proposal doesis not receive the affirmative vote of a majority of the shares entitled to vote and present in person or representedapproved by proxyour shareholders at the Annual Meeting, our Board may appoint auditors to fill the vacancy.
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Recommendation and Required Vote
The affirmative vote of the holders ofproposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve this proposal.resolution. Our Board believes, following a recommendation to this effect by our Audit Committee, that the re-appointment of KPMG LLP (U.K.) as Cardtronics’Cardtronics' U.K. statutory auditors is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”"FOR" THE RE-APPOINTMENT OF KPMG LLP (U.K.) AS OUR U.K. STATUTORY AUDITORS TO HOLD OFFICE FROM THE CONCLUSION OF THE ANNUAL MEETING UNTIL THE CONCLUSION OF THE NEXT ANNUAL GENERAL MEETING OF SHAREHOLDERS AT WHICH THE U.K. ANNUAL REPORTS AND ACCOUNTS ARE PRESENTED TO OUR SHAREHOLDERS.
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PROPOSAL 4:
AN ORDINARY RESOLUTION TO AUTHORIZE OUR AUDIT COMMITTEE
TO DETERMINE OUR U.K. STATUTORY AUDITORS’AUDITORS' REMUNERATION
In accordance with the U.K. Companies Act 2006, the remuneration of our U.K. statutory auditors must be fixed in a general meeting of shareholders or in such manner as may be determined in a general meeting of shareholders. We are asking our shareholders to authorize our Audit Committee to determine the remuneration of KPMG LLP (U.K.) in its capacity as Cardtronics’Cardtronics' U.K. statutory auditors under the U.K. Companies Act 2006 in accordance with our Audit Committee’sCommittee's procedures and applicable law.
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Recommendation and Required Vote
The affirmative vote of the holders ofproposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve this proposal.resolution. Our Board believes that authorizing our Audit Committee to determine the remuneration of KPMG LLP (U.K.) as Cardtronics’Cardtronics' U.K. statutory auditors is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”"FOR" THE AUTHORIZATION OF OUR AUDIT COMMITTEE TO DETERMINE OUR U.K. STATUTORY AUDITORS’AUDITORS' REMUNERATION.
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PROPOSAL 5:
AN ORDINARY RESOLUTION OF A NON-BINDING ADVISORY VOTE
TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION
In accordance with Section 14A of the Securities Exchange Act of 1934, as amended (the “Exchange Act”"Exchange Act"), we are asking shareholders to approve, on an advisory basis, the compensation of our Named Executive Officers as disclosed in this proxy statement in accordance with the compensation disclosure rules of the SEC. We believe that it is appropriate to seek the views of shareholders
Delivering on the design and effectivenessour Executive Compensation Program Key Objectives
The primary objectives of our executive compensation program are to attract, retain and we value your opinion. Basedmotivate qualified individuals who are capable of leading our company to meet its business objectives and to increase overall shareholder value.
To do so, our compensation program aligns the interests of management with those of our investors, creates incentives for, and rewards performances of the individuals based on the shareholder vote on the frequency of an advisory vote on executive compensation that took place at our 2011 Annual Meeting of Stockholders, our Board determined to hold the vote on executive compensation annually until the next shareholder vote on the frequency of such advisory vote. Thus, our shareholder advisory vote to approve executive compensation currently takes place annually,overall success and the next such voteachievement of financial objectives. Specifically, our compensation program provides management with
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the incentive to achieve or maximize certain company-level performance measures. Each year, based upon the expected circumstances and conditions confronting us for that year, our Compensation Committee selects performance metrics that it believes will take place atproduce the Annual Meeting. As described inbest return for our shareholders given the “Compensationthen-current conditions. For a discussion of 2017 compensation decisions, see the "Compensation Discussion and Analysis”Analysis" section of this proxy statement, ourstatement.
Overview of Compensation Committee has structuredProgram Governance Practices
We endeavor to maintain strong governance standards in the oversight of our executive compensation programprograms, including the following policies and practices that were in effect during 2017:
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- Performance-based compensation arrangements, including performance-based equity awards that use select performance measures intended to
achievedrive shareholder value represents a significant portion of the key objectives described below:overall compensation opportunity.
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- No excise tax gross-ups or executive-only perquisites such as company cars, security systems or financial planning.
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- A compensation clawback policy that entitles the Board of Directors to seek recoupment from participants in the 2007 Long Term Incentive Plan and Cash Incentive Plan for a portion of their awards if financials are restated resulting in a lesser payout or for their entire awards if they are involved in fraud or misconduct leading to the restatement.
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- A share ownership policy that generally requires executive officers and directors to hold shares until the requisite ownership threshold is satisfied.
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- Prohibition on repricing of stock options and stock appreciation rights without shareholder approval.
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- Annual advisory shareholder vote to approve the Company's executive compensation.
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- The direct retention by the Compensation Committee of its independent compensation consultant, Meridian Compensation Partners, which performs no other consulting or other services for the Company.
Advisory Say on Pay Proposal
Objectives
|
| How Our Executive Compensation Program Achieves The Objectives
|
The primary objectives of our executive compensation program are to attract, retain and motivate qualified individuals who are capable of leading our company to meet its business objectives and to increase overall shareholder value.
| | We believe our executive compensation program aligns the interests of management with those of our investors and creates incentives for and rewards performances of the individuals based on our overall success and the achievement of financial objectives. Specifically, our compensation program provides management with the incentive to achieve or maximize certain company-level performance measures. Each year, based upon the expected circumstances and conditions confronting us for that year, our Compensation Committee selects performance metrics that it believes will produce the best return for our shareholders given the then-current conditions. For 2016, our Compensation Committee selected (i) Adjusted Earnings before Interest, Taxes, and Amortization (“Adjusted EBITA”), as reported in the reconciliation of Non-GAAP Financial Measures in our Annual Report on Form 10-K, (ii) Revenue, defined as Total Revenue on a U.S. GAAP basis as reported in our Annual Report on Form 10-K and (iii) Adjusted Net Income per Diluted Share (“Adjusted Net Income per Share”), as reported in the reconciliation of Non-GAAP Financial Measures in our Annual Report on Form 10-K, each as further defined below in the “Compensation Discussion and Analysis” section of this proxy statement.
|
We urge shareholders to read the “Compensation"Compensation Discussion and Analysis”Analysis" section of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the Summary Compensation Table for the year ended December 31, 20162017 and other related compensation tables and narrative discussions, which provide detailed information of the compensation of our Named Executive Officers. Our Compensation Committee believes that the policies and procedures articulated in the “Compensation"Compensation Discussion and Analysis”Analysis" section of this proxy statement are effective in achieving our goals and that the compensation of our Named Executive Officers reported in this proxy statement has contributed to ourhelp position us for long-term success.
In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance in recognition that executive compensation is an important matter for our shareholders, we are asking shareholders to adopt the following advisory resolution at the Annual Meeting:
RESOLVED, that the shareholders of Cardtronics approve, on an advisory basis, the compensation of Cardtronics’Cardtronics' Named Executive Officers as disclosed in the proxy statement for the 20172018 Annual General Meeting of Shareholders of Cardtronics pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and related narrative discussion.
This advisory vote, commonly referred to as a “say-on-pay” vote, is not binding on our Board or our Compensation Committee, will not overrule any decisions made by our Board or our Compensation Committee, or require our Board or our Compensation Committee to take any action.Table of Contents
Although the vote is non-binding and is not meant to address any particular element of our executives' compensation arrangements, our Compensation Committee will take into account the outcome of the vote when considering future executive compensation decisions. In particular, to the extent there is any significant vote against our Named Executive Officers’ compensation as disclosed in this proxy statement, we will consider our shareholders’ concerns and our Compensation Committee will evaluate whether any actions are necessary to address those concerns.
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Recommendation and Required Vote
The affirmative vote of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to approve this proposal. Our Board believes that approving Named Executive Officer compensation is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”"FOR" THE APPROVAL OF NAMED EXECUTIVE OFFICER COMPENSATION.
PROPOSAL 6:
AN ORDINARY RESOLUTION OF A NON-BINDING ADVISORY VOTE ON THE FREQUENCY OF
FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION
In accordance with Section 14A of the Exchange Act, we are asking shareholders to vote, on an advisory basis, on how frequently they would like to cast an advisory vote on the compensation of our Named Executive Officers. By voting on this proposal, shareholders may indicate whether they would prefer an advisory vote on executive officer compensation once every one, two or three years.
Our prior say-on-frequency vote occurred in 2011. At that year’s meeting, shareholders agreed with our Board’s recommendation that advisory votes on executive compensation should occur every year. Although this advisory vote is not binding on our Board, our Board will take into account the outcome of the vote when considering the frequency of future advisory votes on executive compensation.
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Recommendation and Required Vote
The affirmative vote of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to approve this proposal. Our Board believes that the adoption of the ordinary resolution approving an annual advisory vote on executive compensation is advisable and in the best interests of Cardtronics and our shareholders. ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “ONE YEAR” AS THE FREQUENCY OF FUTURE ADVISORY VOTES ON NAMED EXECUTIVE OFFICER COMPENSATION.
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PROPOSAL 7:
AN ORDINARY RESOLUTION TO APPROVE THE DIRECTORS’ REMUNERATION POLICY
In accordance with Section 439A of the U.K. Companies Act 2006, shareholders are voting to approve the directors’ remuneration policy as included in the directors’ remuneration report. The policy sets out our policy on directors’ remuneration and is subject to a binding shareholders’ vote by ordinary resolution at least once every three years. On approval of the directors’ remuneration policy, all payments by Cardtronics to our directors and former directors (in their capacity as directors) must be made in accordance with the directors’ remuneration policy unless a payment has been separately approved by a shareholder resolution.
In accordance with the U.K. Companies Act 2006, the directors’ remuneration report (containing the directors’ remuneration policy) has been approved by and signed on behalf of our Board and will be delivered to the Registrar of Companies in the United Kingdom following the Annual Meeting.
We encourage shareholders to read the directors’ remuneration policy, which is set forth on pages A-2 to A-18 in the remuneration report set forth in Annex A to this proxy statement.
If the directors’ remuneration policy is not approved at the Annual Meeting, we will incur additional expenses to comply with the U.K. Companies Act 2006 as we will be required to hold additional shareholder meetings until the policy is approved. In addition, if the directors’ remuneration policy is not approved, we may not be able to pay expected compensation to our directors, including our chief executive officer, which could materially harm our ability to retain top executives and manage our business.
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Recommendation and Required Vote
The affirmative vote of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to approve this proposal. Our Board believes that the adoption of the ordinary resolution approving the directors’ remuneration policy is advisable and in the best interests of Cardtronics and our shareholders. ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE DIRECTORS’ REMUNERATION POLICY.
PROPOSAL 8:
6:
AN ORDINARY RESOLUTION OF A NON-BINDING ADVISORY VOTE TO
APPROVE THE DIRECTORS’DIRECTORS' REMUNERATION REPORT
In accordance with Section 439 of the U.K. Companies Act 2006, shareholders are voting to approve, on an advisory basis, the directors’directors' remuneration report. The report sets out the remuneration that has been paid to each person who has served as a director of Cardtronics at any time during the fiscal year ended December 31, 2016.2017.
In accordance with the U.K. Companies Act 2006, the directors’directors' remuneration report has been approved by and signed on behalf of our Board, and the remuneration report will be delivered to the Registrar of Companies in the United Kingdom following the Annual Meeting.
We encourage shareholders to read the directors’directors' remuneration report as set forth in Annex A to this proxy statement.
This advisory vote is not binding on our Board or our Compensation Committee. A vote against this proposal will not overrule any decisions made by our Board or our Compensation Committee, or require our Board or our Compensation Committee to take any action with respect to the remuneration decisions set out therein. However, we will take into account the outcome of the vote when considering future director compensation decisions.
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Recommendation and Required Vote
The affirmative vote of the holders ofproposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast at the Annual Meeting (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve this proposal.resolution. Our Board believes that the adoption of the ordinary resolution approving the directors’directors' remuneration report is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”"FOR" THE APPROVAL OF THE DIRECTORS’DIRECTORS' REMUNERATION REPORT.
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PROPOSAL 9:
7:
AN ORDINARY RESOLUTION TO RECEIVE OUR U.K. ANNUAL REPORTS AND ACCOUNTS
In accordance with the U.K. Companies Act 2006, our Board is required to present our audited U.K. statutory accounts, together with the directors’directors' report, the strategic report, the directors’directors' remuneration report and the auditors’auditors' report for the fiscal year ended December 31, 2016,2017, to the shareholders at the Annual Meeting. We will propose an ordinary resolution for the shareholders at the Annual Meeting to
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receive our U.K. Annual Reports and Accounts and to ask questions of the representative of KPMG LLP (U.K.) in attendance at the Annual Meeting.
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Recommendation and Required Vote
The affirmative vote of the holders ofproposal will be approved if a simple majority of our issued and outstanding shares, entitled to vote and representedvotes cast (whether in person or by proxy atproxy) for or against a resolution are cast in favor of the Annual Meeting, is required to approve this proposal.resolution. Our Board believes that receiving our U.K. Annual Reports and Accounts is advisable and in the best interests of Cardtronics and our shareholders.ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR”"FOR" THE RECEIPT OF OUR U.K. ANNUAL REPORTS AND ACCOUNTS.
PROPOSAL 10:
AN ORDINARY RESOLUTION TO AUTHORIZE OUR BOARD TO ALLOT SHARES FOR THE PURPOSE OF CAPITALIZING THE MERGER RESERVE AND ENABLE POTENTIAL FUTURE DIVIDENDS OR SHARE REPURCHASES
In accordance with the U.K. Companies Act 2006, we generally may only declare dividends, make distributions or repurchase shares out of “distributable reserves” on the Cardtronics plc statutory balance sheet. The Redomicile Transaction gave rise to a merger reserve on the Cardtronics plc balance sheet in an amount equal to the difference between the nominal value of our shares and the fair market value of the Cardtronics Delaware shares of common stock. While we have no current plans for dividend payments or share repurchases, we believe that it is in the best interests of Cardtronics and our shareholders to create distributable reserves by capitalizing the merger reserve by the allotment of ordinary shares in the capital of Cardtronics (the “Class C Shares”) and their subsequent cancellation as part of a court-approved capital reduction, which would enable our Board to take these actions, if deemed in the interest of our shareholders.
In order to capitalize the merger reserve, our Board proposes the ordinary resolution that, in addition to all existing allotment authorities, the directors of Cardtronics are generally and unconditionally authorized for the purpose of Section 551 of the U.K. Companies Act 2006, to exercise all powers of Cardtronics to capitalize the merger reserve by the allotment of Class C Shares (credited as fully paid), up to a maximum aggregate nominal amount of $1.8 billion. The Class C Shares will have extremely limited rights and will not participate in Cardtronics’ profits or assets, except on a return of capital on a liquidation and then to the extent of the nominal value paid up thereon. They will be redeemable at the option of Cardtronics and will be transferable, but no market will exist for these shares.
It is envisaged that the Class C Shares be allotted to a nominee of the shareholders, to be determined by our Board and the Class C Shares will only be in issue for a short period of time prior to a court-approved capital reduction cancelling them. Accordingly, the Class C Shares will not be registered with the SEC or admitted to trading on NASDAQ or any other market. No share certificates will be issued in respect of the Class C Shares.
Prior to the completion of the Redomicile Transaction, a special resolution was passed on June 29, 2016, by the then sole shareholder of Cardtronics, inter alia, authorizing that the capital of Cardtronics be reduced by cancelling all of the Class C shares (if any) in issue resulting from the capitalization of the merger reserve by a court-approved capital reduction.
The capital reduction would not change the total amount of shareholders’ equity as reflected on the Cardtronics plc balance sheet and will not involve us making any distribution or repayment of capital and will not reduce our underlying net assets. If this proposal is approved, Cardtronics can proceed with the proposed allotment of Class C Shares and the subsequent court-approved capital reduction to create the desired distributable reserves.
The full text of the ordinary resolution to be approved by our shareholders is as follows:
TO APPROVE THAT, in addition to all existing authorities, the directors of Cardtronics be and are hereby generally and unconditionally authorized for the purpose of Section 551 of the U.K. Companies Act 2006 to exercise all powers of Cardtronics to allot Class C ordinary shares in the capital of Cardtronics, with a nominal value of $0.01 each, up to a maximum aggregate nominal amount of $1.8 billion (the “Class C Shares”), in order to capitalize the full amount standing to the credit of the merger reserve, by the allotment of Class C Shares (credited as fully paid), which shall have the following rights and restrictions:
(i)
| the Class C Shares shall have no right to receive any profits of Cardtronics available for distribution by way of dividend or otherwise;
|
| |
(ii)
| the Class C Shares shall, on a return of capital on a liquidation, but not otherwise, be entitled to receive only the nominal amount paid up on each such share and only after the holder of each Class A ordinary share shall have received the amount paid up or credited as paid up on such Class A ordinary share;
|
(iii)
| the Class C Shares shall have no right to receive notice of or to attend or vote at any general meeting of shareholders;
|
| |
(iv)
| the Class C Shares shall be redeemable at the option of Cardtronics for an aggregate price not exceeding $0.01;
|
| |
(v)
| the Class C Shares shall not be entitled to and shall not receive a share certificate in respect of the Class C Shares; and
|
| |
(vi)
| the cancellation of the Class C Shares will not involve a variation of such rights for any purpose,
|
provided that such allotment authority shall expire five years from the date of this resolution, unless renewed, varied or revoked by Cardtronics prior to such date.
* * *
Recommendation and Required Vote
The affirmative voteTable of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to approve this proposal. Our Board believes that the approval of the proposal to authorize our Board to allot shares up to an aggregate nominal value of $1.8 billion is advisable and in the best interests of Cardtronics and our shareholders. Contents
ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE AUTHORIZATION OF OUR BOARD TO ALLOT SHARES FOR THE PURPOSE OF CAPITALIZING THE MERGER RESERVE AND ENABLE POTENTIAL FUTURE DIVIDENDS OR SHARE REPURCHASES.CORPORATE GOVERNANCE
PROPOSAL 11:
AN ORDINARY RESOLUTION TO APPROVE THE FORM OF A SHARE REPURCHASE CONTRACT TO BE ENTERED INTO WITH CERTAIN COUNTERPARTIES IN RELATION TO THE CONVERTIBLE NOTE HEDGE TRANSACTIONS
We are seeking the approval of the form of a share repurchase contract, which provides that Cardtronics will, pursuant to the convertible note hedge transactions with each of Bank of America, N.A., JPMorgan Chase Bank, National Association, London Branch and Wells Fargo Bank, National Association (the “Counterparties”), acquire up to 5,491,882 shares in aggregate, subject to further adjustment as set forth in the relevant confirmations (including but not limited to adjustments arising from dividends, stock splits, recapitalizations and similar changes in our capital structure), which may be delivered by the Counterparties, at Cardtronics Delaware’s direction, to Cardtronics upon the exercise of options in accordance with the terms of such convertible note hedge transactions, in each case (i) in satisfaction of certain obligations owed to Cardtronics Delaware by the Counterparties, and (ii) following the payment by Cardtronics of £1.00 to Cardtronics Delaware (or its designee). The approval of the form of a share repurchase contract will enable such options to be settled through the delivery of shares directly to Cardtronics. These convertible note hedge transactions were amended and restated on October 26, 2016 following the Redomicile Transaction.
Under the U.K. Companies Act 2006, such repurchase of shares by Cardtronics will constitute an “off market purchase” of shares requiring shareholder approval. As such, these repurchases may only be made if the share repurchase contract has been approved by our shareholders.
Even if our shareholders approve this proposal, there can be no guarantee that Cardtronics, Cardtronics Delaware or any or all of the Counterparties will enter into a share repurchase contract with Cardtronics, or that, if entered into by any such Counterparty, Cardtronics and Cardtronics Delaware, Cardtronics Delaware will direct such Counterparty to transfer any shares to Cardtronics.
The form of the share repurchase contract will be made available in accordance with the U.K. Companies Act 2006 for inspection by shareholders: (i) at our registered office for not less than 15 days ending with the date of the Annual Meeting; and (ii) at the Annual Meeting itself.
The authorization to approve the form of a share repurchase contract, if granted, will be valid for five years after the date the proposal is approved by our shareholders.
The full text of the ordinary resolution to be approved by our shareholders is as follows:
TO APPROVE THAT, the terms of the form of share repurchase agreement, produced at the meeting and initialed by the Chairman, to be entered into in separate contracts between Cardtronics and each of the Dealers (as defined below) (each a “Repurchase Contract”) to acquire up to an aggregate maximum number of 5,491,882 class A ordinary shares (the “Repurchase Shares”), subject to further adjustment as set forth in the relevant confirmations (including but not limited to adjustments arising from dividends, stock splits, recapitalizations and similar changes in the capital of Cardtronics), pursuant to the Repurchase Contracts:
(a) be and hereby is approved; and
(b) the directors of Cardtronics, be and are hereby authorized to enter into a Repurchase Contract with each of Bank of America, N.A., JPMorgan Chase Bank, National Association, London Branch and Wells Fargo Bank, National Association (the “Dealers”) and to acquire the Repurchase Shares.
The authority conferred by this resolution shall, unless varied, revoked or renewed prior to such time, expire five years after the date of the passing of this resolution.
* * *
Recommendation and Required Vote
The affirmative vote of the holders of a majority of our issued and outstanding shares, entitled to vote and represented in person or by proxy at the Annual Meeting, is required to approve this proposal. Our Board believes
that the approval of the form of a share repurchase contract is advisable and in the best interests of Cardtronics and our shareholders. ACCORDINGLY, OUR BOARD RECOMMENDS THAT SHAREHOLDERS VOTE “FOR” THE APPROVAL OF THE FORM OF A SHARE REPURCHASE CONTRACT TO BE ENTERED INTO WITH CERTAIN COUNTERPARTIES IN RELATION TO THE CONVERTIBLE NOTE HEDGE TRANSACTIONS.
CORPORATE GOVERNANCE
The remainder of this proxy statement sets forth important information regarding our corporate governance; share ownership by our directors, executive officers and other persons owning more than 5% of our shares; executive officers; compensation practices for executive officers and directors; related person transactions; audit matters; procedures for submitting proposals for the 2018 Annual General Meeting of Shareholders; and directions to our offices.
Our Governance Practices
We are committed to good corporate governance. Our Board has adopted several governance documents, which include our Corporate Governance Principles, Code of Business Conduct and Ethics, Financial Code of Ethics, Related Persons Transactions Policy, Whistleblower Policy and charters for each standing committee of our Board. Each of these documents is available on our website atwww.cardtronics.com and you may also request a copy of each document at no cost by writing (or by telephoning) the following: Cardtronics plc, Attention: Company Secretary, 3250 Briarpark Drive, Suite 400, Houston, Texas 77042, or by telephone at (832) 308-4484.308-4518.
Key Corporate Governance Highlights
- •
- Non-executive, independent Chair of the Board
- •
- All directors are independent, other than the CEO
- •
- Board's four committees are fully independent and meet regularly
- •
- Executive sessions held in conjunction with each quarterly Board meeting
- •
- Majority vote for directors in uncontested elections
- •
- No supermajority shareholder approval requirements
- •
- We have two "audit committee financial experts" on our Audit Committee
- •
- Directors must notify Nominating & Governance Committee prior to joining another public company Board
- •
- Board of Directors and committees have the authority to retain independent advisors
- •
- Board of Directors and committees conduct performance reviews annually
- •
- Stock ownership and retention guidelines for directors and executive officers
- •
- Related-person transactions approval policy regarding the review, approval and ratification by our Audit Committee
- •
- Insider trading policy prohibits hedging and pledging transactions in our shares
Our Board has adopted a Code of Business Conduct and Ethics (“("Code of Ethics”Ethics") for our directors, officers and employees. In addition, our Board has adopted a Financial Code of Ethics for our principal executive officer, principal financial officer, principal accounting officer, and other accounting and finance officers. We intend to disclose any amendments to or waivers of these codes on behalf of our Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer, Controller and persons performing similar functions, on our website atwww.cardtronics.com promptly following the date of any amendment or waiver. Since becoming a publicly traded company on December 10, 2007, we have not granted to any officer or employee a waiver to our Code of Ethics or our Financial Code of Ethics.
Our Board
Board Size
Our Board is currently hascomprised of nine director positions that aredirectors divided into three classes, with one class to be elected at each annual general meeting of shareholders to serve for a three-year term. The term of our Class I
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directors expires in 2017,2020, the term of our Class II directors expires in 2018 and the term of our Class III directors expires in 2019. Each director holds his or her office until a successor is duly elected and qualified or until the earlier of his or her death, resignation, retirement or removal. Our Class I directors are Jorge M. Diaz and G. Patrick Phillips; our Class II directors are J. Tim Arnoult, Dennis F. Lynch and Juli C. Spottiswood; and our Class III directors are Steven A. Rathgaber,Edward H. West, Julie Gardner and Mark Rossi. Our Board currently has one vacant director position. The Board is focused on Board succession planning and is currently conducting a search process.
Our Nominating & Governance Committee considers and makes recommendations to our Board concerning the appropriate size and needs of our Board and considers candidates to fill new positions created by expansion or vacancies that occur by resignation, retirement or any other reason.
In accordance with the provisions of our Articles of Association, any vacancy may be filled only by a majority vote of the directors then in office, whether or not a quorum, or by a sole remaining director. If there are, however, no directors in office, the chief executive officer, the secretary or a shareholder may convene a general meeting for the purpose of appointing directors. Any director so chosen to fill a vacancy will hold office until the next election of the class for which such director was designated at the time of his or her appointment and until his or her successor is duly elected and qualified, unless sooner displaced.
Director Independence
As required under the listing standards of NASDAQ, a majority of the members of our Board must qualify as “independent,”"independent," as affirmatively determined by our Board. Our Board has delegated this responsibility to our Nominating & Governance Committee. Pursuant to its charter, our Nominating & Governance Committee determinesassesses the independence of each director and each prospective director and recommends to the full Board for its determination of whether or not each director and each prospective director is independent.
Our Nominating & Governance Committee evaluatedBased on the evaluation of all relevant transactions or relationships between each director, or any of his or her family members, and our company,Company, senior management, U.S. independent registered accounting firm and U.K. statutory auditors. Based on this evaluation, our Nominating & Governance Committeeauditors, the Board has determined that all of our directors are independent under the applicable standards set forth by NASDAQ and the SEC, with the exception of Mr. Rathgaber,West, our Chief Executive Officer.
In making these independence determinations, our Nominating & Governance Committee in conjunction with ourreviewed, and presented to the Board consideredto consider, the following relationships and transactions, andwhich the Board found that they did not impactaffect the independence of the applicable directors:
- •
·Jorge M. DiazDiaz.. Mr. Diaz is an executive officer withvice chair of strategy and business development in the billing and payments group at Fiserv, Output Solutions, a division of Fiserv. Fiserv serves aswhich is one of our vendors with respect to theATM transaction processing of our ATM transactions.vendors. The amounts paid to Fiserv for the years ended December 31, 2014, 2015, 2016 and 2016 were2017 did not material.exceed the NASDAQ independence thresholds.
·
- •
- Dennis F.
LynchLynch.. In 2012, Mr. Lynch, the chairmanchair of our Board, was elected to the board of directorsis a director of Fiserv. As noted above, we have a business relationship with Fiserv but that relationship is not material. Prior to joining Fiserv’s board of directors, Mr. Lynch disclosed his nomination to that board to our Nominating & Governance Committee. After a review of the relationship between our company and Fiserv, our Nominating & Governance Committee determined that Mr. Lynch’s service on Fiserv’s board did not create a conflict of interest with his service on our Board. The amounts paid to Fiserv for the years ended December 31, 2014, 2015 and 2016 were not material.Fiserv.
·
- •
- G. Patrick
PhillipsPhillips.. Mr. Phillips serves on the board of directors of USAA FSB where he servesserved as ChairmanChair of the Finance and Audit Committee through March 2018 and now serves as Chair of the Risk Committee. USAA FSB is one of many financial institutions that brand our ATMs and is a customer of our Allpoint network. The amounts received from USAA FSB for the years ended December 31, 2014, 2015 and 2016 were not material.
Our Board has determined that having a non-executive director serve as ChairmanChair of our Board is in the best interest of our shareholders at this time. Our Chief Executive Officer is responsible for setting our strategic direction and providing us day-to-day leadership, while the ChairmanChair of our Board provides guidance to our Chief Executive Officer and sets the agenda for Board meetings and presides over meetings of the full Board as well as the executive sessions of independent directors. We believe this structure ensures a greater role for the non-executive directors in the oversight of our company and active participation of the non-executive directors in setting agendas and establishing priorities and procedures for the work of our Board.
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Risk is inherent with every business, and how well a business manages risk can ultimately determine its success. We face a number of risks, including economic and regulatory risks, and others, such as the impact of competition, change in consumer behavior, and technological changes. Management is responsible for the day-to-day management of risks our company faces, while our Board, as a whole and through its committees, has the responsibility for the oversight of risk management. In its risk oversight role, our Board has the responsibility to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
Our Board believes that establishing the right “tone"tone at the top”top" and that full and open communication between management and our Board are essential for effective risk management and oversight. Our ChairmanChair has
regular discussions with our Chief Executive Officer and other executive officers to discuss strategy and risks facing us, and our Board is regularly updated by our management on strategic matters involving our operations.
While our Board is ultimately responsible for risk oversight, each of our Board committees assists our Board in fulfilling its oversight responsibilities in certain areas of risk. Our Audit Committee assists our Board in fulfilling its oversight responsibilities with respect to risk management in the areas of financial reporting, internal controls and compliance with legal and regulatory requirements, and, in accordance with NASDAQ listing standards, discusses policies with respect to risk assessment and risk management. Our Compensation Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks arising from our compensation policies and programs as described in more detail in “Compensation"Compensation Discussion and Analysis”Analysis" below. Our Nominating & Governance Committee assists our Board in fulfilling its oversight responsibilities with respect to the management of risks associated with Board organization, membership and structure, succession planning for our directors and executive officers, and corporate governance. Our Finance Committee assists our Board in fulfilling its oversight responsibilities with respect to our capital structure, interest rate risk management and insurance policies and coverage.
Meetings.Meetings. Our Board held a total of nine meetings (four quarterly and five special meetings) during the year ended December 31, 2016.2017. During 2016,2017, each director attended at least 75% of the aggregate of the total number of meetings of our Board and the total number of meetings held by all Board committees on which such person served.
Executive Sessions; Presiding DirectorDirector.. According to our Corporate Governance Principles, our independent directors must meet in executive session at each quarterly meeting. The ChairmanChair of our Board presides at these meetings and is responsible for preparing an agenda for these executive sessions.
Annual Meeting AttendanceAttendance.. Seven of our eight directors attended our 20162017 annual meeting held on June 2, 2016.May 10, 2017. We do not have a formal policy regarding director attendance at annual meetings. However, our directors are expected to attend all Board and committee meetings, as applicable, and to meet as frequently as necessary to properly discharge their responsibilities.
Members of our Audit Committee are prohibited from serving on audit committees of more than two other public companies. In addition, our Board monitors the number of public company boards on which each director serves and develops limitations on such service as appropriate to ensure the ability of each director to fulfill his or her duties, as required by applicable securities laws and NASDAQ listing standards.
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Our Board and each standing committee of our Board conduct an annual self-evaluation to determine whether they are functioning effectively. Our Nominating & Governance Committee leads our Board’sBoard's self-evaluation effort by conducting an annual evaluation of our Board’sBoard's performance. Similarly, each committee reviews the results of its evaluation to determine whether any changes need to be made to the committee or its procedures.
Our Nominating & Governance Committee is responsible for establishing criteria for selecting new directors and actively seeking individuals to become directors for recommendation to our Board. In addition to having a proven track record of high business ethics and integrity, the present criteria for director qualifications include: (i) possessing the qualifications of an “independent”"independent" director in accordance with applicable NASDAQ listing rules; (ii) capacity to devote sufficient time to learn and understand our marketplace and industry and to prepare for and attend our meetings; (iii) commitment to enhancing shareholder value; (iv) ability to develop productive working relationships with other board members and management; (v) demonstrated skills, background
and competencies that complement and add diversity to our Board; and (vi) possessing demonstrated experience in international business. Our Nominating & Governance Committee does not require that a successful candidate possess each and every criteria.
Our Board values diversity as a factor in selecting nominees to serve on our Board, and believes that the diversity which exists in its composition provides significant benefit to our Board and Cardtronics. AlthoughTherefore, there is no specific policy, on diversity, our Nominating & Governance Committee considers diversity as part of its criteria in selecting nominees for directors. Such considerations may include gender, race, national origin, functional background, executive or professional experience and international business experience.
Our Nominating & Governance Committee may consider candidates for our Board from any reasonable source, including from a search firm engaged by our Nominating & Governance Committee or shareholder recommendations, provided that the procedures set forth below are followed. Our Nominating & Governance Committee does not intend to alter the manner in which it evaluates candidates based on whether the candidate is recommended by a shareholder or not. However, in evaluating a candidate’scandidate's relevant business experience, our Nominating & Governance Committee may consider previous experience as a member of our Board. Any invitation to join our Board must be extended by our Board.
Our Nominating & Governance Committee did not receive shareholder nominations for the Annual Meeting.
One or more shareholders representing, individually or in the aggregate, at least 5% of the paid-up share capital of Cardtronics carrying the right to vote at general meetings, or at least 100 shareholders (and/or beneficial owners of shares) who have a right to vote and hold (on average) at least £100 per shareholder of paid-up share capital (each a “nominating shareholder”),Shareholders may recommend potential candidates to our Board by sending a written request to our Company Secretary, in accordance with our Articles of Association, M. Dilshad Kasmani,Aimie Killeen, at 3250 Briarpark Drive, Suite 400, Houston, Texas 77042, generally not later than 120 calendar days prior to the first anniversary of the date of the previous year’s annual meeting.77042. The written request must comply with the detailed content requirements set out in our Articles of Association and shall include (inter alia) the following:
· the name and address of the person or persons to be nominated;
· the number and class of all shares of each class of our shares owned of record and beneficially by each nominee, as reported to the nominatingprocedures for shareholder by the nominee;
· the information regarding each such nominee required by paragraphs (a), (d), (e) and (f) of Item 401 of Regulation S-K adopted by the SEC;
· a signed consent by each nominee to serve as our director, if elected;
· the nominating shareholder’s name and address;
· the number and class of all shares of each class of our stock owned of record and beneficially by the nominating shareholder; and
·recommendations are described in the case of a person that holds our stock through a nominee or street name holder of record, evidence establishing such indirect ownership of stock and entitlement to vote such stocksection entitled "Proposals for the election2019 Annual General Meeting of directors at an annual meeting.Shareholders".
From time to time, our Nominating & Governance Committee may request additional information from the nominee or the nominating shareholder.
Committees of Our Board
Board Committees. Our Board currently has four standing committees: an Audit Committee, a Compensation Committee, a Nominating & Governance Committee and a Finance Committee. Each committee is comprised of independent directors as currently required under the applicable SEC's rules and regulations and NASDAQ listing standards, and each committee is governed by a written charter
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approved by our Board. These charters form an integral part of our corporate governance policies, and a copy of each charter is available on our website atwww.cardtronics.com.
The shareholder recommendationtable below provides the current composition of each committee of our Board:
| | | | | | | | | | | | | |
Name | | Audit
Committee | | Compensation
Committee | | Nominating &
Governance
Committee | | Finance
Committee | |
|---|
| J. Tim Arnoult | | | X | | | | | | X | * | | X | |
| Jorge M. Diaz | | | | | | X | | | X | | | | |
| Julie Gardner | | | | | | X | | | X | | | | |
| Dennis F. Lynch | | | | | | | | | X | | | X | |
| G. Patrick Phillips | | | X | | | X | * | | | | | | |
| Edward H. West | | | | | | | | | | | | | |
| Mark Rossi | | | X | | | X | | | | | | X | * |
| Juli C. Spottiswood | | | X | * | | | | | | | | X | |
Audit Committee. Our Audit Committee is comprised entirely of directors who satisfy the standards of independence established under the applicable SEC rules and regulations, NASDAQ listing standards and our Corporate Governance Principles. In addition, each member of our Audit Committee satisfies the financial literacy requirements of NASDAQ listing standards. Ms. Spottiswood (our Chair) and Mr. Phillips each qualify as an "audit committee financial expert" within the meaning of the SEC's rules and regulations.
Our Audit Committee is appointed by our Board to:
- •
- assist our Board in fulfilling its oversight responsibilities with respect to our accounting and financial reporting process (including management's development and maintenance of a system of internal accounting and financial reporting controls) and audits of our financial statements;
- •
- assist our Board in overseeing the integrity of our financial statements;
- •
- assist our Board in overseeing our compliance with legal and regulatory requirements;
- •
- assist our Board in overseeing the qualifications, independence and performance of both our U.S. independent registered public accounting firm and the independent U.K. auditor firm engaged to act as Cardtronics' U.K. statutory auditors, in each case, engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services;
- •
- assist our Board in overseeing the effectiveness and performance of our internal audit function;
- •
- prepare the Annual Audit Committee Report for inclusion in our proxy statement for our annual general meeting of shareholders; and
- •
- perform such other functions as our Board may assign to Our Audit Committee from time to time.
The Report of our Audit Committee is set forth under "Audit Matters—Report of our Audit Committee" below.
Our Audit Committee held eight meetings during the fiscal year ended December 31, 2017.
Compensation Committee. Our Compensation Committee is comprised entirely of directors who satisfy the standards of independence established under the applicable SEC rules and regulations, NASDAQ listing standards and our Corporate Governance Principles.
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Pursuant to its charter, the purposes of our Compensation Committee are to:
- •
- oversee the responsibilities of our Board relating to compensation of our directors and executive officers;
- •
- produce the annual Compensation Committee Report for inclusion in our proxy statement and Annual Report on Form 10-K, as applicable, in accordance with applicable rules and regulations; and
- •
- design, recommend and evaluate our director and executive compensation plans, policies and programs.
In addition, our Compensation Committee works with our executive officers, including our Chief Executive Officer, to implement and promote our executive compensation strategy. See "Compensation Discussion and Analysis" and "Executive Compensation" for additional information on our Compensation Committee's processes and procedures described above do not preclude a shareholder from making proposalsfor the consideration and determination of executive compensation and "Director Compensation" for additional information on its consideration and determination of director compensation. Pursuant to its charter, our Compensation Committee has the sole authority, at anyour expense, to retain, terminate and approve the fees and other retention terms of outside consultants to advise our Compensation Committee in connection with the exercise of its powers and responsibilities.
The Report of our Compensation Committee is set forth under "Compensation Committee Report" below.
Our Compensation Committee held eight meetings during the fiscal year ended December 31, 2017.
Nominating & Governance Committee. Our Nominating & Governance Committee identifies individuals qualified to become members of our Board, makes recommendations to our Board regarding director nominees for the next annual general meeting of shareholders providedand develops and recommends corporate governance principles to our Board. Our Nominating & Governance Committee, in its business judgment, has determined that they complyit is comprised entirely of directors who satisfy the applicable standards of independence established under the SEC's rules and regulations, NASDAQ listing standards and our Corporate Governance Principles. For information regarding our Nominating & Governance Committee's policies and procedures for identifying, evaluating and selecting director candidates, including candidates recommended by shareholders, see "Corporate Governance—Our Board—Director Selection and Nomination Process" above.
The purpose of our Nominating & Governance Committee is to serve as an independent and objective body to:
- •
- assist our Board by identifying individuals qualified to become Board members and to recommend that our Board select the director nominees for election at the annual meetings of shareholders or for appointment to fill vacancies on our Board;
- •
- recommend to our Board director nominees for each committee of our Board;
- •
- advise our Board about appropriate composition of our Board and its committees;
- •
- advise our Board about and recommend to our Board appropriate corporate governance practices and to assist our Board in implementing those practices;
- •
- lead our Board in its annual review of the performance of our Board and its committees; and
- •
- perform such other functions as our Board may assign to our Nominating & Governance Committee from time to time.
Our Nominating & Governance Committee held four meetings during the fiscal year ended December 31, 2017.
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Finance Committee. Our Nominating & Governance Committee, in its business judgment, has determined that our Finance Committee is comprised entirely of directors who satisfy the applicable standards of independence established under NASDAQ listing standards and our Corporate Governance Principles. To assist our Finance Committee, the following members of our management are invited to all meetings: Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Treasurer. Our Finance Committee assists our management with respect to corporate insurance programs, derivative arrangements, significant financing arrangements and investment decisions, reviewing and approving certain acquisitions/investments above management's approval level and the requirements described indevelopment and oversight of a comprehensive plan to mitigate interest rate exposure. Accordingly, our Finance Committee will review and recommend to our Board an Interest Rate Risk Management Policy and any changes thereto at least annually.
Our Finance Committee held four meetings during the section entitled “Proposals for the 2018 Annual General Meeting of Shareholders.”fiscal year ended December 31, 2017.
SHARE OWNERSHIP MATTERS
Communications from Shareholders and Interested Parties
Our Board welcomes communications from our shareholders and other interested parties. Shareholders and any other interested parties may send communications to our Board, any committee of our Board, the ChairmanChair of our Board or any director in particular to: c/o Cardtronics plc, 3250 Briarpark Drive, Suite 400, Houston, Texas 77042, Attention: Company Secretary.
Our Company Secretary (or any successor to the duties thereof) will review each such communication received from shareholders and other interested parties and will forward the communication, as expeditiously as reasonably practicable, to the addressees if: (i) the communication complies with the requirements of any applicable policy adopted by us relating to the subject matter of the communication; and (ii) the communication falls within the scope of matters generally considered by our Board. To the extent the subject matter of a communication relates to matters that have been delegated to a committee of our Board to or to an executive officer, our Company Secretary may forward such communication to the executive or the chairmanchair of the committee to which such matter has been delegated. The acceptance and forwarding of communications to the members of our Board or an executive officer does not imply or create any fiduciary duty of our Board members or executive officer to the person submitting the communications.
Committees of Our Board
General
Board Committees. Our Board currently has four standing committees: an Audit Committee, a Compensation Committee, a Nominating & Governance Committee and a Finance Committee. Each committee is comprised of independent directors as currently required under the applicable SEC’s rules and regulations and NASDAQ listing standards, and each committee is governed by a written charter approved by our Board. These charters form an integral part of our corporate governance policies, and a copy of each charter is available on our website at www.cardtronics.com.
The table below provides the current composition of each committee of our Board:
Name
|
| Audit
Committee
|
| Compensation
Committee
|
| Nominating
&
Governance
Committee
|
| Finance
Committee
|
|
J. Tim Arnoult
| | X
| | | | X*
| | X
| |
Jorge M. Diaz
| | | | X
| | X
| | | |
Julie Gardner
| | | | X
| | X
| | | |
Dennis F. Lynch(1)
| | | | | | X
| | X
| |
G. Patrick Phillips
| | X
| | X*
| | | | | |
Steven A. Rathgaber
| | | | | | | | | |
Mark Rossi
| | X
| | X
| | | | X*
| |
Juli C. Spottiswood
| | X*
| | | | | | X
| |
*
| Committee Chairman.
|
(1)
| Mr. Lynch stepped down as a member of our Compensation Committee on March 2, 2016.
|
Audit Committee. Our Nominating & Governance Committee, in its business judgment, has determined that our Audit Committee is comprised entirely of directors who satisfy the standards of independence established under the applicable SEC rules and regulations, NASDAQ listing standards and our Corporate Governance Principles. In addition, our Board, in its business judgment, has determined that each member of our Audit Committee satisfies the financial literacy requirements of NASDAQ listing standards. Our Audit Committee also determined that its Chairman, Ms. Spottiswood, and Messrs. Phillips and Rossi each qualify as an “audit committee financial expert” within the meaning of the SEC’s rules and regulations. For information regarding the business experience of Ms.
Spottiswood and Messrs. Phillips and Rossi, please read “Proposal 1: Ordinary Resolutions to Re-elect Class I Directors” above.
Our Audit Committee is appointed by our Board to:
· assist our Board in fulfilling its oversight responsibilities with respect to our accounting and financial reporting process (including management’s development and maintenance of a system of internal accounting and financial reporting controls) and audits of our financial statements;
· assist our Board in overseeing the integrity of our financial statements;
· assist our Board in overseeing our compliance with legal and regulatory requirements;
· assist our Board in overseeing the qualifications, independence and performance of both our U.S. independent registered public accounting firm and the independent U.K. auditor firm engaged to act as Cardtronics’ U.K. statutory auditors, in each case, engaged for the purpose of preparing or issuing an audit report or performing other audit, review or attest services;
· assist our Board in overseeing the effectiveness and performance of our internal audit function;
· prepare the Annual Audit Committee Report for inclusion in our proxy statement for our annual general meeting of shareholders; and
· perform such other functions as our Board may assign to our Audit Committee from time to time.
Pursuant to its charter, our Audit Committee has the authority, at our expense, to retain professional advisors, including legal, accounting or other consultants, to advise our Audit Committee in connection with the exercise of its powers and responsibilities. Our Audit Committee may require any of our officers or employees, our outside legal counsel or our independent registered public accounting firm to attend a meeting of our Audit Committee or to meet with any members of, or consultants to, our Audit Committee. Our Audit Committee is responsible for the resolution of any disagreements between the U.S. independent registered public accounting firm or U.K. statutory auditors and management regarding our financial reporting. Our Audit Committee meets periodically with management and the U.S. independent registered public accounting firm or U.K. statutory auditors in separate executive sessions, as needed, to discuss any matter that our Audit Committee or each of these groups believe should be discussed privately. Our Audit Committee makes regular reports to our Board.
The Report of our Audit Committee is set forth under “Audit Matters — Report of our Audit Committee” below.
Our Audit Committee held eight meetings during the fiscal year ended December 31, 2016.
Compensation Committee. Our Nominating & Governance Committee, in its business judgment, has determined that all four directors on our Compensation Committee satisfy the standards of independence established under the applicable SEC rules and regulations, NASDAQ listing standards and our Corporate Governance Principles.
Our Compensation Committee is delegated all authority of our Board as may be required or advisable to fulfill the purposes of our Compensation Committee as set forth in its charter. Pursuant to its charter, our Compensation Committee may form and delegate some or all of its authority to subcommittees when it deems appropriate. Our Compensation Committee also has the authority to delegate responsibility for the day-to-day management of executive compensation to our executive officers.
Pursuant to its charter, the purposes of our Compensation Committee are to:
· oversee the responsibilities of our Board relating to compensation of our directors and executive officers;
· produce the annual Compensation Committee Report for inclusion in our proxy statement and Annual Report on Form 10-K, as applicable, in accordance with applicable rules and regulations; and
· design, recommend and evaluate our director and executive compensation plans, policies and programs.
In addition, our Compensation Committee works with our executive officers, including our Chief Executive Officer, to implement and promote our executive compensation strategy. See “Compensation Discussion and Analysis” and “Executive Compensation” for additional information on our Compensation Committee’s processes and procedures for the consideration and determination of executive compensation and “Director Compensation” for additional information on its consideration and determination of director compensation. Pursuant to its charter, our Compensation Committee has the sole authority, at our expense, to retain, terminate and approve the fees and other retention terms of outside consultants to advise our Compensation Committee in connection with the exercise of its powers and responsibilities.
The Report of our Compensation Committee is set forth under “Compensation Committee Report” below.
Our Compensation Committee held eight meetings during the fiscal year ended December 31, 2016.
Nominating & Governance Committee. Our Nominating & Governance Committee identifies individuals qualified to become members of our Board, makes recommendations to our Board regarding director nominees for the next annual general meeting of shareholders and develops and recommends corporate governance principles to our Board. Our Nominating & Governance Committee, in its business judgment, has determined that it is comprised entirely of directors who satisfy the applicable standards of independence established under the SEC’s rules and regulations, NASDAQ listing standards and our Corporate Governance Principles. For information regarding our Nominating & Governance Committee’s policies and procedures for identifying, evaluating and selecting director candidates, including candidates recommended by shareholders, see “Corporate Governance — Our Board — Director Selection and Nomination Process” above.
Our Nominating & Governance Committee is delegated all authority of our Board as may be required or advisable to fulfill the purposes of our Nominating & Governance Committee as set forth in its charter. More particularly, the purpose of our Nominating & Governance Committee is to serve as an independent and objective body to:
· assist our Board by identifying individuals qualified to become Board members and to recommend that our Board select the director nominees for election at the annual meetings of shareholders or for appointment to fill vacancies on our Board;
· recommend to our Board director nominees for each committee of our Board;
· advise our Board about appropriate composition of our Board and its committees;
· advise our Board about and recommend to our Board appropriate corporate governance practices and to assist our Board in implementing those practices;
· lead our Board in its annual review of the performance of our Board and its committees; and
· perform such other functions as our Board may assign to our Nominating & Governance Committee from time to time.
Our Nominating & Governance Committee held four meetings during the fiscal year ended December 31, 2016.
Finance Committee. Our Nominating & Governance Committee, in its business judgment, has determined that our Finance Committee is comprised entirely of directors who satisfy the applicable standards of independence established under NASDAQ listing standards and our Corporate Governance Principles. To assist our Finance Committee, the following members of our management are invited to all meetings: Chief Executive Officer, Chief Financial Officer, Chief Accounting Officer and Treasurer. Our Finance Committee assists our management with respect to corporate insurance programs, derivative arrangements, significant financing arrangements and investment decisions, reviewing and approving certain acquisitions/investments above management’s approval level and the development and oversight of a comprehensive plan to mitigate interest rate exposure. Accordingly, our Finance Committee will review and recommend to our Board an Interest Rate Risk Management Policy and any changes thereto at least annually.
Our Finance Committee held six meetings during the fiscal year ended December 31, 2016.
SHARE OWNERSHIP MATTERS
Section 16(a) Beneficial Ownership Reporting Compliance
Section 16(a) of the Exchange Act requires our executive officers, directors and persons who own more than 10% of a registered class of our equity securities to file reports of ownership on Form 3 and changes in ownership on Form 4 or Form 5 with the SEC. Such executive officers, directors and 10% shareholders are also required by securities laws to furnish us with copies of all Section 16(a) forms they file.
Based solely on our review of copies of these reports, or written representations from reporting persons, we believe that during the year ended December 31, 2016, all of2017, our executive officers, directors and greaterpersons who own more than 10% holders filed the reports required to beof a registered class of our equity securities filed under Section 16(a) on a timely basis under Section 16(a), except for the following late filings: Form 4 filings to report awards of performance-based RSUs granted on March 8, 2017 were filed two reports. Those exceptionsdays late for the following directors and officers: Jonathan Simpson-Dent, David Dove Walker, Edward West, Steven Rathgaber, E. Brad Conrad, Rick Updyke, Gerardo Garcia, J. Tim Arnoult, Jorge Diaz, Julie Gardner, Dennis Lynch, Patrick Phillips, Mark Rossi and Juli Spottiswood. Form 4 filings for Steven Rathgaber and Edward West to report RSU grants made on March 31, 2017 and for Roger Craig to report RSU vestings on March 31, 2017 were the March 7, 2016 report filed by Mr. Dove relating to a Section 16b-3 exempt transaction regarding the March 2, 2016, conversionone day late. Finally, Form 3 filings for Timothy Halford and Aimie Killeen were filed two and six days late, respectively.
Table of restricted stock unit awards (“RSUs”) to shares and the corresponding surrender of a percentage of those shares to cover Mr. Dove’s minimum tax liability in the United States created by such conversion as well as the November 14, 2016 report filed by Mr. Dove, which included the gifting of shares on November 8, 2016.Contents
Securities Authorized for Issuance under Equity Compensation Plans
The following table sets forth information as of December 31, 2016,2017, with respect to the compensation plans under which our equity awards are authorized for issuance, aggregated as follows:
Plan Category | | Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights | | Weighted-
Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)) | |
| | (a) | | (b) | | (c) | |
Equity compensation plans approved by security holders (1) | | 13,450 | | $ | 8.67 | | 5,097,204 | |
Total | | 13,450 | | $ | 8.67 | | 5,097,204 | |
| | | | | | | | | | |
Plan Category | | Number of
Securities to be
Issued Upon
Exercise of
Outstanding
Options,
Warrants and
Rights | | Weighted-
Average
Exercise Price of
Outstanding
Options,
Warrants and
Rights | | Number of Securities
Remaining Available for
Future Issuance Under
Equity Compensation
Plans (Excluding
Securities Reflected in
Column (a)) | |
|---|
| | (a)
| | (b)
| | (c)
| |
|---|
Equity compensation plans approved by security holders(1) | | | 1,250 | | $ | 9.69 | | | 4,824,889 | |
Total | | | 1,250 | | $ | 9.69 | | | 4,824,889 | |
- (1)
- Represents our 2007 Plan. For additional information on the terms of this plan, see "Executive Compensation—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table—Equity Incentive Awards—2007 Plan" below.
(1)
| Represents our 2007 Plan. For additional information on the terms of this plan, see “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Equity Incentive Awards — 2007 Plan” below.
|
Security Ownership of Certain Beneficial Owners and Management
The following table sets forth information regarding the beneficial ownership of our shares as of March 15, 201723, 2018 for:
- •
·each person known byto us to beneficially ownbe the beneficial owner of more than 5% of our shares;·
- •
- each of our directors and director nominees;
·
- •
- each of our Named Executive Officers; and
·
- •
- all directors and executive officers as a group.
The number of shares and the percentages of beneficial ownership are based on 45,608,07445,920,908 shares outstanding as of March 15, 2017,23, 2018, and the number of shares owned and acquirable within 60 days of March 15, 201723, 2018 by the named person, with the exception of the amounts reported in filings on Schedule 13D and 13G, which amounts are based on holdings as of December 31, 2016,2017, or as otherwise disclosed in such filings and reported below.
Table of Contents
To our knowledge and except as indicated in the footnotes to this table and subject to applicable laws, the persons named in this table have the sole voting and investment power with respect to all shares listed as beneficially owned by them.
Name and Address of Beneficial Owners (1) (2) | | Shares Beneficially
Owned (3) | | Percent of Shares
Beneficially Owned | |
5% Shareholders: | | | | | |
BlackRock, Inc. (4) | | 5,002,728 | | 11.0 | % |
The Vanguard Group, Inc. (5) | | 4,742,476 | | 10.4 | % |
Wellington Management Group LLP (6) | | 4,519,035 | | 9.9 | % |
FMR LLC (7) | | 2,803,980 | | 6.1 | % |
| | | | | |
Directors and Named Executive Officers: | | | | | |
Steven A. Rathgaber | | 319,199 | | * | |
David W. Dove | | 61,793 | | * | |
J. Chris Brewster | | 43,523 | | * | |
Jorge M. Diaz | | 42,862 | | * | |
Jonathan Simpson-Dent | | 30,775 | | * | |
Mark Rossi | | 28,394 | | * | |
Dennis F. Lynch | | 22,485 | | * | |
G. Patrick Phillips | | 21,382 | | * | |
Juli C. Spottiswood | | 16,592 | | * | |
E. Brad Conrad | | 10,610 | | * | |
Edward H. West | | 10,372 | | * | |
J. Tim Arnoult | | 10,295 | | * | |
Julie Gardner | | 10,217 | | * | |
P. Michael McCarthy | | — | | * | |
| | | | | |
All directors and executive officers as a group (20 persons) | | 534,767 | | 1.2 | % |
| | | | | | | |
Name and Address of Beneficial Owners(1)(2) | | Shares Beneficially
Owned(3) | | Percent of Shares
Beneficially Owned | |
|---|
5% Shareholders: | | | | | | | |
Hudson Executive Capital LP(4) | | | 6,324,730 | | | 13.8 | % |
BlackRock, Inc.(5) | | | 5,753,980 | | | 12.5 | % |
T. Rowe Price Associates, Inc.(6) | | | 4,231,737 | | | 9.2 | % |
The Vanguard Group, Inc.(7) | | | 4,007,676 | | | 8.7 | % |
Van Berkom & Associates Inc.(8) | | | 3,333,500 | | | 7.3 | % |
FMR LLC(9) | | | 2,410,690 | | | 5.2 | % |
Directors and Named Executive Officers: | | |
| | |
| |
Steven A. Rathgaber | | | 319,199 | | | 0.7 | %* |
Edward H. West | | | 56,522 | | | 0.1 | %* |
Jorge M. Diaz | | | 45,892 | | | 0.1 | %* |
Mark Rossi | | | 38,924 | | | 0.1 | %* |
Dennis F. Lynch | | | 30,515 | | | 0.1 | %* |
G. Patrick Phillips | | | 24,412 | | | 0.1 | %* |
Juli C. Spottiswood | | | 19,622 | | | 0.0 | %* |
J. Tim Arnoult | | | 13,325 | | | 0.0 | %* |
Julie Gardner | | | 13,247 | | | 0.0 | %* |
Stuart Mackinnon | | | 9,323 | | | 0.0 | %* |
Brian Bailey | | | 3,466 | | | 0.0 | %* |
Dan Antilley | | | — | | | 0.0 | %* |
Gary Ferrera | | | — | | | 0.0 | %* |
P. Michael McCarthy | | | — | | | 0.0 | %* |
All directors and executive officers as a group (17 persons) | | | 282,225 | | | 0.6 | %* |
- *
- Less than 1.0% of our outstanding shares
- (1)
- Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she, or it possesses sole or shared voting or investment power of that security, including options that are currently exercisable or exercisable within 60 days of March 23, 2018, and RSUs that are currently vested or will be vested within 60 days of March 23, 2018. Shares issuable pursuant to options and RSUs are deemed outstanding for computing the percentage of the person holding such options or RSUs but are not deemed outstanding for computing the percentage of any other person.
- (2)
- The address for each Named Executive Officer and director set forth in the table, unless otherwise indicated, is c/o Cardtronics plc, 3250 Briarpark Drive, Suite 400, Houston, Texas 77042. The address of Hudson Executive Capital LP is 1185 Avenue of the Americas, 32nd Floor, New York, NY 10036. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. The address of T. Rowe Price Associates Inc. is 100 E. Pratt Street, Baltimore, MD 21202. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The address of Van Berkom & Associates Inc. is 1130 Sherbrooke Street West, Suite 1005, Montreal, Quebec H3A 2M8. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210.
- (3)
- Amounts shown include shares and restricted shares beneficially owned. There are no RSUs that will vest within 60 days of March 23, 2018, and no exercisable options or unvested options that will vest within 60 days of March 23, 2018.
Table of Contents
- (4)
- As reported on the Form 4 dated February 21, 2018 and filed with the SEC on February 23, 2018, Hudson Executive Capital Management LP has shared voting and dispositive power over 6,324,730 shares.
- (5)
- As reported on Schedule 13G/A, dated as of December 31, 2017 and filed with the SEC on January 23, 2018, BlackRock, Inc. has sole voting power over 5,650,828 shares and sole dispositive power over 5,753,980 shares.
- (6)
- As reported on Schedule 13G/A, dated as of December 31, 2017 and filed with the SEC on February 14, 2018, T. Rowe Price Associates, Inc. has sole voting power over 719,473 shares and sole dispositive power over 4,231,737 shares.
- (7)
- As reported on Schedule 13G/A, dated as of December 31, 2017 and filed with the SEC on February 8, 2018, the Vanguard Group, Inc. has sole voting power over 89,338 shares, sole dispositive power over 3,915,492 shares, shared dispositive power over 92,184 shares and shared voting power over 6,500 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 85,684 of such shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 10,154 of such shares as a result of its serving as investment manager of Australian investment offerings.
- (8)
- As reported on Schedule 13G, dated as of December 31, 2017 and filed with the SEC on February 13, 2018 by Van Berkom & Associates Inc. has sole voting power over 3,333,500 shares and sole dispositive power over 3,333,500 shares.
- (9)
- As reported on Schedule 13G/A, dated as of December 31, 2017 and filed with the SEC on January 10, 2018, FMR LLC has sole voting power over 1,975 shares and sole dispositive power over 2,410,690 shares.
*
| Less than 1.0% of our outstanding shares
|
| |
(1)
| Beneficial ownership is determined according to the rules of the SEC and generally means that a person has beneficial ownership of a security if he, she, or it possesses sole or shared voting or investment power of that security, including options that are currently exercisable or exercisable within 60 days of March 15, 2017, and RSUs that are currently vested or will be vested within 60 days of March 15, 2017. Shares issuable pursuant to options and RSUs are deemed outstanding for computing the percentage of the person holding such options or RSUs but are not deemed outstanding for computing the percentage of any other person.
|
| |
(2)
| The address for each Named Executive Officer and director set forth in the table, unless otherwise indicated, is c/o Cardtronics plc, 3250 Briarpark Drive, Suite 400, Houston, Texas 77042. The address of Wellington Management Group LLP is 280 Congress Street, Boston, Massachusetts 02210. The address of BlackRock, Inc. is 55 East 52nd Street, New York, New York 10055. The address of The Vanguard Group, Inc. is 100 Vanguard Blvd., Malvern, Pennsylvania 19355. The address of FMR LLC is 245 Summer Street, Boston, Massachusetts 02210. The address of NewSouth Capital Management, Inc. is 999 Shady Grove Road, Suite 501, Memphis, Tennessee 38120.
|
| |
(3)
| Amounts shown include shares and restricted shares beneficially owned. There are 22,668 RSUs that will vest within 60 days of March 15, 2017, but no exercisable options or unvested options that will vest within 60 days of March 15, 2017.
|
| |
(4)
| As reported on Schedule 13G/A, dated as of December 31, 2016 and filed with the SEC on January 12, 2017, BlackRock, Inc. has sole voting power over 4,902,418 shares and sole dispositive power over 5,002,728 shares.
|
| |
(5)
| As reported on Schedule 13G/A, dated as of December 31, 2016 and filed with the SEC on February 24, 2017, The Vanguard Group, Inc. has sole voting power over 89,439 shares, sole dispositive power over 4,650,037 shares, shared dispositive power over 92,439 shares and shared voting power over 5,300 shares. Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 87,139 of such shares as a result of its serving as investment manager of collective trust accounts. Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc., is the beneficial owner of 7,600 of such shares as a result of its serving as investment manager of Australian investment offerings.
|
| |
(6)
| As reported on Schedule 13G, dated as of December 31, 2015 and filed with the SEC on January 11, 2016 by Wellington Management Group LLP (“Wellington Management”), these shares are owned of record by clients of Wellington Management. Those clients have the right to receive, or the power to direct the receipt of, dividends from, or the proceeds from the sale of, such securities. No such client is known to have such right or power with respect to more than five percent of this class of securities. Wellington Management has shared voting power over 2,950,176 shares and shared dispositive power over 4,519,035 shares.
|
(7)
| As reported on Schedule 13G, dated as of December 31, 2016 and filed with the SEC on February 14, 2017, FMR LLC has sole voting power over 177,367 shares and sole dispositive power over 2,803,980 shares. Abigail P. Johnson is a Director, the Chairman and the Chief Executive Officer of FMR LLC. Members of the Johnson family, including Abigail P. Johnson, are the predominant owners, directly or through trusts, of Series B voting common shares of FMR LLC, representing 49% of the voting power of FMR LLC. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B voting common shares will be voted in accordance with the majority vote of Series B voting common shares. Accordingly, through their ownership of voting common shares and the execution of the shareholders’ voting agreement, members of the Johnson family may be deemed, under the Investment Company Act of 1940, to form a controlling group with respect to FMR LLC. Neither FMR LLC nor Abigail P. Johnson has the sole power to vote or direct the voting of the shares owned directly by the various investment companies registered under the Investment Company Act of 1940 (“Fidelity Funds”) advised by Fidelity Management & Research Company, a wholly owned subsidiary of FMR LLC, which power resides with the Fidelity Funds’ Boards of Trustees. Fidelity Management & Research Company carries out the voting of the shares under written guidelines established by the Fidelity Funds’ Boards of Trustees.
|
EXECUTIVE OFFICERS
Our executive officers are appointed by our Board on an annual basis and serve until removed by our Board or their successors have been duly appointed. The following table sets forth the name, age (as per the date of the Annual Meeting) and position of each person who is currently an executive officer of Cardtronics:
| | | | |
| | Age | |
| | Position | |
|---|
Steven A. Rathgaber
Dan Antilley | | 63
50 | | Chief Executive Officer
| |
Edward H. West
| | 50
| | Chief Financial Officer and Chief Operations Officer
| |
Jonathan Simpson-Dent
| | 50
| | Chief Commercial Officer
| |
Stuart Mackinnon
| | 45
| | Chief Information Officer
| |
Gerardo Garcia
| | 58
| | Chief Information Security Officer | |
Brian Bailey | | 46 | | Executive Vice President & Managing Director, North America |
| E. Brad Conrad | | 44
45 | | Executive Vice President—Treasurer & Interim Chief Accounting Officer | |
Sharon Bridgland-Gough
Gary W. Ferrera | | 46
55 | | Chief Financial Officer |
| Geri House | | 41 | | Chief Human Resources Officer | |
Aimie Killeen | | 38
39 | | General Counsel and Secretary | |
Brian Bailey
Stuart Mackinnon | | 45
46 | | Managing Director — Global Financial InstitutionsExecutive Vice President—Technology and North America
| Operations & Chief Information Officer |
Tim Halford
| | 39
| | Managing Director — United Kingdom & Ireland
| |
Dean Shaw
| | 46
| | Managing Director — Global Operations
| |
Brad Nolan | | 44
45 | | Executive Vice President — President—Global Product & Marketing | |
Phillip Chin
Marc Terry | | 42
56 | | Managing Director—International |
| Edward H. West | | 51 | | Chief Executive Vice President — Corporate Development and Investor Relations | Officer |
There are no family relationships among any of our directors or executive officers.
Table of Contents
The following biographies describe the business experience of our executive officers:
Dan AntilleySteven A. Rathgaber — Mr. Rathgaber’s biographical information is located under “Proposal 1: Ordinary Resolutions to Re-elect Class I Directors.”
Edward H. West joined Cardtronics in January 2016 and became our Chief Financial Officer, replacing J. Chris Brewster, our former Chief Financial Officer, effective February 23, 2016. In July 2016, Mr. West also assumed the role of Chief Operations Officer. Mr. West most recently served as President and Chief Executive Officer of Education Management Corporation, joining that company initially as Chief Financial Officer in 2006. Prior to 2006, Mr. West held various executive positions within Internet Capital Group, including serving as Chief Executive Officer of ICG Commerce, the largest subsidiary of the group from 2002-2006. Prior to his time at Internet Capital Group, Mr. West served as Chief Financial Officer for Delta Air Lines. Mr. West began his career as a banker at SunTrust. Mr. West received a BBA in Finance from Emory University.
Jonathan Simpson-Dent has served as our Chief Commercial Officer since July 2016. Prior to such time, Mr. Simpson-Dent served as the Managing Director of Cardtronics Europe since joining us in August 2013, in connection with the acquisition of Cardpoint Limited. Prior to his employment with us, Mr. Simpson-Dent held the position of Chief Executive Officer at Cardpoint Limited, where he served since February 2012. Mr. Simpson-Dent is a seasoned leader in both private equity and public company environments, and brings with him 25 years of strategy development expertise. Prior to joining Cardpoint Limited, Mr. Simpson-Dent held various executive- and senior-level management positions with the European divisions of PepsiCo and McKinsey & Company. Mr. Simpson-Dent is Cambridge University-educated, a certified Chartered Accountant and a member of The Institute of Chartered Accountants in England and Wales.
Stuart Mackinnon has served as our Chief Information Officer since February 1, 2017. Mr. Mackinnon is responsible for the global information technology infrastructure for Cardtronics. Mr. Mackinnon directs the strategy and implementation of innovative solutions for the business focusing on efficiency and service. Mr. Mackinnon joined Cardtronics in 2015 through the acquisition of Columbus Data Services, the largest ATM processor in North America, where he held the position of President for five years. Prior to Columbus Data Services, Mr. Mackinnon held senior technology roles at Threshold Financial Technologies and Choice Hotels Canada.
Gerardo Garcia has served as our Chief Information Security Officer since January 2013. PriorMay 30, 2017. In this role, Mr. Antilley is responsible for leading the company's global information security and technology risk strategy program, focused on safeguarding company and customer assets, and ATM user information. Mr. Antilley has more than 20 years of information security leadership experience, including retail banking industry expertise. Most recently prior to such time,joining Cardtronics, Mr. GarciaAntilley capped a 16+ year career at Bank of America by serving as Senior Vice President and Global Information Security Operations Executive, a role in which he directed a multi-site global team of 400 information security professionals, with an emphasis on threat and vulnerability management, malware protection and cyber forensics. Earlier in his career, Mr. Antilley served in technology roles at Genuity, Check Point Software Technologies and the Texas Department of Housing and Community Affairs. Earned over the course of his career, Mr. Antilley holds multiple patents for systems and methods related to information security risk assessment.
Brian Bailey has served as our CIO from March 2004 to January 2013.Managing Director, North America, since November 2016. Prior to joining Cardtronics, Mr. GarciaBailey served as Vice President and General Manager for NCR Corporation's Financial Services Division, responsible for Product Management and Marketing. At NCR, Mr. Bailey held various senior positionsleadership roles in ITsales, marketing, and product management, most recently serving as Senior Vice President of e-Business with ALLTEL Information Servicesincluding assignments in NCR's Asia Pacific and also serving as Director of Technology, Consumer Banking Group at First Union (now Wells Fargo).Europe regions, all focused on the financial services industry segment. Mr. GarciaBailey holds a Bachelor of Business AdministrationScience degree in Accounting with a concentration in Business Data SystemsFinance and Marketing from the University of Texas in San Antonio.Dayton.
E. Brad Conrad has served as our Executive Vice President-Treasurer since January 2018. Mr. Conrad currently also serves as our Chief Accounting Officer, a role he has held since October 2010.2010, as the Company is currently in the process of selecting a successor for this position. From April 2008 to October 2010, Mr. Conrad served as our Senior Vice President and Corporate Controller. Prior to joining Cardtronics, Mr. Conrad held various management positions in the accounting and reporting function at Consolidated Graphics, Inc., an international commercial printing company that was acquired by RR Donnelley in January 2014. Prior to such time, Mr. Conrad held several finance and accounting roles at Peregrine Systems, Inc. Mr. Conrad began his career with KPMG LLP in its audit practice. Mr. Conrad holds a Masters in Professional Accounting and a Bachelors of Business Administration from the University of Texas and is a licensed certified public accountant in the state of Texas.
Gary W. Ferrerahas served as our Chief Financial Officer since November 28, 2017. In this role, Mr. Ferrera is responsible for leading all financial functions of the company, and he provides oversight for accounting and reporting, strategic planning and analysis, treasury, tax, internal audit, risk management, investor relations and corporate development. Ferrera has more than 20 years of leadership experience in corporate finance and corporate development roles. Prior to joining Cardtronics, Mr. Ferrera was at DigitalGlobe, Inc., where he served as Chief Financial Officer since early 2015. Previously serving in that same capacity for Intrawest Resorts, Great Wolf Resorts, National CineMedia, and Unity Media, Mr. Ferrera's career as a Chief Financial Officer is notable for overseeing periods of rapid growth, mergers and acquisitions, initial public offerings, along with cost-efficient operating and capital structures and tax efficiency. Prior to his Chief Financial Officer positions, Mr. Ferrera developed his M&A and capital markets expertise with Citigroup and Bear Stearns. Mr. Ferrera also started his commercial career as an international tax consultant with Arthur Andersen. Mr. Ferrera holds an M.B.A. from the Kellogg School of Management, Northwestern University and a B.S. in Accounting from Bentley University, magna cum laude.
Geri HouseSharon Bridgland-Gough has served as our Chief Human Resources Officer since March 2017.February 12, 2018. In this role, Ms. Bridgland-Gough has led our European Human Resources team since joining Cardtronics in 2014. Ms. Bridgland-Gough has beenHouse is responsible for leading several cross-company initiatives, including ourthe company's global human resources function, overseeing human resources strategy, talent acquisition, employee engagement, development and relations, along with compensation and benefits programs. Ms. House is an experienced, strategic human resources executive with a demonstrated ability to align people and culture to the corporate vision, strategies and values and recognition programs and our global talent planning process.to
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drive effective execution of company goals. Prior to joining Cardtronics, Ms. Bridgland-Gough held numerous senior human resources leadership rolesHouse was Executive Vice President, People & Organization, at National CineMedia, where she also previously served as Vice President and Deputy General Counsel. Earlier in her career, Ms. House was in private industry, including information securitypractice, serving as outside counsel for an array of clients of two international law firms. Ms. House holds a Juris Doctor from Harvard Law School and defense contracting, as well as at government and non-profit entities.a Bachelor of Arts from Simon Fraser University.
Aimie Killeenhas served as our General Counsel and Secretary since March 2017, leading our legal, corporate governance and compliance sections. Ms. Killeen joined Cardtronics through our acquisition of DirectCash Payments Inc. (“DCP”("DCP") in January 2017, where she served as Global Corporate Counsel since March 2013. Prior to joining DCP, Ms. Killeen practiced for nine years at one of Australia’sAustralia's premier global law firms. Her experience there included leveraged and acquisition finance, aviation finance, structured asset finance, securitization, debt capital markets, general corporate banking and restructuring. Ms. Killeen is a graduate from the University of Technology in Sydney, Australia, and was admitted to practice law in the Supreme Court of New South Wales, and the High Court of Australia in 2004.
Stuart MackinnonBrian Bailey has served as Managing Director, Global Financial Institutions and North America, since November 2016. Prior to joining Cardtronics, Mr. Bailey served as Vice President and General Manager for NCR Corporation’s Financial Services Division, responsible for Product Management and Marketing. At NCR, Mr. Bailey held various leadership roles in sales, marketing, and product management, including assignments in NCR’s Asia Pacific and Europe regions, all focused on the financial services industry segment. Mr. Bailey holds a Bachelor of Science degree in Finance and Marketing from the University of Dayton.
Tim Halford has served as our Managing Director, United KingdomExecutive Vice President—Technology and Operations & IrelandChief Information Officer since August 2016. Prior to such time,February 1, 2017. Mr. Halford served as Commercial DirectorMackinnon is responsible for the global information technology infrastructure for Cardtronics. Mr. Mackinnon directs the strategy and implementation of innovative solutions for the business focusing on efficiency and service. Mr. Mackinnon joined Cardtronics UK since joining us in August 2013, in connection with2015 through the acquisition of Cardpoint Limited.Columbus Data Services, the largest ATM processor in North America, where he held the position of President for five years. Prior to his employment with us,Columbus Data Services, Mr. HalfordMackinnon held the positions of Business Development Directorsenior technology roles at Threshold Financial Technologies and Corporate Channel Director at Cardpoint Limited, where he served since October 2010. He brings 20 years’ worth of commercial and business development experience across both the IT and transport sectors. Prior to joining Cardpoint Limited, Mr. Halford held various positons at Volt Europe and Kizoom Ltd.Choice Hotels Canada.
Dean Shaw has served as our Managing Director, Global Operations since March 2017. Mr. Shaw is responsible for all elements of our Operations across the four continents in which we operate. Mr. Shaw originally joined Cardtronics in September 2015 in the role of U.K. and Ireland Operations Director before moving onto become the European Operations Director in 2016. Prior to joining Cardtronics, Dean worked for thirteen years in the cash handling equipment business with De La Rue, Talaris and Glory in a number of management positions and was part of the Management Team which worked successfully alongside the Carlyle Private Equity group to sell the Talaris business for £650 million, almost twice the initial acquisition price. Mr. Shaw holds a Masters in Operational Research from University of Birmingham and Bachelor of Economics and Econometrics from Nottingham University.
Brad Nolanhas served as our Executive Vice President, Global Product & Marketing since January 2017.2017. In this role he is charged with leading the design and delivery of new technology solutions which enable financial institutions and retail brands to provide world-class financial access to their customers. Prior to joining Cardtronics, Mr. Nolan spent 20 years at JPMorgan Chase & Co., serving as Managing Director of Branch Systems & Innovation, where he led retail channel design and innovation for the organization. Mr. Nolan is listed as co-designer on multiple patents focused on self-service kiosks and user interface design. Mr. Nolan holds dual Bachelor of Business Administration degrees in Accountancy and Finance from Miami University and is a former licensed Certified Public Accountant in the state of Ohio.
Marc TerryPhillip Chin has served as our Executive Vice President Corporate Development and Investor RelationsManaging Director—International since June 2013.September 18, 2017. In this role, Mr. Terry oversees all commercial activities for the company in Europe, the Middle East, Africa and Australia. Mr. Terry has nearly 30 years of payments and financial services technology business and leadership experience. Prior to joining Cardtronics, Mr. ChinTerry was a senior investment bankerGroup Managing Director—EMEA at Barclays CapitalFIS, where he was responsible for all banking and Lehman Brothers, with coverage responsibilitypayments products. Earlier in his career, Mr. Terry served as Managing Director Commercial for corporate clientsVocalink, where he was responsible for all commercial activities and relationships including management of the LINK ATM network in the technology sector. Prior to such time, heUnited Kingdom. Mr. Terry previously held positions at startup Internet retailer Ethnicgrocer.comroles as International Sales Director for Metavante, Managing Director—EMEA for Clear2Pay, and management consulting firm Arthur D. Little. Mr. Chin holdsVice President—International Sales for S1 UK, following a Masters of Business Administration degree from the University of Chicago Booth School of Business and a Bachelors of Science degree from Northwestern University.15+ year career in multiple global leadership roles for ACI Worldwide.
Edward H. West Mr. West's biographical information is located under "Proposal 1: Ordinary Resolution to Re-Elect Class II Directors."
COMPENSATION DISCUSSION AND ANALYSIS
The Compensation Discussion and Analysis (“("CD&A”&A") set forth below provides an explanation of our compensation programs, including the objectives of such programs and the rationale for each element of compensation, for our current and former Chief Executive Officer,Officers, our current and former Chief Financial Officers, our three other most highly compensated executive officers serving as of December 31, 2016,2017, and one individual who would have been one of our three other most highly compensated executive officers except for the fact that he was not serving as an executive officer as of December 31, 2016 (collectively,2017
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(collectively, the “Named"Named Executive Officers”Officers"). For the year ended December 31, 2016, our Named Executive Officers were as follows:
Name
| | Position
|
Steven A. Rathgaber
| | Chief Executive Officer
|
Edward H. West
| | Chief Financial Officer and Chief Operations Officer
|
J. Chris Brewster
| | Former Chief Financial Officer
|
David W. Dove
| | Former President — North American Business Group
|
P. Michael McCarthy
| | Former Chief Information Officer
|
Jonathan Simpson-Dent
| | Chief Commercial Officer
|
E. Brad Conrad
| | Chief Accounting Officer
|
This CD&A also describes the actions and decisions of our Compensation Committee as it relates to 20162017 compensation decisions. The discussion is divided into
Our 2017 Named Executive Officers
For the following sections:year ended December 31, 2017, our Named Executive Officers were as follows:
| | |
Name | | Position |
|---|
| Steven A. Rathgaber(1) | | Former Chief Executive Officer |
| Edward H. West(2) | | Chief Executive Officer and Director; Former Chief Financial Officer/Chief Operations Officer |
| Gary W. Ferrera(3) | | Chief Financial Officer |
| Dan Antilley | | Chief Information Security Officer |
| Stuart Mackinnon | | Executive Vice President—Technology and Operations & Chief Information Officer |
| Brian Bailey | | Executive Vice President & Managing Director, North America |
| P. Michael McCarthy(4) | | Former Chief Information Officer |
- (1)
- Mr. Rathgaber retired from the Company effective December 31, 2017.
- (2)
- Mr. West served as Chief Financial Officer/Chief Operations Officer through December 31, 2017 and became Chief Executive Officer and a member of the Board effective January 1, 2018.
- (3)
- Mr. Ferrera commenced service as Chief Financial Officer effective November 28, 2017.
- (4)
- Mr. McCarthy retired from the Company effective February 1, 2017.
Execution of Succession Plan; Named Executive Officer Changes
As previously disclosed, in connection with the long-term succession plan undertaken by the Board, Mr. Rathgaber retired from the Company effective December 31, 2017. We announced Mr. West as Mr. Rathgaber's successor and promoted him from his position as Chief Financial Officer/Chief Operations Officer to Chief Executive Officer, effective January 1, 2018. Mr. Ferrera, who most recently served as Chief Financial Officer at DigitalGlobe (see his bio on page 26 for additional detail), joined the Company and commenced service as Chief Financial Officer effective November 28, 2017. Mr. McCarthy also retired from the Company effective February 1, 2017. Mr. Mackinnon was promoted to the role of Executive Vice President—Technology and Operations & Chief Information Officer, as his successor.
· Executive Summary
· Role of Compensation Committee, Compensation Consultant and Management
· Elements of Total Compensation
· Factors Considered in Setting Executive Pay
· 2016 Compensation Decisions
· Other Compensation and Tax Matters
Executive Summary
Compensation Program Philosophy and DesignDesign.. The primary objectives of our executive compensation program are to attract, retain, and motivate qualified individuals who are capable of leading our companyCompany to meet its business objectives and to increase overall shareholder value. To achieve these objectives, our Compensation Committee’sCommittee's philosophy has been to implement a total compensation program that aligns the interests of management with those of our investors and to provide a compensation program that creates incentives for and rewards performances of the individuals based on our overall success and the achievement of financial performance objectives, without encouraging excessive risk-taking.
The framework of our executive compensation program is set forth below:
·
- •
- we provide our Named Executive Officers with annual compensation that includes three primary elements: (i) base salary; (ii) annual non-equity incentive plan awards; and (iii) long-term performance and service-based equity-based incentive awards;
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- •
- we do not provide tax gross-ups for current executive officers;
- •
- we do not backdate options;
- •
- our annual non-equity incentive plans are tied to specific pre-established financial performance
goals;goals as well as individual goals for certain Named Executive Officers;
·
- •
- the cash awards under our non-equity incentive plan are capped at 200% of target;
·
- •
- we have a compensation recoupment
(“Clawback”("Clawback") policy that applies to our annual non-equity incentive plans, and starting in 2015, the performance-based portion of our Equity Incentive Plans;equity incentive awards;
·
- •
- 75% of RSUs under our long-term incentive plan
to thefor Named Executive Officers are performance-based, contingent upon the achievement of certain pre-established company financial performance goals, and the remaining 25% of the RSUs are time-based,service-based, requiring four years of service to be rewarded with total value;·
- •
- earned performance-based RSUs are subject to additional
time-basedservice-based vesting requirements which require fourthree years of service to be rewarded with total value;·
- •
- the number of performance-based RSUs that can be earned by each Named Executive Officer is capped at
200%225% of target, with total equity grants subject to the company-wide equity funding pool, as approved by our Compensation Committee;·
- •
- our Compensation Committee, which comprises solely independent directors, reviews and approves all elements of Named Executive Officer compensation;
·
- •
- our Compensation Committee reviews our compensation program annually to ensure that it does not incentivize excessive risk-taking;
·
- •
- our Compensation Committee retains an independent compensation consultant to advise on executive compensation matters and best practices;
·
- •
- our executive officers and directors are subject to share ownership requirements; and
·
- •
- our executive officers and directors are subject to our insider trading policy, which includes anti-hedging and anti-pledging provisions.
Prior Year Say on Pay ResultsResults.. At the June 2, 2016May 10, 2017 Annual Meeting of Stockholders, the “Advisory"Advisory Vote on Executive Compensation”Compensation" proposal (the “say"say on pay”pay" vote) received support from approximately 98%99.0% of votes cast. Our Compensation Committee considered these results and, based on the overwhelming support from shareholders, determined that the results of the vote did not call for any significant changes to our executive compensation plans and programs already in place for 2016 or 2017.2017 except for the introduction of stock options.
2016 Performance 2017 Performance. 2017 was a transformational year, marked by the largest acquisition in the Company's history (DCPayments). We had strong financial performance during 2016, including approximately 5% The DCPayments acquisition drove 19% growth in Revenues (9%(over 20% on a constant-currency basis), 31% growth in GAAP Net Income and 13%nearly 10% growth in Adjusted Net Income per Share (defined later in this CD&A)EBITDA. Adjusted EBITA was down 1% from 2016, as reported in our consolidated financial statements included in our Annual Report on Form 10-K. For a reconciliation of Net Income to Adjusted Net Income per Share, see pages 65-66 of our Annual Report on Form 10-K (as filed with the SEC on February 21, 2017) for the fiscal year ended December 31, 2016. This strong performance was primarily attributable to growth in our ATM operating revenues, drivenAdjusted EBITDA was more than offset by a combination of: (i) contributions from businesses acquiredincreased depreciation expense, primarily related to the DCPayments acquisition. As expected, these results were adversely impacted by the removal of ATMs at 7-Eleven locations in the U.S., which we commenced and nearly completed in the latter parthalf of 20152017. 7-Eleven in the U.S. was our largest merchant relationship in terms of revenues in 2016 and 2016; (ii) ATM unit growth expansion; and (iii) an increase2017. Excluding 7-Eleven, we saw increases in bank-branding and surcharge-free network revenues resulting from
the continued growth of participating banks and other financial institutions in our bank-branding program and our surcharge-free network, Allpoint. ThisAllpoint, and additionally revenue growth from the deployment of additional units. Adjusted Net Income per Share was down 8% from 2016 as the increased interest and depreciation expense associated with the DCPayments acquisition more than offset the growth in Adjusted EBITDA. The Revenue and Adjusted EBITDA growth was
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partially offset by the strengthening of the U.S. dollar, which resulted in translating revenues from our non-U.S. dollar subsidiaries at a lower rate. Ourrate compared to 2016. In determining the incentive payouts, our Compensation Committee considered thesethe actual results in relationachieved relative to our 2016the 2017 performance goals, net of certain adjustments for foreign currency exchange movements, tax rate movements and other terms in accordance with the plan in authorizing the payouts of incentives under our non-equity incentive plan and under our equity plan, as described below and in detail later in this CD&A. For a reconciliation of Net Income to Adjusted EBITDA and Adjusted Net Income per Share see page 71 of our Annual Report on Form 10-K (filed with the SEC on March 1, 2018).
Cash Incentives Earned for 2016 Performance2017 Performance.. For 2016,2017, payments under our annual non-equity incentive plan were reflective of our performance and the achievement of certain performance goals. As discussed further in “2016"2017 Compensation Decisions — Decisions—Non-Equity Incentive Plan”Plan" below, our 20162017 Total Revenues actual result was $1,287.3$1,483.2 million (as adjusted per the terms of the plan), which exceeded our target of $1,266.9$1,480.2 million. Our Adjusted EBITA (as(which we use as a performance-based compensation metric and is defined in “2016"2017 Compensation Decisions — Decisions—Performance Metrics”Metrics" below) actual result of $233.6$220.2 million exceeded(as adjusted per the terms of the plan) fell short of our target of $229.0$227.6 million. The actual results were adjusted for foreign currency exchange rates and other terms as defined in the plan. As a result of the over-performance ofperformance relative to both the Revenue metric and the Adjusted EBITA metric, along with other factors, depending on the executive, our Compensation Committee approved actual payout amounts for our Named Executive Officers that were above our target payout amounts, ranging from 106.9%86.4% to 166.4%103.8% of target, depending on the individual, except for Messrs. Rathgaber and McCarthy, as discussed below.individual. For a reconciliation of Net Income to Adjusted EBITA, see page 71 of our Annual Report on Form 10-K (filed with the SEC on March 1, 2018).
Equity Awards Earned for 2016 Performance2017 Performance.. For 2016,2017, grants under our long-term incentive plan (“LTIP”("LTIP") alsowere awarded based on 2017 performance, which reflect our performance and achievement of certain performance goals. AsBased on our results, which are discussed further in “2016"2017 Compensation Decisions — 2016Decisions—2017 Long-Term Incentive Plan and other Performance Awards”Awards" below, our Revenue actual result and our Adjusted Net Income per Share actual result came in above our financial target. As a result of the over-performance of the Revenue metric and Adjusted Net Income per Share metric, our Named Executive Officers that received a grant in 2016 under our LTIP earned 136%83% of the 2017 target number of performance-based RSUs. TheRSUs, which were granted in 2018. These awards will vest based onincrementally subject to the Named Executive Officers' continued employment with Cardtronics (or to an employee’semployee's qualified retirement date, if earlier) and will be fully vested in January 2020. Upon his hiring in 2013, Mr. Dove received performance-based RSUs with three annual performance periods that commenced in 2014. For the 2016 performance period, our Compensation Committee set the performance metrics to be the same as for the 2016 LTIP, as such earning 136% of the target number of performance-based RSUs. These awards vested in March 2017, upon our Board’s approval of the 2016 performance results.2021.
Role of Compensation Committee, Compensation Consultant and Management
Compensation CommitteeCommittee.. Our Compensation Committee is responsible for establishingdesigning, recommending and evaluating all compensation programs for our executive officers (including each of the Named Executive Officers) as well as oversight for other broad-based employee benefits programs. Our Compensation Committee receives information and advice from third-party compensation consultants as well as from our human resources department and management to assist in making decisions regarding compensation matters.
Compensation ConsultantConsultant.. Our Compensation Committee has sole authority to retain and terminate the services of a compensation consultant who reports to our Compensation Committee. The role of the compensation consultant is to advise our Compensation Committee in its oversight role, advise management in the executive compensation design process and provide independent compensation data and analysis to facilitate the annual review of our compensation programs. The compensation consultant attends Compensation Committee meetings as requested by our Compensation Committee.
During 2016,2017, our Compensation Committee retained Meridian Compensation Partners, LLC (“Meridian”("Meridian") as its independent advisor. Meridian is an independent compensation consulting firm and does not provide any other services to us outside of matters pertaining to executive officer and director compensation and related corporate governance. Meridian reports directly to our Compensation Committee, which is the sole party responsible for determining the scope of services performed by
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Meridian and the directions given to Meridian regarding the performance of such services. Meridian was not given a specific list of instructions, but rather was engaged to provide our Compensation Committee with information and advice that might assist our Compensation Committee in performing its duties. During 2016,2017, the services provided by Meridian included:
- •
·updating our Compensation Committee on regulatory changes affecting our compensation program;·
- •
- providing information on market trends, practices, benchmarking and other data;
·
- •
- providing guidance on CEO compensation;
- •
- reviewing our Peer Group (as defined in
“Elements"Elements of Total Compensation — Compensation—Peer Company Compensation Analysis”Analysis") and conductedconducting a competitive analysis of compensation for our Named Executive Officers and our Board;·
- •
- assisting in reviewing and designing program elements; and
·
- •
- providing overall guidance and advice about the efficacy of each element of our compensation program and its fit within our Compensation
Committee’sCommittee's developing compensation philosophy.
While the Meridian guidance has been a valuable resource for our Compensation Committee in identifying compensation trends and determining competitive compensation packages for our executives, our Compensation Committee is not bound to adhere to any advice or recommendations that Meridian may provide to our Compensation Committee.
In March 2016 and 2017, ourOur Compensation Committee considered the independence of Meridian in light of SEC rules and NASDAQ listing standards. Our Compensation Committee requested and received a letter from Meridian addressing the consulting firm’s independence,standards, including the following factors: (i) other services provided to us by the consultant; (ii) fees paid by us as a percentage of the consulting firm’sfirm's total revenue; (iii) policies or procedures maintained by the consulting firm that are designed to prevent a conflict of interest; (iv) any business or personal relationships between the individual consultants involved in the engagement and a member of our Compensation Committee; (v) any company stock owned by the individual consultants involved in the engagement; and (vi) any business or personal relationships between our executive officers and the consulting firm or the individual consultants involved in the engagement. Our Compensation Committee discussed these considerations, among other things, and concluded that the work of Meridian did not raise any conflict of interest for either the 2016 or 2017 year.interest.
Role of the Chief Executive Officer in Executive Compensation DecisionsDecisions.. Our Chief Executive Officer works very closely with our Compensation Committee; however, except for providing a self-evaluation report to our Compensation Committee, he does not make, participate in, provide input for, or make recommendations about his own compensation. Our Chief Executive Officer sets our strategic direction and strives to promote compensation programs that motivate employee behavior, consistent with our strategic objectives. Under the direction of our Compensation Committee, and in coordination with the compensation consultant, our Chief Executive Officer coordinates the annual review of the compensation programs for the executive officers. This review includes an evaluation of each officer’sofficer's historical pay and career development, individual and corporate performance, competitive practices and trends and various compensation issues. Based on the results of this review, our Chief Executive Officer makes recommendations to our Compensation Committee regarding each element of compensation for each of the executive officers, other than himself. Our Chief Executive Officer also provides our Compensation Committee with his evaluation of performance of each executive officer other than himself during the prior year for their consideration for determining actual payouts. Our Compensation Committee also meets in executive session, independently of the Chief Executive Officer and other members of senior management, to review not only compensation issues related to the Chief Executive Officer, but those of all Named Executive
Officers and other executive officers. Other than the Chief Executive Officer, none of our other Named Executive Officers provide direct recommendations to our Compensation Committee or
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participate in the executive compensation setting process; however, our Chief Financial Officer provides information and recommendations to our Compensation Committee when it reviews and sets incentive performance goals.
Elements of Total Compensation
The table below summarizes the elements of our compensation program, the form in which each element is paid, the purpose or objective of each element, key features of the element and any performance metrics associated with each element.
| | | | | | | | |
| | Form of
Compensation |
|
| | Purpose/Objective |
|
| | Key Features |
|
| | Performance Metric(s) |
|---|
Base Salary | | Cash — Cash—fixed
| | To provide an executive officer with a fixed income stream, based upon the executive’sexecutive's roles and responsibilities within our organization and relative skills and experience, consistent with market for comparable positions. | | Initial salaries for executive officers are set by our Compensation Committee based on responsibilities and market data. Amounts are reviewed annually by our Compensation Committee, with adjustments made based on the executive’sexecutive's individual performance and our company’scompany's performance for the year. Additional factors considered may include other achievements or accomplishments, any mitigating priorities that may have resulted in a change in the goals, market conditions, participation in the development of other company employees, as well as any additional responsibilities that were assumed by the executive during the period. | | Not performance-based |
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| | | | | | | | |
Element | | Form of Compensation | | Purpose/Objective | | Key Features | | Performance Metric(s) |
|---|
Annual Non-Equity Incentive Plan Awards | | Cash—variable | Cash — variable
| | To reward operating results consistent with the non-equity incentive compensation plan and to provide a strong motivational tool to achieve or exceed earnings and other related pre-established performance objectives. | | Our Compensation Committee establishes a threshold, a target and a maximum possible payout for each executive.
Amounts are paid after year end once our Compensation Committee has determined our performance and each executive’sexecutive's performance relative to pre-established performance goals, which reflects our Compensation Committee’sCommittee's desire that the plan pay amounts relative to actual performance and to provide for substantially increased rewards when performance targets are exceeded. | | Performance metrics are selected on an annual basis that our Compensation Committee believes will produce the best return for our shareholders given the then-current conditions. For 2016,2017, our Compensation Committee selected Revenue and Adjusted EBITA, defined in “2016"2017 Compensation Decisions — Decisions—Non-Equity Incentive Plan”Plan" below. |
Element
|
| Form of
Compensation
|
| Purpose/Objective
|
| Key Features
|
| Performance Metric(s)
|
Long-Term IncentiveLTIP Awards
| | Performance-based RSUs and time-based RSUs — service-based RSUs—variable | | To create a strong financial incentive for achieving or exceeding performance goals, to tie the interests of management to the interests of shareholders, to encourage a significant equity stake in our company and to attract and retain our executive talent base in future years. | | 2017 LTIP2016 LTIP: Under our 20162017 LTIP, the size of an award is based on an analysis of competitive pay that translates an award into a percentage of base salary. Equity awards granted under the 20162017 LTIP comprised 75% performance-based RSUs and 25% time-basedservice-based RSUs.
RSUs granted to new hires are typically not performance-based and generally vest ratably over four years.
| | 75% of RSUs granted under our 2017 LTIP were performance-based awards. For 2017, our Compensation Committee selected Revenue and Adjusted Net Income per Share as the two performance metrics. |
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| | | | | | | | |
Element | | Form of Compensation | | Purpose/Objective | | Key Features | | Performance Metric(s) |
|---|
| | | | | | Performance-based RSUs:The performance-based RSUs (except for those granted to Mr. Dove in 2013, which have unique performance and vesting periods) are earned based on performance achievement over a one-year period followed by vesting requirements based on continued employment (or to an employee’semployee's qualified retirement date, if earlier), over 24, 36, and 48 months from January 31st of the grant year, at the rate of 50%, 25%, and 25%, respectively.
Time-basedService-based RSUs:The time-basedservice-based RSUs are earned during the fiscal year of issuance and generally vest in accordance withover 24, 36, and 48 months from January 31st of the same schedule as performance-based RSUs.grant year, at the rate of 50%, 25%, and 25%, respectively.
| | 75% of RSUs granted under our 2016 LTIP were performance-based awards. For 2016, our Compensation Committee selected Revenue and Adjusted Net Income per Share as the two performance metrics.
Time-based RSUs are not performance-based in the sense that we assign specific performance metrics to the awards.
|
Discretionary Bonuses | | Cash—variable | Cash — variable
| | To reward an executive for significant contributions to a company initiative or when the executive has performed at a level above what was expected or for attracting executives. | | Granted at the discretion of our Compensation Committee, discretionary bonuses are not a recurring element of our executive compensation program. | | Varies, but typically relates to performance with respect to special projects that require significant time and effort on the part of the executive. Payments made in conjunction with significant relocation are not performance-based. |
Element
| | Form of
Compensation
| | Purpose/Objective
| | Key Features
| | Performance Metric(s)
|
Health, Life, Retirement Savings and Other Benefits | | Eligibility to participate in benefit plans generally available to our employees, including retirement, health, life insurance and disability plans — plans—generally fixed. | | Plans are part of our broad-based employee benefits program, which is designed to allow us to remain competitive in the market in terms of attracting and retaining employees and, in the case of our 401(k) plan, to assist our employees in providing for their retirement. | | Under our 401(k) plan, for 2016,2017, we matched 100% of employee contributions up to 4% of the employee’semployee's salary.
Employees immediately vest in their contributions while our matching contributions vest at a rate of 20% per year. We do not provide any supplemental retirement benefits to our Named Executive Officers. For Mr. Simpson-Dent, we provided retirement, health and life insurance benefits that are customarily provided to executives in the United Kingdom. | | Not performance-based |
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| | | | | | | | |
Element | | Form of Compensation | | Purpose/Objective | | Key Features | | Performance Metric(s) |
|---|
Executive Severance and Change in Control Agreements | | Payment of compensation and for benefit coverage costs in the form of separation payments — payments—subject to compliance with restrictive covenants and related conditions. Levels are fixed for duration of employment agreements. | | To provide the executive with assurances against certain types of terminations without cause or resulting from change-in-control where the terminations were not based upon cause. This type of protection is intended to provide the executive with a basis for keeping focus and functioning in the shareholders’shareholders' interests at all times. | | Governed by the terms of employment agreements with certain Named Executive Officers, these agreements and our severance terminology are described in “Executive Compensation — "Executive Compensation—Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Table—Employment-Related Agreements of Named Executive Officers”Officers" below. These agreements provide for severance compensation to be paid if the officer’sofficer's employment is terminated under certain conditions, such as following a corporate change, involuntary termination, termination by us “without"without cause,”" death or disability, each as defined in the applicable executive’sexecutive's agreement. | | Not performance-based |
Limited Perquisites | | Cash—fixed | Cash — fixed
| | To provide the executive with additional benefits considered necessary or customary for the executive’sexecutive's position and for the purpose of attracting and retaining executives. | | Very limited in nature and not guaranteed to be provided to any Named Executive Officer in any given year. During 2016, we provided Mr. Simpson-Dent with a monthly car allowance. No otherNone of the Named Executive Officers received any significant perquisites during 2016, other than the relocation allowance provided to Mr. West.2017. | | Not performance-based |
Factors Considered in Setting Executive Pay
Tally SheetsSheets.. Our Compensation Committee reviews “tally sheets”"tally sheets" for each executive,the Chief Executive Office and the Chief Financial Officer, which are prepared by management and reviewed by Meridian. The tally sheets contain information related to prior years’years' compensation, outstanding equity awards (both vested and unvested) and various termination scenarios. The tally sheets enable our Compensation Committee to review and evaluate various components of the executive pay programs, understand the magnitude of potential payouts as a result of certain employment terminations and consider changes to our plans and programs in light of emerging trends.
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Other FactorsFactors.. In determining the level of total compensation to be set for each compensation component, our Compensation Committee considers a number of factors, including market competitiveness analyses of our compensation levels compared with those paid by comparable companies, our most recent annual performance, each individual Named Executive Officer’sOfficer's performance, the desire to generally maintain internal equity and consistency among our executive officers, tally sheets (as discussed above) and any other considerations that our Compensation Committee deems to be relevant. While our Compensation Committee reviews the total compensation package we provide to each of our Named Executive Officers, our Board and our Compensation Committee view each element of our compensation program as serving a specific purpose and, therefore, as distinct elements. In other words, a significant amount of compensation paid to an executive in the form of one element will not necessarily cause us to reduce another element of the executive’sexecutive's compensation. Accordingly, we have not adopted any formal or informal policy for allocating compensation between long-term and short-term, between cash and non-cash or among the different forms of non-cash compensation.
Peer Company Compensation AnalysisAnalysis.. Our Compensation Committee has historically identified and analyzed the compensation practices of a group of companies we consider to be our peers. The base Peer Group used for its market analyses for 20162017 compensation decisions included the following companies, which we refer to as the “Peer Group”"Peer Group":
| | |
| ACI Worldwide, Inc. | | Jack Henry & Associates, Inc. |
Acxiom Corporation | | Moneygram International, Inc |
Blackhawk Network Holdings, Inc. | | Neustar, Inc. |
CSG Systems International, Inc. | | Outerwall, Inc. |
Earthlink Inc. | | SS&C Technologies Holdings, Inc. |
Euronet Worldwide, Inc. | | Total System Services, Inc. |
Everi Holdings Inc. | | Vantiv Inc. |
Fair Isaac Corp. | | VeriFone Systems, Inc. |
Global Payments, Inc. | | WEX, Inc. |
Heartland Payment Systems | | |
This group was compiled based on a combination of the following factors: (i) companies that have the same GICS (Global Industry Classification Standard) classification; (ii) companies that generate a similar amount of revenues; (iii) companies with similar market value; and (iv) companies that provide services that are similar to the services we provide. TheAlthough a detailed review of the peer group was conducted, the Peer Group utilized for 20162017 pay decisions was expanded from the same Peer Group used for 20152016 pay decisions to reflect corporate changes amongst the companies in our Peer Group and to adjust for our continued growth in relation to companies in our industry.decisions.
Our Compensation Committee believes that using a Peer Group provides meaningful reference points for competitive practices, types of equity awards used and equity usage levels for the executives as well as the total amount of shares set aside for equity programs. Our Compensation Committee’sCommittee's goal is to provide a total compensation package that is competitive with prevailing practices in our industry and within the Peer Group.
In addition to studying the compensation practices and trends at companies that are considered peers, our Compensation Committee has also determined that it is beneficial to our understanding of general industry compensation market data from surveys to consider the best practices in compensation policies from other companies that are not necessarily peers or limited to our industry. Our Compensation Committee does not react to or structure our compensation programs on market data alone, and it has not historically utilized any true
“benchmarking” "benchmarking" techniques when making compensation decisions. Furthermore, our Compensation Committee did not use the Peer Group to establish a particular range of compensation for any element of pay in 2016;2017; rather, the Peer Group and other survey market data were used as general guidelines in our Compensation Committee’sCommittee's deliberations.
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20162017 Compensation Decisions
Base Salaries. In its reviewThe following table sets forth salary and sign-on bonus compensation ("fixed compensation") and annual non-equity incentive plan and long-term equity incentive compensation ("incentive-based variable compensation") as a percentage of total compensation, as presented in the "Total" column of the "Summary Compensation Table for 2017," that we paid for the year ended December 31, 2017 to each Named Executive Officer:
| | | | | | | |
Name | | Fixed
Compensation | | Incentive-based
Variable
Compensation | |
|---|
Steven A. Rathgaber | | | 16.0 | % | | 84.0 | % |
Edward H. West | | | 20.3 | % | | 79.7 | % |
Gary W. Ferrera | | | 20.7 | % | | 79.3 | % |
Dan Antilley | | | 15.8 | % | | 84.2 | % |
Stuart Mackinnon | | | 21.4 | % | | 78.6 | % |
Brian Bailey | | | 35.3 | % | | 64.7 | % |
P. Michael McCarthy(1) | | | n/a | | | n/a | |
- (1)
- Mr. McCarthy's employment with us terminated effective February 1, 2017 in accordance with the retirement agreement dated January 3, 2017. For further information please see the Summary Compensation Table and related discussion.
Base Salary. There were no changes to the annualized base salarysalaries of eachMessrs. Rathgaber, West and McCarthy between 2016 and 2017. The compensation of ourthe remaining Named Executive Officers for 2016, ourwas not previously reportable by the Company. See "Execution of Succession Plan; Named Executive Officer Changes" above.
Non-Equity Incentive Plan. For purposes of tax deductibility, the Compensation Committee generally consideredestablishes a separate bonus pool that sets a maximum bonus payout level for certain of our Executive Officers. For 2017, the market data available for the aforementioned Peer Group. Our Compensation Committee evaluated the results of the market data available andutilized adjusted EBITA as the performance ofmetric to create the executive and made adjustmentsbonus pool. However, the Compensation Committee then uses negative discretion to adjust the base salaries of certainresulting bonus pool payout such that the actual bonus payout to each Named Executive Officers, as deemed necessary,Officer is based on the various factors previously identified aboveoutcomes under “Other Factors.”
The following table reflects annualized base salary amounts for our 2016 Named Executive Officers for 2016 and 2015:
Named Executive Officer | | 2016 Annualized
Base Salary (1) | | 2015 Annualized
Base Salary | | Percentage
Increase | |
Steven A. Rathgaber | | $ | 700,000 | | | $ | 675,000 | | | 3.7% | |
Edward H. West | | $ | 600,000 | | | — | | | — | |
J. Chris Brewster | | $ | 500,000 | | | $ | 415,000 | | | 20.5% | |
David W. Dove | | $ | 602,550 | | | $ | 585,000 | | | 3.0% | |
P. Michael McCarthy | | $ | 396,000 | | | $ | 360,000 | | | 10.0% | |
Jonathan Simpson-Dent | | $ | 521,742 | (2) | | $ | 533,173 | (2) | | (2.1)% | |
E. Brad Conrad | | $ | 300,000 | | | $ | 285,000 | | | 5.3% | |
(1)
| The amounts presented in the “2016 Annualized Base Salary” column above were primarily effective as of March 24, 2016 and, therefore, vary from the amounts presented in the “Salary” column of the “Summary Compensation Table for 2016” included in “Executive Compensation” below.
|
| |
(2)
| The base salary for Mr. Simpson-Dent has been converted from pounds sterling to U.S. dollars using the yearly average exchange rate of approximately $1.36 for 2016, and $1.52 for 2015. The percentage increase of his annualized base salary in pounds sterling was 10.0%.
|
Non-Equitythe Cash Incentive Plan (explained below)..
Each year, management proposes and our Compensation Committee reviews and approves a non-equity incentive compensation plan (the “Cash"Cash Incentive Plan”Plan"). Under the Cash Incentive Plan, each executive officer has a threshold, a target, and a maximum possible payout, which are set by our
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Compensation Committee in its discretion. For our Named Executive Officers, the 2016 and 20152017 threshold, target and maximum annual incentive payout amounts were as follows:
Named Executive | | 2016 Incentive Payout as a % of Base Salary | | 2015 Incentive Payout as a % of Base Salary | |
Officer | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | |
Steven A. Rathgaber | | 50.0 | % | | 100.0 | % | | 200.0 | % | | 50.0% | | 100.0% | | 200.0% | |
Edward H. West | | 50.0 | % | | 100.0 | % | | 200.0 | % | | — | | — | | — | |
J. Chris Brewster (1) | | 6.4 | % | | 12.8 | % | | 25.6 | % | | 45.0% | | 90.0% | | 180.0% | |
David W. Dove | | 47.5 | % | | 95.0 | % | | 190.0 | % | | 47.5% | | 95.0% | | 190.0% | |
P. Michael McCarthy | | 45.0 | % | | 90.0 | % | | 180.0 | % | | 37.5% | | 75.0% | | 150.0% | |
Jonathan Simpson-Dent | | 50.0 | % | | 100.0 | % | | 200.0 | % | | 40.0% | | 80.0% | | 160.0% | |
E. Brad Conrad | | 30.0 | % | | 60.0 | % | | 90.0 | % | | 25.0% | | 50.0% | | 75.0% | |
| | | | | | | | | | |
| | 2017 Incentive Payout as a % of
Base Salary | |
|---|
Named Executive Officer | | Threshold | | Target | | Maximum | |
|---|
Steven A. Rathgaber | | | 50.0 | % | | 100.0 | % | | 200.0 | % |
Edward H. West | | | 50.0 | % | | 100.0 | % | | 200.0 | % |
Gary W. Ferrera | | | 50.0 | % | | 100.0 | % | | 200.0 | % |
Dan Antilley | | | 50.0 | % | | 100.0 | % | | 200.0 | % |
Stuart Mackinnon | | | 35.0 | % | | 70.0 | % | | 105.0 | % |
Brian Bailey | | | 42.5 | % | | 85.0 | % | | 128.0 | % |
P. Michael McCarthy(1) | | | 45.0 | % | | 90.0 | % | | 180.0 | % |
- (1)
- Mr.
Brewster resigned as Chief Financial OfficerMcCarthy's employment with us terminated effective February 22, 2016. In1, 2017 in accordance with his amendedthe retirement agreement dated January 3, 2017. For further information please see the Summary Compensation Table and restated employment agreement, he was eligible for a prorated cash bonus based on his time as Chief Financial Officer.Our Compensation Committee adjusted the target payout percentages for Mr. Dove, Mr. McCarthy and Mr. Simpson-Dent from 2015 to 2016 based on a review of market compensation information compiled by Meridian and other factors. The target payout percentage for Mr. Rathgaber was not adjusted, since our Compensation Committee concluded the current level of target payout percentage was appropriate for the similar executive position at a company of our size, based on market compensation information compiled by Meridian.
related discussion.
Under the 20162017 Cash Incentive Plan, two components factor into whether a participant’sparticipant's award will be paid, as well as what level of payout may be achieved: (i) performance qualifiers; and (ii) performance metrics, both of which are further described below. In addition to the financial goals, for fiscal 2017, Mr. Bailey and Mr. Mackinnon had individual performance goals set for them by the Compensation Committee, which comprised 25% and 34% of their respective incentive cash bonuses. These goals varied from individual to individual and included both objective and subjective measures of performance. The individual performance goals were intended to align the individual officers with the Company's business strategies and objectives in each officer's sphere of duties and control. Examples include implementation of programs and systems, process and control improvements, completion of development projects, and achieving customer and new customer growth objectives. These individual goals are keys to financial and business success for Cardtronics, and thus contribute to producing income and shareholder returns over the long-term. Grading of performance on the individual performance goals for these individuals was in some cases "achieved" or "exceeded" on a sliding scale between threshold and maximum achievement. The CEO provided an assessment of the achievement of these individual goals, and based on that input, the Committee determined that each of these executives achieved their individual performance goals at and above target levels.
Performance QualifiersQualifiers.. Performance qualifiers are minimum levels of company performance that must be attained in order for payouts under the Cash Incentive Plan to occur. Amounts of potential payouts under the Cash Incentive Plan are not adjusted based on the level of performance achieved, but rather act as absolute prerequisites that must be met before we will make payments under the Cash Incentive Plan. For 2016,2017, the qualifiers were (i) our compliance with all material public company regulations and reporting requirements for the fiscal year and (ii) the participant’sparticipant's achievement of the minimum performance standards established by his superior or our Board and completion of required corporate and compliance training as assigned. See "2017 Cash Incentive Performance Levels" below for a discussion of the applicable individual performance standards and achievement.
Financial Performance MetricsMetrics.. Performance metrics are key metrics designated as critical to our success. For 2016,2017, the metrics for the Cash Incentive Plan were (i) Revenue and (ii) Adjusted EBITA. Revenue is defined as “Total Revenues”"Total Revenues" on a U.S. GAAP basis, as reported in our 20162017 consolidated financial statements or as reported in the division’sdivision's financial statements, calculateddefined and reported in the same manner as in our consolidated financial statements included in our Annual Report on Form 10-K. Adjusted EBITA is a non-GAAP measure that excludes from Net Income amortization of intangible assets, share-based compensation expense, acquisition and is defineddivestiture-related expenses, certain
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non-operating expenses (if applicable in a particular period), certain costs not anticipated to occur in future periods, gains or losses on disposal and reported inimpairment of assets, the reconciliationCompany's obligations for the payment of Non-GAAP Financial Measures in our Annual Report on Form 10-K.income taxes, interest expense, and other obligations such as capital expenditures, and includes an adjustment for noncontrolling interests Revenue and Adjusted EBITA were selected as performance metrics as we believe these two metrics are appropriate indicators of success and sustainable business performance that translate into increased shareholder value and are easily understandable and measurable. For a reconciliation of Net Income to Adjusted EBITA, see page 71 of our Annual Report on Form 10-K (filed with the SEC on March 1, 2018).
2017 Cash Incentive Plan Performance Levels.The following table provides (i) the 20162017 pre-established threshold, target and maximum performance levels for each of our financial performance metrics and (ii) our performance results for each metric, as adjusted for the effects of foreign currency exchange rate movements from target, and other minor adjustments as called for in the Cash Incentive Plan.
| | | | | | | | | | | | | |
Performance Metric | | Threshold | | Target | | Maximum | | Performance
Results
Achieved | |
|---|
| | (In thousands)
| |
|---|
Total Revenues | | $ | 1,420,996 | | $ | 1,480,204 | | $ | 1,539,412 | | $ | 1,483,203 | |
Total Adjusted EBITA | | $ | 216,175 | | $ | 227,553 | | $ | 245,757 | | $ | 220,225 | |
Performance Metric | | Threshold | | Target | | Maximum | | Performance
Results
Achieved | |
| | | |
| | (In thousands) | |
| | | |
Total Revenues | | $ | 1,216,250 | | $ | 1,266,927 | | $ | 1,317,604 | | $ | 1,287,310 | |
Total Adjusted EBITA | | $ | 217,508 | | $ | 228,956 | | $ | 247,272 | | $ | 233,632 | |
| | | | | | | | | |
North America Division Revenues | | $ | 851,345 | | $ | 879,770 - 886,818 | | $ | 922,291 | | $ | 873,189 | |
North America Division Adjusted EBITA | | $ | 190,529 | | $ | 198,490 - 200,557 | | $ | 218,607 | | $ | 194,250 | |
| | | | | | | | | |
Europe Division Revenues | | £ | 245,881 | | £ | 254,090 - 256,126 | | £ | 266,371 | | £ | 269,282 | |
Europe Division Adjusted EBITA | | £ | 39,373 | | £ | 41,018 - 41,445 | | £ | 45,175 | | £ | 48,219 | |
When establishing the appropriate threshold, target and maximum performance levels for the performance measures, we typically set the target level such that actualbased on a number of factors including the Board-approved budget for the year, as well as reference to industry dynamics and prior performance requires growth from the prior year. Additionally, targets are generally reflective of our Board-approved budget.results. Our goal for each financial performance measure is to establish a target level of performance that we are not certain to attain, so that achieving or exceeding the target level requires significant effort by our executive officers. Once the target levels are set, our Compensation
Committee sets the threshold and maximum amounts. Taking a variety of business factors into account, our Compensation Committee sets the threshold at what it considers to be the lowest level of acceptable performance and the maximum at what our Compensation Committee views would be outstanding performance versus target and budget. Performance below threshold for a metric will result in no incentive payout for that metric. After achievement of the qualifying factors, a threshold level of performance for a given metric will result in 50% of the target opportunity being earned for that metric; performance at the target level for a metric will result in 100% of the target opportunity being earned for that metric; and performance at or above the maximum level for a metric will result in 150%—200%-200% of the target opportunity being earned. Forearned (depending on the divisionexecutive).
Our Compensation Committee also determines the relative weightings of each performance metrics if total results achieve target for a given metric, and the corresponding division metric falls within the target range, the division will earn 100% of the target opportunity. However, if the total metric falls short of target for a given metric, and the division metric is within the target range, the division will resulteach Named Executive Officer. These are presented in the division earning between 50% and 100%, depending onfollowing table, along with the actual results.total performance percentage achieved:
| | | | | | | | | | | | | | | | |
Named Executive Officer | | Revenue
Total | | Adjusted
EBITA
Total | | Individual
Performance | | Total
Target | | Performance
% Achieved | |
|---|
Steven A. Rathgaber(1) | | | 50.0 | % | | 50.0 | % | | 0.0 | % | | 100.0 | % | | 86.4 | % |
Edward H. West | | | 50.0 | % | | 50.0 | % | | 0.0 | % | | 100.0 | % | | 86.4 | % |
Gary W. Ferrera | | | 50.0 | % | | 50.0 | % | | 0.0 | % | | 100.0 | % | | 86.4 | % |
Dan Antilley | | | 50.0 | % | | 50.0 | % | | 0.0 | % | | 100.0 | % | | 100.0 | % |
Stuart Mackinnon | | | 33.0 | % | | 33.0 | % | | 34.0 | % | | 100.0 | % | | 103.8 | % |
Brian Bailey | | | 50.0 | % | | 25.0 | % | | 25.0 | % | | 100.0 | % | | 99.5 | % |
P. Michael McCarthy(2) | | | 50.0 | % | | 50.0 | % | | 0.0 | % | | 100.0 | % | | n/a | |
- (1)
- Mr. Rathgaber retired effective December 31, 2017.
- (2)
- Mr. McCarthy's employment with us terminated effective February 1, 2017 in accordance with the retirement agreement dated January 3, 2017. For further information please see the Summary Compensation Table and related discussion.
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Our Compensation Committee retains absolute discretion in determining the extent to which any actual payouts are made under the Cash Incentive Plan. Furthermore, our Compensation Committee retains the right to make adjustments to actual performance results to take into account the occurrence of any material event, such as a material acquisition, which would impact the calculation of these performance metrics. Our Compensation Committee exercised the operating discretion that isAs provided within the 20162017 Cash Incentive Plan, during the 2016 year to adjustour Compensation Committee adjusted the actual performance results. Theseresults during the 2017 year, and these adjustments included: (i) the neutralization of foreign currency exchange rate changes as compared to the annual budget and (ii) the exclusion of acquisition and restructuring costs and (iii) other minor adjustments to classify revenues and expenses consistent with the annual budget and in accordance with the terms of the 20162017 Cash Incentive Plan. In addition, our Compensation Committee used its discretion
The amounts awarded to adjust downwardeach of the total performance percentage achieved for Mr. Rathgaber to 82.9% and for Mr. McCarthy to 83.8% to reflect our Board’s evaluation of our delay in successfully implementing software and Europay, MasterCard and Visa (“EMV”) upgrades to our U.S. ATMs in 2016.
In addition to setting and potentially adjusting the performance levels for each performance metric, our Compensation Committee also determines the relative weightings of each performance metrics for each Named Executive Officer. These are presentedOfficers under our 2017 Cash Incentive Plan were paid to the executives in the following table, along with the actual total performance percentage achieved:
| | Revenues | | Adjusted EBITA | | | | | | | |
Named Executive
Officer | | Total | | North
America
Division | | Europe
Division | | Total | | North
America
Division | | Europe
Division | | Individual
Performance | | Total
Target | | Performance
% Achieved (1) | |
Steven A. Rathgaber | | 50.0% | | — | | — | | 50.0% | | — | | — | | — | | 100.0% | | 132.9% | |
Edward H. West | | 50.0% | | — | | — | | 50.0% | | — | | — | | — | | 100.0% | | 132.9% | |
J. Chris Brewster | | 50.0% | | — | | — | | 50.0% | | — | | — | | — | | 100.0% | | 132.9% | |
David W. Dove | | 25.0% | | 25.0% | | — | | 25.0% | | 25.0% | | — | | — | | 100.0% | | 106.9% | |
P. Michael McCarthy | | 50.0% | | — | | — | | 50.0% | | — | | — | | — | | 100.0% | | 132.9% | |
Jonathan Simpson-Dent | | 25.0% | | — | | 25.0% | | 25.0% | | — | | 25.0% | | — | | 100.0% | | 166.4% | |
E. Brad Conrad | | 35.0% | | — | | — | | 35.0% | | — | | — | | 30.0% | | 100.0% | | 119.0% | |
(1)
| As discussed above, our Compensation Committee used its discretion to adjust downward the individual performance percentage achieved for Messrs. Rathgaber and McCarthy.
|
March 2018. For the specific amount paid to each Named Executive Officer under the 20162017 Cash Incentive Plan, see the “Non-Equity"Non-Equity Incentive Plan Compensation”Compensation" column of the “Summary"Summary Compensation Table for 2016”2017" included in “Executive Compensation”"Executive Compensation" below.
Discretionary Bonus to Mr. Conrad Recoupment.. In March 2017, in recognition of his extraordinary efforts on various projects in 2016, Mr. Conrad received a discretionary cash bonus of $200,000.
Recoupment. The 20162017 Cash Incentive Plan is subject to our Clawback policy, under which, if the operating or financial results used to calculate the payout are later restated (other than as a result of new accounting pronouncements), a portion of the payouts related to performance-based awards made to participants may be required to be returned to us, if the calculated payout using restated results was lower than originally calculated. Additionally, under this provision, an executive who engages in fraud or other misconduct leading to the restatement is required to return the full payout for the period in question.
Sign-on Bonuses. The Compensation Committee determined to provide each of Messrs. Ferrera and Antilley with $100,000 discretionary sign-on bonuses upon the commencement of their employment with the Company on November 28, 2017 and May 30, 2017, respectively. Each of Messrs. Ferrera and Antilley is required to repay to the Company his respective sign-on bonus if he terminates his employment without Good Reason, or if the Company terminates either of their employments for Cause, prior to the first anniversary of his respective commencement date.
2016 Long-Term Incentive Plan and other Performance Awards Equity Compensation Plans.. We have two shareholder-approved long-term equity incentive plans: (i) the Third Amended and Restated 2007 Stock Incentive Plan (the “2007 Plan”"2007 Plan"); and (ii) the 2001 Stock Incentive Plan (the “2001 Plan”"2001 Plan"). The purpose of each of these plans is to provide directors and employees of our company and our affiliates with additional equity-based incentive and reward opportunities that are designed to enhance the profitable growth of our company and affiliates. For additional details of these plans, see “Executive Compensation — Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table — Equity Incentive Awards” below. Pursuant to and subject to the terms and conditions of our 2007 Plan, which expressly allows for annual equity awards to be made to eligible employees, in March 2016, our Compensation Committee approved the 2016 Long-Term Incentive Plan (the “2016 LTIP”), which provided for the granting of 75% performance-based RSUs and 25% time-based RSUs under the 2007 Plan. The performance-based RSUs are earned based on performance achievement over a one-year period followed by vesting requirements based on continued employment (or to an employee’s qualified retirement date, if earlier), over 24, 36, and 48 months from January 31st of the grant year, at the rate of 50%, 25%, and 25%, respectively. The time-based RSUs are earned upon completion of the grant year and vest in accordance with the same schedule as performance-based RSUs. Beginning in 2017, our Compensation Committee intends to discontinue the use of annual LTIPs and instead rely on award documents to address the terms previously included in the annual LTIPs.
Under the 2016 LTIP, the size of our 2016 awards was based on a competitive long-term equity compensation element calculated as a percentage of base salary. For example, our CFO was granted RSUs with a target value approximately equal to 2.25x his base salary (with the number of shares granted based on a 15-day average stock price following the 2015 earnings release). Under the 2016 LTIP, the total number of RSUs earned was subject to an annual stock pool limitation established by our Compensation Committee. Performance-based RSUs were then earned based on the achievement of a Revenue performance metric and an Adjusted Net Income per Share performance metric, with each metric being equally weighted. Revenue is defined as “Total Revenue” on a U.S. GAAP basis, as reported in our 2016 consolidated financial statements and calculated in the same manner as in our consolidated financial statements included in our Annual Report on Form 10-K. Adjusted Net Income per Share is a non-GAAP measure and is defined as “Adjusted Net Income per Diluted Share” as reported in our consolidated financial statements and calculated in the same manner as in our Annual Report on Form 10-K. These two measures were selected as we believe they are the best measures of sustainable business performance and drive increased shareholder value.
The following table provides (i) the 2016 pre-established threshold, target and maximum performance levels for each of our performance metrics and (ii) as adjusted for the effects of foreign currency exchange rate movements and tax rate movements from budget and other minor adjustments as called for in the plan. The two targeted amounts for Revenue and Adjusted Net Income per Share were set based on our intermediate-term growth objectives and our Board-approved budget.
Performance Metric | | Threshold | | Target | | Maximum | | Performance
Results
Achieved | |
| | (In thousands) | |
Total Revenue | | $ | 1,216,250 | | $ | 1,266,927 | | $ | 1,317,604 | | $ | 1,287,310 | |
Adjusted Net Income per Share | | $ | 2.97 | | $ | 3.13 | | $ | 3.38 | | $ | 3.21 | |
If we did not meet a given threshold amount for at least one metric, all of the performance-based RSUs would be forfeited with respect to that metric. If we achieved our Revenue and Adjusted Net Income per Share performance levels at the threshold, target, or maximum levels of performance, then 50%, 100% or 200% of the targeted number of performance-based RSUs would be deemed earned, respectively. Our Compensation Committee
retains the right to make adjustments to actual performance results, similar to the Cash Incentive Plan, and exercised the operating discretion in 2016 by adjusting the actual performance results with the same adjustments made to the Cash Incentive Plan as described above.
Our Compensation Committee believes that this long-term incentive design is competitive and will allow us to attract and retain our executive talent base in future years. In addition to serving as a retention tool, these grants were also made to incentivize the executives to work towards achieving certain levels of Revenue and Adjusted Net Income per Share in 2016.
In March 2016, our Compensation Committee awarded the following target number of RSUs under the 2016 LTIP to our Named Executive Officers:
Named Executive Officers: | | Time-based RSUs | | Performance-based RSUs | |
Steven A. Rathgaber | | 24,178 | | 72,534 | |
Edward H. West | | 12,089 | | 36,267 | |
J. Chris Brewster | | 1,292(1) | | 3,875(1) | |
David W. Dove (2) | | — | | — | |
P. Michael McCarthy | | 5,585 | | 16,755 | |
Jonathan Simpson-Dent | | 9,949 | | 29,845 | |
E. Brad Conrad | | 2,418 | | 7,253 | |
(1)
| Mr. Brewster resigned as Chief Financial Officer effective March 22, 2016. In accordance with his amended and restated employment agreement he was eligible for a LTIP award based on his time as Chief Financial Officer.
|
| |
(2)
| Mr. Dove did not receive any awards under the 2016 LTIP. See the discussion below on the performance-based RSUs he received in 2013.
|
We achieved above target results for Revenue and Adjusted Net Income per Share, resulting in 136% of the target number of performance-based RSUs earned for each participant. However, both performance-based and time-based RSUs remain subject to the additional time-based vesting requirements discussed above. Pursuant to the terms of the 2016 LTIP, vesting is contingent upon continued employment (or set to an employee’s qualified retirement date, if earlier), over 24, 36 and 48 months from January 31st of the grant year, at the rate of 50%, 25% and 25%, respectively. For information regarding the fair value of these awards, see the “Stock Awards” column and the related footnotes of the “Summary Compensation Table for 2016” included in “Executive Compensation” below.
Upon his hiring in 2013, Mr. Dove received 50,000 performance-based RSUs to be earned evenly over three annual performance periods that commenced in 2014. For the 16,668 target RSUs of the 2016 performance period, our Compensation Committee set the performance metrics to be the same as for the 2016 LTIP, as such earning 136% of the target number of performance-based RSUs. These RSUs vested in March 2017.
Recoupment. For 2016, performance-based awards granted under our 2007 Plan and the 2016 LTIP are subject to our Clawback policy, under which, if the operating or financial results used to calculate the payout are later restated (other than as a result of new accounting pronouncements), a portion of the payouts related to performance-based awards made to participants may be required to be returned to us, if the calculated payout using restated results was lower than originally calculated. Additionally, under this provision, an executive who engages in fraud or other misconduct leading to the restatement is required to return the full payout for the period in question.
New Hire 2016 Grant to Mr. West. In 2016, Mr. West received a new hire grant of 61,786 time-based RSUs in connection with the start of his employment at Cardtronics. Of these RSUs, 25% vested in December 2016, and 25% will vest each in December 2017, 2018, and 2019.
Discretionary Grant to Mr. Conrad. In March 2017, in recognition of his extraordinary efforts on various projects in 2016, Mr. Conrad received a discretionary grant of 4,488 time-based RSUs. Of these RSUs, 50% will vest January 2018, and 25% will vest each in January 2019, and 2020.
Other Compensation and Tax Matters
Share Ownership Guidelines. We have a share ownership policy (the “Policy”) for senior executives and non-employee directors (collectively the “Participants”), requiring the Participants to maintain a stated level of share ownership in Cardtronics. This Policy was implemented in May 2011 to align the interests of Participants with those of our shareholders. The Policy was based on market trend information regarding executive and director share ownership policies, including design approaches, types of share counted towards ownership, time provided to Participants to meet goals and common multiples of base salary.
The Policy applies to our shares acquired by Participants on or after June 1, 2011 or the Participant’s hire date, excluding shares acquired in the open market (the “Covered Shares”). Under the terms of the Policy, Participants must attain target levels of ownership (set forth below) in Covered Shares before they no longer are required to adhere to the holding requirement (also set forth below), unless ownership falls below these levels. The total stock value of the Participant’s Covered Shares must equal or exceed the specified target value.
Position
|
| Target Ownership Level
|
Non-employee Directors
| | 4x annual retainer
|
Chief Executive Officer
| | 5x base salary
|
Tier I Participants
| | 2x base salary
|
Tier II Participants
| | 1x base salary
|
Prior to attaining the above target ownership levels, a Participant is prohibited from selling, gifting or otherwise transferring more than 50% of any of the shares subject to the Policy, unless those shares are tendered to us in payment of (i) a stock option exercise price or (ii) the minimum state and federal income tax withholding obligations of the Participant that automatically arise upon the lapsing of any restrictions on any restricted stock (or other equity award). If a Participant wishes to sell unrestricted Covered Shares in excess of the allowable amount and is under the target ownership level, the individual must request an exception and have it approved by our Compensation Committee, who has complete discretion to allow or disallow any such sales.
Participants are not subject to a time period to attain their target ownership level, since this will be achieved through the retention of a specified percentage of equity grants each year through our incentive plans. If a Participant receives a raise in his or her base salary, leading to an increase in the ownership requirement, the Participant’s future equity grants will continue to be subject to the holding requirement until the new target ownership level is attained. It is anticipated that actual levels of share ownership will fluctuate over time based on the change in pay rates and the value of the underlying shares. Accordingly, on a periodic basis, our Compensation Committee will review the target ownership levels to determine if any adjustments are appropriate. Furthermore, in response to unusual circumstances and in its sole discretion, our Compensation Committee may grant temporary relief or a waiver to individuals and/or categories of Participants so as to permit them to sell unrestricted Covered Shares even if such sale results in that Participant falling below his or her prescribed target ownership level. All of our Named Executive Officers are currently in compliance with the Policy.
Indemnification Agreements. Following the Redomicile Transaction, Cardtronics entered into a deed of indemnity with each of the Named Executive Officers and non-employee directors (as well as certain other of our officers). In addition, the prior indemnification agreements with Cardtronics Delaware remain in place. The forms of such agreements have been filed with the SEC. These agreements provide for Cardtronics to, among other things, indemnify the individual against certain liabilities that may arise by reason of his or her status or service as a director or officer, to advance expenses incurred as a result of certain proceedings and to cover him or her under our directors’ and officers’ liability insurance policy. These agreements are intended to provide indemnification rights to the fullest extent permitted under U.K. and Delaware law and under our governing documents and those of Cardtronics Delaware.
Equity Granting and Exercise Policy and Policy against Backdating. Under the terms of the governing option agreements, the exercise price of each stock option awarded to employees under our 2007 Plan is calculated as the closing share price of our stock on the date of grant to ensure that options are not granted at less than their fair market value. We do not backdate options and have a specific company policy in place along with a notification system administered by our legal department to be mindful of black-out periods during which the exercise of options or other sales of stock would be prohibited or would violate insider trading rules.
Board and Compensation Committee meetings are generally scheduled several months in advance. The meeting dates on which options, restricted stock, or any other rewards are granted are not established in regard to planned releases of earnings or any other major announcements. Also, our Compensation Committee does not currently believe that it would be appropriate to recommend the re-pricing or discounting of options to any of our employees in the event of a decline in our stock price.
Tax Deductibility of Compensation. Section 162(m) of the U.S. Internal Revenue Code of 1986, as amended (the “Code”), limits the amount of non-performance-based compensation paid to certain “covered employees” as defined in Section 162(m) of the Code to $1,000,000. Our “covered employees” for purposes of Section 162(m) of the Code include, as of the last day of the applicable taxable year, our Chief Executive Officer (or the individual acting as our Chief Executive Officer) and the three most highly compensated Named Executive Officers (other than our Chief Financial Officer). Section 162(m) of the Code will limit certain deductions for U.S. corporate income tax purposes for compensation payments made to these covered employees unless the specifics of the plans impacted have been previously submitted to our shareholders for approval as “performance-based compensation.” Although our Compensation Committee attempts to establish and maintain compensation programs that optimize the tax deductibility of compensation, our Compensation Committee retains discretion to authorize payment of compensation that may not be fully tax deductible when it believes this would be in our best interest and reflecting the U.K. tax residency of the company.
COMPENSATION COMMITTEE REPORT
Our Compensation Committee has reviewed and discussed the disclosure set forth above under the heading “Compensation Discussion and Analysis” with management and, based on the review and discussions, has recommended to our Board that the “Compensation Discussion and Analysis” be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.
Respectfully submitted by the Compensation Committee of the Board of Cardtronics plc,
G. Patrick Phillips, Chairman
Jorge M. Diaz
Julie Gardner
Mark Rossi
EXECUTIVE COMPENSATION
Summary Compensation Table for 2016
The following table discloses the compensation paid to or earned by our Named Executive Officers serving during the applicable period:
Name & Principal Position | | Year | | Salary | | Bonus | | Stock
Awards (1) | | Non-Equity
Incentive Plan
Compensation | | All Other
Compensation (2) | | Total | |
Steven A. Rathgaber | | 2016 | | $ | 693,750 | | $ | — | | $ | 3,447,783 | | $ | 580,134 | | $ | 11,326 | | $ | 4,732,993 | |
Chief Executive Officer | | 2015 | | 668,750 | | — | | 3,014,486 | | 726,153 | | 8,676 | | 4,418,065 | |
| | 2014 | | 637,644 | | — | | 2,589,118 | | 1,034,805 | | 8,364 | | 4,269,931 | |
Edward H. West | | 2016 | | $ | 575,000 | | $ | — | | $ | 3,723,904 | | $ | 797,258 | | $ | 511,145 | | $ | 5,607,307 | |
Chief Financial Officer and Chief Operations Officer | | | | | | | | | | | | | | | |
J. Chris Brewster | | 2016 | | $ | 486,426 | | $ | — | | $ | 184,204 | | $ | 85,198 | | $ | 11,029 | | $ | 766,857 | |
Former Chief Financial | | 2015 | | 407,812 | | — | | 987,648 | | 401,804 | | 8,298 | | 1,805,562 | |
Officer | | 2014 | | 383,723 | | — | | 945,515 | | 430,439 | | 8,129 | | 1,767,806 | |
David W. Dove | | 2016 | | $ | 598,163 | | $ | — | | $ | — | | $ | 611,844 | | $ | 11,072 | | $ | 1,221,079 | |
Former President — North | | 2015 | | 567,500 | | — | | — | | 636,311 | | 8,412 | | 1,212,223 | |
American Business Group | | 2014 | | 511,630 | | — | | — | | 624,987 | | 11,449 | | 1,148,066 | |
P. Michael McCarthy | | 2016 | | $ | 387,000 | | $ | — | | $ | 796,421 | | $ | 298,571 | | $ | 11,123 | | $ | 1,493,115 | |
Former Chief Information Officer | | 2015 | | 352,688 | | — | | 964,621 | | 290,461 | | 8,412 | | 1,616,182 | |
Jonathan Simpson-Dent (3) | | 2016 | | $ | 509,884 | | $ | — | | $ | 1,418,656 | | $ | 868,377 | | $ | 72,704 | | $ | 2,869,621 | |
Chief Commercial Officer | | 2015 | | 504,610 | | — | | 2,324,039 | | 433,361 | | 73,107 | | 3,335,117 | |
| | 2014 | | 442,804 | | — | | 696,179 | | 496,991 | | 72,092 | | 1,708,066 | |
E. Brad Conrad | | 2016 | | $ | 296,250 | | $ | 200,000 | | $ | 531,171 | | $ | 214,212 | | $ | 10,996 | | $ | 1,252,629 | |
Chief Accounting Officer | | | | | | | | | | | | | | | |
(1)
| Amounts included in the “Stock Awards” columns represent the aggregate grant date fair value of the awards made to our Named Executive Officers, computed in accordance with Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) Topic 718, disregarding any estimates for forfeitures. A portion of the awards made to our Named Executive Officers are performance-based RSUs that are based upon the outcome of certain performance conditions at the date of grant. The grant date fair values ultimately realized by the executives upon the actual earning of the awards may be or were different to the values reflected above. For the stock awards granted in 2016, Messrs. Rathgaber, West, Brewster, McCarthy, Simpson-Dent and Conrad earned 136% of the target number of performance-based RSUs. Additionally, Mr. West received a new hire grant of 61,786 time-based RSUs in connection with the start of his employment at Cardtronics and Mr. Conrad received a discretionary award of 5,000 time-based RSUs in recognition of his extraordinary efforts on various projects in 2015. All RSUs will vest based on continued employment with Cardtronics (or to an employee’s qualified retirement date, if earlier). The maximum values of the 2016
|
performance-based RSUs, if the highest level of performance conditions were achieved, would have been as follows:
Name | | Maximum Value of 2016 Stock
Awards That Could Have Been
Achieved |
Steven A. Rathgaber | | $ | 5,171,674 |
Edward H. West | | $ | 2,585,837 |
J. Chris Brewster | | $ | 276,288 |
David W. Dove | | — |
P. Michael McCarthy | | $ | 1,194,632 |
Jonathan Simpson-Dent | | $ | 2,127,949 |
E. Brad Conrad | | $ | 517,139 |
Assumptions used in the calculation of these amounts are included in Part II. Item 8. Financial Statements and Supplementary Data, Note 3. Share-Based Compensation, to our audited consolidated financial statements for the fiscal year ended December 31, 2016, included in our Annual Report on Form 10-K.
Mr. Dove did not receive any awards under the 2016 LTIP.
(2)
| Amounts presented in the “All Other Compensation” column for 2016 include the following:
|
Name | | Matching
401(k)
Contributions | | Life
Insurance
Premiums | | Other | | Total | |
Steven A. Rathgaber | | $ | 10,600 | | $ | 726 | | $ | — | | $ | 11,326 | |
Edward H. West | | $ | 10,600 | | $ | 545 | | $ | 500,000 | | $ | 511,145 | |
J. Chris Brewster | | $ | 10,600 | | $ | 429 | | $ | — | | $ | 11,029 | |
David W. Dove | | $ | 10,600 | | $ | 472 | | $ | — | | $ | 11,072 | |
P. Michael McCarthy | | $ | 10,600 | | $ | 523 | | $ | — | | $ | 11,123 | |
Jonathan Simpson-Dent | | $ | — | | $ | 1,659 | | $ | 71,045 | | $ | 72,704 | |
E. Brad Conrad | | $ | 10,600 | | $ | 396 | | $ | — | | $ | 10,996 | |
The “Other” column for Mr. West represents Mr. West’s relocation allowance paid to him in 2016. For Mr. Simpson-Dent, the “Other” column includes $50,988 of contribution to a personal pension plan, $13,552 of auto allowance and $6,505 of health insurance benefits.
(3)
| The amounts presented for Mr. Simpson-Dent, excluding the “Stock Awards” have been converted from pounds sterling to U.S. dollars using the yearly average exchange rate of approximately $1.36 for 2016, $1.52 for 2015 and $1.65 for 2014.
|
Grants of Plan-Based Awards for 2016
The following table sets forth certain information with respect to the RSUs granted during the year ended December 31, 2016 as well as the details regarding other plan-based awards granted in 2016 to each of our Named Executive Officers:
| | Type of Equity
Incentive | | | | Estimated Possible Payouts Under Non-
Equity Incentive Plan Awards | | Estimated Future Payouts Under
Equity Incentive Plan Awards
(Number of Units) | | Grant
Date Fair
Value of
Stock | |
Name | | Plan Award | | Grant Date | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | | Awards | |
Steven A. Rathgaber | | | | — | | $ | 350,000 | | $ | 700,000 | | $ | 1,400,000 | | — | | — | | — | | — | |
| | Time-based LTIP | | 3/22/2016 | | — | | — | | — | | — | | 24,178 | | — | | $ | 861,946 | |
| | Performance-based LTIP | | 3/22/2016 | | — | | — | | — | | 36,267 | | 72,534 | | 145,068 | | $ | 2,585,837 | |
Edward H. West | | | | — | | $ | 300,000 | | $ | 600,000 | | $ | 1,200,000 | | — | | — | | — | | — | |
| | New Hire | | 1/11/2016 | | — | | — | | — | | — | | 61,786 | | — | | $ | 2,000,013 | |
| | Time-based LTIP | | 3/22/2016 | | — | | — | | — | | — | | 12,089 | | — | | $ | 430,973 | |
| | Performance-based LTIP | | 3/22/2016 | | — | | — | | — | | 18,133 | | 36,267 | | 72,534 | | $ | 1,292,919 | |
J. Chris Brewster | | | | — | | $ | 12,824 | | $ | 64,118 | | $ | 128,236 | | — | | — | | — | | — | |
| | Time-based LTIP | | 3/22/2016 | | — | | — | | — | | — | | 1,292 | | — | | $ | 46,060 | |
| | Performance-based LTIP | | 3/22/2016 | | — | | — | | — | | 1,937 | | 3,875 | | 7,750 | | $ | 138,144 | |
David W. Dove | | | | — | | $ | 286,212 | | $ | 572,423 | | $ | 1,144,846 | | — | | — | | — | | — | |
P. Michael McCarthy | | | | — | | $ | 178,200 | | $ | 356,400 | | $ | 712,800 | | — | | — | | — | | — | |
| | Time-based LTIP | | 3/22/2016 | | — | | — | | — | | — | | 5,585 | | — | | $ | 199,105 | |
| | Performance-based LTIP | | 3/22/2016 | | — | | — | | — | | 8,377 | | 16,755 | | 33,510 | | $ | 597,316 | |
Jonathan Simpson-Dent (1) | | | | — | | $ | 260,871 | | $ | 521,742 | | $ | 1,043,483 | | — | | — | | — | | — | |
| | Time-based LTIP | | 3/22/2016 | | — | | — | | — | | — | | 9,949 | | — | | $ | 354,682 | |
| | Performance-based LTIP | | 3/22/2016 | | — | | — | | — | | 14,922 | | 29,845 | | 59,690 | | $ | 1,063,974 | |
E. Brad Conrad | | | | — | | $ | 90,000 | | $ | 180,000 | | $ | 270,000 | | — | | — | | — | | — | |
| | Time-based LTIP | | 3/22/2016 | | — | | — | | — | | — | | 2,418 | | — | | $ | 86,202 | |
| | Performance-based LTIP | | 3/22/2016 | | — | | — | | — | | 3,626 | | 7,253 | | 14,506 | | $ | 258,569 | |
| | Discretionary Award | | 4/26/2016 | | — | | — | | — | | — | | 5,000 | | — | | $ | 186,400 | |
(1)The amounts presented for Mr. Simpson-Dent as “Estimated Possible Payouts Under Non-Equity Incentive Plan Awards” have been converted from pounds sterling to U.S. dollars using the yearly average exchange rate of approximately $1.36 for 2016.
Narrative Disclosure to Summary Compensation Table and Grants of Plan-Based Awards Table
Employment-Related Agreements of Named Executive Officers
The following is a description of the material terms of the employment agreements we had with our Named Executive Officers as of December 31, 2016:
Employment Agreement with Steven A. Rathgaber — Chief Executive Officer. Mr. Rathgaber has served as our Chief Executive Officer and a director of our Board since February 1, 2010. In connection with Mr. Rathgaber’s appointment, we entered into an employment agreement with him that was also effective February 1, 2010. Under the terms of his agreement, Mr. Rathgaber received a base salary presented in the “Salary” column of the “Summary Compensation Table for 2016” above, that is subject to periodic review by our Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Rathgaber may be eligible to receive an annual award under a non-equity incentive plan on or before March 15th of each year. In addition, Mr. Rathgaber is entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year. The agreement with Mr. Rathgaber provide for an initial term of three years, subject to automatic one-year renewals thereafter unless the agreement is terminated in accordance with its terms. The initial three-year term of our employment agreement with Mr. Rathgaber expired in February 2013; however, the agreement has been automatically renewed through February 2018.
Employment Agreement with Edward H. West — Chief Financial Officer and Chief Operations Officer. In December 2015, we entered into an employment agreement with Mr. West, for his employment commencing January 2016, and in the role of Chief Financial Officer effective February 22, 2016. Under the terms of his agreement, Mr. West received a base salary presented in the “Salary” column of the “Summary Compensation Table for 2016” above, that is subject to periodic review by our Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. West may be eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award. Mr. West’s agreement further entitled him to a sign-on $2,000,000 incentive award in the form of RSUs to vest over four years, and a $500,000 relocation allowance. In addition, Mr. West is entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year. In July 2016, Mr. West’s role was expanded to also include the role of Chief Operations Officer. His employment agreement was not amended in connection with his new position and role. The agreement with Mr. West provides for an initial term of three years, subject to automatic one-year renewals thereafter unless the agreement is terminated in accordance with its terms. The initial three-year term of the employment agreement with Mr. West will expire in January 2019.
Agreement with J. Chris Brewster — Former Chief Financial Officer. On February 22, 2016 in connection with Mr. Brewster’s previously announced resignation from his position as Chief Financial Officer and appointment as an executive advisor, Mr. Brewster entered into a new agreement with us that amended and restated his previous employment agreement in its entirety to reflect his new role as an executive advisor with a salary of $500,000 per year. Mr. Brewster was eligible to receive prorated cash and equity incentive bonuses in 2016 for the period during which he served as Chief Financial Officer, but did not participate in such programs after the effective date of his resignation. Mr. Brewster’s agreement had a term of one year and has expired, and he no longer works in any capacity at Cardtronics.
Employment Agreement with David W. Dove — Former President — North American Business Group. In September 2013, we entered into an employment agreement with Mr. Dove when he began serving as our Group President of Enterprise Growth. Under the terms of his agreement, Mr. Dove received a base salary presented in the “Salary” column of the “Summary Compensation Table for 2016” above, that is subject to periodic review by our
Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Dove may be eligible to receive an annual award under a non-equity incentive plan on or before March 15th of each year. In addition, Mr. Dove is entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year. In August 2016, Mr. Dove entered into an amendment to his employment agreement with us, entitling him to a $200,000 cash bonus payment to be made following the termination of his employment, subject to the receipt by us of Mr. Dove’s release of claims as per the original agreement. The amended agreement with Mr. Dove expired on February 28, 2017.
Employment Agreement with P. Michael McCarthy — Former Chief Information Officer. For 2016, Mr. McCarthy was party to an employment agreement with us that provided for the base salary, non-equity incentive plan award, and perquisites reported in the “Summary Compensation Table for 2016” above. On January 3, 2017, in connection with Mr. McCarthy’s retirement from his position of Chief Information Officer effective February 1, 2017, Mr. McCarthy entered into a retirement agreement with us, entitling him to payments and benefits in accordance with his original employment agreement, which includes the payout of the amount he earned under the 2016 non-equity incentive plan, a prorated portion of the 2017 non-equity incentive plan, payment of an amount equal to two times his base salary and average annual bonus as of his retirement. Any unvested equity awards at the time of his retirement are considered forfeited at that time.
Employment Agreement with Jonathan Simpson-Dent — Chief Commercial Officer. In August 2013, in conjunction with the acquisition of Cardpoint Limited, we entered into an employment agreement with Mr. Simpson-Dent when he began serving as our Managing Director, Cardtronics Europe. Mr. Simpson-Dent’s previous employment with Payzone UK Limited (the entity from which we acquired Cardpoint Limited) is counted as part of his continuous employment with Cardtronics; therefore, the employment commencement date was February 2012. Under the terms of his agreement, Mr. Simpson-Dent received a base salary presented in the “Salary” column of the “Summary Compensation Table for 2016” above, that is subject to periodic review by our Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Simpson-Dent may be eligible to receive annual awards under a non-equity incentive plan and LTIP. In addition, Mr. Simpson-Dent is entitled to receive perquisite benefits customary to his position in the United Kingdom, including car allowance, private medical insurance, life insurance, contribution to a personal pension plan, sick leave and paid vacation time each year. In July 2016, Mr. Simpson-Dent’s role was expanded and he was named to the new position of Chief Operations Officer. His employment agreement was not amended in connection with his new position and role. The agreement with Mr. Simpson-Dent will continue until terminated by either party giving to the other not less than six months’ notice in writing.
Employment Agreement with E. Brad Conrad — Chief Accounting Officer. In October 2010, we entered into an employment agreement with Mr. Conrad when he began serving as our Chief Accounting Officer. Under the terms of his agreement, Mr. Conrad received a base salary presented in the “Salary” column of the “Summary Compensation Table for 2016” above, that is subject to periodic review by our Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Conrad may be eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award, although not provided for in his employment agreement. In addition, Mr. Conrad is entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year. The agreement with Mr. Conrad provides for an initial term of three years, subject to automatic one-year renewals thereafter unless the agreement is terminated in accordance with its terms. The initial three-year term of the employment agreement with Mr. Conrad expired in October 2013.
Please see “Executive Compensation — Potential Payments upon a Termination or Change in Control” below for a discussion of severance benefits available under our employment agreements with our Named Executive Officers.
Annual Non-Equity Incentive Plan Awards
The amounts awarded to each of the Named Executive Officers under our annual non-equity incentive plan for the fiscal year ended December 31, 2016 were paid to the executives in March 2017. For additional information
on the terms of our non-equity incentive compensation plan, see “Compensation Discussion and Analysis — 2016 Compensation Decisions — Non-Equity Incentive Plan” above.
Equity Incentive Awards
As noted above, we have two long-term equity incentive plans — the 2007 Plan and the 2001 Plan. The LTIP, which is an equity-based program subject to the terms and conditions of our 2007 Plan, is annually approved by our Compensation Committee. The following is a description of each plan and program.
2001 Plan. In June 2001 and prior to us being a publicly traded company, our Board adopted the 2001 Plan. Various plan amendments have been approved since that time, the most recent being in November 2007. The 2001 Plan allowed for the issuance of equity-based awards in the form of nonqualified stock options and stock appreciation rights. However, as a result of the adoption of the 2007 Plan, at the direction of our Board, no further awards will be granted under our 2001 Plan. As of December 31, 2016,2017, options to purchase an aggregate of 6,438,172 shares (net of options cancelled) had been granted pursuant to the 2001 Plan, all of which were nonqualified stock options. Of that amount, 6,306,821 options had been exercised, with the remaining amount forfeited. There are no remaining awards outstanding under this plan as of December 31, 2016.2017.
2007 Plan. In August 2007, our Board and our shareholders approved our 2007 Plan. The adoption, approval, and effectiveness of this plan were contingent upon the successful completion of our initial public offering, which occurred in December 2007. Effective July 1, 2016, Cardtronics assumed and adopted the third amendment and restatement of the 2007 Plan. The 2007 Plan provides for the granting of incentive stock options intended to qualify under Section 422 of the Code, nonqualified stock options, restricted stock awards, restricted stock unit awards, annual incentive awards, performance awards, phantom stock awards, and bonus stock awards. The number of shares that may be issued under the 2007
Table of Contents
Plan may not exceed 9,679,393 shares, subject to further adjustment to reflect stock dividends, stock splits, recapitalizations and similar changes in our capital structure. The individual share limitations that any one participant can receive in any given fiscal year is 1,500,000 shares and, for awards denominated in cash amounts, the amount may not exceed $3,500,000 in a given year. As of December 31, 2016,2017, options to purchase an aggregate of 416,500 shares (net of options cancelled) had been granted pursuant to the 2007 Plan, all of which were nonqualified stock options. Of that amount 288,425300,625 options had been exercised. Additionally, as of December 31, 2016, 5,682,343 shares of2017, 6,420,855 restricted stock awards and units, net of cancellations, had been granted pursuant to the 2007 Plan.
Long-Term Incentive Plan.Programs. In the first quarter of each year since 2011, our Compensation Committee of our Board has approved our annual LTIPs, which are subject to the terms and conditions of our 2007 Plan and provideformalized specific details for the equity awards granted during the year. Our Compensation Committee has the sole authority to grant awards under the respective year’syear's LTIP to our Section 16 Officers, as defined by the SEC, and our Chief Executive Officer has the authority to grant awards to all non-Section 16 Officers and other employees. OurStarting in 2017 the Compensation Committee utilized the terms of the 2007 Plan and award agreements to effect the LTIP rather than using a formalized plan for each year. In 2018, the Compensation Committee has determined that anyto grant awards granted would be in the form of RSUs (as defined in the 2007 Plan). All awards in 2011 and 2012, and 75% of the awards in 2013 through 2016, were performance-based RSUs and are subject to a time-based vesting schedule. The remaining 25% of the awards in 2013 through 2016 only have a service-based vesting schedule, with no performance requirements. The number of performance-based RSUs potentially earned under the LTIP is based on the level of performance achieved during a given year. If we fail to achieve at least the threshold performance level on one of the metrics, none of the performance-based RSUs would be earned, and all of the grants would be forfeited. (See “Compensation Discussion and Analysis — 2016 Compensation Decisions — 2016 Long-Term Incentive Plan and other Performance Awards” above for the 2016 threshold, target and maximum amounts of each selected performance metric.) As of December 31, 2016, 2,159,105 RSUs (net of cancellations) had been granted and earned pursuant to the LTIPs, which is included in the number of restricted stock, net of cancellations, that is presented under the “2007 Plan” section above. Beginning in 2017, our Compensation Committee intends to discontinue the use of annual LTIPs and instead rely on award documents to address the terms previously included in the annual LTIPs.as well as option awards.
The type and number of awards held by each of our Named Executive Officers as of December 31, 20162017 that were granted pursuant to each of our Equity Incentive Plans are described below in the “Outstanding"Outstanding Equity Awards at Fiscal 2017 Year-End" section.
Pursuant to and subject to the terms and conditions of our 2007 Plan, which expressly allows for annual equity awards to be made to eligible employees, in March 2017, our Compensation Committee approved the 2017 Long-Term Incentive program (the "2017 LTIP"), which provided for the grant of 75% performance-based RSUs and 25% service-based RSUs under the 2007 Plan. The performance-based RSUs are earned based on performance achievement over a one-year period followed by vesting requirements based on continued employment (or to an employee's qualified retirement date, if earlier), over 24, 36, and 48 months from January 31st of the grant year, at the rate of 50%, 25%, and 25%, respectively. The service-based RSUs vest over 24, 36, and 48 months from January 31st of the grant year, at the rate of 50%, 25%, and 25%, respectively, subject to continued service on each vesting date.
Under the 2017 LTIP, the size of our 2017 awards was based on a competitive long-term equity compensation element calculated as a percentage of base salary. For example, Mr. West was granted RSUs with a target value approximately equal to 3.0x his base salary (with the number of shares granted based on a 15-day average stock price following the 2016 Year-End” section.earnings release). Under the 2017 LTIP, the total number of RSUs earned was subject to an annual stock pool limitation established by our Compensation Committee. Performance-based RSUs were earned based on the achievement of a Revenue performance metric and an Adjusted Net Income per Share performance metric, with each metric being equally weighted. Revenue is defined as "Total Revenue" on a U.S. GAAP basis, as reported in our 2017 consolidated financial statements and calculated in the same manner as in our consolidated financial statements included in our Annual Report on Form 10-K. Adjusted Net Income per Share is a non-GAAP measure and is defined as "Adjusted Net Income per Diluted Share" as reported in the reconciliation of Non-GAAP Financial Measures in our Annual Report on Form 10-K. Both measures were adjusted for changes in currency exchange rates and other adjustments as contemplated by the 2017 LTIP. These two measures were selected as we believe they are the appropriate measures of sustainable business performance and drive increased shareholder value. For a reconciliation of Net Income to Adjusted Net Income per Share, see page 71 of our Annual Report on Form 10-K (filed with the SEC on March 1, 2018).
Selected Compensation in Proportion to Total CompensationTable of Contents
The following table provides (i) the 2017 pre-established threshold, target and maximum performance levels for each of our performance metrics and (ii) actual results as adjusted for the effects of foreign currency exchange rate movements and tax rate movements from budget and other minor adjustments as called for in the plan. The two targeted amounts for Revenue and Adjusted Net Income per Share were set based on market data provided by Meridian and on our intermediate-term growth objectives and our Board-approved budget.
| | | | | | | | | | | | | |
Performance Metric | | Threshold | | Target | | Maximum | | Performance
Results
Achieved | |
|---|
| | (In thousands)
| |
|---|
Total Revenue | | $ | 1,420.9966 | | $ | 1,480,204 | | $ | 1,539,412 | | $ | 1,483,203 | |
Adjusted Net Income per Share | | $ | 2.84 | | $ | 2.99 | | $ | 3.23 | | $ | 2.87 | |
If we did not meet a given threshold amount for at least one metric, all of the performance-based RSUs would be forfeited with respect to that metric. If we achieved our Revenue and Adjusted Net Income per Share performance levels at the threshold, target, or maximum levels of performance, then 50%, 100% or 200% of the targeted number of performance-based RSUs would be deemed earned, respectively. Our Compensation Committee retains the right to make adjustments to actual performance results, similar to the Cash Incentive Plan, and exercised the operating discretion in 2017 by adjusting the actual performance results with the same adjustments made to the Cash Incentive Plan as described above.
Our Compensation Committee believes that providing executives with a long-term incentive opportunity that includes both service- and performance-based equity awards is competitive and allows us to attract and retain a talented executive team. In addition to serving as a retention tool, the 2017 awards were intended to incentivize the executives to focus on achieving certain levels of Revenue and Adjusted Net Income per Share.
In March 2017, our Compensation Committee awarded the following target number of RSUs under the 2017 LTIP to our Named Executive Officers:
| | | | | | | |
Named Executive Officers: | | Service-based
RSUs | | Performance-based
RSUs | |
|---|
Steven A. Rathgaber | | | 16,797 | | | 50,392 | |
Edward H. West | | | 10,079 | | | 30,235 | |
Gary W. Ferrera(1) | | | — | | | — | |
Dan Antilley(1) | | | 2,975 | | | 8,923 | |
Brian Bailey | | | 1,960 | | | 5,879 | |
Stuart Mackinnon(1) | | | 1,876 | | | 5,627 | |
P. Michael McCarthy(2) | | | — | | | — | |
- (1)
- See 2017 New Hire and Other Grants, below. Mr. Antilley's Service-based and Performance-based RSU's were awarded May, 30 2017.
- (2)
- Mr. McCarthy's employment with us terminated effective February 1, 2017 in accordance with the retirement agreement dated January 3, 2017. For further information please see the Summary Compensation Table and related discussion.
We achieved above target results for Revenue and above threshold results for Adjusted Net Income per Share of $1,483.2 million and $2.87 per share, respectively, resulting in 83% of the target number of performance-based RSUs earned for each participant. The performance-based RSUs remain subject to the additional service-based vesting requirements discussed above. Pursuant to the terms of the 2017 LTIP, vesting is contingent upon continued employment (or set to an employee's qualified retirement date, if earlier), over 24, 36 and 48 months from January 31st of the grant year, at the rate of 50%, 25% and 25%,
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respectively. As discussed above, the service-based RSUs are subject to the same service-based vesting requirements applicable to the performance-based RSUs. For information regarding the fair value of these awards, see the "Stock Awards" column and the related footnotes of the "Summary Compensation Table for 2017" included in "Executive Compensation" below.
The maximum values of the 2017 performance-based RSUs, if the highest level of performance conditions were achieved, would have been as follows (based on certain assumptions included in Part II. Item 8. Financial Statements and Supplementary Data, Note 3. Share-Based Compensation, to our audited consolidated financial statements for the fiscal year ended December 31, 2017, included in our Annual Report on Form 10-K):
| | | | |
Name | | Maximum Value of 2017 Stock
Awards That Could Have Been
Achieved | |
|---|
Steven A. Rathgaber | | $ | 4,711,652 | |
Edward H. West | | $ | 2,826,973 | |
Dan Antilley | | $ | 611,404 | |
Stuart Mackinnon | | $ | 526,125 | |
Brian Bailey | | $ | 549,687 | |
2017 New Hire and Other Grants. In November 2017, Mr. Ferrera received a new hire grant of 27,762 service-based RSUs in connection with the start of his employment at Cardtronics. These RSUs will vest 25% each year in 2018, 2019, 2020, and 2021. In May 2017, Mr. Antilley received a new hire grant of 29,189 service-based RSUs in connection with the start of his employment at Cardtronics. These RSUs will vest 25% each year in 2018, 2019, 2020, and 2021. In April 2017, Mr. Mackinnon received a grant of 15,000 service-based RSUs in connection with his acceptance of the Executive Vice President—Technology and Operations & Chief Information Officer role. These RSUs will vest 50% in 2018, and 25% will vest in 2019 and 2020.
Other Compensation and Tax Matters
Share Ownership Guidelines. We implemented a share ownership policy for senior executives and non-employee directors in May 2011, which requires such participants to maintain a stated level of share ownership in Cardtronics in order to align the interests of our senior executives and non-employee directors with those of our shareholders. The policy is based on market trend information regarding executive and director share ownership policies, including design approaches, types of share counted towards ownership, time provided to participants to meet goals and common multiples of base salary.
The policy applies to our shares acquired by the participants on or after June 1, 2011 or the participant's hire date, excluding shares acquired in the open market. Under the terms of the policy, participants must attain target levels of ownership (set forth below) in shares before they no longer are required to adhere to the holding requirement (also set forth below), unless ownership falls below these levels. The total stock value of the participant's shares must equal or exceed the specified target value.
| | |
Position | | Target Ownership Level |
|---|
| Non-employee Directors | | 4x annual retainer |
| Chief Executive Officer | | 5x base salary |
| Tier I Participants | | 2x base salary |
| Tier II Participants | | 1x base salary |
Prior to attaining the above target ownership levels, a participant is prohibited from selling, gifting or otherwise transferring more than 50% of any of the shares subject to the Policy, unless those shares are tendered to us in payment of (i) a stock option exercise price or (ii) the minimum state and federal income tax withholding obligations of the Participant that automatically arise upon the lapsing of any restrictions
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on any restricted stock (or other equity award). If a participant wishes to sell unrestricted Covered Shares in excess of the allowable amount and is under the target ownership level, the individual must request an exception and have it approved by our Compensation Committee, who has complete discretion to allow or disallow any such sales.
Participants are not subject to a time period to attain their target ownership level, since this will be achieved through the retention of a specified percentage of equity grants each year through our incentive plans. If a participant receives a raise in his or her base salary, leading to an increase in the ownership requirement, the participant's future equity grants will continue to be subject to the holding requirement until the new target ownership level is attained. It is anticipated that actual levels of share ownership will fluctuate over time based on the change in pay rates and the value of the underlying shares. Accordingly, on a periodic basis, our Compensation Committee will review the target ownership levels to determine if any adjustments are appropriate. Furthermore, in response to unusual circumstances and in its sole discretion, our Compensation Committee may grant temporary relief or a waiver to individuals and/or categories of participants so as to permit them to sell unrestricted Covered Shares even if such sale results in that participant falling below his or her prescribed target ownership level. All of our Named Executive Officers are currently in compliance with the Policy.
Tax Deductibility of Compensation. Prior to 2018, Section 162(m) of the Internal Revenue Code generally denied a federal income tax deduction to the Company group in the U.S. for compensation in excess of $1 million per year paid to the principal executive officer and the next three most highly compensated officers (other than the principal financial officer). This denial of deduction was subject to an exception for "qualified performance-based compensation."
The Tax Cuts and Jobs Act, enacted on December 22, 2017, substantially modifies Section 162(m) of the Internal Revenue Code and, among other things, eliminated the "qualified performance-based compensation" exception to the $1 million deduction limit effective as of January 1, 2018. As a result, beginning in 2018, compensation paid to certain executive officers in excess of $1 million will generally be nondeductible in the U.S., whether or not it is performance-based. In addition, beginning in 2018, the executive officers subject to Section 162(m) (the "Covered Employees") will include any individual who served as the CEO or Chief Financial Officer ("CFO") at any time during the taxable year and the three other most highly compensated officers (other than the CEO and CFO) for the taxable year, and once an individual becomes a Covered Employee for any taxable year beginning after December 31, 2016, that individual will remain a Covered Employee for all future years, including following any termination of employment.
The Tax Cuts and Jobs Act includes a transition rule under which the changes to Section 162(m) described above will not apply to compensation payable pursuant to a written binding contract that was in effect on November 2, 2017 and is not materially modified after that date. To the extent applicable to our existing contracts and awards, the Compensation Committee may avail itself of this transition rule. However, because of uncertainties as to the application and interpretation of the transition rule, no assurances can be given at this time that our existing contracts and awards, even if in place on November 2, 2017, will meet the requirements of the transition rule.
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COMPENSATION COMMITTEE REPORT
Our Compensation Committee has reviewed and discussed the disclosure set forth above under the heading "Compensation Discussion and Analysis" with management and, based on the review and discussions, has recommended to our Board that the "Compensation Discussion and Analysis" be included in this proxy statement and incorporated by reference into our Annual Report on Form 10-K for the fiscal year ended December 31, 2017.
Respectfully submitted by the Compensation Committee of the Board of Cardtronics plc,
| | |
| | G. Patrick Phillips, Chair
Jorge M. Diaz
Julie Gardner
Mark Rossi
|
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EXECUTIVE COMPENSATION
Summary Compensation Table for 2017
The following table discloses the compensation paid to or earned by our Named Executive Officers serving during the applicable period:
| | | | | | | | | | | | | | | | | | | | | | |
Name & Principal Position | | Year | | Salary | | Bonus(1) | | Stock
Awards(2) | | Non-Equity
Incentive Plan
Compensation(3) | | All Other
Compensation(4) | | Total | |
|---|
Steven A. Rathgaber(6) | | | 2017 | | $ | 700,000 | | $ | — | | $ | 3,141,086 | | $ | 605,016 | | $ | 11,526 | | $ | 4,457,628 | |
Former Chief Executive Officer | | | 2016 | | | 693,750 | | | — | | | 3,447,783 | | | 580,134 | | | 11,326 | | | 4,732,993 | |
| | | 2015 | | | 668,750 | | | — | | | 3,014,486 | | | 726,153 | | | 8,676 | | | 4,418,065 | |
Edward H. West | | |
2017 | |
$ |
600,000 | |
$ |
— | |
$ |
1,884,680 | |
$ |
518,585 | |
$ |
11,394 | |
$ |
3,014,659 | |
Chief Executive Officer, Former Chief | | | 2016 | | | 575,000 | | | — | | | 3,723,904 | | | 797,258 | | | 511,145 | | | 5,607,307 | |
Financial Officer/Chief Operations | | | | | | | | | | | | | | | | | | | | | | |
Officer | | | | | | | | | | | | | | | | | | | | | | |
Gary W. Ferrera | | |
2017 | |
$ |
41,954 | |
$ |
100,000 | |
$ |
499,994 | |
$ |
44,281 | |
$ |
50 | |
$ |
686,279 | |
Chief Financial Officer | | | | | | | | | | | | | | | | | | | | | | |
Dan Antilley | | |
2017 | |
$ |
243,285 | |
$ |
100,000 | |
$ |
1,407,641 | |
$ |
425,000 | |
$ |
327 | |
$ |
2,176,253 | |
Chief Information Security Officer | | | | | | | | | | | | | | | | | | | | | | |
Stuart Mackinnon | | |
2017 | |
$ |
330,512 | |
$ |
— | |
$ |
1,011,665 | |
$ |
243,431 | |
$ |
11,237 | |
$ |
1,596,845 | |
Executive Vice President Technology and | | | | | | | | | | | | | | | | | | | | | | |
Operations & Chief Information Officer | | | | | | | | | | | | | | | | | | | | | | |
Brian Bailey | | |
2017 | |
$ |
350,000 | |
$ |
— | |
$ |
366,473 | |
$ |
295,910 | |
$ |
11,262 | |
$ |
1,023,645 | |
Executive Vice President & Managing | | | | | | | | | | | | | | | | | | | | | | |
Director, North America | | | | | | | | | | | | | | | | | | | | | | |
P. Michael McCarthy(6) | | |
2017 | |
$ |
43,661 | |
$ |
— | |
$ |
— | |
$ |
— | |
$ |
1,407,197 | |
$ |
1,450,858 | |
Former Chief Information Officer | | | 2016 | | | 387,000 | | | — | | | 796,421 | | | 298,571 | | | 11,123 | | | 1,493,115 | |
| | | 2015 | | | 352,688 | | | — | | | 964,621 | | | 290,461 | | | 8,412 | | | 1,616,182 | |
- (1)
- Messrs. Ferrera and Antilley were each provided $100,000 sign-on bonuses in connection with the commencement of their employment with the Company on November 28, 2017 and May 30, 2017, respectively. See discussion in CD&A.
- (2)
- Amounts included in the "Stock Awards" columns represent the aggregate grant date fair value of the awards made to our Named Executive Officers, computed in accordance with Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") Topic 718, disregarding any estimates for forfeitures. A portion of the awards made to our Named Executive Officers are performance-based RSUs that are based upon the probable outcome of certain performance conditions at the date of grant. The grant date fair values ultimately realized by the executives upon the actual earning of the awards may be or were different to the values reflected above. For the performance-based stock awards granted in 2017, Messrs. Rathgaber, West, Antilley, Mackinnon and Bailey earned 83% of the target number of performance-based RSUs. Additionally, Messrs. Ferrera and Antilley received new hire grants of 27,762 and 29,189 service-based RSUs in connection with the start of their employment at the Company and Mr. Mackinnon received a promotion-related grant of 15,000 RSUs. RSU vesting is based on the continued employment with the Company (or to an employee's qualified retirement date, if earlier). Mr. McCarthy did not receive any equity awards under the 2017 LTIP.
- (3)
- Represents amounts paid to each of the Named Executive Officers under our 2017 Cash Incentive Plan in March 2017 based on the achievement of certain performance levels discussed in the "2017 Cash Incentive Plan Performance Levels" section on page 39 above.
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- (4)
- Amounts presented in the "All Other Compensation" column for 2017 include the following:
| | | | | | | | | | | | | |
Name | | Matching
401(k)
Contributions | | Life
Insurance
Premiums | | Other | | Total | |
|---|
Steven A. Rathgaber | | $ | 10,800 | | $ | 726 | | $ | — | | $ | 11,526 | |
Edward H. West | | $ | 10,800 | | $ | 594 | | $ | — | | $ | 11,324 | |
Gary W. Ferrera | | $ | — | | $ | 50 | | $ | — | | $ | 50 | |
Dan Antilley | | $ | — | | $ | 327 | | $ | — | | $ | 327 | |
Stuart Mackinnon | | $ | 10,800 | | $ | 437 | | $ | — | | $ | 11,237 | |
Brian Bailey | | $ | 10,800 | | $ | 462 | | $ | — | | $ | 11,262 | |
P. Michael McCarthy(5) | | $ | 10,800 | | $ | — | | $ | 1,396,397 | | $ | 1,407,197 | |
- (5)
- Mr. McCarthy's retired effective February 1, 2017. In accordance with the retirement agreement dated January 3, 2017, Mr. McCarthy was entitled to severance payments totaling $1,396,277, including the payment of a pro-rata portion of his Cash Incentive Plan award for 2017. In addition, he received salary and benefits totaling $54,581 prior to his retirement. See "Employment Agreement with P. Michael McCarthy—Former Executive Vice President—Technology and Operations & Chief Information Officer" on page 51.
- (6)
- Mr. Rathgaber retired effective December 31, 2017.
Grants of Plan-Based Awards for 2017
The following table sets forth salary and discretionary bonus compensation (“non incentive-based compensation”) and annual non-equity incentive plan and LTIP compensation (“incentive-based compensation”) as a percentage of total compensation, as presented incertain information with respect to the “Total” column of the “Summary Compensation Table for 2016,” that we paid forRSUs granted during the year ended December 31, 20162017 as well as the details regarding other plan-based awards granted in 2017 to each of our Named Executive Officer:Officers:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| |
| |
| |
| |
| |
| |
| |
| |
| | All Other
Stock Awards:
Number of
Shares of
Stock or
Units
Awards(3) | |
| |
|---|
| |
| |
| | Estimated Possible Payouts
Under Non-Equity
Incentive Plan Awards(1) | | Estimated Future Payouts
Under Equity Incentive Plan
Awards (Number of Units)(2) | | Grant
Date Fair
Value of
Stock
Awards(4) | |
|---|
| | Type of Incentive
Plan Award | |
| |
|---|
Name | | Grant Date | | Threshold | | Target | | Maximum | | Threshold | | Target | | Maximum | �� |
|---|
Steven A. Rathgaber | | Cash Plan | | | — | | $ | 350,000 | | $ | 700,000 | | $ | 1,400,000 | | | — | | | — | | | — | | | — | | | — | |
| | Service-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | $ | 785,260 | |
| | Performance-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | 25,196 | | | 50,392 | | | 100,784 | | | — | | $ | 2,355,826 | |
Edward H. West | | Cash Plan | | | — | | $ | 300,000 | | $ | 600,000 | | $ | 1,200,000 | | | — | | | — | | | — | | | — | | | — | |
| | Service-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | $ | 471,193 | |
| | Performance-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | 15,118 | | | 30,235 | | | 60,470 | | | — | | $ | 1,413,486 | |
Gary W. Ferrera | | Cash Plan | | | — | | $ | 110,000 | | $ | 550,000 | | $ | 1,100,000 | | | — | | | — | | | — | | | — | | | — | |
| | New Hire | | | 11/28/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | 27,762 | | $ | 499,994 | |
Dan Antilley | | Cash Plan | | | — | | $ | 212,500 | | $ | 425,000 | | $ | 850,000 | | | — | | | — | | | — | | | — | | | — | |
| | New Hire | | | 5/30/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | 29,189 | | $ | 1,000,015 | |
| | Service-based LTIP | | | 5/30/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | — | | $ | 101,924 | |
| | Performance-based LTIP | | | 5/30/2017 | | | — | | | — | | | — | | | 4,461 | | | 8,923 | | | 17,846 | | | — | | $ | 305,702 | |
Stuart Mackinnon | | Cash Plan | | | — | | $ | 117,250 | | $ | 234,500 | | $ | 351,750 | | | — | | | — | | | — | | | — | | | — | |
| | Service-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,876 | | | 87,703 | |
| | Performance-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | 2,814 | | | 5,627 | | | 11,254 | | | — | | $ | 263,062 | |
| | Service-based LTIP | | | 4/19/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | 15,000 | | | 660,900 | |
Brian Bailey | | Cash Plan | | | — | | $ | 148,750 | | $ | 297,500 | | $ | 446,250 | | | — | | | — | | | — | | | — | | | — | |
| | Service-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | — | | | — | | | — | | | 1,960 | | $ | 91,630 | |
| | Performance-based LTIP | | | 3/31/2017 | | | — | | | — | | | — | | | 2,940 | | | 5,879 | | | 11,758 | | | — | | $ | 274,843 | |
P. Michael McCarthy(5) | �� | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
- (1)
- Represents possible payouts under 2017 Cash Incentive Plan for those executives employed for the entirety of 2017. For 2017, Mr. Ferrera earned a prorated payment based on the actual time of his service and Mr. Antilley was entitled to a payment at target.
- (2)
- Represents performance-based RSU awards under 2017 LTIP. See 2017 Long-Term Incentive Plan section on page 41.
- (3)
- Represents service-based RSU awards under 2017 LTIP, including a New Hire Award for each of Messrs. Ferrera and Antilley and a promotion-related grant of 15,000 RSU awards for Mr. Mackinnon.
- (4)
- Calculated the grant date fair value of each equity award computed in accordance with FASB ASC Topic 718.
- (5)
- Mr. McCarthy retired effective February 1, 2017 in accordance with the retirement agreement dated January 3, 2017 and did not earn or receive awards under our 2017 Cash Incentive Plan or Long-Term Incentive program.
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Name | | Non Incentive-based
Compensation | | Incentive-based
Compensation | |
Steven A. Rathgaber | | 14.7% | | 85.1% | |
Edward H. West | | 45.9% | | 45.0% | |
J. Chris Brewster | | 63.4% | | 35.1% | |
David W. Dove | | 49.0% | | 50.1% | |
P. Michael McCarthy | | 25.9% | | 73.3% | |
Jonathan Simpson-Dent | | 17.8% | | 79.7% | |
E. Brad Conrad | | 54.5% | | 44.6% | |
Outstanding Equity Awards at Fiscal 20162017 Year-End
The following table sets forth information for each of our Named Executive Officers regarding the number of shares subject to exercisable stock options and the number of RSUs that have not vested as of December 31, 2016:2017. As of December 31, 2017 there were no shares subject to exercisable stock options outstanding.
| | | | | | | | | | | | | | | | |
| | Stock Awards | |
|---|
Name | | Grant Date | | Number of
Units
That Have Not
Vested(#)(2) | | Market Value
of Units
That Have Not
Vested($)(1) | | Equity
Incentive Plan
Awards:
Number of
Unearned Units
That Have Not
Vested(#)(3) | | Equity
Incentive Plan
Awards:
Market Value
of Unearned
Units That
Have Not
Vested($)(4) | |
|---|
Steven A. Rathgaber(6) | | | 3/31/2017 | | | 16,797 | | $ | 311,080 | | | 50,392 | | $ | 933,260 | |
| | | 3/22/2016 | | | 122,824 | | $ | 2,274,700 | | | — | | $ | — | |
| | | 3/24/2015 | | | 43,867 | | $ | 812,417 | | | — | | $ | — | |
| | | 3/27/2014 | | | 23,746 | | $ | 437,776 | | | — | | $ | — | |
Edward H. West | | | 3/31/2017 | | | 10,079 | | $ | 186,663 | | | 30,235 | | $ | 559,952 | |
| | | 3/22/2016 | | | 61,412 | | $ | 1,137,350 | | | — | | | — | |
| | | 1/11/2016 | | | 30,893 | (3) | $ | 572,138 | | | — | | $ | — | |
Gary W. Ferrera | | | 11/28/2017 | (7) | | 27,762 | | $ | 514,152 | | | — | | | — | |
Dan Antilley | | | 5/30/17 | (7) | | 32,164 | | $ | 595,677 | | | 8,923 | | $ | 165,254 | |
Stuart Mackinnon | | | 4/19/17 | (7) | | 15,000 | | $ | 277,800 | | | — | | | — | |
| | | 3/31/17 | | | 1,876 | | $ | 34,744 | | | 5,627 | | $ | 104,212 | |
| | | 4/15/16 | | | 5,976 | | $ | 110,676 | | | — | | | — | |
| | | 7/20/15 | | | 3,556 | | $ | 65,857 | | | — | | | — | |
Brian Bailey | | | 3/31/17 | | | 1,960 | | $ | 36,299 | | | 5,879 | | $ | 108,879 | |
P. Michael McCarthy(5) | | | — | | | — | | | — | | | — | | | — | |
- (1)
- The market value of RSUs that have not yet vested is based on the closing market price of our stock on December 29, 2017 of $18.52 per share.
- (2)
- Other than with respect to the service-based RSUs granted to Mr. West on January 11, 2016, service-based RSUs generally vest after 24, 36, and 48 months from January 31st of the grant year, at the rate of 50%, 25%, and 25%, respectively (or to an employee's qualified retirement date, if earlier), subject to continued service on each applicable vesting date. RSUs were granted under each respective year's LTIP, which are governed by our 2007 Plan.
- (3)
- Service-based RSUs vest at the rate of 25% on each of December 15th of 2016, 2017, 2018 and 2019, subject to continued service on each applicable vesting date.
- (4)
- Performance based-awards presented based on target-level of achievement. See "2017 Long-Term Incentive Plan" above on page 41.
- (5)
- Mr. McCarthy's employment with us terminated effective February 1, 2017 in accordance with the retirement agreement dated January 3, 2017. Under this arrangement the stock awards vesting January 2017 became vested and all other stock awards were forfeited. For further information see the Summary Compensation Table and related discussion.
- (6)
- Upon his retirement on December 31, 2017, Mr. Rathgaber retained his then-outstanding RSU awards. In accordance with his employment agreement, the underlying shares will be issued following his retirement date. For a description of his employment agreement and his equity awards in connection with his retirement see "Employment Agreement with Steven A. Rathgaber" below.
- (7)
- New-hire RSU awards granted upon initial employment with the Company and 15,000 RSU awards upon promotion for Mr. Mackinnon. See discussion of such awards granted in 2017 in "New Hire and Other Grants" on page 43 above.
| | Stock Awards | |
Name | | Grant Date | | Number of
Units/Awards
That Have Not
Vested | | Market Value
of Units/Awards
That Have Not
Vested (1) | | Equity
Incentive Plan
Awards:
Number of
Unearned Units
That Have Not
Vested | | Equity
Incentive Plan
Awards:
Market Value
of Unearned
Units That
Have Not
Vested (1) | |
Steven A. Rathgaber | | 3/22/2016 | | 24,178 | (2) | | $ | 1,319,393 | | 72,534(2) | | $ | 3,958,180 | |
| | 3/24/2015 | | 87,736 | (2) | | 4,787,754 | | — | | — | |
| | 3/27/2014 | | 47,491 | (2) | | 2,591,584 | | — | | — | |
| | 3/29/2013 | | 17,200 | (2) | | 938,604 | | — | | — | |
Edward H. West | | 3/22/2016 | | 12,089 | (2) | | $ | 659,697 | | 36,267(2) | | $ | 1,979,090 | |
| | 1/11/2016 | | 46,340 | (3) | | 2,528,774 | | — | | — | |
J. Chris Brewster | | 3/22/2016 | | 1,292 | (2) | | $ | 70,504 | | 3,875(2) | | $ | 211,459 | |
| | 3/24/2015 | | 28,745 | (2) | | 1,568,615 | | — | | — | |
| | 3/27/2014 | | 14,268 | (2) | | 778,605 | | — | | — | |
| | 3/12/2014 | | 1,000 | (4) | | 54,570 | | — | | — | |
| | 3/29/2013 | | 7,518 | (2) | | 410,257 | | — | | — | |
David W. Dove | | 9/1/2013 | | 18,750 | (5) | | $ | 1,023,188 | | 16,668(6) | | $ | 909,573 | |
P. Michael McCarthy | | 3/22/2016 | | 5,585 | (2) | | $ | 304,773 | | 16,755(2) | | $ | 914,320 | |
| | 3/24/2015 | | 19,393 | (2) | | 1,058,276 | | — | | — | |
| | 3/24/2015 | | 3,750 | (7) | | 204,638 | | — | | — | |
| | 3/27/2014 | | 7,273 | (2) | | 396,888 | | — | | — | |
| | 3/29/2013 | | 3,510 | (2) | | 191,541 | | — | | — | |
| | 1/17/2013 | | 5,000 | (8) | | 272,850 | | — | | — | |
Jonathan Simpson-Dent | | 3/22/2016 | | 9,949 | (2) | | $ | 542,917 | | 29,845(2) | | $ | 1,628,642 | |
| | 3/24/2015 | | 32,715 | (2) | | 1,785,258 | | — | | — | |
| | 3/24/2015 | | 30,173 | (9) | | 1,646,541 | | — | | — | |
| | 3/27/2014 | | 12,770 | (2) | | 696,859 | | — | | — | |
| | 9/4/2013 | | 7,500 | (10) | | 409,275 | | — | | — | |
E. Brad Conrad | | 4/26/2016 | | 5,000 | (11) | | $ | 272,850 | | — | | — | |
| | 3/22/2016 | | 2,418 | (2) | | 131,950 | | 7,253(2) | | $ | 395,796 | |
| | 3/24/2015 | | 7,019 | (2) | | 383,027 | | — | | — | |
| | 3/27/2014 | | 3,799 | (2) | | 207,311 | | — | | — | |
| | 3/12/2014 | | 500 | (4) | | 27,285 | | — | | — | |
| | 3/29/2013 | | 1,641 | (2) | | 89,549 | | — | | — | |
(1)
| The market value of RSUs that have not vested is based on the closing market price of our stock on December 31, 2016 of $54.57 per share.
|
| |
(2)
| These RSUs vest after 24, 36, and 48 months from January 31st of the grant year, at the rate of 50%, 25% and 25%, respectively (or to an employee’s qualified retirement date, if earlier). These restricted shares were granted under our respective year’s LTIPs, which are governed by our 2007 Plan. The number of unearned RSUs that
|
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|
| |
(3)
| These RSUs vest at the rate of 25% of the award on December 15th of 2016, 2017, 2018 and 2019. These RSUs were granted pursuant to our 2007 Plan.
|
| |
(4)
| These RSUs vest after 12, 24 and 36 months from January 31st of the grant year, at the rate of 50%, 25% and 25%, respectively (or to an employee’s qualified retirement date, if earlier). These RSUs were granted as a discretionary award under the 2013 LTIP, which is governed by our 2007 Plan.
|
| |
(5)
| These RSUs vest at the rate of 25% of the award on September 1st of 2014, 2015 and 2016 and February 28, 2017. These RSUs were granted pursuant to our 2007 Plan.
|
| |
(6)
| These RSUs are divided into three separate tranches of 16,666, 16,666 and 16,668 target RSUs each, with each tranche having its own annual performance period (specifically, for calendar years 2014, 2015 and 2016) and performance targets or goals. The number of RSUs earned for the applicable year will be determined by our Compensation Committee on or before March 31 of the year immediately following each performance period, and will vest at that time. These RSUs were granted pursuant to our 2007 Plan.
|
| |
(7)
| These RSUs vest after 12, 24 and 36 months from January 31st of the grant year, at the rate of 50%, 25% and 25%, respectively (or to an employee’s qualified retirement date, if earlier). These RSUs were granted as a discretionary award under the 2014 LTIP, which is governed by our 2007 Plan.
|
| |
(8)
| These restricted stock awards vest at the rate of 25% of the award on January 17th of 2014, 2015, 2016 and 2017. These restricted stock awards were granted pursuant to our 2007 Plan.
|
| |
(9)
| These RSUs vest 100% on March 24, 2018. These RSUs were granted pursuant to our 2007 Plan.
|
| |
(10)
| These RSUs vest at the rate of 25% of the award on August 7th of 2014, 2015, 2016 and 2017. These RSUs were granted pursuant to our 2007 Plan.
|
| |
(11)
| These RSUs vest after 12, 24 and 36 months from January 31st of the grant year, at the rate of 50%, 25% and 25%, respectively (or to an employee’s qualified retirement date, if earlier). These RSUs were granted as a discretionary award under the 2015 LTIP, which is governed by our 2007 Plan.
|
Option Exercises and Stock Vested During Fiscal Year 20162017
The following table sets forth information relating to each exercise of stock options and each vesting of restricted stock awards and RSUs during the year ended December 31, 20162017 for each of our Named Executive Officers.
| | Option Awards | | Stock Awards | |
Name | | Number of
Shares
Acquired on
Exercise | | Value Realized
Upon
Exercise(1) | | Number of
Shares
Acquired on
Vesting | | Value Realized
on Vesting(2) | |
Steven A. Rathgaber | | — | | — | | 76,268 | | $ | 2,323,053 | |
Edward H. West | | — | | — | | 15,446 | | $ | 829,296 | |
J. Chris Brewster | | 12,610 | | $ | 245,791 | | 27,832 | | $ | 845,818 | |
David W. Dove | | — | | — | | 38,915 | | $ | 1,528,500 | |
P. Michael McCarthy | | — | | — | | 19,527 | | $ | 603,566 | |
Jonathan Simpson-Dent | | — | | — | | 20,269 | | $ | 740,063 | |
E. Brad Conrad | | — | | — | | 7,242 | | $ | 220,389 | |
| | | | | | | | | | | |
| | | | | | | |
| | Stock Awards | |
|---|
Name | | Number of
Shares/Units
Acquired on
Vesting | | Value Realized
on Vesting($)(1) | |
|---|
Steven A. Rathgaber | | | 84,810 | | $ | 4,630,180 | |
Edward H. West | | | 15,447 | | $ | 289,477 | |
Gary W. Ferrera | | | — | | $ | — | |
Dan Antilley | | | — | | $ | — | |
Stuart Mackinnon | | | 1,778 | | $ | 56,843 | |
Brian Bailey | | | 5,201 | | $ | 86,597 | |
P. Michael McCarthy(2) | | | 5,000 | | $ | 274,250 | |
- (1)
Value realized was calculated based on the difference between the market price of our shares upon exercise and the exercise price of the option.(2)
- Value realized was calculated by multiplying the market value of our shares (which was the average of the high and low trading price or the closing price of our shares on the applicable vesting date) by the number of shares that became vested on the applicable vesting dates.
- (2)
- Mr. McCarthy retired effective February 1, 2017. Pursuant to the retirement agreement dated January 3, 2017, stock awards that were scheduled to vest in January 2017 were vested and all other stock awards were forfeited. For further information please see the Summary Compensation Table and related discussion.
Pension Benefits
Currently, we do not offer, and, therefore, none of our Named Executive Officers participate in or have account balances in qualified or nonqualified defined benefit plans sponsored by us. The contribution to a pension plan made on behalf of Mr. Simpson-Dent was made to his personal pension plan that is not sponsored by us. In the future, however, our Compensation Committee may elect to adopt qualified or nonqualified defined benefit plans if it determines that doing so is in our best interests (e.g., in order to attract and retain employees.)
Nonqualified Deferred Compensation
ForIn 2015, our Compensation Committee elected to provide our officers, directors and other employees with nonqualified deferred compensation benefits. Under our nonqualified deferred compensation program, eligible employees (including non-employee directors) had the ability to defer eligible cash and equity compensation to a trust administered by a third party. No new deferrals were allowed under the program during 2016,2017 and any future deferrals will be subject to the discretion of our Compensation Committee.
Named Executive Officer Employment-Related Agreements
The following is a description of the material terms of the employment agreements we had with our Named Executive Officers as of December 31, 2017:
Employment Agreement with Steven A. Rathgaber—Chief Executive Officer. Mr. Rathgaber served as our Chief Executive Officer and a director of our Board from February 1, 2010 through his retirement on December 31, 2017. We entered into an employment agreement with Mr. Rathgaber that was effective February 1, 2010. Under the terms of his agreement, Mr. Rathgaber received a base salary presented in the "Salary" column of the "Summary Compensation Table for 2017" above, that was subject to periodic review by our Board (or a committee thereof). Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Rathgaber was eligible to receive an annual award
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under a non-equity incentive plan on or before March 15th of each year. In addition, Mr. Rathgaber was entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year. The agreement with Mr. Rathgaber provided for an initial term of three years, subject to automatic one-year renewals thereafter unless the agreement was terminated in accordance with its terms. The initial three-year term of our employment agreement with Mr. Rathgaber expired in February 2013; however, the agreement was renewed annually until Mr. Rathgaber's retirement on December 31, 2017.
Employment Agreement with Edward H. West—Chief Executive Officer and Former Chief Financial Officer/Chief Operations Officer. In December 2015, we entered into an employment agreement with Mr. West, for his employment commencing January 2016, and in the role of Chief Financial Officer effective February 22, 2016. Under the terms of his agreement, Mr. West received a base salary presented in the "Salary" column of the "Summary Compensation Table for 2017" above, that was subject to periodic review by our Board (or a committee thereof) and that could be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. West was eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award. Mr. West's agreement further entitled him to a sign-on $2,000,000 incentive award in the form of RSUs to vest over four years, and a $500,000 relocation allowance. In addition, Mr. West was entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year. In July 2016, Mr. West's role was expanded to also include the role of Chief Operations Officer. His employment agreement was not amended in connection with his new role. The agreement with Mr. West provided for an initial term of three years, subject to automatic one-year renewals thereafter unless the agreement is terminated in accordance with its terms. In December 2017, we entered into an employment agreement with Mr. West, for his promotion to Chief Executive Officer commencing January 1, 2018. Under the terms of his agreement, Mr. West will receive a base salary of $750,000, that is subject to periodic review by our Board (or a committee thereof) and that could be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. West remains eligible to receive an annual award under non-equity incentive plan and an annual LTIP award. Mr. West's agreement further entitled him to $5,500,000 of promotion incentive awards in the form of time-based and performance-based RSUs to vest over three years. In addition, Mr. West was entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year.
Employment Agreement with Gary W. Ferrera—Chief Financial Officer. In November 2017, we entered into an employment agreement with Mr. Ferrera. Under the terms of his agreement, Mr. Ferrera received a base salary, presented in the "Salary" column of the "Summary Compensation Table for 2017" above, that was subject to periodic review by our Board (or a committee thereof) and that could be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Ferrera was eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award. Mr. Ferrera's agreement further entitled him to a sign-on $500,000 incentive award in the form of RSUs to vest over four years, and a $100,000 sign-on bonus and reimbursement of certain relocation costs. In addition, Mr. Ferrera was entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year.
Employment Agreement with Dan Antilley—Chief Information Security Officer. In May 2017, we entered into an employment agreement with Mr. Antilley. Under the terms of his agreement, Mr. Antilley received a base salary, presented in the "Salary" column of the "Summary Compensation Table for 2017" above, that was subject to periodic review by our Board (or a committee thereof) and that could be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Antilley was eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award. The non-equity incentive plan award for 2017 was to be no less than $425,000. Mr. Antilley's agreement further entitled him to a sign-on $1,000,000 incentive award in the form of RSUs to vest over four years, and a $100,000 sign-on bonus and reimbursement of certain
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relocation costs. In addition, Mr. Antilley was entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year.
Employment Agreement with Stuart Mackinnon—Executive Vice President—Technology and Operations & Chief Information Officer. On February 1, 2017, we entered into an employment agreement with Mr. Mackinnon when he began serving as our Executive Vice President—Technology and Operations & Chief Information Officer. Under the terms of his agreement, Mr. Mackinnon received a base salary presented in the "Salary" column of the "Summary Compensation Table for 2017" above, that is subject to periodic review by our Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Mackinnon may be eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award. Mr. Mackinnon is entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year.
Employment Agreement with Brian Bailey—Managing Director, North America. We entered into an employment agreement with Mr. Bailey in November 2016 when he began serving as our Managing Director, North America. Under the terms of his agreement, Mr. Baily received a base salary presented in the "Salary" column of the "Summary Compensation Table for 2017" above, that is subject to periodic review by our Board (or a committee thereof) and may be increased at any time. Additionally, subject to our achieving certain performance standards set by our Compensation Committee, Mr. Bailey may be eligible to receive an annual award under a non-equity incentive plan and an annual LTIP award. Mr. Bailey is entitled to receive perquisite benefits made available to other senior officers, sick leave and paid vacation time each year.
Employment Agreement with P. Michael McCarthy—Former Executive Vice President—Technology and Operations & Chief Information Officer. For 2016, Mr. McCarthy was party to an employment agreement with us that provided for the base salary, non-equity incentive plan award, and perquisites reported in the "Summary Compensation Table for 2016" above. On January 3, 2017, in connection with Mr. McCarthy's retirement from his position of Executive Vice President—Technology and Operations & Chief Information Officer effective February 1, 2017, Mr. McCarthy entered into a retirement agreement with us, entitling him to payments and benefits in accordance with his original employment agreement, which includes the payout of the amount he earned under the 2016 non-equity incentive plan, a prorated portion of the 2017 non-equity incentive plan, payment of an amount equal to two times his base salary and average annual bonus as of his retirement. Any unvested equity awards at the time of his retirement were forfeited.
Potential Payments upon a Termination or Change in Control
We provide our Named Executive Officers with certain severance and change in control benefits in order to provide them with assurances against certain types of terminations without cause or resulting from change in control transactions where the terminations were not based upon cause. This type of protection is intended to provide the executive with a basis for keeping focus and functioning in the shareholders’shareholders' interests at all times. In addition to the potential acceleration of our equity-based awards upon certain events, our employment agreements with Messrs. Rathgaber, West, Dove, McCarthy, Simpson-DentFerrera and ConradAntilley that were in effect on December 31, 20162017 contain severance and change in control provisions. The new agreement (described above) which Mr. Brewster entered into in February 2016 upon his resignation from his position as Chief Financial Officer did not provide for severance or change in control benefits. The amendment to the employment agreement (described above) which Mr. Dove entered into August 2016 provided for a $200,000 cash bonus payment to be made following the termination of his employment, subject to the receipt by us of Mr. Dove’s release of claims as per the original agreement. The retirement agreement (described above) which Mr. McCarthy entered into in January 2017 upon his resignation from his position as Chief Information Officer does not provide for any severance or change in control benefits, other than as described above. The following disclosure with respect to potential payments upon a termination or change in control covers our arrangements with our Named Executive Officers as of December 31, 2016, and therefore Mr. McCarthy’s information will relate to his previous employment agreement that was still in effect on that date.
The employment agreements in place as of December 31, 20162017 contain the following definitions for each of the possible “triggering events”"triggering events" that could result in a termination payment to the below-referenced Named Executive Officers:
- •
·Cause.Messrs. Rathgaber, West Dove, McCarthy and ConradAntilley may be terminated for cause if the executive: (i) engages in gross negligence, gross incompetence, or willful misconduct in the performance of his employment duties; (ii) refuses, without proper legal reason, to perform his employment duties and
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responsibilities; (iii) materially breaches any material provision of his employment agreement, any written agreement or a corporate policy or code of conduct established; (iv) willfully engages in conduct that is materially injurious to us; (v) discloses without specific authorization confidential information that is materially injurious to us; (vi) commits an act of theft, fraud, embezzlement, misappropriation, or willful breach of a fiduciary duty to us; (vii) is convicted of (or pleads no contest to) a crime involving fraud, dishonesty or moral turpitude, or any felony (or a crime of similar import in a foreign jurisdiction).
Mr. Ferrera may be terminated for cause if the executive (i) engages in gross negligence, gross incompetence, or willful misconduct in the performance of his employment duties; (ii) refuses, without proper legal reason, to perform his employment duties and responsibilities; (iii) materially breaches any material provision of his employment agreement, any written agreement or a corporate policy or code of conduct established; (iv) willfully engages in conduct that is materially injurious to us; (v) discloses without specific authorization from the Company, except in the good faith performance his duties or in compliance with legal process, confidential information that is materially injurious to us; (vi)(v) commits an act of theft,
fraud, embezzlement, misappropriation, or willful breach of a fiduciary duty to us; (vii)(vi) is convicted of (or pleads no contest to) a crime involving fraud, dishonesty or moral turpitude, or any felony (or a crime of similar import in a foreign jurisdiction).
In addition to the above-referenced causes for termination, under Mr. Dove’s employment agreement, Mr. Dove may be terminated if he fails three successive quarterly performance reviews.
Mr. Simpson-Dent may be terminated for cause if he: (i) commits any material breach of his duties, or repeats any breach or continuously breaches or fails to observe any express or implied obligations arising from his position with us, including refusing to comply with any reasonable/lawful instructions given to him by our Board; (ii) commits any serious misconduct; (iii) has been guilty of engaging in any conduct, which in the opinion of our Board, adversely impacts the reputation of Cardtronics; (iv) becomes prevented by applicable law or regulation from continuing to perform his obligations with us; (v) commits any act of fraud or dishonesty (whether or not in connection with his position with Cardtronics) or committed any act, which in the reasonable opinion of our Board, adversely affects his ability to properly to carry out his duties; (vi) becomes unable to pay his debts; (vii) is convicted of a criminal offense; (viii) is convicted of any offense relating to bribery or insider dealing; (ix) becomes of unsound mind or a patient or has been admitted to a hospital due to a mental disorder; and (x) resigns or otherwise ceases to be an executive by reason of his own actions or fault without prior consent of our Board.
- •
·Change in Control. Messrs. Rathgaber, Dove and McCarthy’s agreements state Mr. Rathgaber's agreement states that a change in control may occur upon any of the following events:·
- •
- a merger, consolidation or asset sale where all or substantially all of our assets are sold to another entity if (i) the holders of our equity securities no longer own the same proportion of equity securities of the resulting entity that are entitled to 60% or more of the votes eligible to be cast in the election of directors of the resulting entity or (ii) the members of our Board immediately prior to such transaction no longer constitute at least a majority of the board of directors of the resulting entity immediately after such transaction or event;
·
- •
- our dissolution or liquidation;
·
- •
- the date any person or entity, including a
“group”"group" as contemplated by Section 13(d)(3) of the Exchange Act, acquires or gains ownership or control (including, without limitation, power to vote) of more than 50% of the combined voting power of our outstanding securities; or·
- •
- as a result of or in connection with a contested election of directors, the members of our Board immediately before such election cease to constitute a majority of our Board.
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Our Named Executive Officers may be subject to a federal excise tax in the U.S. on compensation they receive in connection with a change in control of our company. The value determined in accordance with Section 280G of the Code of payments and benefits provided that are contingent upon a change in control may be subject to a 20% excise tax in the U.S. to the extent of the excess of such value over the executive’sexecutive's average annual taxable compensation from our company for the five years preceding the year of the change in control (or such shorter period as the executive was employed by us), if the total value of such payments and benefits equals or exceeds an amount equal to three times such average annual taxable compensation. In accordance with their employment agreements, if such excise tax is applicable, Mr. Rathgaber iswould have been entitled to receive a “gross-up payment”"gross-up payment" from Cardtronics in an amount necessary to place the executivehim in the same after-tax position had no portion of such contingent payments been subject to excise tax. Messrs. Dove, McCarthy and West’sNone of our other executives have employment agreements do not provide for a potential gross-up payment.
- •
·Good Reason.Messrs. Mr. Rathgaber Dove and McCarthy have the right tomay terminate employment for good reason upon the occurrence of any of the following good reason events (which in the case of Mr. Dove’s employment agreement, are limited to those events that occur within the 12-month period immediately following a change in control):events: (i) a material diminution in the executive’sexecutive's base salary (defined as 5% or more for Messrs. Dove and McCarthy);salary; (ii) a material diminution of the executive’sexecutive's authority, duties or responsibilities of his job function; and (iii) without the executive’sexecutive's prior consent, a required involuntary relocation of more than 75 miles (50 miles for Messrs. West and Dove) from our corporate headquarters in Houston, Texas. Additionally, in the case of Messrs. Rathgaber, West, DoveTexas; and McCarthy, they may also terminate employment for good reason in the event of(iv) a material breach by us of our agreement with them and in the case of Mr. Dove, he may also terminate employment for good reason in the event of a material diminution of the executive’s reporting relationship with his immediate supervisor(s).them.
Mr. West may also terminate employment for good reason upon the occurrence of any of the following good reason events: (i) a diminution in the executive’sexecutive's base salary, annual non-equity incentive opportunity or annual LTIP opportunity; (ii) a material diminution of the executive’sexecutive's authority, duties or responsibilities of his job function, including his ceasing to be the Chief Financial Officer of a publicly traded company and the principal domestic operating company of such publicly traded company; (iii) the involuntary relocation of more than 50 miles from our corporate headquarters in Houston, Texas; (iv) a material breach by us of our agreement with Mr. West; or (v) any failure by us to comply with the provisions of Mr. West’sWest's agreement regarding the assumption of his agreement by a successor.
Under Mr. Simpson-Dent’s employment agreement, either we or the executiveFerrera may terminate employment for anygood reason upon providingthe occurrence of any of the following good reason events: (i) a material diminution in base salary, provided that a diminution of less than 5% that is part of an initiative that applies to and affects all similarly situated executive officers substantially the same and proportionately shall not be a material diminution; (ii) a material diminution in authority, duties, or responsibilities as Chief Financial Officer (including, in connection with a change in control, being assigned to any position (including offices, titles and reporting requirements), authority, duties or responsibilities that are not at least six months’ prior written notice.or with a publicly traded company or ceasing to be the Chief Financial Officer of a publicly traded company; (iii) any material diminution in the Executive's reporting lines; (iv) a relocation of Executive's work location
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by more than 35 miles from the current location; or (v) a material breach by us of our agreement with them.
Mr. ConradAntilley may terminate his employment under his employmentfor good reason upon the occurrence of any of the following good reason events: (i) a material diminution in base salary, provided that a diminution of less than 5% that is part of an initiative that applies to and affects all similarly situated executive officers substantially the same and proportionately shall not be a material diminution; (ii) a material diminution in authority, duties, or responsibilities as Chief Information Security Officer (including, in connection with a change in control, being assigned to any position (including offices, titles and reporting requirements), authority, duties or responsibilities that are not at or with a publicly traded company or ceasing to be an officer of a publicly traded company; or (iii) a material breach by us of our agreement for any reason whatsoever or for no reason at all, in his sole discretion, by providing at least 15 days’ prior written notice.with them.
- •
·Totally Disabled.Under each of Messrs. Rathgaber, West, Dove, McCarthyFerrera and Conrad’sAntilley's employment agreements, we have the right to terminate the executive’sexecutive's employment at any time if the employee is unable to perform his duties or fulfill his obligations by reason of any medically determinable physical or mental impairment that can be expected to result in death or can be expected to last for a continuous period of not less than six months (twelve for Mr. Antilley), as certified by a competent physician (without this specifically being deemed as “totally disabled”"totally disabled").Pursuant to Mr. Simpson-Dent’s employment agreement, we may terminate the executive’s employment if the executive cannot perform his duties by reason of ill-health or accident or other incapacity, and has been so prevented for at least a continuous period of 243 days or for an aggregate period of 243 days in the preceding 12-month period (whether or not, in either case, working days).
·
- •
- Without Cause Termination. Under Messrs. Rathgaber, West,
Dove, McCarthyFerrera and Conrad’sAntilley's employment agreements, a termination without cause shall mean a termination of the executive’sexecutive's employment other than for death, voluntary resignation, total disability, or cause (and in Mr. Dove’s case, termination for failure to pass three successive quarterly performance reviews).cause.
Each of our Named Executive Officers has received equity awards grants pursuant to our 2007 Plan, the award agreements of which contain provisions permitting accelerated lapsing of forfeiture restrictions upon certain termination and change in control scenarios. Awards granted were granted under either the sub-plan LTIPs or the overriding 2007 Plan. Under Messrs. Rathgaber and West’s employment agreements, the executives are entitled to the followingThe equity award treatment in the event of a termination of employment or a change in control:control under Messrs. Rathgaber and West's employment agreements is summarized below:
- •
·Mr. Rathgaber will receive partial (25%) accelerated lapsing upon a termination of employment as a result of death or disability;·
- •
- Mr. Rathgaber will also receive partial (50%) accelerated
lapsing upon the occurrence of a change in control; this acceleration will be increased to 100% if a termination other than for causewithout Cause or a good reasonGood Reason termination follows such a change in control; andcontrol within 24 months;
·
- •
- Finally, if Mr. Rathgaber terminates his employment with us for Good Reason or if he is terminated by us without Cause, then he will receive partial (25%) accelerated lapsing.
·
- •
- Mr. West will receive full (100%) accelerated
lapsing on his sign-on award and accelerated lapsing on the next vesting tranche of any earned LTIP awards upon a termination of employment as a result of death or disability;·
- •
- Additionally, if Mr. West terminates his employment with us for Good Reason, or if his employment is terminated by us without cause,
notwithstanding anything to the contrary in the applicable award agreements, he will receive full (100%) accelerated lapsing on his sign-on award and accelerated lapsing on the next vesting tranche of any earned LTIP awards, and if his termination occurs within 24 months following a Change of Control, he will receive full (100%) accelerated lapsing on any LTIP awards, with any applicable performance goals to be deemed achieved at the greater of target or actual levels.
Equity awards granted between 2011 and 2016 consisted of RSUs, except for Mr. McCarthy’s award granted January 17, 2013, which was a restricted stock award. Under the terms of the agreements governing our applicable LTIPs andlong-term incentive RSU Agreements,awards, if a Named Executive Officer: (i) is terminated due to death or disability;
(ii) resigns and such resignation constitutes a “Qualified Retirement”"Qualified Retirement" (defined as the employee (a) having been employed for a minimum of five years by us, and (b) being 60 years of age at the time of resignation); or (iii) is involuntarily terminated within 24 months following a Corporate Change (which is substantially the same definition as the Change in Control definition in the employment
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agreements described above), then the forfeiture restrictions on all earned RSUs that have not previously lapsed will immediately lapse. In the event that a Named Executive Officer is eligible for Qualified Retirement after the end of the performance period, but prior to the date that is 12 months prior to the end of the time-basedservice-based vesting period, then a Corporate Change that also qualifies as a change in control pursuant to Section 409A of the Code will result in all earned RSUs becoming fully vested and paid out in shares. If the Named Executive Officer is not eligible for a Qualified Retirement during the period noted in the preceding sentence, then the holder may be eligible to receive a replacement award for the RSU. A “replacement award”"replacement award" shall be an award that has a value at least equal to the value of the replaced RSU, it relates to a publicly traded equity security of the successor of the Corporate Change, and it has terms no less favorable to the participant than the terms of the original RSU award. If an RSU holder is provided with a replacement award following a Corporate Change to replace the then-outstanding earned RSUs, then the replaced RSUs will be cancelled. However, if the Named Executive Officer does not receive a replacement award for his or her earned RSUs in connection with a Corporate Change, then the earned RSUs that the Named Executive Officer holds at the time of the Corporate Change will become fully vested and paid out in shares.
Under the terms of Mr. McCarthy’s restricted stock award granted January 17, 2013, if his employment is terminated due to death prior to the 4th anniversary date of the grant, then the forfeiture restrictions on 25% of the original award will lapse immediately.
Unless otherwise noted above, the definitions of the applicable terms in the RSU agreements are substantially similar to the same terms as described above within Messrs. Rathgaber West and Dove’sWest's employment agreements.
The table below reflects the amount of compensation payable to our Named Executive Officers in the event of a termination of employment or a change in control of Cardtronics as of December 31, 2016.2017. For purposes of calculating the potential payments, we have made certain assumptions that we have determined to be reasonable and relevant to our shareholders. Upon the occurrence of any of the termination events listed, or in the event of a for-cause termination or a voluntary termination (neither of which are shown in the table below), the terminated executive would receive any base salary amount that had been earned but had not been paid at the time of termination. In the event of a without cause termination, a termination for good reason, or a termination in connection with a change in control, the executive would also be entitled to receive payment of any prior year amount earned under our non-equity incentive plan (if not already paid) and a pro rata portion of the amount earned under our non-equity incentive plan for the year in which the termination occurred. However, such amounts would not be considered “termination payments”"termination payments" but rather would represent compensation earned by the executive for services rendered, and we, therefore, have not reflected the amount of earned but unpaid salary and non-equity incentive compensation awards in the table below. The executives are also entitled to receive reimbursement payments for reasonable business expenses, and we have assumed that for purposes of the calculations below, all expense reimbursements were current as of December 31, 2016.2017.
The amount of compensation payable to each applicable Named Executive Officer for each situation is listed below based on the equity award agreements and/or the employment agreements in place for each executive as of December 31, 2016.2017. The amounts shown assume that such termination event was effective as of December 31, 20162017 and that the closing price of our shares on December 30, 201629, 2017 was $54.57.$18.52. The amounts below are our best estimates as to the amounts that each executive would receive upon that particular termination event; however, exact amounts that any executive would receive could only be determined upon an actual termination of employment.
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Potential Payments upon a Termination or Change in Control Table
| | | | | | | | | | | | | | | |
Executive | | Benefits | | Termination by
Us Without
Cause, or
Good Reason
Termination
By Executive | | Change in
Control
(Treatment
of RSUs) | | Termination in
Connection with a
Change in Control | | Death or
Disability | |
|---|
Edward H. West | | Base Salary | | $ | 1,200,000 | (1) | $ | — | | $ | 1,200,000 | (1) | $ | — | |
| | Non-equity incentive compensation | | | 1,315,843 | (1) | | — | | | 1,315,843 | (1) | | — | |
| | Post-employment health care | | | 35,191 | (1) | | — | | | 35,191 | (1) | | — | |
| | Equity Awards | | | 1,140,813 | (5) | | 1,883,966 | (2) | | 2,456,104 | (3) | | 2,456,104 | (4) |
| | Total | | $ | 3,123,172 | | $ | 1,883,966 | | $ | 5,007,138 | | $ | 3,028,242 | |
Gary W. Ferrera | | Base Salary | | $ | 1,100,000 | (6) | $ | — | | $ | 1,100,000 | (6) | $ | — | |
| | Non-equity incentive compensation | | | 1,100,000 | (6) | | — | | | 1,100,000 | (6) | | — | |
| | Post-employment health care and auto allowance | | | 23,460 | (6) | | — | | | 23,460 | (6) | | — | |
| | Equity Awards | | | 514,152 | (5) | | 514,152 | (2) | | 514,152 | (2) | | 514,152 | (4) |
| | Total | | $ | 2,737,612 | | $ | 514,152 | | $ | 2,737,612 | | $ | 514,152 | |
Dan Antilley | | Base Salary | | $ | 425,000 | (7) | $ | — | | $ | 425,000 | (7) | $ | — | |
| | Non-equity incentive compensation | | $ | 425,000 | (7) | | | | $ | 425,000 | (7) | | | |
| | Post-employment health care | | $ | 26,118 | (7) | | — | | $ | 26,118 | (7) | | — | |
| | Equity Awards | | $ | 540,580 | (5) | $ | 760,931 | (2) | $ | 760,931 | (2) | | 760,931 | (4) |
| | Total | | $ | 1,416,698 | | $ | 760,931 | | $ | 1,637,050 | | $ | 760,931 | |
Stuart Mackinnon | | Equity Awards | | $ | — | | $ | 593,288 | (2) | $ | 593,288 | (2) | $ | 593,288 | (4) |
Brian Bailey | | Equity Awards | | $ | — | | $ | 337,805 | (2) | $ | 337,805 | (2) | $ | 337,805 | (4) |
- (1)
- For Mr. West, in the event of a without cause termination, a good reason termination by the executive or a termination within 24 months of a change in control, the executive would be entitled to receive severance pay equal to two times his then-current base salary plus two times the average amount paid to him in the two preceding calendar years under our non-equity incentive plan. For Mr. West, the average of the executive's 2017 and 2016 payout amounts under our non-equity incentive plan were used to calculate the values in the table above. All amounts would be payable in bi-monthly installments; provided, however, that if the executive is a "specified employee" under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive.
Additionally, in the event Mr. West elected to continue benefits coverage through our group health plan under COBRA, we would reimburse the executive for the COBRA premiums for up to 18 months.
- (2)
- Pursuant to the terms of the executives' 2017 RSU agreements and the terms of our 2017 LTIP, in the event a change in control occurs during a performance period, the awards granted during the performance period shall be treated as earned at the target level. We've assumed that the RSUs would be fully vested and settled at the target level, rather than receiving a replacement award. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2017 upon the change in control and (ii) $18.52 the closing price of our shares as of December 29, 2017.
- (3)
- Additionally, pursuant to the terms of Mr. West's employment agreement, in the event Mr. West's employment is terminated for any reason in connection with a change in control, he will receive 100% accelerated vesting of the new hire RSUs granted to him. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2017 and (ii) $18.52, the closing price of our shares as of December 29, 2017.
- (4)
- Pursuant to the terms of the LTIPs, in the event a participant's employment with us terminates as a result of death or disability after a performance period but prior to full vesting, any unvested earned awards shall become fully vested and settled in shares of company stock as soon as practicable following such employment termination. The amounts presented represent the product of (i) the number of RSUs that would have vested as of December 31, 2017 upon the aforementioned events and (ii) $18.52, the closing price of our shares as of December 29, 2017.
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Additionally, pursuant to the terms of the 2017 LTIP, in the event a participant's employment with us terminates as a result of death or disability during the performance period, awards granted during that performance period shall be treated as earned at the target level, with any such earned awards becoming fully vested and paid out in shares of company stock as soon as practicable following such employment termination. The amounts presented represent the product of (i) the number of RSUs that would have vested as of December 31, 2017 upon the aforementioned events and (ii) $18.52, the closing price of our shares as of December 29, 2017.
- (5)
- Pursuant to the terms of Messrs. West, Ferrera and Antilley's employment agreement, in the event that the executive terminates his employment with us for Good Reason or if he is terminated by us without Cause, he will receive 100% accelerated vesting of the new hire RSUs granted to him. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2017 and (ii) $18.52, the closing price of our shares as of December 29, 2017.
- (6)
- Pursuant to the terms of Mr. Ferrera's employment agreement, in the event of a without cause termination or a good reason termination by the executive, he would be entitled to receive severance equal to two times his then-current base salary plus two times the average amount paid to him in the two preceding calendar years under our non-equity incentive plan. However, if the termination occurs prior to the end of the second calendar year following the November 28, 2017 commencement of his employment, then the non-equity incentive compensation used in this calculation shall be the higher of the average annual amounts paid or 100% of the executive's then-current base salary. All amounts would be payable in bi-monthly installments; provided, however, that if the executive is a "specified employee" under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive.
Additionally, in the event the executive elected to continue benefits coverage through our group health plan under COBRA, we would reimburse the executive for the COBRA premiums for up to 18 months.
- (7)
- Pursuant to the terms of Mr. Antilley's employment agreement, in the event of a without cause termination or a good reason termination by the executive, he would be entitled to receive severance equal to his then-current base salary plus the average annual payment under the non-equity incentive plan for the two preceding years. However, if the termination occurs prior to the first anniversary of his employment, then the non-equity incentive compensation used in this calculation shall be the higher of the average annual amounts paid or 100% of the executive's then-current base salary. All amounts would be payable in bi-monthly installments; provided, however, that if the executive is a "specified employee" under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive.
Additionally, in the event the executive elected to continue benefits coverage through our group health plan under COBRA, we would reimburse the executive for the COBRA premiums for up to 18 months.
Retirement Payments for Messrs. Rathgaber and McCarthy
Mr. Rathgaber retired effective December 31, 2017. Following his retirement he received $605,016, which was earned under the 2017 Cash Incentive Plan, and his outstanding RSUs continued to vest in accordance with their terms and will be issued six months after his retirement date. Mr. Rathgaber received no additional payments in conjunction with his retirement.
Executive | | Benefits | | Termination by
Us Without
Cause, or Good
Reason
Termination By
Executive | | Change in Control
(No Termination) | | Termination in
Connection with a
Change in Control | | Death or
Disability | |
Steven A. Rathgaber | | Base Salary | | $ | 1,400,000 | (1) | | $ | — | | | $ | 1,400,000 | (1) | | $ | — | | |
| Non-equity incentive compensation | | 1,306,287 | (1) | | — | | | 1,306,287 | (1) | | — | | |
| | Post-employment health care | | 30,990 | (1) | | — | | | 30,990 | (1) | | — | | |
| | Equity Awards | | — | | | 13,595,515 | (2) | | 13,595,515 | (3) | | 13,595,515 | (4) | |
| | Total | | $ | 2,737,277 | | | $ | 13,595,515 | | | $ | 16,332,792 | | | $ | 13,595,515 | | |
Edward H. West | | Base Salary | | $ | 1,200,000 | (1) | | $ | — | | | $ | 1,200,000 | (1) | | $ | — | | |
| Non-equity incentive compensation | | 1,594,515 | (1) | | — | | | 1,594,515 | (1) | | — | | |
| | Post-employment health care | | — | (1) | | — | | | — | (1) | | — | | |
| | Equity Awards | | 2,528,774 | (5) | | 2,638,787 | (2) | | 5,167,561 | (3) | | 5,167,561 | (4) | |
| | Total | | $ | 5,323,289 | | | $ | 2,638,787 | | | $ | 7,962,076 | | | $ | 5,167,561 | | |
J. Chris Brewster | | Equity Awards | | $ | — | | | $ | 3,094,010 | (2) | | $ | 3,094,010 | (3) | | $ | 3,094,010 | (4) | |
| Total | | $ | — | | | $ | 3,094,010 | | | $ | 3,094,010 | | | $ | 3,094,010 | | |
David W. Dove (10) | | Base Salary | | $ | 100,425 | (6) | | $ | — | | | $ | 100,425 | (6) | | $ | 100,425 | (8) | |
| Non-equity incentive compensation | | 95,404 | (6) | | — | | | 95,404 | (6) | | 95,404 | (8) | |
| | Post-employment health care | | 25,831 | (6) | | — | | | 25,831 | (6) | | 25,831 | (8) | |
| | Equity Awards | | 1,932,760 | (7) | | — | | | 1,023,188 | (3) | | 1,932,760 | (8) | |
| | Total | | $ | 2,154,420 | | | $ | — | | | $ | 1,244,848 | | | $ | 2,154,420 | | |
P. Michael McCarthy (11) | Base Salary | | $ | 792,000 | (1) | | $ | — | | | $ | 792,000 | (1) | | $ | — | | |
| | Non-equity incentive compensation | | 589,032 | (1) | | — | | | 589,032 | (1) | | — | | |
| | Post-employment health care | | — | (1) | | — | | | — | (1) | | — | | |
| | Equity Awards | | — | | | 3,343,286 | (2) | | 3,343,286 | (3) | | 3,616,136 | (4) | |
| | Total | | $ | 1,381,032 | | | $ | 3,343,286 | | | $ | 4,724,318 | | | $ | 3,616,136 | | |
Jonathan Simpson-Dent | | Base Salary | | $ | 260,871 | (9) | | $ | — | | | $ | 260,871 | (9) | | $ | — | | |
| Non-equity incentive compensation | | 868,377 | (9) | | — | | | 868,377 | (9) | | — | | |
| | Post-employment health care and auto allowance | | 21,715 | (9) | | — | | | 21,715 | (9) | | — | | |
| | Equity Awards | | — | | | 4,653,675 | (2) | | 6,709,491 | (3) | | 6,709,491 | (4) | |
| | Total | | $ | 1,150,963 | | | $ | 4,653,675 | | | $ | 7,860,454 | | | $ | 6,709,491 | | |
E. Brad Conrad | | Base Salary | | $ | 300,000 | (12) | | $ | — | | | $ | 300,000 | (12) | | $ | — | | |
| Post-employment health care | | 25,831 | (12) | | — | | | 25,831 | (12) | | — | | |
| | Equity Awards | | — | | | 1,507,769 | (2) | | 1,507,769 | (3) | | 1,507,769 | (4) | |
| | Total | | $ | 325,831 | | | $ | 1,507,769 | | | $ | 1,833,600 | | | $ | 1,507,769 | | |
Mr. McCarthy's employment with us terminated effective February 1, 2017. As discussed above, on January 3, 2017, Mr. McCarthy entered into a retirement agreement with us, entitling him to payments and benefits in accordance with his original employment agreement, which includes a prorated portion of the 2017 non-equity incentive plan, payment of an amount equal to two times his base salary and average annual bonus as of his retirement. Upon termination of his employment, Mr. McCarthy received, in accordance with his retirement agreement, an amount equal to $1,396,277 for the foregoing amounts, payable in semi-monthly payments through March 2019. As of December 31, 2017, $858,428 of this amount remained to be paid.
(1)
| For Messrs. Rathgaber, West and McCarthy, in the event of a without cause termination, a good reason termination by the executive or a termination in connection with a change in control, the executive would be entitled to receive severance pay equal to two times his then-current base salary plus two times the average amount paid to him in the two preceding calendar years under our non-equity incentive plan. For Messrs. Rathgaber and McCarthy, the average of the executive’s 2016 and 2015 payout amounts under our non-equity incentive plan were used to calculate the values in the table above. For Mr. West, his 2016 payout amount under our non-equity incentive plan was used to calculate the values in the table above. For each executive, all amounts would be payable in bi-monthly installments; provided, however, that if the executive is a “specified employee” under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive.
Table of Contents Other Terms of Employment Agreements Additionally, in the event Messrs. Rathgaber, West and McCarthy elected to continue benefits coverage through our group health plan under COBRA, we would reimburse the executive for the COBRA premiums for up to 18 months.
|
| |
(2)
| Pursuant to the terms of Messrs. Rathgaber, West, Brewster, McCarthy, Simpson-Dent and Conrad’s RSU agreements and the terms of our LTIPs, in the event a change in control occurs, earned awards exchanged for replacement awards will be deemed cancelled, or earned awards not exchanged for replacement awards are immediately fully vested and settled. We’ve assumed that the RSUs would be fully vested and settled, rather than receiving a replacement award. The amounts presented above represent the product of (i) the number RSUs that would have vested as of December 31, 2016 upon the change in control and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Additionally, pursuant to the terms of the executives’ 2016 RSU agreements and the terms of our 2016 LTIP, in the event a change in control occurs during a performance period, the awards granted during the performance period shall be treated as earned at the target level. We’ve assumed that the RSUs would be fully vested and settled at the target level, rather than receiving a replacement award. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 upon the change in control and (ii) $54.57, the closing price of our shares as of December 30, 2016.
|
| |
(3)
| Pursuant to the terms of each of our Named Executive Officer’s RSU agreements and the terms of our LTIPs, in the event a change in control occurs, earned awards exchanged for replacement awards will be deemed cancelled, or earned awards not exchanged for replacement awards are immediately fully vested and settled. We have assumed that the RSUs would be fully vested and settled, rather than receiving a replacement award. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 upon the change in control and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Additionally, pursuant to the terms of Messrs. Rathgaber, West, Brewster, McCarthy, Simpson-Dent and Conrad’s RSU agreements and the terms of our 2016 LTIP, in the event a change in control occurs during a performance period, the awards granted during the performance period shall be treated as earned at the target level. We have assumed that the RSUs would be fully vested and settled at the target level, rather than receiving a replacement award. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2015 upon the change in control and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Additionally, pursuant to the terms of Mr. West’s employment agreement, in the event Mr. West’s employment is terminated for any reason in connection with a change in control, he will receive 100% accelerated vesting of the new hire RSUs granted to him. The amounts presented above represent the product of (i) the number of
|
| RSUs that would have vested as of December 31, 2016 and (ii) $54.57, the closing price of our shares as of December 30, 2016.
|
| |
(4)
| Pursuant to the terms of the LTIPs, in the event a participant’s employment with us terminates as a result of death or disability after a performance period but prior to full vesting, any unvested earned awards shall become fully vested and settled in shares of company stock as soon as practicable following such employment termination. The amounts presented represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 upon the aforementioned events and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Additionally, pursuant to the terms of the 2016 LTIP, in the event a participant’s employment with us terminates as a result of death or disability during the performance period, awards granted during that performance period shall be treated as earned at the target level, with any such earned awards becoming fully vested and paid out in shares of company stock as soon as practicable following such employment termination. The amounts presented represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 upon the aforementioned events and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Additionally, pursuant to the terms of Mr. West’s RSU agreement, in the event his employment with us terminates as a result of death or disability, any unvested earned awards shall become fully vested and settled in shares of company stock as soon as practicable following such employment termination. The amounts presented represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 upon the aforementioned events and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Finally, pursuant to the terms of Mr. McCarthy’s restricted stock award agreement, in the event his employment with us terminates as a result of death prior to the 4th anniversary date of the grant, then the forfeiture restrictions on 25% of the original award will lapse as soon as practicable following such employment termination. No such term is included for termination as a result of disability. The amounts presented represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 upon the aforementioned events and (ii) $54.57, the closing price of our shares as of December 30, 2016.
|
| |
(5)
| Pursuant to the terms of Mr. West’s employment agreement, in the event Mr. West terminates his employment with us for Good Reason or if he is terminated by us without Cause, he will receive 100% accelerated vesting of the new hire RSUs granted to him. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 and (ii) $54.57, the closing price of our shares as of December 30, 2016.
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(6)
| Pursuant to the terms of Mr. Dove’s employment agreement, in the event of a without cause termination or a good reason termination by the executive, he would be entitled to receive severance pay equal to the sum of his base salary and his annual target bonus under our non-equity incentive plan, divided by 12 and multiplied by the number of full calendar months remaining in the period on the date of his termination and ending on February 28, 2017, but no greater than 36 months. All amounts would be payable in bi-monthly installments; provided, however, that if the executive is a “specified employee” under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive.
Additionally, in the event the executive elected to continue benefits coverage through our group health plan under COBRA, we would reimburse the executive for the COBRA premiums for up to 12 months.
Finally, pursuant to Mr. Dove’s employment agreement, “Good Reason” includes the occurrence of any of the events described in “Potential Payments upon a Termination or Change in Control –– Good Reason” within a 12-month period immediately following a change in control. Accordingly, any termination by the executive for Good Reason would entitle the executive to receive the amounts described in the table above under the column Termination by Us Without Cause, or Good Reason Termination By Executive.
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(7)
| Pursuant to the terms of Mr. Dove’s employment agreement, in the event Mr. Dove terminates his employment
|
| with us for Good Reason or if he is terminated by us without Cause, he will receive 100% accelerated vesting of the time-based RSUs granted to him and all unvested performance-based RSUs granted to him will be deemed earned or vested at target levels. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 and (ii) $54.57, the closing price of our shares as of December 30, 2016.
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(8)
| Pursuant to the terms of Mr. Dove’s employment agreement, in the event Mr. Dove’s employment with us is terminated due to death or disability, he (or his estate) would be entitled to receive an amount equal to the sum of his base salary as of the date of termination (or, if there are less than 12 months remaining in the term on the date of termination, the amount that would equal the executive’s base salary divided by 12, and multiplied by the number of full calendar months remaining in the term) and his annual target bonus, pro-rated for the number of days that the executive provided employment services under the agreement during the performance period to which the annual target bonus relates. All amounts would be payable in bi-monthly installments; provided, however, that if the executive is a “specified employee” under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive. Mr. Dove will also receive 100% accelerated vesting of the time-based RSUs granted to him and all unvested performance-based RSUs granted to him will be deemed earned or vested at target levels. The amounts presented above represent the product of (i) the number of RSUs that would have vested as of December 31, 2016 and (ii) $54.57, the closing price of our shares as of December 30, 2016.
Additionally, in the event the executive elected to continue benefits coverage through our group health plan under COBRA, we would reimburse the executive for the COBRA premiums for up to 12 months.
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(9)
| Pursuant to the terms of Mr. Simpson-Dent’s employment agreement, in the event Mr. Simpson-Dent terminates his employment with us or if he is terminated by us for any reason, other than good cause or mental illness, he would be entitled to receive severance pay equal to his base salary during the notice period, which is for six months. In addition, under the terms of the employment agreement, during the six-month notice period, Mr. Simpson-Dent may receive compensation in addition to his base salary depending on how he and we determine to handle his conduct during such period. The options available are as follows: (i) Mr. Simpson-Dent would be required to continue working during the notice period, in which event he would be entitled to receive his salary and all his contractual benefits, including, but not limited to bonus, car allowance and medical allowance; (ii) he can be paid in lieu of notice, in which event Mr. Simpson-Dent’s employment would terminate immediately and the payment would be equivalent to his fixed salary only for six months and he would not receive payment for any benefits; or (iii) he can serve his notice on ‘garden leave’ in which event, Mr. Simpson-Dent would continue to receive his salary and all his contractual benefits, but he may not be required to attend work.
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(10)
| Mr. Dove’s employment with us terminated effective February 28, 2017. As discussed above, on August 16, 2016, Mr. Dove entered into an amendment to his employment agreement with us, entitling him to a $200,000 cash bonus payment to be made following the termination of his employment, subject to the receipt by us of Mr. Dove’s release of claims as per the original agreement. The amended agreement with Mr. Dove expired on February 28, 2017. Following termination of his employment, Mr. Dove received the $200,000 cash bonus in accordance with the amendment to his employment agreement.
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(11)
| Mr. McCarthy’s employment with us terminated effective February 1, 2017. As discussed above, on January 3, 2017, Mr. McCarthy entered into a retirement agreement with us, entitling him to payments and benefits in accordance with his original employment agreement, which includes a prorated portion of the 2017 non-equity incentive plan, payment of an amount equal to two times his base salary and average annual bonus as of his retirement. Following termination of his employment. Mr. McCarthy will receive, in accordance with his retirement agreement, an amount equal to $1,381,032 for the foregoing amounts, payable in semi-monthly payments through March 2019.
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(12)
| Pursuant to the terms of Mr. Conrad’s employment agreement, in the event of a without cause termination or a termination in connection with a change in control, he would be entitled to receive severance pay equal to one time his then-current base salary, payable in bi-monthly installments; provided, however, that if the executive is
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| a “specified employee” under Section 409A of the Code at the time of his termination, the amounts will be delayed for a period of six months to the extent required to avoid additional federal income taxes for the executive.
Additionally, in the event Mr. Conrad elected to continue benefits coverage through our group health plan under COBRA, we would reimburse him for the COBRA premiums for up to 12 months.
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Our employment agreements with Messrs. Rathgaber, West, Dove, McCarthyFerrera and ConradAntilley require the executives to sign a full release within 5030 days (30 days for Mr. West) of the executive’sexecutive's termination of employment waiving all claims against us, our subsidiaries, and our officers, directors, employees, agents, representatives, or shareholders as a condition to receiving any severance benefits due under the employment agreements. Further, the employment agreements with Messrs. Rathgaber, West, DoveFerrera and McCarthyAntilley also contain non-compete and non-solicitation restrictions for a 12-month24-month period (24-month(12-month period for Messrs. West and Dove)Mr. Rathgaber), during which the executives may not: (i) directly or indirectly participate in or have significant ownership in a competing company; (ii) solicit or advise any of our employees to leave our employment; or (iii) solicit any of our customers either for his own interest or that of a third party. Finally, the employment agreement with Mr. Rathgaber allow the executives to receive a federal excise tax gross-up payment calculated pursuant to Section 280G of the Code. In the event Mr. Rathgaber’s employment was terminated on December 31, 2016 following a change in control of our company his severance amount would have exceeded his Section 280G safe harbor amount.
Additionally, pursuant to the terms of our 2001 and 2007 Plans (the “Plans”"Plans"), our Compensation Committee, at its sole discretion, may take action related to and/or make changes to stock options and the related option agreements upon the occurrence of an event that qualifies as a Corporate Change under the Plans. Such actions and/or changes could include (but are not limited to): (i) acceleration of the vesting of the outstanding, non-vested options; (ii) modifications to the number and price of shares subject to the option agreements; and/or (iii) the requirement for mandatory cash out of the options (i.e., surrender by an executive of all or some of his outstanding options, whether vested or not, in return for consideration deemed adequate and appropriate based on the specific change in control event). Our Compensation Committee also has discretion to make changes to any awards and the related agreements under the 2007 Plan in the event of a change in our outstanding shares by reason of a recapitalization, a merger, a reorganization or other similar transaction, in order to prevent the dilution or enlargement of rights under the Plans. Such actions and/or changes, if any, may vary among plan participants. As a result of their discretionary nature, these potential changes have not been estimated and are not reflected in the above table.
Pay Ratio
As required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information about the relationship of the annual total compensation of our employees and the annual total compensation of Steven Rathgaber, our CEO, during the year ended December 31, 2017.
To identify the median employee, we identified our employee population as of October 1, 2017 and used base salary paid during the year as our consistently applied compensation measure across our global employee population excluding our CEO.
Mr. Rathgaber's annual total compensation for 2017 was $4,457,628, as reflected in the Summary Compensation Table in this proxy statement. The 2017 annual total compensation of our median employee, other than the CEO, calculated in the same manner as required for the Summary Compensation table, was $54,669. As a result, Mr. Rathgaber's annual total compensation was 82 times that of our median employee in 2017.
Risk Assessment Related to Our Compensation Structure
We have reviewed our compensation policies and practices for all employees, including executive officers, and determined that our compensation policies, practices and programs are not reasonably likely to have a material adverse effect on us. Moreover, we believe that several design features of our compensation programs and policies reduce the likelihood of excessive risk-taking:
- •
·The program design provides a balanced mix of cash and equity, annual and long-term incentives and performance metrics.·
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- Our
20162017 non-equity incentive compensation plan has a cap.
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- The performance-based RSUs under our
20162017 LTIP have a cap of 200% of target.·
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- Our
20162017 non-equity incentive compensation plan, the performance-based portion of our 2007 Plan and the 20162017 LTIP are subject to our Clawback policy.·
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- Our executive officers and directors are subject to share ownership requirements.
·
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- Our executive officers and directors are subject to our insider trading policy, which includes anti-hedging and anti-pledging provisions.
·
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- Compliance and ethical behaviors are integral factors considered in all performance assessments.
·
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- We set the proper ethical and moral expectations through our policies and procedures and provide various mechanisms for reporting issues.
·
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- We maintain an internal and external audit program, which enables us to verify that our compensation policies and practices are aligned with expectations.
·
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- We also perform extensive financial analysis work before entering into new contracts or ventures thus making it more difficult for individuals to act against our long-term interest by attempting to manipulate earnings results in the short term.
We have determined that, for all employees, our compensation programs do not encourage excessive risk and instead encourage behaviors that support sustainable value creation.
DIRECTOR COMPENSATION
The following table provides compensation information for each non-employee director who served as a member of our Board during the year ended December 31, 2016.2017.
Director Compensation Table for 20162017
| | | | | | | | | | |
Name | | Fees Earned or
Paid in Cash | | Stock
Awards(1) | | Total | |
|---|
J. Tim Arnoult | | $ | 113,952 | | $ | 135,017 | | $ | 248,969 | |
Jorge M. Diaz | | $ | 98,952 | | $ | 135,017 | | $ | 233,969 | |
Julie Gardner | | $ | 98,952 | | $ | 135,017 | | $ | 233,969 | |
Dennis F. Lynch | | $ | 182,903 | | $ | 135,017 | | $ | 317,920 | |
G. Patrick Phillips | | $ | 108,952 | | $ | 135,017 | | $ | 243,969 | |
Mark Rossi | | $ | 118,952 | | $ | 135,017 | | $ | 253,969 | |
Juli C. Spottiswood | | $ | 108,952 | | $ | 135,017 | | $ | 243,969 | |
- (1)
- This column shows the grant date fair value of each RSU granted in 2017, as computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating these values may be found in Part II. Item 8. Financial Statements and Supplementary Data, Note 3. Share-Based Compensation, to our audited consolidated financial statements for the fiscal year ended December 31, 2017 included in our Annual Report on Form 10-K. As of December 31, 2017, each non-employee director held 3,030 outstanding RSUs.
Name | | Fees Earned or
Paid in Cash | | Stock Awards (1) | | Total | |
J. Tim Arnoult | | $ | 112,919 | | $ | 130,016 | | $ | 242,935 | |
Jorge M. Diaz | | $ | 96,669 | | $ | 130,016 | | $ | 226,685 | |
Julie Gardner | | $ | 96,669 | | $ | 130,016 | | $ | 226,685 | |
Dennis F. Lynch | | $ | 179,584 | | $ | 130,016 | | $ | 309,600 | |
G. Patrick Phillips | | $ | 89,166 | | $ | 130,016 | | $ | 219,182 | |
Mark Rossi | | $ | 107,500 | | $ | 130,016 | | $ | 237,516 | |
Juli C. Spottiswood | | $ | 89,166 | | $ | 130,016 | | $ | 219,182 | |
(1)
| This column shows the grant date fair value of each RSU granted in 2016, as computed in accordance with FASB ASC Topic 718. A discussion of the assumptions used in calculating these values may be found in Part II. Item 8. Financial Statements and Supplementary Data, Note 3. Share-Based Compensation, to our audited consolidated financial statements for the fiscal year ended December 31, 2016 included in our Annual Report on Form 10-K. As of December 31, 2016, each non-employee director held 3,647 outstanding RSUs.
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Only non-employee directors receive compensation for service on our Board. The 20162017 compensation paid to our non-employee directors consisted of:
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·an annual award of RSUs, valued at approximately $130,000$135,000 at the time of grant;grant, which vest 12 months from the grant date;·
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- an annual cash retainer of
$60,000;$70,000;
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- a meeting fee of
$5,000$10,000 for each Board meeting attended in person in the United Kingdom or other location outside of the United States, with no additional fees paid for committee or other Board meetings attended;·
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- an additional annual cash retainer of
$75,000$85,000 for the ChairmanChair of our Board;·
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- an annual cash retainer of $10,000 for each committee of which the director is a member; and
·
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- an additional annual cash retainer of $10,000 for the chair of the Audit, Finance and Compensation committee, and an additional annual cash retainer of $5,000 for the chair of our Nominating & Governance Committee.
Cash amounts are paid monthly. In addition, all of our directors are reimbursed for their reasonable expenses incurred in attending Board and committee meetings. The 20162017 stock award to all non-employee directors was granted on March 22, 20168, 2017 and the forfeiture restrictions lapsed in full on March 10, 2017.8, 2018.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During 2016,2017, Jorge M. Diaz, Julie Gardner, Dennis F. Lynch, G. Patrick Phillips and Mark Rossi served on our Compensation Committee. On March 2, 2016, Mr. Lynch stepped down as a member of our Compensation Committee so as to concentrate on his duties as Chairman of our Board. During 2016,2017, no member of our Compensation Committee served as an executive officer or employee (current or former) while serving on our Compensation Committee or had any relationships with us or any of our subsidiaries requiring disclosure. Additionally, none of our executive officers has served as a director or member of our Compensation Committee of any other entity whose executive officers served as a director or member of our Compensation Committee.
CERTAIN RELATIONSHIPS AND RELATED PERSON TRANSACTIONS
Transactions with our Directors and Officers
There were no transactions or series of similar transactions since January 1, 20162017 or any currently proposed transactions to which we are or were a party that involved an amount exceeding $120,000 and in which any of our directors, nominees for director, executive officers, holders of more than 5% of any class of our voting securities, or any member of the immediate family of any of the foregoing persons, had or will have a direct or indirect material interest.
Approval of Related Person Transactions
In the ordinary course of business, we may enter into a transaction with related persons. The policies and procedures relating to the approval of related person transactions are set forth in our Related Persons Transactions Policy, which was amended and restated in July 2016. Our Audit Committee is charged with the responsibility of reviewing all the material facts related to any such proposed transaction and either approving or disapproving the entry into such transaction. Our Related Persons Transactions Policy is available on our website atwww.cardtronics.com.
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AUDIT MATTERS
Report of our Audit Committee
Each member of our Audit Committee is an independent director as such term is defined under the current listing requirements. Our Audit Committee is governed by our Audit Committee Charter, which complies with the requirements of the Sarbanes-Oxley Act of 2002 and corporate governance rules of NASDAQ. Our Audit Committee Charter may be further amended to comply with the rules and regulations of the SEC and NASDAQ listing standards as they continue to evolve. A copy of our Audit Committee Charter is available on our website atwww.cardtronics.com.
In fulfilling its responsibilities, our Audit Committee has reviewed and discussed the audited consolidated financial statements contained in our Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 with Cardtronics’Cardtronics' management and independent registered public accounting firm. Management is responsible for the consolidated financial statements and the reporting process, including the system of internal controls. The independent registered public accounting firm is responsible for expressing an opinion on the conformity of those audited consolidated financial statements with U.S. GAAP.
Our Audit Committee discussed with the independent registered public accounting firm their independence from Cardtronics and its management including the matters in the written disclosures required by applicable requirements of the Public Company Accounting Oversight Board (the “PCAOB”"PCAOB") regarding the independent auditors’auditors' communications with our Audit Committee concerning independence, and considered the compatibility of non-audit services with the registered public accounting firms’firms' independence. In addition, our Audit Committee discussed the matters required to be discussed by PCAOB Auditing Standard No. 16, as adopted by the PCAOB and approved by the SEC.
In reliance on the reviews and discussions referred to above, our Audit Committee recommended to our Board, and our Board approved, the inclusion of the audited consolidated financial statements in our Annual Report on Form 10-K for the fiscal year ended December 31, 20162017 for filing with the SEC.
Respectfully submitted by the Audit Committee of the Board of Directors of Cardtronics plc,
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| | Juli C. Spottiswood, Chair
Mark Rossi
J. Tim Arnoult
G. Patrick Phillips
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Juli C. Spottiswood, Chairman
Mark Rossi
J. Tim Arnoult
G. Patrick Phillips
Independent Registered Public Accounting Firm Fee Information
Fees for professional services provided by our independent registered public accounting firm, KPMG LLP, in each of the last two fiscal years in each of the following categories were:
| | | | | | | |
| | 2017 | | 2016 | |
|---|
| | (In thousands)
| |
|---|
Audit Fees | | $ | 2,098 | | $ | 2,261 | |
Audit-Related Fees | | $ | 677 | | $ | 130 | |
Tax Fees | | $ | 180 | | $ | 130 | |
All Other Fees | | $ | — | | $ | — | |
| | | | | | | | |
Total | | $ | 2,955 | | $ | 2,521 | |
| | 2016 | | 2015 | |
| | (In thousands) | |
Audit Fees | | $ | 2,261 | | $ | 1,847 | |
Audit-Related Fees | | $ | 130 | | $ | 205 | |
Tax Fees | | $ | 130 | | $ | 71 | |
All Other Fees | | — | | — | |
Total | | $ | 2,521 | | $ | 2,123 | |
Audit fees include fees associated with the annual audit and quarterly review of our financial statements and the separate statutory audits of several of our entities in the United Kingdom, Australia, Germany and Mexico. The 2017 audit fees also include audit services associated with our acquisition of DCPayments and the 2016 audit fees also include audit services associated with the Redomicile
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Transaction. The 2015 audit fees also include audit services associated with certain acquisitions. Audit related fees in 2015 include due-diligence assistance related to an acquisition. The tax fees in 20162017 and 20152016 relate to fees paid to KPMG LLP for general tax consulting services.
Our Audit Committee considers whether the provision of these services is compatible with maintaining the registered public accounting firm’sfirm's independence and has determined such services for fiscal year 20162017 were compatible.
Policy on Audit Committee Pre-Approval of Audit and Non-Audit Services of Independent Registered Public Accounting Firm
Among its other duties, our Audit Committee is responsible for appointing, setting compensation and overseeing the work of the independent registered public accounting firm. Our Audit Committee has established a policy regarding pre-approval of all audit and non-audit services provided by the independent registered public accounting firm, of which it has delegated its pre-approval authority of certain audit and non-audit services to our Audit Committee Chairman.Chair. On an as-needed basis, management will communicate specific projects and categories of service for which the advance approval of our Audit Committee ChairmanChair or our Audit Committee is requested.
Our Audit Committee ChairmanChair or our Audit Committee reviews these requests and advises management if the engagement of the independent registered public accounting firm is approved. On a periodic basis, management reports to our Audit Committee regarding the actual spending for such projects and services compared to the approved amounts. Our Audit Committee ChairmanChair or our Audit Committee approved all of the services provided by KPMG LLP in 20162017 and 2015.2016.
PROPOSALS FOR THE 20182019 ANNUAL GENERAL MEETING OF SHAREHOLDERS
Pursuant to the various rules promulgated by the SEC and without prejudice to the rights of a shareholder of record under the U.K. Companies Act 2006, shareholders interested in submitting a proposal for inclusion in our proxy materials and for presentation at the 20182019 Annual General Meeting of Shareholders may do so by following the procedures set forth in Rule 14a-8 under the Exchange Act. To be eligible for inclusion in such proxy materials, shareholder proposals must be received by our Company Secretary no later than December 1, 2017.3, 2018.
In additionWithout prejudice to the requirementsrights of the SEC described above, and as more specifically provided for ina shareholder of record under the U.K. Companies Act 2006, and our Articles of Association, in order for a nomination of persons for election to our Board or a proposal of business to be properly brought before our annual general meeting of shareholders, it must be either specified in the notice of the meeting given by our Company Secretary or otherwise brought before the meeting by or at the direction of our Board or by one or more shareholders representing, individually or in the aggregate, at least 5% of the paid-up share capital of Cardtronics plc carrying the right to vote at general meetings, or at least 100 shareholders (and/or beneficial owners of shares) who have a right to vote and hold (on average) at least £100 per shareholder of paid-up share capital and who comply with the following notice procedures.
Eligibleeligible shareholders making a nomination for election to our Board or a proposal of business, must deliver proper notice to our Company Secretary no earlier than 120 days and no later than 90 days prior to the anniversary date of the 20172018 Annual General Meeting of Shareholders. In other words, for a shareholder nomination for election to our Board or a proposal of business to be considered at the 20182019 Annual General Meeting of Shareholders, it should be properly submitted to our Company Secretary no earlier than January 10, 201816, 2019 and no later than the close of business on February 9, 2018.15, 2019.
Shareholders are advised to review our Articles of Association, which contain further details and additional requirements about advance notice of shareholder proposals and director nominations, including the information required to be included in such notice. We reserve the right to reject, rule out of order or take other appropriate action with respect to any proposal that does not comply with the requirements described above and other applicable requirements.as set forth in our Articles of Association. Please see “Corporate Governance — "Corporate Governance—Our Board — Board—Director Selection and Nomination Process”Process" above for additional information concerning the notice requirements for director nominations by shareholders under our Articles of Association.
Under Section 338 of the U.K. Companies Act 2006, shareholders meeting the threshold requirements in that section may require the Company to include a resolution in its Notice of Annual General Meeting. Provided that the appropriate thresholds are met, notice of the resolution must be received by our Company Secretary at least six weeks prior to the date of the Annual General Meeting or, if later, at the time notice of the Annual General Meeting is delivered to shareholders.
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OTHER MATTERS
Management does not intend to bring before the Annual Meeting any matters other than those set forth herein and has no present knowledge that any other matters will or may be brought before the Annual Meeting by others. However, if any other matters properly come before the Annual Meeting, then the Proxy Holders will vote the proxies as recommended by our Board or, if no recommendation is given, in their own discretion.
ANNUAL REPORT TO SHAREHOLDERS
Our Annual Report on Form 10-K, which includes our consolidated financial statements for the fiscal year ended December 31, 2016,2017, accompanies the proxy material and is available atwww.cardtronics.com. Our Annual Report on Form 10-K is not part of the proxy solicitation material.
We will provide you, without charge upon your request, printed copies of our Annual Report on Form 10-K for the fiscal year ended December 31, 2016.2017. We will furnish a copy of any exhibit to our Annual Report on Form 10-K upon payment of a reasonable fee, which shall be limited to our reasonable expenses in furnishing the exhibit. You may request such copies by contacting our Company Secretary, M. DilshadKasmani,Aimie Killeen, by mail to Cardtronics plc, 3250 Briarpark Drive, Suite 400, Houston, Texas 77042 or by telephone at (832) 308-4484.308-4518.
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ANNEX A
CARDTRONICS PLC U.K. STATUTORY DIRECTORS’DIRECTORS' REMUNERATION REPORT (PART II)
INTRODUCTION
INTRODUCTION
Cardtronics is subject to disclosure regimes in the U.S. and the U.K. While some of the disclosure requirements in these jurisdictions overlap or are otherwise similar, some differ and require distinct disclosures. As a result, you will find our Directors’Directors' Remuneration Report (the “Report”"Report") and the Directors’Directors' Remuneration Policy (the “Policy”"Policy") required by the U.K. Companies Act 2006 in two parts: (i) the information included in the “Compensation"Compensation Discussion and Analysis”Analysis" or “CD&A”"CD&A" and the compensation tables and accompanying narrative (or “Part I”"Part I") which begins on page 3727 of the proxy statement and includes disclosure required by the SEC as well as the U.K. Companies Act 2006, and (ii) the information contained in this Part II (labeled as Annex A), which includes additional disclosure required under the U.K. Companies Act 2006. Part I should be read in conjunction with this Part II. Pursuant to the U.K. Companies Act 2006, the Report also forms part of the statutory Annual Accounts and Reports of the company for the year ended December 31, 2016.2017.
The ReportPolicy has applied since it was approved by shareholders at the Board on March 16, 2017.2017 Annual Meeting. The Committee reviews the approved Policy annually to ensure that it remains aligned with the company's strategic objectives. This year, the Committee has determined that no changes should be made. The wording in the Policy, provided for reference below, is unchanged from that approved in 2017 except as necessary to update references and increase clarity for the reader. All capitalized terms not defined in this Annex A have the meanings ascribed to them in the proxy statement.
Numerical information in the Report is not audited, except as explicitly stated below (in conformity with the requirements of paragraphRegulation 41 of Schedule 8 of the U.K. Large & Medium-SizedMedium- Sized Companies and Groups (Accounts and Reports) Regulations 2008, as amended by the Large & Medium-Sized Companies and Groups (Accounts and Reports) (Amendment) Regulations 2013)2008).
CHAIRMAN’SCHAIR'S STATEMENT
The major decisions of the Compensation Committee of the Board on directors’of Directors' compensation (or “remuneration”"remuneration" as such term is used in the U.K. regulations and interchangeably with “compensation”"compensation" throughout this Part II) and the changes to directors’directors' remuneration during the year (and the context for these decisions and changes) are summarized in the proxy statement.
A-1
