I am pleased to invite you to attend NCR’s ~~2006~~2007 Annual Meeting of Stockholders on April ~~26, 2006.~~25, 2007. The meeting will begin promptly at 9:00 a.m. local time in the Auditorium of NCR’s World Headquarters Building, located at 1700 South Patterson Boulevard in Dayton, Ohio.

This booklet includes the formal notice of the meeting and the proxy statement. The proxy statement tells you more about the agenda and procedures for the meeting. It also describes how the Board operates and gives information about our director candidates and general compensation and corporate governance matters. A form of proxy for voting at the meeting and our ~~2005~~ annual report to stockholders for the year ended December 31, 2006 are included with this booklet.

Bill Nuti, NCR’s Chief Executive Officer, and I look forward to sharing more information with you about NCR at the annual meeting. If you plan to attend, please complete and return to NCR the meeting reservation request form printed on the back of this booklet.

Your vote is important. Whether or not you plan to attend the annual meeting, I urge you to authorize your proxy as soon as possible so that your stock may be represented at the meeting.

Elect ~~two~~three Class AB directors to hold office for three-year terms and one Class A director to hold office for a period of time concurrent with the term of the remaining Class A directors, each until ~~their successors are~~his or her respective successor is duly elected and ~~qualified;~~qualifies;

Consider and vote upon the ratification of the appointment of the Company’s independent registered public accounting firm for ~~2006;~~2007; and

~~Consider and vote upon the NCR Management Incentive Plan;~~

~~Consider and vote upon the NCR Stock Incentive Plan;~~

~~Consider and vote upon the NCR Employee Stock Purchase Plan; and~~

Transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting.

Registered stockholders of NCR common stock at the close of business on February ~~13, 2006,~~12, 2007, may vote at the meeting.

Your shares cannot be voted unless they are represented by proxy or in person by the record holder at the meeting. Even if you plan to attend the meeting, please authorize your proxy.

We are delivering these proxy materials to solicit proxies on behalf of the Board of Directors of NCR Corporation, a Maryland corporation (which we refer to as “NCR,” the “Company,” “we,” or “us”), for the ~~2006~~2007 Annual Meeting of Stockholders, including any adjournment or ~~postponement.~~postponement thereof. The meeting will be held at 9:00 a.m. local time, on April ~~26, 2006, in Dayton, Ohio.~~25, 2007, at the Company’s World Headquarters Building at the address above.

Starting March ~~20, 2006,~~19, 2007, we are mailing this proxy statement, together with a notice of meeting, form of proxy and voting instruction card (“proxy card”) and the Company’s annual report for the year ended December 31, ~~2005,~~2006, to stockholders entitled to vote at the meeting.

If you are a registered stockholder at the close of business on the record date for the meeting, February ~~13, 2006,~~12, 2007, you are entitled to vote at the meeting. There were ~~181,802,178~~179,312,878 shares of common stock outstanding on the record date. You will have one vote on each matter properly brought before the meeting for each share of NCR common stock you own.

As we did last year, we are taking advantage of the householding rules adopted by the U.S. Securities and Exchange Commission (“SEC”) that permit us to deliver only one set of disclosure materials (such as a proxy statement and annual report) to stockholders who share an address, unless otherwise requested. This ~~program~~ allows us to reduce the expense of delivering duplicate disclosure materials and notice to our stockholders who may have more than one stock account or who share an address with another NCR stockholder. We will continue to send a separate proxy card for each stockholder residing at a shared address. If you are a registered stockholder (owning your stock directly and not through a nominee suchas a bank or broker) who receives multiple copies of NCR’s annual report and proxy statement,you areencouraged to indicate your consent to the householding of future investor communications by answering “yes” to the Householding Election question on your proxy card.

If you own NCR common stock beneficially through a nominee (such as a bank or broker), information regarding householding of disclosure materials should be forwarded to you by your nominee.

This proxy statement and NCR’s ~~2005~~2006 annual report to stockholders are available on the following Internet sites:http://investor.ncr.com/downloads/~~2006proxy.pdf~~2007proxy.pdf (proxy statement) andhttp://investor.ncr.com/downloads/~~ncr2005ar.pdf~~NCR2006AR.pdf (annual report). Most stockholders can elect to view future proxy statements and annual reports over the Internet instead of receiving paper copies in the mail. In addition, the SEC has proposed rules to permit the delivery of proxy materials electronically. If these rules are adopted, NCR intends to take advantage of the cost savings and other benefits of electronic delivery.

If you are a registered stockholder, you can choose to access your disclosure materials electronically and save the Company the cost of producing and mailing these documents by following the instructions provided athttp://www.icsdelivery.com/ncr or by following the prompt if you choose to authorize your proxy over the Internet. If you hold your NCR stock in a nominee name (such as through a bank or broker), please review the information provided by your nominee for instructions on how to elect to view future proxy statements and annual reports over the Internet.

If you have multiple NCR common stock record accounts and/or share an address with a family member who is an NCR stockholder and have received only one annual report and proxy statement, you may write or call us at 1700 S. Patterson Boulevard, Attn: Investor Relations, Dayton, Ohio 45479 (phone: 937-445-5905), to request separate copies of these materials at no cost to you. For future annual meetings, you may request separate disclosure materials by contacting our mailing agent, ADP-Investor Communications Services, at 51 Mercedes Way, Attn: Householding Department, Edgewood, New York 11717 (phone: 800-542-1061).

Your vote is important. Your shares can be voted at the annual meeting only if you are present in person or represented by proxy. Even if you plan to attend the meeting, we urge you to authorize your proxy in advance. We encourage you to authorize your proxy electronically by going to thehttp://www.proxyvote.com ~~web site~~website or by calling the toll-free number (for residents of the United States and Canada) listed on your proxy card. Please have your proxy card in hand when going online or calling.If you authorize your proxy electronically, you do not need to return your proxy card.If you choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided.

If you hold your shares beneficially in street name through a nominee (such as a bank or broker), you may be able to authorize your proxy by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares.

properly executing and delivering a later-dated proxy (including a telephone or Internet proxy authorization);

voting by ballot at the meeting; or

sending a written notice of revocation to the inspectors of election in care of the Corporate Secretary of the Company at the address listed above.

The method by which you vote and authorize your proxy will in no way limit your right to vote at the meeting if you later decide to vote in person at the meeting. If you hold your shares in street name, you must obtain a proxy executed in your favor from your nominee (such as a bank or broker) to be able to vote at the meeting.

Your shares will be voted at the meeting as directed by the instructions on your proxy card, voting instructions or electronic proxy if: (1) you are entitled to vote, (2) your proxy was properlyexecuted or properly ~~executed,~~authorized electronically, (3) we received your proxy prior to the annual meeting, and (4) you did not revoke your proxy prior to or at the meeting.

If you send a properly executed proxy or authorized your proxy electronically without specific voting instructions, your shares represented by that proxy will be voted as recommended by the Board of Directors:

FOR the election of each of the three Class B director nominees and the single Class A director ~~nominees~~nominee (see ~~page 7)~~pages 6-7); and

FOR ~~approval~~ratification of the appointment of the Company’s independent registered public accounting firm for ~~2006~~2007 (see page ~~37);~~

~~FOR approval of the NCR Management Incentive Plan (see page 38);~~

~~FOR approval of the NCR Stock Incentive Plan (see page 41); and~~

~~FOR approval of the NCR Employee Stock Purchase Plan (see page 47).~~

If you are a participant in the NCR Savings Plan, your proxy includes any NCR common stock allocated to your plan account. The trustee of this plan will vote the number of shares allocated to your account according to your instructions. If you do not vote your shares in the NCR Savings Plan as instructed above, the trustee will vote unallocated shares, and any allocated shares for which voting instructions are not timely received, in the same proportion of “For” and “Against” votes as the shares for which voting instructions were timely received.

If you are a participant in the direct stock purchase and sale plan (the “DSPP”) administered by our transfer agent, Mellon Investor Services (“Mellon”), for NCR, your proxy includes the NCR common stock held in your DSPP account. Mellon, as the DSPP administrator, is the stockholder of record of that plan and will not vote those shares unless you provide it with instructions, which you may do over the Internet, by telephone, or by mail using your proxy card.

The presence at the meeting (in person or by proxy) of the holders of at least a majority of the shares outstanding on the record date, the close of

business on February ~~13, 2006,~~12, 2007, is necessary to have a quorum allowing us to conduct business at the meeting. A majority of the votes cast (in person or by proxy) is required to elect directors and to ~~approve~~ratify the appointment of our independent registered public accounting firm, and to approve the NCR Management Incentive Plan. In order for the NCR Stock Incentive Plan and the NCR Employee Stock Purchase Plan to be approved under the rules of the New York Stock Exchange: (i) more than 50% of the outstanding common stock must cast a vote on the proposal, and (ii) a majority of the votes cast must vote “FOR” the proposal.firm. Broker “non-votes” and abstentions are not votes cast under Maryland law and, therefore, will have no effect on the outcome of the vote for ~~the election of directors, the approval of the appointment of our independent registered public accounting firm or~~ any ~~other~~ item. Broker “non-votes” occur when a broker returns a properly executed proxy but does not vote on a particular item because the broker does not have the authority to vote on a ~~non-routine~~ proposal because it has not received voting instructions from the beneficial owner. We do not expect that brokers will lack authority to vote on either of the proposals that will be considered at the meeting.

You may attend the meeting if you are a registered stockholder, a proxy for a registered stockholder, or a beneficial owner of NCR commonstock with evidence of ownership.If you plan toattend the meeting in person, please complete andreturn to NCR’s Corporate Secretary the meeting reservation request form printed on the back ofthis booklet. If you are not a record stockholder,please include evidence of your ownership of NCRstock with the form (such as an account statement showing you own NCR stock as of the record date).If you do not have a reservation for the meeting, you may still attend if we can verify your stock ownership at the meeting.

We will include the results of the votes taken at the meeting in NCR’s next quarterly report filed with the SEC. You may also find information on how to obtain a full transcript of the meeting in that quarterly report or by writing to NCR’s Corporate Secretary at NCR Corporation, 1700 South Patterson Blvd., Dayton, Ohio 45479.

On January 21, 2005, the Company completed a 2-for-1 stock split of the Company’s common stock in the form of a 100% stock dividend for stockholders of record on December 31, 2004 (the “Stock Split”). All references to numbers of shares and per share amounts in this proxy statement reflect the Stock Split.

On January 25, 2006, the Board of Directors approved an amendment and restatement of the Company’s Bylaws which, among other things, allows the Company to issue uncertificated shares of stock. As a result of a resolution adopted by the Board of Directors, the Company will no longer issue stock certificates. However, stockholders whose shares are uncertificated will have all of the same rights as stockholders who were previously issued stock certificates and whose shares continue to be represented by certificates.

This table shows the NCR common stock beneficially owned as of January 31, ~~2006~~2007 by each executive officer named in the Summary Compensation Table found below on page ~~22,~~30, and each non-employee director and nominee and the current directors and current executive officers as a group. As of that date, the then current directors and executive officers as a group beneficially owned ~~1.1%~~1.2% of NCR stock. In addition to the shares shown in this table, directors hold the restricted stock units which have not yet vested listed in footnote 6 following the table.

To the Company’s knowledge, the following stockholders beneficially own more than 5% of the Company’s outstanding stock.

Fidelity Management & Research Company (“Fidelity), a wholly-owned subsidiary of FMR, is the beneficial owner of 19,537,100 shares as a result of acting as investment adviser to various investment companies.

~~Edward C. Johnson 3d, Chairman of FMR, and FMR, through its control of Fidelity, and the funds each has sole power to dispose of the 19,537,100 shares owned by Fidelity.~~

Members of the family of Edward C. Johnson 3d are the predominant owners, directly or through trusts, of Series B shares of common stock of FMR, representing 49% of the voting power of FMR. The Johnson family group and all other Series B shareholders have entered into a shareholders’ voting agreement under which all Series B shares will be voted in accordance with the majority vote of Series B shares. Accordingly, through their ownership of voting common stock 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.

Fidelity Management Trust Company, a wholly-owned subsidiary of FMR, is the beneficial owner of 403,369 shares as a result of its serving as investment manager of institutional account(s). Edward C. Johnson 3d and FMR, through its control of Fidelity Management Trust Company, each has sole dispositive power over these 403,369 shares, or 0.220% of the Common Stock outstanding of NCR, and sole power to vote or to direct the voting of 311,469 shares, and no power to vote or to direct the voting of 91,900 of these shares of Common Stock owned by the institutional account(s) as reported above.

Strategic Advisers, Inc., a wholly-owned subsidiary of FMR, provides investment advisory services to individuals. As such, FMR’s beneficial ownership includes 4,111 shares, or 0.002%, of the Common Stock outstanding of NCR, beneficially owned through Strategic Advisers, Inc.

Fidelity International Limited (“FIL”), is the beneficial owner of 57,100 shares, or 0.031% of the Common Stock outstanding of NCR. A partnership controlled predominantly by members of the family of Edward C. Johnson 3d, chairman of FMR and FIL, or trusts for their benefit, owns shares of FIL voting stock with the right to cast approximately 38% of the total votes which may be cast by all holders of FIL voting stock. FMR and FIL are separate and independent corporate entities, and their Boards of Directors are generally composed of different individuals. FMR and FIL are of the view that they are not acting as a “group” for purposes of Section 13(d) under the Securities Exchange Act of 1934 and that they are not otherwise required to attribute to each other the “beneficial ownership” of securities “beneficially owned” by the other. Therefore, they are of the view that the shares held by the other corporation need not be aggregated for purposes of Section 13(d). However, FMR has made the filing on Schedule 13G on a voluntary basis as if all the shares are beneficially owned by FMR on a joint basis.

The following graph compares the relative investment performance of NCR stock, the Standard & Poor’s 500 Stock Index, and the Standard & Poor’s Technology Sector Index. This graph covers the five-year period from December 31, 2000, through December 31, 2005.

The Board of Directors is currently divided into three classes. Directors hold office for staggered terms of three years (or less if they are filling a vacancy) and until their successors are elected and ~~qualified.~~qualify. One of the three classes is elected each year to succeed the directors whose terms are expiring. As of the ~~2006~~2007 annual meeting, the terms for the directors in Classes A, B and C of the Board of Directors expire in ~~2006,~~2009, 2007, and 2008, respectively.

Messrs. Boykin and Lund and Ms. Levinson are Class B Directors whose current terms are expiring at the 2007 annual meeting. Messrs. Boykin and Lund and Ms. Levinson have been nominated for reelection through the 2010 annual meeting of stockholders and until their successors are elected and qualify. Mr. Daichendt is a Class A Director who was elected by the Board of Directors following the 2006 annual meeting of stockholders. NCR’s Chief Executive Officer identified and recommended Mr. Daichendt to the Committee on Directors and Governance as a candidate for such position and that committee subsequently recommended to the Board of Directors that he be elected a director of the Company to serve as a Class A director until the 2007 annual meeting. Mr. Daichendt has been nominated for reelection through the 2009 annual meeting of stockholders and until his successor is elected and qualifies.

Proxies solicited by the Board will be voted for the election of the nominees, unless you withhold your vote on your proxy. The Board has no reason to believe that these nominees will be unable to serve. However, if one of them should become unavailable, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute, shares represented by proxies will be voted for the substitute nominee.

The Board recommends that you vote FOR each of the following nominees for election as a director.

Class A—B—Current Terms Expiring in ~~2006:~~2007 and New Terms Expiring in 2010:

~~William R. Nuti~~Edward P. “Pete” Boykin, ~~42, is our~~68, served as the President and Chief ~~Executive Officer. Before joining NCR in August 2005, Mr. Nuti served as President and CEO~~Operating Officer of ~~Symbol Technologies, Inc.~~Computer Sciences Corporation (“CSC”), an information technology services company ~~(“Symbol Technologies”). Prior~~he joined in 1966, from July 2001 to ~~that, he was Chief Operating Officer of Symbol Technologies. Mr. Nuti joined Symbol Technologies in 2002 following 10 years at Cisco Systems where~~June 2003. From 1998 to 2001, he held ~~positions of increasing responsibility, advancing to the dual role~~a number of senior management positions at CSC, including group president of its Financial Services Group from 1999 to 2001 and vice president of ~~the company’s Worldwide Service Provider Operations~~its Technology Management Group from 1998 to 1999. From 1996 to 1998, Mr. Boykin was President of The Pinnacle Alliance, a CSC-managed organization providing information technology outsourcing and ~~U.S. Theater Operations. Prior~~other services to ~~his Cisco experience,~~J.P. Morgan. Mr. ~~Nuti held sales and management positions at IBM, Netrix Corporation and Network Equipment Technologies. Mr. Nuti~~Boykin became a director of NCR on ~~August 7, 2005.~~June 5, 2002.

~~James M. Ringler~~Linda Fayne Levinson, ~~60,~~65, is Chair of the Board of Directors of Vendare Media Corporation, an online media and marketing company providing solutions for brand marketers, direct marketers and web publishers, a position she has held since July 2006. She is also Chair of the Board of Directors of X1 Technologies, Inc., an Idealab company providing secure enterprise desktop search solutions, a position she has held since November 2006. From February 2006 through July 2006, Ms. Levinson was Interim Chief Executive Officer of Vendare Media. Ms. Levinson was a partner at GRP Partners, a private equity investment fund investing in start-up and early-stage retail and electronic commerce companies, from 1997 to December 2004. From 1994 to 1999, she was President of Fayne Levinson Associates, an independent consulting firm. Ms. Levinson has also served as an executive with Creative Artists Agency Inc., as a partner in the merchant banking operations of Alfred Checchi Associates, Inc., as a Senior Vice President of American Express and as a Partner at McKinsey & Co. She is also a director of DemandTec, Inc., Jacobs Engineering Group Inc., Ingram Micro Inc., and The Western Union Company. Ms. Levinson became a director of NCR on January 1, 1997.

Victor L. Lund, 59, has served as non-executive Chairman of the Board of DemandTec, Inc., a SAS demand forecasting company, since December 2006. Prior to this

position, Mr. Lund served as the non-executive Chairman of the Board of Mariner Health Care, Inc., a long-term health care services company, from May 2002 to December 2004. He served as Vice Chairman of ~~Illinois Tool Works~~Albertson’s, Inc., a ~~multi-billion dollar diversified manufacturer of highly engineered components~~food and ~~industrial systems,~~drug retailer, from June 1999 until ~~2004.~~June 2002. Mr. Lund served as Chairman of the Board of American Stores Company from 1995 until its acquisition by Albertson’s in June 1999, and as Chief Executive Officer of American Stores Company from 1992 until 1999. He was President of American Stores Company from 1992 until 1995. Prior to joining ~~IllinoisTool Works, from 1997 to 1999,~~American Stores Company in 1977, Mr. ~~Ringler~~Lund was ~~Chairman of Premark International, Inc. (“Premark”),~~ a ~~large, diversified manufacturing company serving the food equipment, builder products and consumer durable markets.~~practicing certified public accountant. He also serves on the boards of Borders Group, Inc., Del Monte Foods Company, and Service Corporation International. Mr. Lund became a director of NCR on April 23, 2003.

Gary Daichendt, 55, is the lead investor in Howie’s Game Shack LLC, a gaming center company, and the commercial real estate firm, TheoryR Properties LLC. He served as ~~Premark’s Chief Executive Officer from 1995 to 1999, and prior to that as its~~ President and Chief Operating ~~Officer.~~Officer of Nortel Networks, a global supplier of communication equipment, from March 2005 to June 2005. Prior to that and until his retirement in December 2000, Mr. ~~Ringler was~~Daichendt served as Executive Vice President, Worldwide Operations for Cisco Systems, a manufacturer of communications and information technology networking products. Mr. Daichendt joined Cisco in 1994 as Vice President, Intercontinental Operations, and soon became Senior Vice president, Sales. In 1998 he became Executive Vice President, Worldwide Operations. He became a director of Premark from 1990 until it merged with Illinois Tool Works in 1999. Mr. Ringler serves as a director of Autoliv Inc., The Dow Chemical Company, FMC Technologies, Inc., and Corn Products International, Inc. He joined NCR’s Board of DirectorsNCR on ~~November 1, 2003.~~April 26, 2006.

~~Edward P. “Pete” Boykin~~William R. Nuti, ~~67,~~43, is our President and Chief Executive Officer. Before joining NCR in August 2005, Mr. Nuti served as ~~the~~ President and Chief Executive Officer of Symbol Technologies, Inc., an information technology company (“Symbol Technologies”). Prior tothat, he was Chief Operating Officer of ~~Computer Sciences Corporation (“CSC”), an information technology services company he~~Symbol Technologies. Mr. Nuti joined Symbol Technologies in ~~1966, from July 2001 to June 2003. From 1998 to 2001,~~2002 following 10 years at Cisco Systems where he held ~~a number~~positions of increasing responsibility, advancing to the dual role of senior vice president of the company’s Worldwide Service Provider Operations and U.S. Theater Operations. Prior to his Cisco experience, Mr. Nuti held sales and management positions at ~~CSC, including group president of its Financial Services Group from 1999 to 2001~~IBM, Netrix Corporation and ~~vice president of its Technology Management Group from 1998 to 1999. From 1996 to 1998,~~Network Equipment Technologies. Mr. ~~Boykin was President of The Pinnacle Alliance, a CSC-managed organization providing information technology outsourcing and other services to J.P. Morgan. Mr. Boykin~~Nuti became a director of NCR on ~~June 5, 2002.~~August 7, 2005.

~~Linda Fayne Levinson~~James M. Ringler, 64, was a partner at GRP Partners, a private equity investment fund investing in start-up and early-stage retail and electronic commerce companies, from 1997 to December 2004. From 1994 to 1999, she was President of Fayne Levinson Associates, an independent consulting firm. Ms. Levinson has also served as an executive with Creative Artists Agency Inc. and as a partner in the merchant banking operations of Alfred Checchi Associates, Inc. She61, is ~~also a director of Jacobs Engineering Group Inc. and Ingram Micro Inc. Ms. Levinson became a director of NCR on January 1, 1997.~~

~~Victor L. Lund~~~~, 58, served from May 2002 to December 2004 as the non-executive~~ Chairman of the Board of ~~Mariner Health Care, Inc.,~~NCR, a ~~long-term health care services company.~~position he has held since July 25, 2005. From March 30, 2005 to August 7, 2005, Mr. Ringler served as NCR’s President and Interim Chief Executive Officer. He ~~previously~~ served as Vice Chairman of ~~Albertson’s,~~Illinois Tool Works Inc., a ~~food~~multi-billion dollar diversified manufacturer of highly engineered components and ~~drug retailer,~~industrial systems, from ~~June~~ 1999 until ~~June 2002.~~2004. Prior to joining Illinois Tool Works, from 1997 to 1999, Mr. ~~Lund~~Ringler was Chairman of Premark International, Inc. (“Premark”), a large, diversified manufacturing company serving the food equipment, builder products and consumer durable markets. He also served as ~~Chairman of the Board of American Stores Company from 1995 until its acquisition by Albertson’s in June 1999, and as~~Premark’s Chief Executive Officer ~~of American Stores Company~~ from ~~1992 until 1999. He~~1995 to 1999, and prior to that as its President and Chief Operating Officer. Mr. Ringler was President of American Stores Company from 1992 until 1995. Prior to joining American Stores Company in 1977, Mr. Lund was a practicing certified public accountant. He also serves on the boards of Borders Group, Inc., Del Monte Foods Company, and Service Corporation International. Mr. Lund became a director of ~~NCR~~Premark from 1990 until it merged with Illinois Tool Works in 1999. Mr. Ringler serves as a director of Autoliv Inc., The Dow Chemical Company, FMC Technologies, Inc., and Corn Products International, Inc. He joined NCR’s Board of Directors on ~~April 23,~~November 1, 2003.

Mark P. Frissora, ~~50,~~51, became Chief Executive Officer of The Hertz Corporation, a car and equipment rental company, on July 19, 2006, and became Chairman of the Board of The Hertz Corporation on January 1, 2007. Prior to becoming Chief Executive officer of The Hertz Corporation, Mr. Frissora was Chairman and Chief Executive Officer of Tenneco Inc. (“Tenneco”) in, a manufacturer of automotive emission control and ride control products and systems, from March 2000, after serving as its President and Chief Executive Officer from November 1999 until ~~that time.~~March 2000. From March

to November 1999, he was President, Worldwide Operations, at Tenneco’s automotive subsidiary, and also served as that company’s Senior Vice President and General Manager, Worldwide Original Equipment, from 1998 until March 1999. Mr. Frissora ~~is a director of Tenneco and FMC Corporation, and~~ became a director of NCR on June 5, 2002.

C.K. Prahalad, ~~63,~~65, is the Paul and Ruth McCracken Distinguished University Professor at The Ross School of Business, University of Michigan. Mr. Prahalad is a nationally recognized specialist in corporate strategy and the role of top management in large, diversified, multi-national corporations. From 2000 to 2002, he was Chairman of PRAJA, Inc., a software company located in San Diego, California. He is also a director of Hindustan Lever Limited, India, and World Resources Institute, Washington, D.C., a non-governmental organization. Mr. Prahalad became a director of NCR on January 1, 1997.

William S. Stavropoulos, ~~66, has been~~67, retired as director and Chairman of the Board of Directors ~~and Chairman of the Executive Committee~~ of The Dow Chemical Co. (“Dow Chemical”), a chemical and plastics producer, ~~since November 2000. He has announced his retirement as Chairman and director of Dow Chemical, effective~~on April 1, 2006. He had served ~~as Chief Executive Officer of Dow Chemical from 2002 to~~in such capacity since November ~~1, 2004, and Chairman of the Executive Committee of Dow Chemical from December 2000 to December 2002. From 1995 until November 2000, he~~2000. Mr. Stavropoulos was the President and Chief Executive Officer of Dow ~~Chemical.~~Chemical from 1995 to 2000 and was reappointed to that position in December 2002. In November 2003, Mr. Stavropoulos relinquished the position as President and in November 2004 relinquished the position as Chief Executive Officer. In addition, he is a director of BellSouth Corporation, Chemical Financial Corporation, and Maersk Inc., and is a trustee of the Fidelity Group of Funds. Mr. Stavropoulos became a director of NCR on January 1, 1997.

The Board of Directors oversees the overall performance of the Company on your behalf. Members of the Board stay informed of the Company’s business through discussions with the Chief Executive Officer and other members of management and staff, by reviewing materials provided to them, and by participating in regularly scheduled Board and committee meetings. The Board met 13 times last year. In 2005, all of the directors, except for Mr. Prahalad, attended 75% or more of the total number of meetings of the Board and the committee(s) on which he or she serves.

NCR’s Board of Directors is elected by the stockholders to govern the business and affairs of the Company. The Board selects the senior management team, which is charged with conducting the Company’s business. Having selected the senior management team, the Board acts as an advisor to senior management and monitors its performance. The Board reviews the Company’s strategies, financial objectives and operating plans. It also plans for management succession of the Chief Executive Officer, as well as other senior management positions, and oversees the Company’s compliance efforts.

To help discharge its responsibilities, ~~your~~the Board of Directors has adopted Corporate Governance Guidelines on significant corporate governance issues. These guidelines address, among other things, such matters as director independence, committee membership and structure, meetings and executive sessions, and director selection, retirement, and ~~training, among other things.~~training. The Board’s Corporate Governance Guidelines are found on NCR’s corporate governance ~~web page~~website athttp://www.ncr.com/corpgovernance/guidelines.htm. You may obtain a written copy of these guidelines, or any of the Board’s committee charters, by writing to NCR’s Corporate Secretary at the address listed on page 153 of this proxy statement. The Board’s independent directors meet regularly in executive session and, as provided in the Corporate Governance Guidelines, the Board of Directors has selected the Chairman of the Board to preside at its executive sessions during ~~2006.~~2007.

In connection with its Corporate Governance Guidelines, the Board of Directors has established independence standards. In general, the Board shall determine whether a director is considered independent, taking into account the independenceguidelines of the New York Stock Exchange and the factors listed immediately following ~~factors,~~this paragraph, which are included as Exhibit B, Definition of Director Independence, to the Board’s Corporate Governance Guidelines referenced above, in addition to those other factors it may deem relevant. No director may qualify as independent unless the Board affirmatively determines (i) under the New York Stock Exchange listing standards, that he or she has no material relationship with the Company (either directly or as a partner, stockholder or officer of an organization that has a relationship with NCR)~~. In addition,~~; and (ii) under the Company’s independence standards, that the director or director candidate:

~~cannot have~~

has not been an employee of the Company or any of its affiliates, or affiliated with the Company, within the past five years;

~~cannot have~~

has not been affiliated with or an employee of the Company’s present or former independent auditors or its affiliates ~~for~~within at least the past five ~~years after the end of such affiliation or auditing relationship;~~years;

cannot have been in the past five years a paid advisor, service provider or consultant to the Company or any of its affiliates or to an executive officer of the Company or an employee or owner of a firm that is such a paid advisor, service provider or consultant;

~~cannot,~~

has not, directly or indirectly, ~~have~~had a material relationship (such as being an executive officer, director, partner, or significant stockholder) with a significant customer or supplier of the Company, and in no case may the director be an executive officer or employee of another company that in the previous three years made payments to or received payments from the Company in a fiscal year exceeding the greater of $1 million or 2% of the other company’s consolidated gross revenues;

~~cannot be~~is not an executive officer or director of a foundation, university or other non-profit entity receiving significant contributions from the Company, including contributions in the previous three years that, in any single fiscal year, exceeded the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues;

~~cannot have~~has not been employed as an executive officer by another corporation that has (or ~~had)~~had during the past five years) an executive officer of the Company on its board of ~~directors during the past five years;~~directors;

~~cannot~~

has not for the past five years ~~have~~ received any compensation, consulting, advisory or other fees from the Company, other than director compensation and expense reimbursement or compensation for prior service that is not contingent on continued service; and

~~cannot be or have~~

is not and has not been for the past five years, a member of the immediate family of (i) an officer of the Company, (ii) an individual who receives more than $100,000 per year in direct compensation from the Company, other than compensation for prior service that is not contingent on continued service, (iii) an individual affiliated with or an employee of the Company’s present or former independent auditors or its affiliates, (iv) an individual who is an executive officer of another company that has (or had) an executive officer of the Company on its board of directors, (v) an executive officer of a company that has made payments to, or received payments from, the Company in a fiscal year that exceeded the greater of $1 million or 2% of the other company’s consolidated gross revenues, or (vi) any director who is not considered an independent director.

NCR’s Board of Directors has determined that all of the Company’s non-employee directors ~~except Mr. Nuti,~~and nominees, namely Edward (Pete) Boykin, Gary Daichendt, Mark Frissora, Linda Fayne Levinson, Victor Lund, C.K. Prahalad, James Ringler and William Stavropoulos, meet ~~these~~the New York Stock Exchange listing independence standards and the Company’s independence standards. In evaluating and determining the independence of Mr. Frissora, the Board of Directors considered the relationship between NCR and The Hertz Corporation. Mr. Frissora is the Chairman of the Board and Chief Executive Officer of The Hertz Corporation, which is the primary supplier of rental cars to NCR. There were no other transactions, relationships or arrangements that required review by the Board for purposes of determining director independence.

The Board met 7 times last year. In 2006, all of the directors attended 75% or more of the totalnumber of meetings of the Board and the committee(s) on which he or she serves. In addition, NCR’s directors have a practice of attending the Company’s annual meeting of stockholders each year. All of the directors who had been elected at the time of the meeting attended the Company’s 2006 annual meeting of stockholders. There is no formal policy regarding director attendance at the annual meeting of stockholders.

Committees of the Board

NCR’s Board of Directors has four committees: the Audit Committee, the Compensation and Human Resource Committee, the Committee on Directors and Governance, and the Executive Committee.

Audit Committee: The Audit Committee is the principal agent of the Board of Directors in overseeing (i) the quality and integrity of the Company’s financial ~~statements,~~statements; (ii) the assessment of financial risk and risk management ~~programs,~~programs; (iii) the independence, qualifications, and performance of the Company’s independent registered public accounting ~~firm,~~firm; (iv) the performance of the Company’s internal ~~auditors,~~auditors; and (v) the integrity of management and the quality and adequacy of disclosures to stockholders. The committee also:

is solely responsible for hiring and terminating the Company’s independent registered public accounting firm and pre-approving all audit, as well as any audit-related, tax and other non-audit services, to be performed by the independent registered public accounting firm;

reviews and discusses with NCR’s independent registered public accounting firm their quality control procedures and the Company’s critical accounting policies and practices;

regularly reviews the scope and results of audits performed by the Company’s independent registered public accounting firm and internal auditors;

meets with management to review the adequacy of the Company’s internal control framework and its financial, accounting, reporting and disclosure control processes;

reviews the Company’s periodic SEC filings and quarterly earnings releases;

reviews and discusses with the Company’s Chief Executive and Financial Officers the procedures they followed to complete their certifications in connection with NCR’s periodic filings with the SEC; and

discusses management’s plans with respect to the Company’s major financial risk exposures.

~~All three of the~~The Audit Committee has four members, ~~are~~Edward (Pete) Boykin, Gary Daichendt, Victor Lund and C.K. Prahalad, each of whom is independent and financially literate as determined by the Board under applicable SEC and New York Stock Exchange (“NYSE”) standards. In addition, the Board has determined that Messrs. Boykin and Lund are “audit committee financial experts,” as defined under SEC regulations. No member of the committee may receive any compensation, consulting, advisory or other fee from the Company, other than Board compensation described below under the caption

~~“Compensation~~ “Compensation of Directors,” as determined in accordance with applicable SEC and NYSE rules. Members serving on the Audit Committee are limited to serving on two other audit committees of public companies, unless the Board of Directors evaluates and determines that these other commitments would not impair his or her effective service to the Company.

A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Audit Committee Charter, which was adopted as revised by the Board of Directors in ~~January 2004.~~October 2006. A copy of this charter can be found on NCR’s corporate governance ~~web page~~website athttp://www.ncr.com/corpgovernance/~~corpgov_board_charters.htm~~corpgov_board_charters.htm..

Compensation and Human Resource Committee: This committee reviews and approves the Company’s total compensation goals, objectives and programs covering executive officers and key management employees as well as the competitiveness of NCR’s total executive officer compensation practices. The committee also:

evaluates and reviews the performance levels of NCR’s executive officers and determines base salaries and equity and incentive awards for such officers;

discusses its evaluation of, and determination of compensation to, the ~~Chief Executive~~ChiefExecutive Officer at executive session of the Board of Directors;

reviews and approves NCR’s executive compensation plans;

monitors NCR’s compliance with the Sarbanes-Oxley Act of 2002 relating to 401(k) plans and loans to directors and officers, NYSE rules relating to approval of equity compensation plans and all other applicable laws affecting employee compensation and benefits;

reviews management’s proposals to make significant organizational changes or significant changes to existing executive officer compensation plans; and

oversees NCR’s plans for management succession and development.

This committee ~~is composed entirely~~may delegate its authority to the Company’s Chief Executive Officer to make equity awards to individuals other than executive officers in limited instances.

This committee has three members, Linda Fayne Levinson, James Ringler and Mark Frissora, each of ~~independent directors, although one member~~whom the Board of Directors has determined meet the ~~committee,~~New York Stock Exchange listing independence standards and the Company’s independence standards. However, Mr. Ringler does not qualify ~~as a “non-employee director” for certain purposes under Rule 16b-3 of the Securities Exchange Act of 1934, or~~ as an “outside director” as defined in Section 162(m) of the Internal Revenue Code. Mr. Ringlerdoes not participate in committee votes pertaining to plan design ~~and~~or compensation decisions under plans intended to be compliant with ~~Rule 16b-3 or~~ Section 162(m).

This committee is authorized to and has directly engaged its compensation consultant, Frederic W. Cook & Co., to review the Company’s long-term incentive program, the Management Incentive Plan and other key programs related to the compensation of executive officers. In 2006, the committee directed its consultant to conduct market studies, review publicly available market data and be readily available for consultation with this committee and its members regarding such matters.

A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Compensation and Human Resource Committee Charter, which was adopted as revised by the Board of Directors in January ~~2006.~~2007. A copy of this charter can be found on NCR’s corporate

governance ~~web page~~website athttp://www.ncr.com/corpgovernance/corpgov_board_charters.htm.

Compensation and Human Resource Committee Interlocks and Insider Participation: Mr. Ringler served as President and Interim Chief Executive Officer from March 30, 2005, to August 7, 2005.

Committee on Directors and Governance: This committee is responsible for reviewing the Board’s corporate governance practices and procedures and the Company’s ethics and compliance program, and:

establishes procedures for evaluating the performance of the Board of Directors and oversees such evaluation;

reviews and makes recommendations to the Board concerning director compensation; and

reviews the composition of NCR’s Board of Directors and the qualifications of persons identified as prospective directors, recommends the candidates to be nominated for election as directors, and, in the event of a vacancy on the Board, recommends any successors.

This committee is authorized to and directly engaged Watson Wyatt as its consultant to review the Company’s director compensation program. In 2006, the committee directed its consultant to conduct market studies, review publicly available market data concerning various elements of potential director compensation, including retainer and meeting fees and long-term incentive payments, and be readily available for consultation with this committee and its members regarding such matters.

The Committee on Directors and Governance is composed entirely of independent directors, Linda Fayne Levinson, C.K. Prahalad and with the Board, recommended this year’s director nominees. A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Committee on Directors and Governance Charter, which was adopted by the Board of Directors as amended in January 2003. A copy of this charter can be found on NCR’s corporate governance web page at~~http://www.ncr.com/corpgovernance/corpgov_board_charters.htm~~.

~~Executive Committee~~: This committee has the authority to exercise all powers of the full Board of Directors, except those prohibited by applicable law, such as amending the Bylaws or approving a merger that requires stockholder approval. This committee meets between regular Board meetings if urgent action is required.

~~Board Committee Membership~~

Name
    Executive
    Committee

Compensation and
Human Resource
Committee
Audit
Committee Committee on
Directors and
Governance
James Ringler
X * X
Edward (Pete) Boykin
X X *
Mark Frissora
X
Linda Fayne Levinson
X X * X
Victor Lund
X
William R. Nuti
X
C.K. Prahalad
X X X *
William Stavropoulos
X
Number of meetings in 2005
    0 8 9 4

*ChairWilliam Stavropoulos.

~~Compensation of Directors~~

NCR has a director compensation program for its non-employee directors. Directors who are employees of the Company receive no additional compensation for their services as directors. Each of NCR’s non-employee directors receives an annual retainer which is payable for the year beginning on the date of NCR’s annual meeting and ending on the day before the next such meeting. All non-employee directors, other than the non-executive Chairman of the Board, receive an annual retainer of $40,000. The annual retainers are payable quarterly in equal installments as long as the director is still serving on NCR’s Board. If a director resigns or is terminated, he or she will forfeit any future installments of the annual retainer. Committee chairs receive an additional annual retainer of $5,000, except that the Chair of the Audit Committee receives an additional annual retainer of $12,000, and as of April 27, 2005, the Chair of the Compensation and Human Resource Committee also receives an additional annual retainer of $12,000.

Lars Nyberg was appointed non-executive Chairman of the Board in March 2003, and as such he received an annual retainer of $225,000 until his service as Chairman of the Board ended as of July 27, 2005. Mr. Nyberg resigned from the Board as of October 26, 2005.

Mr. Ringler was appointed Chairman of the Board on July 27, 2005. As additional compensation for his services as Chairman of the Board, Mr. Ringler received a retainer in the amount of $225,000 for the period from August 8, 2005,through October 31, 2005, and a monthly retainer of $20,000 for the period from November 1, 2005, through the date of NCR’s 2006 annual meeting. Mr. Ringler did not receive any additional compensation for his services as a director or Chairman during the period in which he served as President and Interim Chief Executive Officer.

The non-employee directors may elect to receive all or a portion of their annual retainers in NCR stock instead of cash. In addition, a director may choose to defer receipt of this stock (a) until he or she is no longer a director, (b) until five or ten years after it is payable, or (c) in one to five equal annual installments, beginning either the year after the retainer is earned, or the year following the date of termination as a director.

The Company maintains stock unit accounts based on NCR stock for deferred stock payments. Dividend payments on NCR stock equivalents, if any, will be reinvested in additional deferred stock units. Deferred stock payments may be paid in cash or in stock.

Prior to April 27, 2005, non-employee directors received a meeting fee of $1,500 for each regular Board or committee meeting attended and each special Board meeting attended. On April 27, 2005, the Board’s Committee on Directors and Governance exercised its discretion to increase the meeting fees payable to directors to $2,000 per meeting. If a committee holds a special meeting, the committee chair will determine if the meeting is subject to the meeting fee. In 2005, meeting fees were paid for all special meetings held during the year. The meeting

fees, which may be deferred in the same manner as the annual retainers, are paid one quarter in arrears. NCR also pays or reimburses the directors’ expenses for attending Board and committee meetings. Our corporate aircraft is sometimes used to transport directors to and from these meetings, and directors are permitted to bring their spouses with them during such trips. In 2005, spouse travel occurred on 3 occasions. In addition, Mr. Ringler is permitted to use the corporate aircraft for additional personal travel and will receive related tax gross-up payments to cover federal and state income taxes associated with such usage, subject to limits established by the Board of Directors. During 2005, Mr. Ringler’s personal use of the corporate aircraft did not exceed the limit established by the Board, and is more fully described in the “Non-Employee Director Compensation Table for 2005” table on page 14 of this proxy statement and the “Executive Compensation” section on pages 22-26 of this proxy statement.

Each non-employee director who joins the Board receives an initial grant of NCR common stock with a value that is currently equal to each such director’s annual retainer fee. These directors have the option of receiving this stock immediately or deferring receipt in the same manner available for deferring their annual retainers; however, thesedeferred stock accounts are paid only in stock. If deferred, a stock unit account is maintained for each participating director.

In addition, NCR also pays a portion of director compensation in stock options. Each non-employee director receives stock option grants effective on the date of the annual meeting for a number of shares of NCR common stock as determined by the Committee on Directors and Governance in its discretion, based on a review of competitive data. The options have an exercise price of the fair market value of the stock on the grant date, are fully vested on the grant date, and are exercisable for ten years. Due to his service as President and Interim Chief Executive Officer at the time of the 2005 stock option grants to directors, Mr. Ringler did not receive a 2005 stock option grant in connection with his service as a director. The Committee on Directors and Governance may also, in its discretion, grant shares of Company stock to directors in conjunction with the annual option grants. If granted, the stock is free of restrictions. Eligible directors may elect to defer receipt of this stock in the same manner available for deferring their annual retainers.

~~In 2005, each non-employee director other than Messrs. Nyberg and Ringler received 4,000 shares of NCR common stock and options for 8,000 shares of stock.~~

~~The following table provides information on fiscal 2005 compensation for our non-employee directors:~~

Non-Employee Director Compensation Table for 2005

Name Annual retainers
and meeting fees
(1)
Stock Awards
$ (2)

Option Awards
$ (3)
Non-Stock
Incentive Plan
Compensation
All Other
Compensation
(4)
Edward P. “Pete” Boykin
$ 92,000    131,440 104,480 $ 0 $ 0
Mark P. Frissora
$ 70,500    131,440 104,480 $ 0 DM
Linda Fayne Levinson
$ 95,250    131,440 104,480 $ 0 $ 0
Victor L. Lund
$ 83,500    131,440 104,480 $ 0 $ 0
C.K. Prahalad
$ 78,000    131,440 104,480 $ 0 $ 0
James M. Ringler(5)
$ 299,984    0 0 $ 0 $ 23,479
William S. Stavropoulos
$ 69,500    131,440 104,480 $ 0 DM

~~(1)~~

Amounts shown represent the cash value of the annual retainers and meeting fees earned by the directors in 2005. Directors may elect to receive these payments in the form of cash or common stock. In the event a director elects to receive payment in the form of stock, he or she may further elect to receive such stock currently or at a future specified date.

~~(2)~~

Amounts shown represent the dollar value of stock awards on the date upon which such stock was granted. These amounts are based on a stock price of $32.86 on April 27, 2005. Each non-employee director, other than Mr. Ringler, received a grant of 4,000 shares of NCR common stock on April 27, 2005.

~~(3)~~

On April 27, 2005, each non-employee director other than Mr. Ringler received options for 8,000 shares of NCR common stock. The options vested immediately upon grant and are exercisable for a period of ten years. This column utilizes the Black-Scholes option pricing model to estimate the present value of the options on the grant date. NCR’s use of this model for this limited purpose should not be construed as an endorsement of its accuracy at valuing options. The following assumptions were made for purposes of calculating the present values of the options listed in this column: volatility of 35.5%, dividend yield of 0%, an expected term of 5.5 years, and an interest rate of 3.91% based on April 27, 2005, the actual date of the grant.

~~(4)~~

The only perquisite offered to our directors other than Mr. Ringler is the ability of our directors to bring their spouses with them on the corporate aircraft when traveling to a meeting. In 2005, this occurred on three occasions. The incremental cost to the company of the provision of this perquisite is limited to items such as food and beverages provided to a director’s spouse on a flight. It is not reasonably practical to quantify these amounts precisely, but they are known to be de minimis and are represented by the notation “DM” in this table, in the rows corresponding to the appropriate non-employee director. The amount set forth with respect to Mr. Ringler represents the incremental cost to the Company of Mr. Ringler’s personal use of the corporate aircraft during his service as a non-employee director and related tax gross-up amounts paid by the Company within the limits established by the Board of Directors.

~~(5)~~

Mr. Ringler served as President and Interim Chief Executive Officer from March 30, 2005 to August 7, 2005. During this period, he did not receive additional compensation for his services as a director, including stock or option awards. The compensation for Mr. Ringler shown in this table pertains exclusively to his service as a director and does not include compensation he received in connection with his service as President and Interim Chief Executive Officer, which is included in the “Summary Compensation Table” on page 22 of this proxy statement.

Selection of Nominees for Directors

Your directors and the Committee on Directors and Governance are responsible for recommending candidates for membership to the Board. The director selection process is described in detail in the Board’s Corporate Governance Guidelines, which are posted on the Company’s corporate governance website athttp://www.ncr.com/corpgovernance/guidelines.htm. In determining candidates for nomination, the Committee on Directors and Governance will seekthe input of the Chairman of the Board and the Chief Executive Officer and will consider individuals recommended for Board membership by the Company’s stockholders in accordance with the Company’s Bylaws and applicable law. From time to time, the committee may engage outside search firms to assist it in identifying and contacting qualified candidates. In 2006, the Committee on Directors and Governance engaged Spencer Stuart to assist in identifying qualified candidates for the open Class A Director position. Although Spencer Stuart identified potential candidates, the committee ultimately selected a candidate, Mr. Daichendt, who had been recommended to the committee by the Company’s Chief Executive Officer. All candidates are evaluated by the committee using the qualification guidelines included as part of the Board’s Corporate Governance Guidelines. As part of the selection process, the Committee on Directors and Governance and the Board of Directors examine candidates’ business skills and experience, personal integrity, judgment, and ability to devote the appropriate amount of time and energy to serving the best interests of stockholders. The Board and the Committee on Directors and Governance are committed to finding proven leaders who are qualified to serve as NCR directors.

Stockholders wishing to recommend individuals for consideration as directors should contact the Committee on Directors and Governance by writing the Company’s Corporate Secretary at NCR Corporation, 1700 South Patterson Blvd., Dayton, OH 45479. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as other candidates. Stockholders who want to nominate directors for election at NCR’s next annual meeting of stockholders must follow the procedures described in the Company’s Bylaws, which are available on our corporate governance website athttp://www.ncr.com/corpgovernance/corpgov_bylaws.htm. See “Procedures for Stockholder Proposals and Nominations” on page 56 of this proxy statement for further details regarding how to nominate directors.

The directors nominated by the Board of Directors for election at the ~~2006~~2007 annual meeting were recommended by the Committee on Directors and Governance. ~~Both~~All of these candidates for election are currently serving as directors of the Company and ~~Mr. Ringler has~~have been determined by the Board to be ~~an independent director.~~independent.

A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Committee on Directors and Governance Charter, which was adopted by the Board of Directors as amended in January 2007. A copy of this charter can be found on NCR’s corporate governance website athttp://www.ncr.com/corpgovernance/corpgov_board_charters.htm.

Executive Committee: This committee has the authority to exercise all powers of the full Board of Directors, except those prohibited by applicable law, such as amending the Bylaws or approving a merger that requires stockholder approval. This committee meets between regular Board meetings if urgent action is required.

Board Committee Membership

Name

Executive

Committee

Compensation and

Human Resource

Committee

Audit

Committee

Committee on

Directors and

Governance

James Ringler

Edward (Pete) Boykin

Gary Daichendt

Mark Frissora

Linda Fayne Levinson

Victor Lund

William R. Nuti

C.K. Prahalad

William Stavropoulos

Number of meetings in 2006

*Chair

Communications with Directors

Stockholders wishing to communicate directly with NCR’s Board of Directors, any individual director, the Chairman of the Board, or NCR’s non-management or independent directors as a group are welcome to do so by writing NCR’s Corporate Secretary at 1700 South Patterson Blvd., Dayton, Ohio 45479. The Corporate Secretary will forward any communications as directed. Any matters reported by stockholders relating to NCR’s accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee as appropriate. Anonymous and/or confidential communications with the Board of Directors may also be ~~made.~~made by writing to this address. For more information on how to contact NCR’s Board, please see the Company’s Corporate Governance website athttp://www.ncr.com/corpgovernance/corpgov_contact.htm.

~~In addition, NCR’s directors have a practice of attending the Company’s annual meeting of stockholders each year. All of the directors attended the Company’s 2005 Annual Meeting of Stockholders.~~

Code of Conduct

The Company has a Code of Conduct that sets the standard for ethics and compliance for all of itsemployees. NCR’s Code of Conduct is available on NCR’s corporate governance web site athttp://www.ncr.com/corpgovernance/~~corpgov_code_conduct.htm.~~corpgov_code_ conduct.htm. To receive a copy of the Code of Conduct, please send a written request to the Corporate Secretary at the address provided above.

Section 16(a) Beneficial Ownership Reporting Compliance

During ~~2005,~~2006, all executive officers and directors of the Company timely filed the reports required under Section 16(a) of the Securities Exchange Act of 1934, except that the Company filed a late ~~report~~report: (a) in 2006 on behalf of ~~Lee Schram, the Company’s~~each of Bruce Langos, Senior Vice President, ~~Retail Solutions~~Global Operations, and Peter Dorsman, Vice President and General Manager, Systemedia Division, each in connection with the ~~cancellation~~grant of a performance-based restricted stock ~~award~~and options awarded in ~~2005.~~September 2006; and (b) in 2007 on behalf of Peter Bocian, Senior Vice President and Chief Financial Officer, in connection with the exercise of options in March 2006.

1513

BOARD COMPENSATION AND HUMAN RESOURCE COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation and Human Resource Committee of the Board of Directors (the “Committee”) consists entirely of independent directors as required by New York Stock Exchange rules. Committee member James Ringler was appointed President and Interim Chief Executive Officer (“CEO”) effective March 30, 2005. To maintainmanages the ~~independence~~Company’s compensation programs on behalf of the Board of Directors. The Committee ~~he resigned from~~reviewed and discussed with the Company’s management theCompensation Discussion and Analysis included in this Proxy Statement. In reliance on the review and discussions referred to above, the Committee ~~on that date and Board member Victor Lund was appointed to replace him. At the conclusion of Mr. Ringler’s service as interim CEO, he was re-appointed~~recommended to the ~~Committee~~Board of Directors that theCompensation Discussion and ~~Mr. Lund resigned from~~Analysis be included in the ~~Committee. Because Mr. Ringler does not qualify as a “non-employee director”~~Company’s Annual Report on Form 10-K for ~~certain purposes under Rule 16b-3~~the fiscal year ended December 31, 2006 and theCompany’s Proxy Statement to be filed in connection with the Company’s 2007 Annual Meeting of Stockholders, each of which will be filed with the Securities and Exchange Act of 1934, or as an “outside director,” as defined in Section 162(m) of the Internal Revenue Code, he does not participate in Committee votes pertaining to plan design and compensation decisions under plans intended to be compliant with Rule 16b-3 or Section 162(m).Commission.

The Committee establishes and evaluates the Company’s total compensation philosophy and regularly reviews and approves the compensation programs covering executive officers and key management employees, including fixed and variable pay and the design of annual and long-term incentive compensation. The Committee reviews the performance levels of the Company’s executive officers and evaluates and determines all of the compensation actions for the CEO and other executive officers, including their annual base salaries, cash and equity incentive awards to be paid, and executive benefits and perquisites.

The Committee also provides guidance as needed on the Company’s strategic workforce initiatives and practices, reviews management’s proposals regarding significant organizational changes, and oversees the Company’s plans for management succession and development.Dated: February 26, 2007

The Compensation ~~Philosophy~~and Human Resource Committee:

~~The basic objectives of the Company’s~~Linda Fayne Levinson, Chair

Mark P. Frissora, Member

James M. Ringler, Member

EXECUTIVE COMPENSATION

COMPENSATION DISCUSSION AND ANALYSIS

In order to better understand our executive compensation program, it is necessary to understand our business and the markets in which we compete. We provide technology and services that help businesses interact, connect, and relate with their customers. Our specific solutions for the retail and financial industries are ~~to:~~provided through our Financial Self Service (which includes our ATM business) and Retail Store Automation businesses. Our Teradata Data Warehousing and Customer Services businesses also provide solutions for these industries, as well as to other major industries, including telecommunications, transportation, insurance, healthcare, manufacturing, travel, logistics and government. Our solutions are based on a foundation of long-established industry knowledge and consulting expertise, value-added software, hardware technology, global customer support services, and a complete line of business consumables and specialty media products.

~~Attract,~~

We are a multinational company that has been in business for more than 120 years and has established a reputation of providing quality products, services and solutions to our customers. We maintain offices in approximately 70 countries and employ approximately 29,000 employees and contractors worldwide.

We operate in the intensely competitive information technology industry, which is characterized by rapidly changing technology, evolving industry standards, frequent new product introductions, price and cost reductions, and increasingly greater commoditization of products. As a global company, our business is affected by the economies of the numerous countries in which we operate.We also face many aggressive and well-financed competitors both in the United States and in the various international markets where we operate.

In this environment, our success depends on putting together and maintaining a leadership team with the integrity, skills, and dedication needed to manage a global organization and the vision to anticipate and respond to future market developments. We use our executive compensation program to help us achieve this objective. Asdescribed below, portions of the program have been designed to enable us to assemble and retain a group of executives who have the collective and individual abilities necessary to run our business to meet these challenges. Other portions are intended to focus these executives on achieving financial results that enhance the value of our stockholders’ investment. At the same time, we have structured the program to be flexible, so that we can meet the changing needs of our business over time.

The Company’s named executive officers discussed in thisCompensation Discussion and Analysisand the related tables include Messrs. Nuti, Bocian, Collins and Koehler and Ms. Wallace (collectively, the “Named Executive Officers”).

Compensation Philosophy

Our Company’s goal is to attract, motivate and retain key leadership. We believe that, to be successful, we need to be competitive not only in our products and solutions, but also in the ~~talented executive leadership necessary for the Company’s short and long-term success;~~

~~Reward achievement~~quality of ~~financial and strategic Company results;~~

~~Recognize individual contributions;~~

~~Deliver a substantial portion of each executive’s total compensation on a pay-for-performance basis; and~~

~~Align the long-term interests of~~our executives. This, in turn, requires that we pay our executives ~~with those of the Company’s stockholders.~~

~~The~~competitively. Accordingly, our executive compensation program is ~~designed to support and provide incentives for achieving and exceeding~~guided by the Company’s current business priorities and executing a business strategy that emphasizes both growth and cost containment. The Company’s long-term goals and stockholder interests are also taken into consideration in the design of NCR’s executive compensation programs. In addition, the compensation programs recognize that NCR is a single company made up of multiple business units with differing market dynamics.following four principles:

~~How~~1. Our key program elements are current cash and long-term equity incentives. We compensate our Named Executive ~~Pay~~Officers primarily with cash (base salary and annual incentives) and equity awards. We believe these components provide our executives with a stable source of income while, at the same time, affording us the flexibility, as described below, to structure most of their compensation so that it is ~~Determined~~directly aligned with our performance.

To In recent years, we have begun to shift the relative mix of cash and equity compensation for our executives. This change supports our objective of ensuring that a large portion of total compensation for executives is tied to the achievement of multi-year operating performance goals and changes in stockholder value. In addition, this change enhances the retentive aspect of the overall program by requiring executives to remain employed for a multi-year period to fully vest in the awards. As part of this process, we have begun to rebalance cash compensation (base salary and annual cash incentives) and long-term incentives so that, when we

achieve targeted financial results, the total compensation of our ~~goal of attracting, motivating and retaining top executive talent,~~executives, including the ~~Committee, with~~Named Executive Officers, will be at the ~~assistance of outside consultants, analyzes~~ competitive market ~~data~~median.

Consistent with our focus on cash and ~~reviews~~equity, we have historically de-emphasized the ancillary components of our program, such ~~factors~~ as ~~market trends~~perquisites and ~~critical business objectives when determining~~other personal benefits. This is intended to minimize the non-performance-based components of the overall compensation program and to place a greater portion of pay “at risk.” As reflected in the Summary Compensation Table on page30, our executives, including the Named Executive Officers, receive a limited number of perquisites. The Compensation and Human Resource Committee (the “Committee”) monitors our perquisite practices closely and must approve any perquisites before they can be offered to an executive.

In addition, as we have transitioned our employee retirement program from a defined benefit to a defined contribution structure, retirement benefits have played an increasingly smaller role in the overall program. Due to restrictions we have placed on participation in our defined benefit pension plans over the past three years, only three of our Named Executive Officers participated in these plans as of the end of 2006, and, for these individuals, their benefits were frozen at pre-2007 levels.

~~The Committee’s charter, which is available on the Company’s corporate governance website athttp://www.ncr.com/corpgovernance/corpgov_board_charters.htm~~, gives the Committee the sole authority to retain consultants to assist in evaluating the Company’s executive compensation programs. In 2005, as in prior years, the Committee independently engaged outside consultants to provide guidance and market information to assist it in evaluating and developing programs in order2. We strive to pay at competitive market levels. When setting targeted total compensation for our executives, including the Named Executive Officers, we seek to ensure that both the cash (base salary and annual incentive) and equity components of their packages are competitive in the relevant market. This supports our objective of attracting and retaining high quality executives and ensures that the overall economic cost of compensation is reasonable, and therefore sustainable, in relation to our peers. In fashioning the cash component, we look at compensation data about comparable positions at companies in the relevant peer group (as discussed on pages 17-18), as well as the cash compensation arrangements of our other senior executives. To set the target value of equity awards, we consider several factors, including compensation data about comparable positions in the peer group, amounts previously awarded to our other executives, and, in the case of a new hire, the amount that the prospective executive ~~officers competitively~~may be forfeiting by leaving his or her current employer.

3. To motivate and reward our executives for superior performance, the majority of our key program elements are performance-based. Although we provide our executives, including the Named Executive Officers, with a competitive base salary, most of their compensation is performance-based. Importantly, the portion of performance-based “at risk” compensation increases directly with the executive’s role and responsibility within the Company. Consequently, the senior-most executives are held most accountable to ~~design~~stockholders for the achievement of operational targets and strategic goals. Generally, we use three different vehicles to achieve this purpose:

A performance-based annual cash incentive ~~programs~~plan;

Annual performance-based equity awards; and

Special performance awards for exemplary individual contributions (which are made in the form of either cash or equity).

We believe that, ~~motivate~~by emphasizing these vehicles, we are able to reinforce our goal of maintaining a results-oriented culture that provides above-target rewards only when performance is also above target. Thus, the interests of our executives are directly aligned with those of our stockholders as the financial success of both is contingent upon performance.

Equity compensation is used as a tool to unite all executives in a common set of goals and foster stock ownership, which creates commonality of interest with stockholders, while the annual incentive plan is used to ensure that performance targets vary among business units in a manner consistent with each business unit’s key objectives.

4.To encourage high-performing executives to stay with us, key program elements are structured to enable them to ~~contribute~~share in our long-term growth and success. To ensure that our efforts to attract and motivate our executives provide benefits to our stockholders, we have designed our key program elements to encourage our executives to remain with the ~~Company’s short~~Company. For example, our equity awards are subject to multi-year vesting schedules and ~~long-term success~~we set our cash compensation at competitive levels. We also devote significant attention to talent management and ~~reward them for their performance. The consultants retained by~~succession planning to support the Committee do not perform any other services for the Company, and the sole focus of their engagement is to advise the Committee on executive compensation matters. The Committee also conducts a detailed review of all the components of the CEO’sindividual career

growth of our executives and ~~other executive officers’ compensation, including salary, bonus, long-term incentive compensation, perquisites and other personal benefits,~~ to ~~support its executive pay decisions.~~identify promotion opportunities for key individuals.

The Committee, ~~uses~~which oversees our executive compensation program, evaluates these principles regularly to ensure that they are consistent with our goals and needs.

General Compensation Levels

Each year, we review the base salaries and annual and long-term incentive opportunities offered to our executives, including the Named Executive Officers, to ensure that they are competitive with market practices, support our executive recruitment and retention objectives, and are internally equitable among executives. While we do not set specific total compensation targets, our process essentially results in ade facto target – that is, a total amount of compensation that we will pay an executive if all corporate and individual performance objectives are fully met. Each of our key program components is generally set with market median as a guideline, except that long-term incentives are generally based upon a combination of affordability, market practices and retention objectives.

As part of this process, the Committee considers market data ~~drawn~~and input provided by its compensation consultant, Frederic W. Cook & Co., and our management. The market data is derived from ~~multiple nationally recognized~~several published high-technology and general industry compensation surveys. We use this data to match our specific executive positions to those with similar functional descriptions at companies with similar business characteristics. For example, survey data from high-technology companies is weighted more heavily for the Named Executive Officers in charge of business units using more advanced technology (such as Teradata) than for the Named Executive Officers in charge of “lower technology” businesses (such as Systemedia or Customer Services).

In most cases, each Named Executive Officer is specifically matched to comparable positions within the compensation surveys to ~~compare~~ascertain the ~~Company’s compensation program~~appropriate placement relative to ~~market levels. The surveys utilized in 2005 were selected~~market. Where it is not possible to ~~reflect companies and business units of~~match a ~~similar~~Named Executive Officer’s role, he or she will be compared with several other senior executive positions based on functional responsibilities, revenue size ~~and scope as NCR and its businesses, and included a mix of general industry and technology companies. In general, total compensation for executives is targeted to approximate the median~~ of the ~~applicable~~business unit, and individual experience. We also take into consideration market ~~data. In~~trends todetermine how base salary and annual cash incentives are changing from year to year and how each component relates as a percentage of total compensation. We generally start by setting ~~executive compensation opportunities for officers other than~~base salary at the ~~CEO,~~relevant market median and build on that, factoring in performance and the ~~Committee reviews~~experience and skills of the Named Executive Officer. However, we use the market data as context only, and ~~solicits input from~~any cash compensation decisions also factor in individual experience and internal fairness. Accordingly, base salary will – and does – vary among the ~~CEO on~~Named Executive Officers. Annual cash incentive award target levels are set as a percentage of base salary. Through this process, we believe that the ~~individual performance~~cash compensation package for our Named Executive Officers has been balanced for both internal and external fairness.

Peer Groups and Benchmarking

We benchmark the various elements of ~~each executive. Other factors considered~~our executive compensation program in order to gauge where we stand versus the market and our competitors. We use several methods to benchmark our executive compensation practices against other companies. First, we use publicly available market surveys to match the roles of our Named Executive Officers to roles in the surveys. We then compare the actual base salary and annual cash incentives for our Named Executive Officers to those disclosed in the surveys. In addition, we conduct a total compensation study which is reviewed for accuracy and appropriateness by the ~~Committee in setting target~~Committee’s compensation ~~include~~consultant. The Committee’s compensation consultant also conducts an ~~executive’s experience in the job, difficulty of replacement and criticality~~analysis of the ~~position and the individual~~Named Executive Officers to assist the Company with establishing a budget for overall long-term incentive awards and ~~expertise and internal positioning relative to other executives of comparable level and responsibility. The process for determining the CEO’s target compensation is similar, except that~~assists the Committee ~~meets in executive session both~~ with setting compensation for the ~~Committee and other independent directors to review relevant market data and performance information regarding~~Named Executive Officers. For further perspective, we evaluate the ~~CEO.~~

Beginning in 2006, the Committee also reviews tally sheets showing components of executive compensation opportunity, including salary, bonus, equity, accumulated realized and unrealized stock option and restricted stock gains, and actual projected payout obligations under the Company’s retirement plans.

Actual compensation ranges above and below target are based on performance versus specific goals as well as changes in total stockholder return. Assuming that target performance goals are achieved, actual compensation is generally consistent with the targeted median competitive levels. If performance exceeds targeted goals, compensation may exceed median and reach the upper quartile. Conversely, if performance falls below target, compensation may fall below median into the lower quartile.

~~The key components of the compensation program for executive officers are~~ base salary, annual incentive ~~compensation~~awards, and long-term ~~incentivescomprised of stock options and restricted stock. For 2006,~~incentives provided to the Company will shift the emphasis in long-term incentives away from stock options and restricted stock to performance shares, which are grants of restricted stock that vest only if specific operational performance goals are achieved. The following is a description of each of these major componentsnamed executive officers of the program, along with a discussion of the decisions taken by the Committee with regard to 2005 compensation and the limited perquisites offered to NCR’s executive officers. A discussion of the compensation of the CEO also followscompanies in our peer group. We extract this ~~report.~~data from publicly available sources.

~~Base Salary~~

~~Base salaries~~The unique combination of industries represented by our business units creates challenges in identifying comparable companies for executive ~~officers are determined~~compensation benchmarking. We select our primary peer group by ~~the Committee annually, based on (1) a review~~examining our competitors in terms of ~~the market data; (2) each executive’s performance for the prior year; (3) each executive’s experience, expertise~~industry, size and ~~internal positioning; and (4) the level of annual increase for the Company’s employees generally. When the annual review of base salaries occurred~~recruiting. That is, we look first at companies with similar business models in ~~February, 2005, the Committee determined~~comparable industries that the base salaries of all but one of the executive officers were appropriate and did not warrant modification. The Committee increased the base salary of one executive officer whose base salary was determined to be significantly below market and whose performance in 2004 was exceptional. The Committee then revisited the base salaries of executive officers in June, 2005 against updated market data, and determined that moderate mid-year base salary increases were warranted, given current performance levels and the Company’s transition to a new CEO. As a result, the base pay for four executive officers, including Mr. Koehler and Mr. Bocian, was increased.

~~Annual Incentive Compensation~~

Executive officers participate in the NCR Management Incentive Plan for Executive Officers (“MIP”) and are eligible to receive annual incentive awards based upon performance against objectives established by the Committee. Each executive other than the CEO is eligible to receive a target award of 60% of base pay if financial objectives are met. At specified threshold levels of performance the plan pays a portion of the target amount, and up to twice the target amount may be paid if objectives are significantly exceeded.

are of reasonably similar size based primarily on annual revenue and market capitalization. Then, in addition to industry peers, we examine companies that compete with us for executive talent on a national and geographically-specific basis. Because of our unique business mix, when appropriate, we may use alternative peer groups that provide more accurate market information concerning a particular industry in which we operate. For 2006, our primary peer group included the following companies:

Avaya, Inc.

Cognos, Inc.

CA International

Diebold, Inc.

DST Systems, Inc.

EMC Corporation

Fiserv Inc.

Hewlett-Packard

Hyperion Solutions Corporation

IBM

Lexmark International Inc.

Micros Systems, Inc.

Oracle Corporation

Pitney Bowes Inc.

Symbol Technologies, Inc.

Unisys Corp

We periodically review survey data compiled by other compensation consultants to benchmark how we compare to the market on other compensation components, such as executive perquisites or the provisions of severance plans or agreements.

Elements of Executive Compensation

While, as described earlier, our primary emphasis was on cash and equity compensation, we used several compensation elements in our executive compensation program in 2006, including:

Cash compensation, consisting of:

Base salary

Annual incentives (such as the annual cash award opportunities available under the Management Incentive Plan, performance bonuses and retention bonuses)

Long-term equity incentives

Executive perquisites and other personal benefits

Welfare benefits

Post-termination compensation (such as severance and change in control arrangements)

Cash Compensation

In 2006, we provided cash compensation to our Named Executive Officers through base salary and one or more annual incentive opportunities. This is consistent with both general market practice and the practices of our peer groups, which typically provide base salary and annual incentives in the form of cash.

Base Salary

We set base salary to be competitive with the general market and our peer groups. In addition to base salary, we rely on other forms of compensation (both cash and equity) to motivate and reward the Named Executive Officers.

Generally, the median of the relevant market data as described above is used as a guideline for determining base salary. In February of each year, the base salary of each of our Named Executive Officers is reviewed and approved. Adjustments to base salary levels on a year-over-year basis depend largely on the Committee’s assessment of market data and Company, business unit, and individual performance. The Named Executive Officers’ experience, expertise, and internal positioning are also factored into the annual review, and the CEO provides recommendations as to pay actions with respect to the Named Executive Officers other than himself. During our 2006 review, the Committee decided to increase the salaries for Mr. Bocian and Mr. Koehler in support of our retention objectives, and because Mr. Bocian’s salary was well below the market median. In addition, in March 2006, the Committee approved an increase in base salary for Ms. Wallace in connection with her new assignment.

The base salaries paid to the Named Executive Officers during 2006 are reported in the Summary Compensation Table on page 30.

Short-Term Incentives

Our annual incentive awards are payable in cash under our stockholder-approved Management Incentive Plan, which was approved by our stockholders in 2006 (“MIP”), and are performance based to ensure that amounts payable to senior executives are deductible for NCR’s federal income

tax purposes. We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our long-term objectives. This plan ensures that a significant portion of each executive officer’s cash compensation is “at risk” and payable only when our stockholders have also benefited from his or her efforts.

We have designed the MIP so that the awards payable to the Named Executive Officers will be fully deductible for NCR’s federal income tax purposes. As a result, the award payable to each Named Executive Officer for 2006 was based on the Company’s earnings before interest and taxes (“EBIT”). The award was 1.5% of actual EBIT for Mr. Nuti and 0.75% of EBIT for each of the other Named Executive Officers. Pursuant to the terms of the MIP, however, the Committee has the ability to use and did use its negative discretion to reduce the amount of the awards that were generated pursuant to this formula.

For 2006, the Committee established a series of objectives to be taken into consideration in exercising its negative discretion and determining award amounts (the “2006 Annual MIP Objectives”). These objectives consisted of three components. First, each Named Executive Officer was assigned financial performance objectives linked to corporate and/or business unit performance applicable to his or her role. Second, those Named Executive Officers with business unit responsibilities were assigned stretch objectives relating to his or her respective business unit’s financial performance. Finally, each Named Executive Officer was subject to objectives relating to the Company’s endeavors to increase the diversity of its workforce. The Committee determined each executive’s actual award by comparing the actual corporate and/or business unit performance against the metrics and objectives described above. In no circumstances could an actual award exceed the award level established in the MIP.

The 2006 Annual MIP Objectives were based on a percentage of base salary and were comprised of a set of financial performance metrics measured at the corporate and, if applicable, business unit, level. The target payouts for 2006 were set at 100% of base salary for the CEO and 75% of base salary for the CFO and for the Senior Vice Presidents of our Teradata, Financial Solutions, and Customer Services Divisions (“Business Unit SVPs”). We determinedthese percentages after assessing external market conditions and evaluating annual incentive award levels in the relevant peer group and in the various industries in which we operate.

The 2006 target payouts for the CFO and the Business Unit SVPs reflected an increase over the 2005 ~~as in 2004,~~target payouts (which were 60% of base salary). We made this adjustment because we wanted a higher percentage of our senior executive officers’ total compensation to be performance based. The Business Unit SVP positions were singled out for this treatment due to their direct influence on the ~~objectives~~performance of our principal business units. Depending on the executive officer and actual performance results, between 0% and 200% of each executive’s target payout could be possible under the 2006 Annual MIP ~~were designed~~Objectives.

In 2006, we used the MIP and the 2006 Annual MIP Objectives established by the Committee to promote a vision of shared success among our executive officers by providing a ~~straightforward, understandable~~clear, concise framework that unified ~~the Company’s~~our multiple business units around ~~the goal~~our overall corporate success. To achieve this result, at least 25% of the ~~Company’s overall success. To this end, at least 50% of~~ target annual incentive ~~pay~~award for ~~all executive officers~~each Named Executive Officer was based on ~~the performance of the Company’s~~our “non-pension operating income after capital ~~charge.” NPOI is also~~charge” for the ~~key measure used by the Company in setting 2005~~year. For Named Executive Officers who were not aligned with a specific business unit, Messrs. Nuti and Bocian, their entire target annual incentive ~~awards for non-sales employees who are not executive officers.~~

“award was based on this measure. Non-pension operating ~~income” or “NPOI”~~income is ~~based on the Company’s~~essentially our operating income as reported under ~~U.S.~~ generally accepted accounting principles, ~~less~~but without taking into consideration the impact of pension income or expense ~~during~~for the year ~~because~~(“NPOI”). Generally, we exclude the ~~positive or negative~~ impact of our pension plans when calculating our operating income because their impact on financial performance is ~~recognized~~better considered over ~~a number of~~several years, and isdoes not directly ~~related~~relate to an ~~individual executive’s performance.~~executive officer’s performance or the Company’s success in operations. In addition, for purposes of determining annual incentive ~~awards, in limited circumstances,~~award payouts, from time to time we may also exclude non-operational items, such as significant currency fluctuations, acquisitions or restructurings, ~~may be excluded~~ when ~~determining non-pension operating income~~computing NPOI for the Company as a whole or ~~its~~our business units. ~~“Non-pension operating income” represents~~The NPOI of the ~~Company’s~~Company was not adjusted in 2006, but in some cases the NPOI of a business unit was adjusted for the impact of foreign currency rate fluctuation, the sale of lines of business and items that impacted

the business unit’s results but were not included in such business unit’s original 2006 financial plans.

We use NPOI as a performance measure because it reflects our highest business imperative ~~of growing~~– driving growth in profit by increasing revenue ~~while~~and controlling operating ~~costs (excluding the impact of pension),~~costs. We also use this measure because it is simple to calculate and easily understood by both employees and stockholders, and it is a measure that ~~is simple, easily understood and tracked by the Company~~we track throughout the year. As a result, using this measure as a primary consideration in the ~~Committee believes~~exercise of our negative discretion, we believe that ~~this performance measure will help drive~~we are able to influence behaviors that will lead to ~~the Company’s~~our financial success.

~~For executive officers, non-pension operating income~~We adjust NPOI to take into consideration capital charges for the year. These capital charges represent our cost of capital as used in our operations and corporate activities. By incorporating this factor into the performance measure, we are able to ensure that the Named Executive Officers consider the long-term impact of their decisions as well as the short-term financial consequences. The long-term impact is ~~measured “after~~based on charging a cost of capital ~~charge”~~for long-term assets to reflect our investors’ required rate of return. The short-term financial consequence is based on the charge associated with working capital items such as accounts receivable, inventory and other current liabilities. As a result, we expect the MIP to motivate ~~them~~the Named Executive Officers to prudently manage ~~the Company’s~~our assets ~~while driving~~as they strive to increase revenue and lower operating costs. ~~“Capital charge” is the cost of capital used by NCR in its operations and corporate activity.~~

In addition to ~~their company-wide~~this corporate performance measure, ~~executive officers~~Named Executive Officers who are aligned with a specific business ~~units~~unit have at least 50% of their target annual incentive award tied to their business ~~unit~~unit’s operating income and/or ~~revenue. The plan also contains a payout gate: no payout occurs unless~~revenue for the ~~Company achieves at least 2004 actual operating results.~~year under the 2006 Annual MIP Objectives.

~~For 2005,~~Under the ~~Committee set the~~2006 Annual MIP ~~measures at levels that would pay 25%~~Objectives, each of the target bonus if aminimum level of performance was achieved, increasing to 100% of the target bonus if stretch financial objectives were achieved. Payouts greater than 100% would occur if the stretch financial objectives were significantly out-performed, with a maximum payout of 200%. The Company’s 2005 performance was slightly below the stretch financial objectives that would have resulted in a 100% payout. The Teradata and Worldwide Customer Services business units exceeded their target goals, while payouts for the other business units fell short of target, resulting in payouts for the executive officers ranging from 65% to 130% of target.

~~For 2005, the Committee~~Business Unit SVPs also had the ~~discretion~~potential to ~~adjust the MIP awards upward or downward. Other than as described below with respect~~receive a stretch incentive award equal to Mr. Ringler, no discretionary adjustments were made for 2005. For 2006 and subsequent years, subject to stockholder approval of the NCR Management Incentive Plan being presented for vote, the Committee will have the discretion to make downward, but not upward, adjustments.

In addition to the MIP, in June 2005 the Committee approved a diversity incentive program for the executive officers to encourage initiatives to recruit, hire, retain, and promote women and minority employees at upper management levels. Under the program, each executive officer could be awarded an additional 5%25% of his or her base salary if his or her business unit achieved a specific order or revenue target considered to be significantly above the unit’s annual plan. We used the respective business unit’s three-year strategic and operating plan to help determine these stretch goals. We included this component on an “all or none” basis. That is, if the goal was achieved, the executive received the full award; if it was not achieved, he or she received nothing.

For 2006 Annual MIP Objectives, we set the target level for our non-pension operating income after capital charge at our projected one-year business growth objective as we believed that achieving this goal represents a solid step in meeting our longer-term strategic financial objectives. We set the operating income and/or revenue target levels for each business unit to exceed its 2005 operating results by an amount that would represent acceptable growth if the unit was being evaluated as a stand-alone business and would reflect an appropriate contribution relative to our other business units towards our operating income objectives. In the case of the stretch incentive awards for the Business Unit SVPs, target levels were tailored to the strategic measure (for example, customer orders) or financial measure (for example, revenue) which we considered to be a key metric in evaluating that business unit’s competitive position in its market and the levels were set to ensure annual progress towards fulfilling the unit’s three year strategic and operating plan. In making determinations of the desired threshold, target, and maximum performance levels for each financial and strategic measure, we also considered the general economic climate and the specific market conditions that we were likely to face in the upcoming year in each of the business sectors in which we operate. The 2006 Annual MIP Objectives also contained a payout threshold, which suggested that there would be no payout for 2006 unless the Company as a whole achieved, at a minimum, our actual 2005 operating results as measured by NPOI.

In the case of our core financial performance objectives applied at the ~~Committee’s~~Company level, over the past five years, we have performed significantly below target one time, slightly below target three times, and in excess of target one time, but have not achieved the maximum performance level. In the case of the stretch financial performance objectives, 2006 was the first year in which such objectives were set, so no historical performance periods are available for comparison.

When setting objectives to take into consideration when exercising negative discretion under the MIP, we tend to set the threshold, target, and maximum performance levels for annual incentive awards to ensure that the relative level of difficulty of achieving the target level is consistent from year to year. However, in the case of the stretch awards for 2006, we set the performance level on an “all or

none” basis each year at a level of difficulty that reflects a significant increase from the prior year’s operating results and would represent a significant increase in customer orders or revenue, as the case may be, relative to our competitors.

Finally, each of the Named Executive Officers had the potential to receive an additional diversity component under the 2006 Annual MIP Objectives. They had the potential to receive an award equal to 10% of their base salary if the Company achieved three separate measures surrounding the interviewing and hiring of women or ethnic minorities at the management level in the U.S. These three measures were:

25% of open roles above a certain level are filled by diverse candidates;

40% of candidates interviewed for the open roles above a certain level are diverse; and

An increase in the percentage of diverse employees in the targeted population versus the prior year.

Like the stretch incentive award, we considered this award on an “all or none” basis. If the goal was achieved, the Named Executive Officers received the full award; if it was not achieved, no award was payable. Unlike the stretch incentive award, the diversity award measures were based on ~~achievement~~total Company, rather than individual or business unit, performance, in order to better promote the Company-wide efforts to increase the diversity of ~~certain diversity objectives. No payout was~~its workforce. For 2006, all three of the above measures were achieved and each Named Executive Officer received the award payouts.

The annual cash incentive awards earned by the Named Executive Officers for 2006 are reported in the Summary Compensation Table on page 30. Additional information about these awards is reported in the Grants of Plan-Based Awards Table on page 34.

Long-Term Incentives

A substantial portion of our executives’ total compensation is delivered in the form of equity compensation. In 2006, this portion varied directly with each executive’s role and degree of responsibility in the Company. In recent years, we have used three different equity vehicles - stock options, time-basedrestricted stock, and performance-based restricted stock - to provide long-term incentives to our Named Executive Officers. However, in 2006, as part of our emphasis on performance-based compensation, we did not make any time-based restricted stock awards to our Named Executive Officers. Equity awards granted to our Named Executive Officers prior to April 26, 2006, were made under ~~this program for 2005.~~the Management Stock Plan. Awards made on or after April 26, 2006, were made under the Stock Incentive Plan approved by our stockholders at our 2006 annual meeting.

~~Long-Term Incentives~~Stock Options. The stock option awards granted to our Named Executive Officers in 2006 vest through continued service over four years in equal annual 25% increments. This feature is intended to ensure that a Named Executive Officer will realize meaningful value from his or her award only if he or she remains employed with us for at least four years and the market price of our common stock appreciates over that time.

Performance-Based Restricted Stock. The performance-based restricted stock awards granted to our Named Executive Officers in 2006 vest only if, at the end of the three-year performance period, we have achieved specific Cumulative Net Operating Profit (“CNOP”) goals for the period from January 1, 2006 through December 31, 2008. To determine CNOP, we:

Multiplied Controllable Capital by 10% (which approximates our weighted average cost of capital), and

Subtracted this amount from the sum of NPOI as reported for each quarterly reporting period during the performance period.

By Controllable Capital, we mean:

(i)

our working capital (accounts receivable plus inventory, minus the sum of accounts payable, deferred revenue and customer deposits), plus

(ii)

the sum of Property, Plant & Equipment, other current assets excluding taxes, and capitalized software, minus

(iii)

the sum of payroll and employee benefits and other current liabilities, excluding taxes and severance.

We use CNOP because it is the measure that we use to monitor progress in achieving our long-term business objectives.

We apply straight-line interpolation to our actual CNOP for the performance period to compute the number of shares earned by the Named Executive Officers between the specified threshold, target, and maximum payout levels. However, regardless of our CNOP for the performance period, we pay awards only if we achieve a minimum cumulative Return on Capital goal of 40% for the 2006-2008 performance period. Return on Capital is equal to our NPOI divided by Controllable Capital.

For the awards made in 2006, we set the target level for our CNOP atour projected long-term business growth objective over the next three years. In making determinations of the desired threshold, target, and maximum performance levels, we also considered the general economic climate and the specific market conditions that we were likely to face in the upcoming years. We set the target performance levels for performance-based restricted stock awards such that the levels are challenging but achievable, in that the target levels represent projected long-term meaningful growth of the Company. We set our threshold and maximum performance levels approximately 10% below and above, respectively, the target performance level. Although our assessment is subject to change over time, our performance was generally on target for 2006 and we are currently expensing our outstanding performance-based restricted stock for financial statement purposes based upon an assumption of achieving the target performance levels.

Other than performance-based equity awards made to Mr. Nuti in connection with his employment in 2005, this was the first year in which we used performance-based restricted stock awards as a primary equity vehicle for Named Executive Officers.

Annual Awards

We determine the target amount of equity compensation that we want to deliver to the Named Executive Officers each year using both internal and external data. We rely on the Committee’s compensation consultant to validate our assessment of external conditions and to analyze competitive equity award levels in the relevant peer group and in the various industries in which we operate. The peer groups that we use for evaluating the size of each Named Executive Officer’s target compensation level are selected as discussed on pages 17-18. We use this information, as well as the initial award recommendations of the CEO (in the case of the other Named Executive Officers), to make final decisions. We set the size of the equity awards as adollar amount to facilitate our comparison of this component with the other components of each executive’s compensation package and to aid us in assessing targeted total compensation.

In 2006, the Named Executive Officers each received an equity award that was divided equally between stock options and performance-based restricted stock. This reflected a change from 2005 in which equity awards consisted of combinations of stock options and time-based restricted stock. We believe that the mix used in 2006 provided the most appropriate alignment with both stockholder and economic interests. While a stock option provides a direct link to financial performance as measured by growth in the market price of our common stock and emphasizes our overall performance in the market, the performance-based restricted stock awards drive results since their payout is directly tied to the achievement of specific pre-established financial performance goals that have been crafted to help us reach our long-term strategic objectives.

The equity mix reflected in our long-term incentives is consistent with our objective of emphasizing performance-based compensation. The upside potential in stock options is attractive to our Named Executive Officers, and the greater reward that an option provides when we experience favorable long-term performance and growth aligns this vehicle with our stockholders’ interests. The performance-based restricted stock reduces the impact of share price volatility in compensation realized by the executives without sacrificing upside or downside leverage in the program because the ultimate value realized by the executive is influenced by both the number of shares earned, which reflects performance versus predetermined operating objectives, and changes in share price.

We also consider affordability to the Company as a factor in determining the size and mix of each equity award we grant. The accounting expense recognized by the Company in 2006 with respect to long-term incentive ~~program was designed~~awards earned by the Named Executive Officers during 2006 and earlier years is reported in the Summary Compensation Table on page 30. Additional information on these awards, including the number of shares subject to ~~effectively manage~~each award, is reported in the ~~Company’s dilution~~Grants of Plan-Based Awards Table on page 34 and ~~overhang, balance~~ the ~~cost~~Outstanding Equity Awards at Fiscal Year-End Table on page 36.

Ad Hoc Awards

From time to time, we may grant equity awards to the Named Executive Officers outside the annual award process, such as in connection with the hiring of a new executive, for retention purposes, to reward exemplary performance, and/or for promotional

recognition. The CEO provides initial award recommendations to the Committee for approval. Generally, these “ad hoc” awards take the form of either stock options or performance-based restricted stock. In 2006, the ad hoc awards to the Named Executive Officers had effective dates that corresponded to the later of either the date of Committee approval or, in the case of a new hire, the first date of employment. Only two ad hoc awards were granted to Named Executive Officers in 2006.

Equity Award Grant Practices

The Committee approves all equity awards, including our annual equity awards, to our executives, including the Named Executive Officers. Generally, it is our practice for the Committee to make annual awards during its prescheduled February meeting. As reflected in the Grants of Plan-Based Awards Table on page 34, the effective date of the ~~plan with its effectiveness~~annual awards made in ~~driving results important~~2006 corresponded to ~~stockholders, and maximize participant perceived value of~~the date on which the Committee approved these awards.

~~Long-term incentives for 2005 consisted~~We do not coordinate the release of ~~a blend~~information about the Company to affect the value of stock options or other equity awards that are part of the Named Executive Officers’ total compensation packages. Nor do we have a program, plan, or practice specifically designed to coordinate the grant of ad hoc awards with the release of information about the Company. Nevertheless, starting in 2007 we revised our approval process for making equity awards to our executives and other employees in order to standardize the grant dates for our equity awards and to ensure that there is no potential discretion in selecting the timing of awards and specific grant dates. This process works as follows:

•

Annual Awards: Grants of annual equity awards, including stock option grants, are effective on the first calendar day of the month immediately following the date the Committee meets to approve the award. Because the Committee traditionally reviews grant recommendations and approves annual equity awards at its February meeting, the effective date for annual grants will typically be March 1 each year.

•

Ad hoc Awards: In the case of an award approved by the Committee at any meeting that is scheduled at least 30 days in advance of the meeting date, the effective date forthe award will be the first calendar day of the month immediately following the date the Committee approves the award. In the case of awards approved by the Committee at any meeting that is scheduled with less than 30 days notice (a “special meeting”), or via an action by unanimous written consent (“Action by Consent”), the effective date for the award will be determined as follows:

With respect to awards approved at a special meeting held on or before the 15^th day of the month, or via an Action by Consent fully executed on or before the 15^th day of the month, the effective date will be the first calendar day of the month immediately following the special meeting or Action by Consent.

With respect to awards approved at a special meeting held on or after the 16^th day of the month, or via an Action by Consent fully executed on or after the 16^th day of the month, the effective date will be the first calendar day of the second month immediately following the special meeting or Action by Consent.

In no case will an ad hoc award for a newly hired employee be effective prior to the recipient’s effective date of employment.

Once a stock option ~~grants and restricted stock awards under~~grant has been approved by the ~~NCR Management Stock Plan (“Stock Plan”). Generally, options granted to executives vest in equal annual installments over four years and expire ten years from~~Committee, the ~~date of grant. The~~award’s exercise price ~~equals~~(which must be equal to the fair market value of ~~the~~our common stock on the grant date) is determined under the methodology approved by the Committee. In 2006, we determined the fair market value of our common stock (and, thus, the option’s exercise price) by averaging the high and low trading prices on the effective date of ~~grant. Restricted~~the award. However, in response to market trends, and after completing an extensive analysis, the Committee decided that, effective January 1, 2007, we would compute the fair market value of our common stock ~~awards~~(and, thus, the exercise price of our stock option awards) by using the closing market price of the common stock on the effective date of the award.

18We do not have any program, plan, or practice for setting the exercise price of our stock option

~~also vest in equal annual installments over four years, except~~awards on any date other than the effective date of the award. If an award’s effective date happens to fall on a non-trading day (such as a Saturday, Sunday, or holiday), we use the first trading date immediately preceding the effective date of the award to compute the option’s exercise price. It is our policy not to permit the repricing of stock option awards.

As previously described, it is our practice to determine the dollar amount of equity compensation that ~~restricted stock granted for retention purposes vests over three years. Options and restricted stock vest in full upon a Change in Control, as defined in the NCR Change in Control Severance Plan for~~we want to provide to our Named Executive Officers ~~described later in this proxy statement under “Employment Agreements~~ and ~~Change in Control Arrangements.” Options, but not restricted stock, vest in full upon retirement from the Company. Beginning with~~then to convert those values into a specific number of shares or options ~~granted in 2006, upon retirement, unvested options are forfeited.~~

The size of the awards of long-term incentives under the Stock Plan was determined by the Committee after considering and balancing market data, the desired mix of cash and equity, and financial considerations, including the impact on stockholder dilution, affordability and expensing considerations. Talent management and performance considerations were also factored into individual awards by the Committee, including the mix of options and restricted stock.

On occasion, in connection with the Company’s efforts to hire, retain or promote executive officers, restricted stock is also awarded. In 2005, retention awards of restricted stock were awarded to Michael Koehler.In addition, one other Section 16 officer receivedusing a ~~restricted stock award in connection with retention initiatives.~~

During 2005, the Committee worked closely with its outside consultants to undertake a thorough review of the principles and policies underlying the Company’s Long-Term Incentive program, as described in this report. This review confirmed that such principles are consistent with sound executive compensation practices and principles, and will be continued in 2006 with certain modificationsmethodology based on the Committee’s in-depth analysis. Specifically, in 2006 the Committee has shifted the weighting of long-term incentives away from stock options and restricted shares, each of which create fixed expense that is not tied to operational performance, and introduced new plans focused on performance shares and stock options when appropriate. Performance shares are grants of restricted stock that vest over a 3-year period based on achievement of predetermined levels of cumulative net operating profit. Failure to achieve the threshold performance requirements results in forfeiture of the performance shares. Twenty-five percent of the shares vest if the threshold level is achieved, and one hundred percentvest if the target level is achieved, with straight line interpolation between the points. Achievement above the target level will result in up to a 150% payout. Thus, the restricted stock portion of the long-term incentive award will be directly tied to operational performance.historical trading prices.

Executive Perquisites and Welfare Benefits

~~NCR prefers~~Perquisites and other personal benefits do not comprise a significant aspect of our executive compensation program. Historically, we have kept the number of executive perquisites to ~~compensate its executive officers in cash~~a minimum. The perquisites that are provided to our Named Executive Officers are limited to items that enable them to be more efficient (such as financial planning), balance their personal, business, and ~~equity rather than with perquisites. Consequently, NCR’s~~travel schedules (such as use of the corporate aircraft, Company-owned lodging and rental cars), and promote their continued good health (such as the Executive Medical Program). All perquisites for ~~executives are minimal and~~Named Executive Officers must be approved by the Committee. ~~The Company does not provide its executive officers with perquisites such~~

Except as ~~club memberships. The Company has~~described below, our corporate aircraft ~~that~~ are available to ~~executives,~~the Named Executive Officers, as well as other employees, for ~~business travel. Company policy permits~~business-related travel only. We permit the ~~use~~family members of ~~such aircraft~~the executive officers, including Named Executive Officers, to accompany them on limited occasions ~~by executives’ family members~~on corporate aircraft as long as ~~there~~such travel is noapproved by the Chief Executive Officer and the Company does not incur any incremental cost ~~to the Company.~~from such use. In addition, as set forth in the ~~Committee has~~letter agreement described on pages 28-29, we have authorized the ~~CEO to use the Company’s aircraft for~~ personal use of our corporate aircraft by Mr. Nuti on an ~~availability~~as-available basis, provided that the imputed income ~~related to~~from such personal use does not exceed $35,000 per year. ~~The Committee has~~We also approved the use of ~~the Company’s~~our corporate aircraft by ~~Gerald Gagliardi and another executive officer~~Mr. Nuti for commuting between ~~their residences~~his residence and work ~~locations~~location on a weekly or less frequent basis ~~due~~and tax reimbursements for Mr. Nuti to ~~Company-initiated changes in their work locations. The Committee also approved payment~~the extent of ~~a tax gross-up for certain executives, including Messrs. Nuti, Gagliardi and Ringler, who incur~~the imputed income ~~for~~that he incurs from his personal use of ~~the~~our corporate aircraft.

~~During~~In 2006, Mr. Nuti, who maintains his primary residence in another state, was provided with Company-paid lodging and meals at a Company-owned facility while working at our Dayton, Ohio headquarters. In addition, we paid for Mr. Nuti’s use of a rental car to commute to work from this facility. In addition, Mr. Collins also has use of a Company-paid car for business, commuting, and personal purposes.

We currently provide our Named Executive Officers up to $5,000 annually under our Executive Medical Program for a comprehensive physical examination and diagnostic testing. In 2006, we arranged for the Cleveland Clinic to provide these services. We believe that this perquisite benefits our stockholders by encouraging our executives to proactively maintain their health, thereby minimizing health-related disruptions of our business.

We also currently provide the Named Executive Officers with a $12,000 annual allowance under our Financial Counseling Program that may be used for financial and tax planning, estate planning, financial planning-related legal services, and income tax preparation. We believe that good financial planning by experts reduces the amount of time and attention that the Named Executive Officers would otherwise spend on that topic and maximizes the net financial reward that they receive under our executive compensation program.

Under Mr. Nuti’s employment letter agreement, we agreed to reimburse him for the legal expenses he incurred in negotiating the terms of his employment, up to $25,000. We incurred $23,841 of this expense during 2005 and $1,159 during 2006.

The incremental costs to the Company associated with providing each of these perquisites to the Named Executive Officers is described in the Perquisites Table on page 32.

The Named Executive Officers are eligible to participate in our Company-wide medical, dental, life, and disability insurance plans. Any participant, including a Named Executive Officer, may purchase higher levels of coverage for particular benefits. Some of the Named Executive Officers have taken advantage of this option. Mr. Collins is based in the United Kingdom and his benefits include standard medical, life and disability insurance plans generally available to our United Kingdom employees.

Retirement Benefits

Historically, we have provided retirement benefits to our U.S. employees under a number of defined benefit pension plans. The plans that are applicable to our Named Executive Officers include: the NCR Pension Plan, the NCR Nonqualified Excess Plan and the Retirement Plan for Officers of NCR. The NCR Pension Plan is a broad-based tax-qualified defined benefit pension plan for our U.S. employees. The NCR Nonqualified Excess Plan is a non-tax-qualified defined benefit pension plan that restores benefits to participants in the NCR Pension Plan that would otherwise be lost under that plan due to limitations under the federal income tax laws on the provision of benefits under tax-qualified defined benefit pension plans. The Retirement Plan for Officers of NCR is a non-tax-qualified supplemental executive retirement plan that provides more generous benefits than the NCR Nonqualified Excess Plan for designated executives, including some of the Named Executive Officers.

Starting in 2004, we began transitioning our U.S. retirement program from a defined benefit to a defined contribution structure. In 2004, we closed the plans to new participants and froze the pension benefits for existing U.S. participants under the age of 40. In 2006, we froze the pension benefits under these plans as of December 31, 2006, for all of the remaining U.S. participants, including the Named Executive Officers. Freezing the plans means that, while participants retain the pension benefits already accrued, no additional contributions will be made by the Company after the effective date of the freeze. At the same time, we increased our matching contribution to our Section 401(k) savings plan. The changes to the defined benefit pension plans and the enhancement to the Section 401(k) plans were designed to provide a valued benefit to our employees while balancing our need to manage costs, be more competitive and optimize stockholder value.

Mr. Collins is an employee in the U.K. and participates in the U.K. Defined Contribution Pension, which is a defined contribution plan. He is not a participant in the U.K. pension plan, which was closed to participants in 2004.

Mr. Bocian, Mr. Koehler and Ms. Wallace are the only Named Executive Officers eligible for benefits under our defined benefit pension plans.Because Mr. Nuti joined NCR after the plans had been closed to new participants, he is not eligible to receive any pension benefits from the Company.

The actuarial present values of the accumulated pension benefits of the Named Executive Officers who participate in these plans as of the end of 2006, as well as other information about each of our defined benefit pension plans, are reported in the Pension Benefits Table on page 40.

Change in Control Arrangements

From time to time, we may explore potential transactions that could result in a change in control of the Company. We believe that when a transaction is perceived as imminent, or is taking place, we should be able to receive and rely on the disinterested service of the Named Executive Officers, without them being distracted or concerned by the personal uncertainties and risks associated with such a situation. We further believe that our stockholders are best served if their interests are aligned with the interests of our executives, and providing change in control benefits should eliminate, or at least reduce, the reluctance of senior management to pursue potential transactions that may enhance the value of our stockholders’ investments.

In order to further these objectives, in 2006, we adopted a Change in Control Severance Plan. The plan provides for separation payments and benefits to our executives based on the ~~circumstances~~plan level, or “tier,” to which the executive is assigned by the Committee. We selected these benefit levels for the different tiers because, based on our analysis, they represent the most common market practices among our peer group. Messrs. Nuti, Bocian, Koehler and Collins and Ms. Wallace participate in ~~each case,~~Tier I, which provides for the ~~Committee approved~~following benefits:

A payment equal to 300% of the ~~extension~~executive’s annual base salary and targeted bonus opportunity under the Management Incentive Plan;

•

A payment equal to apro rata portion of the current year’s target bonus opportunity under the Management Incentive Plan, based on the number of days in the year prior to the date of termination;

Accelerated vesting of ~~relocation~~all performance-based and time-based restricted stock and options;

Medical and dental benefits and life insurance coverage for the executive and his or her dependents at the same level he or she received during his or her employment for a period of three years;

Outplacement assistance for a period of one year; and

An excise tax gross-up, if applicable.

The estimated payments and benefits payable to the Named Executive Officers assuming an ~~executive officer,~~event triggering payment under these plans and arrangements as of the last day of 2006 are reported in the discussion of Potential Payments Upon Termination or Change in Control beginning on page 44 of this proxy statement. In general terms, events that trigger such payment ~~of temporary living~~are that a change in control has occurred, and, ~~rental car expenses for an executive officer who commutes between his residence and work location. In addition,~~within the two year period following the change in control, (i) a participant’s employment is terminated by the Company ~~provides limited home security monitoring and consulting services to some~~without cause (other than by reason of ~~its executive officers. In 2005,~~ the ~~Company also approved programs of financial planning and physical exams~~participant’s death or disability) or (ii) a participant’s employment is terminated by the participant for ~~Section 16 officers, to commence in 2006.~~good reason.

~~Stock Ownership Guidelines~~Severance Agreements

~~NCR has~~To ensure that we are offering a competitive executive compensation program, we believe it is important to provide reasonable severance benefits to our executive officers, including the Named Executive Officers.

We do not have individual severance agreements with Mr. Bocian, Mr. Koehler, Ms. Wallace or Mr. Collins. Instead, they are covered under our standard U.S. Reduction-in-Force Plan, except for Mr. Collins, who is covered under our U.K. Reduction-in-Force plan. Generally, these plans provide employees with severance benefits if we terminate their employment in connection with a business restructuring (unless the termination is for cause). The payments and other benefits provided under these plans reflect the fact that it may be difficult for these individuals to find comparable employment within a short period of time.

The U.S. plan provides our U.S. employees with one week of separation pay for each full year of service (employees with one year of service or less receive a minimum of two weeks of separation pay, while employees with either two or three full years of service receive a minimum of four weeks ofseparation pay). Payments are capped at an amount equal to 26 weeks of separation pay. The plan also provides employees with outplacement services to assist them with securing new employment and the continuation of Company-subsidized medical coverage for them and their dependents for up to 26 weeks. Finally, the plan gives us the discretion to increase the number of weeks of separation pay that an employee receives. It is generally our practice to negotiate such terms with each of our most senior executives, including our Named Executive Officers.

Our U.K. plan is statutorily prescribed and provides our U.K. employees with a half of a week of pay per year of service for service provided during the time the employee was between 18 and 21 years old, plus one week of pay per year of service for service provided during the time the employee was between 22 and 40 years old, plus one and a half weeks of pay per year of service for service provided during the time the employee was more than 40 years old, up to a total limit of 30 weeks of pay with a weekly pay limit in 2006 of GBP £290. Our U.K. plan includes, in addition to the statutorily prescribed component, a discretionary severance benefit that allows the Company to provide an additional severance benefit of two weeks of pay per year of service up to a maximum of 23 years of service. Like the U.S. plan, the U.K. plan permits us to exercise our discretion to adjust Mr. Collins’ separation pay if we consider it appropriate.

We have a separate severance arrangement with Mr. Nuti under the letter agreement dated as of July 29, 2005 that we entered into with him when he became our CEO. The agreement provides that, in the event we terminate his employment (other than for cause) or if he were to voluntarily terminate employment for good reason, he would receive:

A payment equal to 150% of his annual base salary;

A payment equal to 150% of his targeted bonus opportunity under the Management Incentive Plan;

•

A payment equal to apro rata portion of the applicable award payout under the Management Incentive Plan for the year in which the severance occurs; and

Medical benefits for himself and his dependents, equal to the level he received

during his employment, for a period of 18 months.

The estimated payments and benefits payable to the Named Executive Officers assuming an event triggering payment under these plans and arrangements as of the last day of 2006 are reported in the discussion of Potential Payments Upon Termination or Change in Control beginning on page 44 of this proxy statement.

Equity Ownership Guidelines

We have adopted stock ownership guidelines ~~that are intended to encourage executives to increase their equity stake in~~for our executive officers, including the ~~Company, which aligns their~~

~~interests more closely with those of stockholders. The~~Named Executive Officers. These guidelines encourage ~~the executive officers~~our executives to increase their ownership of ~~NCR~~common stock to a ~~face~~market value equal to two times base salary (three times ~~for~~base salary in the case of our CEO) over a period of five years. ~~Ownership can include~~For these purposes, ownership includes interests in restricted stock, stock acquired through ~~the Company’s~~our employee stock purchase plan, and investments in NCR stock through the Company’s Section 401(k) savings plan. ~~Options to acquire NCR stock~~Stock options are not taken into consideration in meeting the ownership guidelines.

~~Compensation~~The guidelines are intended to ensure that our executive officers maintain an equity interest in the Company at a level sufficient to assure our stockholders of ~~Chief Executive Officer~~their commitment to value creation, while satisfying an individual’s needs for portfolio diversification.

Tax Deductibility Policy

~~William Nuti was hired as CEO effective August 7, 2005. A substantial portion of his~~We believe that the incentive compensation ~~package was designed~~paid to be delivered on a pay-for-performance basis. He received a significant equity grant of 85,000 restricted shares and 650,000 stock options in lieu of a sign-on bonus, and the majority of his stock option grant will vest on December 31, 2008, only if the Company achieves specified performance goals. His annual base pay was set at $1,000,000 and his target annual MIP incentive percentage was set at 100% of base pay, based on the performance measures previously approved for the CEO for 2005, with the bonus payout potentially ranging from 0% to 200% of target. For calendar year 2005, his MIP award was set at a guaranteed minimum of $500,000, with the ability of the Board to adjust it upward in its discretion. No discretionary adjustment was made and his payout was the guaranteed amount of $500,000.

Mr. Nuti is eligible to participate in the Company’s Internal Revenue Code Section 401(k) savings plan, but is not eligible to participate in the NCR Pension Plan or any nonqualified supplemental pension plan sponsored by the Company, because these plans were closed to new participants effective September 1, 2004. His employment agreement did not provide for any additional pension arrangement, because of a preference for delivering his total compensation through base pay and performance-based annual and long-term incentives.

~~Like other~~our executive officers, ~~Mr. Nuti’s Company-provided perquisites are minimal. He is authorized to use~~including the ~~corporate aircraft~~Named Executive Officers, for ~~travel between his residence and business location~~2006 qualifies as “performance-based compensation” for a limited time until he relocates his personal residence.In addition, he is authorized to use the corporate aircraft for personal travel on an availability basis for himself and family members, up to a maximum annual imputed income valuepurposes of $35,000. Mr. Nuti also receives a tax gross-up for imputed income related to use of the corporate aircraft, and will participate in the executive financial counseling and executive physical programs effective in 2006.

~~Compensation of Former Chief Executive Officers~~

Mark Hurd served as CEO from January 1, 2005 until he voluntarily resigned effective March 30, 2005.For 2005, his annual base pay was set at $935,000. His target annual MIP incentive percentage was 100%. He did not receive a MIP award for 2005 due to his resignation.

Mr. Hurd’s long-term incentive grant for 2005 consisted of a mix of options and restricted stock with a face value of $6,000,000. According to their terms, his unvested options and restricted stock were forfeited upon his resignation, including his 2005 awards. In exchange for a noncompetition agreement and Mr. Hurd’s agreement to provide transition assistance to the incoming CEO, the Board amended Mr. Hurd’s vested stock options to make them exercisable for 90 days following his termination, rather than the standard 59 days.

Following Mr. Hurd’s resignation, Board member James Ringler was appointed to serve as President and Interim CEO until a permanent replacement was hired. Pursuant to an Employment Agreement entered into with Mr. Ringler in connection with his service as Interim Chief Executive Officer, Mr. Ringler’s annual base pay in such role was set at $1,000,000, which was prorated for his period of service. In connection with his appointment, he was awarded 52,610 stock options, of which two-thirds vested immediately, and the remaining one-third vested monthly over three months, beginning on August 1, 2005. His target annual MIP incentive percentage was 100% of his base pay, based on the performance measures previously approved for the CEO, which was also prorated for his period of service. As provided in an amendment to his Employment Agreement, his MIP will be paid to him partially in the form of shares of common stock and the remainder in cash, in an amount sufficient to pay the tax withholdings applicable to the share award. His MIP award value,

as prorated for his period of service, was $331,346. The Committee exercised its discretion to award him a total value of $547,441 in recognition of his assistance during the transition period immediately following the appointment of Mr. Nuti.

~~Additional information about the terms of employment for the individuals serving as CEO in 2005 is provided under “Employment Agreements.”~~

~~Policy on Qualifying Compensation for Deductibility~~

Section 162(m) of the Internal Revenue Code ~~limits~~and, thus, is fully deductible for federal income tax purposes. While we generally try to ensure the ~~tax deduction to $1 million for~~deductibility of the incentive compensation paid to ~~the~~our executive officers, offrom time to time we award cash or equity compensation to an executive that is subject to Section 162(m) if we believe that it is in our best interests and our stockholders’ best interests, even if these amounts are not fully tax deductible.

The following tables provide additional detail on the ~~Company, unless certain requirements are met. The Company’s policy~~topics discussed in thisCompensation Discussion and Analysis with respect to the deductibility limit of Section 162(m) generally is to preserve the federal income tax deductibility of compensation paid when it is appropriate and is in the best interests of the Company and its stockholders.our Named Executive Officers.

We have structured the Company’s executive compensation program so that a majority of the amounts paid will be fully deductible. However, some of the compensation that we are able to pay under this program cannot be deducted. For example, because the Committee has historically retained certain discretion under the MIP in making annual incentive awards, amounts payable to executive officers may not be fully deductible where the$1 million deduction limit under Section 162(m) is otherwise reached. In addition, while the Company’s stock option grants currently meet the performance- based requirements under Section 162(m), the restricted stock awards to executives do not. The Committee believes that the payment of such nondeductible compensation has been appropriate under the circumstances and in the best interests of the Company and its stockholders. However, for 2006 and subsequent years, and subject to stockholder approval of the NCR Management Incentive Plan and the NCR Stock Incentive Plan being presented for vote, the Committee intends to administer the annual and long-term incentive programs in a manner that permits the Company to preserve the deductibility of a greater portion of incentive awards in accordance with the requirements of Section 162(m) for performance-based compensation. In addition, the performance share plan is intended to be administered in a manner that meets the requirements for performance-based compensation.

~~Dated: February 22, 2006~~

~~Linda Fayne Levinson, Chair~~

~~Mark P. Frissora~~

~~James M. Ringler~~

Victor Lund*

~~Committee member from April~~ 27 ~~2005 to September 6, 2005~~

~~EXECUTIVE~~ COMPENSATION TABLES

The following tables present certain compensation information for our Chief Executive Officer, two other individuals who served as Chief Executive Officer during 2005, and our four other most-highly compensated executive officers as of December 31, 2005, each of whom is sometimes also referred to as a “Named Executive.”

Summary Compensation Table

~~Name and~~
~~Principal Position~~

~~Year~~

~~Annual Compensation~~

~~Long-Term Compensation~~

~~All~~

~~Other~~

~~Compen-~~

~~sation~~
~~$(10)~~

~~Salary~~

~~Bonus~~

~~Other~~

~~Annual~~
~~Compen-~~

~~sation~~
~~$(7)~~

~~Awards~~

~~Payouts~~

~~Restricted~~
~~Stock Awards~~
~~$(8)~~

~~Securities~~
~~Underlying~~
~~Options/SARs~~

~~#(9)~~

~~LTIP~~

~~Payouts~~
$

~~William R. Nuti(1)~~

~~President and Chief~~

~~Executive Officer~~

~~2005~~
~~2004~~
~~2003~~

~~365,385~~
—
—

~~500,000~~

—
—

~~108,192~~
—
—

~~2,979,250(8h)~~
—
—

~~650,000(9g)~~
—
—

—
—
—

—
—

~~Gerald Gagliardi(2)~~
~~Former Senior Vice President, Worldwide Customer Services Division~~

~~2005~~
~~2004~~
~~2003~~

~~430,000~~
~~430,000~~
~~430,000~~

~~283,181~~
~~269,178~~
~~267,670~~

~~20,144~~
0
0

     ~~95,500(8a)~~
   ~~109,776(8b)~~
   ~~274,440(8c)~~
    0

~~11,046(9a)~~
~~32,000(9b)~~

~~64,000(9c)~~

—
—

—

~~12,054~~
~~6,029~~
0

~~Jonathan Hoak~~
~~Senior Vice President,~~

~~General Counsel and Secretary~~

~~2005~~
~~2004~~
~~2003~~

~~365,000~~
~~363,502~~
~~357,210~~

~~205,074~~
~~245,923~~
~~206,040~~

0
0

     ~~95,500(8a)~~
     ~~42,538(8b)~~
   ~~274,440(8d)~~
    0

~~11,046(9a)~~
~~22,000(9b)~~
~~30,000(9c)~~

—
—
—

~~12,646~~
~~8,125~~
~~7,500~~

~~Michael Koehler(3)~~
~~Senior Vice President, Teradata Division~~

~~2005~~
~~2004~~
~~2003~~

~~358,269~~
~~335,000~~
~~336,608~~

~~279,534~~
~~288,738~~
~~156,110~~

~~1,700~~
0
0

~~1,802,512(8a,8e)~~
~~68,610(8b)~~
~~284,700(8f)~~

~~15,648(9a)~~
~~30,000(9b)~~
~~34,000(9c)~~
~~30,000(9e)~~

—
—
—

~~9,141~~
~~7,896~~
~~7,500~~

~~Peter J. Bocian(4)~~
~~Senior Vice President and Chief Financial Officer~~

~~2005~~
~~2004~~
~~2003~~

~~322,200~~
~~251,884~~
~~215,331~~

~~182,039~~
~~166,896~~
~~83,838~~

0
0
0

   ~~105,030(8a)~~
   ~~317,980(8b,8i)~~
    0

~~12,150(9a)~~
~~28,000(9b,9i)~~
~~20,000(9c)~~

—
—
—

~~14,323~~
~~7,709~~
~~7,205~~

~~James M. Ringler(5)~~
~~Chairman of the Board and Former President and~~
~~Interim Chief Executive Officer~~

~~2005~~
~~2004~~
~~2003~~

~~357,692~~
—
—

~~547,441~~

—
—

~~10,854~~
—
—

0
—
—

~~52,610(9h)~~
—
—

—
—
—

—
—

~~Mark Hurd(6)~~

~~Former President and Chief~~

~~Executive Officer~~

~~2005~~
~~2004~~
~~2003~~

~~262,519~~
~~899,423~~
~~727,308~~

~~1,122,000~~
~~792,000~~

~~14,833~~
0
0

~~2,387,099(8a,8g)~~
~~382,432(8b,8g)~~
0

~~184,094(9a,9f)~~
~~200,562(9b,9f)~~
~~110,000(9c,9f)~~
~~100,000(9d,9f)~~

—
—
—

~~31,625~~
~~8,125~~
~~7,500~~

The table that follows this discussion summarizes the total compensation paid to or earned by each of our Named Executive Officers for the fiscal year ended December 31, 2006. The narrative below describes current employment agreements and material employment terms with each of our Named Executive Officers, as applicable.

Employment Agreements and Material Employment Terms

During 2006, Messrs. Nuti and Collins and Ms. Wallace served as executive officers of NCR pursuant to letter agreements with the Company. Each letter agreement sets forth, among other things, the Named Executive Officer’s base salary, bonus opportunities, entitlement to participate in NCR’s benefit plans and initial equity awards. None of the letter agreements has a fixed expiration date. Messrs. Bocian and Koehler do not have agreements with NCR regarding their service as executive officers.

Pursuant to the letter agreements, the base salaries for Messrs. Nuti and Collins and Ms. Wallace were: Mr. Nuti, $1,000,000; Mr. Collins, GBP £237,709; and Ms. Wallace, $294,000 through February 28, 2006, and $330,000 thereafter. The base salaries for Messrs. Bocian and Koehler established by the Committee were: Mr. Bocian, $350,000 through February 28, 2006, and $400,000 thereafter; and Mr. Koehler, $385,000 through February 28, 2006, and $425,000 thereafter.The letter agreements for Messrs. Nuti and Collins and Ms. Wallace provide that they will each be eligible to receive a bonus under NCR’s Management Incentive Plan (the “MIP”). Actual receipt of a bonus depends on whether NCR meets certain annual performance metrics that are established by the Committee. The letter agreements provide that bonuses may range from 0% of target if the targeted objectives are not met up to a maximum bonus of 200% of target, with a target bonus equal to 100% of annual base salary for Mr. Nuti and 75% of annual base salary for Mr. Collins and Ms. Wallace. Pursuant to his letter agreement, in 2006 Mr. Collins received a guaranteed award under the MIP equal to 100% of his annual base salary. The Committee has also determined that Messrs. Bocian and Koehler are eligible to participate in the MIP.See “Short TermIncentives” in theCompensation Discussion and Analysis above for a further discussion of potential bonus awards under the MIP.

The letter agreement signed by Mr. Collins in 2006 also provided for an initial grant of stock options and performance-based restricted shares upon his becoming employed by NCR. Mr. Collins received an award of stock options and performance-based restricted shares with an aggregate grant date fair value of $2,385,793. Mr. Nuti’s letter agreement also provided for initial equity awards, which were granted in 2005 and consisted of stock options and restricted shares with an aggregate grant date fair value of $12,499,570, and for a subsequent equity award, to be granted in 2006 and consisting of stock options and performance-based restricted shares with an aggregate minimum value of $2,500,000. The letter agreement signed by Ms. Wallace in 2006 in connection with her appointment to the position of Senior Vice President, Worldwide Customer Services, from her former position of Senior Vice President, Human Resources, also provided for an award of stock options and performance-based restricted shares with an aggregate grant date fair value of $315,561. See “Long Term Incentives” in theCompensation Discussion and Analysis above for further information regarding the terms of these awards.

Pursuant to his letter agreement, Mr. Nuti is entitled to use NCR’s corporate aircraft for commuting between his personal residence and NCR’s offices and for personal use on an availability basis up to $35,000 of imputed income (or such higher amount as approved by the Committee), with such amount grossed-up for tax purposes. NCR also provides Mr. Nuti with temporary housing, meals and rental cars while he is working at NCR’s offices. Pursuant to his letter agreement, in 2006 Mr. Collins received a one-time lump sum payment of £55,931 related to the move of Mr. Collins and his family from their home in the United States to the United Kingdom. Mr. Collins is also entitled to either a company vehicle or vehicle allowance, at his discretion.

The letter agreements described above each provide that the applicable Named Executive Officer

is entitled to participate in the Change in Control Severance Plan. In addition, the Committee has determined that Messrs. Bocian and Koehler are entitled to participate in such plan. Please see “Change in Control Arrangements” in theCompensation Discussion and Analysis above for a description of the Change in Control Severance Plan.

Each letter agreement also provides that the particular Named Executive Officer will be entitled to participate in applicable employee benefit plans maintained by NCR.

Salary and Bonus in Proportion to Total Compensation

NCR’s Named Executive Officers generally receive 60-65% of their total direct compensation inthe form of base salary and cash incentive awards under the MIP. As noted in theCompensationDiscussion and Analysis beginning on page 15 of this Proxy Statement, the Committee believes that a significant portion of each Named Executive Officer’s compensation should be in the form of equity awards. The Committee believes that NCR’s current compensation program gives our Named Executive Officers a substantial alignment with stockholders, while also permitting the Committee to incentivize the Named Executive Officers to pursue short and long-term performance goals. Please see theCompensation Discussion and Analysis for a description of the objectives of NCR’s compensation program and overall compensation philosophy.

2006 Summary Compensation Table


Name and Principal Position (a)	Year (b)	Salary ($) (c)	Bonus ($) (d)	Stock Awards ($) (e)⁽⁴⁾	Option Awards ($) (f)⁽⁵⁾	Non-Equity Incentive Plan Compensation ($) (g)⁽⁷⁾	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (h)⁽¹³⁾	All Other Compensation ($) (i)⁽¹⁴⁾	Total ($) (j)
Nuti, William President and Chief Executive Officer	2006	1,000,000	—	1,460,125	3,230,347(6)	935,140(8)	—	348,780	6,974,392
Bocian, Peter Senior Vice President and Chief Financial Officer	2006	390,000	—	225,774	226,855	290,542(9)	121,726	27,296	1,282,193
Koehler, Michael Senior Vice President, Teradata Division	2006	417,000	—	852,963	259,156	332,150(10)	175,405	27,682	2,064,356
Collins, Malcolm⁽¹⁾ Senior Vice President, Financial Solutions Division	2006	367,803	464,514(3)	336,823	249,350	38,555(11)	—	136,281	1,593,326
Wallace, Christine⁽²⁾ Senior Vice President, Worldwide Customer Services	2006	322,800	—	273,420	240,148	296,067(12)	125,466	27,332	1,285,233

(1)

Mr. ~~Nuti~~Collins was ~~appointed~~hired as Senior Vice President, Financial Solutions Division, effective March 1, 2006. Mr. Collins is based in the United Kingdom, and ~~Chief Executive Officer~~his annual base salary is GBP £237,709. The amounts reported in the Summary Compensation Table with respect to Mr. Collins are in U.S. dollars and were converted from GBP using the average exchange rate for the month in which each payment was made or accrued, as ~~of August 7, 2005.~~applicable, except that his bonus amount and Non-Equity Incentive Compensation amount were converted from GBP using the average exchange rate for January 2007.

(2)

~~Mr. Gagliardi resigned from his~~Ms. Wallace was appointed to the position asof Senior Vice President, Worldwide Customer Services, ~~Division, as~~from her former position of ~~February 28, 2006, and will retire from NCR on April~~Senior Vice President, Human Resources, effective March 1, 2006.

(3)

As provided in Mr. ~~Koehler~~Collins’ offer letter at the time of his employment by the Company, Mr. Collins was ~~promoted~~guaranteed a minimum award under the Company’s 2006 Management Incentive Plan equal to 100% of his ~~current position, Senior Vice President, Teradata Division, on March 14, 2003. From October 1999 until that time, he was Vice President, Teradata Global Field Operations.~~2006 base salary. The amount reported has been converted from GBP utilizing the method described in footnote 1.

(4)

~~Mr. Bocian~~The amounts reported in this column are equal to the dollar amount recognized for financial statement reporting purposes in 2006 in connection with performance-based restricted stock granted under the Company’s Management Stock Plan, which was effective through April 25, 2006, and the Company’s Stock Incentive Plan, which was approved by the Company’s stockholders and became ~~Senior Vice President~~effective on April 26, 2006. With respect to performance-based restricted stock granted in 2006 and ~~Chief~~2005, respectively, see Note 8 to the Consolidated Financial ~~Officer~~Statements included in the Company’s Annual Report on ~~September 1, 2004. From October 2003 until that time, he served as Vice President, Finance and Interim Chief Financial Officer. He was Chief Financial Officer~~Form 10-K for the year ended December 31, 2006 for a discussion of the ~~Company’s Retail and~~relevant assumptions used in calculating the dollar amount recognized for financial statement reporting purposes with respect to the applicable fiscal year in accordance with Financial ~~Group from 2002 to 2003. From 1999 to 2002, Mr. Bocian was Chief~~Accounting Standards Board Statement of Financial ~~Officer and Vice President~~Accounting Standards no. 123 (revised 2004),Share Based Payment (“FAS 123R”). For further information about awards made in 2006, see the Grants of ~~the Retail Solutions Division.~~Plan-Based Awards table beginning on page 34 of this Proxy Statement.

(5)

~~Mr. Ringler~~Except as set forth in footnote 6, the amounts reported in this column are equal to the dollar amount recognized for financial statement reporting purposes in 2006 in connection with options granted under the Company’s Management Stock Plan, which was ~~appointed President~~effective through April 25, 2006, and ~~Interim Chief Executive Officer as of March 30,~~the Company’s Stock Incentive Plan, which was approved by the Company’s stockholders and became effective on April 26, 2006. With respect to options granted in 2006, 2005 and ~~served as such until August 7, 2005.~~2004, respectively, see Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006 for a discussion of the relevant assumptions used in calculating the dollar amount recognized for financial statement reporting purposes with respect to the applicable fiscal year in accordance with FAS 123R. For further information about awards made in 2006, see the Grants of Plan-Based Awards table beginning on page 34 of this Proxy Statement.

(6)

The amount reported for Mr. ~~Hurd was promoted~~Nuti includes an amount equal to ~~President and Chief Executive Officer~~the dollar amount recognized for financial statement reporting purposes for fiscal year ended December 31, 2006 in connection with performance based options granted to Mr. Nuti in 2005 pursuant to the terms of ~~NCR~~his letter agreement. See Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on March 14, 2003, and resigned from such position as of March 30, 2005. From September 2002 until March 14, 2003, he was President and Chief Operating Officer of NCR. From July 2001 until September 2002, he was President, NCR, and Chief Operating OfficerForm 10-K for the year ended December 31, 2006, for a discussion of the ~~Teradata Division.~~relevant assumptions used in calculating grant date fair value of such options pursuant to FAS 123R. For further information about this award, see the Outstanding Equity Awards at Fiscal Year-End table beginning on page 36 of this Proxy Statement.

(7)

As discussed above in the Board Compensation and Human Resource Committee Report on Executive Compensation, the Company offers very limited perquisites to its executive officers. As permitted under the SEC’s rules, perquisites and personal benefits to executive officers during the years 2003 and 2004 are not listedThe amounts reported in this column ~~because they did not exceed~~consist of payments made in March 2007 with respect to the ~~lesser~~Company’s Management Incentive Plan (“MIP”) for 2006. For more information regarding the MIP measurement criteria and eligibility, see the Grants of ~~$50,000 or 10%~~Plan-Based Awards table beginning on page 34 of this Proxy Statement.

(8)

Mr. Nuti received a total MIP payment of $935,140, which includes $835,140 attributable to the Company’s performance as compared to the established NPOI criteria, and $100,000 attributable to the Company’s achievement of specified diversity objectives.

(9)

Mr. Bocian received a total MIP payment of $290,542, which includes $250,542 attributable to the Company’s performance as compared to the established NPOI criteria, and $40,000 attributable to the Company’s achievement of specified diversity objectives.

(10)

Mr. Koehler received a total MIP payment of $332,150, which includes $289,650 attributable to the Company’s performance as compared to the established NPOI criteria, and $42,500 attributable to the Company’s achievement of specified diversity objectives.

(11)

Mr. Collins received a MIP payment of $38,555, all of which is attributable to the Company’s achievement of specified diversity objectives. The amount shown has been converted from GBP utilizing the method described in footnote 1. The amount reported in this column is in addition to the amount noted in footnote (3).

(12)

Ms. Wallace received a total MIP payment of $296,067, which includes $263,067 attributable to the Company’s performance as compared to the established NPOI criteria, and $33,000 attributable to the Company’s achievement of specified diversity objectives.

(13)

The amounts reported in this column reflect the aggregate increase in actuarial values of each of the Named ~~Executive’s salary~~Executive Officer’s benefits under the Company’s various qualified and ~~bonus for~~nonqualified defined benefit pension plans. Messrs. Bocian and Koehler and Ms. Wallace will receive no additional Company contributions to their defined benefit plans after December 31, 2006, as a result of the Company’s action to freeze all U.S. defined benefit plans as of that ~~year; however, for 2005~~date. Mr. Nuti is not a participant in any of the ~~Company has begun reporting~~Company’s defined benefit pension plans because all such plans were closed to new participants prior to his joining the ~~value of all perquisites and personal benefits provided to its named executive officers.~~ Company. Mr. Collins is a participant in the Company’s U.K. Defined Contribution Pension.

(14)

The ~~only exception to~~amounts reported in this ~~is for perquisites and personal benefits that represent a de minimis~~column include the aggregate incremental cost to the Company ~~that is not reasonably practical~~with respect to ~~quantify, such as the cost of food and beverages~~perquisites provided to ~~a family member or companion riding~~the Named Executive Officer in 2006, contributions made by the Company to the Company’s Savings Plan on ~~the corporate aircraft with an executive or the cost associated with the monitoring~~behalf of each of the ~~home~~Named Executive Officers, any insurance premiums paid by the Company with respect to life insurance for the benefit of ~~an executive through~~ the ~~Company’s security system.~~ Named Executive Officers and gross-ups and reimbursements for the payment of taxes made to the Named Executive Officers during 2006 as detailed in the All Other Compensation Table immediately following this footnote.

2006 All Other Compensation Table


Name	Year	Perquisite and Other Personal Benefits ($) (A)	Tax Reimbursements ($)		Insurance Premiums ($) (C)	Company Contributions to Retirement and 401(k) Plans ($) (D)	Severance Payments /Accruals ($)	Change in Control Payments /Accruals ($)	Total ($)
Nuti, William President and Chief Executive Officer	2006	317,208	19,46	1(B)	1,397	10,714	—	—	348,780
Bocian, Peter Senior Vice President and Chief Financial Officer	2006	17,000	—		2,260	8,036	—	—	27,296
Koehler, Michael Senior Vice President, Teradata Division	2006	17,050	—		2,596	8,036	—	—	27,682
Collins, Malcolm Senior Vice President, Financial Solutions Division	2006	132,084	—		519	3,678	—	—	136,281
Wallace, Christine Senior Vice President, Worldwide Customer Services	2006	17,000	—		2,082	8,250	—	—	27,332

(A)

The amounts ~~shown~~reported in this column ~~for the last fiscal year~~ include the aggregate incremental costs to the Company ofin fiscal year 2006 for the items set forth in the ~~following table. The Company uses a per-mile calculation~~Perquisites Table. Perquisites, other than corporate aircraft usage, are valued at the actual amount paid to each provider of ~~non-fixed costs to determine the incremental cost~~such perquisites, or if applicable, to the ~~Company of~~Named Executive Officer for use in connection with a perquisite program.

(B)

Per Mr. Nuti’s employment letter, Mr. Nuti receives a tax gross up relating to his living expenses in Dayton, Ohio and his commuting and personal use of the corporate ~~aircraft~~aircraft.

(C)

The amounts reported in this column include the dollar value of any insurance premiums paid by ~~executives. For purposes~~the Company with respect to life insurance for the benefit of the ~~following table,~~Named Executive Officers. For Mr. Collins, the ~~symbol “NE” indicates that an executive~~amount reported was ~~not eligible or authorized to receive a specific perquisite,~~converted from GBP using the ~~symbol “DM” indicates that~~average of the ~~incremental cost~~average monthly exchange rates for March through December 2006.

(D)

The amounts reported in this column include contributions made by the Company to the ~~Company~~Company’s Savings Plan on behalf of ~~providing a perquisite was de minimis, and “$0” indicates that~~each of the ~~executive was eligible for, but did not utilize, the perquisite in 2005.~~Named Executive Officers.

Named Executive    Corporate
Aircraft
Usage (A)    Temporary
Living
Allowance Legal
Expenses Security
Equipment Security
Monitoring Tax
Gross-Ups
William Nuti
   $61,061    $16,044      $23,841      NE      $0      $7,246
Gerald Gagliardi
   $13,878    NE NE NE $0 $6,266
Jonathan Hoak
   DM    NE NE NE $0 NE
Michael Koehler
   $0    NE NE $1,700 DM NE
Peter Bocian
   $0    NE NE NE $0 NE
James Ringler(B)
   $10,854    NE NE NE $0 $0
Mark Hurd
   $14,833    NE NE NE DM NE

2006 Perquisites Table


Named Executive Officer	Corporate Aircraft Usage(I)		Temporary Housing Expenses(II)		Meals(III)		Legal Expenses(IV)		Security Monitoring	Relocation		Rental Cars		Executive Medical Program(V)		Financial Planning Allowance(VI)
William Nuti	$	282,750	$	8,944	$	1,331	$	1,159	NE		NE	$	6,024	$	5,000	$	12,000
Peter Bocian		$—		NE		NE		NE	NE		NE		NE	$	5,000	$	12,000
Michael Koehler		$—		NE		NE		NE	$50(VII)		NE		NE	$	5,000	$	12,000
Malcolm Collins		$—		NE		NE		NE	NE	$	101,800	$	12,679	$	5,000	$	12,605
Christine Wallace		$—		NE		NE		NE	NE		NE		NE	$	5,000	$	12,000

Throughout this table, the notation “NE” indicates that an executive was not eligible or authorized to receive a specific perquisite.

~~(A)~~(I)

~~Includes non-fixed~~The amounts reported in this column represent the incremental costs to the Company of personal usage of the corporate aircraft, including for ~~Messrs.~~Mr. Nuti, ~~Gagliardi and Ringler,~~ the ~~non-fixed~~ incremental costs to the Company associated with use of the corporate aircraft for commuting between ~~their residences~~his residence and the Company ~~offices.~~office. The incremental cost to the Company of personal or commuting use of corporate aircraft was calculated by determining the variable operating cost to the Company, which includes items such as fuel, landing and terminal fees, crew travel expenses and operational maintenance. Expenses that were determined to be less variable in nature, such as pilot compensation, general administration and depreciation, were not included in the determination of the Company’s incremental cost. On occasion, ~~executives’ friends or family members~~others traveled with ~~them~~Mr. Nuti on corporate aircraft; however, the Company incurredde minimis incremental costs as a result of such ~~travel by friends and family members.~~travel.

~~(B)~~(II)

The ~~data~~amounts reported ~~for Mr. Ringler~~ in this ~~table pertains exclusively~~column represent the incremental costs to ~~his tenure as President and Interim Chief Executive Officer. For data regarding Mr. Ringler’s compensation~~the Company incurred in connection with ~~his services as~~providing temporary housing for Mr. Nuti at a ~~director, see the “Director Compensation” section on pages 12-14 of this proxy statement.~~Company-owned location in Dayton, Ohio.

~~(8)~~

(III)

~~Amounts shown~~The amounts reported in this column represent the ~~dollar value of any restricted stock awards on~~payments made by the ~~date originally granted. Certain restricted stock awards were granted in each of 2005, 2004~~Company for meals and 2003 under the NCR Management Stock Plan. Dividends, if any, on all of the shares granted under such awards are reinvested in additional shares of restricted stock. These awards are described in further detail in notes 8(a) through 8(i) below. On December 31, 2005, the aggregate value of the unvested restricted stock awards granted to each of the Named Executives was as follows:other miscellaneous living expenses for Mr. Nuti 85,000 shares ($2,884,900); Mr. Ringler, 0 shares ($0); Mr. Hurd, 0 shares ($0); Mr. Gagliardi, 13,655 shares ($463,451); Mr. Hoak, 15,695 shares ($532,688); Mr. Koehler, 91,861 shares ($3,117,762);while he was living away from his residence and ~~Mr. Bocian, 15,368 shares ($521,590). These amounts are based on a stock price of $33.94 per share as of December 30, 2005.~~at his principal Company location.

~~(a)~~

On March 1, 2005, NCR’s Compensation and Human Resource Committee granted the Named Executives these restricted shares of NCR common stock as part of its annual long-term incentive program. These awards include non-competition and non-solicitation provisions and vest annually in one-fourth increments on March 1, 2006 through 2009, provided the executive is still employed by NCR on such dates.

~~(b)~~

On February 13, 2004, NCR’s Compensation and Human Resource Committee granted, effective on March 1, 2004, the Named Executives these restricted shares of NCR common stock as part of its annual long-term incentive program. These awards include non-competition and non-solicitation provisions and vest annually in one-third increments on March 1, 2005 through 2007, provided that the executive is still employed by NCR on such dates.

~~(c)~~

On March 1, 2004, Mr. Gagliardi was awarded 12,000 restricted shares of NCR stock by the NCR Compensation and Human Resource Committee. This award, which includes non-competition, non-solicitation and performance provisions, vested in two installments: (i) 4,000 restricted shares vested on June 1, 2005, and (ii) 8,000 restricted shares vested on March 1, 2006.

~~(d)~~

On September 2, 2004, the Compensation and Human Resource Committee granted Mr. Hoak a special retention award of 12,000 restricted shares of NCR stock. This award, which includes non-competition and non-solicitation provisions, will vest on December 31, 2006, provided Mr. Hoak is still employed by NCR at such time.

~~(e)~~

On July 1, 2005, and October 25, 2005, NCR’s Compensation and Human Resource Committee granted Mr. Koehler special retention awards of 5,000 and 48,170 shares, respectively. These awards, which are included in this row of the table, include non-competition and non-solicitation provisions. The shares granted on July 1, 2005 will vest on July 1, 2008, and the shares granted on October 25, 2005 will vest in two installments: one-half on October 25, 2007 and one-half on October 25, 2008, provided Mr. Koehler is still employed by NCR at such times.

~~(f)~~

In March 2003, NCR granted Mr. Koehler a special award of 30,000 restricted shares of NCR stock in connection with his promotion to Senior Vice President, Teradata Division. This award, which includes non-competition and non-solicitation provisions, vested on March 4, 2006.

~~(g)~~

Amounts shown represent the dollar value of the restricted stock awards on the date originally granted to Mr. Hurd. Upon Mr. Hurd’s resignation from the Company as President and Chief Executive Officer as of March 30, 2005, all of his unvested restricted stock awards were forfeited.

~~(h)~~

On August 8, 2005, Mr. Nuti received a special award of 85,000 restricted shares of NCR stock in connection with his appointment as the Company’s President and Chief Executive Officer. These shares will vest annually in one-fourth increments on August 8, 2006 through 2009, provided Mr. Nuti is still employed by NCR on such dates.

~~(i)~~

On September 2, 2004, the Compensation and Human Resource Committee granted Mr. Bocian a special award of 10,000 restricted shares of NCR stock in connection with his promotion to the position of Chief Financial Officer. This award will vest on September 2, 2007, provided Mr. Bocian is still employed by NCR at such time.

~~(9)~~

~~Amounts shown represent the aggregate number of shares of NCR common stock underlying the options on the dates originally granted after giving effect to the Stock Split.~~

~~(a)~~

On March 1, 2005, the Compensation and Human Resource Committee granted the Named Executives management stock options under the NCR Management Stock Plan as part of its annual long-term incentive program.

~~(b)~~

On February 13, 2004, the Compensation and Human Resource Committee granted, effective on March 1, 2004, the Named Executives management stock options under the NCR Management Stock Plan as part of its annual long-term incentive program.

~~(c)~~

On February 3 and August 4, 2003, the Compensation and Human Resource Committee granted the Named Executives management stock options under the NCR Management Stock Plan as part of its annual long-term incentive program.

~~(d)~~

On March 14, 2003, the Compensation and Human Resource Committee granted Mr. Hurd special options for 100,000 shares of NCR common stock in connection with his appointment as Chief Executive Officer of

2432

~~NCR. One-third of~~(IV)

The amount reported in this ~~award, which includes non-competition and non-solicitation provisions, vested on March 14, 2004, one-third of~~column represents the ~~award vested on March 14, 2005, and the remaining one-third was forfeited due to Mr. Hurd’s resignation from~~legal expenses paid by the Company on Mr. Nuti’s behalf in connection with the negotiation of his employment letter, as ~~of March 30, 2005.~~

provided in his employment letter.

~~(e)~~

On March 4, 2003, the Compensation and Human Resource Committee granted Mr. Koehler special options for 30,000 shares of NCR common stock in connection with his promotion to Senior Vice President, Teradata Division. Two-thirds of this award, which includes non-competition and non-solicitation provisions, vested as of March 4, 2005, and the remaining one-third of the award vested as of March 4, 2006.

~~(f)~~

~~Upon Mr. Hurd’s resignation as President and Chief Executive Officer as of March 30, 2005, all unvested options held by him were forfeited.~~

~~(g)~~(V)

In ~~August 2005, Mr. Nuti received~~2006, the Company implemented an executive medical program, which provided reimbursement of up to $5,000 for each executive to receive medical diagnostic services at a ~~special award~~designated medical facility. Although not all of ~~650,000 options~~the Named Executive Officers used all of their allowance, due to purchase shares of NCR stock in connection with his appointment as the Company’s President and Chief Executive Officer. 400,000 of Mr. Nuti’s options are performance options and have the potential to fully vest on December 31, 2008, subject to his continued employmentprivacy considerations associated with the receipt of medical services, the Company ~~on such date and subject~~has elected to disclose the ~~achievement~~total amount of ~~specific performance goals, including a specified cumulative net operating profit, set forth in his agreement dated July 29, 2005.~~the maximum benefit available to each executive, rather than the amounts actually used by each individual.

~~(h)~~

In July 2005, Mr. Ringler received a special award of 52,610 options to purchase shares of NCR stock in connection with his appointment as the Company’s President and Interim Chief Executive Officer.

~~(i)~~

On September 2, 2004, the Compensation and Human Resource Committee granted Mr. Bocian a special award of options for 10,000 shares of NCR common stock in connection with his promotion to the position of Chief Financial Officer. This award vests in three installments: one-third vested on September 2, 2005; one-third vests on September 2, 2006; and one-third vests on September 2, 2007.

~~(10)~~(VI)

The amounts ~~shown~~reported in this column ~~for~~represent the ~~last fiscal year represent (i) matching contributions~~payment made by the Company to each executive to be used to obtain financial planning assistance, as part of the NCR 401(k) Savings Plan for participating Named Executives, including in 2005, contributions of: $0 for each of Messrs. Nuti and Ringler; $7,875 each for Messrs. Hurd and Gagliardi; $7,249 for Mr. Hoak; $6,490 for Mr. Koehler; and $7,561 for Mr. Bocian; and (ii) imputed income for group term life insurance of $0 for each of Messrs. Nuti and Ringler; $1,273 for Mr. Hurd; $4,179 for Mr. Gagliardi; $5,397 for Mr. Hoak; $2,650 for Mr. Koehler; and $6,762 for Mr. Bocian.Company’s Financial Planning Allowance Program. The amount ~~shown in this column~~reported with respect to Mr. ~~Hurd~~Collins is in ~~2005 includes~~U.S. dollars and were converted from GBP using the average exchange rate for the month in which the payment was made.

(VII)

The amount reported consists of ~~$22,476 in vacation payout in connection with his resignation.~~expenses relating to a residential security telephone line that reports to NCR’s central station. The cost of monitoring such security is estimated to be less than $50 per year.

~~Option~~ Grants ~~in 2005~~of Plan-Based Awards Table

   Individual Grants
Name
Number of
Shares
Underlying
Options
Granted (#)(1)

Percent of
Total
Options
Granted to
Employees

Exercise
Price
($/Share)

Expiration
Date

Grant
Date
Present
Value
($)(2)
William Nuti
   250,000
400,000(1a)    13.24%
21.18%    34.915
34.915    8/7/2015
8/7/2015      $
$ 3,532,500
5,652,000
Gerald Gagliardi
   11,046              .58%    38.97      2/28/2015        $ 171,876
Jonathan Hoak
   11,046              .58%    38.97      2/28/2015        $ 171,876
Michael Koehler
   15,648              .83%    38.97      2/28/2015        $ 243,483
Peter Bocian
   12,150              .64%    38.97      2/28/2015        $ 189,054
James Ringler
   52,610(1b)      2.79%    36.205    7/10/2015        $ 756,532
Mark Hurd
   184,094             9.75%    38.97      6/28/2005        $ 2,864,503

Plan-Based Awards

During 2006, the Committee granted equity awards to each of our Named Executive Officers pursuant to NCR’s equity incentive plans.

Grants made to our Named Executive Officers prior to April 26, 2006 were made under NCR’s Management Stock Plan, which was in effect until that date, and grants made to our Named Executive Officers after April 26, 2006 were made under NCR’s 2006 Stock Incentive Plan, which became effective on that date.

The Committee granted options to purchase shares of NCR common stock to Messrs. Nuti, Bocian and Koehler and Ms. Wallace on February 13, 2006, and to Mr. Collins and Ms. Wallace on March 1, 2006. Twenty-five percent of these options vest on each of the first, second, third and fourth anniversaries of the grant date. The exercise price for each of these options is equal to the average of the high and low sale prices of NCR’s common stock on the date of grant. The Committee also granted performance-based restricted shares to Messrs. Nuti, Bocian and Koehler and Ms. Wallace on February 13, 2006, and to Mr. Collins and Ms. Wallace on March 1, 2006. These shares will vest at the end of the three year performance cycle at such time as the Committee determines that such performance metrics are met. The performance metrics are based on NCR’s cumulative net operating profit for the period from January 1, 2006 through December 31, 2008. No shares will vest if the performance metrics are not met. If the performance metrics are met, the number of shares shown in the “Target” column in the Grants of Plan-Based Awards table will vest; if the performance metrics are exceeded, an additional number of shares will vest, up to the number shown in the “Maximum” column in such table. Performance-based restricted sharesinclude the right to vote and the right to receive dividends, but may not be sold or transferred during the vesting period.

In 2006, the Committee established objectives to be considered when exercising its negative discretion under the MIP for calculating potential bonuses for each of our Named Executive Officers under the MIP. The objectives focused primarily on the level of NCR’s non-pension operating income (“NPOI”) during 2006. Each Named Executive Officer had the potential to receive a bonus as described more specifically in theCompensation Discussion and Analysis. For Messrs. Nuti and Bocian, 100% of the potential bonus was based on Company performance. For Messrs. Collins and Koehler, 75% of the potential bonus was based on the performance of the division for which such Named Executive Officer was responsible during 2006. For Ms. Wallace, 50% of the potential bonus was based on the performance of the division for which she was responsible in 2006 and 50% of the potential bonus was based on Company performance.

Pursuant to the terms of his employment offer letter, in 2006 Mr. Collins received a guaranteed MIP bonus equal to 100% of his annual base salary; Mr. Collins did not receive an additional bonus based on NCR’s performance in 2006. Using the objectives taken into consideration by the Committee, Messrs. Collins and Koehler and Ms. Wallace were also each eligible to earn an additional bonus if the division for which each such Named Executive Officer was responsible during 2006 achieved certain “stretch” order value or revenue objectives. Each Named Executive Officer was also able to earn an additional bonus under the MIP in the event the Company met certain employment diversity objectives that were established by the Committee.

2006 Grants of Plan-Based Awards Table


			Estimated Future Payouts Under Non-Equity Incentive Plan Awards(2)			Estimated Future Payouts Under Equity Incentive Plan Awards(3)			All Other Stock Awards: Number of Shares of Stock or Units (#)	All Other Option Awards: Number of Securities Underlying Options (#)	Exercise or Base Price of Option Awards ($ / Sh)	Closing Price on Grant Date ($ / Sh)	Grant Date Fair Value
Name	Grant Date	Approval Date	Threshold ($)	Target ($)	Maximum ($)	Threshold (#)	Target (#)	Maximum (#)			Exercise or Base Price of Option Awards ($ / Sh)	Closing Price on Grant Date ($ / Sh)	Grant Date Fair Value
(a)	(b)	(b1)(1)	(c)	(d)	(e)	(f)	(g)	(h)	(i)	(j)(4)	(k)(5)	(k1)(6)	(l)
Nuti, William	MIP		500,000	1,000,000	2,000,000
President and Chief	Diversity			100,000
Executive Officer	2/13/2006	2/13/2006				16,524	66,096	99,144	—				2,554,280
	2/13/2006	2/13/2006								165,655	38.645	38.540	2,554,293
Bocian, Peter	MIP		150,000	300,000	600,000
Senior Vice President	Diversity			40,000
and Chief Financial	2/13/2006	2/13/2006				2,181	8,725	13,088	—				337,178
Officer	2/13/2006	2/13/2006								21,866	38.645	38.540	337,160
Koehler, Michael	MIP		159,375	318,750	637,500
Senior Vice President,	Diversity			42,500
Teradata Division	Stretch			106,250
	2/13/2006	2/13/2006				2,082	8,328	12,492	—				321,836
	2/13/2006	2/13/2006								20,872	38.645	38.540	321,833
Collins, Malcolm	MIP			—	87,191
Senior Vice President,	Diversity			38,555
Financial Solutions	Stretch			91,951
Division	3/1/2006	1/26/2006	—			7,923	31,690	47,535	—				1,260,787
	3/1/2006	1/26/2006								70,870	39.785	40.070	1,125,006
Wallace, Christine Senior Vice President, Worldwide	MIP Diversity Stretch		123,750	247,500 33,000 82,500	495,000
Customer Services	3/1/2006	2/13/2006				992	3,966	5,949	—				157,787
	3/1/2006	2/13/2006								9,939	39.785	40.070	157,774
	2/13/2006	2/13/2006				1,322	5,288	7,932					204,355
	2/13/2006	2/13/2006								13,252	38.645	38.540	204,337

(1)

~~These are management options for NCR common stock under~~This column was included in order to demonstrate those situations where the NCR Management Stock Plan. Except as set forth in footnote (1)(a) and (b), these options become exercisable in one-fourth increments over four years, provided the officer is still employed by NCR, with certain exceptions in the casedate of ~~death, disability, or retirement, and where specifically noted.~~

~~(a)~~

~~400,000~~approval of Mr. Nuti’s options are performance options and have the potential to fully vest on December 31, 2008, subject to his continued employment with the Company on such date and subject to the achievement of specific performance goals, including a specified cumulative net operating profit, set forth in his agreement dated July 29, 2005.

~~(b)~~

~~Two-thirds of these options vested immediately on~~an equity award differed from the grant date ~~(July 11, 2005) and the remainder vested ratably over a three-month period on the first day of each~~ of the ~~following months (August 1, September 1 and October 1, 2005).~~

~~(2)~~

award for FAS 123R purposes. In ~~accordance with SEC rules, we chose~~all instances, the ~~Black-Scholes option pricing model to estimate the present value~~approval of the ~~options on~~equity award preceded the grant ~~date. NCR’s use~~date of this model for this limited purpose should not be construed as an endorsement of its accuracy at valuing options. All stock option valuation models, including Black-Scholes, require certain assumptions to be made. The following assumptions were made for purposes of calculating the present values of the options listed above: volatility of 35.5%, dividend yield of 0%, an expected term of 5.5 years, and an interest rate based on the actual grant date: 4.0% for those granted on 3/1/05 with an exercise price of $38.97, 4.28% for those granted on 8/8/05 with a grant price of $34.915, and 3.89% for those granted on 7/11/05 with a grant price of $36.205. These assumptions differ from the assumptions used by the Company in prior years, but are identical to the assumptions used by the Company for financial statements for SFAS 123R purposes.

~~Aggregated Option Exercises in 2005 and Year-End Values~~

Name(1)
  Shares
Acquired
      On
Exercise
      (#)

     Value
    Realized
    ($)
     Unexercised
   Options at
  Year End (#)    Value of In-the-
Money Options
at Year End ($)
           Exercisable/
Unexercisable    Exercisable/
Unexercisable
(2)
William Nuti
   0    0    0/
650,000    0/0
Gerald Gagliardi(3)
   184,666    2,776,676    74,000/
53,716    728,715/
715,960
Jonathan Hoak
   151,888    2,725,593    191,332/
35,714    2,887,869/
388,277
Michael Koehler
   100,998    1,794,264    10,000/
56,984    112,900/
721,974
Peter Bocian
     63,018    1,036,625    27,822/
37,486    355,930/
360,992
James Ringler
   0    0    64,610/0    149,780/0
Mark Hurd
     993,184    14,750,105    0/0    0/0

~~(1)~~

~~None of the individuals in this table has stock appreciation rights.~~such award.

(2)

The ~~value of in-the-money options is calculated as~~entries in columns (c), (d) and (e), with respect to Messrs. Nuti, Bocian, Koehler and Collins and Ms. Wallace reflect the ~~difference between~~potential award level for each such Named Executive Officer under the ~~closing market price of NCR common stock underlying~~2006 Annual MIP Objectives. For additional information regarding these award levels, see the ~~NCR stock options as of December 30, 2005 ($33.94), after giving effect to~~narrative preceding this table. The actual amounts earned under the ~~Stock Split and~~MIP are reflected in the ~~exercise price of~~Non-Equity Incentive Plan Compensation column in the ~~option.~~Summary Compensation Table.

(3)

~~Mr. Gagliardi resigned~~The numbers reported in columns (f), (g) and (h) relate to performance-based restricted shares granted to each of the Named Executive Officers in 2006. Each of these awards is subject to a 3-year vest and requires the achievement of specified performance metrics established by the Committee in order for vesting to occur. No shares will vest if the objectives are not met. If the objectives are met, the “target” number of shares will vest. In the event the objectives are exceeded, additional shares will vest, up to the maximum number described in column (h).

(4)

The numbers reported in this column reflect the number of options to purchase shares that were awarded to the Named Executive Officers in 2006 pursuant to the Management Stock Plan, which was in effect until April 26, 2006, and the Stock Incentive Plan, which became effective on April 26, 2006. Each of these awards is subject to a four year vesting schedule, during which 25% of the award vests on each anniversary of the grant date.

(5)

The exercise or base price of option awards is determined by the Fair Market Value (“FMV”) of the Company’s common stock on the grant date. Pursuant to the terms of the Stock Incentive Plan and the former Management Stock Plan, FMV is equal to the average of the high and low prices of NCR common stock on the grant date (or, if the grant date is not a trading day, on the immediately preceding trading day). The Committee has determined, within its discretion as ~~Senior Vice President, Worldwide Customer Services Division,~~set forth in the Stock Incentive Plan, that as of ~~February 28, 2006, and will retire~~January 1, 2007, FMV for future awards shall be equal to the closing price of NCR common stock on the grant’s effective date.

(6)

Because the Company previously used a definition of FMV as described in footnote 5 above, the exercise or base price of an option award may differ from ~~NCR~~the closing price of the Company’s stock on ~~April 1, 2006.~~a given grant date. This column is included, as prescribed by SEC rules, to identify those dates upon which the option exercise price differs from the grant date closing price.

2635

2006 Outstanding Equity Awards at Fiscal Year-End Table



	Option Awards					Stock Awards

	Number of Securities Underlying Unexercised Options (#)	Number of Securities Underlying Unexercised Options (#)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Name	Exercisable	Unexercisable		Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)
William Nuti
2/13/2006(1)		165,655		38.65	2/13/2016
2/13/2006(2)			—					66,096	2,826,265
8/8/2005(3)		400,000		34.92	8/8/2015
8/8/2005(1)	62,500	187,500		34.92	8/8/2015
8/8/2005(1)						63,750	2,725,950

Peter Bocian
2/13/2006(1)		21,866		38.65	2/13/2016
2/13/2006(2)								8,725	373,081
3/1/2005(1)	3,037	9,113		38.97	3/1/2015
3/1/2005(1)						2,025	86,589
9/2/2004(4)	6,666	3,334	—	22.39	9/2/2014
9/2/2004(5)						10,000	427,600
3/1/2004(4)	12,000	6,000		22.65	3/1/2014
3/1/2004(4)						1,334	57,042
8/4/2003(4)	3,334			13.67	8/4/2013
1/26/2001(4)	3,216			22.23	1/26/2011

Michael Koehler
2/13/2006(1)		20,872		38.65	2/13/2016
2/13/2006(2)								8,328	356,105
10/25/2005(6)			—			48,170	2,059,749
7/1/2005(5)						5,000	213,800
3/1/2005(1)	3,912	11,736		38.97	3/1/2015
3/1/2005(1)						2,608	111,518



	Option Awards					Stock Awards

Name/Award Date	Number of Securities Underlying Unexercised Options (#)	Number of Securities Underlying Unexercised Options (#)	Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#)	Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)	Market Value of Shares or Units of Stock That Have Not Vested ($)	Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)	Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)
Name/Award Date	Exercisable	Unexercisable		Option Exercise Price ($)	Option Expiration Date	Number of Shares or Units of Stock That Have Not Vested (#)
3/1/2004(4)		10,000		22.65	3/1/2014
3/1/2004(4)						1,000	42,760
8/4/2003(4)	5,668		—	13.67	8/4/2013			—	—
1/1/1996(7)						3,214	137,431

Malcolm Collins
3/1/2006(1)	—	70,870	—	39.79	3/1/2016	—	—
3/1/2006(2)								31,690	1,355,064

Christine Wallace
3/1/2006(1)		9,939		39.79	3/1/2016
3/1/2006(2)								3,966	169,586
2/13/2006(1)		13,252		38.65	2/13/2016
2/13/2006(2)								5,288	226,115
3/1/2005(1)	2,531	7,594	—	38.97	3/1/2015
3/1/2005(1)		11,046		38.97	3/1/2015
3/1/2005(1)						1,688	72,179
2/1/2005(5)						12,000	513,120
3/1/2004(4)	22,666	11,334		22.65	3/1/2014
3/1/2004(4)						534	22,834
8/4/2003(4)	2,500			13.67	8/4/2013
1/26/2001(4)	22,800			22.23	1/26/2011
1/4/1999(4)	21,000			20.75	1/4/2009
1/1/1996(7)						1,494	63,883

(1)

This grant will vest in four equal annual installments, beginning on the first anniversary of the grant date.

(2)

This grant will vest in full three years after the date of grant if specified performance conditions are satisfied, as approved by the Committee.

(3)

This grant will vest in full on December 31, 2008.

(4)

This grant will vest in three equal annual installments, beginning on the first anniversary of the grant date.

(5)

This grant will vest in full three years after the grant date.

(6)

This grant will vest in two equal installments, the first on October 25, 2007, and the second on October 25, 2008.

(7)

This grant will vest in full once the recipient reaches age 55.

2006 Option Exercises and Stock Vested Table



	Option Awards		Stock Awards
Name (a)	Number of Shares Acquired on Exercise (#) (b)	Value Realized on Exercise ($) (c)	Number of Shares Acquired on Vesting (#) (d)	Value Realized on Vesting ($) (e)
William Nuti	0	—	21,250	695,831
Peter Bocian	18,608	397,529	2,009	79,928
Michael Koehler	35,668	787,344	31,869	1,259,208
Malcolm Collins	0	—	0	—
Christine Wallace	8,000	210,149	1,096	43,604

Pension ~~Plans~~Benefits

~~The Company~~NCR maintains several pension plans ~~as part~~that provide benefits for certain of our Named Executive Officers. In 2004, NCR closed its U.S. pension plans to new participants and froze the pension benefits for existing U.S. participants under the age of 40. Effective December 31, 2006, these plans were frozen for all of the ~~compensation and benefits it provides to its employees and executive officers. The plans covering NCR’s~~remaining participants, including the Named ~~Executives are summarized below.~~Executive Officers.

If Messrs. ~~Hoak,~~Bocian and Koehler and ~~Bocian continue in their current positions and retire at age 62,~~Ms. Wallace are the ~~estimated annual pensions payable to each of them from NCR’s pension plans described below would be $296,305, $333,512, and $275,068, respectively. These amounts~~only Named Executive Officers who are based on several assumptions, including that the executives continue in their current positions for 5, 9 and 11 years, respectively, and receive incentive payouts at target amounts and annual merit increases in each of these years. If, however, Messrs. Hoak, Koehler, and Bocian had left the Company as of December 31, 2005, the annual pensions payable to each of them from NCR’s pension plans at age 62 would have been $189,731, $147,013 and $64,061 respectively. As of the end of 2005, Mr. Gagliardi was not vestedparticipants in NCR’s pension plans. Mr. ~~Gagliardi will retire from~~Nuti is not eligible for any pension benefits at NCR, as ~~of April 1, 2006, and~~ the ~~estimated annual pension payable to him at age 62 will be $118,416. Based upon Mr. Hurd’s resignation date of March 30, 2005, the annual pension payable to him from NCR’s~~U.S. pension plans ~~at age 62 will be $233,240. All of~~were already closed to new participants upon his becoming employed by NCR. Mr. Collins is a participant in the ~~above amounts are straight-life annuity amounts although other optional forms of payment, some with reduced pensions, are available. In addition, benefits under NCR’s current~~U.K. Defined Contribution Pension, which is a defined contribution plan. He is not a participant in the U.K. pension ~~plans are not subject~~plan, which was closed to ~~reductions for Social Security benefits or other offset amounts.~~participants in 2004.

~~The~~ NCR Pension Plan:

The ~~Company has~~NCR Pension Plan is a non-contributory, qualified pension plan ~~called the~~that previously covered all NCR ~~Pension Plan which covers all~~ employees based in the United States. Benefits under the plan ceased accruing as of September 1, 2004, other than for employees who were hired prior to September 1, 2004, and were at least 40 years old as of that date. As of September 1, 2004, the plan is closed to new participants.

~~Each of the Named Executives, except Messrs. Nuti and Ringler, is covered under this plan.~~ The NCR Pension Plan pays a monthly pension benefit and ~~a PensionPlus benefit. These benefits vest afterfive~~aPensionPlus benefit, each of which vests after the earlier of five years of service or ~~reaching~~attaining age 65. The full monthly pension benefit ~~begins~~may begin at age 62, orbut may be started between age 55 and 62 in a reduced ~~amount.~~amount at the option of the participant after the participant has terminated employment. The PensionPlus benefit may be taken as a lump sum after termination of employment, or may be used to increase the monthly pension benefit.

The monthly pension benefit is computed by multiplying the following three items: (1) the participant’s years of service with ~~the Company,~~NCR, (2) a factor between 1.4% and 1.7%, depending on the participant’s total years of service, and (3) the participant’s modified average pay. Modified average pay is the average annual base pay and bonus received during a participant’s career, with an adjustment to ~~update~~ pay for earlier years when earnings typically were less.

The PensionPlus benefit is computed as an account balance, although the account is for bookkeeping purposes only. The plan ~~credits~~allocates to a participant’s account ~~with~~each month 1¹/2% (3% in the case of ~~base pay~~employees hired on and ~~bonus, as well as~~after June 1, 2002) of the participant’s compensation for such month, and also provides monthly interest credits on the participant’s account balance. These

~~Employees hired~~38

interest credits will continue despite the plan being frozen, as long as the participant remains an employee of NCR. See Note 9 to the Consolidated Financial Statements included in the Company’s Annual Report on ~~or after June 1, 2002, are not eligible~~Form 10-K for the ~~monthly pension~~year ended December 31, 2006, for a discussion of the relevant assumptions used in quantifying the present value of the current accrued benefit ~~but receive credits to their PensionPlus accounts of 3% of base pay and bonus.~~as reported in the Pension Benefits Table.

~~The~~ NCR Nonqualified Excess Plan:

~~Federal laws limit the amount of pay that may be considered under the~~ NCR ~~Pension Plan. The Company makes up the difference for senior managers with~~also maintains the NCR Nonqualified Excess ~~Plan. The excess plan~~Plan (the “Excess Plan”), which pays the additional pension benefits that would be paid under the NCR Pension Plan if certain federal limits on the ~~federal~~amount of pay ~~limits~~that may be considered under the NCR Pension Plan were not in effect. ~~Each~~Benefits are calculated in the same way as under the NCR Pension Plan, and vesting provisions are the same. See Note 9 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, for a discussion of the ~~Named Executives, except~~relevant assumptions used in quantifying the present value of the current accrued benefit as reported in the Pension Benefits Table. Messrs. ~~Nuti~~Bocian and ~~Ringler, is covered by~~Koehler and Ms. Wallace are participants in the excess plan. Benefits under the plan ceased accruing as of September 1, 2004, other than for employees who were hired prior to September 1, 2004, and were at least 40 years old as of that date. As of September 1, 2004, the plan is closed to new participants.Excess Plan.

~~NCR Mid-Career Hire~~ Supplemental ~~Pension Plan~~:Retirement Plans

NCR also maintains ~~the NCR Mid-Career Hire Supplemental Pension Plan. This plan covers employees, including Mr. Gagliardi and Mr. Hoak,~~

who were hired by NCR for the first time at age 35 or over at specified management levels, and who terminate with at least five years of service. The benefit is 1% of annual pay for each year worked for NCR, up to a maximum equal to the number of years between age 30 and the age on the date of hire with NCR. As of June 1, 2002, no new participants will be added to this plan.

~~Supplemental Retirement Plan~~:

~~The Company also has~~ a supplemental retirement plan for senior managers called the Retirement Plan for Officers of NCR (the “Officer Plan”). This plan covers senior managers appointed to specified executive levels after November 30, 1988. ~~Each of the Named Executives, except~~ Messrs. ~~Nuti~~Bocian, Koehler and ~~Ringler, is covered under this plan. Effective June 1, 2002, no new~~Wallace are participants ~~will be added to~~in the Officer Plan.

The Officer Plan pays monthly benefits ofin an amount equal to 2.5% of career average monthly pay for service after becoming a plan ~~participant.~~participant and vests after the earlier of five years of service or attaining age 65. The full monthly pension ~~begins~~benefit may begin at age 62, orbut may be started between age 55 and 62 in a reduced ~~amount. The benefit is offset by~~amount at the ~~participant’s retirement or disability benefits paid under other NCR plans except~~option of the participant after the participant has terminated employment. See Note 9 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the ~~NCR Mid-Career Hire Supplemental Pension Plan. No~~year ended December 31, 2006, for a discussion of the relevant assumptions used in quantifying the present value of the current accrued benefit is payable if a participant terminates employment during the first year covered by the plan. No benefit is payable if a participant terminates employment before age 55, other than by death, with less than 5 years of service with NCR. However, a participant will be entitled to plan benefits if employment is terminated after a change in control, as ~~described~~reported in the ~~NCR change in control severance plans (see the description of those plans under “Employment Agreements and Change in Control Arrangements”). The Officer Plan also pays death benefits.~~Pension Benefits Table.

~~The~~39

2006 Pension Benefits Table



Name	Plan Name	Number of Years Credited Service(#)	Present Value of Accumulated Benefit($)
William Nuti(1)	N/A
Peter Bocian(2)	NCR Pension Plan Officer Plan Excess Plan	23.9 4.9 23.9	343,117 157,781 93,130
Michael Koehler(2)	NCR Pension Plan Officer Plan Excess Plan	31.3 12.2 31.3	525,001 434,377 332,835
Malcolm Collins(1)(3)	N/A
Christine Wallace	NCR Pension Plan Officer Plan Excess Plan	27.2 11.1 27.2	476,503 378,650 205,418

(1)

Messrs. Nuti and Collins are not participants in, nor eligible with respect to any of the Company’s pension plans, because all of the plans were closed to new participants prior to their respective employment dates.

(2)

Pursuant to the terms of the Officer Plan, Messrs. Bocian and Koehler and Ms. Wallace have each been credited with fewer years of service under the Officer Plan than their years of service with the Company because they did not become eligible for Officer Plan participation until the attainment of executive status.

(3)

Mr. Collins participates in a defined contribution plan in the United Kingdom.

DIRECTOR COMPENSATION

Pursuant to authority granted to it by NCR’s Board of Directors, the Committee on Directors and Governance (the “Directors Committee”) adopted the NCR ~~Officer Plan for individuals newly hired or promoted into senior manager positions after June 1, 2002.~~Director Compensation Program on April 26, 2006. The ~~plan has identical provisions to the Officer Plan, except that the monthly benefits equal 1.75% of career average monthly pay. As of September 1, 2004, it is closed to new participants.~~

~~NCR Supplemental Plan for AT&T Transfers~~:

NCR maintains the NCR Supplemental Plan for AT&T Transfers, a supplemental retirement plan forsenior managers, including Mr. Hoak, who transferred to NCR from AT&T Corp. during the years that NCR was a wholly-owned subsidiary of AT&T. No new participants have been added to the plan since NCR spun-off from AT&T on December 31, 1996. Participants receive a benefit from the plan if they terminate from NCR at or after age 55 with at least 5 years of service. The plan pays a pension equal to the difference, if any, between the retirement benefits provided by NCR and the retirement benefits that would have been provided by AT&T if the participant had continued to work for AT&TDirector Compensation Program provides for the ~~duration~~payment of ~~the participant’s~~annual retainers, annual equity grants and initial equity grants to non-employee members of NCR’s Board of Directors. Mr. Nuti does not receive remuneration for his service ~~with~~as a director of NCR. If Mr. Hoak continues in his current position and retires at age 62, based on current projections, it is likely that his NCR retirement benefits will exceed the benefits he would have received from AT&T, so that no benefit would be payable to him from this plan.

~~Employment Agreements and Change in Control Arrangements~~Annual Retainer

Under the Director Compensation Program adopted on April 26, 2006, each non-employee member of NCR’s Board receives an annual retainer of $75,000. The Chairman of the Board (Mr. Ringler) receives an additional retainer of $165,000, and each director serving on the Audit Committee receives an additional retainer of $5,000. The Chair of the Directors Committee (Mr. Prahalad) receives an additional retainer of $9,000, and the Chairs of the Audit Committee (Mr. Boykin) and Compensation and Human Resource Committee (Ms. Levinson) each receive an additional retainer of $12,000. Prior to the adoption of the new Director Compensation Program, NCR’s previous director compensation program provided for the payment of an annual retainer as well as meeting fees and committee chair fees.

Prior to January 1 of each year, a director may elect to receive all or a portion of his or her annual retainer in NCR common stock instead of cash. In addition, a director may elect to defer receipt of shares of common stock payable in lieu of cash. For awards received in 2006, directors could elect to receive payments for deferred stock in NCR common stock or in cash. Beginning in 2007, payments for deferred stock may be paid only in cash.

~~Arrangement with Mr. Nuti~~:Initial Equity Grant

~~NCR and Mr. Nuti entered into~~The Director Compensation Program provides that upon initial election to the Board, eachnon-employee director will receive a ~~letter agreement dated as~~grant of July 29, 2005 regarding Mr. Nuti’s service as the President and Chief Executive Officer of NCR from and after August 7, 2005. The letter agreement specified Mr. Nuti’s base salary and bonus opportunity under the NCR Management Incentive Plan and his eligibility for annual option grants, restricted stock ~~awards, employee benefit plans~~or restricted stock units. A director may elect to defer receipt of the shares of common stock that would otherwise be received upon vesting of restricted stock or restricted stock units. The restricted stock units vest in four equal quarterly installments commencing three months after the grant date. Payment is made only in NCR common stock. Upon his election to the Board in 2006, Mr. Daichendt received an initial equity award valued at $40,000, which consisted of 911 restricted stock units.

Annual Equity Grant

The Director Compensation Program also provides that on the date of each annual meeting of NCR’s stockholders each non-employee director will be granted restricted stock and/or restricted stock units and ~~retirement plans as routinely provided~~options to ~~officers at his level. The Company agreed that Mr. Nuti would receive~~purchase a ~~minimum award payout~~number of ~~$500,000 for 2005 under the Management Incentive Plan. In addition, under the letter agreement, Mr. Nuti received a special grant of stock options for 650,000~~ shares of NCR common stock ~~of which 400,000 are subject to vesting requirements that include Mr. Nuti’s continuing employment through December 31, 2008, and~~in an amount determined by the ~~achievement of certain performance goals. The remaining 250,000 options~~Directors Committee. Any restricted stock units awarded will vest in four equal ~~annual~~quarterly installments ~~beginning~~commencing three months after the grant date. Any options that are granted will be fully vested and exercisable on ~~August 7, 2006, provided Mr. Nuti~~the first anniversary of the grant. If the grant is ~~still employed by NCR at such times. The option award also includes non-competition and non-solicitation restrictions. Mr. Nuti also received an award of 85,000 shares~~made in the form of restricted stock ~~which shall vest in four equal annual installments, and subject~~units, a director may elect to ~~the terms~~defer receipt of the ~~letter agreement, Mr. Nuti received an additional~~

~~equity award in February 2006, with a Black-Scholes value~~shares of $2,625,632, based on the following assumptions: volatility of 35.5%, dividend yield of 0%, an expected term of 5.5 years, and an interest rate of 4.57%. The letter agreement also provides for certain relocation and commuting benefits for Mr. Nuti to permit his family to move to the Dayton, Ohio, area.common stock payable when such restricted stock units vest.

Pursuant to the letter agreement, if Mr. Nuti’s employment is terminated voluntarily by him for “Good Reason” (as defined in the letter agreement) or is terminated involuntarily by the Company without “Cause” (as defined in the Change In Control plan described below), certain of Mr. Nuti’s stock options and restricted stock will vest immediately and Mr. Nuti will be entitled to receive, in equal monthly installments, an amount equal to 1.5 times his annual base salary and targeted bonus opportunity, as well as a pro rata amount of the applicable award payout under the Management Incentive Plan.

~~Arrangement with Mr. Ringler~~:

~~Mr. Ringler, who has served~~Director Compensation Program, on the ~~Company’s Board~~date of Directors since November 1, 2003, was selected by the Board to serve as President and Interim Chief Executive Officer as of March 30, 2005. On July 11, 2005, the Company entered into a letter agreement with Mr. Ringler relating to his temporary service as President and Interim Chief Executive Officer (“CEO”) of the Company. The letter agreement provided that Mr. Ringler would serve in this position until his replacement by a new President and Chief Executive Officer of the Company (the “Term”) subject to earlier termination at will by the Company’s Board of Directors or Mr. Ringler.

~~Under the terms of the letter agreement, Mr. Ringler~~NCR’s 2006 annual meeting each non-employee director received an annual ~~base salary of $1,000,000, prorated based on the length of the Term. He~~equity award valued at $62,500, which was also entitled to receive an annual bonus under the NCR Management Incentive Plan for Executive Officers (“MIP”). For 2005, Mr. Ringler’s MIP award was based on the same performance objectives as previously established in 2005 by the Compensation and Human Resource Committee of the Board for the Company’s former CEO. Mr. Ringler’s 2005 MIP award had a targeted incentive opportunity of 100% of his annual base salary ($1,000,000), and ranged from 0% if the target objective was not met to a maximum award of 200% ($2,000,000) of his annual base salary,to be prorated for the length of the Term. Pursuant to the terms of an amendment to Mr. Ringler’s letter agreement, Mr. Ringler’s MIP award will be paid to him partiallygranted in the form of 1,486 restricted stock units. Messrs. Boykin, Lund and Ringler each elected to defer his receipt of the shares ~~of common~~represented by the restricted stock ~~and~~units until the ~~remainder~~date upon which he ceases to serve as a director. Each non-employee director also received an additional annual equity award valued at $62,500, which was granted in ~~cash, in an amount sufficient to pay~~ the ~~tax withholdings applicable to the share award.~~

~~Under the letter agreement, the Company agreed to grant Mr. Ringler~~form of options to purchase ~~52,610~~3,724 shares of ~~the Company’s~~NCR’s common stock, subject to the terms and conditions of a stock option agreement. Two-thirds of these options vested immediately on the date of grant, and the remaining third vested on a monthly basis over a three month period starting August 1, 2005. Under the stock option agreement, Mr. Ringler’s options are exercisable for a ten-year term, and include a non-competition/non-solicitation provision.stock.

In addition, under the letter agreement, Mr. Ringler was entitled to receive certain benefits relating to his travel and living expenses. Specifically, the Company agreed to pay for the cost of his temporary housing in Dayton, Ohio, and related living and travel expenses. He was also permitted to use the Company’s aircraft for travel to and from his Florida residence and elsewhere as needed. Mr. Ringler was permitted to use such aircraft for personal use on an availability basis, provided that such use did not exceed $35,000 in imputed income to him. The Company agreed to provide Mr. Ringler a tax gross-up payment to cover any such imputed income.

Under the letter agreement, the Company also agreed to indemnify Mr. Ringler for any Ohio state or local income taxes that may be owed by him on certain income earned from his former employer. Likewise, Mr. Ringler agreed that he would use his best efforts to avoid any such taxes.

Mr. Ringler served as President and Interim Chief Executive Officer until August 7, 2005, at which time Mr. Nuti joined the Company as the President and Chief Executive Officer, and Mr. Ringler’s letter agreement expired by its own terms.

~~Letter Agreement Concerning the Resignation of Mr. Hurd~~:

~~In connection with his resignation as President and Chief Executive Officer and a director of NCR as~~

2941

~~of March 30, 2005, the~~2006 Director Compensation and Human Resource Committee of the Board of Directors, on behalf of NCR, and Mr. Hurd entered into a letter agreement dated March 29, 2005. This letter agreement set forth the terms and conditions associated with Mr. Hurd’s compensation and long term incentives upon his resignation. Specifically, the letter stated that all of Mr. Hurd’s vested stock options would remain exercisable for a period of ninety days after Mr. Hurd’s resignation date, and that unvested options and restricted shares would be forfeited upon his resignation. Mr. Hurd’s pension benefits to which he was otherwise entitled were not affected by his resignation. The letter agreement also contained confidentiality and non-competition obligations, and provided that Mr. Hurd shall not solicit certain employees of NCR for employment for a period of eighteen months. In addition, the letter agreement set forth certain post-resignation transition obligations on the part of Mr. Hurd, including participation in talent management and operational reviews, knowledge transfer to NCR’s President and Interim Chief Executive Officer, and certifications in connection with NCR’s SEC filings. Finally, the letter included a waiver and release by Mr. Hurd of claims against NCR.

~~Arrangement with Mr. Gagliardi~~:Table

Mr. Gagliardi received an offer letter from NCR when he joined the Company in 2001. The offer letter, dated January 15, 2001, specified his starting base salary and bonus opportunity under the NCR Management Incentive Plan, and his eligibility for annual option grants, employee benefit plans and retirement plans as routinely provided to officers at his level. In addition, under the letter, he received special relocation benefit payments in 2001 and 2002 that totaled $60,500.

Pursuant to the letter, Mr. Gagliardi also received a $175,000 sign-on bonus. In addition, Mr. Gagliardi received initial awards of stock options and restricted stock that in part compensated him for lost opportunity for compensation and equity incentives with his former employer. He received an initial one-time grant of options for 200,000 shares of NCR common stock, which included his 2001 grant of management stock options under the NCR Management Stock Plan. Mr. Gagliardi also received a special grant of 40,000 restricted shares of NCR common stock. The option and restricted stockawards vested in three and four equal annual installments, respectively, beginning on his first anniversary with the Company. These awards required that Mr. Gagliardi remain employed by NCR and included non-competition and non-solicitation restrictions.

The ~~letter~~following table provides information on 2006 compensation for our non-employee directors:

Name
(a)
Fees Earned or
Paid in Cash
($)
(b) (5),(6)

Stock Awards
($)
(c)
(8), (9),(10)

Option Awards
($)
(d) (12), (13)

Non-Equity
Incentive Plan
Compensation
($)
(e)

Change
in Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
(f)

All Other
Compensation
($)
(g)

Total
($)
(h)
James Ringler, Chairman(1)
249,777 321,275 43,464 — — 18,542(14) 633,058
Edward (Pete) Boykin(2)
—(7) 130,566 43,464 — — — 174,030
Mark Frissora
71,846 27,395 43,464 — — — 142,705
Gary Daichendt
—(7) 78,738 (11) 43,464 — — — 122,202
Linda Fayne Levinson(3)
43,923 (7) 80,920 43,464 — — — 168,307
Victor Lund
75,253 31,250 43,464 — — — 149,967
C.K. Prahalad(4)
—(7) 117,436 43,464 — — — 160,900
William Stavropoulos
65,846 27,395 43,464 — — — 136,705
(1) Mr. Ringler serves as Chairman of the Board of Directors.
(2) Mr. Boykin serves as Chair of the Audit Committee.
(3) Ms. Levinson serves as Chair of the Compensation and Human Resource Committee.
(4) Mr. Prahalad serves as Chair of the Committee on Directors and Governance.
(5) Amounts reported in this column represent the annual retainers and meeting fees earned by the directors in 2006 and paid in cash (“Cash Retainers”). Directors may elect to receive these Cash Retainers in the form of cash or common stock, or an even distribution of both. To the extent that a director elected to receive his or her Cash Retainers in common stock, such fees are not reported in column (b); however, the dollar amount, if any, recognized for financial statement reporting purposes in 2006 in accordance with FAS 123R with respect to such stock is reflected in the “stock awards” column (column (c)).
(6) The Board of Directors adopted a new Director Compensation Program, effective April 26, 2006. Prior to the adoption of the new program, the previous director compensation program provided for the payment of an annual retainer as well as meeting fees and committee chair fees. Therefore, this column reflects the payment of meeting fees with respect to meetings prior to April 26, 2006.
(7) Messrs. Boykin, Daichendt and Prahalad elected to receive the following Cash Retainers earned in 2006 in the form of an equivalent number of shares: Mr. Boykin, $87,253; Mr. Daichendt, $54,505; and Mr. Prahalad, $84,978. Ms. Levinson elected to receive her Cash Retainers equally divided between cash and an equivalent number of shares, such that she received $43,923 in the form of cash and $43,923 in the form of shares. In the event a director elects to receive Cash Retainers in the form of stock, he or she may further elect to receive such stock currently or at a future specified date. Mr. Boykin has elected to defer his receipt of shares in respect of his Cash Retainers until the date upon which he ceases to serve as a director.
(8) The amounts reported in this column include the dollar amount recognized for financial statement reporting purposes in 2006 in accordance with FAS 123R in connection with annual awards of Restricted Stock Units made to each non-employee director pursuant to the Director Compensation Program (“RSU Awards”). See Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FAS 123R. The grant date fair value of the RSU Award given to each non-employee director is $65,258 and equates to 1,486 Restricted Stock Units.
(9) The amounts reported in this column also include the dollar amount recognized for financial statement reporting purposes in 2006 in accordance with FAS 123R with respect to Ms. Levinson and Messrs. Boykin, Daichendt and Prahalad who have elected to receive their Cash Retainers in the form of shares, as described in footnote 7 above. See Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FAS 123R. The grant date fair value for Cash Retainers paid in stock on March 31, 2006 is $12,537 for Ms. Levinson, $23,012 for Mr. Boykin and $19,268 for Mr. Prahalad. The grant date fair value for Cash Retainers paid in stock on June 30, 2006 is $15,679 for Ms. Levinson, $28,274 for Mr. Boykin, $14,541 for Mr. Daichendt and $29,229 for Mr. Prahalad. The grant date fair value for Cash Retainers paid in stock on September 30, 2006 is $10,906 for Ms. Levinson, $23,028 for Mr. Boykin, $20,007 for Mr. Daichendt and $22,283 for Mr. Prahalad. The grant date fair value for Cash Retainers paid in stock on December 31, 2006 are $10,917 for Ms. Levinson, $23,032 for Mr. Boykin, $20,035 for Mr. Daichendt and $22,261 for Mr. Prahalad.
42
(10) Each non-employee director had 744 Restricted Stock Units unvested and outstanding as of December 31, 2006, with the exception of Mr. Daichendt, who had 1,201 Restricted Stock Units unvested and outstanding as a result of his initial stock grant as discussed in footnote 11 below. Messrs. Ringler, Lund and Boykin elected to defer their receipt of shares that would otherwise be issuable in respect of restricted stock units until they vest.
(11) The amount reported with respect to Mr. Daichendt, includes the dollar amount recognized for financial statement reporting purposes in 2006 in accordance with FAS 123R for an initial equity award valued at $40,000, which consists of Restricted Stock Units granted to him on April 26, 2006, when he joined the Board of Directors. This equates to a total of 911 Restricted Stock Units (calculated by dividing the total dollar value of $40,000 by the average of the high and low prices of Company common stock on the grant date). See Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FAS 123R.
(12) The amounts reported in this column include the dollar amount recognized for financial statement reporting purposes in 2006 in accordance with FAS 123R with respect to the annual stock option grants made to each non-employee director (“Option Awards”). See Note 8 to the Consolidated Financial Statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2006, for a discussion of the relevant assumptions used in calculating grant date fair value pursuant to FAS 123R. The grant date fair value of the Option Award given to each non-employee director is $65,252 and equates to 3,724 options to purchase NCR common stock.
(13) The Option Awards outstanding as of December 31, 2006 for each of the non-employee directors are as follows: Mr. Ringler, 68,334; Mr. Boykin, 39,724; Mr. Frissora, 19,724; Mr. Daichendt, 3274; Ms. Levinson, 82,670; Mr. Lund, 27,724; and Mr. Prahalad, 82,670; and Mr. Stavropoulos, 65,724.
(14) The amount reported reflects the incremental cost to the Company for Mr. Ringler’s personal use of the corporate aircraft. See footnote I to the 2006 Perquisites Table for a discussion of the method of calculating such incremental cost to the Company.
43
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
The tables below reflect the amount of compensation to be paid, and/or benefits to be provided, ~~that if Mr. Gagliardi’s employment is terminated involuntarily other than for Cause or Good Reason (as such terms are defined~~to each of the Named Executive Officers, in the ~~NCR Change~~event of termination of such executive’s employment as of December 31, 2006. A description of death and disability benefits and treatment of equity upon termination is provided below. See “Retirement Benefits,” “Change in Control ~~Severance Plan~~Arrangements” and “Severance Agreements” in theCompensation Discussion and Analysis for ~~Executive Officers described below), he will receive~~ a ~~cash payment equal to his annual base salary.~~
~~Mr. Gagliardi will retire from NCR as~~description of ~~April 1, 2006, at which time his offer letter will expire by its own terms.~~such items.

The agreements discussed in “Change in Control Arrangements:
~~NCR has a Change~~” and “Severance Agreements” in ~~Control Severance Plan that became effective January 1, 2006~~theCompensation Discussion and ~~replaced a prior plan that terminated December 31, 2005. The plan has an initial term of two years with automatic one-year extensions, unless terminated by~~Analysis include the ~~Board at least 90 days prior~~following material conditions to the ~~end~~receipt of compensation and/or benefits. In the current term. The plan provides that executive officers will receive severance benefits if their employment with NCR is terminated as a result of involuntary termination without cause, or voluntary termination for good reason during the two years following certain change-in-control events (such as an acquisition, merger or liquidation of the Company). The severance benefits include (a) severance pay equal to 300% of base pay for Messrs. Nuti, Gagliardi (until the effective date of his retirement), Koehler and Bocian, and 200% of base pay for Mr. Hoak, (b) the same percentage applied to the target annual bonus under the NCR Management Incentive Plan, (c) a pro-rata long-term incentive payment, and any earned but unpaid long-term incentive payments or annual bonuses, (d) reimbursement for any excise tax liability for the severance benefits under Internal Revenue Code Section 280G, (e) continued medical and dental coverage for the officer and eligible dependents and continued life insurance for the officer for a period no longer than the end of the second full year following the change-in-control, (f) outplacement services for one year, and (g) financial counseling for one year, if the Company has an executive financial counseling program in place at the time of the change-in-control. In addition, the officer will be fully vested in any NCR
30
~~stock options or other stock awards, according to the NCR Management Stock Plan. Supplemental pension benefits under the Officer Plan will also vest in full upon a change-in-control.~~
~~In order to receive the benefits~~case of the Change in Control Severance Plan, the compensation and/or benefits provided to each participant are conditioned upon such participant’s execution of a ~~participant must sign,~~restrictive covenant and ~~not revoke,~~release agreement that includes, among other items, an eighteen month non-competition, non-solicitation a ~~release~~confidentiality provision. As discussed in “Severance Agreements” in theCompensation Discussion and Analysis, it is generally our practice to negotiate the terms of ~~employment-related claims against~~such agreements, when needed, with each of our most senior executives, including our Named Executive Officers. Such negotiated agreements typicallyinclude non-competition, non-solicitation and confidentiality provisions. In the ~~Company~~case of the severance arrangement with Mr. Nuti previously discussed in “Severance Agreements,” such compensation and ~~must agree not to competewith the Company~~benefits are conditioned upon Mr. Nuti’s compliance with an eighteen month non-competition and ~~not to recruit Company employees following termination of employment.~~non-solicitation provision, and a confidentiality provision.

~~If stockholders approve~~Death and Disability Benefits
Benefits provided to Named Executive Officers under the termination scenarios of death or disability depend on the individual level of benefits chosen by the Named Executive Officer during the annual benefits enrollment process. The Named Executive Officers receive the same company-provided life insurance coverage, short-term disability coverage, and long-term disability coverage as the general NCR population. These core coverages are 200% of base salary for life insurance, 100% of base salary for two to eighteen weeks depending on years of service and 66²/3% of base salary for the remainder of a 26-week period for short-term disability coverage, and 50% of base salary for the duration of an employee’s long-term disability for long-term disability coverage. Each employee has the option of choosing a higher level of coverage at his or her own expense.
44
Treatment of Equity upon Termination
Under the Stock Incentive Plan, equity awards may have unique vesting treatment based on a change in employment status. The vesting treatment is unique based on the form of equity and the termination reason as ~~presented~~outlined below for awards granted in ~~this proxy,~~2006. The vesting treatment described below is conditioned upon the participant’s compliance with a ~~change-in-control any NCR stock options or other stock awards will vest in full only if the continuing company declines to assume or convert the outstanding stock options~~non-competition and ~~awards.~~non-solicitation provision of at least twelve month’s duration, as well as a confidentiality provision.

Situation Restricted Stock Performance-Based
Restricted Stock Stock Options
Death and Long-term Disability (“LTD”) Awards vest in full upon the date of death or LTD A pro rata portion of the stock, calculated as of the date of death or long-term disability, will continue to vest and payout at the end of the performance period based on actual results Awards vest in full upon the date of death or LTD and are exercisable for the one-year period following the date of death if the death occurs prior to age 55; or the earlier of the actual expiration or three years if after age 55
Retirement Pro-rata portion will become fully vested as of date of retirement A pro rata portion of the stock, calculated as of the date of retirement will continue to vest and payout at the end of the performance period based on actual results Unvested awards are forfeited. Vested awards expire the earlier of three years following retirement date or the expiration date
Termination due to Reduction in Force (“RIF”) Pro-rata portion will become fully vested as of date of RIF A pro rata portion of the stock, calculated as of the date of RIF, will continue to vest and payout at the end of the performance period based on actual results Unvested awards are forfeited. Vested awards expire the earlier of one day prior to 60 days post termination or the expiration date
Voluntary Resignation Award is forfeited Award is forfeited Unvested awards are forfeited. Vested awards expire the earlier of one day prior to 60 days post termination or the expiration date
Involuntary Termination for Cause Award is forfeited Award is forfeited Award is forfeited
Change in Control (“CIC”) Award vests in full upon the date of CIC
Award vests in full upon the date of CIC
Award vests in full upon the date of CIC
45
Grants made under the Management Stock Plan prior to April 26, 2006, may have unique vesting treatment based on a change in employment status. There are grants outstanding and unvested under the Management Stock Plan from the years 2005, 2004 and 2003. The vesting treatment is unique based on the vehicle and the termination reason as outlined below. The vesting treatment described below is conditioned upon the participant’s compliance with a non-competition and non-solicitation provision of at least eighteen month’s duration, as well as a confidentiality provision.
Situation Restricted Stock
Performance-Based
Restricted Stock
Stock Options
Death and Long-term Disability Awards vest in full upon date of death or LTD N/A Awards vest in full upon the date of death or LTD and are exercisable for the ten-year life of the grant
Retirement Award is forfeited N/A Awards vest in full upon the date of death or LTD and are exercisable for the ten-year life of the grant
Termination due to Reduction in Force Award is forfeited N/A Unvested awards are forfeited. Vested awards expire the earlier of one day prior to 60 days post termination or the expiration date
Voluntary Resignation Award is forfeited N/A Unvested awards are forfeited. Vested awards expire the earlier of one day prior to 60 days post termination or the expiration date
Involuntary Termination for Cause Award is forfeited N/A Award is forfeited
Change-in- Control Award is forfeited N/A Awards vest in full upon the date of CIC
46
Change in Control Severance
Executive Cash
Prorata
Bonus

Stock
Options⁽¹⁾

Restricted
Stock &
Performance-
Based Shares⁽¹⁾

Welfare
Benefits

Excise Tax
Gross-Up^(1)(2)(3)(4)

Out-
placement
Total
William Nuti
$6,000,000    $935,140    $5,290,595    $5,552,215    $32,738    $7,537,042    $10,000    $25,357,730
Peter Bocian
$2,100,000 $290,542 $313,094 $944,312 $32,738 $1,183,692 $10,000 $4,874,378
Malcolm Collins
$2,459,218 $460,417 $210,832 $1,355,064 $7,651 $2,036,870 $10,000 $6,540,052
Michael Koehler
$2,231,250 $332,150 $331,468 $2,921,320 $32,738 $1,289,071 $10,000 $7,147,997
Christine Wallace
$1,732,500 $296,067 $340,796 $1,067,760 $32,738 $949,219 $10,000 $4,429,080
(1) Equity valuations assume closing price of NCR stock on December 29, 2006 of $42.76.
(2) For purposes of calculating the excise tax gross up, the parachute value of stock options was calculated using the Black-Scholes option valuation methodology and the following assumptions:
(a) Volatility - 35.3%
(b) Dividend Yield - 0%
(c) Risk Free Rate - 4.61%
(d) Option Term - expected option term of 5.3 years less elapsed time since option grant or one year (depending on stock plan in effect at grant)
(3) Discount rates to determine the present values of the accelerated benefit of stock options and restricted shares for the parachute calculation were:
(a) Short Term - 5.89%
(b) Mid Term - 5.62%
(c) Long Term - 5.81%
(4) The excise tax gross up is calculated using a 20% excise tax rate and a 40% individual income tax rate.
Reduction-in-Force Severance
Executive Cash⁽¹⁾
Prorata
Bonus

Stock
Options⁽²⁾⁽³⁾

Restricted
Stock &
Performance-
Based
Shares⁽²⁾⁽³⁾

Welfare
Benefits

Out-
placement
Total
William Nuti
$3,000,000      $935,140      $1,470,938      $3,554,472      $14,900      $10,000      $8,985,450
Peter Bocian
$200,000 $290,542 $0 $109,369 $4,739 $10,000 $614,650
Malcolm Collins
$234,211 $460,417 $0 $377,438 $7,651 $10,000 $1,089,717
Michael Koehler
$212,500 $332,150 $0 $104,393 $4,739 $10,000 $663,782
Christine Wallace
$165,000 $296,067 $0 $113,522 $4,739 $10,000 $589,328
(1) Cash severance payment is subject to individual negotiation. The amount provided is an estimate.
(2) The payments reported in these columns include only unvested awards. Vested equity is reported in the Outstanding Equity Awards at Fiscal Year-End Table.
(3) Equity valuations assume closing price of NCR stock on December 29, 2006 of $42.76.
Death
Executive Life
Insurance⁽¹⁾
Prorata
Bonus

Stock
Options⁽²⁾

Restricted
Stock &
Performance-
Based Shares⁽²⁾

Welfare
Benefits

Out-
placement
Total
William Nuti
$1,200,000      $935,140      $5,290,595      $3,554,472      $0      $0      $10,980,207
Peter Bocian
$2,800,000 $290,542 $313,094 $680,600 $0 $0 $4,084,236
Malcolm Collins
$636,656 $460,417 $210,832 $377,438 $0 $0 $1,685,343
Michael Koehler
$1,155,000 $332,150 $331,468 $2,669,608 $0 $0 $4,488,226
Christine Wallace
$0 $296,067 $340,796 $785,581 $0 $0 $1,422,444
(1) Proceeds would be payable by a third-party insurer.
(2) Equity valuations assume closing price of NCR stock on December 29, 2006 of $42.76.
47
Disability
Executive Disability
Payments⁽¹⁾⁽²⁾
Prorata
Bonus

Stock
Options⁽³⁾

Restricted
Stock &
Performance-
Based Shares⁽³⁾

Welfare
Benefits

Out-
placement
Total
William Nuti
$0      $935,140      $5,290,595      $3,554,472      $0      $0      $9,780,207
Peter Bocian
$0 $290,542 $313,094 $680,600 $0 $0 $1,284,236
Malcolm Collins
$0 $460,417 $210,832 $377,438 $0 $0 $1,048,687
Michael Koehler
$0 $332,150 $331,468 $2,669,608 $0 $0 $3,333,226
Christine Wallace
$0 $296,067 $340,796 $785,581 $0 $0 $1,422,444
(1) Named Executive Officers in the United States are provided with core disability payments as discussed under “Death and Disability Benefits” on page 44. Messrs. Nuti and Koehler and Ms. Wallace each opted for core coverage for 2006, while Mr. Bocian opted for higher coverage. Mr. Collins would have received GBP £54,300 (approximately $106,109) per year as long-term disability benefits.
(2) Proceeds would be payable by a third-party insurer.
(3) Equity valuations assume closing price of NCR stock on December 29, 2006 of $42.76.
Voluntary Resignation
Executive Cash
Prorata
Bonus

Stock
Options⁽¹⁾

Restricted
Stock &
Performance-
Based Shares⁽¹⁾

Welfare
Benefits

Out-
placement
Total
William Nuti⁽²⁾
$0      $0      $1,470,938      $3,554,472      $0      $0      $5,025,410
Peter Bocian
$0 $0 $0 $109,369 $0 $0 $109,369
Malcolm Collins
$0 $0 $0 $377,438 $0 $0 $377,438
Michael Koehler
$0 $0 $0 $104,393 $0 $0 $104,393
Christine Wallace
$0 $0 $0 $113,522 $0 $0 $113,522
(1) Equity valuations assume closing price of NCR stock on December 29, 2006 of $42.76.
(2) Figures for Mr. Nuti assume voluntary resignation for good reason. If Mr. Nuti resigns for a reason that does not qualify as good reason, then his unvested equity is forfeited.
48
EQUITY COMPENSATION PLAN INFORMATION

The table below shows information regarding awards outstanding and shares available for issuance under our Management Stock ~~Plan. If the~~Plan that was in effect until April 26, 2006 and our Stock Incentive Plan ~~(see Item 4) is approved by stockholders, no additional shares will be available for issuance under the Management Stock Plan.~~that was adopted April 26, 2006.

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)

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)    (a) (b)    (c)
Equity compensation plans approved by security holders :

Management Stock Plan¹
   11,140,097    $ 21.53    62,069,097
Management Stock Plan (1)
   7,757,842 $ 25.21    72,718,865
Stock Incentive Plan (2)
   302,203 (3) $ 39.63    11,506,583
Equity compensation plans not approved by security holders:
   N/A    N/A    N/A    N/A N/A    N/A






Total
   11,140,097    $ 21.53    62,069,097    8,060,045 $ 25.75    84,225,448






1. The NCR Management Stock Plan was adopted with stockholder approval, effective January 1, 1997. The plan ~~contains~~contained an evergreen provision, pursuant to which the number of shares authorized under the plan iswas increased by 4% of the outstanding shares on the first day of the year for aeach year during the ten-year term of the plan without the need for additional ~~board~~Board or stockholder approval. There were ~~73,209,194~~no shares authorized under the plan as of December 31, ~~2005. As described in Item 4 of this proxy statement, if stockholders approve the NCR Stock Incentive Plan, the~~2006. The NCR Management Stock Plan ~~will be terminated;~~was terminated as of April 26, 2006, upon the stockholders’ approval of the Stock Incentive Plan; however, such termination ~~will~~did not affect awards previously granted and outstanding under the NCR Management Stock Plan.

2. The Stock Incentive Plan was adopted with stockholder approval, effective April 26, 2006.
3. Includes a total of 6,399 performance-based restricted stock units that were outstanding under the Stock Incentive Plan as of December 31, 2006.
49
~~CERTAIN RELATIONSHIPS AND~~ RELATED PERSON TRANSACTIONS

Our Committee on Directors and Governance is responsible for determining whether any conflicts of interest exist and the review and approval of each related party transaction. In January 2007 the Board of Directors formalized in writing a Related Person Transactions Policy.
This policy provides for approval or ratification each related person transaction in accordance with the procedures and policies discussed below (i) by the Company’s Committee on Directors and Governance or (ii) if the Committee on Directors and Governance determines that the approval or ratification of such related person transaction should be considered by all of the disinterested members of the Board of Directors, by such disinterested members of the Board of Directors by the vote of a majority thereof.
The policy provides for our General Counsel to advise the Chairman of the Committee on Directors and Governance of any related person transaction of which the General Counsel becomes aware. The Committee on Directors and Governance shall consider such related person transaction, unless the Committee on Directors and Governance determines that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board of Directors, in which case such disinterested members of the Board of Directors shall consider the transaction. Except as set forth below, no related person transaction not approved in advance shall be entered into by the Company unless the consummation of such transaction is expressly subject to ratification.
If the Company enters into a transaction that it subsequently determines is a related person transaction or a transaction that was not a related person transaction at the time it was entered into but thereafter becomes a related person transaction, then in either such case the related person transaction shall be presented to the Committee on Directors and Governance or the disinterested members of the Board of Directors, as applicable, for ratification. If such related person transaction is not ratified, then the Company shall take all reasonable actions to attempt to terminate the Company’s participation in that transaction.
Factors that are reviewed by the Committee on Directors and Governance or the Board of Directors, as applicable, include: the size of the transaction and the amount payable to a related person; the nature of the interest of the related person in the transaction; whether the transaction may involve a conflict of interest; and whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unaffiliated third parties.
The Company previously considered and authorized a related party transaction involving Kimberly Bocian who is an employee of the Company and the wife of Peter Bocian, NCR’s Senior Vice President and Chief Financial Officer. Ms. Bocian received ~~compensation~~total cash payments of approximately ~~$202,873~~$212,996 during ~~2005.~~2006. In addition, on ~~March 1, 2005,~~February 13, 2006, Ms. Bocian received an award of ~~3,351~~3,578 options to purchase shares of NCR stock. This award vests in four annual installments, beginning on ~~March 1, 2006.~~February 13, 2007. On ~~March 1, 2005,~~February 13, 2006, Ms. Bocian also received an award of ~~272~~1,428 shares of performance-based restricted stock. These restricted shares fully vest ~~in four annual installments beginning on March 1, 2006. Ms. Bocian is~~three years after the ~~wife~~date of ~~Peter Bocian, NCR’s Senior Vice President and Chief Financial Officer.~~issuance.

50
FEES PAID TO INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

The following table presents the approximate fees for professional audit services rendered by the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), for the audit of the Company’s financial statements for fiscal years ~~2005~~2006 and ~~2004,~~2005, as well as the approximate worldwide fees billed for other services rendered by PwC in such years:

Service    2005    2004    2006    2005
Audit Fees(1)
   $ 8,542,500    $ 12,018,400    $ 7,779,400    $ 8,542,500
Audit-Related Fees(2)
   $ 331,400    $ 246,400    $ 333,800    $ 331,400
Subtotal
   $ 8,873,900    $ 12,264,800    $ 8,113,200    $ 8,873,900
Tax Fees(3)
   $ 1,669,000    $ 2,925,800    $ 1,318,000    $ 1,669,000
All Other Fees(4)
   $ 12,100    $ 42,200    $ 15,800    $ 12,100
Subtotal
   $ 1,681,100    $ 2,968,000    $ 1,333,800    $ 1,681,100
Total Fees
   $ 10,555,000    $ 15,232,800    $ 9,447,000    $ 10,555,000
(1) Includes fees required for the review and examination of NCR’s consolidated financial statements, the audit of internal ~~control~~controls over financial reporting, quarterly reviews of interim financial statements, statutory audits, and consultations by management as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by regulatory and standard setting bodies. Also includes attestation services and review services associated with the Company’s filings with the SEC. The Audit Fees presented for 2004 have been updated from the amount disclosed in last year’s proxy statement to include additional fees for Sarbanes-Oxley Section 404 attestation services of $287,000, and additional statutory audit fees of approximately $317,000.
(2) Includes fees related to financial audits of employee benefit plans and services related to the filing of securities reports for one of the Company’s international ~~subsidiaries, and services related to obtaining business licenses for provinces for the Company’s China entity.~~subsidiaries.
(3) Generally includes tax compliance, tax advice, tax planning and expatriate services. In ~~2005~~2006 and ~~2004~~2005 respectively, fees for tax services include:
(a) $~~180,900~~27,300 and ~~$459,800~~$180,900 for tax compliance including the preparation, review and filing of tax returns;
(b) ~~in 2004 only, $84,900 for transaction tax advice~~$184,100 and ~~support relating to assistance with non-income tax matters such as sales, use and other taxes;~~
~~(c)~~ ~~$332,700 and $619,300~~$332,700 for Internal Revenue Service consultation and tax audit assistance;
~~(d)~~(c) $~~56,600~~40,500 and ~~$81,500~~$56,600 for local country statutory financial statement services incidental to the preparation of local country tax returns, among other things, and a foreign tax consultation;
~~(e)~~(d) $~~1,098,400~~1,066,100 and ~~$980,500~~$1,098,400 for expatriate services including tax return preparation, tax equalization calculations, tax consultancy, and related international assignment administration services; and
~~(f)~~(e) in 2004 only, $699,800 for tax consulting services for projects relating to: U.S. meals and entertainment audit of $239,000, interest recomputation of $387,000, excise tax consulting of $65,000, and local tax planning of $5,600. No tax consulting services were performed in ~~2005.~~2005 and 2006.
32
(4) Includes fees for all other ~~permissible~~ work performed by PwC that does not meet the above category descriptions. In 2006 and 2005, respectively, of these fees: approximately 33% and ~~2004, respectively, approximately~~ 85% ~~and 82% of this work~~ related to planning, advisory and tax services in connection with the liquidation of previously-acquired corporate entities after their operational integration into the ~~Company.~~
~~PwC has recently notified the Company~~Company; approximately 19% and ~~the Audit Committee~~12% related to licensing of ~~the Company’s Board of Directors that certain~~proprietary software; and approximately 5% and 3% related to non-audit work regarding a compensation analysis performed by ~~PwC’s affiliate~~the Company. In addition, in ~~Japan for NCR’s Japanese subsidiary was potentially violative of the SEC Independence Rules on scope of services.~~
PwC performs expatriate and local staff tax return preparation services for certain of the Company’s employees in Japan. In conjunction with these services, PwC’s affiliated firm in Japan took custody, through a trust arrangement, of funds intended to satisfy the employees’ tax obligations and remitted payment of those funds to the local taxing authorities on behalf of the employees. As a result, PwC had custody of funds that may have belonged to the Company, which is not permitted under SEC auditor independence rules. The payment aspect of the tax return preparation services was discontinued in April 2003. The fees paid to PwC for these tax services in Japan totaled2006, approximately ~~$5,100 from March 2001 to April 2003.~~
PwC has concluded that its objectivity and impartiality were unaffected by these services and therefore its independence has not been impaired. This conclusion is based upon the nature of services, the size of the fees associated therewith, the fact that none of its personnel who were involved in providing these tax services performed any audit or audit-related services for the Company and that those professionals who did conduct the audit were unaware of the payment aspect of the tax services. In January 2006, PwC issued its latest Independence Standards Board Standard No. 1 independence letter to the Audit Committee of the Company’s Board of Directors and therein reported that it is independent under applicable standards in connection with its audit opinion for the financial statements contained in this Annual Report on Form 10-K.
The Audit Committee has discussed with PwC its independence from the Company and considered whether the non-audit services described above impaired the firm’s independence. The committee concurred with PwC that its independence was not impaired by the provision30% of these ~~services,~~fees related to assistance with Securities and ~~agreed with the bases~~Exchange Commission filings for ~~PwC’s conclusion regarding independence listed above.~~new stock plans, and approximately 13% of these fees related to audits pertaining to a foundation and a dormant organization.

The Audit Committee has adopted policies and procedures regarding its pre-approval of the audit, audit-related, tax and all other non-audit services to be provided by the Company’s independent registered public accounting firm or its affiliates to NCR or its consolidated subsidiaries (the “Pre-Approval Policy”). This policy is designed to ~~assure that~~assurethat the provision of such services does not impair the independence of the Company’s independent registered public accounting firm. Under the Pre-Approval Policy, at the beginning of each fiscal year, the Audit Committee will review the services proposed by management and the Company’s independent registered public accounting firm to be
51
provided during that year. The ~~committee~~Audit Committee will then provide its pre-approval based on the limitations set forth in the Pre-Approval Policy. ~~Under the Pre-Approval Policy adopted by the Audit Committee in January 2006 for the year ending December 31, 2006, these~~These limitations ~~include~~included the following:

In no case should NCR or its consolidated subsidiaries retain the Company’s ~~independentregistered~~independent registered public accounting firm or its affiliates to provide management consulting services or any non-audit services that are not permitted under applicable laws and regulations, including, without limitation, the Sarbanes-Oxley Act of 2002 and the SEC’s related rules and regulations.

Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any other non-audit services and tax consulting services will require specific pre-approvals by the Audit Committee and a determination that such services would not impair the independence of the Company’s independent registered public accounting firm. Specific pre-approvals by the Audit Committee will also be required for any material changes or additions to the pre-approved services.

The ~~committee~~Audit Committee recommends that the ratio of total tax and all other non-audit services to total audit and audit-related services procured by the Company in a fiscal year be less than 1 to 1.

33
The ~~committee~~Audit Committee will not permit the exclusive retention of NCR’s independent registered public accounting firm in connection with a transaction initially recommended by the independent auditors, the purpose of which may be tax avoidance and the tax treatment of which is not supported in applicable tax law.

Pre-approval fee levels for all services to be provided by the independent registered public accounting firm will be established annually by the Audit Committee, and updated on a quarterly basis by the ~~committee~~Audit Committee at its regularly scheduled meetings. Any proposed services significantly exceeding these levels will require separate pre-approval by the ~~committee.~~Audit Committee.

The Corporate Controller will report to the ~~committee~~Audit Committee on a quarterly basis regarding the status of all ~~pre-approved audit,~~pre-approvedaudit, audit-related, tax and all other non-audit services provided by the Company’s independent registered public accounting firm or its affiliates to NCR or its consolidated subsidiaries.

Back-up documentation will be provided to the Audit Committee by management and/or the independent registered public accounting firm when requesting pre-approval of services by the Company’s independent registered public accounting firm. At the request of the ~~committee,~~Audit Committee, additional detailed documentation regarding the specific services will be provided.

Requests or applications to provide services that require separate approval by the Audit Committee will be submitted to the ~~committee~~Audit Committee by the Chief Financial Officer, with the support of the independent registered public accounting firm, and must include a joint statement as ~~towhether,~~to whether, in the view of management and the independent registered public accounting firm, the request or application is consistent with the SEC’s rules on auditor independence.

Under the Pre-Approval Policy, the Audit Committee has ~~designated~~delegated to its Chair ~~with~~ limited authority to grant pre-approvals for audit, audit-related, tax and other non-audit services in the event that immediate approval of a service is needed. The Chair shall report any pre-approval decisions to the ~~committee~~Audit Committee at its next scheduled meeting for its review and approval. The ~~committee~~Audit Committee has not delegated to management its responsibilities to pre-approve services performed by the independent registered public accounting firm.

The audit, non-audit, tax and all other non-audit services provided by PwC to the Company, and the fees charged for such services, are actively monitored by the Audit Committee as set forth in the Pre-Approval Policy on a quarterly basis to maintain the appropriate level of objectivity and independence in the firm’s audit work for NCR. Part of the ~~committee’s~~Audit Committee’s ongoing monitoring includes a review of any de minimis exceptions as provided in the applicable SEC rules for non-audit services that were not pre-approved by the ~~committee.~~Audit Committee. In 2006 and 2005, of those total amounts reported above, all activities were pre-approved by the Audit Committee prior to commencement, thus no de minimis activity was reported. In 2004, 0.2% of fees paid by the Company to PwC were approved by the committee after their commencement. The Audit Committee was promptly informed and concluded the services did not impair the firm’s independence as the Company’s independent registered public accounting firm.

3452
BOARD AUDIT COMMITTEE REPORT

The Audit Committee consists of ~~three~~four directors, each of whom is independent as determined by the Board of Directors under the standards set forth in the Board’s Corporate Governance Guidelines, which are based on the requirements of the listing standards of the New York Stock Exchange (“NYSE”) and the applicable rules of the U.S. Securities and Exchange Commission (“SEC”). In accordance with NYSE and SEC rules, all members are “financially literate.” In addition, two of its members are “audit committee financial experts” as defined under applicable SEC rules. A brief description of the responsibilities of the Audit Committee is set forth above under the caption “Committees of the Board.” The Audit Committee acts under a charter adopted by the Board of Directors, which is periodically reviewed and revised as appropriate. The Audit Committee charter was revised and approved by the Board of Directors in ~~January 2004,~~October 2006, and ~~was again reviewed at the October 2005 meeting with no resulting changes. The Audit Committee charter~~ is available on the Company’s corporate governance ~~web page~~website athttp://www.ncr.com/corpgovernance/corpgov_board_charters.htm.

In general, NCR’s management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. PricewaterhouseCoopers, NCR’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting ~~principles.~~principles, as well as an independent audit of the Company’s internal control over financial reporting.

In the course of fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed with NCR management the Company’s audited financial statements for fiscal year ~~2005,~~2006, as well as its quarterly public earnings releases and its quarterly reports on Form 10-Q, and, together with the Board, has reviewed and discussed the Company’s annual report on Form 10-K and proxy statement. In addition, the Audit Committee met with management frequently during the year to ~~consider the~~considerthe adequacy of the Company’s internal control over financial reporting and spent considerable time ~~andeffort~~and effort overseeing the Company’s compliance efforts in connection with Section 404 of the Sarbanes-Oxley Act of 2002. The Audit Committee also discussed with NCR’s senior management and independent registered public accounting firm the process used for certifications by the Company’s Chief Executive and Chief Financial Officers for certain of the Company’s filings with the SEC, as well as the clarity and completeness of the Company’s financial disclosures. Further, the Audit Committee discussed with PricewaterhouseCoopers, the Company’s independent registered public accounting firm, the matters required to be discussed by SAS 61 (Codification of Statements on Auditing Standards). The Audit Committee also has received the written disclosures and the letter from PricewaterhouseCoopers required by Independence Standards Board Standard No. 1, “Independence Discussions with Audit Committees,” and has discussed with PricewaterhouseCoopers its independence. In connection with its discussions concerning the independence of its independent registered public accounting firm, the Audit Committee adopted its annual policy requiring that the Audit Committee pre-approve all audit, audit-related, tax and other non-audit services provided by the Company’s independent registered public accounting firm or its affiliates to NCR or its consolidated subsidiaries. The committee also reviewed its procedures for processing and addressing complaints regarding accounting, internal controls, or auditing matters, and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters. Finally, the Audit Committee has reviewed NCR’s critical accounting policies and alternative policies, if any, with management and the Company’s independent registered public accounting firm to determine that both are in agreement that the policies currently being used are appropriate.

35
The Audit Committee met in executive session at its regular meetings periodically throughout the year with both PricewaterhouseCoopers and the internal auditors. It also met privately on occasion with the Chief Financial Officer and Corporate
53
Controller of the Company, each of whom has unrestricted access to the committee.

Based on the reviews and the discussions referred to above, the Audit Committee recommended to the Board that the Company’s audited ~~consolidatedfinancial~~consolidated financial statements be ~~included in~~includedin the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, ~~2005~~2006 for filing with the SEC.

Dated:    February ~~28, 2006~~26, 2007

The Audit Committee:

Edward P. Boykin, Chair
Gary Daichendt
Victor L. Lund
C.K. Prahalad

3654
DIRECTORS’ PROPOSAL TO ~~APPROVE~~RATIFY THE APPOINTMENT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR ~~2006~~2007
(Item 2 on Proxy Card)

The Board’s Audit Committee, which is composed entirely of independent directors, appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the Company’s independent registered public accounting firm for ~~2006~~2007 to audit NCR’s consolidated financial statements. The Board has approved this selection and, as a matter of good corporate governance, is asking you to ~~approve~~ratify this appointment.

Based on its “Pre-Approval Policy” (as defined above on page ~~33)~~51) and applicable SEC rules and guidance, the Audit Committee has considered whether the provision of the tax and other non-audit services described above under the caption “Fees Paid to Independent Registered Public Accounting Firm” was compatible with maintaining PricewaterhouseCoopers’ independence and concluded that ~~they were.~~it was.

PricewaterhouseCoopers has been the Company’s independent registered public accounting firm for many years and is a leader in providing audit services to the high-technology industry. The Board believes that PricewaterhouseCoopers is well qualified to ~~serve as~~serveas NCR’s independent registered public ~~accountingfirm~~accounting firm given its experience, global presence with offices or affiliates in or near most locations where NCR does business, and quality audit work in serving the Company. PricewaterhouseCoopers rotates its audit partners assigned to audit NCR at least once every five years and the Audit Committee has placed restrictions on the Company’s ability to hire any employees or former employees of PricewaterhouseCoopers or its affiliates.

PricewaterhouseCoopers representatives will be at the annual meeting to answer questions, and they may also make any statement they wish at the meeting.

The Board and Audit Committee recommend that you vote FOR this proposal. If the stockholders do not approve this proposal, the Audit Committee and the Board of Directors will reconsider the appointment, but may decide to maintain its appointment of PricewaterhouseCoopers. Proxies solicited by the Board of Directors will be voted FOR this proposal, unless you specify otherwise in your proxy.

37
~~DIRECTORS’ PROPOSAL TO APPROVE THE NCR MANAGEMENT INCENTIVE PLAN~~
~~(Item 3 on Proxy Card)~~
~~Summary of the Management Incentive Plan.~~
At the Annual Meeting of Stockholders, we will ask the stockholders to approve the NCR Management Incentive Plan (the “MIP”) to replace the Company’s current management incentive plan. The Board of Directors adopted the MIP on January 25, 2006, subject to approval by the stockholders at the Annual Meeting of Stockholders. The purpose of the MIP is to advance the interests of NCR and its stockholders and assist NCR in attracting and retaining executive officers by providing incentives and financial rewards to such executive officers that are intended to be deductible to the maximum extent possible as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code of 1986, as amended (the “Code”). If approved by stockholders, the MIP will become effective as of January 1, 2006.
~~The principal features of the MIP are summarized below. This summary is qualified by reference to the full text of the MIP that is included as Exhibit A to this proxy statement.~~
~~Administration; Amendment and Termination.~~ The MIP is administered by the Compensation and Human Resource Committee or a subcommittee of the Compensation and Human Resource Committee (the “Committee��), which has broad authority to administer and interpret the MIP and its provisions as it deems necessary and appropriate. The Committee will be composed solely of two or more “outside directors” within the meaning of Section 162(m) of the Code. The Board of Directors reserves the right to amend or terminate the MIP at any time. Amendments to the MIP will require stockholder approval to the extent required to comply with applicable law.
~~Eligibility~~.    Board-appointed officers of NCR who are designated by the Board of Directors as “Section 16 officers” and are selected by the Committee to participate in the MIP are eligible to receive awards under the MIP. Currently, there are 9 Board-appointed officers who are designated by the Board as Section 16 officers.
~~Awards~~~~.    Under the MIP, each participant is eligible to receive a maximum performance award equal to a percentage of NCR’s “earnings before~~income taxes” for a performance period established by the Committee. “Earnings before income taxes” means the Company’s earnings before income taxes as reported in the Company’s income statement for the applicable performance period, prior to accrual of any amounts for payment under the MIP for the performance period, adjusted to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring items, and the cumulative effect of tax or accounting changes, each as defined by generally accepted accounting principles or identified in the Company’s financial statements, notes to the financial statements or management’s discussion and analysis.
Specifically, NCR’s Chief Executive Officer is eligible to receive a performance award equal to 1.5% of “earnings before income taxes” for the performance period and the other participants in the MIP are each eligible to receive a performance award equal to 0.75% of “earnings before income taxes” for the performance period. The actual performance award granted to a participant is determined by the Committee, which retains the discretionary authority to reduce or eliminate (but not increase) a performance award based on its consideration of, among other things, corporate or business unit performance against budgeted financial goals, achievement of non-financial goals, economic and relative performance considerations and assessments of individual performance.
The time period during which the achievement of the performance goals is to be measured shall be determined by the Committee, but may be no longer than five years and no less than six months. Within the earlier of 90 days after the beginning of each fiscal year or the expiration of 25% of a performance period, the Committee will designate one or more performance periods, determine the participants for such performance periods and affirm the applicability of the formula for determining each participant’s award.
Each award under the MIP shall be paid in cash, provided that the Committee may in its discretion determine that all or a portion of an award shall be paid in stock, restricted stock, stock options or other stock-based or stock denominated units that are issued pursuant to NCR’s equity compensation plans. An award shall be paid only after written certification by
38
the Committee as to the attainment of the performance goals and the amount of the award. Receipt of performance awards may be deferred under certain circumstances in accordance with a deferred compensation plan approved by the Committee.
~~Termination of Employment~~.    A participant who terminates employment with NCR during a performance period due to retirement, disability or death shall be eligible to receive an award under the MIP prorated for the portion of the performance period prior to termination of employment. Subject to the discretion of the Committee to determine otherwise, if a participant terminates employment with NCR for a reason other than retirement, disability or death, no award shall be payable with respect to the performance period in which such termination occurs.
~~Federal Income Tax Consequences.~~
The following is a summary of certain federal income tax consequences of awards made under the MIP, based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of the circumstances of a particular participant under the MIP. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.
If an award under the MIP is paid in cash or its equivalent, a participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the award is paid in an amount equal to the cash or the fair market value of its equivalent, and NCR will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply. If, in accordance with the exercise of Committee discretion, a portion or all of an award under the MIP is paid to a participant in stock, restricted stock, stock options, or other stock-based or stock-denominated units, pursuant to the Stock Incentive Plan (see Item 4 of this proxy statement), the federal income tax consequences of such payment will be identical to those discussed in Item 4 of this proxy statement with respect to the Stock Incentive Plan.
Section 162(m) of the Code limits the deductibility of certain compensation of the Chief Executive Officer and the next four most highly compensated officers of publicly-held corporations. Compensation paid to suchan officer during a year in excess of $1 million that is not performance-based (or does not comply with other exceptions) would not be deductible on the Company’s federal income tax return for that year. It is intended that compensation attributable to awards payable under the MIP will qualify as performance-based. The Board of Directors will evaluate from time to time the relative benefits to the Company of qualifying other awards under the MIP for deductibility under Section 162(m) of the Code.
The foregoing general tax discussion is intended for the information of stockholders considering how to vote with respect to this proposal and not as tax guidance to participants in the MIP. Participants are strongly urged to consult their own tax advisors regarding the federal, state, local, foreign and other tax consequences to them of participating in the MIP.
~~New Plan Benefits.~~
The amounts of awards for fiscal year 2006 or subsequent years will be determined based upon NCR’s earnings before income taxes and, in addition, will be subject to the Committee’s right to reduce any participant’s award by any amount in its sole discretion. As a result, it is not possible to determine the amounts of awards for fiscal year 2006 or subsequent years at this time. Moreover, because the Committee can reduce each participant’s award under the MIP by any amount in its discretion, it is also not possible to determine the amounts that would have been paid for fiscal year 2005 had the MIP been in effect during such year. If the MIP had been in effect during fiscal year 2005, the maximum award payable under the MIP’s formula would have been $5,940,000 for the Chief Executive Officer (prorated among the Chief Executive Officers who served during 2005) and $2,970,000 for each of the other nine executive officer participants. We believe that, if the MIP had been in effect for the 2005 fiscal year, the Committee would have exercised its discretion to reduce each participant’s award. See the Summary Compensation table on page 22 of this proxy statement for the awards the Committee actually determined to pay our Named Executive Officers for the 2005 fiscal year.
~~Approval.~~
~~Under Maryland law and the charter and Bylaws of NCR, the affirmative vote of a majority of the~~
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votes cast (in person or by proxy) is required for approval of the MIP. Under Section 162(m) of the Code, the material terms of a performance goal are approved by stockholders if, in a separate vote, a majority of the votes cast on the issue are cast in favor of approval.
~~The Board recommends that you vote FOR this proposal.~~    ~~Proxies solicited by the Board of Directors will be voted FOR this proposal, unless you specify otherwise in your proxy.~~
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~~DIRECTORS’ PROPOSAL TO APPROVE THE NCR STOCK INCENTIVE PLAN~~
~~(Item 4 on Proxy Card)~~
~~Summary of the Stock Incentive Plan.~~
At the Annual Meeting of Stockholders, we will ask the stockholders to approve the NCR 2006 Stock Incentive Plan (the “SIP”). Our Board of Directors adopted the SIP on February 28, 2006, subject to approval by the stockholders at the Annual Meeting of Stockholders. The purpose of the SIP is to give NCR a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to provide NCR and its subsidiaries and affiliates with a stock plan providing incentives directly linked to stockholder value. If approved by stockholders at the Annual Meeting of Stockholders, the SIP will become effective on that date.
If the SIP is approved by NCR’s stockholders, the Company’s existing Management Stock Plan, which expires by its own terms at the end of 2006, will be terminated; however, such termination will not affect awards previously granted and outstanding under the Management Stock Plan. The Company’s 2006 annual stock grants were made on February 13, 2006. After taking into account these grants, as of the end of the day on the February 13, 2006, record date, there were outstanding awards of 11,035,029 stock options having a weighted-average exercise price of $23.31 and a weighted-average term of 6.55 years, and 1,283,437 full-value stock awards. In addition, 69,441,678 shares remained available for future awards, and these shares will be cancelled and not carried forward if NCR’s stockholders approve the SIP. If the SIP is approved, no additional shares will be available for issuance under the Management Stock Plan.
~~The principal features of the SIP are summarized below. This summary is qualified by reference to the full text of the SIP that is included as Exhibit B to this proxy statement.~~
~~General~~.    Awards granted under the SIP may be in the form of stock options, stock appreciation rights, restricted stock, restricted stock units, performance units, other stock-based awards or any combination of those awards. The SIP provides that awards may be made under the SIP for ten years.
~~Administration~~~~.    Under the terms of the SIP, the SIP will be administered by the Compensation~~and Human Resource Committee of our Board of Directors, or by such other committee or subcommittee as may be appointed by our Board, and which consists entirely of two or more “outside directors” within the meaning of Section 162(m) of the Internal Revenue Code (“Code”) and which will be referred to in the summary as the “Committee.” Unless and until the Board appoints any other committee or subcommittee, the SIP will be administered by the Committee. Under the terms of the SIP, the Committee can make rules and regulations and establish such procedures for the administration of the SIP as it deems appropriate.
~~Shares Available~~.    The SIP provides that the aggregate number of shares of NCR common stock that may be subject to awards under the SIP cannot exceed 12,000,000, subject to adjustment in certain circumstances to prevent dilution or enlargement. No more than 5,000,000 shares may be granted as options intended to be incentive stock options. No participant may be granted, during any consecutive 36-month period, options and stock appreciation rights covering in excess of 2,000,000 shares, or restricted stock, restricted stock units or other awards subject to the achievement of performance goals covering in excess of 750,000 shares. Shares underlying awards that expire or are forfeited or terminated without being exercised will again be available for the grant of additional awards within the limits provided by the SIP. In addition, shares underlying awards outstanding under the NCR Management Stock Plan that expire or are forfeited or terminated without being exercised or that are settled for cash will again be available for the grant of additional awards under the SIP, within the limits provided by the SIP. Shares withheld by or delivered to the Company to satisfy the exercise price of options or tax withholding obligations will not be deemed to have been issued under the SIP.
~~Eligibility~~.    The SIP provides for awards to directors, officers, employees and consultants of the Company and its subsidiaries and affiliates and prospective employees and consultants who have accepted offers of employment or consultancy from the Company or its subsidiaries or affiliates, except that incentive stock options may only be granted to employees of the Company and its subsidiaries or parent corporation. As of the date of this proxy
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statement, there were approximately 615 directors, officers and employees eligible to participate in the SIP. The current executive officers of the Company named in the Summary Compensation Table under the caption “Executive Compensation” herein and each of the directors of the Company are among the individuals eligible to receive awards under the SIP.
~~Stock Options~~.    Subject to the terms and provisions of the SIP, options to purchase NCR common stock may be granted to eligible individuals at any time and from time to time as determined by the Committee. Options may be granted as incentive stock options, which are intended to qualify for favorable treatment to the recipient under Federal tax law, or as non-qualified stock options, which do not qualify for this favorable tax treatment. Subject to the limits provided in the SIP, the Committee determines the number of options granted to each recipient. Each option grant will be evidenced by a stock option agreement that specifies the option exercise price, whether the options are intended to be incentive stock options or non-qualified stock options, the duration of the options, the number of shares to which the options pertain and such additional limitations, terms and conditions as the Committee may determine, but the plan provides that in no event will the normal vesting schedule of an option provide that the option will vest before the first anniversary of the date of grant (other than in the case of death or disability).
The Committee determines the exercise price for each option granted, except that the option exercise price may not be less than 100 percent of the fair market value of a share of NCR common stock on the date of grant. As of March 6, 2006, the fair market value (as that term is defined under the SIP) of a share of NCR common stock was $39.05 per share.
All options granted under the SIP will expire no later than ten years from the date of grant. The method of exercising an option granted under the SIP will be set forth in the stock option agreement for that particular option.
At the discretion of the Committee, a stock option agreement evidencing the award of stock options may contain limitations on the exercise of options under certain circumstances upon or after the termination of employment or in the event of death, disability or retirement. Stock options are nontransferable except by will or by the laws of descent and distribution or, in the case of non-qualified stock options, as otherwise expresslypermitted by the Committee. The granting of an option does not accord the recipient the rights of a stockholder, and such rights accrue only after the exercise of an option and the registration of shares of NCR common stock in the recipient’s name.
~~Stock Appreciation Rights~~.    The Committee in its discretion may grant stock appreciation rights under the SIP. A stock appreciation right entitles the holder to receive from the Company upon exercise an amount equal to the excess, if any, of the aggregate fair market value of a specified number of shares of NCR common stock that are the subject of such stock appreciation right over the aggregate exercise price for the underlying shares. At the discretion of the Committee, the agreement evidencing the award of stock appreciation rights may place limitations on the exercise of such stock appreciation rights under certain circumstances upon or after the termination of employment or in the event of death, disability, or retirement.
The Company may make payment of the amount to which the participant exercising stock appreciation rights is entitled by delivering shares of NCR common stock, cash or combination of stock and cash as set forth in the award agreement relating to the stock appreciation rights. Stock appreciation rights are not transferable except by will or the laws of descent and distribution or, with respect to stock appreciation rights that are not granted in “tandem” with an option, as expressly permitted by the Committee. Each stock appreciation right will be evidenced by an award agreement that specifies the date and terms of the award and such additional limitations, terms and conditions as the Committee may determine.
~~Restricted Stock~~.    The SIP provides for the award of shares of NCR common stock that are subject to forfeiture and restrictions on transferability (“Restricted Stock”) as set forth in the SIP and as may be otherwise determined by the Committee. Except for these restrictions and any others imposed by the Committee, upon the grant of Restricted Stock the recipient will have rights of a stockholder with respect to the Restricted Stock, including the right to vote the Restricted Stock and to receive all dividends and other distributions paid or made with respect to the Restricted Stock. During the restriction period set by the Committee, the recipient may not sell, transfer, pledge, exchange or otherwise encumber the
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Restricted Stock. Any award of Restricted Stock will be subject to vesting during a restriction period of at least three years following the date of grant, except that a restriction period of at least one year is permissible if vesting is conditioned upon the achievement of performance goals established by the Committee. An award of Restricted Stock may vest in part on a pro rata basis prior to the expiration of any restriction period, and up to five percent of shares available for grant as Restricted Stock (together with all other shares available for grant as awards under the SIP other than options, stock appreciation rights or dividend equivalent rights) may be granted with a restriction period of at least one year regardless of whether vesting is conditioned upon the achievement of performance goals.
~~Restricted Stock Units~~.    The SIP authorizes the Committee to grant restricted stock units. Restricted stock units are not shares of NCR common stock and do not entitle the recipients to the rights of a stockholder. Restricted stock units granted under the SIP may or may not be subject to performance conditions. The recipient may not sell, transfer, pledge or otherwise encumber restricted stock units granted under the SIP prior to their vesting. Restricted stock units will be settled in cash or shares of NCR common stock, in an amount based on the fair market value of NCR common stock on the settlement date.
Any award of restricted stock units will be subject to vesting during a restriction period of at least three years following the date of grant, except that a restriction period of at least one year is permissible if vesting is conditioned upon the achievement of certain performance goals established by the Committee. In addition, an award of restricted stock units may vest in part on a pro rata basis prior to the expiration of any restriction period, and up to five percent of shares available for grant as restricted stock units (together with all other shares available for grant as awards other than options, stock appreciation rights or dividend equivalent rights) may be granted with a restriction period of at least one year regardless of whether vesting is conditioned upon the achievement of performance goals.
~~Performance Units~~~~.    The SIP provides for the award of performance units that are valued by reference to a designated amount of property other than shares of NCR common stock. The payment of~~the value of a performance unit is conditioned upon the achievement of performance goals set by the Committee in granting the performance unit and may be paid in cash, shares of NCR common stock, other property or a combination thereof. The performance period for a performance unit must be at least one year. The maximum value of the property that may be paid to a participant pursuant to a performance unit in any year is $10,000,000.
~~Other Stock-Based Awards~~.    The SIP also provides for the award of shares of NCR common stock and other awards that are valued by reference to NCR common stock, including unrestricted stock, dividend equivalents and convertible debentures (collectively, “Other Stock-Based Awards”). Awards of unrestricted stock may only be granted in lieu of compensation that would otherwise be payable to the participant. Any Other Stock-Based Award that is a Full Value Award (as defined in the SIP) will be subject to vesting during a restriction period of at least three years following the date of grant, except that a restriction period of at least one year is permissible if vesting is conditioned upon the achievement of certain performance goals established by the Committee. In addition, an Other Stock-Based Award that is a Full Value Award may vest in part on a pro rata basis prior to the expiration of any restriction period, and up to five percent of shares available for grant as Other Stock-Based Awards that are Full Value Awards (together with all other shares available for grant as Full Value Awards) may be granted with a restriction period of at least one year regardless of whether vesting is conditioned upon the achievement of performance goals.
~~Performance Goals.~~    The plan provides that performance goals may be established by the Committee in connection with the grant of Restricted Stock, Restricted Stock Units, Performance Unit or Other Stock-Based Awards. In the case of an award intended to qualify for the performance-based compensation exception of Section 162(m) of the Code, (i) such goals shall be based on the attainment of specified levels of one or more of the following measures: revenues; revenue growth; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization); earnings per share; operating income (including non-pension operating income); pre- or after-tax income; cash flow (before or after dividends); cash flow per share (before or
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after dividends); gross margin; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; return on assets or operating assets; economic value added (or an equivalent metric); stock price appreciation; total stockholder return (measured in terms of stock price appreciation and dividend growth); cost control; gross profit; operating profit; cash generation; unit volume; stock price; market share; sales; asset quality; cost saving levels; marketing spending efficiency; core non-interest income; or change in working capital with respect to the Company or any one or more subsidiaries, divisions, business units or business segments of the Company either in absolute terms or relative to the performance of one or more other companies or an index covering multiple companies and (ii) such performance goals will be set by the Committee within the time period and other requirements prescribed by Section 162(m) of the Code and the regulations promulgated thereunder.
~~Change in Control~~.    In the event of a Change in Control of NCR (as defined in the SIP), awards granted under the SIP that are not assumed, converted or replaced in connection with such Change in Control will vest immediately prior to the Change in Control. If awards are assumed, converted or replaced in connection with a Change in Control, and during the 24-month period following the Change in Control there is a termination of an award holder’s employment (a) by NCR for any reason other than Cause or Disability (as defined in the SIP) or (b) by certain employees who participate in NCR’s Change in Control Severance Plan or NCR’s Severance Policy, or to the extent set forth in an award agreement, for Good Reason (as defined in the SIP): (1) any option or stock appreciation right outstanding as of the date of the Change in Control that remains outstanding as of the date of termination will vest immediately and become fully exercisable until the later of the date upon which the option or stock appreciation right would expire absent the special change-in-control provision and the first anniversary of the date of termination; (2) the restrictions and deferral limitations applicable to any Restricted Stock will lapse, and any Restricted Stock outstanding as of the date of the Change in Control that remains outstanding as of the date of termination will become free of all restrictions and become fully vested and transferable; and (3) all restricted stock units outstanding as of the date of the Change inControl that remain outstanding as of the date of termination will be considered to be earned and payable in full, and any deferral or other restriction will lapse and each such restricted stock unit will be settled as promptly as practicable in accordance with the applicable award agreement.
~~Awards Under the SIP~~.    Because it is within the discretion of the Committee to determine which officers and employees receive awards and the amount and type of awards received, it is not presently possible to determine the number of individuals to whom awards will be made in the future under the SIP or the amount of the awards.
~~Amendment~~.    The Board may amend, alter or discontinue the SIP at any time. No such amendment or termination, however, may impair the rights of any holder of outstanding awards without his or her consent, except for amendments made to cause the SIP to comply with applicable law, stock exchange rules or accounting rules, and no award may be amended or otherwise subject to any action that would be treated, for accounting purposes, as a “repricing” of such award, unless such action is approved by the Company’s stockholders.
~~Federal Income Tax Consequences.~~
The following is a summary of certain federal income tax consequences of awards made under the SIP, based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of the circumstances of a particular participant under the SIP. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.
~~Non-Qualified Stock Options~~.    A participant will not recognize taxable income at the time of grant of a non-qualified stock option, and the Company will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of a non-qualified stock option equal to the excess of the fair market value of the shares purchased over their exercise price, and the Company generally will be entitled to a corresponding deduction.
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~~Incentive Stock Options~~.    A participant will not recognize taxable income at the time of grant of an incentive stock option. A participant will not recognize taxable income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date the shares were transferred, any gain or loss arising from a subsequent disposition of such shares will be taxed as long-term capital gain or loss, and the Company will not be entitled to any deduction. If, however, such shares are disposed of within such two or one year periods, then in the year of such disposition the participant will recognize compensation taxable as ordinary income equal to the excess of the lesser of the amount realized upon such disposition and the fair market value of such shares on the date of exercise over the exercise price, and the Company generally will be entitled to a corresponding deduction.
~~Stock Appreciation Rights~~.    A participant will not recognize taxable income at the time of grant of a stock appreciation right, and the Company will not be entitled to a tax deduction at such time. Upon exercise, a participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) equal to the fair market value of any shares delivered and the amount of cash paid by the Company, and the Company generally will be entitled to a corresponding deduction.
~~Restricted Stock~~.    A participant will not recognize taxable income at the time of grant of shares of restricted stock, and the Company will not be entitled to a tax deduction at such time, unless the participant makes an election under Section 83(b) of the Code to be taxed at such time. If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of the grant equal to the excess of the fair market value of the shares at such time over the amount, if any, paid for such shares. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the restrictions lapse in an amount equal to the excess of the fair market value ofthe shares at such time over the amount, if any, paid for such shares. The Company is entitled to a corresponding deduction at the time the ordinary income is recognized by the participant, except to the extent the deduction limits of Section 162(m) of the Code apply. In addition, a participant receiving dividends with respect to restricted stock for which the above-described election has not been made and prior to the time the restrictions lapse will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee), rather than dividend income. The Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.
~~Restricted Stock Units.~~    A participant will not recognize taxable income at the time of grant of a restricted stock unit, and the Company will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of settlement of the award equal to the fair market value of any shares delivered and the amount of cash paid by the Company, and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.
~~Performance Units.~~    A participant will not recognize taxable income at the time of grant of performance units, and the Company will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of settlement of the award equal to the fair market value of any shares or property delivered and the amount of cash paid by the Company, and the Company will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) of the Code apply.
~~Section 162(m)~~.    Section 162(m) of the Code limits the deductibility of certain compensation of the Chief Executive Officer and the next four most highly compensated officers of publicly-held corporations. Compensation paid to such an officer during a year in excess of $1 million that is not performance-based (or does not comply with other exceptions) would not be deductible on the
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Company’s federal income tax return for that year. It is intended that compensation attributable to stock options and stock appreciation rights granted under the SIP will qualify as performance-based. The Board of Directors will evaluate from time to time the relative benefits to the Company of qualifying other awards under the SIP for deductibility under Section 162(m) of the Code.
The foregoing general tax discussion is intended for the information of stockholders considering how to vote with respect to this proposal and not as tax guidance to participants in the SIP. Participants are strongly urged to consult their own tax advisors regarding the federal, state, local, foreign and other tax consequences to them of participating in the SIP.
~~New Plan Benefits.~~
~~The number of options or other awards, if any, that an individual may receive under the SIP is at the discretion of the Committee and therefore cannot be determined in advance.~~
~~Approval.~~
Under Maryland law and the charter and Bylaws of NCR, the affirmative vote of a majority of the votes cast (in person or by proxy) is required for approval of the SIP. For the SIP to be approved under the rules of the New York Stock Exchange: (i) more than 50% in interest of all securities entitled to vote on the proposal must cast a vote on the proposal, and (ii) a majority of the votes cast must vote “FOR” the proposal. Under Section 162(m) of the Code, the material terms of a performance goal are approved by stockholders if, in a separate vote, a majority of the votes cast on the issue are cast in favor of approval.
~~The Board recommends that you vote FOR this proposal.~~    ~~Proxies solicited by the Board of Directors will be voted FOR this proposal, unless you specify otherwise in your proxy.~~
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~~DIRECTORS’ PROPOSAL TO APPROVE THE NCR EMPLOYEE STOCK PURCHASE PLAN~~
~~(Item 5 on Proxy Card)~~
~~Summary of the Employee Stock Purchase Plan.~~
At the Annual Meeting of Stockholders, we will ask the stockholders to approve the NCR Employee Stock Purchase Plan, (the “ESPP”). The Board of Directors adopted the ESPP on February 28, 2006, subject to approval by the stockholders at the Annual Meeting of Stockholders. The purpose of the ESPP is to provide eligible employees of NCR and its designated subsidiaries an opportunity to purchase NCR common stock through payroll deductions. It is intended to encourage ownership of NCR common stock to enable eligible employees to participate in the economic progress of the Company during the term of the plan. The ESPP is intended to qualify as an “employee stock purchase plan” under Section 423 of the Internal Revenue Code of 1986, as amended (the “Code”). If approved by stockholders, the ESPP will become effective on January 1, 2007.
~~The principal features of the ESPP are summarized below. This summary is qualified by reference to the full text of the ESPP that is included as Exhibit C to this proxy statement.~~
~~Administration~~.    The ESPP will be administered by the Senior Vice President, Human Resources. He or she will have discretionary authority to interpret the ESPP and to establish rules and regulations relating to the ESPP from time to time and to make all other determinations necessary or advisable for the administration of the ESPP. A third party recordkeeper maintains an investment account for each participant with a record of the shares purchased by such participant.
~~Shares Available~~. The maximum number of shares of NCR common stock available for purchase under the ESPP will be 4,000,000, of which 1,900,000 shares will be newly authorized and the remainder will consist of shares previously authorized under NCR’s prior employee stock purchase plan. The aggregate number of shares will be subject to adjustment in the event of certain changes to NCR’s capital structure as described in the ESPP. The shares of NCR common stock purchased and issued under the ESPP will consist of authorized and unissued shares.
~~Eligibility~~~~.    Any person who is employed by NCR or any of its subsidiaries on the first business~~day of each month, other than those persons whose customary employment is 20 hours or less per week and/or whose customary employment is five months or less in any calendar year, is eligible to participate in the ESPP. Notwithstanding anything to the contrary contained in the ESPP, if any person entitled to purchase shares pursuant to the ESPP would be deemed to own stock possessing 5% or more of the total combined voting power or value of all classes of stock of NCR, any parent of NCR or any subsidiary, the maximum number of shares which such person shall be entitled to purchase pursuant to the ESPP will be reduced to that number which, when added to the number of shares of stock of NCR, any parent of NCR or any subsidiary which such person is deemed to own, is one less than such 5%, and any balance remaining in such person’s account to purchase shares of NCR common stock under the ESPP will be refunded. As of the date of this proxy statement, approximately 8,760 officers and employees are eligible to participate in the ESPP.
~~Participation and Payroll Deductions~~.    Eligible employees may purchase shares of NCR common stock at below-market prices through payroll deductions during each purchase period, with amounts accumulated during each purchase period. To participate in the ESPP, an eligible employee must file a stock purchase agreement prior to February 15 or August 15 of any year the ESPP is in effect, stating the amount of the requested payroll deduction. The amount of the payroll deduction must be a whole percentage amount of the employee’s compensation (before withholding or other deductions) paid during the purchase period by the Company or any of its subsidiaries, and may not be less than 1% of such employee’s compensation nor more than 10% of such compensation. The amounts deducted from participants’ pay is reflected in an account maintained on the books and records of the Company. No interest is paid on the amounts credited to these accounts.
~~Deduction Changes and Withdrawal~~.    Employees may change their rate of payroll deduction at any time prior to February 15 or August 15 of any year the ESPP is in effect. A participant may withdraw from participation in the ESPP at any time by filing a notice of withdrawal. Upon a participant’s withdrawal, the
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amount credited to his or her stock purchase account will be applied to the purchase of NCR common stock on the next exercise date, which occurs on the last business date of the month. A participant who withdraws from the ESPP may again become a participant by filing a new stock purchase agreement in accordance with the procedures described above.
~~Purchase of Shares~~.    Funds held in a participant’s account on the last business day of each month will be used to purchase shares of NCR common stock for the participant. The purchase price on each such date shall be 95% of the average of the reported highest and lowest sale prices of shares of NCR common stock on the New York Stock Exchange on that date. On March 6, 2006, the average of reported highest and lowest sale prices of shares of NCR common stock on the New York Stock Exchange was $39.05. Dividends on shares purchased and held in a participant’s account are credited to the participant’s account and will be used to purchase additional shares on the next monthly exercise date, unless the participant elects not to have such dividends reinvested.
The provisions of the ESPP do not impose restrictions upon the resale by holders of the NCR common stock acquired under the ESPP. Certain resale restrictions are imposed, however, by the terms of NCR’s insider trading and confidentiality policies and the provisions of the federal securities laws. A participant may at any time direct the third-party recordkeeper to sell some or all of the shares credited to the participant’s investment account.
~~A participant’s rights under the ESPP are not transferable by the participant during his or her lifetime.~~
~~Limitations on Purchases of Shares~~.     Notwithstanding anything to the contrary in the ESPP, a participant may not purchase more than 50,000 shares of NCR common stock on any purchase date. Further notwithstanding anything in the ESPP to the contrary, if at any time when a participant is entitled to complete the purchase of any shares pursuant to the ESPP, taking into account such person’s rights to purchase stock under all other employee stock purchase plans of NCR, any parent of NCR or any of its subsidiaries, the result would be that during the then current calendar year such person would have first become entitled to purchase under the ESPP and allsuch other plans a number of shares of stock which would exceed the maximum number of shares permitted by the provisions of Section 423(b)(8) of the Code, then the number of shares which such person shall be entitled to purchase pursuant to the ESPP shall be reduced by the number which is one more than the number of shares which represents the excess, and any remaining balance of the participant’s payroll deductions shall be refunded.
~~Termination of Participation~~.    When a participant ceases to be an employee of NCR and its eligible subsidiaries for any reason, the amount credited to the participant’s stock purchase account on the date of termination will be used to purchase shares of NCR common stock on the next applicable purchase date. Within 60 days after the date of termination, the participant may elect to liquidate his or her account by providing instructions to the ESPP recordkeeper. If the recordkeeper receives no directions from the participant within 60 days after the date of termination, a notice of issuance of uncertificated shares reflecting the number of full shares of NCR common stock held for the participant’s benefit, and the cash equivalent for any fractional share so held, will be delivered to the participant.
~~Amendment and Termination of the ESPP~~.    The Board of Directors may amend the ESPP at any time and for any reason, provided that, without approval of the stockholders of NCR, no amendment may increase the number of shares of NCR common stock reserved for purchase under the ESPP or reduce the purchase price per share below 95% of the average of the highest and lowest sale prices of shares of NCR common stock on the New York Stock Exchange on the applicable purchase date.
The ESPP will continue in effect through December 31, 2016, unless the Board of Directors terminates the ESPP. Upon termination or expiration of the ESPP, the entire amount credited to the stock purchase account of each participant shall be refunded to such participant.
~~Federal Income Tax Consequences.~~
The following is a summary of certain federal income tax consequences under the ESPP, based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of
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~~the circumstances of a particular participant under the ESPP. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.~~
The ESPP is intended to be an “employee stock purchase plan” within the meaning of Section 423 of the Code. Under Section 423 of the Code, an eligible employee who elects to participate in the ESPP will not recognize any taxable income at the time shares are purchased under the ESPP for the employee.
If a participant disposes of the shares purchased under the ESPP after two years from the applicable exercise date and the amount realized exceeds the purchase price, the participant will recognize compensation taxable as ordinary income in an amount equal to the lesser of (a) the excess of the fair market value of the shares on the exercise date over the purchase price and (b) the amount realized on such disposition over the purchase price. The participant’s cost basis in the shares will be increased by the amount of ordinary income recognized by the participant. In addition, if the amount realized on such disposition exceeds the fair market value of the shares on the exercise date, such excess will be taxed as long term capital gain. If the amount realized on such disposition is less than the purchase price of the shares under the ESPP, the participant will recognize long term capital loss in the amount of the difference between the purchase price and the amount realized. The Company will not be entitled to any deduction with respect to a disposition of the shares occurring under these circumstances.
If the participant disposes of the shares purchased under the ESPP within two years after the applicable exercise date, the participant will recognize compensation taxable as ordinary income, and the Company will be entitled to a corresponding deduction, in an amount equal to the excess of the fair market value of the shares on the applicable exercise date over the purchase price of the sharesunder the ESPP. The participant’s cost basis in the shares will be increased by the amount of the ordinary income recognized by such participant. In addition, upon such disposition of the shares, the participant will recognize capital gain or loss equal to the difference between the amount realized on such disposition and the participant’s cost basis in the shares, as so increased. The Company will not be entitled to any deduction with respect to the amount recognized by such participant as a capital gain.
The foregoing general tax discussion is intended for the information of stockholders considering how to vote with respect to this proposal and not as tax guidance to participants in the ESPP. Participants are strongly urged to consult their own tax advisors regarding the federal, state, local, foreign and other tax consequences to them of participating in the ESPP.
~~New Plan Benefits.~~
The benefits that might be received by employees under the ESPP cannot be determined because the benefits depend upon the degree of participation by employees and the trading price of the Common Stock in future purchase periods.
~~Approval.~~
Under Maryland law and the charter and Bylaws of NCR, the affirmative vote of a majority of the votes cast (in person or by proxy) is required for approval of the ESPP. For the ESPP to be approved under the rules of the New York Stock Exchange: (i) more than 50% in interest of all securities entitled to vote on the proposal must cast a vote on the proposal, and (ii) a majority of the votes cast must vote “FOR” the proposal.
~~The Board recommends that you vote FOR this proposal.~~    ~~Proxies solicited by the Board of Directors will be voted FOR this proposal, unless you specify otherwise in your proxy.~~
4955
OTHER MATTERS

The Board of Directors does not know of any matters that will be brought before the annual meeting other than those listed in the notice of meeting. If any other matters are properly introduced at the meeting for consideration, including consideration of a motion to adjourn the meeting to another time or place, the individuals named on the enclosed form of proxy will have authority to vote on such matters in their discretion.

ADDITIONAL INFORMATION

Cost of Proxy Solicitation

We will pay the expenses of soliciting proxies in connection with the annual meeting. Proxies may be solicited on our behalf through the mail, in person, by telephone, electronic transmission, or facsimile transmission. We have hired Georgeson Shareholder Communications Inc., to assist in the solicitation of proxies, at an estimated cost of $15,000, plus reimbursement of reasonable out-of-pocket expenses. In accordance with the SEC and the New York Stock Exchange rules, NCR will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses of sending proxies and proxy materials to the beneficial owners of NCR common stock.

Procedures for Stockholder Proposals and Nominations

Under NCR’s Bylaws, nominations for directors at an annual meeting may be made only by (1) the Board of Directors or a committee of the Board, or (2) a stockholder entitled to vote who has delivered notice to the Company within 90 to 120 days before the first anniversary of the date of the mailing of the notice for the preceding year’s annual meeting.

Our Bylaws also provide that business may not be brought before an annual meeting unless it is (1) specified in the notice of meeting (which includes stockholder proposals that the Company is required to include in its proxy statement under SEC Rule 14a-8), (2) brought before the meeting by or at the direction of the Board, or (3) brought by a stockholder entitled to vote who has delivered notice to the Company (containing certain information specified in the Bylaws) within 90 to 120 days ~~beforethe~~before the first anniversary of the date of the mailing of the notice ~~for the~~forthe preceding year’s annual meeting. In addition, you must comply with SEC Rule 14a-8 to have your proposal included in the Company’s proxy statement.

A copy of the full text of the Company’s Bylaws may be obtained upon written request to the Corporate Secretary at the address provided on page 153 of this proxy statement.

Stockholder Proposals for ~~2007~~2008 Annual Meeting

Stockholders interested in presenting a proposal for consideration at NCR’s annual meeting of stockholders in ~~2007~~2008 must follow the procedures found in SEC Rule 14a-8 and the Company’s Bylaws. To be eligible for inclusion in the Company’s ~~2007~~2008 proxy materials, all qualified proposals must be received by NCR’s Corporate Secretary no later than November 20, ~~2006.~~2007. Stockholder proposals submitted after that date but before December 20, ~~2006, may~~2007, will be presented at the annual meeting if such proposal complies with the Company’s Bylaws, but will not be included in the Company’s proxy materials. If a stockholder proposal is received after December 20, ~~2006,~~2007, and is properly brought before the meeting, the persons named on the proxy card may vote in their discretion regarding such proposal all of the shares for which we have received proxies for the annual meeting.

The above notice and proxy statement are sent by order of the Board of Directors.
��
~~Jonathan S. Hoak~~Peter M. Lieb
Senior Vice President,
General Counsel and Secretary

Dated:    March ~~10, 2006~~1, 2007

5056
~~EXHIBIT A~~
~~NCR MANAGEMENT INCENTIVE PLAN~~
~~Effective January 1, 2006~~
~~PREAMBLE~~
This NCR Management Incentive Plan (“Plan”) is adopted effective January 1, 2006, by the Board of Directors of NCR Corporation (“Company”). The purpose of the Plan is to advance the interests of the Company and its stockholders and assist the Company in attracting and retaining executive officers by providing incentives and financial rewards to such executive officers that are intended to be deductible to the maximum extent possible as “performance-based compensation” within the meaning of Section 162(m) of the Internal Revenue Code. This Plan is subject to stockholder approval with respect to amounts that may become payable under the Plan for fiscal year 2006 and thereafter and shall be null and void and of no further effect if such stockholder approval is not obtained.
~~ARTICLE I~~
~~Definitions~~
~~1.1~~ ~~Award~~ ~~means an award of incentive compensation pursuant to the Plan.~~
~~1.2~~ ~~Code~~ ~~means the Internal Revenue Code of 1986, as amended.~~
~~1.3~~ ~~Committee~~ means the Compensation and Human Resource Committee of the Board of Directors of the Company, or a subcommittee thereof consisting of members appointed from time to time by the Board of Directors of the Company, and shall comprise not less than such number of directors as shall be required to permit the Plan to satisfy the requirements of Code Section 162(m). The Committee administering the Plan shall be composed solely of “outside directors” within the meaning of Code Section 162(m).
~~1.4~~ ~~Company~~ ~~means NCR Corporation, a Maryland corporation.~~
~~1.5~~ ~~Disability~~ means a total and permanent disability that causes a Participant to be eligible to receive long term disability benefits from the NCR Long Term Disability Plan, or any similar plan or program sponsored by a subsidiary or branch of the Company.
~~1.6~~ ~~Executive Officers~~ ~~means Board-appointed officers of the Company who are designated by the Board as “Section 16 officers.”~~
~~1.7~~ ~~Participant~~ ~~means an Executive Officer who is selected by the Committee to participate in the Plan.~~
~~1.8~~ ~~Performance Period~~ ~~means the time period during which the achievement of the performance goals is to be measured.~~
~~1.9~~ ~~Plan~~ ~~means this NCR Management Incentive Plan.~~
~~1.10~~ ~~Retirement~~ ~~means termination of employment with the Company or an affiliated company when a Participant is age 55 or older.~~
~~ARTICLE II~~
~~Eligibility and Participation~~
~~2.1~~ ~~Eligibility and Participation.~~    The Committee shall select Executive Officers of the Company who are eligible to receive Awards under the Plan, and who shall be Participants in the Plan during any Performance Period in which they may earn an Award.
~~A-1~~
~~ARTICLE III~~
~~Terms of Awards~~
~~3.1~~ ~~Calculation of Awards.~~    The Award payable under the Plan for a Performance Period is equal to 1.5% of “Earnings Before Income Taxes” for the Chief Executive Officer for the Performance Period and 0.75% of Earnings Before Income Taxes for each of the other participants for the Performance Period.
“Earnings Before Income Taxes” means the Company’s earnings before income taxes as reported in the Company’s income statement for the applicable Performance Period, prior to accrual of any amounts for payment under the Plan for the Performance Period, adjusted to eliminate the effects of charges for restructurings, discontinued operations, extraordinary items and other unusual or non-recurring items, and the cumulative effect of tax or accounting changes, each as defined by generally accepted accounting principles or identified in the Company’s financial statements, notes to the financial statements or management’s discussion and analysis.
~~3.2~~ ~~Discretionary Adjustment.~~    The Committee may not increase the amount payable under the Plan or with respect to an Award pursuant to Section 3.1, but retains the discretionary authority to reduce the amount. The Committee may establish factors to take into consideration in implementing its discretion, including, but not limited to, corporate or business unit performance against budgeted financial goals (e.g., operating income or revenue), achievement of non-financial goals, economic and relative performance considerations and assessments of individual performance.
~~3.3~~ ~~Form of Payment.~~    Each Award under the Plan shall be paid in cash or its equivalent. The Committee in its discretion may determine that all or a portion of an Award shall be paid in stock, restricted stock, stock options, or other stock-based or stock denominated units, which shall be issued pursuant to the Company’s equity compensation plans in existence at the time of the grant.
~~3.4~~ ~~Timing of Payment.~~    Payment of Awards will be made as soon as practicable following determination of and certification of the Award, but in no event more than two and a half months after the end of the calendar year with respect to which such Award was earned, unless the a Participant has, prior to the grant of an Award, submitted an election to defer receipt of the Award in accordance with a deferred compensation plan approved by the Committee.
~~3.5~~ ~~Performance Period.~~    Within 90 days after the commencement of each fiscal year or, if earlier, by the expiration of 25% of a Performance Period, the Committee will designate one or more Performance Periods, determine the Participants for the Performance Periods and affirm the applicability of the Plan’s formula for determining the Award for each Participant for the Performance Periods. The time period during which the achievement of the performance goals is to be measured shall be determined by the Committee, but may be no longer than five years and no less than six months.
~~3.6~~ ~~Certification.~~    Following the close of each Performance Period and prior to payment of any amount to any Participant under the Plan, the Committee will certify in writing as to the attainment of the performance goals and the amount of the Award.
~~ARTICLE IV~~
~~New Hires, Promotions and Terminations~~
~~4.1~~ ~~New Participants During the Performance Period.~~    If an individual is newly hired or promoted during a calendar year into a position eligible for participation in the Plan, he or she shall be eligible for an Award under the Plan for the Performance Period, prorated for the portion of the Performance Period following the date of eligibility for the Plan.
~~4.2~~ ~~Retirement, Disability or Death.~~    A Participant who terminates employment with the Company during a Performance Period due to Retirement, Disability or death shall be eligible to receive an Award prorated for the portion of the Performance Period prior to termination of employment. Awards payable in the event of death shall be paid to the Participant’s estate.
~~A-2~~
~~4.3~~ ~~Termination of Employment.~~    If a Participant terminates employment with the Company for a reason other than Retirement, Disability or death, unless otherwise determined by the Committee, no Award shall be payable with respect to the Performance Period in which such termination occurs.
~~ARTICLE V~~
~~Miscellaneous~~
~~5.1~~ ~~Withholding Taxes.~~    The Company shall have the right to make payment of Awards net of any applicable federal, state and local taxes required to be withheld, or to require the Participant to pay such withholding taxes. If the Participant fails to make such tax payments as required, the Company shall, to the extent permitted by law, have the right to deduct any such taxes from any payment of any kind otherwise due to such Participant or to take such other action as may be necessary to satisfy such withholding obligations.
~~5.2~~ ~~Nontransferability.~~    No Award may be sold, assigned, transferred, pledged, hypothecated or otherwise disposed of, including assignment pursuant to a domestic relations order, during the time in which the requirement of continued employment or attainment of performance objectives has not been achieved. Each Award shall be paid during the Participant’s lifetime only to the Participant, or, if permissible under applicable law, to the Participant’s legal representatives. No Award shall, prior to receipt thereof by the Participant, be in any manner liable for or subject to the debts, contracts, liabilities, or torts of the Participant.
~~5.3~~ ~~Administration.~~    The Committee shall administer the Plan, interpret the terms of the Plan, amend and rescind rules relating to the Plan, and determine the rights and obligations of Participants under the Plan. The Committee may delegate any of its authority as it solely determines. In administering the Plan, the Committee may at its option employ compensation consultants, accountants and counsel and other persons to assist or render advice to the Committee, all at the expense of the Company. All decisions of the Committee shall be final and binding upon all parties including the Company, its stockholders, and the Participants. The provisions of this Plan are intended to ensure that all Awards granted hereunder qualify for the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code, and this Plan shall be interpreted and operated consistent with that intention.
~~5.4~~ ~~Severability.~~    If any provisions of the Plan or any Award is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction or would disqualify the Plan or any Award under any law deemed applicable by the Committee, such provision shall be construed or deemed amended to conform to applicable laws, or if it cannot be so construed or deemed amended without, in the determination of the Committee, materially altering the purpose or intent of the Plan or the Award, such provision will be stricken as to such jurisdiction, and the remainder of the Plan or Award shall remain in full force and effect.
~~5.5~~ ~~No Fund Created.~~    Neither the Plan nor any Award shall create or be construed to create a trust or separate fund of any kind or a fiduciary relationship between the Company and a Participant or any other person. To the extent that any person acquires a right to receive payments from the Company pursuant to an Award, such right shall be no greater than the right of any unsecured general creditor of the Company.
~~5.6~~ ~~Employment at Will.~~    Neither the adoption of the Plan, eligibility of any person to participate, nor payment of an Award to a Participant shall be construed to confer upon any person a right to be continued in the employ of the Company. The Company expressly reserves the right to discharge any Participant whenever in the sole discretion of the Company its interest may so require.
~~5.7~~ ~~Amendment or Termination of the Plan.~~    The Board of Directors of the Company reserves the right to amend or terminate the Plan at any time with respect to future Awards to Participants. Amendments to the Plan will require stockholder approval to the extent required to comply with applicable law, including the exemption under Code Section 162(m).
~~5.8~~
~~Non-Exclusivity of Plan.~~    ~~Neither the adoption of the Plan by the Board of Directors nor the submission of the Plan to stockholders of the Company for approval shall be construed as creating any limitations on the~~
~~A-3~~
power of the Board of Directors or the Committee to adopt such other incentive arrangements as either may deem desirable, including, without limitation, cash or equity-based compensation arrangements, either tied to performance or otherwise.
~~5.9~~ ~~Dispute Resolution.~~    The Plan and any agreements hereunder shall be interpreted in accordance with the laws of the State of Maryland and applicable federal law. Any controversy or claim related in any way to the Plan shall be resolved by arbitration on a de novo standard pursuant to this paragraph and the then current rules of the American Arbitration Association. The arbitration shall be held in Dayton, Ohio, before an arbitrator who is an attorney knowledgeable of employment law. The arbitrator’s decision and award shall be final and binding and may be entered in any court having jurisdiction thereof. The arbitrator shall not have the power to award punitive or exemplary damages. Issues of arbitrability shall be determined in accordance with the federal substantive and procedural laws relating to arbitration; all other aspects shall be interpreted in accordance with the laws of the State of Ohio. Each party shall bear its own attorneys’ fees associated with the arbitration and other costs and expenses of the arbitration shall be borne as provided by the rules of the American Arbitration Association; provided, however, that if the participant is the prevailing party, the Company shall reimburse the Participant for reasonable attorneys’ fees and expenses and arbitration expenses incurred in connection with the dispute.
~~IN WITNESS WHEREOF~~~~, the Company has caused this Plan to be executed on thisday of, 2006.~~
~~FOR NCR CORPORATION~~
~~By:~~
~~Name:~~
~~Title:~~
~~A-4~~
~~EXHIBIT B~~
~~NCR CORPORATION~~
~~2006 STOCK INCENTIVE PLAN~~
~~SECTION 1.    Purpose; Definitions~~
The purpose of this Plan is to give the Company a competitive advantage in attracting, retaining and motivating officers, employees, directors and/or consultants and to provide the Company and its Subsidiaries and Affiliates with a stock plan providing incentives directly linked to stockholder value. Certain terms used herein have definitions given to them in the first place in which they are used. In addition, for purposes of this Plan, the following terms are defined as set forth below:
~~(a)~~    ~~“Affiliate”~~ ~~means a corporation or other entity controlled by, controlling or under common control with, the Company.~~
~~(b)~~    ~~“Applicable Exchange”~~ ~~means the New York Stock Exchange or such other securities exchange as may at the applicable time be the principal market for the Common Stock.~~
~~(c)~~    ~~“Award”~~ ~~means an Option, Stock Appreciation Right, Restricted Stock, Restricted Stock Unit, Performance Units or Other Stock-Based Award granted pursuant to the terms of this Plan.~~
~~(d)~~    ~~“Award Agreement”~~ ~~means a written document or agreement setting forth the terms and conditions of a specific Award.~~
~~(e)~~    ~~“Board”~~ ~~means the Board of Directors of the Company.~~
~~(f)~~    ~~“Cause”~~ means, unless otherwise provided in an Award Agreement, (i) “Cause” as defined in any Individual Agreement to which the applicable Participant is a party, or (ii) if there is no such Individual Agreement or if it does not define Cause: (A) conviction of the Participant for committing a felony under federal law or the law of the state in which such action occurred, (B) dishonesty in the course of fulfilling the Participant’s employment duties, (C) failure on the part of the Participant to perform substantially such Participant’s employment duties in any material respect, (D) a material violation of the Company’s ethics and compliance program, or (E) before a Change in Control, such other events as shall be determined by the Committee and set forth in a Participant’s Award Agreement. Notwithstanding the general rule of Section 2(c), following a Change in Control, any determination by the Committee as to whether “Cause” exists shall be subject to de novo review.
~~(g)~~    ~~“Change in Control”~~ ~~has the meaning set forth in Section 10(b).~~
~~(h)~~    ~~“Code”~~ ~~means the Internal Revenue Code of 1986, as amended from time to time, and any successor thereto.~~
~~(i)~~    ~~“Commission”~~ ~~means the Securities and Exchange Commission or any successor agency.~~
~~(j)~~    ~~“Committee”~~ ~~has the meaning set forth in Section 2(a).~~
~~(k)~~    ~~“Common Stock”~~ ~~means common stock, par value $.01 per share, of the Company.~~
~~(l)~~    ~~“Company”~~ ~~means NCR Corporation, a Maryland corporation.~~
~~(m)~~    ~~“Disability”~~ means (i) “Disability” as defined in any Individual Agreement to which the Participant is a party, (ii) if there is no such Individual Agreement or it does not define “Disability,” (A) permanent and total
~~B-1~~
disability as determined under the Company’s long-term disability plan applicable to the Participant, or (B) if there is no such plan applicable to the Participant, “Disability” as determined by the Committee.
~~(n)~~    ~~“Disaffiliation”~~ means a Subsidiary’s or Affiliate’s ceasing to be a Subsidiary or Affiliate for any reason (including, without limitation, as a result of a public offering, or a spinoff or sale by the Company, of the stock of the Subsidiary or Affiliate) or a sale of a division of the Company and its Affiliates.
~~(o)~~    ~~“Eligible Individuals”~~means directors, officers, employees and consultants of the Company or any of its Subsidiaries or Affiliates, and prospective employees and consultants who have accepted offers of employment or consultancy from the Company or its Subsidiaries or Affiliates.
~~(p)~~    ~~“Exchange Act”~~ ~~means the Securities Exchange Act of 1934, as amended from time to time, and any successor thereto.~~
~~(q)~~    ~~“Fair Market Value”~~ means, unless otherwise determined by the Committee, the average of the high and low sale prices of a share of Common Stock on the Applicable Exchange on the date of measurement, or if Shares were not traded on the Applicable Exchange on such measurement date, then on the next preceding date on which Shares were traded, all as reported by such source as the Committee may select. If the Common Stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion.
~~(r)~~    ~~“Free-Standing SAR”~~ ~~has the meaning set forth in Section 5(b).~~
~~(s)    “~~~~Full Value Award~~~~” means any Award other than an Option or Stock Appreciation Right or dividend equivalent right.~~
~~(t)~~    ~~“Grant Date”~~ means (i) the date on which the Committee by resolution selects an Eligible Individual to receive a grant of an Award and determines the number of Shares to be subject to such Award, or (ii) such later date as the Committee shall provide in such resolution.
~~(u)~~    ~~“Incentive Stock Option”~~ ~~means any Option that is designated in the applicable Award Agreement as an “incentive stock option” within the meaning of Section 422 of the Code, and that in fact so qualifies.~~
~~(v)~~    ~~“Individual Agreement”~~ ~~means an employment, consulting or similar agreement between a Participant and the Company or one of its Subsidiaries or Affiliates.~~
~~(w)~~    ~~“Nonqualified Option”~~ ~~means any Option that is not an Incentive Stock Option.~~
~~(x)~~    ~~“Option”~~ ~~means an Award granted under Section 5.~~
~~(y)~~    ~~“Other Stock-Based Award”~~ means Awards of Common Stock and other Awards that are valued in whole or in part by reference to, or are otherwise based upon, Common Stock, including (without limitation), unrestricted stock, dividend equivalents, and convertible debentures.
~~(z)~~    ~~“Participant”~~ ~~means an Eligible Individual to whom an Award is or has been granted.~~
~~(aa)    “~~~~Performance Goals”~~ means the performance goals established by the Committee in connection with the grant of Restricted Stock, Restricted Stock Units, Performance Units or Other Stock-Based Awards. In the case of Qualified Performance-Based Awards, (i) such goals shall be based on the attainment of specified levels of one or more of the following measures: revenues; revenue growth; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest, taxes, depreciation and amortization); earnings per share; operating income (including non-pension operating income); pre- or after-tax income; cash flow (before or
~~B-2~~
after dividends); cash flow per share (before or after dividends); gross margin; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; return on assets or operating assets; economic value added (or an equivalent metric); stock price appreciation; total stockholder return (measured in terms of stock price appreciation and dividend growth); cost control; gross profit; operating profit; cash generation; unit volume; stock price; market share; sales; asset quality; cost saving levels; marketing-spending efficiency; core non-interest income; or change in working capital with respect to the Company or any one or more subsidiaries, divisions, business units or business segments of the Company either in absolute terms or relative to the performance of one or more other companies or an index covering multiple companies and (ii) such Performance Goals shall be set by the Committee within the time period prescribed by Section 162(m) of the Code and the regulations promulgated thereunder.
~~(bb)    “~~~~Performance Period~~” means that period established by the Committee at the time any Performance Unit is granted or at any time thereafter during which any Performance Goals specified by the Committee with respect to such Award are to be measured.
~~(cc)    “~~~~Performance Unit~~” means any Award granted under Section 8 of a unit valued by reference to a designated amount of property other than Shares, which value may be paid to the Participant by delivery of such property as the Committee shall determine, including, without limitation, cash, Shares, or any combination thereof, upon achievement of such Performance Goals during the Performance Period as the Committee shall establish at the time of such grant or thereafter.
~~(dd)~~    ~~“Plan”~~ ~~means this NCR Corporation 2006 Stock Incentive Plan, as set forth herein and as hereafter amended from time to time.~~
~~(ee)~~    ~~“Qualified Performance-Based Award”~~ ~~means an Award intended to qualify for the Section 162(m) Exemption, as provided in Section 11.~~
~~(ff)~~    ~~“Restricted Stock”~~ ~~means an Award granted under Section 6.~~
~~(gg)~~    ~~“Restricted Stock Units”~~ ~~means an Award granted under Section 7.~~
~~(hh)~~    ~~“Section 162(m) Exemption”~~ ~~means the exemption from the limitation on deductibility imposed by Section 162(m) of the Code that is set forth in Section 162(m)(4)(C) of the Code.~~
~~(ii)    “~~~~Senior Manager~~~~” means any manager of the Company or any Affiliate holding a position at a salary grade of 15 or higher or any future grade that is the equivalent thereof.~~
~~(jj)~~    ~~“Share”~~ ~~means a share of Common Stock.~~
~~(kk)~~    ~~“Stock Appreciation Right”~~ ~~has the meaning set forth in Section 5(b).~~
~~(ll)~~    ~~“Subsidiary”~~means any corporation, partnership, joint venture or other entity during any period in which at least a 50% voting or profits interest is owned, directly or indirectly, by the Company or any successor to the Company.
~~(mm)~~    ~~“Tandem SAR”~~ ~~has the meaning set forth in Section 5(b).~~
~~(nn)~~    ~~“Term”~~ means the maximum period during which an Option or Stock Appreciation Right may remain outstanding, subject to earlier termination upon Termination of Employment or otherwise, as specified in the applicable Award Agreement.
~~(oo)~~    ~~“Termination of Employment”~~ ~~means the termination of the applicable Participant’s employment with, or performance of services for, the Company and any of its Subsidiaries or Affiliates. Unless otherwise~~
~~B-3~~
determined by the Committee, if a Participant’s employment with the Company and its Affiliates terminates but such Participant continues to provide services to the Company and its Affiliates in a non-employee capacity, such change in status shall not be deemed a Termination of Employment. A Participant employed by, or performing services for, a Subsidiary or an Affiliate or a division of the Company and its Affiliates shall be deemed to incur a Termination of Employment if, as a result of a Disaffiliation, such Subsidiary, Affiliate, or division ceases to be a Subsidiary, Affiliate or division, as the case may be, and the Participant does not immediately thereafter become an employee of, or service provider for, the Company or another Subsidiary or Affiliate. Temporary absences from employment because of illness, vacation or leave of absence and transfers among the Company and its Subsidiaries and Affiliates shall not be considered Terminations of Employment.
~~SECTION 2.    Administration~~
~~(a)~~    ~~Committee~~.    The Plan shall be administered by the Compensation and Human Resource Committee of the Board or such other committee of the Board as the Board may from time to time designate (the “Committee”), which shall be composed of not less than two directors, and shall be appointed by and serve at the pleasure of the Board. The Committee shall, subject to Section 11, have plenary authority to grant Awards pursuant to the terms of the Plan to Eligible Individuals. Among other things, the Committee shall have the authority, subject to the terms of the Plan:
~~(i)    to select the Eligible Individuals to whom Awards may from time to time be granted;~~
(ii)    to determine whether and to what extent Incentive Stock Options, Nonqualified Options, Stock Appreciation Rights, Restricted Stock, Restricted Stock Units, Performance Units, Other Stock-Based Awards, or any combination thereof, are to be granted hereunder;
~~(iii)    to determine the number of Shares to be covered by each Award granted hereunder;~~
~~(iv)    to determine the terms and conditions of each Award granted hereunder, based on such factors as the Committee shall determine;~~
~~(v)    subject to Section 12, to modify, amend or adjust the terms and conditions of any Award;~~
~~(vi)    to adopt, alter and repeal such administrative rules, guidelines and practices governing the Plan as it shall from time to time deem advisable;~~
~~(vii)    to interpret the terms and provisions of the Plan and any Award issued under the Plan (and any agreement relating thereto);~~
(viii)    determine whether, to what extent and under what circumstances cash, Shares and other property and other amounts payable with respect to an Award under this Plan shall be deferred either automatically or at the election of the Participant;
~~(ix)    to establish any “blackout” period that the Committee in its sole discretion deems necessary or advisable; and~~
~~(x)    to otherwise administer the Plan.~~
~~(b)~~    ~~Procedures~~.
(i)    The Committee may act only by a majority of its members then in office, except that the Committee may, except to the extent prohibited by applicable law or the listing standards of the Applicable Exchange and subject to Section 11, allocate all or any portion of its responsibilities and powers to any one or more of its members and may delegate all or any part of its responsibilities and powers to any person or persons selected by it.
(ii)    Subject to Section 11(c), any authority granted to the Committee may also be exercised by the full Board. To the extent that any permitted action taken by the Board conflicts with action taken by the Committee, the Board action shall control.
~~B-4~~
~~(c)~~    ~~Discretion of Committee~~.    Subject to Section 1(f), any determination made by the Committee or by an appropriately delegated officer pursuant to delegated authority under the provisions of the Plan with respect to any Award shall be made in the sole discretion of the Committee or such delegate at the time of the grant of the Award or, unless in contravention of any express term of the Plan, at any time thereafter. All decisions made by the Committee or any appropriately delegated officer pursuant to the provisions of the Plan shall be final and binding on all persons, including the Company, Participants, and Eligible Individuals.
~~(d)~~    ~~Cancellation or Suspension~~.    The Committee shall have full power and authority to determine whether, to what extent and under what circumstances any Award shall be canceled or suspended. In particular, but without limitation, all outstanding Awards to any Participant may be canceled if the Participant, without the consent of the Committee, while employed by the Company or after termination of such employment, becomes associated with, employed by, renders services to, or owns any interest in (other than any nonsubstantial interest, as determined by the Committee), any business that is in competition with the Company or with any business in which the Company has a substantial interest, as determined by the Committee or any one or more Senior Managers or committee of Senior Managers to whom the authority to make such determination is delegated by the Committee.
~~(e)~~    ~~Award Agreements.~~    The terms and conditions of each Award, as determined by the Committee, shall be set forth in a written (or electronic) Award Agreement, which shall be delivered to the Participant receiving such Award upon, or as promptly as is reasonably practicable following, the grant of such Award. The effectiveness of an Award shall not be subject to the Award Agreement’s being signed by the Company and/or the Participant receiving the Award unless specifically so provided in the Award Agreement. Award Agreements may be amended only in accordance with Section 12 hereof.
~~SECTION 3.    Common Stock Subject to Plan~~
~~(a)~~    ~~Plan Maximums.~~    The maximum number of Shares that may be granted pursuant to Awards under the Plan shall be 12,000,000. The maximum number of Shares that may be granted pursuant to Options intended to be Incentive Stock Options shall be 5,000,000 Shares and shall not be affected by the provisions of Section 3(c)(ii).Shares subject to an Award under the Plan may be authorized and unissued Shares.
~~(b)~~    ~~Individual Limits~~.    No Participant may be granted Options and Free-Standing SARs covering in excess of 2,000,000 Shares, or Restricted Stock and Restricted Stock Units or other award subject to Performance Goals covering in excess of 750,000 Shares, in either case, during any consecutive 36-month period.
~~(c)~~    ~~Rules for Calculating Shares Delivered~~.
(i)    To the extent that any Award is forfeited, or any Option and the related Tandem SAR (if any) or Free-Standing SAR terminates, expires or lapses without being exercised, or any Award is settled for cash, the Shares subject to such Awards not delivered as a result thereof shall again be available for Awards under the Plan.
(ii)    If the exercise price of any Option and/or the tax withholding obligations relating to any Award are satisfied by delivering Shares (either actually or through attestation) or withholding Shares relating to such Award or if any Shares subject to an Award shall otherwise not be delivered in settlement of such Award (including upon the exercise of a Stock Appreciation Right), only the net number of Shares received by the Participant shall be deemed to have been issued for purposes of the maximum number of Shares in the first sentence of Section 3(a).
(iii)    The provisions of Section 3(c)(i) and 3(c)(ii) shall also apply to awards granted under the Management Stock Plan that are outstanding on the Effective Date such that any Shares subject to such awards that are forfeited or terminated, expire, lapse without being exercised or are settled for cash shall again be available for Awards under the Plan.
~~(d)~~    ~~Adjustment Provision~~.    In the event of (i) a stock dividend, stock split, reverse stock split, extra-ordinary dividend of cash or other property, share combination, or recapitalization or similar event affecting the
~~B-5~~
capital structure of the Company (each, a “Share Change”), or (ii) a merger, consolidation, acquisition of property or shares, separation, spinoff, reorganization, stock rights offering, liquidation, Disaffiliation, or similar event affecting the Company or any of its Subsidiaries (each, a “Corporate Transaction”), the Committee or the Board may in its discretion make such substitutions or adjustments as it deems appropriate and equitable to (A) the aggregate number and kind of Shares or other securities reserved for issuance and delivery under the Plan, (B) the various maximum limitations set forth in Sections 3(a) and 3(b) upon certain types of Awards and upon the grants to individuals of certain types of Awards, (C) the number and kind of Shares or other securities subject to outstanding Awards; and (D) the exercise price of outstanding Options and Stock Appreciation Rights. In the case of Corporate Transactions, such adjustments may include, without limitation, (1) the cancellation of outstanding Awards in exchange for payments of cash, property or a combination thereof having an aggregate value equal to the value of such Awards, as determined by the Committee or the Board in its sole discretion (it being understood that in the case of a Corporate Transaction with respect to which stockholders of Common Stock receive consideration other than publicly traded equity securities of the ultimate surviving entity, any such determination by the Committee that the value of an Option or Stock Appreciation Right shall for this purpose be deemed to equal the excess, if any, of the value of the consideration being paid for each Share pursuant to such Corporate Transaction over the exercise price of such Option or Stock Appreciation Right shall conclusively be deemed valid),~~provided~~, that in the event of the cancellation of such Awards pursuant to this clause (1), the Awards shall vest in full immediately prior to the consummation of such Corporate Transaction; (2) the substitution of other property (including, without limitation, cash or other securities of the Company and securities of entities other than the Company) for the Shares subject to outstanding Awards; and (3) in connection with any Disaffiliation, arranging for the assumption of Awards, or replacement of Awards with new awards based on other property or other securities (including, without limitation, other securities of the Company and securities of entities other than the Company), by the affected Subsidiary, Affiliate, or division or by the entity that controls such Subsidiary, Affiliate, or division following such Disaffiliation (as well as any corresponding adjustments to Awards that remain based upon Company securities). The Committee may adjust in its sole discretion the Performance Goals applicable to any Awards to reflect any unusual or non-recurring events and other extraordinary items, impact of charges for restructurings, discontinued operations, and the cumulative effects of accounting or tax changes, each as defined by generally accepted accounting principles or as identified in the Company’s financial statements, notes to the financial statements, management’s discussion and analysis or the Company’s SEC filings,~~provided~~ ~~that in the case of Performance Goals applicable to any Qualified Performance-Based Awards, such adjustment does not violate Section 162(m) of the Code.~~
~~SECTION 4.    Eligibility~~
~~Awards may be granted under the Plan to Eligible Individuals;~~~~provided, however~~~~, that Incentive Stock Options may be granted only to employees of the Company and its subsidiaries or parent corporation (within the meaning of Section 424(f) of the Code).~~
~~SECTION 5.    Options and Stock Appreciation Rights~~
~~(a)~~    ~~Types of Options~~.    Options may be of two types: Incentive Stock Options and Nonqualified Options. The Award Agreement for an Option shall indicate whether the Option is intended to be an Incentive Stock Option or a Nonqualified Option.
~~(b)~~    ~~Types and Nature of Stock Appreciation Rights.~~    Stock Appreciation Rights may be “Tandem SARs,” which are granted in conjunction with an Option, or “Free-Standing SARs,” which are not granted in conjunction with an Option. Upon the exercise of a Stock Appreciation Right, the Participant shall be entitled to receive an amount in cash, Shares, or both, in value equal to the product of (i) the excess of the Fair Market Value of one Share over the exercise price of the applicable Stock Appreciation Right, multiplied by (ii) the number of Shares in respect of which the Stock Appreciation Right has been exercised. The applicable Award Agreement shall specify whether such payment is to be made in cash or Common Stock or both, or shall reserve to the Committee or the Participant the right to make that determination prior to or upon the exercise of the Stock Appreciation Right.
~~B-6~~
~~(c)~~    ~~Tandem SARs~~.    A Tandem SAR may be granted at the Grant Date of the related Option. A Tandem SAR shall be exercisable only at such time or times and to the extent that the related Option is exercisable in accordance with the provisions of this Section 5, and shall have the same exercise price as the related Option. A Tandem SAR shall terminate or be forfeited upon the exercise or forfeiture of the related Option, and the related Option shall terminate or be forfeited upon the exercise or forfeiture of the Tandem SAR.
~~(d)~~    ~~Exercise Price~~.    The exercise price per Share subject to an Option or Free-Standing SAR shall be determined by the Committee and set forth in the applicable Award Agreement, and shall not be less than the Fair Market Value of a share of the Common Stock on the applicable Grant Date. In no event may any Option or Free-Standing SAR granted under this Plan be amended, other than pursuant to Section 3(d), to decrease the exercise price thereof, be cancelled in conjunction with the grant of any new Option or Free-Standing SAR with a lower exercise price, or otherwise be subject to any action that would be treated, for accounting purposes, as a “repricing” of such Option or Free-Standing SAR, unless such amendment, cancellation, or action is approved by the Company’s stockholders.
~~(e)~~    ~~Term~~~~.    The Term of each Option and each Free-Standing SAR shall be fixed by the Committee, but shall not exceed ten years from the Grant Date (except in the case of death or Disability).~~
~~(f)~~    ~~Vesting and Exercisability~~.    Except as otherwise provided herein, Options and Free-Standing SARs shall be exercisable at such time or times and subject to such terms and conditions as shall be determined by the Committee, provided that in no event shall the normal vesting schedule of an Option or Free-Standing SAR provide that such Option or Free-Standing SAR vest prior to the first anniversary of the date of grant (other than in the case of death or Disability). If the Committee provides that any Option or Free-Standing SAR will become exercisable only in installments, the Committee may at any time waive such installment exercise provisions, in whole or in part, based on such factors as the Committee may determine.
~~(g)~~    ~~Method of Exercise~~~~.    The method of exercising Options and SARs shall be set forth in the applicable Award Agreement.~~
~~(h)~~    ~~Delivery; Rights of Stockholders~~.    No Shares shall be delivered pursuant to the exercise of an Option until the exercise price therefor has been fully paid and applicable taxes have been withheld. The applicable Participant shall have all of the rights of a stockholder of the Company holding the class or series of Common Stock that is subject to the Option or Stock Appreciation Right (including, if applicable, the right to vote the applicable Shares and the right to receive dividends), when the Participant (i) has given written notice of exercise, (ii) if requested, has given the representation described in Section 14(a), and (iii) in the case of an Option, has paid in full for such Shares.
~~(i)~~    ~~Nontransferability of Options and Stock Appreciation Rights~~.    No Option or Free-Standing SAR shall be transferable by a Participant other than (i) by will or by the laws of descent and distribution, or (ii) in the case of a Nonqualified Option or Free-Standing SAR, as otherwise expressly permitted by the Committee including, if so permitted, pursuant to a transfer to the Participant’s family members, whether directly or indirectly or by means of a trust or partnership or otherwise. For purposes of this Plan, unless otherwise determined by the Committee, “family member” shall have the meaning given to such term in General Instructions A.1(a)(5) to Form S-8 under the Securities Act of 1933, as amended, and any successor thereto. A Tandem SAR shall be transferable only with the related Option as permitted by the preceding sentence. Any Option or Stock Appreciation Right shall be exercisable, subject to the terms of this Plan, only by the applicable Participant, the guardian or legal representative of such Participant, or any person to whom such Option or Stock Appreciation Right is permissibly transferred pursuant to this Section 5(i), it being understood that the term “Participant” includes such guardian, legal representative and other transferee;~~provided, however~~~~, that the term “Termination of Employment” shall continue to refer to the Termination of Employment of the original Participant.~~
~~SECTION 6.    Restricted Stock~~
~~(a)~~    ~~Nature of Awards and Certificates~~~~.    Shares of Restricted Stock are actual Shares issued to a Participant, and shall be evidenced in such manner as the Committee may deem appropriate, including book-entry registration~~
~~B-7~~
or issuance of one or more stock certificates. Any certificate issued in respect of Shares of Restricted Stock shall be registered in the name of the applicable Participant and shall bear an appropriate legend referring to the terms, conditions, and restrictions applicable to such Award, substantially in the following form:
“The transferability of this certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture) of the NCR Corporation, 2006 Stock Incentive Plan and an Award Agreement. Copies of such Plan and Agreement are on file at the offices of NCR Corporation, 1700 S. Patterson Blvd., Dayton, Ohio 45479.”
The Committee may require that the certificates evidencing such shares be held in custody by the Company until the restrictions thereon shall have lapsed and that, as a condition of any Award of Restricted Stock, the applicable Participant shall have delivered a stock power, endorsed in blank, relating to the Common Stock covered by such Award.
~~(b)~~    ~~Terms and Conditions~~~~.    Shares of Restricted Stock shall be subject to the following terms and conditions:~~
(i)    The Committee may, prior to or at the time of grant, designate an Award of Restricted Stock as a Qualified Performance-Based Award, in which event it shall condition the grant or vesting, as applicable, of such Restricted Stock upon the attainment of Performance Goals. If the Committee does not designate an Award of Restricted Stock as a Qualified Performance-Based Award, it may also condition the grant or vesting thereof upon the attainment of Performance Goals. Regardless of whether an Award of Restricted Stock is a Qualified Performance-Based Award, the Committee may also condition the grant or vesting thereof upon the continued service of the applicable Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Awards (including without limitation any applicable Performance Goals) need not be the same with respect to each recipient.
(ii)    Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Award for which such Participant’s continued service is required (the “Restriction Period”), and until the later of (A) the expiration of the Restriction Period and (B) the date the applicable Performance Goals (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Shares of Restricted Stock. Subject to the terms of the Plan, any Award of Restricted Stock shall be subject to vesting during the Restriction Period of at least three years following the date of grant,~~provided~~~~that a Restriction Period of at least one year following the date of grant is permissible if vesting is conditioned upon the achievement of Performance Goals, and~~~~provided, further~~ ~~that an Award may vest in part on a pro rata basis prior to the expiration of any Restriction Period,~~~~provided~~,~~further~~, that up to five percent of Shares available for grant as Restricted Stock (together with all other Shares available for grant as Full Value Awards) may be granted with a Restriction Period of at least one year following the date of grant regardless of whether vesting is conditioned upon the achievement of Performance Goals.
(iii)    Except as provided in this Section 6 and in the applicable Award Agreement, the applicable Participant shall have, with respect to the Shares of Restricted Stock, all of the rights of a stockholder of the Company holding the class or series of Common Stock that is the subject of the Restricted Stock, including, if applicable, the right to vote the Shares and the right to receive any cash dividends. If so determined by the Committee in the applicable Award Agreement and subject to Section 14(e), (A) cash dividends on the class or series of Common Stock that is the subject of the Restricted Stock Award shall be automatically deferred and reinvested in additional Restricted Stock, held subject to the vesting of the underlying Restricted Stock, and (B) subject to any adjustment pursuant to Section 3(d), dividends payable in Common Stock shall be paid in the form of Restricted Stock of the same class as the Common Stock with which such dividend was paid, held subject to the vesting of the underlying Restricted Stock.
(iv)    If and when any applicable Performance Goals are satisfied and the Restriction Period expires without a prior forfeiture of the Shares of Restricted Stock for which legended certificates have been issued, unlegended certificates for such Shares shall be delivered to the Participant upon surrender of the legended certificates.
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~~SECTION 7.    Restricted Stock Units~~
~~(a)~~    ~~Nature of Awards.~~    Restricted Stock Units are Awards denominated in Shares that will be settled, subject to the terms and conditions of the Restricted Stock Units, in an amount in cash, Shares, or both, based upon the Fair Market Value of a specified number of Shares.
~~(b)~~    ~~Terms and Conditions~~~~.    Restricted Stock Units shall be subject to the following terms and conditions:~~
(i)    The Committee may, in connection with the grant of Restricted Stock Units, designate them as Qualified Performance-Based Awards, in which event it shall condition the vesting thereof upon the attainment of Performance Goals. If the Committee does not designate Restricted Stock Units as Qualified Performance-Based Awards, it may also condition the vesting thereof upon the attainment of Performance Goals. Regardless of whether Restricted Stock Units are Qualified Performance-Based Awards, the Committee may also condition the vesting thereof upon the continued service of the Participant. The conditions for grant or vesting and the other provisions of Restricted Stock Awards (including without limitation any applicable Performance Goals) need not be the same with respect to each recipient. An Award of Restricted Stock Units shall be settled as and when the Restricted Stock Units vest or at a later time specified by the Committee or in accordance with an election of the Participant, if the Committee so permits.
(ii)    Subject to the provisions of the Plan and the applicable Award Agreement, during the period, if any, set by the Committee, commencing with the date of such Restricted Stock Units Award for which such Participant’s continued service is required (the “Restriction Period”), and until the later of (A) the expiration of the Restriction Period and (B) the date the applicable Performance Goals (if any) are satisfied, the Participant shall not be permitted to sell, assign, transfer, pledge or otherwise encumber Restricted Stock Units. Subject to the terms of the Plan, any Restricted Stock Unit Awards shall be subject to vesting during the Restriction Period of at least three years following the date of grant,~~provided~~~~that a Restriction Period of at least one year following the date of grant is permissible if vesting is conditioned upon the achievement of Performance Goals, and~~~~provided, further~~ ~~that a Restricted Stock Unit Award may vest in part on a pro rata basis prior to the expiration of any Restriction Period,~~~~provided~~,~~further~~, that up to five percent of Shares available for grant as Restricted Stock Units (together with all other Shares available for grant as Full Value Awards) may be granted with a Restriction Period of at least one year following the date of grant regardless of whether vesting is conditioned upon the achievement of Performance Goals.
(iii)    The Award Agreement for Restricted Stock Units shall specify whether, to what extent and on what terms and conditions the applicable Participant shall be entitled to receive current or deferred payments of cash, Common Stock or other property corresponding to the dividends payable on the Common Stock (subject to Section 14(e) below).
~~SECTION 8.    Performance Units.~~
Performance Units may be issued hereunder to Eligible Individuals, for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The Performance Goals to be achieved during any Performance Period and the length of the Performance Period shall be determined by the Committee upon the grant of each Performance Unit, ~~provided~~that the Performance Period shall be no less than one year following the date of grant. The Committee may, in connection with the grant of Performance Units, designate them as Qualified Performance-Based Awards. The conditions for grant or vesting and the other provisions of Performance Units (including without limitation any applicable Performance Goals) need not be the same with respect to each recipient. Performance Units may be paid in cash, Shares, other property or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance levels to be achieved for each Performance Period and the amount of the Award to be distributed shall be conclusively determined by the Committee. Performance Units may be paid in a lump sum or in installments following the close of the Performance Period. The maximum value of the property, including cash, that may be paid or distributed to any Participant pursuant to a grant of Performance Units made in any one calendar year shall be ten million dollars ($10,000,000).
~~B-9~~
~~SECTION 9.    Other Stock-Based Awards~~
~~Other Stock-Based Awards may be granted under the Plan,~~~~provided~~ that any Other Stock-Based Awards that are Awards of Common Stock that are unrestricted shall only be granted in lieu of other compensation due and payable to the Participant. Subject to the terms of the Plan, any Other Stock-Based Award that is a Full Value Award shall be subject to vesting during a Restriction Period of at least three years following the date of grant,~~provided~~~~that a Restriction Period of at least one year following the date of grant is permissible if vesting is conditioned upon the achievement of Performance Goals, and~~~~provided, further~~ ~~that an Other Stock-Based Award that is a Full Value Award may vest in part on a pro rata basis prior to the expiration of any Restriction Period,~~~~provided~~,~~further~~, that up to five percent of Shares available for grant as Other Stock-Based Awards that are Full Value Awards (together with all other Shares available for grant as Full Value Awards) may be granted with a Restriction Period of at least one year following the date of grant regardless of whether vesting is conditioned upon the achievement of Performance Goals.
~~SECTION 10.    Change in Control Provisions~~
~~(a)~~    ~~Impact of Event~~.    Unless otherwise provided in the applicable Award Agreement, notwithstanding any other provision of this Plan to the contrary, unless Awards are not assumed, converted or replaced in which case such Awards shall vest immediately prior to the Change in Control, upon a Participant’s Termination of Employment, during the 24-month period following a Change in Control, (x) by the Company other than for Cause or Disability or (y) for Participants who are participants in the NCR Change in Control Severance Plan (the “CIC Severance Plan”), for Participants who participate in a NCR Severance Policy (“Severance Policy”) at a level that provides the Participant with the opportunity to resign for “good reason,” and for other Participants to the extent set forth in an Award Agreement, by the Participant for Good Reason (as defined below):
(i)    any Options and Stock Appreciation Rights outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control shall be fully exercisable and vested and shall remain exercisable until the later of (A) the last date on which such Option or Stock Appreciation Right would be exercisable in the absence of this Section 10(a) and (B) the first anniversary of such Termination of Employment,~~provided~~ ~~that in no event shall the Option or Stock Appreciation Right be exercisable beyond the expiration of the Term of such Option or Stock Appreciation Right;~~
(ii)    the restrictions and deferral limitations applicable to any Restricted Stock shall lapse, and such Restricted Stock outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control shall become free of all restrictions and become fully vested and transferable; and
(iii)    all Restricted Stock Units outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control shall be considered to be earned and payable in full, and any deferral or other restriction shall lapse and such Restricted Stock Units shall be settled as promptly as is practicable in (subject to Section 3(d)) the form set forth in the applicable Award Agreement.
For purposes of this Section 10, “Good Reason” means if the Participant is a participant in the CIC Severance Plan or is subject to the Severance Policy, “Good Reason” as defined in the CIC Severance Plan or the Severance Policy, as applicable, or, if the Participant is not a participant in the CIC Severance Plan or the Severance Policy, as applicable, “Good Reason” as defined in any Individual Agreement or Award Agreement to which the applicable Participant is a party.
~~(b)~~    ~~Definition of Change in Control~~~~. For purposes of the Plan, a “Change in Control” shall mean any of the following events:~~
(i)    The acquisition by any individual, entity or group (within the meaning of Section 13(d)(3) or 14(d)(2) of the Exchange Act) (a “Person”) of beneficial ownership (within the meaning of Rule 13d-3 promulgated under the Exchange Act) of thirty percent (30%) or more of either (a) the then outstanding shares of common stock of the Company (the “Outstanding Company Common Stock”) or (b) the combined
~~B-10~~
voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors (the “Outstanding Company Voting Securities”); provided, however, that for purposes of this subsection (i), the following acquisitions shall not constitute a Change in Control: (A) any acquisition directly from the Company, (B) any acquisition by the Company, (C) any acquisition by any employee benefit plan (or related trust) sponsored or maintained by the Company or any corporation controlled by the Company, or (d) any acquisition pursuant to a transaction which complies with clauses (A), (B) and (C) of subsection (iii) of this Section 10(b); or
~~(ii)    Individuals who, as of the date of this Plan, constitute the Board (the “Incumbent Board”) cease for any reason to constitute at least a majority of the Board;~~~~provided, however,~~ that any individual becoming a director subsequent to the date of this Plan whose election, or nomination for election by the Company’s stockholders, was approved by a vote of at least two-thirds (2/3) of the directors then comprising the Incumbent Board shall be considered as though such individual were a member of the Incumbent Board, but excluding, for this purpose, any such individual whose initial assumption of office occurs as a result of an actual or threatened election contest with respect to the election or removal of directors or other actual or threatened solicitation of proxies or consents by or on behalf of a Person other than the Board; or
(iii)    Consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of assets of another entity (a “Corporate Transaction”), in each case, unless, following such Corporate Transaction, (A) all or substantially all of the individuals and entities who were the beneficial owners, respectively, of the Outstanding Company Common Stock and Outstanding Company Voting Securities immediately prior to such Corporate Transaction beneficially own, directly or indirectly, more than fifty percent (50%) of, respectively, the then outstanding shares of common stock and the combined voting power of the then outstanding voting securities entitled to vote generally in the election of directors, as the case may be, of the corporation resulting from such Corporate Transaction (including, without limitation, a corporation which as a result of such transaction owns the Company or all or substantially all of the Company’s assets either directly or through one or more subsidiaries) in substantially the same proportions as their ownership, immediately prior to such Corporate Transaction of the Outstanding Company Common Stock and Outstanding Company Voting Securities, as the case may be; (B) no Person (excluding any employee benefit plan (or related trust) of the Company or such corporation resulting from such Corporate Transaction) beneficially owns, directly or indirectly, thirty percent (30%) or more of, respectively, the then outstanding shares of common stock of the corporation resulting from such Corporate Transaction or the combined voting power of the then outstanding voting securities of such corporation except to the extent that such ownership existed prior to the Corporate Transaction; and (C) at least a majority of the members of the board of directors of the corporation resulting from such Corporate Transaction were members of the Incumbent Board at the time of the execution of the initial agreement, or of the action of the Board, providing for such Corporate Transaction; or
~~(iv)    Approval by the stockholders of the Company of a complete liquidation or dissolution of the Company.~~
~~SECTION 11.    Qualified Performance-Based Awards; Section 16(b)~~
(a)    The provisions of this Plan are intended to ensure that all Options and Stock Appreciation Rights granted hereunder to any Participant who is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) in the tax year in which such Option or Stock Appreciation Right is expected to be deductible to the Company qualify for the Section 162(m) Exemption, and all such Awards shall therefore be considered Qualified Performance-Based Awards and this Plan shall be interpreted and operated consistent with that intention (including, without limitation, to require that all such Awards be granted by a committee composed solely of members who satisfy the requirements for being “outside directors” for purposes of the Section 162(m) Exemption (“Outside Directors”)). When granting any Award other than an Option or Stock Appreciation Right, the Committee may designate such Award as a Qualified Performance-Based Award, based upon a determination
~~B-11~~
that (i) the recipient is or may be a “covered employee” (within the meaning of Section 162(m)(3) of the Code) with respect to such Award, and (ii) the Committee wishes such Award to qualify for the Section 162(m) Exemption, and the terms of any such Award (and of the grant thereof) shall be consistent with such designation (including, without limitation, that all such Awards be granted by a committee composed solely of Outside Directors). Within 90 days after the commencement of a Performance Period or, if earlier, by the expiration of 25% of a Performance Period, the Committee will designate one or more Performance Periods, determine the Participants for the Performance Periods and establish the Performance Goals for the Performance Periods.
(b)    Each Qualified Performance-Based Award (other than an Option or Stock Appreciation Right) shall be earned, vested and payable (as applicable) only upon the achievement of one or more Performance Goals, together with the satisfaction of any other conditions, such as continued employment, as the Committee may determine to be appropriate, and no Qualified Performance-Based Award may be amended, nor may the Committee exercise any discretionary authority it may otherwise have under this Plan with respect to a Qualified Performance-Based Award under this Plan, in any manner that would cause the Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption.
(c)    The full Board shall not be permitted to exercise authority granted to the Committee to the extent that the grant or exercise of such authority would cause an Award designated as a Qualified Performance-Based Award not to qualify for, or to cease to qualify for, the Section 162(m) Exemption.
(d)    The provisions of this Plan are intended to ensure that no transaction under the Plan is subject to (and not exempt from) the short-swing recovery rules of Section 16(b) of the Exchange Act (“Section 16(b)”). Accordingly, the composition of the Committee shall be subject to such limitations as the Board deems appropriate to permit transactions pursuant to this Plan to be exempt (pursuant to Rule 16b-3 promulgated under the Exchange Act) from Section 16(b), and no delegation of authority by the Committee shall be permitted if such delegation would cause any such transaction to be subject to (and not exempt from) Section 16(b).
~~SECTION 12.    Term, Amendment and Termination~~
~~(a)~~    ~~Effectiveness~~~~.    The Plan was adopted by the Board on February~~ 28~~, 2006, and will be effective as of the date (the “Effective Date”) it is approved by a least a majority of the outstanding shares of the Company.~~
~~(b)~~    ~~Termination~~~~.    The Plan will terminate on the tenth anniversary of the Effective Date. Awards outstanding as of such date shall not be affected or impaired by the termination of the Plan.~~
~~(c)~~    ~~Amendment of Plan~~.    The Board may amend, alter, or discontinue the Plan, but no amendment, alteration or discontinuation shall be made which would materially impair the rights of the Participant with respect to a previously granted Award without such Participant’s consent, except such an amendment made to comply with applicable law, including without limitation Section 409A of the Code, stock exchange rules or accounting rules. In addition, no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law or the listing standards of the Applicable Exchange.
~~(d)~~    ~~Amendment of Awards~~.    Subject to Section 5(d), the Committee may unilaterally amend the terms of any Award theretofore granted, but no such amendment shall cause a Qualified Performance-Based Award to cease to qualify for the Section 162(m) Exemption or without the Participant’s consent materially impair the rights of any Participant with respect to an Award, except such an amendment made to cause the Plan or Award to comply with applicable law, stock exchange rules or accounting rules.
~~SECTION 13.    Unfunded Status of Plan~~
It is presently intended that the Plan constitute an “unfunded” plan for incentive and deferred compensation. The Committee may authorize the creation of trusts or other arrangements to meet the obligations created under
~~B-12~~
~~the Plan to deliver Common Stock or make payments;~~~~provided, however~~~~, that unless the Committee otherwise determines, the existence of such trusts or other arrangements is consistent with the “unfunded” status of the Plan.~~
~~SECTION 14.    General Provisions~~
~~(a)~~    ~~Conditions for Issuance~~.    The Committee may require each person purchasing or receiving Shares pursuant to an Award to represent to and agree with the Company in writing that such person is acquiring the Shares without a view to the distribution thereof. The certificates for such Shares may include any legend which the Committee deems appropriate to reflect any restrictions on transfer. Notwithstanding any other provision of the Plan or agreements made pursuant thereto, the Company shall not be required to issue or deliver any certificate or certificates for Shares under the Plan prior to fulfillment of all of the following conditions: (i) listing or approval for listing upon notice of issuance, of such Shares on the Applicable Exchange; (ii) any registration or other qualification of such Shares of the Company under any state or federal law or regulation, or the maintaining in effect of any such registration or other qualification which the Committee shall, in its absolute discretion upon the advice of counsel, deem necessary or advisable; and (iii) obtaining any other consent, approval, or permit from any state or federal governmental agency which the Committee shall, in its absolute discretion after receiving the advice of counsel, determine to be necessary or advisable.
~~(b)~~    ~~Additional Compensation Arrangements~~~~. Nothing contained in the Plan shall prevent the Company or any Subsidiary or Affiliate from adopting other or additional compensation arrangements for its employees.~~
~~(c)~~    ~~No Contract of Employment~~.    The Plan shall not constitute a contract of employment, and adoption of the Plan shall not confer upon any employee any right to continued employment, nor shall it interfere in any way with the right of the Company or any Subsidiary or Affiliate to terminate the employment of any employee at any time.
~~(d)~~    ~~Required Taxes~~.    No later than the date as of which an amount first becomes includible in the gross income of a Participant for federal, state, local or foreign income or employment or other tax purposes with respect to any Award under the Plan, such Participant shall pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount. Unless otherwise determined by the Company, withholding obligations may be settled with Common Stock, including Common Stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company under the Plan shall be conditional on such payment or arrangements, and the Company and its Affiliates shall, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to such Participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with Common Stock.
~~(e)~~    ~~Limitation on Dividend Reinvestment and Dividend Equivalents~~.    Reinvestment of dividends in additional Restricted Stock at the time of any dividend payment, and the payment of Shares with respect to dividends to Participants holding Awards of Restricted Stock Units, shall only be permissible if sufficient Shares are available under Section 3 for such reinvestment or payment (taking into account then outstanding Awards). In the event that sufficient Shares are not available for such reinvestment or payment, such reinvestment or payment shall be made in the form of a grant of Restricted Stock Units equal in number to the Shares that would have been obtained by such payment or reinvestment, the terms of which Restricted Stock Units shall provide for settlement in cash and for dividend equivalent reinvestment in further Restricted Stock Units on the terms contemplated by this Section 14(e).
~~(f)~~    ~~Designation of Death Beneficiary~~.    The Committee shall establish such procedures as it deems appropriate for a Participant to designate a beneficiary to whom any amounts payable in the event of such Participant’s death are to be paid or by whom any rights of such eligible Individual, after such Participant’s death, may be exercised.
~~B-13~~
~~(g)~~    ~~Subsidiary Employees~~.    In the case of a grant of an Award to any employee of a Subsidiary of the Company, the Company may, if the Committee so directs, issue or transfer the Shares, if any, covered by the Award to the Subsidiary, for such lawful consideration as the Committee may specify, upon the condition or understanding that the Subsidiary will transfer the Shares to the employee in accordance with the terms of the Award specified by the Committee pursuant to the provisions of the Plan. All Shares underlying Awards that are forfeited or canceled should revert to the Company.
~~(h)~~    ~~Governing Law and Interpretation~~.The Plan and all Awards made and actions taken thereunder shall be governed by and construed in accordance with the laws of the State of Marlyand, without reference to principles of conflict of laws. The captions of this Plan are not part of the provisions hereof and shall have no force or effect.
~~(i)~~    ~~Non-Transferability~~~~.    Except as otherwise provided in Section 5(i) or by the Committee, Awards under the Plan are not transferable except by will or by laws of descent and distribution.~~
~~(j)~~    ~~Foreign Employees and Foreign Law Considerations~~.    The Committee may grant Awards to Eligible Individuals who are foreign nationals, who are located outside the United States or who are not compensated from a payroll maintained in the United States, or who are otherwise subject to (or could cause the Company to be subject to) legal or regulatory provisions of countries or jurisdictions outside the United States, on such terms and conditions different from those specified in the Plan as may, in the judgment of the Committee, be necessary or desirable to foster and promote achievement of the purposes of the Plan, and, in furtherance of such purposes, the Committee may make such modifications, amendments, procedures, or subplans as may be necessary or advisable to comply with such legal or regulatory provisions.
~~(k)~~    ~~Deferrals~~.    The Committee shall be authorized to establish procedures pursuant to which the payment of any Award may be deferred. Subject to the provisions of this Plan and any Award Agreement, the recipient of an Award (including, without limitation, any deferred Award) may, if so determined by the Committee, be entitled to receive, currently or on a deferred basis, interest or dividends, or interest or dividend equivalents, with respect to the number of shares covered by the Award, as determined by the Committee, in its sole discretion, and the Committee may provide that such amounts (if any) shall be deemed to have been reinvested in additional Shares or otherwise reinvested.
~~IN WITNESS WHEREOF~~~~, the Company has caused this Plan to be executed on thisday of, 2006.~~
~~FOR NCR CORPORATION~~
~~By:~~
~~Name:~~
~~Title:~~
~~B-14~~
~~EXHIBIT C~~
~~NCR EMPLOYEE STOCK PURCHASE PLAN~~
~~1.    Purpose~~
The NCR Employee Stock Purchase Plan (“Plan”) provides Eligible Employees with an opportunity to purchase NCR Common Stock through payroll deductions and is intended as an employment incentive and to encourage ownership of NCR Common Stock to enable Eligible Employees to participate in the economic progress of NCR Corporation (“NCR”) during the term of the Plan.
The Company intends to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of Section 423 of the Code.
~~This Plan will be effective January 1, 2007.~~
~~2.    Definitions~~
~~2.1~~    ~~“Affiliate” means any person that directly, or through one or more intermediaries, controls, or is controlled by, or under common control with, the Company.~~
~~2.2~~    ~~“Beneficiary” has the meaning set forth in Section 15.~~
~~2.3~~    ~~“Board of Directors” means the Board of Directors of the Company.~~
~~2.4~~    ~~“Code” means the Internal Revenue Code of 1986, as amended.~~
~~2.5~~    ~~“Company” means NCR Corporation, a Maryland corporation.~~
~~2.6~~    “Compensation” means the total amount received by a Participant from the Company or a Subsidiary as salary, wages, bonus or other remuneration including (i) overseas premium pay, (ii) appropriate commission or other earnings by sales personnel, (iii) overtime pay, (iv) payments for cost-of-living increases, and (v) sick pay, but excluding contributions of the Company or a Subsidiary to an employee benefit plan thereof.
~~2.7~~    ~~“Continuous Service” means the length of time an Employee has been in the continuous employ of the Company and/or a Subsidiary and/or an Affiliate.~~
~~2.8~~    “Designated Subsidiary” means a Subsidiary which shall have been designated by the Chief Executive Officer or Senior Vice President, Human Resources of the Company to participate in the Plan; provided, that any such designation may be revoked in like manner at any time.
~~2.9~~    “Eligible Employees” means only those persons who on an Offering Date: (i) are Employees of the Company or a Designated Subsidiary, and (ii) are not deemed for purposes of Section 423(b)(3) of the Code to own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or a Subsidiary or the parent of the Company, if any.
~~2.10~~    “Employees” means all persons employed by the Company or a Subsidiary, excluding those persons whose customary employment is 20 hours or less per week and/or whose customary employment is for five months or less in any calendar year. “Employee” does not include leased employees within the meaning of Section 414(n) of the Code, and does not include “payroll service or agency employees” as defined in the following sentence. “Payroll service or agency employee” means an individual (i) for whom the direct pay or
~~C-1~~
compensation with respect to the performance of services for the Company or any Subsidiary or Affiliate is paid by any outside entity, including but not limited to a payroll service or temporary employment agency rather than by the NCR internal corporate payroll system, or (ii) who is paid directly by the Company or any Subsidiary or Affiliate, but not through an internal corporate payroll system (e.g., through purchase order accounts). The determination whether an individual is a “payroll service or agency employee” shall be made solely according to the method of paying the individual for services, without regard to whether the individual is considered a common law employee of the Company for any other purpose, and such determination will be within the discretionary authority of the plan administrator.
~~2.11~~    ~~“Exercise Date” means the last business day of each month.~~
~~2.12~~    ~~“Investment Account” has the meaning set forth in Section 12.~~
~~2.13~~    ~~“NCR Common Stock” means shares of common stock, par value $0.01, of NCR.~~
~~2.14~~    ~~“Offering” means the offering of shares of NCR Common Stock to Eligible Employees pursuant to the Plan that occurs on each Offering Date.~~
~~2.15~~    ~~“Offering Date” means the first business day of each month.~~
~~2.16~~    ~~“Participant” means an Eligible Employee who elects to participate in the Plan.~~
~~2.17~~    ~~“Payroll Department” means the department of the Company or a Subsidiary from which a Participant’s Compensation is disbursed.~~
~~2.18~~    ~~“Plan” means this NCR Employee Stock Purchase Plan.~~
~~2.19~~    ~~“Plan Year” means calendar years through December 31, 2016.~~
~~2.20~~    ~~“Purchase Period” means the period from an Offering Date to the next succeeding Exercise Date.~~
~~2.21~~    ~~“Recordkeeper” means the third party administrator that maintains records for the Plan.~~
~~2.22~~    ~~“Subsidiary” means any corporation in which the Company, directly or indirectly, owns stock possessing 50% or more of the total combined voting power of all classes of stock.~~
~~3.    Shares~~
The aggregate number of shares of NCR Common Stock which may be purchased under the Plan shall not exceed a total of four million (4,000,000), of which 1,900,000 shares are newly authorized in connection with the Plan and the remainder are shares previously authorized under the Company’s prior employee stock purchase plan. Notwithstanding the foregoing, the aggregate number of shares is subject to adjustment in accordance with Section 20 hereof. Shares issued under the Plan will consist of authorized and unissued shares.
~~4.    Offering~~
Each Eligible Employee on an Offering Date shall be entitled to purchase, in the manner and on the terms herein provided, shares of NCR Common Stock at the Purchase Price set forth in Section 8 hereof with amounts withheld pursuant to Section 6 hereof during the Purchase Period commencing on such Offering Date.
Anything herein to the contrary notwithstanding, if any person entitled to purchase shares pursuant to any Offering hereunder would be deemed, for the purposes of Section 423(b)(3) of the Code, to own stock (including
~~C-2~~
any number of shares which such person would be entitled to purchase hereunder and under any other similar plan or stock option plan of the Company, the parent of the Company or any Subsidiary) possessing 5% or more of the total combined voting power or value of all classes of stock of the Company, the parent of the Company or a Subsidiary, the maximum number of shares which such person shall be entitled to purchase pursuant to the Plan shall be reduced to that number which, when added to the number of shares of stock of the Company, the parent of the Company or a Subsidiary which such person is so deemed to own (excluding any number of shares which such person would be entitled to purchase hereunder), is one less than such 5% and any balance remaining in such person’s account to purchase shares of NCR Common Stock under this Plan (“Stock Purchase Account”) shall be refunded.
~~5.    Entry Into the Plan; Stock Purchase Agreements~~
~~Any Eligible Employee may become a Participant in the Plan by filing a stock purchase agreement prior to the 15~~^th day of the month immediately preceding March 1 or September 1 in each Plan Year (a “Stock Purchase Agreement”). Once an Eligible Employee has filed a Stock Purchase Agreement and become a Participant in the Plan, he shall remain a Participant until he withdraws from the Plan in accordance with Section 13 hereof, and he shall not be required to file a Stock Purchase Agreement for any succeeding Offering or Plan Year until he withdraws from the Plan.
~~A Participant may change his level of payroll deduction prior to the 15~~^th ~~of the month immediately preceding March 1 or September 1 in any Plan Year.~~
~~6.    Payment for Shares; Payroll Deductions~~
~~Payment for shares of NCR Common Stock purchased hereunder shall be made by authorized payroll deductions from a Participant’s Compensation pursuant to this Section.~~
In his Stock Purchase Agreement, a Participant shall authorize a deduction from each payment of Compensation during a Purchase Period of an amount equal to any full percentage of such payment; provided, however, that the minimum deduction shall be 1% and the maximum deduction shall be 10% of any payment of Compensation.
A Participant on an unpaid leave of absence will remain a Participant in the Plan but no amounts will be credited to the Participant’s Stock Purchase Account during the time the Participant receives no Compensation.
~~7.    Payroll Deductions~~
Amounts deducted from a Participant’s Compensation pursuant to Section 6 hereof shall be recorded by the Company and applied to the purchase of NCR Common Stock hereunder. No interest shall accrue or be payable to any Participant with respect to any deducted amounts.
~~8.    Purchase Price~~
The Purchase Price per share of the shares of NCR Common Stock sold to Participants hereunder for any Offering shall be 95% of the average of the reported highest and lowest sale prices of shares of NCR Common Stock on the New York Stock Exchange on the applicable Exercise Date. Should no sale of NCR Common Stock occur on any Exercise Date, then the Purchase Price shall be determined on the basis of the sales of NCR Common Stock on the first day prior thereto on which such sales were made. Anything herein to the contrary notwithstanding, the Purchase Price per share shall not be less than the par value of a share of NCR Common Stock.
~~9.    Purchase of Shares; Limitation on Right to Purchase~~
As of each Exercise Date, each Participant shall be offered the right to purchase, and shall be deemed, without any further action, to have purchased, at the Purchase Price in United States dollars, the number of full
~~C-3~~
shares of NCR Common Stock which can be purchased with the amount credited to such Participant’s Stock Purchase Account. All such shares shall be maintained in Investment Accounts for the Participants. All dividends paid with respect to such shares shall be credited to the Participants’ Investment Accounts, and will be automatically reinvested in shares of NCR Common Stock, unless the Participant elects not to have such dividends reinvested. Any remaining balance in a Participant’s Stock Purchase Account not used to purchase full shares of NCR Common Stock shall be applied to purchase shares of NCR Common Stock on the next Exercise Date or, in the event that there is no next Exercise Date, shall be refunded to the Participant.
At the time a Participant’s payroll deduction amounts are used to purchase the NCR Common Stock, he or she will have all of the rights and privileges of a stockholder of NCR with respect to the shares purchased under the Plan.
Anything herein to the contrary notwithstanding, (i) a Participant may not purchase more than 50,000 shares of NCR Common Stock in any Offering hereunder and (ii) if at any time when any person is entitled to complete the purchase of any shares pursuant to the Plan, taking into account such person’s rights, if any, to purchase stock under all other employee stock purchase plans of the Company, its parent and of any Subsidiaries, the result would be that during the then current calendar year such person would have first become entitled to purchase under the Plan and all such other plans a number of shares of stock which would exceed the maximum number of shares permitted by the provisions of Section 423(b)(8) of the Code, then the number of shares which such person shall be entitled to purchase pursuant to the Plan shall be reduced by the number which is one more than the number of shares which represents the excess, and any remaining balance of the Participant’s payroll deductions shall be refunded.
~~10.    Expiration of Offering~~
~~As of each Exercise Date the amount of payroll deductions for each Participant in the applicable Offering shall be applied to purchase shares of NCR Common Stock at the Purchase Price.~~
~~11.    Issuance of Shares~~
The shares of NCR Common Stock purchased by a Participant on an Exercise Date shall, for all purposes, be deemed to have been issued and sold at the close of business on such Exercise Date. Prior to that time, none of the rights or privileges of a stockholder shall exist with respect to such shares.
As soon as practicable after such Exercise Date, the Company shall cause a book entry to be registered in the street name of the Recordkeeper on behalf of the Participants, for the number of shares of NCR Common Stock purchased by the Participants on such Exercise Date, as designated in the Participant’s Stock Purchase Agreement. Such designation may be changed at any time by filing notice thereof. The Senior Vice President, Human Resources shall have sole discretion to adopt rules governing the registration of shares purchased hereunder, and may restrict the types of designations permitted under a Participant’s Stock Purchase Agreement.
~~l2.    Investment Accounts Maintained by Recordkeeper~~
The Recordkeeper shall maintain an Investment Account for each Participant with a record of the shares purchased by the Participant. The Participant may at any time direct the Recordkeeper to (i) sell some or all of the shares credited to his Investment Account and deliver the cash in U.S. currency to the Participant, subject to any applicable delivery or transfer charge or (ii) provide the Participant a notice of issuance of uncertificated shares reflecting some or all of the whole shares credited to his Investment Account.
~~13.    Withdrawal~~
A Participant may withdraw from the Plan at any time by filing notice of withdrawal. Upon a Participant’s withdrawal, the amount credited to his Stock Purchase Account shall go toward the purchase of NCR Common Stock on the next Exercise Date. Any Participant who withdraws from the Plan may again become a Participant hereunder in accordance with Section 5 hereof.
~~C-4~~
~~14.    Termination of Continuous Service~~
If a Participant’s Continuous Service terminates for any reason during a Purchase Period, the amount credited to his Stock Purchase Account as of the termination date shall be used to purchase shares of NCR Common Stock pursuant to Section 9 hereof as of the next succeeding Exercise Date. The Participant may elect within 60 days of the date of his termination of employment to liquidate his Investment Account by either of the methods described in Section 12 or some combination of both. If the Recordkeeper receives no directions from the Participant within 60 days after his termination date, the Recordkeeper may deem that the Participant elected to retain ownership of the stock in the Participant’s own name and receive appropriate evidence of such ownership, and the Recordkeeper may proceed accordingly.
If a Participant transfers to part-time status during a Purchase Period, his payroll deductions for the Plan shall terminate as of the date of such transfer and the amount credited to his Stock Purchase Account as of the effective date of any such occurrence shall remain in the Stock Purchase Account until the Exercise Date. The Recordkeeper shall continue to maintain the Participant’s Investment Account.
~~15.    Death~~
~~If a Participant dies during a Purchase Period, the amount credited to his Stock Purchase Account as of the date of death shall be applied to the purchase of NCR Common Stock on the Exercise Date.~~
The Recordkeeper shall transfer the Participant’s Investment Account to the executor or administrator of the Participant’s estate. If no executor or administrator is appointed (to the knowledge of the Company), the Company in its discretion may direct the Recordkeeper to transfer the Investment Account to the Participant’s spouse or to any one or more dependents of the Participant.
~~16.    Procedure if Insufficient Shares Available~~
In the event that on any Exercise Date the aggregate funds available for the purchase of shares of NCR Common Stock pursuant to Section 9 hereof would purchase a number of shares in excess of the number of shares then available for purchase under the Plan, the Senior Vice President, Human Resources shall proportionately reduce the number of shares which would otherwise be purchased by each Participant on such Exercise Date in order to eliminate such excess, the Plan shall automatically terminate immediately after such Exercise Date and any remaining balance credited to the Stock Purchase Account of each Participant shall be refunded to each such Participant.
~~l7.    Rights not Transferable~~
Rights to purchase shares under the Plan are exercisable only by the Participant during his lifetime and are not transferable by him other than by will or the laws of descent and distribution. If a Participant attempts to transfer his rights to purchase shares under the Plan other than by will, he shall be deemed to have requested withdrawal from the Plan and the provisions of Section 13 hereof shall apply with respect to such Participant.
~~18.    Administration of the Plan~~
Subject to the general control of, and superseding action by, the Board of Directors, the Senior Vice President, Human Resources shall have full power to administer the Plan. He or she shall adopt rules not inconsistent with the provisions of the Plan for its administration. He or she shall adopt the form of Stock Purchase Agreement, all notices required hereunder, and any on the registration of certificates for shares purchased hereunder. His or her interpretation and construction of the Plan and Rules shall, subject as aforesaid, be final and conclusive.
~~19.    Amendment of the Plan~~
The Board of Directors may at any time, or from time to time, alter or amend the Plan in any respect, except that, without approval of the stockholders of NCR, no amendment may (i) increase the number of shares reserved for purchase under the Plan other than as provided in Section 20 hereof or (ii) reduce the Purchase Price per share as defined in Section 8 hereof.
~~C-5~~
~~20.    Recapitalization; Effect of Certain Transactions~~
The aggregate number of shares of NCR Common Stock reserved for purchase under the Plan as provided in Section 3 hereof, the maximum number of shares which a Participant may purchase in any Offering as provided in Section 9 hereof, and the calculation of the Purchase Price per share as provided in Section 8 hereof shall be appropriately adjusted to reflect a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend, extraordinary cash dividend or other increase or decrease in the number of issued shares of NCR Common Stock, effected without receipt of consideration by the Company. If NCR shall merge or consolidate, whether or not NCR is the surviving or resulting corporation in such merger or consolidation, any Offering hereunder shall pertain to and apply to shares of stock of NCR or any shares issued in connection with such merger or consolidation in exchange for shares of stock of NCR, unless prior to such merger or consolidation, the Board of Directors of the Company shall, in its discretion, terminate the Plan and/or any Offering hereunder. Notwithstanding the foregoing, a dissolution or liquidation of NCR shall cause the Plan and any Offering hereunder to terminate and the entire amount credited to the Stock Purchase Account of each Participant thereunder shall be paid to each such Participant.
~~21.    Expiration and Termination of the Plan~~
The Plan shall continue in effect through December 31, 2016 unless terminated prior thereto pursuant to Section 16 or 20 hereof, or pursuant to the next succeeding sentence. The Board of Directors shall have the right to terminate the Plan or any Offering hereunder at any time. In the event of the expiration of the Plan or its termination or the termination of any Offering pursuant to the immediately preceding sentence, the entire amount credited to the Stock Purchase Account of each Participant hereunder shall be refunded to each such Participant.
~~22.    Treatment of Fractional Shares~~
For any amounts of payroll deductions that are insufficient to purchase a whole share, the Recordkeeper may determine whether its standard practice will be to credit the Participants’ Investment Accounts with fractional shares or with the insufficient cash amount that will be carried over and applied to the next Purchase Period. If the Investment Accounts are credited with fractional shares, such fractional shares shall be cashed out when a Participant closes his or her Investment Account.
~~23.    Notice~~
~~Any notice which a Participant files pursuant to the Plan shall be in the appropriate form and shall be delivered by hand or mailed, postage prepaid, to such Participant’s Payroll Department.~~
~~24.    Repurchase of Stock~~
~~The Company shall not be required to repurchase from any Participant shares of NCR Common Stock which such Participant acquires under the Plan.~~
~~25.    Use of Funds~~
~~All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions.~~
~~26.    Alternate Contribution Methods~~
Anything herein to the contrary notwithstanding, in the event authorized payroll deductions form a Participant’s Compensation are not permitted by reason of the provisions of local law applicable to the Company or a Designated Subsidiary, or are not practicable in the opinion of the Senior Vice President, Human Resources, the appropriate alternative method pursuant to which affected Participants may make payment for shares of NCR
~~C-6~~
Common Stock purchased hereunder which would otherwise have been made pursuant to Section 6 hereof shall be designated by the Senior Vice President, Human Resources. Payments made hereunder shall be deemed to have been made pursuant to Section 6 hereof.
~~27.    Fees~~
~~The Recordkeeper may charge Participants reasonable transaction fees, as agreed by the Company.~~
~~IN WITNESS WHEREOF~~~~, the Company has caused this Plan to be duly executed on thisday of, 2006.~~
~~FOR NCR CORPORATION~~
~~By:~~
~~Name:~~
~~Title:~~
~~C-7~~

Detach Here

~~2006~~2007 ANNUAL STOCKHOLDERS’ MEETING
RESERVATION REQUEST FORM

If you plan to attend the ~~2006~~2007 Annual Stockholders’ Meeting of NCR Corporation, please complete the following information and return to ~~Jonathan S. Hoak,~~Peter M. Lieb, Senior Vice President, General Counsel and Secretary, NCR Corporation, 1700 South Patterson Blvd., Dayton, Ohio 45479.

Your name and address:






Number of shares of NCR
common stock you hold:


If the shares listed above are not registered in your name, identify the name of the registered stockholder belowand include evidence that you beneficially own the shares.

Registered stockholder:

(name of your bank, broker, or other nominee)

THIS IS NOT A PROXY CARD
1700 S. PATTERSON BOULEVARD
DAYTON, OH 45479

Your Internet or telephone ~~vote~~authorization authorizes the named proxies to vote the shares in the same manner as if you marked, signed and returned your proxy card.

~~VOTE~~AUTHORIZE BY INTERNET -www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:00 P.M. Eastern Time on April ~~25, 2006.~~24, 2007. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form.

~~VOTE~~AUTHORIZE BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:00 P.M. Eastern Time on April ~~25, 2006.~~24, 2007. Have your proxy card in hand when you call and follow the instructions.

VOTE BY MAIL
Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to NCR Corporation, c/o ADP, 51 Mercedes Way, Edgewood, NY 11717.

ELECTRONIC DELIVERY OF FUTURE STOCKHOLDER COMMUNICATIONS
If you would like to reduce the costs incurred by NCR in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to authorize your vote using the Internet and, when prompted, indicate that you agree to receive or access stockholder communications electronically in future years.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
   NCORP1 KEEP THIS PORTION FOR YOUR RECORDS
— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —
   DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
~~NCR CORPORATION~~
~~NCR’S BOARD OF DIRECTORS RECOMMENDS A~~
~~VOTE “FOR” PROPOSALS 1, 2, 3, 4 and 5.~~

1. Election of Directors.
  For
All

Withhold
All

For All
Except
To withhold authority to vote, mark “For All Except” and write the nominee’s number on the line below.
Class A Nominees:

01)   William R. Nuti
¨ ¨ ¨

02)   James M. Ringler


  For   Against Abstain   For   Against Abstain
2. Approval of the appointment of independent registered public accounting firm for 2006. ¨ ¨ ¨ 4. Approval of the NCR Stock Incentive Plan. ¨ ¨ ¨

3. Approval of the NCR Management Incentive Plan. ¨ ¨ ¨ 5. Approval of the NCR Employee Stock Purchase Plan. ¨ ¨ ¨

NOTE: If you attend the meeting and decide to vote by ballot, your ballot will supersede this proxy. If signing for a corporation or partnership or as an agent, attorney or fiduciary, indicate the capacity in which you are signing.

For comments, please check this box and write them on the back where indicated ¨

Yes No
HOUSEHOLDING ELECTION - Please indicate if you consent to receive certain future investor communications in a single package per household. ¨ ¨

~~Signature [PLEASE SIGN WITHIN BOX]~~ ~~Date~~ ~~Signature [Joint Owners]~~ ~~Date~~
~~Annual Meeting of Stockholders~~
NCR’s Annual Meeting of Stockholders will be held at 9:00 a.m. on April 26, 2006 at NCR’s World Headquarters Auditorium, 1700 S. Patterson Boulevard, Dayton, Ohio 45479. Please see your proxy statement for instructions should you wish to attend the meeting.
D     ~~FOLD AND DETACH HERE~~     D
NCR CORPORATION
NCR’S BOARD OF DIRECTORS RECOMMENDS A
VOTE “FOR” PROPOSALS 1 and 2.
ForWithholdFor All
To with hold authority to vote for any individual
1.
Election of Directors.
AllAllExcept
nominee(s), mark “For All Except” and write the
number(s) of the nominee(s) on the line below.
Class B Nominees:
        01) Edward P. Boykin
¨¨¨
        02) Linda Fayne Levinson
        03) Victor L. Lund
Class A Nominee:
        04) Gary Daichendt
ForAgainstAbstain ��
2.
Ratification of the appointment of independent registered public accounting firm for 2007.
¨¨¨
NOTE: If you attend the meeting and decide to vote by ballot, your ballot will supersede this proxy. If signing for
a corporation or partnership or as an agent, attorney or fiduciary, indicate the capacity in which you are signing.
For address changes and/or comments, please check this box
and write them on the back where indicated.
¨
Yes
  No
HOUSEHOLDING ELECTION - Please indicate if you
consent to receive certain future investor communications in a single package per household.
¨
¨
Signature [PLEASE SIGN WITHIN BOX]
Date
Signature (Joint Owners)
Date
Annual Meeting of Stockholders
NCR’s Annual Meeting of Stockholders will be held at 9:00 a.m. on April 25, 2007 at NCR’s World Headquarters Auditorium, 1700 S. Patterson Boulevard, Dayton, Ohio 45479. Please see your proxy statement for instructions should you wish to attend the meeting.
__ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ __ ___ __ __ __ __ __ _
Ù    FOLD AND DETACH HERE    Ù
NCR CORPORATION
Proxy/Voting Instruction Card
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS
FOR NCR’S ANNUAL MEETING OF STOCKHOLDERS ON APRIL ~~26, 2006~~25, 2007
The undersigned stockholder of NCR Corporation, a Maryland corporation (“NCR” or the “Company”), hereby appoints William Nuti, ~~Jon Hoak~~Peter Lieb and Peter Bocian, and each of them, proxies, with the powers the undersigned would possess if personally present, and with full power of substitution, to vote all shares of common stock of NCR that the undersigned is entitled to vote at NCR’s Annual Meeting of Stockholders to be held in Dayton, Ohio, on April ~~26, 2006,~~25, 2007, and at any postponement or adjournment thereof, upon any matter that may properly come before the meeting, or any postponement or adjournment thereof, including the matters described in the accompanying proxy statement. This proxy also provides voting instructions to the trustee of the NCR Savings Plan and to the trustees and administrators of other plans, with regard to shares of NCR common stock the undersigned may hold under such plans for which the undersigned is entitled to vote at said meeting to the extent permitted by such plans and their trustees and administrators. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Stockholders and of the accompanying Proxy Statement, the terms of each of which are incorporated by reference, and revokes any proxy heretofore given with respect to such meeting.
THE PROXIES OR THE TRUSTEES AND ADMINISTRATORS OF THE PLANS, AS THE CASE MAY BE, WILL VOTE THE SHARES IN ACCORDANCE WITH THE DIRECTIONS ON THIS CARD. IF YOU DO NOT INDICATE YOUR CHOICES ON THIS CARD, THE PROXIES WILL VOTE THE SHARES “FOR” EACH OF THE NOMINEES FOR DIRECTORS, “FOR” EACH OF THE OTHER PROPOSALS DESCRIBED IN ~~ACCORDANCE WITH~~ THE ~~DIRECTORS’ RECOMMENDATIONS.~~PROXY STATEMENT AND IN THE DISCRETION OF THE PROXYHOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF YOU ARE AN NCR SAVINGS PLAN PARTICIPANT OR OTHER PLAN PARTICIPANT ENTITLED TO VOTE AT THE ~~2006~~2007 ANNUAL MEETING OF STOCKHOLDERS AND DO NOT INDICATE YOUR CHOICES ON THIS CARD, THOSE SHARES WILL BE SO VOTED BY THE TRUSTEES OF SUCH PLANS.
Address Changes/Comments:

(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
(Continued and to be signed on the reverse side.)


Name	Total Shares Beneficially Owned(1)	Shares Covered by Options(2)	Total Shares Beneficially Owned(1)(2)	Shares Covered by Options(3)
Current Non-Employee Directors
Edward P. Boykin, Director	61,099	36,000	47,541	20,000
Mark Frissora, Director(3)	32,400	16,000
Gary Daichendt, Director			3,168	0
Mark Frissora, Director(4)			37,593	16,000
Linda Fayne Levinson, Director	98,977	78,946	104,938	78,946
Victor L. Lund, Director	39,628	24,000	39,628	24,000
C.K. Prahalad, Director	112,574	78,946	110,746	78,946
James M. Ringler, Director(4)	64,610	64,610
James M. Ringler, Director			94,463	64,610
William Stavropoulos, Director	96,377	62,000	101,080	62,000
Current Named Executive Officers
William R. Nuti, Director and Officer(5)	85,000	0
Gerald Gagliardi, Officer(6)	168,725	127,716
Jonathan S. Hoak, Officer	269,212	227,046
William R. Nuti, Director and Officer			245,701	103,913
Peter Bocian, Officer(5)			91,656	52,122
Malcolm Collins, Officer			49,407	17,717
Michael Koehler, Officer	159,523	39,580	114,200	28,710
Peter Bocian, Officer(7)	78,705	53,150
Former Director and Named Executive Officer
Mark V. Hurd(8)	0	0
Current Directors and Current Executive Officers as a Group (17 persons)	1,969,745	1,357,066
Christine Wallace, Officer			131,351	91,159
Current Directors and Executive Officers as a Group (19 persons)			2,215,694	768,923


Name and Address of Beneficial Owner	Total Number of Shares		Percent of Class
FMR Corp. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . 82 Devonshire Street Boston, Massachusetts 02109	20,001,680	(1)	10.89	%

Dodge & Cox . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .. . . . . . . . . 555 California Street, 40^th Floor San Francisco, California 94104	14,583,790	(2)	7.9	%


Name and Address of Beneficial Owner	Total Number of Shares		Percent of Class
FMR Corp 82 Devonshire Street Boston, Massachusetts 02109	22,077,310	(1)	12.39	%

Dodge & Cox 555 California Street, 40^th Floor San Francisco, California 94104	13,695,990	(2)	7.7	%


	12/31/00		12/31/01		12/31/02		12/31/03		12/31/04		12/31/05
NCR	$	100.00	$	75.03	$	48.33	$	78.98	$	140.93	$	138.18
S&P 500 Stock Index	$	100.00	$	88.11	$	68.64	$	88.33	$	97.94	$	102.75
S&P Technology Sector	$	100.00	$	74.13	$	46.40	$	68.31	$	70.06	$	70.75



Non-Employee Director Compensation Table for 2005

Name	Annual retainers and meeting fees (1)		Stock Awards $ (2)	Option Awards $ (3)	Non-Stock Incentive Plan Compensation		All Other Compensation (4)
Edward P. “Pete” Boykin	$	92,000	131,440	104,480	$	0	$	0
Mark P. Frissora	$	70,500	131,440	104,480	$	0		DM
Linda Fayne Levinson	$	95,250	131,440	104,480	$	0	$	0
Victor L. Lund	$	83,500	131,440	104,480	$	0	$	0
C.K. Prahalad	$	78,000	131,440	104,480	$	0	$	0
James M. Ringler(5)	$	299,984	0	0	$	0	$	23,479
William S. Stavropoulos	$	69,500	131,440	104,480	$	0		DM



	Individual Grants
Name	Number of Shares Underlying Options Granted (#)(1)	Percent of Total Options Granted to Employees	Exercise Price ($/Share)	Expiration Date	Grant Date Present Value ($)(2)
William Nuti	250,000 400,000(1a)	13.24% 21.18%	34.915 34.915	8/7/2015 8/7/2015	$ $	3,532,500 5,652,000
Gerald Gagliardi	11,046	.58%	38.97	2/28/2015	$	171,876
Jonathan Hoak	11,046	.58%	38.97	2/28/2015	$	171,876
Michael Koehler	15,648	.83%	38.97	2/28/2015	$	243,483
Peter Bocian	12,150	.64%	38.97	2/28/2015	$	189,054
James Ringler	52,610(1b)	2.79%	36.205	7/10/2015	$	756,532
Mark Hurd	184,094	9.75%	38.97	6/28/2005	$	2,864,503


Name(1)	Shares Acquired On Exercise (#)	Value Realized ($)	Unexercised Options at Year End (#)	Value of In-the- Money Options at Year End ($)
Name(1)	Shares Acquired On Exercise (#)	Value Realized ($)	Exercisable/ Unexercisable	Exercisable/ Unexercisable (2)
William Nuti	0	0	0/ 650,000	0/0
Gerald Gagliardi(3)	184,666	2,776,676	74,000/ 53,716	728,715/ 715,960
Jonathan Hoak	151,888	2,725,593	191,332/ 35,714	2,887,869/ 388,277
Michael Koehler	100,998	1,794,264	10,000/ 56,984	112,900/ 721,974
Peter Bocian	63,018	1,036,625	27,822/ 37,486	355,930/ 360,992
James Ringler	0	0	64,610/0	149,780/0
Mark Hurd	993,184	14,750,105	0/0	0/0


Name (a)	Fees Earned or Paid in Cash ($) (b) (5),(6)		Stock Awards ($) (c) (8), (9),(10)		Option Awards ($) (d) (12), (13)	Non-Equity Incentive Plan Compensation ($) (e)	Change in Pension Value and Nonqualified Deferred Compensation Earnings ($) (f)	All Other Compensation ($) (g)	Total ($) (h)
James Ringler, Chairman(1)	249,777		321,275		43,464	—	—	18,542(14)	633,058
Edward (Pete) Boykin(2)	—(7)		130,566		43,464	—	—	—	174,030
Mark Frissora	71,846		27,395		43,464	—	—	—	142,705
Gary Daichendt	—(7)		78,738	(11)	43,464	—	—	—	122,202
Linda Fayne Levinson(3)	43,923	(7)	80,920		43,464	—	—	—	168,307
Victor Lund	75,253		31,250		43,464	—	—	—	149,967
C.K. Prahalad(4)	—(7)		117,436		43,464	—	—	—	160,900
William Stavropoulos	65,846		27,395		43,464	—	—	—	136,705


Situation	Restricted Stock	Performance-Based Restricted Stock	Stock Options
Death and Long-term Disability (“LTD”)	Awards vest in full upon the date of death or LTD	A pro rata portion of the stock, calculated as of the date of death or long-term disability, will continue to vest and payout at the end of the performance period based on actual results	Awards vest in full upon the date of death or LTD and are exercisable for the one-year period following the date of death if the death occurs prior to age 55; or the earlier of the actual expiration or three years if after age 55
Retirement	Pro-rata portion will become fully vested as of date of retirement	A pro rata portion of the stock, calculated as of the date of retirement will continue to vest and payout at the end of the performance period based on actual results	Unvested awards are forfeited. Vested awards expire the earlier of three years following retirement date or the expiration date
Termination due to Reduction in Force (“RIF”)	Pro-rata portion will become fully vested as of date of RIF	A pro rata portion of the stock, calculated as of the date of RIF, will continue to vest and payout at the end of the performance period based on actual results	Unvested awards are forfeited. Vested awards expire the earlier of one day prior to 60 days post termination or the expiration date
Voluntary Resignation	Award is forfeited	Award is forfeited	Unvested awards are forfeited. Vested awards expire the earlier of one day prior to 60 days post termination or the expiration date
Involuntary Termination for Cause	Award is forfeited	Award is forfeited	Award is forfeited
Change in Control (“CIC”)	Award vests in full upon the date of CIC	Award vests in full upon the date of CIC	Award vests in full upon the date of CIC


Executive	Cash	Prorata Bonus	Stock Options⁽¹⁾	Restricted Stock & Performance- Based Shares⁽¹⁾	Welfare Benefits	Excise Tax Gross-Up^(1)(2)(3)(4)	Out- placement	Total
William Nuti	$6,000,000	$935,140	$5,290,595	$5,552,215	$32,738	$7,537,042	$10,000	$25,357,730
Peter Bocian	$2,100,000	$290,542	$313,094	$944,312	$32,738	$1,183,692	$10,000	$4,874,378
Malcolm Collins	$2,459,218	$460,417	$210,832	$1,355,064	$7,651	$2,036,870	$10,000	$6,540,052
Michael Koehler	$2,231,250	$332,150	$331,468	$2,921,320	$32,738	$1,289,071	$10,000	$7,147,997
Christine Wallace	$1,732,500	$296,067	$340,796	$1,067,760	$32,738	$949,219	$10,000	$4,429,080


Executive	Cash⁽¹⁾	Prorata Bonus	Stock Options⁽²⁾⁽³⁾	Restricted Stock & Performance- Based Shares⁽²⁾⁽³⁾	Welfare Benefits	Out- placement	Total
William Nuti	$3,000,000	$935,140	$1,470,938	$3,554,472	$14,900	$10,000	$8,985,450
Peter Bocian	$200,000	$290,542	$0	$109,369	$4,739	$10,000	$614,650
Malcolm Collins	$234,211	$460,417	$0	$377,438	$7,651	$10,000	$1,089,717
Michael Koehler	$212,500	$332,150	$0	$104,393	$4,739	$10,000	$663,782
Christine Wallace	$165,000	$296,067	$0	$113,522	$4,739	$10,000	$589,328


Executive	Life Insurance⁽¹⁾	Prorata Bonus	Stock Options⁽²⁾	Restricted Stock & Performance- Based Shares⁽²⁾	Welfare Benefits	Out- placement	Total
William Nuti	$1,200,000	$935,140	$5,290,595	$3,554,472	$0	$0	$10,980,207
Peter Bocian	$2,800,000	$290,542	$313,094	$680,600	$0	$0	$4,084,236
Malcolm Collins	$636,656	$460,417	$210,832	$377,438	$0	$0	$1,685,343
Michael Koehler	$1,155,000	$332,150	$331,468	$2,669,608	$0	$0	$4,488,226
Christine Wallace	$0	$296,067	$340,796	$785,581	$0	$0	$1,422,444


Executive	Disability Payments⁽¹⁾⁽²⁾	Prorata Bonus	Stock Options⁽³⁾	Restricted Stock & Performance- Based Shares⁽³⁾	Welfare Benefits	Out- placement	Total
William Nuti	$0	$935,140	$5,290,595	$3,554,472	$0	$0	$9,780,207
Peter Bocian	$0	$290,542	$313,094	$680,600	$0	$0	$1,284,236
Malcolm Collins	$0	$460,417	$210,832	$377,438	$0	$0	$1,048,687
Michael Koehler	$0	$332,150	$331,468	$2,669,608	$0	$0	$3,333,226
Christine Wallace	$0	$296,067	$340,796	$785,581	$0	$0	$1,422,444


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)	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)	(a)		(b)		(c)
Equity compensation plans approved by security holders :
Management Stock Plan¹	11,140,097	$	21.53	62,069,097
Management Stock Plan (1)					7,757,842		$	25.21	72,718,865
Stock Incentive Plan (2)					302,203	(3)	$	39.63	11,506,583
Equity compensation plans not approved by security holders:	N/A		N/A	N/A	N/A			N/A	N/A

Total	11,140,097	$	21.53	62,069,097	8,060,045		$	25.75	84,225,448


Service	2005		2004		2006		2005
Audit Fees(1)	$	8,542,500	$	12,018,400	$	7,779,400	$	8,542,500
Audit-Related Fees(2)	$	331,400	$	246,400	$	333,800	$	331,400
Subtotal	$	8,873,900	$	12,264,800	$	8,113,200	$	8,873,900
Tax Fees(3)	$	1,669,000	$	2,925,800	$	1,318,000	$	1,669,000
All Other Fees(4)	$	12,100	$	42,200	$	15,800	$	12,100
Subtotal	$	1,681,100	$	2,968,000	$	1,333,800	$	1,681,100
Total Fees	$	10,555,000	$	15,232,800	$	9,447,000	$	10,555,000


Your name and address:



Number of shares of NCR common stock you hold:


Registered stockholder:
		(name of your bank, broker, or other nominee)


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		NCR CORPORATION Proxy/Voting Instruction Card THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR NCR’S ANNUAL MEETING OF STOCKHOLDERS ON APRIL ~~26, 2006~~25, 2007 The undersigned stockholder of NCR Corporation, a Maryland corporation (“NCR” or the “Company”), hereby appoints William Nuti, ~~Jon Hoak~~Peter Lieb and Peter Bocian, and each of them, proxies, with the powers the undersigned would possess if personally present, and with full power of substitution, to vote all shares of common stock of NCR that the undersigned is entitled to vote at NCR’s Annual Meeting of Stockholders to be held in Dayton, Ohio, on April ~~26, 2006,~~25, 2007, and at any postponement or adjournment thereof, upon any matter that may properly come before the meeting, or any postponement or adjournment thereof, including the matters described in the accompanying proxy statement. This proxy also provides voting instructions to the trustee of the NCR Savings Plan and to the trustees and administrators of other plans, with regard to shares of NCR common stock the undersigned may hold under such plans for which the undersigned is entitled to vote at said meeting to the extent permitted by such plans and their trustees and administrators. The undersigned hereby acknowledges receipt of the Notice of the Annual Meeting of Stockholders and of the accompanying Proxy Statement, the terms of each of which are incorporated by reference, and revokes any proxy heretofore given with respect to such meeting. THE PROXIES OR THE TRUSTEES AND ADMINISTRATORS OF THE PLANS, AS THE CASE MAY BE, WILL VOTE THE SHARES IN ACCORDANCE WITH THE DIRECTIONS ON THIS CARD. IF YOU DO NOT INDICATE YOUR CHOICES ON THIS CARD, THE PROXIES WILL VOTE THE SHARES “FOR” EACH OF THE NOMINEES FOR DIRECTORS, “FOR” EACH OF THE OTHER PROPOSALS DESCRIBED IN ~~ACCORDANCE WITH~~ THE ~~DIRECTORS’ RECOMMENDATIONS.~~PROXY STATEMENT AND IN THE DISCRETION OF THE PROXYHOLDER ON ANY OTHER MATTER THAT MAY PROPERLY COME BEFORE THE MEETING OR ANY ADJOURNMENT OR POSTPONEMENT THEREOF. IF YOU ARE AN NCR SAVINGS PLAN PARTICIPANT OR OTHER PLAN PARTICIPANT ENTITLED TO VOTE AT THE ~~2006~~2007 ANNUAL MEETING OF STOCKHOLDERS AND DO NOT INDICATE YOUR CHOICES ON THIS CARD, THOSE SHARES WILL BE SO VOTED BY THE TRUSTEES OF SUCH PLANS.
				Address Changes/Comments:
		(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.) (Continued and to be signed on the reverse side.)

Preliminary Proxy Statement

Confidential, for Use of the Commission Only
(as permitted by Rule 14a-6(e)(2))

Definitive Proxy Statement

Definitive Additional Materials

Soliciting Material Pursuant to Section 240.14a-12