| | Cash and equity compensation | | | Fixed and variable compensation
| | We seek to increase the percentage of total pay that is “at risk” as executive officers move to greater levels of responsibility, with direct impact on company results. | | | Short-term and long-term focus
| | We seek to create incentives to achieve near-term goals by providing annual cash incentives, which are based on annual performance measures. We seek to create incentives to achieve long-term goals by granting equity awards with multi-year vesting periods, the ultimate value of which depends on our share price. These awards promote retention and further align the interests of our executive officers and shareholders. | | | Cash and equity compensation
| | We believe that executive officers in positions that more directly affect corporate performance should have as their main priority profitably growing the company. Accordingly, we generally structure the target compensation of these executive officers so that they receive a significant portion of their compensation in the form of equity. Using equity in this manner further aligns executive officers’ interests with those of our shareholders, encourages retention and rewards our executive officers if we succeed. | | |
Peer Group Consistent with Fiserv’s “pay for performance” philosophy, the compensation committee strives to set executive officer base salaries at a level that is comparable to the 50th percentile of our peers and provides for total compensation at a level comparable to the 50th percentile of our peers for median performance with an opportunity for 75th percentile compensation for superior performance. To determine peer group compensation for an executive officer, the committee reviewed publicly available proxy and survey data regarding comparable executive officer positions and the compensation paid to our other executive officers in light of their relative functional responsibilities and experience. Notwithstanding the use of benchmarking as a tool to set compensation, comparison data only provides a context for the decisions that the compensation committee makes. The committee may also consider, among other matters, market trends in executive compensation, the percentage that each component of compensation comprises of an executive officer’s total compensation and the executive officer’s tenure in position. The peer group that we used for 2014 and approved by the committee reviewed publicly available proxy and survey data regarding comparable executive officer positions and the compensation paid to our other executive officers in light of their relative functional responsibilities and experience. Notwithstanding the use of benchmarking as a tool to set compensation, comparison data only provides a context for the decisions that the compensation committee makes. The committee also considers, among other matters, market trends in executive compensation and the percentage that each component of compensation comprises of an executive officer’s total compensation. The peer group that we used for 2011 is set forth below:
| | | | | Alliance Data Systems Corporation
| | Equifax Inc.
| | Paychex, Inc.
| Automatic Data Processing, Inc.
| | Fidelity National Information Services, Inc.
| | Total System Services, Inc.
| Convergys Corporation
| | Intuit Inc.
| | Unisys Corporation
| Discover Financial Services
| | Jack Henry & Associates, Inc.
| | Visa Inc.
| DST Systems, Inc.
| | MasterCard Incorporated
| | The Western Union Company
| The Dun & Bradstreet Corporation
| | NCR Corporation
| | | Alliance Data Systems Corporation | | Equifax Inc. | | NCR Corporation | | | | Automatic Data Processing, Inc. | | Fidelity National Information Services, Inc. | | Paychex, Inc. | Convergys Corporation | | | Total System Services, Inc. | | | | Discover Financial Services | | Intuit Inc. | | Unisys Corporation | | | | DST Systems, Inc. | | Jack Henry & Associates, Inc. | | Visa Inc. | | | | The Dun & Bradstreet Corporation | | MasterCard Incorporated | | The Western Union Company |
We believe our peer group is comprised of companies directly comparable to ours based on our industry, company size and competition for managerial talent. In this regard, we include: companies that directly compete with us in our primary businesses; companies with similar business models in similar industries because they
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We believe our peer group is comprised of companies comparable to ours based on our industry, company size and competition for managerial talent. In this regard, we include: companies that compete with us for managerial talent; companies that directly compete with us in our primary businesses; companies with similar business models in similar industries because they reflect the complexities inherent in managing an organization with multiple business lines and revenue sources; and other publicly traded business-to-business, service-based companies that are of similar size based primarily on annual revenue and market capitalization. 2014 Named Executive Officer Compensation Base Salaries In 2014, we increased the base salaries of Messrs. Gupta and Hirsch to recognize their performance and better align their base salary compensation with those holding comparable positions at peer companies. We did not increase the base salaries of our other named executive officers in 2014. We have not increased the base salary of our chief executive officer in the last nine years. Cash Incentive Awards
reflect the complexities inherent in managing an organization with multiple business lines and revenue sources; other publicly traded business-to-business, service-based companies that are of similar size based primarily on annual revenue and market capitalization; and companies that compete with us for managerial talent. Based on our analysis, for 2011, the base salaries of our named executive officers were below the 50th percentile of our peers, and total compensation of our named executive officers was generally at the 50th percentile of our peers, although certain of the named executive officers were above, and others were below, such mark.
2011 Named Executive Officer Compensation
Base Salaries
We have not increased the base salary of our chief executive officer in the last six years or our chief financial officer in the last five years. In addition, the base salary of Mr. Warsop has remained unchanged since 2008. Our compensation committee elected to maintain the base salary amounts for these named executive officers in order to increase the proportion of overall compensation that is “at risk.” Mr. Gupta’s base salary was increased in October 2011 from $400,000 to $420,000 in connection with his promotion. Prior to that, his base salary had not increased since he joined our company in 2006. When Mr. Ernst joined Fiserv, the committee set his base salary to deliver a mix of compensation aimed at performance with salary reflecting 25% of his overall target compensation.
Cash Incentive Awards
Certain Terminology In this section of the proxy statement, we use a number of financial terms. Set forth below is a description of these terms: Adjusted earnings per share, is calculated as earnings per share from continuing operations in accordance with generally accepted accounting principles excluding merger and integration-related costs, severance costs, amortization of acquisition-related intangible assets, losses on early debt extinguishment and certain other non-operating gains and losses. Adjustedadjusted internal revenue growth is measured as the increase in adjusted revenue, excluding all acquired revenue, for the current year divided by adjusted revenue from the prior year. Adjusted revenue is calculated as total revenue in accordance with generally accepted accounting principles excluding output solutions postage reimbursements. Adjusted business unit or group internal revenue growth is calculated in the same manner using business unit or group adjusted revenue as applicable.
Adjustedand consolidated net operating profit is calculated as total revenue minus total operating expenses, includingare non-GAAP financial measures. See Appendix A to this proxy statement for a costdefinition of capital charge, excluding capitalization and amortization of internally developed software and share-based compensation, and is adjusted for the items described in the calculation of adjusted earnings per share. Adjusted business unit or group net operating profit is calculated in the same manner using business unit or group revenue, expenses and adjustments as applicable.these measures.
Messrs. Yabuki and Hirsch The cash incentive payments to Messrs. Yabuki and Hirsch for 20112014 were based on adjusted earnings per share and adjusted internal revenue growth. We use adjusted earnings per share as a performance measure because we believe that there is a direct correlation between the increase in adjusted earnings per share and shareholder value. For 2011, we set the target adjusted earnings per share performance goal at $4.51, which represented an 11% increase over 2010 adjusted earnings per share. We use adjusted internal revenue growth because we believe that the long-term value of our enterprise depends on our ability to grow revenue without regard forto acquisitions. For 2011,2014, we set the target adjusted earnings per share performance goal at $3.31, which represented an 11% increase over our 2013 adjusted earnings per share. For 2014, we set the target adjusted internal revenue growth performance goal at 3%3.7% compared to adjusted internal 36
revenue growth of 1.4% in 2010. We increased the weight given to adjusted internal revenue growth from 35%of 2.7% in 2010 to 40% in 2011. We also increased the cash incentive award threshold, target and maximum opportunities for Mr. Hirsch primarily because peer compensation data indicated that his total compensation was below market.
2013. For 2011,2014, the threshold, target, maximum and actual amounts for Messrs. Yabuki and Hirsch were as follows: | Performance Measure (weighting) | | Threshold | | Target | | Maximum | | Actual | | | Threshold | | | Target | | | Maximum | | | Actual | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share (60%) | | $4.28 | | $4.51 | | $4.71 or more | | $4.58 | | | $3.16 | | | | $3.31 | | | | $3.52 or more | | | | $3.37 | | | | | | | | | | | | | | | | | | Adjusted Internal Revenue Growth (40%) | | 0% | | 3% | | 7% or more | | 3% | | | 1.2% | | | | 3.7% | | | | 6.2% or more | | | | 4.3% | | | | | | | | | | | | | | | | | | Award as a Percentage of Base Salary | | | | | | | | | | | | | | | | | | | | | | | | | | J. Yabuki | | 63% | | 125% | | 250% | | 150% | | | 75% | | | | 150% | | | | 300% | | | | 193% | | | | | | | | | | | | | | | | | | T. Hirsch | | 45% | | 90% | | 180% | | 108% | | | 50% | | | | 100% | | | | 200% | | | | 129% | | | | | | | | | | | | | | | | | |
Mr. Ernst The cash incentive payment to Mr. Ernst for 20112014 was based on achievement of adjusted earnings per share, adjusted internal revenue growth adjustedand consolidated net operating profit and adjusted earnings per share. We use adjusted consolidated net operating profit because we believe it reflects how well Mr. Ernst is performing as our Chief Operating Officer.profit. Similar to other named executive officers, these company-wide performance measures for Mr. Ernst focused on driving greaterare designed to drive internal revenue growth and overall profitability. In addition, we considered consolidated net operating profit because we believe Mr. Ernst has the ability to drive high quality revenue growth and effectively managing our costs through operational effectiveness programs. For 2011,2014, the threshold, target, maximum and actual amounts for Mr. Ernst were as follows: | | | | | | | | | Performance Measure (weighting) | | Threshold | | Target | | Maximum | | Actual | Adjusted Internal Revenue Growth (40%) | | 0% | | 3% | | 7% or more | | 3% | Adjusted Consolidated Net Operating Profit (in millions) (40%) | | $1,170 | | $1,220 | | $1,295 | | $1,212 | Adjusted Earnings Per Share (20%) | | $4.28 | | $4.51 | | $4.71 or more | | $4.58 | Award as a Percentage of Base Salary | | 40% | | 80% | | 160% | | 82% |
| | | | | | | | | | | | | | | | | | | Performance Measure(weighting) | | | | Threshold | | | Target | | | Maximum | | | Actual | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share (30%) | | | | | $3.16 | | | | $3.31 | | | | $3.52 or more | | | | $3.37 | | | | | | | | | | | | | | | | | | | | | Adjusted Internal Revenue Growth (40%) | | | | | 1.2% | | | | 3.7% | | | | 6.2% or more | | | | 4.3% | | | | | | | | | | | | | | | | | | | | | Consolidated Net Operating Profit (in millions) (30%) | | | | | $1,415 | | | | $1,465 | | | | $1,560 | | | | $1,475 | | | | | | | | | | | | | | | | | | | | | Award as a Percentage of Base Salary | | | | | 63% | | | | 125% | | | | 250% | | | | 154% | | | | | | | | | | | | | | | | | | | | |
Mr. WarsopMessrs. Gupta and Vielehr
The cash incentive payment to Mr. Warsopeach of Messrs. Gupta and Vielehr for 20112014 was based on sales quota attainment,the achievement of adjusted earnings per share, adjusted internal revenue growth, consolidated net operating profit and group-level results (group net operating profit (20%) and group revenue (20%)). Similar to other named executive officers, adjusted earnings per share, adjusted internal revenue growth and adjusted consolidated net operating profit. The committee considered company-wide performance measures becauseprofit are designed to drive internal revenue growth and profitability, and Mr. Warsop couldGupta and Mr. Vielehr had the ability to significantly impact those results as the leaderpresident of our sales organization. For 2011, the threshold, target, maximumDigital Solutions Group and actual amounts forDepository Institution Services Group, respectively. Mr. Warsop were as follows: | | | | | | | | | Performance Measure (weighting) | | Threshold | | Target | | Maximum | | Actual | Sales Quota Attainment (50%) | | 95% | | 100% | | 120% | | 116% | Adjusted Internal Revenue Growth (40%) | | 0% | | 3% | | 7% or more | | 3% | Adjusted Consolidated Net Operating Profit (in millions) (10%) | | $1,170 | | $1,220 | | $1,295 | | $1,212 | Award as a Percentage of Base Salary | | 50% | | 100% | | 250% | | 170% |
Sales quota attainment is expressed as a percentage achievement of the targeted total contract value for the year. The committee determines sales quota attainment by evaluating our sales results for the year against the quota levels set by our chief executive officer at the beginning of the year. Mr. Warsop’s cash incentive award for 2011 was paid above target level primarily due to the strong performance of our sales organization in 2011.
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Mr. Gupta
Mr. Gupta’s 2011 cash incentive award performance goals and threshold, target and maximum payouts were initially set when he served as president of our card services business unit. Upon his promotion toDigital Solutions Group President, Mr. Guptafor most of 2014 and in November 2014 assumed responsibility for group results and his performance goals and threshold, target and maximum payouts for the remainderrole of the year were revised accordingly. Mr. Gupta’s cash incentive award for 2011 was determined on a pro rata basis to reflect the time he served as president of card servicesour newly created Billing and as Group President. The following summarizes Mr. Gupta’s average weighted threshold, target, maximum and actual amounts based on his average weighted salary for the year.
| | | | | | | Percent of Average Weighted Base Salary (%) | Threshold | | Target | | Maximum | | Actual | 34% | | 67% | | 135% | | 81% |
Payments Group. The committee considered business unit- andthe group-level results (adjusted net operating profit, 20%, and adjusted internal revenue growth, 20%) because it believed they were most relevant to, and could be most directly influenced by Mr.Messrs. Gupta during the time he served as leader of the card services business unit and Digital Payments group.Vielehr. The balance of his cash incentive award was determined based on company-wide results (adjusted consolidated net operating profit, 20%, andadjusted earnings per share, adjusted internal revenue growth 40%) because we are focused on profitably growing company revenue, and Mr. Gupta had the ability to significantly impact those results in his leadership roles. The adjusted internal revenue growth and adjusted consolidated net operating profit threshold, target and maximum goals for Mr.Messrs. Gupta and Vielehr were set at the same levels set forth above for our other named executive officers. With respect to adjusted business unit and group net operating profit and adjusted business unit and group internal revenue, growth, we set the performance goal levels for each of Mr. Gupta and Mr. Vielehr such that we believed that it would be unlikely that the top end of the range would be achieved, but it would be reasonably likely that the target wouldcould be achieved. Overall, his cash incentive award for 2011 was paid aboveFor 2014, the threshold, target, primarily because of his business unitmaximum and individual performance.actual results were as follows:
| | | | | | | | | | | | | | | | | | | Performance Measure(weighting) | | | | Threshold | | | Target | | | Maximum | | | Actual | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share (10%) | | | | | $3.16 | | | | $3.31 | | | | $3.52 or more | | | | $3.37 | | | | | | | | | | | | | | | | | | | | | Adjusted Internal Revenue Growth (35%) | | | | | 1.2% | | | | 3.7% | | | | 6.2% or more | | | | 4.3% | | | | | | | | | | | | | | | | | | | | | Consolidated Net Operating Profit (in millions) (15%) | | | | | $1,415 | | | | $1,465 | | | | $1,560 | | | | $1,475 | | | | | | | | | | | | | | | | | | | | | Group-Level Results (40%) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Award as a Percentage of Base Salary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Gupta | | | | | 55% | | | | 110% | | | | 220% | | | | 118% | | | | | | | | | | | | | | | | | | | | | B. Vielehr | | | | | 55% | | | | 110% | | | | 220% | | | | 137% | | | | | | | | | | | | | | | | | | | | |
Equity Incentive Awards The committee established threshold, target and maximum values of total equity awards comprised of stock options and restricted stock units, expressed as a percentage of base salary, which Messrs. Yabuki, Hirsch, Ernst and WarsopGupta could receive. The target equity awards generally reflect the committee’s assessment of the level of an executive officer’s responsibilities within the company. On February 23, 2011,19, 2014, we granted equity awards to Messrs. Yabuki, Hirsch, Ernst and WarsopGupta based on the committee’s judgment of each executive’s prospective performance including with respect to leadership,strategic impact, growth, talent development, risk management, financial results, and, other than with respect to his own awards, the recommendation of our chief executive officer. The mix of options and restricted stock units granted is determined by the committee based on the expressed preference of the executive officer which is considered in the context of the committee’s overall performanceassessment of the executive officer’s compensation. The equity mix awarded by the committee is consistent with our objective of emphasizing performance-based compensation and strategic alignmentaligning our executive officers’ economic interests with those of our shareholders. For 2014, the compensation committee increased the target and maximum equity grantsawards available to executives serving in comparableMessrs. Hirsch, Ernst and Gupta to provide them with equity opportunities that are better aligned with the equity compensation available to individuals holding similar positions at our peer companies. We revised Mr. Warsop’s maximum award opportunity from 150% to 205% of base salary in recognition of the superior performance of our sales organization. The grant date fair value of the annual equity incentive awards, restricted stock units and options combined, as a percentage of base salary were as follows: | | | Percent of Base Salary (%) | | | | Percent of Base Salary(%) | | Equity Incentive Award | | Threshold | | | Target | | | Maximum | | | Actual Award | | | | Annual Equity Incentive Awards | | | | Threshold | | | Target | | | Maximum | | | Actual Award | | | | | | | | | | | | | | | | | | | J. Yabuki | | | 327 | % | | | 476 | % | | | 625 | % | | | 548 | % | | | 238% | | | | 476% | | | | 952% | | | | 691% | | | | | | | | | | | | | | | | | | T. Hirsch | | | 100 | % | | | 200 | % | | | 300 | % | | | 281 | % | | | 100% | | | | 250% | | | | 350% | | | | 260% | | T. Warsop | | | 75 | % | | | 100 | % | | | 205 | % | | | 205 | % | | | | | | | | | | | | | | | | | | M. Ernst | | | | 100% | | | | 250% | | | | 350% | | | | 244% | | | | | | | | | | | | | | | | | | R. Gupta | | | | 75% | | | | 150% | | | | 250% | | | | 149% | | | | | | | | | | | | | | | | | |
WhenUpon joining Fiserv at the end of 2013, Mr. Gupta’s 2011 equity award was determined, he was president of our card services business. At that time, his target equity award was $200,000Vielehr received stock options and his actual award was $350,006. The amount of his 2011 equity award was based on an assessment of Mr. Gupta’s performance as the leader of the card services business, the results of the business, his prospective performance and equity grants to executives serving in comparable
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positions at peer companies. On March 31, 2011, Mr. Gupta received an additional 1,595 restricted stock units with ahaving an aggregate grant date fair value of approximately $100,000 because$4 million to induce him to join the company. The grant was intended to immediately and strongly align Mr. Vielehr’s interests with those of our shareholders and, in part, recognize that he was named Business Unit Executive of the Year. This annual award is given to the business president whose unit demonstrated outstanding financial performance, including growth in revenue, earnings and clients, along withforfeiting significant achievements in respect of sales and client satisfaction. In connection withbenefits upon leaving his promotion to Group President, we awardedprior employer. As a result, Mr. GuptaVielehr was not eligible for an additional 3,398 restricted stock units with a grant date fair value of approximately $200,000 to better align his equity compensation with the target level typically set for a group president at our company.
Mr. Ernst received an award of 48,645 stock options with a grant date fair value of approximately $1,000,000 at the time he joined Fiserv in January 2011. Mr. Ernst did not receive any additional equity awards during 2011.
Additional Compensation
In 2008, in addition to annual equity awards, we granted options with performance-based vesting criteria to, among others, Messrs. Yabuki, Hirsch, Gupta and Warsop. These options vested subject to our achievement of annual or cumulative cost synergy goals associated with our acquisition of CheckFreeincentive award in 2007 and annual or cumulative internal revenue growth rates for 2008, 2009 and 2010. Messrs. Yabuki, Hirsch, Gupta and Warsop earned, cumulatively, an aggregate 70% of the maximum possible award for the achievement of cost synergy goals. The earned portion of the award vested and became exercisable in February 2011. These options have a ten year term and an exercise price of $54.21 per share.2014.
Other Elements of Compensation
Retirement Savings Plan and Health and Welfare Benefits
We provide subsidized health and welfare benefits which include medical, dental, life and accidental death or dismemberment insurance, disability insurance and paid time off. Executive officers are entitled to participate in our health, welfare and 401(k) savings plans on generally the same terms and conditions as other employees, subject to limitations under applicable law. We maintain supplemental long-term disability coverage for executive officers and other employees with cash compensation of $200,000 or more. We do not provide a separate pension program, supplemental executive retirement plan or other post-retirement payments to executive officers. Fiserv associates, including executive officers, are immediately eligible for matching contributions under our 401(k) savings plan. Our matching contributions are capped at 3% of annual cash compensation and vest after the first two calendar years in which the employee is credited with 1,000 hours of service. For 2011, subject to a minimum 2% employee contribution and the attainment of 1,000 hours of service, we also made a 1% discretionary profit sharing matching contribution.
| | | | | Other Elements of Compensation Employee Stock Purchase Plan We maintain a tax-qualified employee stock purchase plan that is generally available to all employees, including executive officers, which allows employees to acquire our common stock at a discounted price on an after-tax basis. This plan allows employees to buy our common stock at a 15% discount to the market price with up to 10% of their salary and incentives (subject(up to IRS limits)a maximum of $25,000 in any calendar year), with the objective of allowing employees to benefit when the value of our stock increases over time. Under applicable tax law, no plan participant may purchase more than $25,000 in market value of our stock under this plan in any calendar year. Post-Employment Benefits We provide severance and change-in-control protections to our named executive officers through key executive employment and severance agreements or “KEESAs,” and, in the case of Messrs. Yabuki, Ernst, Gupta and Warsop,Vielehr, employment agreements. We discuss the purposes and terms of the KEESAs and other arrangements with our named executive officersagreements below under the heading “Employment“Employment and Other Agreements with Executive Officers.Officers.” 39
Perquisites We generally do
In 2014, we did not provide any personal-benefit perquisites to our named executive officers.officers other than relocation-related expenses disclosed in footnote 3 to the Summary Compensation Table below and participation in an executive physical program. Retirement Savings Plan and Health and Welfare Benefits We provide subsidized health and welfare benefits which include medical, dental, life insurance, disability insurance and paid time off. Executive officers are entitled to participate in our health, welfare and 401(k) savings plans on generally the same terms and conditions as other employees, subject to limitations under applicable law. We subsidize supplemental long-term disability coverage for executive officers. We do not provide a separate pension program, supplemental executive retirement plan or other post-retirement payments to executive officers. Our employees, including executive officers, are immediately eligible for matching contributions under our 401(k) savings plan. Our matching contributions | | | | are capped at 3% of annual cash compensation and vest after two years. Additional Compensation Policies
Securities Trading Policy We prohibit our executive officers from trading in our common stock during certain periods at the end of each quarter until after we disclose our financial and operating results. We may impose additional restricted trading periods at any time if we believe trading by executive officers would not be appropriate because of developments that are, or could be, material. In addition, we require pre-clearance by our general counselchief legal officer and our chief executive officer of all stock transactions by designated senior members of management and our board of directors.directors, including the establishment of a Rule 10b5-1 trading plan.
We also prohibit our employees, officers and directors from hedging or engaging in short sales of our stock. Furthermore, directors and executive officers are prohibited from pledging our stock and from entering into transactions in derivative instruments in connection with our stock. Stock Ownership and Disposition Requirements We believe that stock ownership by our executive officers is essential for aligning management’s long-term interests with those of our shareholders. To emphasize this principle, we maintain a stock ownership policy that requires our chief executive officersofficer to own directly or indirectly, equity having a value of at least six times his base salary in the caseand our other executive officers to own equity having a value of our chief executive officer andat least four times their respective base salary in the case of our other named executive officers.salaries. We believe that these levels are sufficiently high to demonstrate a commitment to value creation, while satisfying our executive officers’ needs for portfolio diversification. All executive officers are expected to satisfy the stock ownership requirements within five years after they become subject to them with minimum attainment levels beginning at the end of the second year. All named executive officers are currently in compliance with the requirements. |
| | | | | For these purposes, our calculation of ownership includes interests in restricted stock, restricted stock units, stock acquired through our employee stock purchase plan, investments in our common stock through our 401(k) savings plan and, as of January 1, 2012, 20% of the value of shares underlying vested but unexercised stock options. The value of all other shares subject to options are not considered in determining whether the ownership requirement is met. If an executive officer does not achieve the required ownership level, our policy permits us, among other options, to require the executive officer to retain all shares acquired on exercise of options or on vesting of restricted stock units.
We have also adopted restrictions regarding the number of shares that any director or executive officer may sell in a given year. The restrictions generally provide that an executive officer or director may not, in any particular year, dispose of more than 10% of the shares he or she beneficially owns at the beginning of such year. Shares of our stock that are sold or withheld to pay the applicable option exercise prices or taxes associated with such exercises are not included when determining whether the relevant limitations are satisfied.
Compensation Recoupment Policy In the event that we restate our financial results, we may recover all or a portion of the incentive awards that we paid or granted, or that vested, on the basis of such results. Recovery may be sought, in the discretion of the board, from any person who was serving as an executive officer of the company at the time the original results were published. Both cash and equity incentive awards are subject to recoupment. With respect to equity awards: (i) unvested awards may be immediately cancelled; (ii) vested but unexercised options or similar awards may be immediately cancelled; (iii) shares issued upon vesting or exercise of awards may be rescinded; and (iv) if the shares subject to any such award have been sold at the time of a restatement, an amount in cash equal to the value of the shares may be recovered. Thererecoupment; there is no time limit on our ability to recover such amounts, other than limits imposed by law,law; and recoupment is available to us regardless of whether the individuals subject to recoupment are still employed by us when repayment is required. To the extent recoupment is sought, the board of directors may, in its discretion, seek 40
to recover interest on amounts recovered and/or costs of collection and we have the right to offset the repayment amount from any compensation owed by us to any executive officer. The independent members of our board of directors, or a committee thereof comprised solely of independent directors, are responsible for determining whether recoupment is appropriate and the specific amount, if any, to be recouped by us.
Equity Award Grant Practices The compensation committee generally approves annual equity awards during its regularly-scheduled February meeting, after we issue our financial results for the prior year. In addition, in order to accommodate the need for periodic awards, such as in connection with newly hired employees, promotions or retention awards, the compensation committee delegates its authority to our chief executive officer and chief operating officer to enable himsuch individuals to grant equity awards within certain parameters; provided that all grants to directors and executive officers are specifically made by the compensation committee. Our approval process for making equity awards does not allow for discretion in selectinggrant policy prescribes the timing of awards or specific grant dates. To this end: equity awards to executive officers determined atUnder the February compensation committee meeting are granted immediately after the board meeting following the committee meeting;
annual equity awards to non-employee directors are granted immediately following the annual meeting of shareholders;
equity awards to new employees or directors are granted on the date of commencement of service; and
equity awards that are not tied to a specific date (e.g., awards for retention or special recognition) are granted on the last calendar day of the month in which our chief executive officer approves the grant or on the date determined by the compensation committee.
Unless the compensation committee determines otherwise,Incentive Plan, the exercise price of all options to purchase shares of our common stock is equal tomay not be less than the closing market price of our common stock on the NASDAQ stock market on the grant date.
| | | | Deductibility of Compensation Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct from our taxable income for federal income tax purposes in any one year with respect to our named executive officers (other than our chief executive officer and each of the next four highest compensated executive officers.financial officer). Certain performance-based compensation is not subject to the deduction limit. We seekIt is generally our intention to make cash and equity-based awards under our plans in a manner that is not subject to the limit imposed by Section 162(m). For example, our incentivequalify compensation is paid pursuant to the Incentive Plan, which has been approved by our shareholders, one of the requirementspayments for tax deductibility under Section 162(m). In addition,Notwithstanding our employment agreements with named executive officers are designedintentions, because of ambiguities and uncertainties as to comply withthe application and interpretation of Section 162(m). and the regulations issued thereunder, no assurance can be given that compensation intended to satisfy the requirements for deductibility under Section 162(m) will so qualify. Our compensation committee reserves the right to provide compensation that does not qualify as performance-based compensation under Section 162(m) to the extent it believes that we should use our best effortssuch compensation is necessary to cause any compensation paidcontinue to executiveprovide competitive arrangements intended to attract and retain, and provide appropriate incentives to, qualified officers to be deductible. However, in order to maintain flexibility in compensating our executive officers, it is not a policy of the committee that all executive compensation must be tax deductible.and other key employees. Employment and Other Agreements with Executive Officers
Yabuki Employment Agreement In 2005, we entered into an employment agreement with Mr. Yabuki that provides that, during the term of his employment, Mr. Yabuki will serve as a director and our president and chief executive officer.officer and, subject to election by our shareholders, as a director. Under his employment agreement, as amended, Mr. Yabuki is entitled: (i) to receive an annual salary of at least $840,000; (ii) to participate in our executive incentive compensation plan with a target cash incentive award of not less than 125% of his base salary; (iii) to receive grants of options, restricted stock and/or other awards under our long-term incentive compensation program commensurate with his position; (iv) to receive up to four weeks of vacation; and 41
(v) to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. The agreement automatically renews for one year terms unless either party gives |
| | | | | the other 90 days prior written notice of his or its desire to terminate the agreement. In the event of a conflict between his employment agreement and the terms of an equity award agreement, his employment agreement will control unless the equity award agreement provides a more favorable benefit. We selected Mr. Yabuki to succeed our former chief executive officer after conducting a thorough search process. The terms of Mr. Yabuki’s employment agreement and KEESA resulted from an arm’s-length negotiation, and, as a result, we believe the terms reflect the current market terms for the leader of a company of our size in our industry.
Ernst, Gupta and WarsopVielehr Employment Agreements We entered into an employment agreement with each of Messrs. Ernst, Gupta and Warsop in 2011, 2006 and 2006, respectively,Vielehr pursuant to which we agreed to employ each of them until one party provides the other with a notice of termination. Under histheir employment agreement, Mr.agreements, Messrs. Ernst isand Vielehr are entitled: (i) to receive an annual salary of at least $525,000;$525,000 and $470,000, respectively; (ii) to participate in our executive incentive compensation plan, with a target and maximum possible cash incentive award of 80% and 160% of annual base salary, respectively, for the 2011 calendar year; andplan; (iii) to participate in our executive long-term incentive compensation program with an annual target of at least 200% of base salary.salary; and (iv) in the case of Mr. Vielehr, a one-time cash payment of $200,000 which was paid on March 15, 2014. Under theirhis employment agreements, as amended and restated in 2008,agreement, Mr. Gupta and Mr. Warsop areis entitled: (i) to receive an annual salary of at least $400,000 and $350,000, respectively;$400,000; (ii) to participate in our executive incentive compensation plan; (iii) to participate in our executive long-term compensation program; and (iv) to receive a minimum of four weeks paid vacation. In addition, Messrs. Ernst, Gupta and WarsopVielehr are entitled to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. WeEach of Messrs. Ernst, Gupta and Vielehr also granted Mr. Ernst 48,645 stock options, which have an exercise price of $59.50 and vest one-third on each of the second, third and fourth anniversaries of the grant date,received equity awards upon joining Fiserv pursuant to his employment agreement. Mr. Gupta and Mr. Warsop also received equityThese awards pursuant to their employment agreements when they joined our company, all of which have since vested.are reflected in the Outstanding Equity Awards table below. The terms of Mr. Ernst’s, Mr. Gupta’s and Mr. Warsop’sVielehr’s employment agreements and KEESAs resulted from arm’s-length negotiations, and, as a result, we believe the terms reflect the current market terms for a leader of a company of our size in our industry.
| | | | Key Executive Employment and Severance Agreements We have entered into Key Executive Employmentkey executive employment and Severance Agreements,severance agreements, or “KEESAs,” with our executive officers that provide for potential benefits in connection with a change in control. A complete discussion of the terms of the KEESAs, together with an estimate of the amounts potentially payable under each KEESA, appears below under the heading “Potential“Potential Payments Upon Termination or Change in Control.Control.” |
| | | | | Compensation Committee Interlocks and Insider Participation
There are no compensation committee interlocks between us and other entities involving our executive officers and directors who serve as executive officers or directors of such other entities. During the last completed fiscal year, no member of the compensation committee was a current or former officer or employee.
Compensation Committee Report The compensation committee has reviewed and discussed the “Compensation“Compensation Discussion and Analysis”Analysis” contained in this proxy statement with management. Based on our review and the discussions with management, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2011.2014. Glenn M. Renwick, Chairman Kim M. RobakDennis F. Lynch
Doyle R. Simons | | | | Compensation Committee Interlocks and Insider Participation 42There are no compensation committee interlocks between us and other entities involving our executive officers and directors who serve as executive officers or directors of such other entities. During the last completed fiscal year, no member of the compensation committee was a current or former officer or employee.
COMPENSATION OF EXECUTIVE OFFICERS
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Executive Compensation Summary Compensation Table The following table sets forth in summary form the compensation of our chief executive officer, our chief financial officer and our next three highest paid executive officers (collectively, our “named executive officers”) for the year ended December 31, 2014. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | Salary | | | Bonus | | | Stock Awards(1) | | | Option Awards(1) | | | Non-Equity Incentive Plan Compensation(2) | | | All Other Compensation(3) | | | Total | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Jeffery W.Yabuki | | 2014 | | | $840,000 | | | | — | | | | $1,078,613 | | | | $4,722,371 | | | | $1,622,880 | | | | $12,053 | | | | $8,275,917 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | President and Chief | | 2013 | | | 840,000 | | | | — | | | | 916,074 | | | | 4,400,022 | | | | 1,359,036 | | | | 11,965 | | | | 7,527,097 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Executive Officer | | 2012 | | | 840,000 | | | | — | | | | 2,458,003 | | | | 2,600,546 | | | | 1,154,160 | | | | 12,155 | | | | 7,064,864 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas J. Hirsch | | 2014 | | | 500,000 | | | | — | | | | 650,028 | | | | 650,004 | | | | 644,000 | | | | 12,427 | | | | 2,456,459 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Financial Officer, | | 2013 | | | 475,000 | | | | — | | | | 650,039 | | | | 650,008 | | | | 461,102 | | | | 12,109 | | | | 2,248,258 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Treasurer and Assistant | | 2012 | | | 475,000 | | | | — | | | | 600,027 | | | | 600,124 | | | | 391,590 | | | | 11,867 | | | | 2,078,608 | | Secretary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Mark A. Ernst | | 2014 | | | 575,000 | | | | — | | | | — | | | | 1,400,005 | | | | 886,291 | | | | 11,923 | | | | 2,873,219 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Chief Operating Officer | | 2013 | | | 575,000 | | | | — | | | | 350,033 | | | | 1,050,003 | | | | 715,515 | | | | 11,985 | | | | 2,702,536 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2012 | | | 575,000 | | | | — | | | | 325,045 | | | | 975,202 | | | | 589,807 | | | | 14,275 | | | | 2,479,329 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Rahul Gupta | | 2014 | | | 470,000 | | | | — | | | | 350,024 | | | | 350,015 | | | | 554,055 | | | | 12,917 | | | | 1,737,011 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Group President, | | 2013 | | | 420,000 | | | | — | | | | 1,150,075 | | | | 350,018 | | | | 441,902 | | | | 12,644 | | | | 2,374,639 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Billing and Payments | | 2012 | | | 420,000 | | | | — | | | | 275,048 | | | | 275,064 | | | | 368,076 | | | | 12,834 | | | | 1,351,022 | | Group | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Byron C. Vielehr(4) | | 2014 | | | 470,000 | | | | $200,000 | | | | — | | | | — | | | | 645,900 | | | | 313,257 | | | | 1,629,157 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Group President, | | 2013 | | | 39,167 | | | | — | | | | 2,000,290 | | | | 2,000,186 | | | | — | | | | 13,245 | | | | 4,052,888 | | Depository Institution | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Services Group | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | (1) Reflects the grant date fair value of the awards granted in the respective years under the Incentive Plan. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 8 to our Consolidated Financial Statements for the year ended December 31, 2011. SUMMARY COMPENSATION TABLE2014.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name and Principal Position | | Year | | | Salary ($) | | | Stock Awards ($)(1) | | | Option Awards ($)(1) | | | Non-Equity Incentive Plan Compensation ($)(2) | | | All Other Compensation ($)(3) | | | Total ($) | | Jeffery W. Yabuki | | | 2011 | | | | 840,000 | | | | 850,672 | | | | 3,749,474 | | | | 1,262,100 | | | | 13,980 | | | | 6,716,226 | | President and Chief | | | 2010 | | | | 840,000 | | | | 693,794 | | | | 3,489,713 | | | | 849,450 | | | | 13,951 | | | | 5,886,908 | | Executive Officer | | | 2009 | | | | 840,000 | | | | 802,523 | | | | 3,372,701 | | | | 728,438 | | | | 14,023 | | | | 5,757,685 | | | | | | | | | | Thomas J. Hirsch | | | 2011 | | | | 400,000 | | | | 281,274 | | | | 843,635 | | | | 432,720 | | | | 14,123 | | | | 1,971,752 | | Chief Financial Officer and | | | 2010 | | | | 400,000 | | | | 250,039 | | | | 747,797 | | | | 258,880 | | | | 13,545 | | | | 1,670,261 | | Treasurer | | | 2009 | | | | 400,000 | | | | 182,526 | | | | 547,138 | | | | 222,000 | | | | 13,617 | | | | 1,365,281 | | | | | | | | | | Mark A. Ernst Chief Operating Officer | | | 2011 | | | | 525,000 | | | | — | | | | 1,000,141 | | | | 432,768 | | | | 98,068 | | | | 2,055,977 | | | | | | | | | | Rahul Gupta(4) Group President, Digital Payments | | | 2011 | | | | 403,333 | | | | 475,088 | | | | 174,996 | | | | 325,160 | | | | 14,658 | | | | 1,393,235 | | | | | | | | | | Thomas W. Warsop, III | | | 2011 | | | | 400,000 | | | | 205,001 | | | | 614,923 | | | | 681,240 | | | | 13,698 | | | | 1,914,862 | | Group President, Distribution | | | 2010 | | | | 400,000 | | | | 260,006 | | | | 259,252 | | | | 553,288 | | | | 13,119 | | | | 1,485,665 | | and Sales | | | 2009 | | | | 400,000 | | | | 212,515 | | | | 212,362 | | | | 286,600 | | | | 13,421 | | | | 1,124,898 | |
(1) | Reflects the grant date fair value of the awards granted in the respective years under the Incentive Plan. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 6(2) These cash incentive payments were made pursuant to the Incentive Plan. These awards were earned in the year listed and paid in the following year. (3) The amounts shown in this column include company matching under our 401(k) savings plan; company-paid premiums for insurance; and if applicable, company contributions to a health savings account. For 2014, the amount shown for Mr. Vielehr also includes participation in our executive physical program and $301,517 of reimbursement for relocation-related expenses | | | | pursuant to the terms of his employment agreement. (4) Mr. Vielehr joined Fiserv on December 1, 2013. On March 15, 2014, Mr. Vielehr received a $200,000 cash payment pursuant to the terms of his employment agreement to compensate him for the benefits which he forfeited upon leaving his prior employer. For 2013, Mr. Vielehr’s base salary was paid at an annualized rate of $470,000. The amount shown reflects the actual amount of base salary paid to him during 2013. We granted restricted stock units and options to Mr. Vielehr on December 1, 2013 pursuant to his employment agreement. The grant was intended to immediately and strongly align Mr. Vielehr’s interests with those of our shareholders and, in part, recognize that he was forfeiting significant benefits upon leaving his prior employer. Mr. Vielehr did not receive any equity awards during 2014. |
The material terms of the company’s agreements with Messrs. Yabuki, Ernst, Gupta and Vielehr are set forth above under the heading “Compensation Discussion and Analysis – Employment and Other Agreements with Executive Officers.” Mr. Hirsch does not have an employment agreement, other than the KEESA, which, together with the estimated possible benefits payable thereunder, is discussed below. Grants of Plan-Based Awards in 2014 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All Other Stock Awards; Number of Shares of | | | All Other Option Awards; Number of Securities | | | Exercise or Base Price of Option | | | Grant Date Fair Value of Stock and | | Name | | Grant Date | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | Stock or Units (#)(1) | | | Underlying Options (#)(1) | | | Awards ($/Sh) | | | Option Awards($)(2) | | J. Yabuki | | | | | 630,000 | | | | 1,260,000 | | | | 2,520,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | 18,933 | | | | | | | | | | | | 1,078,613 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | | | | | 251,570 | | | | 56.97 | | | | 4,722,371 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | T. Hirsch | | | | | 250,000 | | | | 500,000 | | | | 1,000,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | 11,410 | | | | | | | | | | | | 650,028 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | | | | | 34,627 | | | | 56.97 | | | | 650,004 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | M. Ernst | | | | | 362,250 | | | | 718,750 | | | | 1,437,500 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | | | | | 74,581 | | | | 56.97 | | | | 1,400,005 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Gupta | | | | | 258,500 | | | | 517,000 | | | | 1,034,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | 6,144 | | | | | | | | | | | | 350,024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 02/19/2014 | | | | | | | | | | | | | | | | | | | 18,646 | | | | 56.97 | | | | 350,015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | B. Vielehr(3) | | | | | 258,500 | | | | 517,000 | | | | 1,034,000 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | (1) We granted all of the equity awards reported above pursuant to the Incentive Plan. Unless otherwise noted, one-third of the restricted stock units vest on each of the second, third and fourth anniversaries of the grant date, and one-third of the stock options vest on each anniversary of the grant date. The options have an exercise price equal to the closing price of our common stock on the grant date and expire on the 10 year anniversary of the grant date. (2) The amounts in the table represent the grant date fair value of the awards. Information about the assumptions that we used to determine the grant fair value of the awards is set forth in our Annual Report on Form 10-K in Note 8 to our Consolidated Financial Statements for the year ended December 31, 2011. |
(2) | These non-equity incentive plan compensation payments were made pursuant to the Incentive Plan. These awards were earned in the year listed and paid in the following year. |
(3) | The amounts shown in this column for 2011, 2010 and 2009 include company matching and, if applicable, discretionary contributions under our 401(k) savings plan; company-paid premiums for insurance; and if applicable, company contributions to a health savings account. The amount shown for Mr. Ernst includes $84,922 of reimbursement for relocation-related expenses pursuant to the terms of his employment agreement. |
(4) | Mr. Gupta was promoted to Group President in October 2011. In connection with his promotion, his base salary was increased from $400,000 to $420,000. The amount shown in the base salary column for Mr. Gupta reflects the actual amount of base salary paid to him during 2011. |
The material terms of the company’s agreements with Messrs. Yabuki, Ernst, Gupta and Warsop are set forth above under the heading “Compensation Discussion and Analysis – Employment and Other Agreements with Executive Officer.” Mr. Hirsch does not have an employment agreement other than the KEESA, which, together with the estimated possible benefits payable thereunder, is discussed below.
43
GRANTS OF PLAN-BASED AWARDS IN 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Name | | Grant Date | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | | All Other Stock Awards: Number of Shares of Stock or Units (#)(1) | | | All Other Option Awards: Number of Securities Underlying Options (#)(1) | | | Exercise or Base Price of Option Awards ($/Sh) | | | Grant Date Fair Value of Stock and Option Awards ($)(2) | | | | Threshold ($) | | | Target ($) | | | Maximum ($) | | | | | | J. Yabuki | | | | | | | 525,000 | | | | 1,050,000 | | | | 2,100,000 | | | | | | | | | | | | | | | | | | | | | 02/23/11 | | | | | | | | | | | | | | | | 13,785 | | | | | | | | | | | | 850,672 | | | | | 02/23/11 | | | | | | | | | | | | | | | | | | | | 164,595 | | | | 61.71 | | | | 3,749,474 | | T. Hirsch | | | | | | | 180,000 | | | | 360,000 | | | | 720,000 | | | | | | | | | | | | | | | | | | | | | 02/23/11 | | | | | | | | | | | | | | | | 4,558 | | | | | | | | | | | | 281,274 | | | | | 02/23/11 | | | | | | | | | | | | | | | | | | | | 37,034 | | | | 61.71 | | | | 843,635 | | M. Ernst | | | | | | | 210,000 | | | | 420,000 | | | | 840,000 | | | | | | | | | | | | | | | | | | | | | 01/03/11 | | | | | | | | | | | | | | | | | | | | 48,645 | (3) | | | 59.50 | | | | 1,000,141 | | R. Gupta(4) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | From 01/01/2011 to 10/25/2011 | | | | | | | 120,000 | | | | 240,000 | | | | 480,000 | | | | | | | | | | | | | | | | | | From 10/26/2011 to 12/31/2011 | | | | | | | 210,000 | | | | 420,000 | | | | 840,000 | | | | | | | | | | | | | | | | | | | | | 02/23/11 | | | | | | | | | | | | | | | | 2,836 | | | | | | | | | | | | 175,010 | | | | | 02/23/11 | | | | | | | | | | | | | | | | | | | | 7,682 | | | | 61.71 | | | | 174,996 | | | | | 03/31/11 | | | | | | | | | | | | | | | | 1,595 | (5) | | | | | | | | | | | 100,038 | | | | | 10/31/11 | | | | | | | | | | | | | | | | 3,398 | (5) | | | | | | | | | | | 200,040 | | T. Warsop | | | | | | | 200,000 | | | | 400,000 | | | | 1,000,000 | | | | | | | | | | | | | | | | | | | | | 02/23/11 | | | | | | | | | | | | | | | | 3,322 | | | | | | | | | | | | 205,001 | | | | | 02/23/11 | | | | | | | | | | | | | | | | | | | | 26,994 | | | | 61.71 | | | | 614,923 | |
(1) | We granted all of the equity awards reported above pursuant to the Fiserv, Inc. 2007 Omnibus Incentive Plan. Unless otherwise noted, one-third of the restricted stock units vest on each of the second, third and fourth anniversaries of the grant date, and one-third of the stock options vest on each anniversary of the grant date. The options have an exercise price equal to the closing price of our common stock on the grant date and expire on the 10 year anniversary of the grant date. |
(2) | The amounts in the table represent the grant date fair value of the awards. Information about the assumptions that we used to determine the grant fair value of the awards is set forth in our Annual Report on Form 10-K in Note 6 to our Consolidated Financial Statements for the year ended December 31, 2011. |
(3) | One-third of these stock options vest on each of the second, third and fourth anniversaries of the grant date. |
(4) | Mr. Gupta served as president of our card services business for most of 2011. At the time of his promotion to Group President, Digital Payments in October 2011, his threshold, target and maximum payouts as a percentage of base salary were modified. His cash incentive award for 2011 was determined on a pro-rata basis to reflect the time during which he served in each of those roles. See “Compensation Discussion and Analysis – 2011 Named Executive Officer Compensation – Cash Incentive Awards” above. |
(5) | One half of these restricted stock units vest on each of the third and fourth anniversaries of the grant date. |
44
OUTSTANDING EQUITY AWARDS AT DECEMBER 31, 2011
| | | | | | | | | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | | Number of Securities Underlying Unexercised Options (#) Exercisable | | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | | Option Exercise Price ($) | | | Option Expiration Date | | | Number of Shares or Units of Stock that Have Not Vested (#) | | | Market Value of Shares or Units of Stock that Have Not Vested ($)(1) | | J. Yabuki | | | | | | | | | | | | | | | | | | | 48,910 | (2) | | | 2,872,973 | | | | | — | | | | 164,595 | (3) | | | 61.71 | | | | 02/23/2021 | | | | | | | | | | | | | 64,804 | | | | 129,609 | (4) | | | 47.69 | | | | 02/24/2020 | | | | | | | | | | | | | 181,328 | | | | 90,664 | (5) | | | 32.74 | | | | 02/26/2019 | | | | | | | | | | | | | 95,274 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 25,826 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 124,392 | | | | — | | | | 54.69 | | | | 02/23/2017 | | | | | | | | | | | | | 145,000 | | | | — | | | | 46.09 | | | | 12/01/2015 | | | | | | | | | | | | | 225,000 | | | | — | | | | 46.09 | | | | 12/01/2015 | | | | | | | | | | T. Hirsch | | | | | | | | | | | | | | | | | | | 14,595 | (6) | | | 857,310 | | | | | — | | | | 37,034 | (3) | | | 61.71 | | | | 02/23/2021 | | | | | | | | | | | | | 13,886 | | | | 27,774 | (4) | | | 47.69 | | | | 02/24/2020 | | | | | | | | | | | | | 29,416 | | | | 14,708 | (5) | | | 32.74 | | | | 02/26/2019 | | | | | | | | | | | | | 24,212 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 19,370 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 25,000 | | | | — | | | | 54.69 | | | | 02/23/2017 | | | | | | | | | | | | | 3,542 | | | | — | | | | 41.21 | | | | 02/21/2016 | | | | | | | | | | | | | 20,000 | | | | — | | | | 44.32 | | | | 05/01/2016 | | | | | | | | | | | | | 3,616 | | | | — | | | | 38.16 | | | | 02/16/2015 | | | | | | | | | | | | | 4,840 | | | | — | | | | 38.73 | | | | 02/18/2014 | | | | | | | | | | | | | 2,388 | | | | — | | | | 30.99 | | | | 02/11/2013 | | | | | | | | | | | | | 5,764 | | | | — | | | | 41.57 | | | | 02/13/2012 | | | | | | | | | | M. Ernst | | | — | | | | 48,645 | (7) | | | 59.50 | | | | 01/03/2021 | | | | | | | | | | R. Gupta | | | | | | | | | | | | | | | | | | | 12,596 | (8) | | | 739,889 | | | | | — | | | | 7,682 | (3) | | | 61.71 | | | | 02/23/2021 | | | | | | | | | | | | | 2,407 | | | | 4,815 | (4) | | | 47.69 | | | | 02/24/2020 | | | | | | | | | | | | | 11,282 | | | | 5,642 | (5) | | | 32.74 | | | | 02/26/2019 | | | | | | | | | | | | | 13,836 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 16,141 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 13,940 | | | | 3,485 | (9) | | | 53.06 | | | | 03/30/2017 | | | | | | | | | | | | | 15,000 | | | | — | | | | 52.49 | | | | 12/18/2016 | | | | | | | | | | T. Warsop | | | | | | | | | | | | | | | | | | | 17,717 | (10) | | | 1,040,697 | | | | | — | | | | 26,994 | (3) | | | 61.71 | | | | 02/23/2021 | | | | | | | | | | | | | 4,814 | | | | 9,629 | (4) | | | 47.69 | | | | 02/24/2020 | | | | | | | | | | | | | 11,417 | | | | 5,709 | (5) | | | 32.74 | | | | 02/26/2019 | | | | | | | | | | | | | 13,836 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 16,141 | | | | — | | | | 54.21 | | | | 02/27/2018 | | | | | | | | | | | | | 15,000 | | | | — | | | | 52.42 | | | | 01/02/2017 | | | | | | | | | |
45
(1) | The amounts in this column were calculated by multiplying the closing market price of our common stock on December 30, 2011 (the last day that NASDAQ was open for trading during our most recently completed fiscal year), $58.74, by the number of unvested shares or units. |
(2) | Includes 4,849 restricted stock units that vested on February 24, 2012, 8,171 restricted stock units that vested on February 26, 2012 and 4,235 restricted stock units that vested on February 27, 2012. The remaining restricted stock units will vest as follows: 4,849 on February 24, 2013; 8,171 on February 26, 2013; 4,850 on February 24, 2014; and 4,595 on each of February 23, 2013, 2014 and 2015. |
(3) | One-third of the options vest on each anniversary of the grant date, February 23, 2011. |
(4) | One-third of the options vest on each anniversary of the grant date, February 24, 2010. |
(5) | One-third of the options vest on each anniversary of the grant date, February 26, 2009. |
(6) | Includes 1,747 restricted stock units that vested on February 24, 2012, 1,858 restricted stock units that vested on February 26, 2012 and 1,077 restricted stock units that vested on February 27, 2012. The remaining restricted stock units will vest as follows: 1,859 on February 26, 2013; 1,519 on each of February 23, 2013 and 2014; 1,748 on each of February 24, 2013 and 2014; and 1,520 on February 23, 2015. |
(7) | One-third of the options vest on each of January 3, 2013, 2014 and 2015. |
(8) | Includes 908 restricted stock units that vested on February 24, 2012, 713 restricted stock units that vested on February 26, 2012 and 615 restricted stock units that vested on February 27, 2012. The remaining restricted stock units will vest as follows: 945 on each of February 23, 2013 and 2014; 909 on each of February 24, 2013 and 2014; 713 on February 26, 2013; 946 on February 23, 2015; 797 on March 31, 2014; 798 on March 31, 2015; and 1,699 on each of October 31, 2014 and 2015. |
(9) | One-fifth of the options vest on each anniversary of the grant date, March 30, 2007. |
(10) | Includes 1,817 restricted stock units that vested February 24, 2012, 2,164 restricted stock units that vested on February 26, 2012 and 615 restricted stock units that vested on February 27, 2012. The remaining restricted stock units will vest as follows: 4,000 on December 31, 2012; 1,817 on February 24, 2013; 2,164 on February 26, 2013; 1,107 on each of February 23, 2013 and 2014; 1,818 on February 24, 2014; and 1,108 on February 23, 2015. |
All of the agreements that govern equity awards contain provisions that provide for automatic vesting in the event that certain age and/or term of service requirements are achieved at the time of an executive officer’s retirement. If these requirements are met, the options and restricted stock units may vest earlier than indicated in the table above.
46
OPTION EXERCISES AND STOCK VESTED DURING 2011
During our fiscal year ended December 31, 2011,2014.
| | | | (3) Mr. Vielehr joined Fiserv on December 1, 2013 and did not receive any equity awards in 2014. |
Outstanding Equity Awards at December 31, 2014 | | | | | | | | | | | | | | | | | | | | | Option Awards(1) | | Stock Awards(1) | | | | | | | | | Name | | Number of Securities Underlying Unexercised Options Exercisable (#) | | | Number of Securities Underlying Unexercised Options Unexercisable (#) | | 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 ($)(2) | | | | | | | | | | | | | | | | | | | | | J. Yabuki | | | | | | | | | | | | | | 101,041(3) | | | 7,170,880 | | | | | | | | | | | | | | | | | | | | | | | | — | | | 251,570(4) | | | 56.97 | | | 02/19/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 83,704 | | | 233,484(5) | | | 40.35 | | | 02/20/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 160,900 | | | 80,450(6) | | | 32.64 | | | 02/22/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 329,190 | | | — | | | 30.86 | | | 02/23/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 388,826 | | | — | | | 23.85 | | | 02/24/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 543,984 | | | — | | | 16.37 | | | 02/26/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 51,652 | | | — | | | 27.11 | | | 02/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 190,548 | | | — | | | 27.11 | | | 02/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 248,784 | | | — | | | 27.35 | | | 02/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 450,000 | | | — | | | 23.05 | | | 12/01/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 290,000 | | | — | | | 23.05 | | | 12/01/2015 | | | | | | | | | | | | | | | | | | | | | | | | | | T. Hirsch | | | | | | | | | | | | | | 42,820(7) | | | 3,038,935 | | | | | | | | | | | | | | | | | | | | | | | | — | | | 34,627(4) | | | 56.97 | | | 02/19/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,246 | | | 34,492(5) | | | 40.35 | | | 02/20/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,130 | | | 18,566(6) | | | 32.64 | | | 02/22/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 74,068 | | | — | | | 30.86 | | | 02/23/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 83,320 | | | — | | | 23.85 | | | 02/24/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 88,248 | | | — | | | 16.37 | | | 02/26/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 38,740 | | | — | | | 27.11 | | | 02/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 48,424 | | | — | | | 27.11 | | | 02/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 37,500 | | | — | | | 27.35 | | | 02/23/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | M. Ernst | | | | | | | | | | | | | | 15,316(8) | | | 1,086,977 | | | | | | | | | | | | | | | | | | | | | | | | — | | | 74,581(4) | | | 56.97 | | | 02/19/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 27,858 | | | 55,718(5) | | | 40.35 | | | 02/20/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 60,336 | | | 30,170(6) | | | 32.64 | | | 02/22/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 64,860 | | | 32,430(9) | | | 29.75 | | | 01/03/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | R. Gupta | | | | | | | | | | | | | | 47,156(10) | | | 3,346,661 | | | | | | | | | | | | | | | | | | | | | | | | — | | | 18,646(4) | | | 56.97 | | | 02/19/2024 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 9,286 | | | 18,574(5) | | | 40.35 | | | 02/20/2023 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 17,018 | | | 8,510(6) | | | 32.64 | | | 02/22/2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 15,364 | | | — | | | 30.86 | | | 02/23/2021 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 14,444 | | | — | | | 23.85 | | | 02/24/2020 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 33,848 | | | — | | | 16.37 | | | 02/26/2019 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 32,282 | | | — | | | 27.11 | | | 02/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 27,672 | | | — | | | 27.11 | | | 02/27/2018 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 34,850 | | | — | | | 26.53 | | | 03/30/2017 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | 30,000 | | | — | | | 26.25 | | | 12/18/2016 | | | | | | | | | | | | | | | | | | | | | | | | | | B. Vielehr | | | | | | | | | | | | | | 36,402(11) | | | 2,583,450 | | | | | | | | | | | | | | | | | | | | | | | | — | | | 116,892(12) | | | 54.95 | | | 12/01/2023 | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | (1) In December 2013, we completed a two-for-one split of our common stock. Accordingly, all amounts are presented on a split-adjusted basis. (2) The amounts in this column were calculated by multiplying the named executive officers exercised options to purchase sharesclosing market price of our common stock and/on December 31, 2014 (the last day that NASDAQ was open for trading during our most recently completed fiscal year), $70.97, by the number of unvested shares or had restrictions with respectunits. (3) Includes 7,568 restricted stock units that vested on February 20, 2015, 25,106 restricted stock units that vested on February 22, 2015, and 9,190 restricted stock units that vested on February 23, 2015. The remaining restricted stock units will vest as follows: 6,311 on each of February 19, 2016, 2017 and 2018; 7,568 on February 20, 2016; 25,106 on February 22, 2016; and 7,570 on February 20, 2017. (4) One-third of the options vest on each anniversary of the grant date, February 19, 2014. (5) One-third of the options vest on each anniversary of the grant date, February 20, 2013. (6) One-third of the options vest on each anniversary anniversary of the grant date, February 22, 2012. (7) Includes 5,370 restricted stock units that vested on February 20, 2015, 6,128 restricted stock units that vested on February 22, 2015, and 3,040 restricted stock units that vested on February 23, 2015. The remaining restricted stock units will vest as follows: 3,803 on each of February 19, 2016 and 2017; 5,370 on February 20, 2016; 6,130 on February 22, 2016; 5,372 on February 20, 2017; and 3,804 on February 19, 2018. | | | | (8) Includes 2,892 restricted stock units that vested on February 20, 2015 and 3,320 restricted stock units that vested on February 22, 2015. The remaining restricted stock units will vest as follows: 2,892 on each of February 20, 2016 and 2017; and 3,320 on February 22, 2016. (9) One-third of the options vest on the second, third and fourth anniversaries of the grant date, January 3, 2011. (10) Includes 2,892 restricted stock units that vested on February 20, 2015, 2,810 restricted stock units that vested on February 22, 2015, 1,892 restricted stock units that vested on February 23, 2015, and 1,596 restricted stock units that vested on March 31, 2015. The remaining restricted stock units will vest as follows: 3,398 on October 31, 2015; 2,048 on each of February 19, 2016, 2017 and 2018; 2,892 on each of February 20, 2016 and 2017; 9,914 on February 20, 2016; 2,810 on February 22, 2016; and 9,916 on February 20, 2017. (11) One-half of these restricted stock units will vest on each of December 1, 2016 and 2017. (12) One-third of the options vest on the second, third and fourth anniversaries of the grant date, December 1, 2013. |
Option Exercises and Stock Vested During 2014 During our fiscal year ended December 31, 2014, the named executive officers exercised options to purchase shares of our common stock and/or had restricted stock units vest as set forth below. | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | | | Number of Shares | | | Value Realized | | | Number of Shares | | | Value Realized | | Name | | Acquired on Exercise (#) | | | on Exercise ($)(1) | | | Acquired on Vesting (#) | | | on Vesting ($)(2) | | J. Yabuki | | | — | | | | — | | | | 43,996 | | | | 2,525,894 | | | | | | | | | | | | | | | | | | | T. Hirsch | | | 27,500 | | | | 1,092,175 | | | | 12,662(3) | | | | 727,083 | | | | | | | | | | | | | | | | | | | M. Ernst | | | — | | | | — | | | | 3,320 | | | | 190,468 | | | | | | | | | | | | | | | | | | | R. Gupta | | | — | | | | — | | | | 11,508 | | | | 700,625 | | | | | | | | | | | | | | | | | | | B. Vielehr | | | -— | | | | — | | | | — | | | | — | | | | | | | | | | | | | | | | | | |
| | | | | (1) The “Value Realized on Exercise” was calculated by multiplying the number of shares acquired on exercise times the difference between the market value of the shares on the exercise date and the exercise price of the option. (2) The “Value Realized on Vesting” was calculated by multiplying the number of shares acquired on vesting times the market value of the shares on the vesting date. | | | | (3) The receipt of 3,496 of these shares due upon vesting of restricted stock and/or restricted stock units heldon February 24, 2014, with an aggregate value of $201,230 as of the vesting date, has been deferred by them lapse as set forth below.Mr. Hirsch for five years. | | | | | | | | | | | | | | | | | | | Option Awards | | | Stock Awards | | Name | | Number of Shares Acquired on Exercise (#) | | | Value Realized on Exercise ($) | | | Number of Shares Acquired on Vesting (#) | | | Value Realized on Vesting ($)(1) | | J. Yabuki | | | — | | | | — | | | | 20,697 | | | $ | 1,296,562 | | T. Hirsch | | | — | | | | — | | | | 4,184 | | | $ | 262,772 | | M. Ernst | | | — | | | | — | | | | — | | | | — | | R. Gupta | | | — | | | | — | | | | 2,506 | | | $ | 157,730 | | T. Warsop | | | — | | | | — | | | | 17,778 | | | $ | 1,068,264 | |
(1) | The “Value Realized on Vesting” was calculated by multiplying the number of shares acquired on vesting times the market value of the shares on the vesting date. |
| | | | | 47Potential Payments Upon Termination or Change in Control
POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE IN CONTROL
In the discussion below, we describe potential payments to the named executive officers upon termination of employment or a change in control. The following descriptions of arrangements under which our named executive officers may become entitled to potential payments upon termination or change in control are qualified in their entirety by reference to the relevant agreements. The complete definitions of cause, good reason, disability and change in control are set forth in: Mr. Yabuki’sin the named executive officers’ employment agreementagreements, KEESAs and KEESA and Mr. Warsop’s employment agreement, which we filed with our Current Report on Form 8-K on December 23, 2008; the KEESAs for Messrs. Hirsch, Ernst, Gupta and Warsop, a form of which we filed with our Current Report on Form 8-K on December 23, 2008; Mr. Ernst’s employment agreement, which we filed with our Current Report on Form 8-K on May 27, 2011; Mr. Gupta’s employment agreement, which we filed with our Annual Report on Form 10-K on February 24, 2012; and the relevant stock option restricted stock and restricted stock unit award agreements, formsall of which we have filed with the Securities and Exchange Commission. Terminology “Cause” under the agreements generally refers to specified types of serious misconduct that may harm our company. In some cases, executive officers have “good reason” to terminate their employment if we change in a negative manner their working conditions or position within our organization if we modify their travel requirements, or if we breach the terms of the agreements. “Disability” under the agreements generally means physical or mental illness that causes the executive officer to become disabled to a degree as to be unable to perform substantially all of his duties for a continuous period of six months. The complete definitions may vary from agreement to agreement. Accordingly, the preceding summary description of the definitions is qualified by reference to the agreements themselves. Employment Agreements General. Our employment agreements with Messrs. Yabuki, Ernst, Gupta and WarsopVielehr provide for potential payments on certain terminations of employment. As described above under “Compensation“Compensation Discussion and Analysis – Deductibility of Compensation,,” these agreements are designed to comply with Section 162(m) of the Internal Revenue Code. In addition, these agreements and our KEESAs all provide that post-termination payments and benefits are subject to a six-month delay in the event that the executive officer is considered a “specified employee” within the meaning of Section 409A of the Internal Revenue Code at the time of a qualifying termination. The employment agreements also contain provisions that require each of the named executive officers | | | | to maintain the confidentiality of our confidential information and proprietary data during and following his employment. In addition, each of Messrs. Yabuki, Ernst, Gupta and WarsopVielehr agrees that during his employment and for 12 months after termination of employment, he will not compete with us or solicit our clients or our employees. Under the employment agreements, we have the ability to recover certain compensation previously paid to the named executive officer if he breaches these obligations. Terms of Employment Agreement with Mr. Yabuki.Yabuki We have the right to terminate Mr. Yabuki’s employment at any time. Under his employment agreement, if we terminate Mr. Yabuki’s employment or fail to renew the term of his employment other than for death, disability or cause, or Mr. Yabuki terminates his employment for good reason, he is entitled to receivereceive: (i) a lump sum payment equal to four and one-half times his current annual base salary, (ii) full vesting of all equity awards, as well as the right to exercise the stock options granted to him upon hire for two years, and all other stock options for not less than one year, following the date of termination of his employment, but in no event longer than ten years from the date of grant, or if earlier, the latest date the option could have been exercised had Mr. Yabuki remained employed, (iii) a lump sum payment equal to any cash incentive compensation that has been allocated or awarded, but not paid, to him for any period ending prior to his termination and (iv) reimbursement for COBRA or other health insurance premiums for up to two years following the date of his termination, or until Mr. Yabuki obtains health care coverage through subsequent employment, whichever is earlier. If Mr. Yabuki’s employment is terminated for death or disability, he, or his estate as applicable, is entitled to receive full vesting of all equity and long-term awards and a lump sum payment equal to any cash incentive compensation that has been allocated or awarded, but not paid, to him for any period ending prior to his termination. 48
Under his employment agreement and KEESA, Mr. Yabuki will also beis entitled to receive an excise tax gross-up payment so that the net amount retained by Mr. Yabuki,him, after deduction of all applicable taxes and any interest, penalties or additions with respect thereto, equals the total present value of the payments to which Mr. Yabukihe is entitled under his employment agreement or KEESA |
| | | | | at the time such payments are to be made. In 2014, our compensation committee adopted a policy not to enter into new excise tax gross-up arrangements with executive officers. If the benefits to Mr. Yabuki under his employment agreement are duplicative of benefits provided under his KEESA, his employment agreement provides that he will receive the most favorable benefits (determined on a benefit-by-benefit basis) under his KEESA or his employment agreement. Terms of Employment AgreementAgreements with Mr.Messrs. Ernst, Gupta Mr. Warsop and Mr. ErnstVielehr. We have the right to terminate their employment at any time. If we terminate Mr. Gupta’s or Mr. Warsop’s employment other than for death, disability or cause, or if either of them terminates his employment because we breach his employment agreement, he is entitled to receive: (i) a lump sum payment equal to 12 months of salary; (ii) in the case of Mr. Warsop only, a lump sum payment equal to the smaller of $150,000 or the cash incentive award earned in the prior year; (iii) the benefit of accelerated vesting for all other equity awards as if he had remained employed for an additional 12-month period; and (iv) reimbursement of COBRA premiums for up to 12 months following the date of his termination. With respect to Mr. Ernst, if we terminate hisErnst’s employment other than for death, disability or cause, or if he terminates his employment for good reason, he is entitled to receive a lump sum payment equal to 1.8 times his then-current base salary. If we terminate Mr. Gupta’s employment other than for death, disability or cause, or if he terminates his employment because we breach his employment agreement, he is entitled to receive: (i) a lump sum payment equal to 12 months of salary, (ii) the benefit of accelerated vesting for all unvested equity awards as if he had remained employed for an additional 12-month period, and (iii) reimbursement of COBRA premiums for up to 12 months following the date of his termination. With respect to Mr. Vielehr, if we terminate his employment other than for death, disability or cause, he is entitled to receive: (i) a lump sum payment equal to 12 months of salary and (ii) accelerated vesting of certain equity awards granted to him pursuant to his employment agreement determined by dividing each of the total number of stock options and restricted stock units granted upon employment by two and then subtracting the number of stock options or restricted stock units, as applicable, that have vested prior to termination. Key Executive Employment and Severance Agreements General Our Key Executive Employment and Severance Agreements (“KEESAs”) set forth the amounts and types of benefits that we believe will enable us to keep our executive officers’ interests aligned with those of our shareholders in the event of a | | | | change in control by allowing them to concentrate on taking actions that are in the best interests of our shareholders without consideration of whether their actions may ultimately have an effect on the security of their employment. We also intend the benefits to recognize past contributions by the executive officers if they are asked to leave, and to help to prevent the departure of key managers in connection with an anticipated or actual change in control. The KEESAs fulfill these purposes by generally providing for severance in the event of a qualifying termination following a change in control and vesting of outstanding equity awards upon a change in control. We believe these agreements provide for an equitable financial transition for an executive officer when an adverse change in his or her employment status is required as a result of certain unexpected corporate events. The committee selected the triggering events for benefits under the KEESAs based on its judgment that the change in control events described in the KEESAs are likely to result in the concerns described above. New executive officers have generally entered into KEESAs with the same economic terms as those provided since 2001, which is when we began to enter into KEESAs. Thus, benefits for new executive officers are generally consistent with those for executive officers with existing agreements. We believe that this helps us achieve compensation that is equitable among executive officers. Because these agreements have been entered into for the specific purposes described above, these arrangements do not affect the decisions we make with respect to annual or long-term compensation. Benefits Pursuant to the terms of the KEESAs, upon a change in control, all restrictions on restricted stock awards will lapse such that they become fully and immediately vested, and all stock options and restricted stock units granted prior to the change in control will become fully and immediately vested. In addition, if we terminate them other than for death, disability or cause, or they resign for good reason, within three years following a change in control, then our named executive officers will be entitled to receive: —a cash termination payment equal to two times the sum of (i) their annual salary plus (ii) —their highest annual cash incentive award during the three completed fiscal years before the change in control; or 49
—in the case of Mr. Ernst,Vielehr, because he has not been employed by us for three or more years, the greater of 60% of his annual salary at the time of the change in control or the highest annual cash incentive award during the two completed fiscal years before the change in control; —with respect to each incentive compensation award made to the named executive officer for all uncompleted periods as of the termination date, a cash payment |
| | | | | equal to the value of such award pro ratedprorated through the termination date as if the goals with respect to such award had been achieved (at the target level, if applicable), which we refer to as the “prorated bonus;” and —continuation for up to three years of life, disability, hospitalization, medical and dental insurance coverage at our expense as in effect at the termination, in addition to certain other benefits related to securing other employment. In the event their employment is terminated for death or disability within three years following a change in control, our named executive officers will be entitled to receive the prorated bonus under their KEESAs. If, within three years following a change in control, we terminate the employment of our named executive officers for any reason, or they resign or retire, our named executive officers (or their heirs or estate, as applicable) will also be entitled to receive: any unpaid base salary through the termination date; reimbursement of business expenses incurred through the termination date; any compensation previously deferred by the named executive officer; and the sum of any bonus or incentive compensation allocated or awarded but not yet paid. To comply with Section 409A of the Internal Revenue Code, the KEESAs require a six-month delay of post-termination payments and benefits (other than payments to cover employment taxes due on such amounts) in the event that the named executive officer is a “specified employee” within the meaning of Section 409A at the time of a qualifying termination in connection with a change in control of our company.
The KEESAs, other than Mr. Yabuki’s, also provide that if any portion of the benefits under the KEESAs or any other agreement to which they are a party would constitute an “excess parachute payment” for purposes of the Internal Revenue Code, then they will have the option to receive the total payments and pay the 20% excise tax imposed by the Internal Revenue Code, or have the total payments reduced such that they would not be required to pay the excise tax. Mr. Yabuki’s employment agreement provides for an excise tax gross-up payment so that the net amount retained by Mr. Yabuki, after deduction of all applicable taxes and any interest, penalties or additions with respect thereto, equals the total present value of the payments to which Mr. Yabuki is entitled under his employment agreement or his KEESA at the time such payments are to be made. Change in Control Defined A “change in control” under the KEESAs generally will occur if: any person becomes the beneficial owner of securities representing 20% or more of our outstanding shares of common stock or combined voting power; specified changes occur to our incumbent board of directors; our shareholders approve a merger, consolidation or share exchange with any other corporation, or approve the issuance of voting securities in connection with a merger, consolidation or share exchange; or our shareholders approve a plan of complete liquidation or dissolution or an agreement for the sale or disposition of all or substantially all of our assets. | | | | Non-Compete Each named executive officer with a KEESA agrees that he will not, for a period of six months after the termination date, participate in the management of, be employed by or own any business enterprise at a location within the United States that substantially competes with us or our subsidiaries. In addition, during and following his employment, he will hold in confidence, and not directly or indirectly disclose, use or copy, our confidential information and proprietary data. Finally, he agrees that for a period of two years after the termination date, he will not hire or solicit for employment any person who is or was employed by us during the twelve months preceding his termination. 50
Equity Awards Equity award agreements under the Incentive Plan provide that, on a recipient’s death disability or retirement,disability, 100% of any then-unexercisablethen unexercisable stock options will become exercisable by the recipient until the earlier of one year following the triggering event or the stock option expiration date. In addition, the restricted stock unit agreements generally provide for pro rata vesting in the event of death disability or disability. In 2015, our named executive officers executed amendments to their outstanding equity award agreements to revise the criteria for retirement and post-retirement treatment of such awards. Following a qualified retirement and subject to compliance with ongoing obligations, all unvested equity awards held by an executive officer will continue to vest on their original vesting schedule as if the executive officer had not ceased to be an employee, and vested stock options will remain exercisable until the earlier of five years following retirement or the original expiration date of the stock option. Prior to the modifications, all unvested options and a pro rata portion of restricted stock units granted to our executive officers would vest immediately upon retirement. The modifications apply to both previously granted awards and awards to be granted in the future. The compensation committee approved these changes to enable our executive officers to better align their long-term interests with those of our shareholders and to retain the potential value of their awards as they approach possible retirement. |
| | | | | The equity award agreements require our named executive officers to maintain the confidentiality of our confidential information and not to compete with us or solicit our employees or clients while employed by us or during the 12 months following the termination of their employment. In the event the named executive officer breaches these obligations, we are entitled to recover the value of any amounts previously paid or payable or any shares or the value of any shares delivered pursuant to any of our programs, plans or arrangements. Upon a change in control, the Incentive Plan provides that if a named executive officer has an employment, retention, change in control or similar agreement that addresses the effect of a change in control on his or her awards, then such agreement will control. Otherwise, the Incentive Plan provides that the successor or purchaser may assume the equity awards or provide substitute awards with similar terms and conditions; provided, that, if within 12 months following the change in control the named executive officer is terminated without cause or terminates his employment for good reason, the assumed equity award or such substitute award will become fully vested and exercisable and/or all restrictions on the award will lapse as of the time immediately prior to such termination of employment. In that case, the named executive officer will have 90 days after the termination to exercise an option award unless a longer exercise period is applicable under the agreement, and the confidentiality, non-compete and non-solicit covenants in the equity award agreement will cease to apply. If the successor or purchaser does not assume the equity award or issue a replacement award, then immediately prior to the change in control, each equity award subject to the agreements will become fully vested and exercisable and/or all restrictions on the award will lapse. Cash Incentive Awards Our Incentive Plan provides that, upon a change in control, the successor or purchaser may assume the cash incentive awards to our named executive officers or provide substitute awards with similar terms and conditions. If the successor or purchaser in the change in control does not assume the cash incentive award or issue a replacement award, then any award earned but not yet paid will be paid to the named executive officer. If the cash incentive award is not yet earned, then the award will be canceled in | | | | exchange for a cash payment equal to the product of the amount that would have been due under the canceled award as if the performance goals measured at the time of the change in control were achieved at the same rate through the end of the performance period and a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to the date of the change in control and the denominator of which is the number of whole months in the performance period. 51
Estimated Potential Payments In the tables below, we estimate the maximum amount of compensation payable to each of our named executive officers assuming that the triggering event or events indicated occurred on December 31, 2011.2014. In December 2013, we completed a two-for-one split of our common stock. Accordingly, all amounts are presented on a split-adjusted basis. The amounts shown in the tables below rely on the following assumptions: —The amount shown in the table with respect to stock options is equal to the difference between the exercise price of the unvested options which would experience accelerated vesting and $58.74,$70.97, the closing price of our common stock on the last trading day of the calendar year. —The amount shown in the table with respect to restricted stock units is equal to the closing price of our common stock on the last trading day of the calendar year times the number of unvested restricted stock units which would experience accelerated vesting. —The prorated bonus amounts reflect the named executive officer’s target cash incentive award for 20112014 because we assume that the triggering event or events indicated occurred on December 31, 2011.2014. —The amount shown for “Post-Employment Benefits” on a termination without cause or resignation for good reason following a change in control is the value of three years of continued benefits for the named executive officer and his immediate family, including medical, dental and life insurance. The amount shown for “COBRA Reimbursement” is, in the case of Mr. Yabuki, the value of two years of continued medical and dental coverage for Mr. Yabuki and his immediate family; and, in the case of Mr. Gupta, and Mr. Warsop, the value of one year of such benefits. The value of the benefits is based on a number |
| | | | | of assumptions, including the continued availability of these types of coverage at expected rates. Accordingly, the amount shown is only an estimate, and the actual amount payable by us may be greater or less than the amount shown. • In accordance with the terms of the KEESAs, the amount shown for outplacement services is 10% of the executive officers’ respective base salaries for 2011.2014. • The executive officers’ KEESAs provide that the named executive officers are entitled to receive reimbursement for certain fees and expenses, up to $15,000, paid to consultants and legal or accounting advisors in connection with the computation of benefits under the KEESAs. Accordingly, $15,000 is shown for advisor fees for each named executive officer. | | | | • In certain circumstances, our named executive officers could elect to have payments reduced to eliminate potential excise taxes; however, for purposes of the tables below, we have assumed that no such election has been made. |
Potential Payments on a Change in Control without Termination of Employment; Acceleration of Vesting | | | | | | | | | | | | | | | Number of Option Shares | | | Number of Restricted Units | | | | | Name | | Vested on Accelerated Basis (#) | | | Vested on Accelerated Basis (#) | | | Value Realized | | | | | | | | | | | | | | | J. Yabuki | | | 565,504 | | | | 101,041 | | | | $20,925,789 | | | | | | | | | | | | | | | T. Hirsch | | | 87,685 | | | | 42,820 | | | | $ 5,291,493 | | | | | | | | | | | | | | | M. Ernst | | | 192,899 | | | | 15,316 | | | | $ 6,330,377 | | | | | | | | | | | | | | | R. Gupta | | | 45,730 | | | | 47,156 | | | | $ 4,502,629 | | | | | | | | | | | | | | | B. Vielehr | | | 116,892 | | | | 36,402 | | | | $ 4,456,060 | | | | | | | | | | | | | | |
| Potential Payments on a Change in Control without Termination of Employment; Acceleration of Vesting49 2015 Proxy Statement |
Potential Payment on a Termination of Employment Mr. Yabuki | | | | | | | | | | | | | | | | | | Resignation For Good | | | Resignation For Good Reason | | | | | | | Reason or Termination | | | or Termination Without | | | | Death or Disability | | | Without Cause | | | Cause Following Change in | | Benefits and Payments | | (Employment Agreement) | | | (Employment Agreement) | | | Control (KEESA) | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | — | | | | $ 3,780,000 | | | | $ 1,680,000 | | | | | | | | | | | | | | | Cash Incentive Award | | | — | | | | — | | | | 2,718,072 | | | | | | | | | | | | | | | Prorated Bonus | | | $ 1,260,000 | | | | 1,260,000 | | | | 1,260,000 | | | | | | | | | | | | | | | Stock Options: | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 13,754,909 | | | | 13,754,909 | | | | 13,754,909 | | | | | | | | | | | | | | | Restricted Stock Units: | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 7,170,880 | | | | 7,170,880 | | | | 7,170,880 | | | | | | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | COBRA Reimbursement | | | — | | | | 11,396 | | | | — | | | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | 96,925 | | | | | | | | | | | | | | | Outplacement Services | | | — | | | | — | | | | 84,000 | | | | | | | | | | | | | | | Advisor Fees | | | — | | | | — | | | | 15,000 | | | | | | | | | | | | | | | Total | | | $22,185,789 | | | | $25,977,185 | | | | $26,779,786 | | | | | | | | | | | | | | | Mr. Hirsch | | | | | | | | | | | | | | | | | | | | | | | | | Resignation For Good Reason | | | | Death or Disability Prior | | | Death or Disability | | | or Termination Without | | | | to Change in Control | | | Following Change in Control | | | Cause Following Change in | | Benefits and Payments | | (Equity Award Agreements) | | | (KEESA) | | | Control (KEESA) | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | — | | | | — | | | | $1,000,000 | | | | | | | | | | | | | | | Cash Incentive Award | | | — | | | | — | | | | 922,204 | | | | | | | | | | | | | | | Prorated Bonus | | | — | | | | $ 500,000 | | | | 500,000 | | | | | | | | | | | | | | | Stock Options: | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | $2,252,558 | | | | 2,252,558 | | | | 2,252,558 | | | | | | | | | | | | | | | Restricted Stock Units: | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 557,398 | | | | 3,038,935 | | | | 3,038,935 | | | | | | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | 117,199 | | | | | | | | | | | | | | | Outplacement Services | | | — | | | | — | | | | 50,000 | | | | | | | | | | | | | | | Advisor Fees | | | — | | | | — | | | | 15,000 | | | | | | | | | | | | | | | Total | | | $2,809,956 | | | | $5,791,493 | | | | $7,895,896 | | | | | | | | | | | | | | |
Potential Payment on a Termination of Employment Mr. Ernst | | | | | | | | | | | | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Resignation For Good Reason or Termination Without Cause (Employment Agreement) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | — | | | | $1,035,000 | | | | — | | | | $1,150,000 | | | | | | | | | | | | | | | | | | | Cash Incentive Award | | | — | | | | — | | | | — | | | | 1,431,030 | | | | | | | | | | | | | | | | | | | Prorated Bonus | | | — | | | | — | | | | $ 718,750 | | | | 718,750 | | | | | | | | | | | | | | | | | | | Stock Options: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | $5,243,400 | | | | — | | | | 5,243,400 | | | | 5,243,400 | | | | | | | | | | | | | | | | | | | Restricted Stock Units: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 271,744 | | | | — | | | | 1,086,977 | | | | 1,086,977 | | | | | | | | | | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | — | | | | 103,106 | | | | | | | | | | | | | | | | | | | Outplacement Services | | | — | | | | — | | | | — | | | | 57,500 | | | | | | | | | | | | | | | | | | | Advisor Fees | | | — | | | | — | | | | — | | | | 15,000 | | | | | | | | | | | | | | | | | | | Total | | | $5,515,144 | | | | $1,035,000 | | | | $7,049,127 | | | | $9,805,763 | | | | | | | | | | | | | | | | | | | | | Mr. Gupta | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Breach of Employment Agreement or Termination Without Cause (Employment Agreement) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | — | | | | $ 470,000 | | | | — | | | | $ 940,000 | | | | | | | | | | | | | | | | | | | Cash Incentive Award | | | — | | | | — | | | | — | | | | 883,804 | | | | | | | | | | | | | | | | | | | Prorated Bonus | | | — | | | | — | | | | $ 517,000 | | | | 517,000 | | | | | | | | | | | | | | | | | | | Stock Options: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | $1,155,968 | | | | 697,536 | | | | 1,155,968 | | | | 1,155,968 | | | | | | | | | | | | | | | | | | | Restricted Stock Units: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 816,439 | | | | 893,370 | | | | 3,346,661 | | | | 3,346,661 | | | | | | | | | | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | COBRA Reimbursement | | | — | | | | 17,095 | | | | — | | | | — | | | | | | | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | — | | | | 136,886 | | | | | | | | | | | | | | | | | | | Outplacement Services | | | — | | | | — | | | | — | | | | 47,000 | | | | | | | | | | | | | | | | | | | Advisor Fees | | | — | | | | — | | | | — | | | | 15,000 | | | | | | | | | | | | | | | | | | | Total | | | $1,972,407 | | | | $2,078,001 | | | | $5,019,629 | | | | $7,042,319 | | | | | | | | | | | | | | | | | | |
Potential Payment on a Termination of Employment Mr. Vielehr | | | | | | | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Termination Without Cause (Employment Agreement) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | | | | | | | | | | | | | | | | | | Compensation: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Base Salary | | | — | | | | $ 470,000 | | | | — | | | | $ 940,000 | | | | | | | | | | | | | | | | | | | Cash Incentive Award | | | — | | | | — | | | | — | | | | 564,000 | | | | | | | | | | | | | | | | | | | Prorated Bonus | | | — | | | | — | | | | $ 517,000 | | | | 517,000 | | | | | | | | | | | | | | | | | | | Stock Options: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | $ | 1,872,610 | | | | 936,305 | | | | 1,872,610 | | | | 1,872,610 | | | | | | | | | | | | | | | | | | | Restricted Stock Units: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 645,862 | | | | 1,291,725 | | | | 2,583,450 | | | | 2,583,450 | | | | | | | | | | | | | | | | | | | Benefits: | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | — | | | | 125,852 | | | | | | | | | | | | | | | | | | | Outplacement Services | | | — | | | | — | | | | — | | | | 47,000 | | | | | | | | | | | | | | | | | | | Advisor Fees | | | — | | | | — | | | | — | | | | 15,000 | | | | | | | | | | | | | | | | | | | Total | | | $2,518,472 | | | | $2,698,030 | | | | $4,973,060 | | | | $6,664,912 | | | | | | | | | | | | | | | | | | |
Section 16(a) Beneficial Ownership Reporting Compliance Section 16 of the Exchange Act requires our directors and executive officers and persons who own more than ten percent of a registered class of our equity securities to file with the Securities and Exchange Commission initial reports of ownership and reports of changes in ownership of our common stock and other equity securities. These Section 16 reporting persons are required by Securities and Exchange Commission regulations to furnish us with copies of all Section 16 forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations from Section 16 reporting persons, we believe that, during our fiscal year ended December 31, 2014, all Section 16 reporting persons complied with all applicable filing requirements, except that, on April 8, 2014, each of Kevin Gregoire and Rahul Gupta filed a late Form 4 to report our withholding of 735 shares and 560 shares, respectively, to satisfy the taxes incident to the vesting of restricted stock units on March 31, 2014.
Proposal 3. Ratification of the Appointment of Independent Registered Public Accounting Firm | | | | | | | | | | | | | Name | | Number of Option Shares Vested on Accelerated Basis (#) | | | Number of Restricted Units Vested on Accelerated Basis (#) | | | Value Realized | | J. Yabuki | | | 384,868 | | | | 48,910 | | | $ | 6,662,416 | | T. Hirsch | | | 79,516 | | | | 14,595 | | | $ | 1,546,621 | | M. Ernst | | | 48,645 | | | | — | | | | — | | R. Gupta | | | 21,624 | | | | 12,596 | | | $ | 959,582 | | T. Warsop | | | 42,332 | | | | 17,717 | | | $ | 1,295,531 | |
| | | | | Background 52
Potential Payment on a Termination of Employment
Mr. Yabuki
| | | | | | | | | | | | | Benefits and Payments | | Death or Disability (Employment Agreement) | | | Resignation For Good Reason or Termination Without Cause (Employment Agreement) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | Compensation: | | | | | | | | | | | | | Base Salary | | | — | | | $ | 3,780,000 | | | $ | 1,680,000 | | Cash Incentive Award | | | — | | | | — | | | | 2,184,000 | | Prorated Bonus | | $ | 1,050,000 | | | | 1,050,000 | | | | 1,050,000 | | Stock Options: | | | | | | | | | | | | | Unvested and Accelerated | | | 3,789,443 | | | | 3,789,443 | | | | 3,789,443 | | Restricted Stock and Restricted Stock Units: | | | | | | | | | | | | | Unvested and Accelerated | | | 2,872,973 | | | | 2,872,973 | | | | 2,872,973 | | Benefits: | | | | | | | | | | | | | COBRA Reimbursement | | | — | | | | 28,625 | | | | — | | Post-Employment Benefits | | | — | | | | — | | | | 102,079 | | Excise Tax Gross-Up | | | — | | | | — | | | | — | | Outplacement Services | | | — | | | | — | | | | 84,000 | | Advisor Fees | | | — | | | | — | | | | 15,000 | | Total | | $ | 7,712,416 | | | $ | 11,521,041 | | | $ | 11,777,495 | |
Mr. Hirsch
| | | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | Compensation: | | | | | | | | | | | | | Base Salary | | | — | | | | — | | | $ | 800,000 | | Cash Incentive Award | | | — | | | | — | | | | 665,600 | | Prorated Bonus | | | — | | | $ | 360,000 | | | | 360,000 | | Stock Options: | | | | | | | | | | | | | Unvested and Accelerated | | $ | 689,311 | | | | 689,311 | | | | 689,311 | | Restricted Stock and Restricted Stock Units: | | | | | | | | | | | | | Unvested and Accelerated | | | 147,437 | | | | 857,310 | | | | 857,310 | | Benefits: | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | 93,545 | | Outplacement Services | | | — | | | | — | | | | 40,000 | | Advisor Fees | | | — | | | | — | | | | 15,000 | | Total | | $ | 836,748 | | | $ | 1,906,621 | | | $ | 3,520,766 | |
53
Mr. Ernst
| | | | | | | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Resignation for Good Reason or Termination Without Cause (Employment Agreement) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | Compensation: | | | | | | | | | | | | | | | | | Base Salary | | | — | | | $ | 945,000 | | | | — | | | $ | 1,050,000 | | Cash Incentive Award | | | — | | | | — | | | | — | | | | 630,000 | | Prorated Bonus | | | — | | | | — | | | $ | 420,000 | | | | 420,000 | | Stock Options: | | | | | | | | | | | | | | | | | Unvested and Accelerated(1) | | | — | | | | — | | | | — | | | | — | | Benefits: | | | | | | | | | | | | | | | | | Post-Employment Benefits | | | — | | | | — | | | | — | | | | 104,910 | | Outplacement Services | | | — | | | | — | | | | — | | | | 52,500 | | Advisor fees | | | — | | | | — | | | | — | | | | 15,000 | | Total | | | — | | | $ | 945,000 | | | $ | 420,000 | | | $ | 2,272,410 | |
(1) | The exercise price of Mr. Ernst’s unvested stock options subject to accelerated vesting is higher than the closing price of our common stock on the last trading day of our fiscal year ended December 31, 2011. |
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Mr. Gupta
| | | | | | | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Breach of Employment Agreement or Termination Without Cause (Employment Agreement) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | Compensation: | | | | | | | | | | | | | | | | | Base Salary | | | — | | | $ | 420,000 | | | | — | | | $ | 840,000 | | Cash Incentive Award | | | — | | | | — | | | | — | | | | 603,400 | | Prorated Bonus | | | — | | | | — | | | $ | 420,000 | | | | 420,000 | | Stock Options: | | | | | | | | | | | | | | | | | Unvested and Accelerated | | $ | 219,693 | | | | 193,084 | | | | 219,693 | | | | 219,693 | | Restricted Stock and Restricted Stock Units: | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 70,003 | | | | 131,343 | | | | 739,889 | | | | 739,889 | | Benefits: | | | | | | | | | | | | | | | | | COBRA Reimbursement | | | — | | | | 14,312 | | | | — | | | | — | | Post-Employment Benefits | | | — | | | | — | | | | — | | | | 104,785 | | Outplacement Services | | | — | | | | — | | | | — | | | | 42,000 | | Advisor fees | | | — | | | | — | | | | — | | | | 15,000 | | Total | | $ | 289,696 | | | $ | 758,739 | | | $ | 1,379,582 | | | $ | 2,984,767 | |
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Mr. Warsop
| | | | | | | | | | | | | | | | | Benefits and Payments | | Death or Disability Prior to Change in Control (Equity Award Agreements) | | | Breach of Employment Agreement or Termination Without Cause (Employment Agreement) | | | Death or Disability Following Change in Control (KEESA) | | | Resignation For Good Reason or Termination Without Cause Following Change in Control (KEESA) | | Compensation: | | | | | | | | | | | | | | | | | Base Salary | | | — | | | $ | 400,000 | | | | — | | | $ | 800,000 | | Cash Incentive Award | | | — | | | | 150,000 | | | | — | | | | 1,106,576 | | Prorated Bonus | | | — | | | | — | | | $ | 400,000 | | | | 400,000 | | Stock Options: | | | | | | | | | | | | | | | | | Unvested and Accelerated | | $ | 254,834 | | | | 201,629 | | | | 254,834 | | | | 254,834 | | Restricted Stock and Restricted Stock Units: | | | | | | | | | | | | | | | | | Unvested and Accelerated | | | 328,900 | | | | 504,929 | | | | 1,040,697 | | | | 1,040,697 | | Benefits: | | | | | | | | | | | | | | | | | COBRA Reimbursement | | | — | | | | 13,888 | | | | — | | | | — | | Post-Employment Benefits | | | — | | | | — | | | | — | | | | 85,431 | | Outplacement Services | | | — | | | | — | | | | — | | | | 40,000 | | Advisor fees | | | — | | | | — | | | | — | | | | 15,000 | | Total | | $ | 583,734 | | | $ | 1,270,446 | | | $ | 1,695,531 | | | $ | 3,742,538 | |
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COMPENSATION OF DIRECTORS
Objectives for Director Compensation
Quality non-employee directors are critical to our success. We believe that the two primary duties of non-employee directors are to effectively represent the long-term interests of our shareholders and to provide guidance to management. As such, our compensation program for non-employee directors is designed to meet several key objectives:
Adequately compensate directors for their responsibilities and time commitments and for the personal liabilities and risks that they face as directors of a public company;
Attract the highest caliber non-employee directors by offering a compensation program consistent with those at companies of similar size, complexity and business character;
Align the interests of directors with our shareholders by providing a significant portion of compensation in equity and requiring directors to own our stock;
Provide compensation that is simple and transparent to shareholders and reflects corporate governance best practices; and
Where possible, provide flexibility in form and timing of payments.
Elements of Director Compensation
The compensationaudit committee of the board of directors reviews non-employee directoris directly responsible for the appointment, compensation, every otherretention and oversight of our independent registered public accounting firm. The audit committee has appointed Deloitte & Touche LLP (“Deloitte”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2015. Deloitte has served as our independent public accounting firm since 1986. The audit committee, from time to time, evaluates the performance and considersindependence of Deloitte to determine whether we should continue to retain the firm. To this end, at least annually, Deloitte makes a presentation to the committee regarding the services it provides, and our chief financial performance, general market conditionsofficer provides the committee with his assessment of the firm’s performance. The audit committee is responsible for the audit fee negotiations associated with the retention of Deloitte. In addition, in conjunction with the mandated rotation of Deloitte’s lead engagement partner, the audit committee and non-employee director compensationits chairman actively participate in the selection of a successor lead engagement partner. The members of the audit committee and the board believe that the continued retention of Deloitte to serve as our independent registered public accounting firm is in the best interests of the company and its shareholders. A representative of Deloitte is expected to be present at the peer group companies set forth above under “Compensation Discussionannual meeting, will have an opportunity to make a statement if he or she so desires, and Analysis – Structuring Compensation – Peer Group.” will be available to respond to appropriate questions. | | | | Reason for the Proposal Appointment of our independent registered public accounting firm is not required to be submitted for shareholder approval, but the audit committee of our board of directors is seeking ratification of its appointment of Deloitte as a matter of good corporate practice. If our shareholders do not ratify this appointment, the audit committee of the board of directors will consider it a direction to seek to retain another independent public accounting firm. Even if the appointment is ratified, the audit committee may, in its discretion, appoint a different independent registered public accounting firm at any time if it determines that such a change would be in our shareholders’ best interests. Vote Required and Recommendation of the Board of Directors To ratify the appointment of Deloitte as our independent registered public accounting firm, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted to ratify the appointment of Deloitte as our independent registered public accounting firm for 2015. The board of directors recommends that you vote in favor of Proposal 3. |
Independent Registered Public Accounting Firm and Fees The following table presents the aggregate fees billed by Deloitte & Touche LLP, the member firms of Deloitte Touche Tohmatsu Limited, and their respective affiliates (the “Deloitte Entities”) for services provided during 2013 and 2014. | | | | | | | | | | | 2013 | | | 2014 | | | | | Audit Fees | | $ | 2,830,000 | | | $ | 2,491,000 | | | | | Audit-Related Fees | | | 3,439,000 | | | | 3,352,000 | | | | | Tax Fees | | | 669,000 | | | | 634,000 | | | | | All Other Fees | | | 312,000 | | | | 75,000 | | | | | | | | | | | | | | | | | Total | | $ | 7,250,000 | | | $ | 6,552,000 | | | | | | | | | | | | | |
Audit Fees. Audit fees are for professional services rendered by the Deloitte Entities in connection with the integrated audit of our annual consolidated financial statements, the review of financial statements included in our quarterly reports on Form 10-Q, other statutory audits and other regulatory filings. Audit-Related Fees. Audit-related fees are for professional services rendered by the Deloitte Entities for service auditor reports. Tax Fees. Tax fees are for tax consultations and tax return preparation and compliance. All Other Fees. All other fees are for consulting and training services. Audit Committee Pre-Approval Policy The audit committee has established pre-approval policies and procedures that require audit committee approval of all audit and permitted non-audit services to be provided by its independent registered public accounting firm. In some cases, the audit committee pre-approves particular services, subject to certain monetary limits, after the audit committee is presented with a schedule describing the services to be approved. The audit committee’s pre-approval policies do not permit the delegation of the audit committee’s responsibilities to management. In 2014, the audit committee pre-approved all services provided by our independent registered public accounting firm. | | | | | Audit Committee Report In accordance with its written charter, the audit committee provides independent review and oversight of the accounting and financial reporting processes and financial statements of Fiserv, Inc., the system of internal controls that management and the board of directors have established, the audit process and the results of operations of Fiserv, Inc. and its financial condition. Management has the responsibility for preparing the company’s financial statements, and Deloitte & Touche LLP (“Deloitte”), the company’s independent registered public accounting firm, has the responsibility for examining those statements. The audit committee has reviewed and discussed with management and Deloitte the audited financial statements of Fiserv, Inc. for the fiscal year ended December 31, 2014. The audit committee has also discussed with Deloitte the matters required to be discussed by the standards of the Public Company Accounting Oversight Board. The audit committee has received the written disclosures and letter from Deloitte required by the Public Company Accounting Oversight Board regarding the independent registered public accounting firm’s communications with the audit committee concerning independence, and has discussed with Deloitte its independence. The audit committee has pre-approved all services provided and fees charged by the independent registered public accounting firm to Fiserv, Inc. and has concluded that such services are compatible with Deloitte’s independence. The audit committee also discussed with management, the internal auditors and Deloitte the quality and adequacy of the internal controls and internal audit organization, responsibilities, budget and staffing of Fiserv, Inc. The audit committee reviewed with both Deloitte and the internal auditors their respective audit plans, audit scope and identification of audit risks. Based on the above-mentioned reviews and discussions, the audit committee recommended to the board of directors that the audited financial statements of Fiserv, Inc. be included in its Annual Report on Form 10-K for the fiscal year ended December 31, 2014, for filing with the Securities and Exchange Commission. Thomas C. Wertheimer, Chairman Alison Davis Christopher M. Flink Denis J. O’Leary |
Proposal 4. Shareholder Proposal The following proposal was submitted by an individual shareholder and will be voted on at the annual meeting if it is properly presented.The board of directors recommends you vote AGAINST the proposal and asks you to read Fiserv’s Statement in Opposition which follows the proposal. The shareholder’s name, address, and number of shares of common stock held may be obtained upon written request therefor made to our corporate Secretary. The proposal has been included exactly as we received it in accordance with the rules of the Securities and Exchange Commission. Proposal 4 - Executives To Retain Significant Stock Resolved: Shareholders urge that our executive pay committee adopt a policy requiring senior executives to retain a significant percentage of stock acquired through equity pay programs until reaching normal retirement age and to report to shareholders regarding the policy before our Company’s next annual meeting. For the purpose of this policy, normal retirement age would be an age of at least 60 and be determined by our executive pay committee. Shareholders recommend a share retention percentage requirement of 75% of net after-tax shares. This single unified policy shall prohibit hedging transactions for shares subject to this policy which are not sales but reduce the risk of loss to the executive. Otherwise our directors might be able to avoid the impact of this proposal. This policy shall supplement any other share ownership requirements that have been established for senior executives, and should be implemented without violating current company contractual obligations or the terms of any current pay or benefit plan. Requiring senior executives to hold a significant portion of stock obtained through executive pay plans would focus our executives on our company’s long-term success. A Conference Board Task Force report stated that hold-to-retirement requirements give executives “an ever-growing incentive to focus on long-term stock price performance.” GMI Ratings, an independent investment research firm, said unvested equity pay partially or fully accelerates upon CEO termination. Accelerated equity vesting allows executives to realize lucrative pay without necessarily having earned it through strong performance. Fiserv had not disclosed specific, quantifiable performance objectives for our CEO. Fiserv gives long-term incentive pay to executives without requiring our company to perform above the median of its peer group. Please vote to protect shareholder value: Executives To Retain Significant Stock - Proposal 4
| | | | | Statement In Opposition We believe that the following componentsownership of a meaningful amount of stock by our executive officers creates a beneficial alignment of the interests of our director compensation program supportexecutive officers with the objectives above:long-term interests of our shareholders. Accordingly, we require significant stock ownership by all of our executive officers, and maintain other policies that align the interests of our executive officers with the long-term interests of our shareholders. In light of these policies, the strong culture of stock ownership that exists among our executive officers and the potential negative consequences of this proposal, we do not believe that implementation of this proposal is appropriate for our company or in the best interest of our shareholders.The board of directors strongly urges you to vote AGAINST this proposal. We provide cash compensation through retainers for board and committee service, as well as separate retainersalready have a stock ownership policy that requires our executive officers to the chairpersonsown a significant amount of our board committees. We do not provide board and committee meeting fees. Compensation in this manner simplifies the administration of our program and creates greater equality in rewarding service on committees of the board. The committee and committee chair retainers compensate directors for the additional responsibilities and time commitments involved with those positions.stock. To compensate the Chairman for his involvement in board and committee matters, he receives an annual cash retainer of $100,000. The Chairman also receives equity grants in the same manner as the other non-employee directors.
Non-employee directors receive grants of stock options and restricted stock units which vest 100% on the earlier of (i) the first anniversary of the grant date or (ii) immediately prior to the first annual meeting of shareholders following the grant date.
Our stock ownership guidelines require non-employee directorspolicy requires our chief executive officer to own shares of our common stockequity having a total value equal to six times the annual retainer amount, an increase from five times previously. 57
In order to provide greater flexibility in managing their compensation, we maintain a non-employee director deferred compensation plan. This plan allows directors to defer all or a part of their cash retainers until their service on the board ends. Funds in deferred accounts are invested in hypothetical shares of our common stock. We denominate these deferred payments in shares of our common stock to promote alignment between director compensation and the interest of our shareholders.
Non-employee directors may also defer receipt of the restricted stock units granted to them annually. Restricted stock units are hypothetical shares of our common stock that are settled in shares of common stock on a one-for-one basis upon vesting, subject to any deferral elections. Directors may defer receipt of shares issuable pursuant to the restricted stock units until their service on the board ends.
Our non-employee director compensation program is summarized below:
| | | | | Element of Compensation | | | | Board Retainer | | $ | 60,000 | | | | Chairman’s Retainer(1) | | | 100,000 | | | | Committee Retainer | | | | | Audit | | | 12,000 | | Compensation | | | 10,000 | | Nominating and Corporate Governance | | | 10,000 | | | | Committee Chair Retainer | | | | | Audit | | | 7,500 | | Compensation | | | 7,500 | | Nominating and Corporate Governance | | | 7,500 | | | | Equity Awards(2) | | | | | Stock Options | | | 60,000 | | Restricted Stock Units | | | 60,000 | |
(1) | The Chairman’s retainer includes, and is not in addition to, the standard board retainer. |
(2) | Upon being elected or continuing as a director at our annual meeting of shareholders, each non-employee director receives stock options and restricted stock units each having approximately $60,000 in value. |
2011 Director Compensation
| | | | | | | | | | | | | | | | | Name | | Fees Earned or Paid in Cash ($)(1) | | | Stock Awards ($)(2) | | | Option Awards ($)(2) | | | Total ($) | | Donald F. Dillon(3) | | | 100,000 | | | | 60,024 | | | | 60,017 | | | | 220,041 | | Daniel P. Kearney(4) | | | 82,000 | | | | 60,024 | | | | 60,017 | | | | 202,041 | | Peter J. Kight(5) | | | 60,000 | | | | 60,024 | | | | 60,017 | | | | 180,041 | | Denis J. O’Leary(6) | | | 74,500 | | | | 60,024 | | | | 60,017 | | | | 194,541 | | Gerald J. Levy(7) | | | 32,088 | | | | — | | | | — | | | | 32,088 | | Glenn M. Renwick(8) | | | 77,500 | | | | 60,024 | | | | 60,017 | | | | 197,541 | | Kim M. Robak(9) | | | 80,000 | | | | 60,024 | | | | 60,017 | | | | 200,041 | | Doyle R. Simons(10) | | | 70,000 | | | | 60,024 | | | | 60,017 | | | | 190,041 | | Carl W. Stern(11) | | | 25,895 | | | | 75,081 | | | | 75,029 | | | | 176,005 | | Thomas C. Wertheimer(12) | | | 79,500 | | | | 60,024 | | | | 60,017 | | | | 199,541 | |
(1) | This column includes the following amounts deferred under our non-employee director deferred compensation plan, a non-qualified defined contribution plan: Mr. Kearney ($82,000); Mr. O’Leary ($74,500); Ms. Robak ($40,002); Mr. Renwick ($77,500); and Mr. Simons ($70,000). |
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(2) | We granted each incumbent non-employee director a number of restricted stock units determined by dividing $60,000 by $62.59, the closing price of our common stock on May 25, 2011, the date of grant. Accordingly, each incumbent non-employee director received 959 restricted stock units. We also granted each incumbent non-employee director a number of stock options determined by dividing $60,000 by a binomial valuation of an option of one share of our common stock on the grant date. Accordingly, we granted an option to purchase up to 2,597 shares of our common stock at an exercise price of $62.59 to each non-employee director. The restricted stock units vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date. The options vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date. The dollar amount shown in the table is the grant date fair value of the award. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 6 to our Consolidated Financial Statements for the year ended December 31, 2011. |
(3) | As of December 31, 2011, Mr. Dillon held 329,617 options to purchase shares of our common stock, 326,510 of which were vested, and 1,110 shares of restricted stock and restricted stock units. |
(4) | As of December 31, 2011, Mr. Kearney held 35,578 options to purchase shares of our common stock, 32,471 of which were vested, 1,110 shares of restricted stock and restricted stock units, and 6,724 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
(5) | As of December 31, 2011, Mr. Kight held 85,749 options to purchase shares of our common stock, 60,586 of which were vested, and 8,199 restricted stock units. |
(6) | Mr. O’Leary joined the nominating and corporate governance committee in the fourth quarter of 2011 and, accordingly, received 25% of the annual committee retainer. As of December 31, 2011, Mr. O’Leary held 14,185 options to purchase shares of our common stock, 11,588 of which were vested, 959 restricted stock units, and 4,556 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
(7) | Mr. Levy retired from our board of directors effective May 25, 2011, and he did not receive any equity awards in 2011. As of December 31, 2011, Mr. Levy held 151 shares of restricted stock that will vest on May 23, 2012 and 32,541 options to purchase shares of our common stock, 400 of which expire on May 15, 2012 and the remainder of which expire one year after his retirement. |
(8) | As of December 31, 2011, Mr. Renwick held 38,600 options to purchase shares of our common stock, 35,493 of which were vested, 1,110 shares of restricted stock and restricted stock units, and 6,356 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
(9) | Ms. Robak joined the compensation committee in the fourth quarter of 2011 and, accordingly, received 25% of the annual committee retainer. As of December 31, 2011, Ms. Robak held 33,105 options to purchase shares of our common stock, 29,998 of which were vested, 1,110 shares of restricted stock and restricted stock units, and 1,877 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
(10) | As of December 31, 2011, Mr. Simons held 15,028 options to purchase shares of our common stock, 12,009 of which were vested, 1,084 shares of restricted stock and restricted stock units, and 5,741 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
(11) | Mr. Stern joined our board of directors on February 23, 2011 and resigned effective August 1, 2011. Mr. Stern received stock options and restricted stock units at the time he joined our board and on May 25, 2011. None of the equity awards made to Mr. Stern vested and all were cancelled upon his resignation. |
(12) | As of December 31, 2011, Mr. Wertheimer held 36,271 options to purchase shares of our common stock, 33,164 of which were vested, and 1,110 shares of restricted stock and restricted stock units. |
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Non-Employee Director Deferred Compensation Plan
Under our non-employee director deferred compensation plan, each non-employee director may defer up to 100% of his or her cash fees. Based on his or her deferral election, the director is credited with a number of share units at the time he or she would have otherwise received the portion of the fees being deferred. Share units are equivalent to shares of our common stock except that share units have no voting rights. Upon cessation of service on the board, the director receives a share of our common stock for each share unit. Shares are received in a lump sum distribution, and any fractional share units are paid in cash. Share units credited to a director’s account are considered awards granted under the Incentive Plan and count against that plan’s share reserve.
Share Ownership Requirements
Under our share ownership policy, non-employee directors are required to accumulate and hold our common stock having a market value equal to at least six times his base salary and, in the amountcase of our other named executive officers, four times their base salary. All executive officers are expected to satisfy the annual board retainer. The value of shares of restricted stock and restricted stock units count towards meeting the minimum ownership amount, as do other shares held by the director. As of January 1, 2012, 20% of the value of shares underlying vested but unexercised stock options are also counted towards meeting the minimum ownership amount. Non-employee directors haverequirements within five years after they become subject to them with minimum attainment levels beginning at the end of the second year. This requirement is monitored by our compensation committee and all of our executive officers are in compliance, holding significant amounts of our stock.
We have a strong culture of stock ownership. We have a strong corporate culture of stock ownership and retention. Our executive officers have voluntarily retained a significant number of the net after-tax shares received under our equity compensation programs throughout their careers. We have other policies that further align the interests of our executives with the long-term interests of our shareholders. Our stock ownership guidelines are supplemented by policies that strengthen the incentive for our executives to meetfocus on the long-term success of our | | | | business. For example, we prohibit our executive officers from hedging, pledging or engaging in short sales of, or transactions in derivative instruments in, our stock. In addition, under our compensation recoupment policy, in the event that we restate our financial results, we may recover all or a portion of the incentive awards that we paid or granted, or that vested, on the basis of such results. Recovery may be sought, in the discretion of our board of directors, from any person who was serving as an executive officer of the company at the time the original results were published. A requirement to retain at least 75% of shares acquired through equity pay programs would hinder our ability to recruit key executive talent and to promote from within our company. We believe that most public companies do not have stock retention requirements comparable to that which is proposed. As a result, we believe that adoption of this proposal would harm our ability to recruit new executive talent from outside our company. Furthermore, we believe adoption of this proposal could serve to discourage our current employees from accepting promotions that would result in them becoming subject to the proposed retention policy. Our success in recruiting new executives and promoting from within our company has been an important factor in our long-term success, and this proposal would harm our overall competitiveness. A requirement to retain at least 75% of shares acquired through equity pay programs is inappropriately high. Sensible stock ownership requirements providedbalance the importance of aligning executive officer and shareholder interests against the need to allow executives to prudently manage their personal financial affairs. We believe that interimour stock ownership milestones are achieved duringrequirements and other policies strike that balance effectively. By creating and maintaining this balance, we ensure that our executive officers have a significant investment in the five year period.future of our company, while also allowing them to prudently manage their financial affairs through the ability, in common with other investors, to diversify their holdings over an extended period, and through the ability, in common with executive officers at other companies, to realize |
| | | | | substantial value from the equity component of their compensation before reaching normal retirement age. We believe that the addition of a policy that would require executives to hold at least 75% of shares acquired through equity pay programs until reaching normal retirement age is inappropriately high because it would upset this balance in a manner that would undermine the effectiveness and competitiveness of our executive compensation program. | | | | Vote Required and Recommendation of the Board of Directors The number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal for it to gain approval. Unless otherwise specified, the proxies solicited hereby will be voted against the shareholder proposal. The board of directors recommends that you vote AGAINST Proposal 4. |
Other Matters | | | | | Shareholder Proposals for the 2013 2016 Annual Meeting Any proposal that a shareholder desires to include in our proxy materials for our 20132016 annual meeting of shareholders pursuant to Rule 14a-8 under the Exchange Act (“Rule 14a-8”) must be delivered to the following address no later than December 13, 2012:8, 2015 to the following address: 255 Fiserv Drive, Brookfield, Wisconsin 53045, Attention: Charles W. Sprague, Executive Vice President, General CounselLynn S. McCreary, Chief Legal Officer and Secretary. A shareholder who intends to present business, other than a shareholder’s proposal pursuant to Rule 14a-8, at the 20132016 annual meeting must comply with the requirements set forth in our by-laws. Among other matters, a shareholder must give written notice to our corporate Secretary not less than 45 days and not more than 70 days prior to the first anniversary of the date on which we first mailed our proxy materials for the 20122015 annual meeting. Because we anticipatecommenced mailing our proxy statement for the 20122015 annual meeting on April 12, 2012,6, 2015, we must receive notice of a shareholder’s intent to present business, other than pursuant to Rule 14a-8, at the 20132016 annual meeting no sooner than February 1, 2013,January 27, 2016, and no later than February 26, 2013.21, 2016. If the notice is received after February 26, 2013,21, 2016, then we are not required to permit the business to be presented at the 20132016 annual meeting of shareholders because the notice will be considered untimely. Nevertheless, if our board of directors permits a matter of business submitted after February 26, 201321, 2016 to be presented at the 20132016 annual meeting, then the persons named in proxies solicited by the board of directors for the 20132016 annual meeting may exercise discretionary voting power with respect to such proposal. | | | | Proxy Statement and Annual Report Delivery Our Annual Report on Form 10-K for 20112014 will be made available or mailed to each shareholder on or about April 12, 2012. Our Annual Report on Form 10-K for 2011, which we filed with the Securities and Exchange Commission,6, 2015. We will be furnishedfurnish such report, without charge, to any person requesting a copy thereof in writing and stating such person is a beneficial holder of shares of our common stock on the record date for the 20122015 annual meeting. Requests and inquiries should be sent to our corporate Secretary, Charles W. Sprague,Lynn S. McCreary, at the address below. 60
Other Matters
As permitted by rules of the Securities and Exchange Commission, services that deliver our communications to shareholders who hold their stock through a bank, broker or other holder of record may deliver a single copy of our Notice, Annual Report to shareholders and proxy statement to multiple shareholders sharing the same address. Upon written or oral request, we will promptly deliver a separate copy of our annual reportNotice, Annual Report and/or proxy statement to any shareholder at a shared address to which a single copy of each document was delivered. Shareholders sharing an address who are currently receiving multiple copies of the Notice, Annual Report and/ or proxy statement may also request delivery of a single copy. Shareholders may make a request by writing to Charles W. Sprague, Executive Vice President, General CounselLynn S. McCreary, Chief Legal Officer and Secretary, Fiserv, Inc., 255 Fiserv Drive, Brookfield, Wisconsin 53045 or by calling him at (262) 879-5000. | By Order of the Board of Directors
| |
| | Charles W. Sprague, Secretary | Brookfield, Wisconsin
| April 12, 2012
|
53045. 61
Appendix A
PROPOSED AMENDMENT TO ARTICLE VII OF
THE RESTATED ARTICLES OF INCORPORATION OF FISERV, INC.
(New language is indicated by underlining and deletions are indicated by strike-through)
Article VII of the Restated Articles of Incorporation of Fiserv, Inc. is amended and restated in its entirety to read as follows:
ARTICLE VII
Until the annual meeting of shareholders of the Corporation held in 2013, theThe termsBy Order of the Board of Directors shall be staggered by dividing the total number of directors into three groups,
Lynn S. McCreary, Secretary Brookfield, Wisconsin April 6, 2015 |
Appendix A | | | | | Non-GAAP Financial Measures The Company reports its financial results in accordance with Section 180.0806 of the Wisconsin Business Corporation Law.Directors elected at each annual meeting of shareholders held prior to 2013 (or such directors’ successors) shall hold office for a term expiring at the annual meeting of shareholders heldaccounting principles generally accepted in the third year following the yearUnited States of their election and until their successors have been elected and qualified. Commencing with the annual meetingAmerica (“GAAP”). We supplement our reporting of shareholders held in 2013, directors shall hold office for terms as follows: (i) at the 2013 annual meeting of shareholders, directors for whom such annual meeting is the annual meeting of shareholders held in the third year following the year of their election (or such directors’ successors) shall be elected to hold office for a term expiring at the next annual meeting of shareholders and until their successors have been elected and qualified, (ii) at the 2014 annual meeting of shareholders, directors for whom such annual meeting is the annual meeting of shareholders held in the third year following the year of their election and directors elected at the 2013 annual meeting of shareholders (or such directors’ successors) shall be elected to hold office for a term expiring at the next annual meeting of shareholders and until their successors have been elected and qualified, and (iii) at the 2015 annual meeting of shareholders and each annual meeting of shareholders thereafter, all directors shall be elected to hold office for a term expiring at the next annual meeting of shareholders and until their successors have been elected and qualified. A-1
Appendix B
FISERV, INC.
2007 OMNIBUS INCENTIVE PLAN
1.Purpose and Effective Date.
(a)Purpose. The Fiserv, Inc. 2007 Omnibus Incentive Plan has two complementary purposes: (i) to attract and retain outstanding individuals to serve as officers, directors, employees and consultants; and (ii) to increase shareholder value. The Plan will provide participants incentives to increase shareholder value by offering the opportunity to acquire shares of the Company’s common stock, receive monetary payments based on the value of such common stock, or receive other incentive compensation, on the potentially favorable terms that this Plan provides.
(b)Effective Date. This Plan will become effective, and Awards may be granted under this Plan, on and after the date that the Plan is approved by the Company’s shareholders (the “Effective Date”). If the Company’s shareholders approve this Plan, then the Fiserv, Inc. Stock Option and Restricted Stock Plan will terminate on the Effective Date and the Fiserv, Inc. Executive Incentive Compensation Plan will terminate on December 31, 2007, and no new awards may be granted under such plans after their respective termination dates; provided that each such plan shall continue to govern awards outstanding as of the date of such plan’s termination and such awards shall continue in force and effect until terminated pursuant to their terms.
2.Definitions. Capitalized terms used in this Plan have the following meanings:
(a) “Administrator” means the Committee with respect to employee Participants and the Board with respect to Director Participants.
(b) “Affiliate” and “Associate” shall have the respective meanings ascribed to such terms in Rule 12b-2 under the Exchange Act. Notwithstanding the foregoing, for purposes of determining those individuals to whom an Option or Stock Appreciation Right may be granted, the term “Affiliate” means any entity that, directly or through one or more intermediaries, is controlled by, controls, or is under common control with the Company within the meaning of Code Sections 414(b) or (c); provided that, in applying such provisions, the phrase “at least 20 percent” shall be used in place of “at least 80 percent” each place it appears therein.
(c) “Award” means a grant of Options, Stock Appreciation Rights, Performance Shares, Performance Units, Restricted Stock, Restricted Stock Units, Dividend Equivalent Units, an Annual Incentive Award, a Long-Term Incentive Award, or any other type of award permitted under the Plan.
(d) “Beneficial Owner” means a Person who owns any securities
(i) which such Person or any of such Person’s Affiliates or Associates has the right to acquire (whether such right is exercisable immediately or only after the passage of time) pursuant to any agreement, arrangement or understanding, or upon the exercise of conversion rights, exchange rights, rights, warrants or options, or otherwise; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, (A) securities tendered pursuant to a tender or exchange offer made by or on behalf of such Person or any of such Person’s Affiliates or Associates until such tendered securities are accepted for purchase, or (B) securities issuable upon exercise of preferred stock purchase rights issued pursuant to the terms of the Company’s Shareholder Rights Agreement, dated as of February 24, 1998, as amended from time to time, or any successor to such Rights Agreement, or any similar stock purchase rights that the Company may authorize and issue in the future, at any time before the issuance of such securities; or
(ii) which such Person or any of such Person’s Affiliates or Associates, directly or indirectly, has the right to vote or dispose of or has “beneficial ownership” of (asinformation determined pursuant to Rule 13d-3 under the
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Exchange Act), including pursuant to any agreement, arrangement or understanding; provided, however, that a Person shall not be deemed the Beneficial Owner of, or to beneficially own, any security under this clause (ii) as a result of an agreement, arrangement or understanding to vote such security if the agreement, arrangement or understanding: (A) arises solely from a revocable proxy or consent given to such Person in response to a public proxy or consent solicitation made pursuant to, and in accordance with the applicable rulesGAAP, such as revenue and regulations under the Actearnings per share, with “adjusted revenue,” “adjusted internal revenue growth” and (B) is not also then reportable on Schedule 13D under the Exchange Act (or any comparable or successor report); or
(iii) which are beneficially owned, directly or indirectly, by any other Person with which such Person or any of such Person’s Affiliates or Associates has had any agreement, arrangement or understanding“adjusted earnings per share.” Management believes that adjustments for the purpose of acquiring, holding, voting (except pursuant to a revocable proxy as described in clause (ii) above) or disposing of any voting securities of the Company.
(e) “Board” means the Board of Directors of the Company.
(f) “Cause” means, except as otherwise determined by the Administrator and set forth in an Award agreement: (i) if a Participant is subject to an employment, retention or similar agreement with the Company or an Affiliate that includes a definition of “Cause,” such definition; and (ii) for all other Participants, (A) conviction of a felony or a plea of no contest to a felony, (B) willful misconduct that is materially and demonstrably detrimental to the Company or an Affiliate, (C) willful refusal to perform duties consistent with a Participant’s office, position or status with the Company or an Affiliate (other than as a result of physical or mental disability) after being requested to do so by a person or body with the authority to make such request, or (D) other conduct or inaction that the Administrator determines in its discretion constitutes Cause.
(g) “Change of Control” means the occurrence of any of the following events:
(i) any Person (other than (A) the Company or its subsidiaries, (B) a trusteecertain non-cash or other fiduciary holding securities under any employee benefit planitems and the exclusion of the Company or its subsidiaries, (C) an underwriter temporarily holding securities pursuantcertain pass-through revenue and expenses enhance our shareholders’ ability to an offeringevaluate our core business performance because such items do not reflect how we manage our operations. Therefore, we exclude these items from GAAP revenue and earnings per share to calculate these non-GAAP measures. In this proxy statement, we also disclose performance goals related to cash incentive awards based on adjusted earnings per share, adjusted internal revenue growth and consolidated net operating profit, which is another non-GAAP financial measure. Set forth below is a description of such securities, (D) a corporation owned, directly or indirectly, by the shareholders of the Company in substantially the same proportionsthese terms:
— Adjusted earnings per share is calculated as their ownership of stock in the Company (“Excluded Persons”) or (E) unless otherwise determined by the Board or the Committee, a Person which has acquired Stock in the ordinary course of business for investment purposes only and not with the purpose or effect of changing or influencing the control of the Company, or in connection with or as a participant in any transaction having such purpose or effect (“Investment Intent”), as demonstrated by the filing by such Person of a statement on Schedule 13G (including amendments thereto) pursuant to Regulation 13D under the Exchange Act, as long as such Person continues to hold such Stock with an Investment Intent) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directlyearnings per share from the Company or its Affiliates pursuant to express authorization by the Board of Directors that refers to this exception) representing 20% or more of either the then outstanding shares of Stock of the Company or the combined voting power of the Company’s then outstanding voting securities; or (ii) the following individuals cease for any reason to constitute a majority of the number of directors of the Company then serving: (A) individuals who, on the Effective Date, constituted the Board of Directors; and (B) any new director (other than a director whose initial assumption of office is in connection with an actual or threatened election contest, including but not limited to a consent solicitation, relating to the election of directors of the Company) whose appointment or election by the Board of Directors or nomination for election by the Company’s shareholders was approved by a vote of at least two-thirds (2/3) of the directors then still in office who either were directors on the Effective Date or whose appointment, election or nomination for election was previously so approved (collectively the “Continuing Directors”); provided, however, that individuals who are appointed to the Board of Directors pursuant to orcontinuing operations in accordance with the termsGAAP, excluding merger and integration-related costs, severance costs, amortization of an agreement relating to a merger, consolidation,acquisition-related intangible assets, and certain other non-operating gains and losses or share exchange involving the Company (or any direct or indirect Subsidiary of the unusual items. B-2
Company) shall not be Continuing Directors for purposes of this Agreement until after such individuals are first nominated for election by a vote of at least two-thirds (2/3) of the then Continuing Directors and are thereafter elected as directors by shareholders of the Company at a meeting of shareholders held following consummation of such merger, consolidation, or share exchange; provided further, that in the event the failure of any such persons appointed to the Board of Directors to be Continuing Directors results in a Change in Control, the subsequent qualification of such persons as Continuing Directors shall not alter the fact that a Change in Control occurred; or
(iii) the shareholders of the Company approve a merger, consolidation or share exchange of the Company with any other corporation or approve the issuance of voting securities of the Company in connection with a merger, consolidation or share exchange of the Company (or any direct or indirect subsidiary of the Company) pursuant to applicable stock exchange requirements, other than (A) a merger, consolidation or share exchange which would result in the voting securities of the Company outstanding immediately prior to such merger, consolidation or share exchange continuing to represent (either by remaining outstanding or by being converted into voting securities of the surviving entity or any parent thereof) at least 50% of the combined voting power of the voting securities of the Company or such surviving entity or any parent thereof outstanding immediately after such merger, consolidation or share exchange, or (B) a merger, consolidation or share exchange effected to implement a recapitalization of the Company (or similar transaction) in which no Person (other than an Excluded Person) is or becomes the Beneficial Owner, directly or indirectly, of securities of the Company (not including in the securities beneficially owned by such Person any securities acquired directly from the Company or its Affiliates after the Effective Date, pursuant to express authorization by the Board of Directors that refers to this exception) representing 20% or more of either the then outstanding shares of Stock or the Company or the combined voting power of the Company’s then outstanding voting securities; or
(iv) the shareholders of the Company approve of a plan of complete liquidation or dissolution of the Company or an agreement for the sale or disposition by the Company of all or substantially all of the Company’s assets (in one transaction or a series of related transactions within any period of 24 consecutive months), other than a sale or disposition by the Company of all or substantially all of the Company’s assets to an entity at least 75% of the combined voting power of the voting securities of which are owned by persons in substantially the same proportions as their ownership of the Company immediately prior to such sale.
Notwithstanding the foregoing, no “Change in Control of the Company” shall be deemed to have occurred if there is consummated any transaction or series of integrated transactions immediately following which the holders of the Stock of the Company immediately prior to such transaction or series of transactions continue to own, directly or indirectly, in the same proportions as their ownership in the Company, an entity that owns all or substantially all of the assets or voting securities of the Company immediately following such transaction or series of transactions.
If an Award is considered deferred compensation subject to the provisions of Code Section 409A, and if a payment under such Award is triggered upon a “Change of Control,” then the foregoing definition shall be deemed amended as necessary to comply with Code Section 409A, and the Administrator may include such amended definition in the Award agreement issued with respect to such Award.
| | | | (h) “Code” means the Internal Revenue Code of 1986, as amended. Any reference to a specific provision of the Code includes any successor provision and the regulations promulgated under such provision.—
(i) “Committee” means the Compensation Committee of the Board (or a successor committee with the same or similar authority).
(j) “Company” means Fiserv, Inc., a Wisconsin corporation, or any successor thereto.
(k) “Director” means a member of the Board, and “Non-Employee Director” means a Director who is not also an employee of the Company or its Subsidiaries.
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(l) “Disability” has the meaning given in Code Section 22(e)(3), except as otherwise determined by the Administrator and set forth in an Award agreement. The Administrator shall make the determination of Disability and may request such evidence of disability as it reasonably determines.
(m) “Dividend Equivalent Unit” means the right to receive a payment, in cash or Shares, equal to the cash dividends or other distributions paid with respect to a Share.
(n) “Exchange Act” means the Securities Exchange Act of 1934, as amended. Any reference to a specific provision of the Exchange Act includes any successor provision and the regulations and rules promulgated under such provision.
(o) “Fair Market Value” means, per Share on a particular date: (i) the last sales price on such date on the Nasdaq Global Select Market, as reported in The Wall Street Journal, or if no sales of Stock occur on the date in question, on the last preceding date on which there was a sale on such market; (ii) if the Shares are not listed on the Nasdaq Global Select Market, but are traded on another national securities exchange or in an over-the-counter market, the last sales price (or, if there is no last sales price reported, the average of the closing bid and asked prices) for the Shares on the particular date, or on the last preceding date on which there was a sale of Shares on that exchange or market; or (iii) if the Shares are neither listed on a national securities exchange nor traded in an over-the-counter market, the price determined by the Administrator.
(p) “Incentive Award” means the right to receive a cash payment to the extent Performance Goals are achieved, and shall include “Annual Incentive Awards” as described in Section 10 and “Long-Term Incentive Awards” as described in Section 11.
(q) “Option” means the right to purchase Shares at a stated price for a specified period of time.
(r) “Participant” means an individual selected by the Administrator to receive an Award.
(s) “Performance Goals” means any goals the Administrator establishes that relate to one or more of the following with respect to the Company or any one or more of its Subsidiaries, Affiliates or other business units: net sales; cost of sales; revenue; gross income; net income; operating income; income from continuing operations; earnings (including before taxes, and/or interest and/or depreciation and amortization); earnings per share (including diluted earnings per share); price per share; cash flow; net cash provided by operating activities; net cash provided by operating activities less net cash used in investing activities; net operating profit; ratio of debt to debt plus equity; return on shareholder equity; return on capital; return on assets; operating working capital; average accounts receivable; economic value added; customer satisfaction; operating margin; profit margin; sales performance; sales quota attainment; new sales; cross/integrated sales; client engagement; client acquisition; net promoter score; Adjusted internal revenue growth; and client retention. As to each Performance Goal, the relevant measurement of performance shall be computed in accordance with generally accepted accounting principles, if applicable; provided that, the Administrator may, at the time of establishing the Performance Goal(s), exclude the effects of (i) extraordinary, unusual and/or non-recurring items of gain or loss, (ii) gains or losses on the disposition of a business, (iii) changes in tax or accounting regulations or laws, or (iv) the effect of a merger or acquisition. In the case of Awards that the Administrator determines will not be considered “performance based compensation” under Code Section 162(m), the Administrator may establish other Performance Goals not listed in this Plan. Where applicable, the Performance Goals may be expressed, without limitation, in terms of attaining a specified level of the particular criterion or the attainment of an increase or decrease (expressed as absolute numbers or a percentage) in the particular criterion or achievement in relation to a peer group or other index. The Performance Goals may include a threshold level of performance below which no payment will be made (or no vesting will occur), levels of performance at which specified payments will be paid (or specified vesting will occur), and a maximum level of performance above which no additional payment will be made (or at which full vesting will occur).
(t) “Performance Shares” means the right to receive Shares to the extent Performance Goals are achieved.
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(u) “Performance Unit” means the right to receive a payment valued in relation to a unit that has a designated dollar value or the value of which is equal to the Fair Market Value of one or more Shares, to the extent Performance Goals are achieved.
(v) “Person” has the meaning given in Section 3(a)(9) of the Exchange Act, as modified and used in Sections 13(d) and 14(d) thereof.
(w) “Plan” means this Fiserv, Inc. 2007 Omnibus Incentive Plan, as may be amended from time to time.
(x) “Restricted Stock” means a Share that is subject to a risk of forfeiture or restrictions on transfer, or both a risk of forfeiture and restrictions on transfer.
(y) “Restricted Stock Unit” means the right to receive a payment equal to the Fair Market Value of one Share.
(z) “Retirement” means, except as otherwise determined by the Administrator and set forth in an Award agreement, with respect to employee Participants, termination of employment from the Company and its Affiliates (for other than Cause): (i) on or after attainment of age fifty-five (55) and completion of twenty-five (25) years of service with the Company and its Affiliates; (ii) on or after attainment of age sixty-two (62) and completion of ten (10) years of service with the Company and its Affiliates; or (iii) on or after attainment of age sixty-five (65); provided that, with respect to Director Participants, “Retirement” means the Director’s resignation or failure to be re-elected on or after attainment of age sixty-two (62) and completion of six (6) years of service with the Company as a director.
(aa) “Section 16 Participants” means Participants who are subject to the provisions of Section 16 of the Exchange Act.
(bb) “Share” means a share of Stock.
(cc) “Stock” means the Common Stock of the Company, par value of $0.01 per share.
(dd) “Stock Appreciation Right” or “SAR” means the right to receive a payment equal to the appreciation of the Fair Market Value of a Share during a specified period of time.
(ee) “Subsidiary” means any corporation, limited liability company or other limited liability entity in an unbroken chain of entities beginning with the Company if each of the entities (other than the last entities in the chain) owns the stock or equity interest possessing more than fifty percent (50%) of the total combined voting power of all classes of stock or other equity interests in one of the other entities in the chain.
3.Administration.
(a)Administration. In addition to the authority specifically granted to the Administrator in this Plan, the Administrator has full discretionary authority to administer this Plan, including but not limited to the authority to: (i) interpret the provisions of this Plan, (ii) prescribe, amend and rescind rules and regulations relating to this Plan, (iii) correct any defect, supply any omission, or reconcile any inconsistency in any Award or agreement covering an Award in the manner and to the extent it deems desirable to carry this Plan into effect, and (iv) make all other determinations necessary or advisable for the administration of this Plan. All Administrator determinations shall be made in the sole discretion of the Administrator and are final and binding on all interested parties.
(b)Delegation to Other Committees or Officers. To the extent applicable law permits, the Board may delegate to another committee of the Board, or the Committee may delegate to one or more officers of the
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Company, any or all of their respective authority and responsibility as an Administrator of the Plan; provided that no such delegation is permitted with respect to Stock-based Awards made to Section 16 Participants at the time any such delegated authority or responsibility is exercised unless the delegation is to another committee of the Board consisting entirely of Non-Employee Directors. If the Board or the Committee has made such a delegation, then all references to the Administrator in this Plan include such other committee or one or more officers to the extent of such delegation.
(c)Indemnification. The Company will indemnify and hold harmless each member of the Board and the Committee, and each officer or member of any other committee to whom a delegation under Section 3(b) has been made, as to any acts or omissions with respect to this Plan or any Award to the maximum extent that the law and the Company’s by-laws permit.
4.Eligibility. The Administrator may designate any of the following as a Participant from time to time, to the extent of the Administrator’s authority: any officer or other employee of the Company or its Affiliates; an individual that the Company or an Affiliate has engaged to become an officer or employee; a consultant who provides services to the Company or its Affiliates; or a Director, including a Non-Employee Director. The Administrator’s granting of an Award to a Participant will not require the Administrator to grant an Award to such individual at any future time. The Administrator’s granting of a particular type of Award to a Participant will not require the Administrator to grant any other type of Award to such individual.
5.Types of Awards. Subject to the terms of this Plan, the Administrator may grant any type of Award to any Participant it selects, but only employees of the Company or a Subsidiary may receive grants of incentive stock options within the meaning of Code Section 422. Awards may be granted alone or in addition to, in tandem with, or in substitution for any other Award (or any other award granted under another plan of the Company or any Affiliate).
6.Shares Reserved under this Plan.
(a)Plan Reserve. Subject to adjustment as provided in Section 17, an aggregate of 10,000,000 Shares are reserved for issuance under this Plan. The Shares reserved for issuance may be either authorized and unissued Shares or shares reacquired at any time and now or hereafter held as treasury stock.
(b)Aggregate Award Limits. Subject to adjustment as provided in Section 17, the Company may issue only an aggregate of 2,500,000 Shares upon the exercise of incentive stock options and may issue only an aggregate of 4,000,000 Shares pursuant to “full-value awards.” For this purpose, a full-value award includes Restricted Stock, Restricted Stock Units, Performance Shares, Performance Units (valued in relation to a Share), and any other similar Award under which the value of the Awardgrowth is measured as the full value of a Share, rather than the increase in adjusted revenue, excluding the valuenet impact of a Share.acquisitions and dispositions, for the current year divided by adjusted revenue from the prior year. Adjusted revenue is calculated as total revenue in accordance with GAAP, excluding the impact of postage reimbursements in our Output Solutions business and including deferred revenue purchase accounting adjustments. Adjusted business unit or group internal revenue growth is calculated in the same manner using business unit or group adjusted revenue as applicable.
(c)Replenishment of Shares Under this Plan. The aggregate number of Shares reserved under Section 6(a) shall be depleted by the number of Shares with respect to which an Award— Consolidated net operating profit is granted. If, however, an Award lapses, expires, terminates or is cancelled without the issuance of Shares under the Award, or if Shares are forfeited under an Award, or if Shares are issued under any Awardcalculated as total revenue minus total operating expenses, excluding share-based compensation and the Company subsequently reacquires them pursuantcapitalization and amortization of internally developed software, and is adjusted for the items described in the calculation of adjusted earnings per share. Business unit or group net operating profit is calculated in the same manner using business unit or group revenue, expenses and adjustments as applicable.
These non-GAAP measures should be considered in addition to, rights reserved upon the issuanceand not as a substitute for, revenue, earnings per share and any other amount determined in accordance with GAAP. These non-GAAP measures reflect management’s judgment of the Shares, then such Shares may again be used for new Awards under this Plan under Section 6(a)particular items and Section 6(b), but such Shares may not be issued pursuantcomparable to incentive stock options.similarly titled measures reported by other companies. (d)Participant Limitations. Subject to adjustment as provided in Section 17, no Participant may be granted Awards that could result in such Participant:
| (i) | receiving Options for, and/or Stock Appreciation Rights with respect to, more than 500,000 Shares during any fiscal year of the Company; |
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| (ii) | receiving Awards of Restricted Stock and/or Restricted Stock Units relating to more than 120,000 Shares during any fiscal year of the Company;
Below is a reconciliation of adjusted earnings per share and adjusted internal revenue growth to the most directly comparable measure determined in accordance with GAAP: | | | | | | | | | | | | | | | 2013 | | | 2014 | | | | | | | | | | | | | | | | | GAAP earnings per share from continuing operations | | | | | $2.44 | | | | $2.99 | | Adjustments – net of income taxes: | | | | | | | | | | | Merger and integration costs1 | | | | | 0.20 | | | | 0.03 | | | | | | | | | | | | | Severance costs | | | | | 0.03 | | | | 0.05 | | | | | | | | | | | | | Amortization of acquisition-related intangible assets | | | | | 0.51 | | | | 0.52 | | | | | | | | | | | | | StoneRiver transactions2 | | | | | (0.20) | | | | (0.20) | | | | | | | | | | | | | Tax benefit3 | | | | | — | | | | (0.03) | | | | | | | | | | | | | Adjusted earnings per share from continuing operations | | | | | $2.99 | | | | $3.37 | | | | | | | | | | | | |
Earnings per share is calculated using actual, unrounded amounts. | | | | (iii) | receiving Awards of Performance Shares, and/or Awards of Performance Units the value of which is based on the Fair Market Value of Shares, for more than 120,000 Shares during any fiscal year of the Company; |
| | (iv) | receiving Awards of Performance Units, the value of which is not based on the Fair Market Value of Shares, for more than $3,000,000 during any fiscal year of the Company; |
| (v) | receiving other Stock-based Awards pursuant to Section 13 relating to more than 120,000 Shares during any fiscal year of the Company; |
| (vi) | receiving an Annual Incentive Award in any single fiscal year of the Company that would pay more than $3,000,000; or |
| (vii) | receiving a Long-Term Incentive Award in any single fiscal year of the Company that would pay more than $6,000,000. |
In all cases, determinations under this Section 6(d) should be made in a manner that is consistent with the exemption for performance based compensation that Code Section 162(m) provides.
7.Options. Subject(1) Merger and integration costs are attributable to the terms of this Plan, the Administrator will determine all terms and conditions of each Option, including but not limited to: (i) whether the Option is an “incentive stock option” which meets the requirements of Code Section 422, or a “nonqualified stock option” which does not meet the requirements of Code Section 422; (ii) the number of Shares subject to the Option; (iii) the exercise price, which may not be less than the Fair Market Value of the Shares subject to the Option as determined on the date of grant; (iv) the terms and conditions of exercise; and (v) the term, except that an Option must terminate no later than ten (10) years after the date of grant. In all other respects, the terms of any incentive stock option should comply with the provisions of Code section 422 except to the extent the Administrator determines otherwise. If an Option that is intended to be an incentive stock option fails to meet the requirements thereof, the Option shall automatically be treated as a nonqualified stock option to the extent of such failure.
8.Stock Appreciation Rights. Subject to the terms of this Plan, the Administrator will determine all terms and conditions of each SAR, including but not limited to: (a) whether the SAR is granted independently of an Option or relates to an Option; (b) the number of Shares to which the SAR relates; (c) the grant price, provided that the grant price shall not be less than the Fair Market Value of the Shares subject to the SAR as determined on the date of grant; (d) the terms and conditions of exercise or maturity; (e) the term, provided that an SAR must terminate no later than ten (10) years after the date of grant; and (f) whether the SAR will be settled in cash, Shares or a combination thereof. If an SAR is granted in relation to an Option, then unless otherwise determined by the Administrator, the SAR shall be exercisable or shall mature at the same time or times, on the same conditions and to the extent and in the proportion, that the related Option is exercisable and may be exercised or mature for all or part of the Shares subject to the related Option. Upon exercise of any number of SAR, the number of Shares subject to the related Option shall be reduced accordingly and such Option may not be exercised with respect to that number of Shares. The exercise of any number of Options that relate to an SAR shall likewise result in an equivalent reduction in the number of Shares covered by the related SAR.
9.Performance and Stock Awards. Subject to the terms of this Plan, the Administrator will determine all terms and conditions of each award of Restricted Stock, Restricted Stock Units, Performance Shares or Performance Units, including but not limited to: (a) the number of Shares and/or units to which such Award relates; (b) whether, as a condition for the Participant to realize all or a portion of the benefit provided under the Award, one or more Performance Goals must be achieved during such period as the Administrator specifies; (c) whether
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the restrictions imposed on Restricted Stock or Restricted Stock Units shall lapse, and all or a portion of the Performance Goals subject to an Award shall be deemed achieved, upon a Participant’s death, Disability or Retirement; (d) with respect to Performance Units, whether to measure the value of each unit in relation to a designated dollar value or the Fair Market Value of one or more Shares; and (e) with respect to Restricted Stock Units and Performance Units, whether to settle such Awards in cash, in Shares, or a combination thereof.
10.Annual Incentive Awards. Subject to the terms of this Plan, the Administrator will determine all terms and conditions of an Annual Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, and the timing of payment, subject to the following: (a) the Administrator must require that payment of all or any portion of the amount subject to the Annual Incentive Award is contingent on the achievement of one or more Performance Goals during the period the Administrator specifies, although the Administrator may specify that all or a portion of the Performance Goals subject to an Award are deemed achieved upon a Participant’s death, Disability or Retirement, or such other circumstances as the Administrator may specify; and (b) the performance period must relate to a period of one fiscal year of the Company except that, if the Award is made in the year this Plan becomes effective, at the time of commencement of employment with the Company or on the occasion of a promotion, then the Award may relate to a period shorter than one fiscal year.
11.Long-Term Incentive Awards. Subject to the terms of this Plan, the Administrator will determine all terms and conditions of a Long-Term Incentive Award, including but not limited to the Performance Goals, performance period, the potential amount payable, and the timing of payment, subject to the following: (a) the Administrator must require that payment of all or any portion of the amount subject to the Long-Term Incentive Award is contingent on the achievement of one or more Performance Goals during the period the Administrator specifies, although the Administrator may specify that all or a portion of the Performance Goals subject to an Award are deemed achieved upon a Participant’s death, Disability or Retirement, or such other circumstances as the Administrator may specify; and (b) the performance period must relate to a period of more than one fiscal year of the Company.
12.Dividend Equivalent Units. Subject to the terms of this Plan, the Administrator will determine all terms and conditions of each award of Dividend Equivalent Units, including but not limited to whether: (a) such Award will be granted in tandem with another Award; (b) payment of the Award be made currently or credited to an account for the Participant which provides for the deferral of such amounts until a stated time; and (c) the Award will be settled in cash or Shares; provided that any Dividend Equivalent Units granted in connection with an Option, Stock Appreciation Right or other “stock right” within the meaning of Code Section 409A shall be set forth in a written arrangement that is separate from such Award, and to the extent the payment of such dividend equivalents is considered deferred compensation, such written arrangement shall comply with the provisions of Code Section 409A.
13.Other Stock-Based Awards. Subject to the terms of this Plan, the Administrator may grant to Participants other types of Awards, which may be denominated or payable in, valued in whole or in part by reference to, or otherwise based on, Shares, either alone or in addition to or in conjunction with other Awards, and payable in Stock or cash. Without limitation, such Award may include the issuance of shares of unrestricted Stock, which may be awarded in payment of director fees, in lieu of cash compensation, in exchange for cancellation of a compensation right, as a bonus, or upon the attainment of Performance Goals or otherwise, or rights to acquire Stock from the Company. The Administrator shall determine all terms and conditions of the Award, including but not limited to, the time or times at which such Awards shall be made, and the number of Shares to be granted pursuant to such Awards or to which such Award shall relate; provided that any Award that provides for purchase rights shall be priced at 100% of Fair Market Value on the date of the Award.
14.Transferability. Awards are not transferable other than by will or the laws of descent and distribution, unless and to the extent the Administrator allows a Participant to: (a) designate in writing a beneficiary to exercise the Award or receive payment under an Award after the Participant’s death; or (b) transfer an Award for no consideration.
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15.Termination and Amendment of Plan; Amendment, Modification or Cancellation of Awards.
(a)Term of Plan. Unless the Board earlier terminates this Plan pursuant to Section 15(b), this Plan will terminate when all Shares reserved for issuance have been issued. If the term of this Plan extends beyond ten (10) years from the Effective Date, no incentive stock options may be granted after such time unless the shareholders of the Company have approved an extension of this Plan.
(b)Termination and Amendment. The Board or the Committee may amend, alter, suspend, discontinue or terminate this Plan at any time, subject to the following limitations:
(i) the Board must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) action of the Board, (B) applicable corporate law, or (C) any other applicable law;
(ii) shareholders must approve any amendment of this Plan to the extent the Company determines such approval is required by: (A) Section 16 of the Exchange Act, (B) the Code, (C) the listing requirements of any principal securities exchange or market on which the Shares are then traded, or (D) any other applicable law; and
(iii) shareholders must approve any of the following Plan amendments: (A) an amendment to materially increase any number of Shares specified in Section 6(a) or the limits set forth in Section 6(d) (except as permitted by Section 17), or (B) an amendment that would diminish the protections afforded by Section 15(e).
(c)Amendment, Modification or Cancellation of Awards. Except as provided in Section 15(e) and subject to the requirements of this Plan, the Administrator may modify, amend or cancel any Award, or waive any restrictions or conditions applicable to any Award or the exercise of the Award; provided that any modification or amendment that materially diminishes the rights of the Participant, or the cancellation of the Award, shall be effective only if agreed to by the Participant or any other person(s) as may then have an interest in the Award, but the Administrator need not obtain Participant (or other interested party) consent for the adjustment or cancellation of an Award pursuant to the provisions of Section 17 or the modification of an Award to the extent deemed necessary to comply with any applicable law, the listing requirements of any principal securities exchange or market on which the Shares are then traded, or to preserve favorable accounting or tax treatment of any Award for the Company. Notwithstanding the foregoing, unless determined otherwise by the Administrator, any such amendment shall be made in a manner that will enable an Award intended to be exempt from Code Section 409A to continue to be so exempt, or to enable an Award intended to comply with Code Section 409A to continue to so comply.
(d)Survival of Authority and Awards. Notwithstanding the foregoing, the authority of the Board and the Administrator under this Section 15 and to otherwise administer the Plan will extend beyond the date of this Plan’s termination. In addition, termination of this Plan will not affect the rights of Participants with respect to Awards previously granted to them, and all unexpired Awards will continue in force and effect after termination of this Plan except as they may lapse or be terminated by their own terms and conditions.
(e)Repricing and Backdating Prohibited. Notwithstanding anything in this Plan to the contrary, and except for the adjustments provided in Section 17, neither the Administrator nor any other person may decrease the exercise price for any outstanding Option or SAR after the date of grant nor allow a Participant to surrender an outstanding Option or SAR to the Company as consideration for the grant of a new Option or SAR with a lower exercise price. In addition, the Administrator may not make a grant of an Option or SAR with a grant date that is effective prior to the date the Administrator takes action to approve such Award.
(f)Foreign Participation. To assure the viability of Awards granted to Participants employed or residing in foreign countries, the Administrator may provide for such special terms as it may consider necessary or appropriate to accommodate differences in local law, tax policy or custom. Moreover, the Administrator may approve such supplements to, or amendments, restatements or alternative versions of, this Plan as it determines is necessary or appropriate for such purposes. Any such amendment, restatement or alternative versions that the
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Administrator approves for purposes of using this Plan in a foreign country will not affect the terms of this Plan for any other country. In addition, all such supplements, amendments, restatements or alternative versions must comply with the provisions of Section 15(b)(ii).
(g)Code Section 409A. The provisions of Code Section 409A are incorporated herein by reference to the extent necessary for any Award that is subject to Code Section 409A to comply therewith.
16.Taxes.
(a)Withholding. In the event the Company or an Affiliate of the Company is required to withhold any Federal, state or local taxes or other amounts in respect of any income recognized by a Participant as a result of the grant, vesting, payment or settlement of an Award or disposition of any Shares acquired under an Award, the Company may deduct (or require an Affiliate to deduct) from any payments of any kind otherwise due the Participant cash, or with the consent of the Committee, Shares otherwise deliverable or vesting under an Award, to satisfy such tax obligations. Alternatively, the Company may require such Participant to pay to the Company, in cash, promptly on demand, or make other arrangements satisfactory to the Company regarding the payment to the Company of the aggregate amount of any such taxes and other amounts. If Shares are deliverable upon exercise or payment of an Award, the Committee may permit a Participant to satisfy all or a portion of the Federal, state and local withholding tax obligations arising in connection with such Award by electing to (a) have the Company withhold Shares otherwise issuable under the Award, (b) tender back Shares received in connection with such Award, or (c) deliver other previously owned Shares; provided that the amount to be withheld may not exceed the total minimum federal, state and local tax withholding obligations associated with the transaction to the extent needed for the Company to avoid an accounting charge. If an election is provided, the election must be made on or before the date as of which the amount of tax to be withheld is determined and otherwise as the Committee requires. In any case, the Company may defer making payment or delivery under any Award if any such tax may be pending unless and until indemnified to its satisfaction.
(b)No Guarantee of Tax Treatment. Notwithstanding any provisions of the Plan, the Company does not guarantee to any Participant or any other Person with an interest in an Award that (i) any Award intended to be exempt from Code Section 409A shall be so exempt, (ii) any Award intended to comply with Code Section 409A or Code Section 422 shall so comply, (iii) any Award shall otherwise receive a specific tax treatment under any other applicable tax law, nor in any such case will the Company or any Affiliate indemnify, defend or hold harmless any individual with respect to the tax consequences of any Award.
17.Adjustment Provisions; Change of Control.
(a)Adjustment of Shares. If: (i) the Company shall at any time be involved in a merger or other transaction in which the Shares are changed or exchanged; (ii) the Company shall subdivide or combine the Shares or the Company shall declare a dividend payable in Shares, other securities (other than preferred stock purchase rights issued pursuant to the terms of the Company’s Shareholder Rights Agreement, dated as of February 24, 1998, as amended from time to time, or any successor to such Rights Agreement, or any similar stock purchase rights that the Company may authorize and issue in the future) or other property; (iii) the Company shall effect a cash dividend the amount of which, on a per Share basis, exceeds ten percent (10%) of the Fair Market Value of a Share at the time the dividend is declared, or the Company shall effect any other dividend or other distribution on the Shares in the form of cash, or a repurchase of Shares, that the Board determines by resolution is special or extraordinary in nature or that is in connection with a transaction that the Company characterizes publicly as a recapitalization or reorganization involving the Shares; or (iv) any other event shall occur, which, in the case of this clause (iv), in the judgment of the Board or Committee necessitates an adjustment to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, then the Administrator shall, in such manner as it may deem equitable to prevent dilution or enlargement of the benefits or potential benefits intended to be made available under this Plan, adjust as applicable: (A) the number and type of Shares subject to this Plan (including the number and type of Shares described in Sections 6(a), (b) and (d)) and which may after the event be made the subject of Awards; (B) the number and type of Shares subject to
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outstanding Awards; (C) the grant, purchase, or exercise price with respect to any Award; and (D) to the extent such discretion does not cause an Award that is intended to qualify as performance-based compensation under Code Section 162(m) to lose its status as such, the Performance Goals of an Award. In each case, with respect to Awards of incentive stock options, no such adjustment may be authorized to the extent that such authority would cause this Plan to violate Code Section 422(b). Without limitation, in the event of any reorganization, merger, consolidation, combination or other similar corporate transaction or event, whether or not constituting a Change of Control (other than any such transaction in which the Company is the continuing corporation and in which the outstanding Stock is not being converted into or exchanged for different securities, cash or other property, or any combination thereof), the Administrator may substitute, on an equitable basis as the Administrator determines, for each Share then subject to an Award and the Shares subject to this Plan (if the Plan will continue in effect), the number and kind of shares of stock, other securities, cash or other property to which holders of Stock are or will be entitled in respect of each Share pursuant to the transaction. Notwithstanding the foregoing, in the case of a stock dividend (other than a stock dividend declared in lieu of an ordinary cash dividend) or subdivision or combination of the Shares (including a reverse stock split), if no action is taken by the Administrator, adjustments contemplated by this subsection that are proportionate shall nevertheless automatically be made as of the date of such stock dividend or subdivision or combination of the Shares.
(b)Issuance or Assumption. Notwithstanding any other provision of this Plan, and without affecting the number of Shares otherwise reserved or available under this Plan, in connection with any merger, consolidation, acquisition of property or stock, or reorganization, the Administrator may authorize the issuance or assumption of awards under this Plan upon such termsOpen Solutions in 2013 and conditions as it may deem appropriate.
(c)Change of Control. If the Participant has in effect an employment, retention, change of control, severance or similar agreement with the Company or any Affiliate that discusses the effect of a Change of Control on the Participant’s Awards, then such agreement shall control. In all other cases, unless provided otherwise in an Award agreement, in the event of a Change of Control:
(i) The successor or purchaser in the Change of Control transaction may assume an Award or provide a substitute award with similar termsinclude integration costs and conditions, and preserving the same benefits, as the Award it is replacing.
(ii) If the successor or purchaser in the Change of Control transaction does not assume the Awards or issue replacement awards as provided in clause (i), then unless otherwise determined by the Board prior to the date of the Change of Control, immediately prior to the date of the Change of Control:
(A) each Option or SAR that is then held by a Participant who is employed by or in the service of the Company or an Affiliate shall become immediately and fully vested, and all Options and SARs shall be cancelled on the date of the Change of Control in exchange for a cash payment equal to the excess of the Change of Control price of the Shares covered by the Option or SAR that is so cancelled over thedeferred revenue purchase or grant price of such Shares under the Award;accounting adjustments.
(B) Restricted Stock and Restricted Stock Units that are not then vested shall vest;
(C) all Performance Shares and/or Performance Units that are earned but not yet paid shall be paid in cash in an amount equal to the value of the Performance Share and/or Performance Unit, and all Performance Shares and Performance Units for which the performance period has not expired shall be cancelled in exchange for a cash payment equal to the product of the value of the Performance Share and/or Performance Unit and a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to which the Award is subject to the date of the Change of Control and the denominator of which is the number of whole months in the performance period;
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(D) all Annual and Long-Term Incentive Awards that are earned but not yet paid shall be paid, and all Annual and Long-Term Incentive Awards that are not yet earned shall be cancelled in exchange for a cash payment in an amount determined by taking the product of: (1) the amount that would have been due under such Award(s) if the Performance Goals (as measured at the time of the Change of Control) were to continue to be achieved at the same rate through the end of the performance period; and (2) a fraction, the numerator of which is the number of whole months that have elapsed from the beginning of the performance period to which the Award is subject to the date of the Change of Control and the denominator of which is the number of whole months in the performance period; and
(E) all Dividend Equivalent Units that are not vested shall vest and be paid in cash, and all other Awards that are not vested shall vest and if an amount is payable under such vested Award, such amount shall be paid in cash based on the value of the Award.
If the value of an Award is based on the Fair Market Value of a Share, Fair Market Value shall be deemed to mean the per share Change of Control price. The Administrator shall determine the per share Change of Control price paid or deemed paid in the Change of Control transaction.
Except as otherwise expressly provided in any agreement between a Participant and the Company or an Affiliate, if the receipt of any payment by a Participant under the circumstances described above would result in the payment by the Participant of any excise tax provided for in Section 280G and Section 4999 of the Code, then the amount of such payment shall be reduced to the extent required to prevent the imposition of such excise tax.
18.Miscellaneous.
(a)Other Terms and Conditions. The grant of any Award may also be subject to other provisions (whether or not applicable to the Award granted to any other Participant) as the Administrator determines appropriate, including, without limitation, provisions for:
(i) the payment of the purchase price of Options by delivery of cash or other Shares or other securities of the Company (including by attestation) having a then Fair Market Value equal to the purchase price of such Shares, or by delivery (including by fax) to the Company or its designated agent of an executed irrevocable option exercise form together with irrevocable instructions to a broker dealer to sell or margin a sufficient portion of the Shares and deliver the sale or margin loan proceeds directly to the Company to pay for the exercise price;
(ii) restrictions on resale or other disposition of Shares; and
(iii) compliance with federal or state securities laws and stock exchange requirements.
(b)Employment and Service. The issuance of an Award shall not confer upon a Participant any right with respect to continued employment or service with the Company or any Affiliate, or the right to continue as a Director. Unless determined otherwise by the Administrator, for purposes of the Plan and all Awards, the following rules shall apply:
(i) a Participant who transfers employment between the Company and its Affiliates, or between Affiliates, will not be considered to have terminated employment;
(ii) a Participant who ceases to be a Non-Employee Director because he or she becomes an employee of the Company or an Affiliate shall not be considered to have ceased service as a Director with respect to any Award until such Participant’s termination of employment with the Company and its Affiliates;
(iii) a Participant who ceases to be employed by the Company or an Affiliate and immediately thereafter becomes a Non-Employee Director, a non-employee director of an Affiliate, or a consultant to the Company or any Affiliate shall not be considered to have terminated employment until such Participant’s service as a director of, or consultant to, the Company and its Affiliates has ceased; and
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(iv) a Participant employed by an Affiliate will be considered to have terminated employment when such entity ceases to be an Affiliate.
Notwithstanding the foregoing, for purposes of an Award that is subject to Code Section 409A, if a Participant’s termination of employment or service triggers the payment of compensation under such Award, then the Participant will be deemed to have terminated employment or service upon his or her “separation from service” within the meaning of Code Section 409A.
(c)No Fractional Shares. No fractional Shares or other securities may be issued or delivered pursuant to this Plan, and the Administrator may determine whether cash, other securities or other property will be paid or transferred in lieu of any fractional Shares or other securities, or whether such fractional Shares or other securities or any rights to fractional Shares or other securities will be canceled, terminated or otherwise eliminated.
(d)Unfunded Plan. This Plan is unfunded and does not create, and should not be construed to create, a trust or separate fund with respect to this Plan’s benefits. This Plan does not establish any fiduciary relationship between the Company and any Participant or other person. To the extent any person holds any rights by virtue of an Award granted under this Plan, such rights are no greater than the rights of the Company’s general unsecured creditors.
(e)Requirements of Law and Securities Exchange. The granting of Awards and the issuance of Shares in connection with an Award are subject to all applicable laws, rules and regulations and to such approvals by any governmental agencies or national securities exchanges as may be required. Notwithstanding any other provision of this Plan or any award agreement, the Company has no liability to deliver any Shares under this Plan or make any payment unless such delivery or payment would comply with all applicable laws and the applicable requirements of any securities exchange or similar entity, and unless and until the Participant has taken all actions required by the Company in connection therewith. The Company may impose such restrictions on any Shares issued under the Plan as the Company determines necessary or desirable to comply with all applicable laws, rules and regulations or the requirements of any national securities exchanges.
(f)Governing Law. This Plan, and all agreements under this Plan, will be construed in accordance with and governed by the laws of the State of Wisconsin, without reference to any conflict of law principles. Any legal action or proceeding with respect to this Plan, any Award or any award agreement, or for recognition and enforcement of any judgment in respect of this Plan, any Award or any award agreement, may only be heard in a “bench” trial, and any party to such action or proceeding shall agree to waive its right to a jury trial.
(g)Limitations on Actions. Any legal action or proceeding with respect to this Plan, any Award or any award agreement, must be brought within one year (365 days) after the day the complaining party first knew or should have known of the events giving rise to the complaint.
(h)Construction. Whenever any words are used herein in the masculine, they shall be construed as though they were used in the feminine in all cases where they would so apply; and wherever any words are used in the singular or plural, they shall be construed as though they were used in the plural or singular, as the case may be, in all cases where they would so apply. Title of sections are for general information only, and this Plan is not to be construed with reference to such titles.
(i)Severability. If any provision of this Plan or any award agreement or any Award (a) is or becomes or is deemed to be invalid, illegal or unenforceable in any jurisdiction, or as to any person or Award, or (b) would disqualify this Plan, any award agreement or any Award under any law the Administrator deems applicable, then such provision should 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 Administrator, materially altering the intent of this Plan, award agreement or Award, then such provision should be stricken as to such jurisdiction, person or Award, and the remainder of this Plan, such award agreement and such Award will remain in full force and effect.
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| | | FISERV, INC.
255 FISERV DRIVE
BROOKFIELD, WI 53045
| | VOTE BY INTERNET - www.proxyvote.com
Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. 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 BY PHONE - 1-800-690-6903
Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then 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 Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
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(2) Represents the company’s share of net gains associated with capital transactions at StoneRiver Group, L.P. (“StoneRiver”), a joint venture in which the company owns a 49% interest, including | | | a gain on a partial divestiture of a subsidiary business in 2013 and sales of subsidiary businesses and related expenses in 2014. (3) The tax benefit represents certain discrete income tax benefits that have been excluded from adjusted earnings per share. | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
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| | | | | | | | | | | (in millions) | | | | 2013 | | | 2014 | | | | | | | | | | | | | | | | | Revenue | | | | | $4,814 | | | | $5,066 | | | | | | Output Solutions postage reimbursements | | | | | (289) | | | | (327) | | | | | | | | | | | | | Open Solutions deferred revenue adjustment1 | | | | | 21 | | | | 4 | | | | | | | | | | | | | Adjusted revenue | | | | | $4,546 | | | | $4,743 | | | | | | | | | | | | |
1See footnote 1 on adjusted earnings per share reconciliation. Adjusted internal revenue growth is measured as the increase in adjusted revenue, excluding the net impact of acquisitions and dispositions (“acquired revenue”), for the current year divided by adjusted revenue from the prior year. Acquired revenue was $3 million for the full year 2014. | | KEEP THIS PORTION FOR YOUR RECORDS | 61 2015 Proxy Statement |
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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FISERV, INC. 255 FISERV DRIVE BROOKFIELD, WI 53045 | | | | | | VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. 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. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company 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 vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then 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 Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. |
| | | | | | | | | | | TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: | | | | |
M86161-P62204 KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | FISERV, INC. | | | | For All | | Withhold All | | For All Except | | To withhold authority to vote for any individual nominee(s), mark “For All Except” and write the number(s) of the nominee(s) on the line below. | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR all the nominees listed: | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | 1. | | Election of Directors | | | | | | | | | | | | | | | | | | | | | | | | | | | Nominees: | | | | | | | | | | | | | | | | | | | | | | | 01) Alison Davis 02) Christopher M. Flink 03) Daniel P. Kearney 04) Dennis F. Lynch 05) Denis J. O'Leary | | 06) Glenn M. Renwick 07) Kim M. Robak 08) Doyle R. Simons 09) Thomas C. Wertheimer 10) Jeffery W. Yabuki | | | | | | | | | | | | | | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2 and 3: | | For | | Against | | Abstain | | | | | 2. | | To approve, on an advisory basis, the compensation of the named executive officers of Fiserv, Inc. | | | | ¨ | | ¨ | | ¨ | | | | | | | 3. | | To ratify the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of Fiserv, Inc. for 2015. | | | | ¨ | | ¨ | | ¨ | | | | | | | The Board of Directors recommends you vote AGAINST the following proposal: | | | | | | For | | Against | | Abstain | | | | | | | 4. | | A shareholder proposal relating to executive retention of stock. | | | | ¨ | | ¨ | | ¨ | | | | | | | NOTE:If other matters properly come before the meeting or any adjournment or postponement thereof, it is intended that shares represented by proxies will be voted in the discretion of the proxy holders. | | | | | | | | | | | | | Yes No Please indicate if you plan to attend this meeting ¨¨ Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer. | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX] | | | | | | Date | | | | Signature (Joint Owners) | | | | | | | | | | Date | | | | | | | | | | | | | The Board of Directors recommends you vote FOR the following:
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice of Annual Meeting and Proxy Statement and Annual Report for the Year Ended December 31, 2014 | | | | | | | | | | | | | | | | | 1. | | Election of Directors
Nominees
| | | | ¨ | | ¨ | | ¨ | | | | | | | | | | | | | | | | | | | 01 | | Daniel P. Kearney 2015 02 Jeffery W. Yabuki 2015 | | | | | | | | | | | | | | The Board of Directors recommends you vote FOR proposals 2, 3, 4, and 5.
| | For | | Against | | Abstain | | | | | | | 2.
| | To approve an amendment to our articles of incorporation that would eliminate the classified structure of our board of directors and provide for the annual election of directors as set forth in the amendment.
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| | | | 3. | | To approve performance goals and related matters under the Fiserv, Inc. 2007 Omnibus Incentive Plan.
| | ¨ | | ¨ | | ¨ | | | | | | 4. | | To approve, on an advisory basis, the compensation of our named executive officers.
| | ¨ | | ¨ | | ¨ | | | | | | 5. | | To ratify the selection of Deloitte & Touche LLP as our independent registered public accounting firm for 2012.
| | ¨ | | ¨ | | ¨ | | | | | | NOTE:Such other business as may properly come before the meeting or any adjournment thereof. | | | | | | | | | | Yes
| | No | | | | | | | | | | | | | | | | Please indicate if you plan to attend this meeting
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| | | | | | | | | | | | | | | | Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer. | | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Signature [PLEASE SIGN WITHIN BOX]
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Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting:The Notice & Proxy Statement, Annual Report is/are available atwww.proxyvote.com.
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| | | | | | | M86162-P62204 FISERV, INC. Annual Meeting of Shareholders May 20, 2015 This proxy is solicited by the Board of Directors The undersigned hereby appoints DANIEL P. KEARNEY, JEFFERY W. YABUKI and LYNN S. MCCREARY as Proxies, each with the power to appoint his or her substitute, and hereby authorizes them to represent and to vote as set forth herein, all the shares of common stock of Fiserv, Inc. held of record by the undersigned on March 23, 2015 at the Annual Meeting of Shareholders to be held on May 20, 2015 and at any adjournment or postponement thereof, with like effect as if the undersigned were personally present and voting upon the following matters. This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder.If no direction is made, this proxy will be voted (1) FOR the election of all listed director nominees, (2) FOR the approval of the compensation of the named executive officers of Fiserv, Inc., (3) FOR the ratification of the appointment of Deloitte & Touche LLP as the independent registered public accounting firm of Fiserv, Inc. for 2015 and (4) AGAINST the shareholder proposal relating to executive retention of stock. This proxy covers all the shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the 401(k) Savings Plan of Fiserv, Inc. and its Participating Subsidiaries (the "Plan"). This proxy, when properly executed, will be voted as directed. If voting instructions are not received by the proxy tabulator by 11:59 pm ET on May 17, 2015, the Plan's Trustee will be deemed to have been instructed to vote your shares held in the Plan in the same proportion as the shares for which the Trustee has received timely voting instructions from others. Continued and to be signed on reverse side
| | | | FISERV, INC.
Annual Meeting of Shareholders
May 23, 2012
This proxy is solicited by the Board of Directors
The undersigned hereby appoints JEFFERY W. YABUKI, DONALD F. DILLON, AND CHARLES W. SPRAGUE as Proxies, each with the power to appoint his substitute, and hereby authorizes them to represent and to vote as designated below, all the shares of common stock of Fiserv, Inc. held of record by the undersigned on March 28, 2012 at the Annual Meeting of Shareholders to be held on May 23, 2012 and at any adjournment or postponement thereof, with like effect as if the undersigned were personally present and voting upon the following matters.
This proxy, when properly executed, will be voted in the manner directed herein by the undersigned shareholder. If no direction is made, this proxy will be voted (1) FOR the election of the indicated nominees as directors, (2) FOR an amendment to our articles of incorporation that would eliminate the classified structure of our board of directors and provide for the annual election of directors as set forth in the amendment, (3) FOR the performance goals and related matters under the Fiserv, Inc. 2007 Omnibus Incentive Plan, (4) FOR the approval of the compensation of our named executive officers, and (5) FOR the ratification of the selection of Deloitte & Touche LLP as the registered independent public accounting firm of Fiserv, Inc. for 2012.
This proxy covers all the shares for which the undersigned has the right to give voting instructions to Vanguard Fiduciary Trust Company, Trustee of the 401(k) Savings Plan of Fiserv, Inc. and Its Participating Subsidiaries (the “Plan”). This proxy, when properly executed, will be voted as directed. If voting instructions are not received by the proxy tabulator by 11:59 pm ET on May 18, 2012, the Plan’s Trustee will be deemed to have been instructed to vote your shares held in the Plan in the same proportion as the shares for which the Trustee has received timely instructions from others who do vote.
Continued and to be signed on reverse side
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