UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

SCHEDULE 14A

(Rule14a-101)

INFORMATION REQUIRED IN PROXY STATEMENT

SCHEDULE 14A INFORMATION

Proxy Statement Pursuant to Section 14(a) of the

Securities Exchange Act of 1934

Filed by the Registrant                Filed by a Party other than the Registrant    

Check the appropriate box:

 

   Preliminary Proxy Statement

 

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   Definitive Proxy Statement

 

   Definitive Additional Materials

 

   Soliciting Material Pursuant toSection 240.14a-12

Teradata Corporation

(Name of Registrant as Specified In Its Charter)

(Name of Person(s) Filing Proxy Statement, if other than the Registrant)

Payment of Filing Fee (Check the appropriate box):

No fee required.

 

Fee computed on table below per Exchange Act Rules14a-6(i)(1) and0-11.

 

 (1)

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Per unit price or other underlying value of transaction computed pursuant to Exchange Act Rule0-11 (set forth the amount on which the filing fee is calculated and state how it was determined):

 

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Check box if any part of the fee is offset as provided by Exchange Act Rule0-11(a)(2) and identify the filing for which the offsetting fee was paid previously. Identify the previous filing by registration statement number, or the Form or Schedule and the date of its filing.

 

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LOGOLOGO

NOTICE OF 2017 ANNUAL MEETING


AND PROXY STATEMENT

Message to Stockholders


MESSAGE TO SHAREHOLDERS

March 1, 201720, 2020

Dear Fellow Stockholder:Shareholder:

I am pleased to invite you to attend Teradata Corporation’s 20172020 Annual Meeting of Stockholders on April 19, 2017.May 5, 2020. The meeting will begin promptly at 8:00 a.m. local time at the Waldorf Astoria Chicago, 11 East Walton Street, Chicago, Illinois 60611.

InterContinental San Diego, 901 Bayfront Court, San Diego, California 92101. I do want to alert you to the possibility, given current events, that we may decide to hold the meeting virtually – please see the note in the Notice of Meeting that follows this letter for more information. This proxy statement, which includes a notice of the 20172020 annual meeting, tells you more about the agenda and procedures for the meeting. It also describes how our Board of Directors operates and gives information about director candidates and general compensation and corporate governance matters.

Since last year’s annual meeting,

At Teradata, we transform how businesses work and people live through the power of data. As a leading hybrid cloud analytics software provider, we focus on helping customers leverage all of their data across an enterprise, whether on premises, in the cloud or anywhere in between, to uncover real-time intelligence, at scale. In doing so, we enable our customers to find answers to their toughest challenges.

We are in the midst of a transformation to a subscription-based business. In 2019, Teradata continued its businessto make meaningful progress executing our strategic objectives and delivering value to our shareholders, as evidenced by achieving significant annual recurring revenue (“ARR”) and recurring revenue growth, although falling short of the goals that we set for the year.

As we progress through our transformation, processwe have implemented leadership changes that we believe best position Teradata for long-term growth. In November 2019, Victor Lund was elected our Interim President and took aChief Executive Officer, and in February 2020, I was appointed Chairman of the Board, succeeding Mr. Lund and separating the roles of CEO and Chairman, which we believe is in the best interests of the Company and our shareholders.

Other notable achievements in 2019 include:

We drove consumption of our game-changing hybrid cloud analytics platform, Teradata Vantage, through new use cases and capabilities, and continued to enhance Vantage to deliver meaningful answers to customers’ toughest analytics needs;
We exceeded our own expectations with respect to converting our customers to subscription-based transactions – 88% of our bookings in 2019 were subscription-based;
We expanded our offering capabilities and partnerships and doubled the number of significant actions to increase shareholder value, principally the development and initial implementation of our new strategic direction as announced at our Analyst Day on November 17, 2016. During 2016, Teradata made great strides in developing and implementing key steps of our business transformation, including: refocusing the Company’s strategy away from simply selling technology to information technology buyers and toward delivering business value to business users as a trusted advisor; expanding our core data warehouse market opportunity by making it easier for customers to buy our solutions and by providingleveraging Teradata data warehousinganalytics solutions in the public cloud;
We expanded ourgo-to-market reach through focused vertical investments, deepening customer success programs and transitioningstrengthening our partner relationships; and
We improved efficiency and execution throughout the organization through the implementation of new processes and systems.

As we execute our strategy and transform our Company, we continue to greatly value the input we receive from perpetual to subscription-based Teradata database licenses, which will result in a more predictable, recurring revenue stream for the company.

In addition, as describedinvestors on page 37 of this proxy statement, stockholderour progress and future direction. Shareholder engagement has always beenremains an importantintegral part of Teradata’s business practices, and we greatly value the input we receive from our investors. We are in frequent communication with stockholdersour largest investors on a variety ofkey business matters, including operations,our strategic direction, corporate governance practices and executive compensation and have designedcompensation. Moreover, our executive compensation program has been designed and continues to evolve in a waymanner that addresses the inputfeedback provided through our stockholdershareholder outreach efforts. During 2016, we continuedOur goal is to modify our executive compensation programcontinue to address common themes expressed by our investors. These changes connect pay and performance more closely than ever and enhance the alignment of our executive compensation program with your long-term interests.

Our Board of Directors continues to evolve, and we remainremains committed to ensuring that it includes a highly qualified and diverse group of directors who are well-equipped to oversee the success of Teradata’s business and effectively represent your interests. Just recently, we added two directors who bring new technological and business growth expertise to the board. We encourage you to review the qualifications, skills and experience that we have identified as important attributes for each of our directors contributes to our Board of Directors as described beginning on page 64 of this proxy statement.

VictorMr. Lund Teradata’s new President and Chief Executive Officer, and I look forward to seeing youyour participation at the annual meeting. If you plan to attend, please send an email toinvestor.relations@teradata.com to receive a meeting reservation request form. In addition, you are welcome to share your thoughts or concerns with us on any topic. Communications can be addressed to directors in care of the Corporate Secretary, Laura Nyquist,Margaret A. Treese, at 10000 Innovation Drive, Dayton, Ohio 4534217095 Via Del Campo, San Diego, California 92127 or by email at the address listed above.

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

We value your support and thank you for your commitment to Teradata.joining Teradata on this transformational journey.

Sincerely,

Michael P. Gianoni

Chairman of the Board

LOGO


 

Sincerely,
James M. Ringler
Chairman of the Board



TERADATA CORPORATION

NOTICE OF ANNUAL MEETING

OF STOCKHOLDERS

TIME

LOGOLOGOLOGO

TIME

8:00 a.m. local time

DATE

Tuesday,

May 5, 2020

PLACE*

InterContinental San Diego

901 Bayfront Court

San Diego, CA 92101

8:00 a.m. local

* Depending on conditions associated with the coronavirus orCOVID-19, we might hold a Virtual Annual Meeting instead of holding the meeting in San Diego, California. If we decide to hold a Virtual Annual Meeting, we will make a public announcement, which will be available at https://www.teradata.com as soon as practicable before the meeting. In that event, Teradata’s 2020 Annual Meeting of Stockholders would be conducted solely virtually, at the above date and time, via live audio webcast. You or your proxyholder could participate, vote and examine our stockholder list at the Virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/TDC2020 and using your16-digit control number, but only if the meeting is not held in San Diego, California.

DATE

Wednesday, April 19, 2017

PLACE

Waldorf Astoria Chicago

11 East Walton Street, Chicago, Illinois 60611

PURPOSEPurpose

 

Elect Ms. CooperNelson and Messrs. Fishback Kepler and StavropoulosKepler to serve as Class I directors for three-year terms expiring at the 20202023 annual meeting of stockholders and to hold office until their respective successors are duly elected and qualified;

 

AdvisoryConsider an advisory(non-binding) vote to approve executive compensation (a“say-on-pay” vote);

 

Advisory(non-binding)Consider and vote on the frequency ofsay-on-pay votes;

Vote onupon the ratification of the appointment of our independent registered public accounting firm for 2017;2020; and

 

Transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting by or at the direction of the Board of Directors.

OTHER IMPORTANT INFORMATIONOther Important Information

 

Record holders of Teradata common stock at the close of business on February 22, 2017,March 6, 2020, may vote at the meeting.

 

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

INTERNET AVAILABILITYInternet Availability

Important Notice Regarding the Availability of Proxy Materials for the 20172020 Annual Meeting of Stockholders to Be Heldbe held on April 19, 2017:May 5, 2020: This notice of the 20172020 annual meeting of stockholders and proxy statement, our 20162019 annual report, and form of proxy and voting instruction card are available athttp:https://www.proxyvote.com.

By order of the Board of Directors,
Laura Nyquist
General Counsel and Secretary

March 1, 2017


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    10000 Innovation Drive

    Dayton, OH 45342

PROXY STATEMENT

General Information

On behalf of the Board of Directors,

Margaret A. Treese

Deputy General Counsel and Secretary

March 20, 2020

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TABLE OF CONTENTS


Proxy Summary

1

Election of Directors (Item 1 on Proxy Card)

4

Additional Information Concerning the Board of Directors

11

Committees of the Board

18

Related Person Transactions

22

Corporate Responsibility and Sustainability

23

Stock Ownership

26

Director Compensation

28

Board Compensation and Human Resource Committee Report on Executive Compensation

30

Compensation Discussion and Analysis

31

Section 1: Executive Summary

31

Section 2: Compensation Philosophy and Governance

38

Section 3: Core Compensation Program

39

Section 4: Compensation Consultant and Peer Group

46

Section 5: Severance, Change in Control and Other Benefits

48

Section 6: Other Compensation Policies and Practices

50

Compensation Tables

52

Potential Payments Upon Termination or Change in Control

58

CEO Pay Ratio Disclosure

64

Advisory(non-binding) Vote on Executive Compensation (Item 2 on Proxy Card)

65
Directors’ Proposal to Ratify the Appointment of Independent Registered Public Accounting Firm for 2020
(Item 3 on Proxy Card)
66
Board Audit Committee Report67

Fees Paid to Independent Registered Public Accounting Firm

68

Other Matters

70

Householding of Proxy Materials

70

Additional Information

71

Other General Information

73

i    



PROXY SUMMARY

This summary highlights information contained elsewhere in the proxy statement that is being provided to you by Teradata Corporation a Delaware corporation (“Teradata”,Teradata,” the “Company”, “we”“Company,” “we,” or “us”), we are requesting your proxy for the 2017 in connection with its 2020 annual meeting of stockholdersstockholders. This summary is not a complete description, and any adjournments or postponements that follow. The meeting will be held at 8:00 a.m. local time, on April 19, 2017, atyou should read the Waldorf Astoria Chicago, 11 East Walton Street, Chicago, Illinois 60611. At the meeting, we will: (1) consider the election of Ms. Cooper and Messrs. Fishback, Kepler and Stavropoulos as Class I directors for three-year terms expiring in 2020; (2) vote on an advisory(non-binding) basis to approve executive compensation as disclosed in thisentire proxy statement (acarefully“say-on-pay”before vote); (3) vote on an advisory(non-binding) basis to approve the frequency ofsay-on-pay votes; (4) vote on the ratification of the appointment of our independent registered public accounting firm for 2017; and (5) transact such other business as may properly come before the meeting and any adjournment or postponement thereof. voting.

This proxy statement contains important information about the 20172020 annual meeting of stockholders, as well as information regarding the voting process, director elections, our corporate governance programs, and executive and director compensation, among other things. We are furnishing this proxy statement together with our 20162019 annual report and form of proxy and voting instruction card (“proxy card”). Proxy materials for the 20172020 annual meeting of stockholders are being made available in printed form on or about March 13,23, 2020, and they will be available online on or about March 14, 2017.26, 2020. On behalf of the Teradata Board of Directors, we are requesting your proxy for the 2020 annual meeting of stockholders and any adjournments or postponements that follow.

Voting Methods – Your Vote is Important!

Even if you plan to attend the 2020 annual meeting of stockholders in person, we urge you to vote in advance of the meeting using one of these advance voting methods.

 

LOGOLOGOLOGO

By Internet:

www.proxyvote.com

By Phone:

YOUR VOTE IS IMPORTANT!1-800-690-6903

By Mail:

51 Mercedes Way

Edgewood, NY 11717

 

2020 Annual Meeting Information

Meeting Date:May 5, 2020
Meeting Place:

WhetherInterContinental San Diego

901 Bayfront Court

San Diego, CA 92101

Record Date:March 6, 2020
Meeting Time:8:00 a.m. (Pacific)

Voting:All common stockholders of record as of March 6, 2020 may vote. Each outstanding share of common stock is entitled to one vote on each matter to be voted upon at the annual meeting.
Admission:You will need an admission ticket or notproof of ownership of Teradata common stock, as well as a form of personal photo identification, to be admitted to the annual meeting. If you plan to attend, please send an email toinvestor.relations@teradata.com to receive a meeting reservation request form. If we decide to hold a Virtual Annual Meeting, to attend and participate in the Virtual Annual Meeting, visit www.virtualshareholdermeeting.com/TDC2020 and use your16-digit Control Number provided in the Notice to log in to this website and access the live audio webcast of the meeting. Please refer to page 73 of this proxy statement under “Other General Information” for more information about attending the meeting.

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Meeting Agenda

MATTER

BOARD VOTE
RECOMMENDATION
PAGE
REFERENCE
(FOR MORE
DETAIL)

Proposal 1

Consider and vote upon the election of Ms. Nelson and Messrs. Fishback and Kepler to serve as Class I directors for three-year terms expiring at the 2023 annual meeting pleaseof stockholders and to hold office until their respective successors are duly elected and qualified

FOR

each nominee

4

Proposal 2

Consider an advisory(non-binding) vote your shares as soon as possible by phone, Internet, or mail if you are receiving paper proxy materials. By usingto approve executive compensation (a“say-on-pay” vote)

FOR

65

Proposal 3

Consider and vote upon the Internet or phone voting methods, you help us reduce costs and respectratification of the environment. Both are fast, convenient, and environmentally-friendly.appointment of our independent registered public accounting firm for 2020

FOR

66

2019 Financial Highlights vs. Prior Year

LOGO 9%

 

If you are a stockholder of record (i.e., you directly hold your common stock through an accountANNUAL RECURRING REVENUE (“ARR”)
GROWTH

LOGO 88%

SUBSCRIPTION-BASED BOOKINGS

AS A % OF TOTAL PRODUCT BOOKINGS

LOGO 9%

TOTAL RECURRING REVENUE GROWTH

LOGO 72%

RECURRING REVENUE

AS A % OF TOTAL REVENUE

Board of Directors

  NAMECLASSAGEPOSITION

Victor L. Lund

III72Interim President and Chief Executive Officer

Michael P. Gianoni1

III59Chairman

Cary T. Fu

III71Director

Joanne B. Olsen

III61Director

Daniel R. Fishback*

I58Director

David E. Kepler*

I67Director

Kimberly K. Nelson*2

I52Director

William S. Stavropoulos3

I80Director

Lisa R. Bacus

II55Director

Timothy C.K. Chou

II65Director

James M. Ringler

II74Director

John G. Schwarz

II69Director

* Nominees for election

1 Appointednon-executive Chairman as of February 6, 2020.

2 Elected to the board as of November 5, 2019.

3 Retiring at end of current term, which expires at 2020 annual meeting, at which time the number of directors will be reduced from twelve to eleven and the number of Class I directors will be reduced from four to three.


2    

2020 PROXY STATEMENT




Board and Governance Highlights

Teradata has adopted many governance practices that establish strong independent leadership in our boardroom and provide our stockholders with our transfer agent, Computershare Investor Services), you can vote your shares using one of the following three methods. If you are a beneficial owner (i.e., you indirectly hold your common stock through a nominee such as a bank or broker), you can vote your shares using the methods provided by your nominee.meaningful rights, including:

LOGO

LOGO

 

VOTE BY INTERNET

http://www.proxyvote.com

Use the Internet to transmit your voting instructions and for electronic delivery of information.LOGO

 all directors (other than Interim CEO) and all audit, compensation and governance committee members are independent

VOTE BY PHONE

1-800-690-6903

Use any touch-tone telephone to transmit your voting instructions.LOGO

 independentnon-executive Chairman

VOTE BY MAILLOGO

Vote Processing, c/o Broadridge,
51 Mercedes Way, Edgewood, NY 11717

If you receive paper proxy materials, mark, sign

separate CEO and date your proxy cardboard chair roles

LOGO

strategy actively overseen by board

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highly qualified and return itdiverse board with extensive executive experience at global, public companies and knowledge of software and technology industries, including cloud-based technologies

LOGO

active board oversight of risk and operational plans

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ongoing board refreshment (6 new directors in the postage-paid envelope we have provided or return itpast 5 years)

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regular executive sessions of independent directors at board and committee meetings

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independent compensation consultant engaged to the address shown above.advise on compensation of our executives and directors

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ongoing shareholder engagement that results in impactful changes to executive compensation and corporate governance programs

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robust stock ownership requirements for directors and executive officers and prohibitions on hedging and pledging stock

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compensation clawback and anti-harmful activity policies

1


LOGOWho may vote at the meeting?

Only stockholders of record may vote at the meeting. A stockholder of record is a stockholder as of the close of business on February 22, 2017, the record date for the meeting. On the record date, there were 130,887,589 shares of common stock outstanding.

LOGOHow many votes do I have?

For each share of common stock you own, you are entitled to cast one vote on each director candidate submitted for election and to cast one vote on each other matter properly brought before the meeting.

LOGOWhen will I receive my proxy materials?

Proxy materials for the 2017 annual meeting of stockholders are being made available in printed form on or about March 13. They will be available online on or about March 14.

LOGOHow do I access my proxy materials?

Notice and Access. Proxy materials (including our 2016 annual report, notice of the 2017 annual meeting of stockholders and proxy statement, and proxy card) are being made available via the Internet pursuant to the “notice and access” rules of the Securities and Exchange Commission (“SEC”). A Notice of Internet Availability of Proxy Materials (“Notice”) is being mailed to most of our record and beneficial stockholders. The Notice includes instructions on how to access the proxy materials on the Internet or request printed copies of these materials. To receive future proxy materials by mail or email, follow the instructions included with the Notice. If you previously elected to receive materials via mail or email delivery, you will not receive the Notice, but you will receive your materials via the delivery method you requested.

Electronic Delivery. At their request, many stockholders are receiving an email providing them with links to receive the Notice and Internet access to the proxy materials rather than receiving a printed copy of the Notice or printed proxy materials.

Paper Copies. If you have previously requested paper copies of your proxy materials, or are otherwise required to receive paper copies, you will receive the 2017 proxy materials, including notice of the meeting, in printed form unless you consent to receive these documents electronically in the future.

LOGOHow do I receive my proxy materials electronically?

If you are a stockholder of record (i.e., you directly own your common stock through an account with our transfer agent, Computershare Investor Services), you can choose to access your Teradata proxy materials electronically and save the cost of producing and mailing a Notice and other documents by following the instructions provided athttp://www.investordelivery.com or by following the prompt if you choose to authorize your proxy over the Internet. You must provide your sixteen-digit control number listed on your Notice or proxy card to make this election.

Your election to receive proxy materials by electronic access will remain in effect until you revoke your consent athttp://www.proxyvote.com, or your consent is deemed to be revoked under applicable law. You must provide your sixteen-digit control number to revoke your consent.

If you are a beneficial owner (i.e., you indirectly hold your common stock through a nominee such as a bank or broker), please review the information provided by your nominee for instructions on how to elect to view future proxy statements and annual reports over the Internet.

 

Please keep in mind that choosing electronic delivery saves the Company

and its stockholders money and preserves natural resources.LOGO  3


 

2


LOGOHow do I obtain a separate set of proxy materials?

To save costs, only one set of proxy materials is being printed and mailed to stockholders who have requested printed copies and share an address, unless otherwise requested or required under applicable law. If you have multiple Teradata common stock record accounts and/or share an address with a family member who is a Teradata stockholder and want to receive more than one copy of the Notice and/or proxy materials, you may contact our mailing agent, Broadridge Financial Solutions, at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 (phone:1-800-542-1061). Broadridge will mail you a separate copy of the proxy materials and will remove you from the householding program within thirty days after receipt of this request.

LOGOHow can I vote my shares of Teradata stock?

Your vote is important. Your shares can be voted at the annual meeting only if you are a record stockholder and present in person or represented by proxy. Even if you plan to attend the meeting, we urge you to authorize your proxy in advance. You may vote your shares by authorizing a proxy over the Internet or by telephone. In addition, if you received paper copies of the proxy materials by mail, you can also submit a proxy by mail by following the instructions on the proxy card. Voting your shares by authorizing a proxy over the Internet, by telephone or by written proxy card will ensure your representation at the annual meeting regardless of whether you attend in person.

If you are a stockholder of record, please authorize your proxy electronically by going to thehttp://www.proxyvote.comwebsite or by calling the toll-free number (for residents of the United States and Canada) listed on your Notice and proxy card. Please have your Notice or proxy card in hand when going online or calling. If you authorize your proxy via the Internet, you do not need to return your proxy card. If you choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided.

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

LOGOHow do I revoke my proxy for the annual meeting?

You may revoke your proxy at any time before it is voted at the meeting by:

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

voting by ballot at the meeting; or

sending a written notice of revocation to the inspectors of election in care of our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342.

LOGOWhat if I want to vote in person at the meeting?

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

LOGOWhat are the requirements for ensuring that my shares are voted by proxy at the meeting?

Your shares will be voted at the meeting as directed by the instructions on your proxy card, voting instructions or electronic proxy if (1) you are entitled to vote, (2) your proxy was properly executed or properly exercised electronically, (3) we received your proxy prior to the voting deadlines for the annual

3


meeting (April 18, 2017 at 11:59 p.m. for record stockholders who do not vote at the meeting, such time as directed by the nominee for beneficial owners, and April 14, 2017 for participants in our 401(k) savings plan), and (4) you did not revoke your proxy prior to or at the meeting.

LOGOHow do I vote the shares I hold in the Teradata 401(k) savings plan?

If you are a participant in the Teradata 401(k) savings plan, your proxy includes the number of Teradata common stock units (share interests) allocated to your plan account. You may instruct the trustee how to vote the number of share interests allocated to your plan account. The trustee will vote the share interests allocated to your plan account in accordance with your instructions. If you do not vote your share interests in the Teradata 401(k) savings plan, the trustee will vote the unallocated share interests, as well as any allocated share interests held by the plan, in the same proportion as the share interests for which it received timely voting instructions.

LOGOWhat is considered a quorum to conduct the annual meeting?

To have a quorum necessary to conduct business at the meeting, it is necessary to have shares that represent (in person or by proxy) the holders of a majority of our shares of common stock outstanding on the record date, which is the close of business on February 22, 2017. Shares of common stock represented in person or by proxy (including shares that abstain with respect to a particular proposal to be voted upon and “brokernon-votes”) will be counted as present for the purpose of determining whether a quorum exists at the meeting for that proposal. If a quorum is not present, the meeting will be adjourned until a quorum is obtained.

LOGOHow many votes are required to approve each item?

With respect to Proposal 1 (the election of directors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on the election of directors is required to elect each director.

With respect to Proposal 2 (the advisory“say-on-pay” vote on executive compensation), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such question is required to adopt this advisory resolution in accordance with Teradata’s bylaws. However, the results of this vote are not binding on the board, whether or not any resolution is passed under this voting standard.

With respect to Proposal 3 (the frequency of the advisorysay-on-pay vote on executive compensation), the voting option (e.g., 1 year, 2 years or 3 years), if any, that receives the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business will be the option adopted by the stockholders in accordance with the voting standard established in Teradata’s bylaws. Like thesay-on-pay vote, the results of this vote are not binding on the board, whether or not any option is passed under this voting standard.

With respect to Proposal 4 (the ratification of the appointment of the Company’s independent auditors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item of business is required to ratify the appointment.

Abstentions effectively count as votes “against” the adoption of a proposal and the election of a director. Moreover, if you do not instruct your nominee (such as your bank or broker) how to vote your shares with respect to the election of directors, the advisory vote on executive compensation, and the advisory vote on the frequency of votes on executive compensation, the nominee may not vote on these proposals. However, broker“non-votes” will have no effect on the outcome of the vote for any proposal or the election of any director. Broker“non-votes” occur when a nominee returns a properly executed proxy but does not vote on a particular item because the nominee has not received voting instructions from the beneficial owner and, therefore, does not have the authority to vote on a proposal.

4


LOGOHow does the Board recommend that I vote my shares?

The Teradata Board of Directors recommends that you vote:

FOR the election of each of the four Class I director nominees, Ms. Cooper and Messrs. Fishback, Kepler and Stavropoulos (see page 6);

FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement (see page 73);


 

FOR the approval, on an advisory basis, of a frequency of once every year for future advisorysay-on-pay votes on executive compensation (see page 75); and

FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2017 (see page 76).

If you submit your proxy without specific voting instructions, your shares represented by that proxy will be voted as recommended by our board. As discussed above, if you hold your shares beneficially through a nominee (such as a bank or a broker) and fail to provide specific voting instructions to that nominee, your shares will not be voted in the election of directors, the advisory“say-on-pay” vote on executive compensation, or the advisory vote on the frequency of future advisorysay-on-pay votes on executive compensation.

LOGOWhat do I need to do if I want to attend the annual meeting?

If you plan to attend the meeting in person, please send an email to us atinvestor.relations@teradata.com to request a meeting reservation request form. You may attend the meeting if you are a stockholder of record, hold a proxy for a stockholder of record, or are a beneficial owner of our common stock with evidence of ownership. If you are a beneficial owner (i.e., you hold your common stock through a nominee such as a bank or broker), please include evidence of your ownership of common stock with the form (such as an account statement showing you own Teradata common stock as of the record date). If you do not have a reservation for the meeting, you may still attend if we can verify your stock ownership at the meeting.

We will include the results of the votes taken at the meeting, as well as the frequency with which the Company intends to conduct thesay-on-pay vote in light of the results of the advisory frequency vote, in a Form8-K filed with the SEC within four business days after the date of the annual meeting or any adjournment or postponement thereof. You may also find information on how to obtain a transcript of the meeting by writing to our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342.

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ELECTION OF DIRECTORS

(Item 1 on Proxy Card)

The Board of Directors is currently divided into three classes. Directors are elected by stockholders for terms of three years and hold office until their successors are elected and qualified. One of the three classes is elected each year to succeed the directors whose terms are expiring. As of the 20172020 annual meeting, the terms for the directors in Classes I, II and III of the Board of Directors expire in 2017, 20182020, 2021 and 2019,2022, respectively.

Ms. CooperNelson and Messrs. Fishback, Kepler, and Stavropoulos currently are Class I directors whose terms are expiring at the 20172020 annual meeting. In February 2020, Mr. Stavropoulos informed the Board of Directors that he will be retiring at the end of his current term and will not stand forre-election at the 2020 annual meeting. The board has extended its sincerest gratitude to Mr. Stavropoulos for his many years of distinguished service to the Company and decided not to nominate a replacement director for Mr. Stavropoulos at this time. As a result, as of the 2020 annual meeting, the size of the Board of Directors will be reduced from twelve members to eleven members, and the number of Class I directors will be reduced from four to three members.

For the reasons described below, each of the remaining Class I directors has been nominated by the board forre-election through the 20202023 annual meeting of stockholders and until his or her successor is elected and qualified.

Proxies solicited by the board will be voted for the election of the nominees, unless you provide a contrary instructioninstruct otherwise on your proxy. Each of the nominees has indicated his or her willingnessis willing to serve if elected. The board has no reason to believe that these nominees will be unable to serve. However, if one of them should become unavailable,be unable to serve, the board may further reduce the size of the board or designate a substitute nominee. If the board designates a substitute, shares represented by proxies will be voted for the substitute nominee.

 

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The Board of Directors recommends that you vote FOR the election

of each of the Class I nominees as a director.

Election of each nominee requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item.election. If a nominee does not receive a majority vote, he or she is required to tender theirhis or her resignation for consideration by the disinterested members of the Board of Directors in accordance with the board’sour Corporate Governance Guidelines as described on page 1912 of this proxy statement. Proxies solicited by the Board of Directors will be voted FOR each nominee, unless you specify otherwise in your proxy. Abstentions will have the same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote.

Director Qualifications

Our Board of Directors currently consists of eleventwelve members who we believe are extremely well-qualified to serve on the board and represent our stockholders’ best interests. As described belowon page 16 of this proxy statement under the caption “Selection of Nominees for Directors,” the board and its Committee on Directors and Governance (the “Governance Committee”) select nominees with a view to establishing a Board of Directors that is comprised of members who:

 

·

have extensive business leadership experience,

bring diverse perspectives to the board,

are independent and collegial,

have high ethical standards as well as sound business judgment and acumen, and

understand and are willing to make the time commitment necessary for the board to effectively fulfill its responsibilities.

Key Qualifications and Attributes

LOGOLOGO


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2020 PROXY STATEMENT

 

·

bring diverse perspectives to the board,

·

are independent and collegial,


·

have high ethical standards as well as sound business judgment and acumen, and

·

understand and are willing to make the time commitment necessary for the board to effectively fulfill its responsibilities.

Election of Directors

 

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We believe that each of the director nominees and other directors bring these qualifications to our Board of Directors. Moreover, they provide our board with a diverse complement of specific business skills, experience and perspectives, including: extensive financial and accounting expertise, public-company board experience, knowledge of the technology and software industries and of Teradata’s business, including cloud-based technologies, experience with companies with a global presence and with growth and/or transformation strategies, and extensive operational and strategic planning experience. In addition, the board believes that each of the director nominees and other directors has demonstrated outstanding achievement in his or her professional career, the willingness to participate actively in board activities and share policy-making and strategic thinking experiences, an ability to articulate independent perspectives, make analytical inquiries and take tough positions that challenge management, and a high degree of personal and professional integrity.

The following describes the key qualifications, business skills, experience and perspectives that each of our directors brings to the Board of Directors, in addition to the general qualifications and attributes described above and information included in the biographical summaries provided below for each director. Based on all of these qualifications and attributes, the board believeswe believe that the directors and nominees have the appropriate set and complement of skills to serve as members of the board.

2017 DIRECTOR NOMINEES2020 Director Nominees

Class I Nominees — Current Terms Expiring in 20172020:

 

Director

Key Qualifications and

Attributes

Biography

Nancy E. Cooper

Retired Executive Vice President and Chief Financial Officer of CA TechnologiesDANIEL R. FISHBACK

  

Co-Chief Significant financial expertiseExecutive Officer and Chairman of

the Board of Directors of UserZoom

Director since: 2017

Key Qualifications and Attributes:

 

     Experience as the chief financial officer of a global, publicly-traded company in the software technology industry

     Strong ethics and compliance focus

     Audit committee experience

     Gender diversity

Ms. Cooper, age 63, served as the Executive Vice President and Chief Financial Officer of CA Technologies (“CA”), an IT management software provider, from August 2006 until her retirement in May 2011. She joined CA in August 2006 with nearly 30 years of finance experience. From 2001 until that time, Ms. Cooper served as Chief Financial Officer for IMS Health Incorporated, the world’s leading provider of market intelligence to the pharmaceutical and healthcare industries. Prior to joining IMS Health, she was the Chief Financial Officer of Reciprocal, Inc., a leading digital rights management and consulting firm. In 1998, she served as a partner responsible for finance and administration at General Atlantic Partners, a private equity firm focused on software and services investments. Ms. Cooper began her career at IBM Corporation where she held increasingly important roles over a22-year period that focused on technology strategy and financial management. She serves as a director of The Mosaic Company, The Guardian Life Insurance Company of America, and Brunswick Corporation. Ms. Cooper joined our board in August 2009.

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Director

Key Qualifications and

Attributes

Biography

Daniel R. Fishback

Former President and Chief Executive Officer of DemandTec, Inc.

  Experience as the chief executive officer of a global, publicly-traded company in the softwaresoftware-as-a service industry

 

  Strong leadership skills and a proven track record driving financial growth and product development

 

  High-technologyTechnology industry expertise

 Mr. Fishback, age 55, served as the President and Chief Executive Officer of DemandTec, Inc. from 2001 to 2013. DemandTec is a provider of a cloud-based collaborative optimization network for retailers and consumer products companies that was acquired by IBM Corporation in 2012. From 2000 to 2001, Mr. Fishback served as Vice President of Channels for Ariba, Inc., a provider of solutions to help companies manage their corporate spending. Prior to that, he held sales and executive leadership positions at Trading Dynamics Company and Hyperion Solutions Corporation. Mr. Fishback currently serves on the board of directors for several private technology companies and serves as advisor and consultant to a number of companies, focusing on the application of analytic solutions to solve complex business problems. He joined Teradata’s board in January 2017.LOGO

Biography:

Mr. Fishback, age 58, has served asCo-Chief Executive Officer of UserZoom, a user behavior and analytics platform provider, since April 2018 and as Chairman of the Board of UserZoom since October 2015. Mr. Fishback previously served as the President and Chief Executive Officer of DemandTec, Inc. from 2001 to 2013. DemandTec was a provider of a cloud-based collaborative optimization network for retailers and consumer products companies that was acquired by IBM in 2012. From 2000 to 2001, Mr. Fishback served as Vice President of Channels for Ariba, Inc., a provider of solutions to help companies manage their corporate spending. Prior to that, he held sales and executive leadership positions at Trading Dynamics Company and Hyperion Solutions Corporation. Mr. Fishback serves on the board of Qumu Corporation, a leading enterprise video platform provider, serves on the board of directors for several private technology companies, and is an advisor and consultant to a number of companies focusing on the application of analytic solutions to solve complex business problems. He joined our board in January 2017.

DavidDAVID E. KeplerKEPLER

Retired Executive Vice President, Chief
Sustainability Officer and Chief Information
Officer of The Dow Chemical Company

 Director since: 2007

Key Qualifications and Attributes:

  Experience as the chief information officer of a complex, global company with additional responsibility for corporate sustainability initiatives, risk management and business services operations

 

  Financial expertise

 

  Recognized leader in the area of cybersecurity

 

Mr. Kepler, age 64, served as the Executive Vice President, Chief Sustainability Officer and Chief Information Officer (“CIO”) of The Dow Chemical Company (“Dow”) from 2008 until his retirement in December 2014. Mr. Kepler joined Dow in 1975. He was appointed Vice President and CIO of Dow in 1998 and Corporate Vice President in 2001. At Dow, Mr. Kepler assumed responsibility for Business Services in 2004, was appointed Senior Vice President in 2006, with added responsibilities for the company’s sustainability initiatives, and appointed Executive Vice President in February 2008. He also serves on the board of directors of TD Bank Group and Autoliv, Inc. Mr. Kepler serves as a trustee of the University of California Berkeley and as a board member of the Michigan Baseball Foundation and previously served on the U.S. National Infrastructure Advisory Council that advisesLOGO

Biography:

Mr. Kepler, age 67, served as the Executive Vice President, Chief Sustainability Officer and Chief Information Officer (“CIO”) of The Dow Chemical Company (“Dow”) from 2008 until his retirement in 2014. Mr. Kepler joined Dow in 1975 and was appointed the company’s Vice President and CIO in 1998 and Corporate Vice President in 2001. At Dow, Mr. Kepler assumed responsibility for Business Services in 2004, was appointed Senior Vice President in 2006, with added responsibilities for the company’s sustainability initiatives, and appointed Executive Vice President in 2008. He also serves on the board of directors of TD Bank Group and Autoliv, Inc., as a trustee of the University of California Berkeley, and as a board member of the Michigan Baseball Foundation. From 2008 to 2015, he was appointed to and served on the U.S. National Infrastructure Advisory Council that advised the President on the protection of critical infrastructure and homeland security issues. He joined our board in November 2007.

 

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Election of Directors

 

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Director

KIMBERLY K. NELSON

  

Key QualificationsExecutive Vice President and Chief Financial
Officer, SPS Commerce, Inc.

Attributes

 BiographyDirector since: 2019

Key Qualifications and Attributes:

  Senior executive leadership of cloud-based solutions company

  Financial expertise and experience as a chief financial officer

  Diverse perspectives given gender and technology company experience

LOGO

Biography:

Ms. Nelson, age 52, is the Executive Vice President and Chief Financial Officer at SPS Commerce, Inc., a provider of cloud-based supply chain management solutions worldwide, a position she has held since joining the company in 2007. Prior to joining SPS Commerce, Ms. Nelson led Investor Relations at Amazon.com, Inc., from 2005 until 2007. She served as Amazon’s Finance Director, Technology, from 2003 to 2005, and its Finance Director, Corporate Financial Planning and Analysis, from 2000 to 2003. Prior to that, she served as a Director, Finance at The Pillsbury Company, LLC, a subsidiary of General Mills, Inc., from 1997 until 2000. She also serves as a director of Calyxt, Inc., a consumer-centric food- and agriculture-focused public company. She joined our board in November 2019.

   Class I — Retiring upon Expiration of Term in 2020:

WilliamWILLIAM S. StavropoulosSTAVROPOULOS

Chairman Emeritus of the Board of
Directors of The Dow Chemical Company

 Director since: 2007*

Key Qualifications and Attributes:

  Distinguished career with extensive public-company board experience

 

  Leadership experience as a former chief executive officer and chairman of a major, global company

 

  Substantial business and strategic acumen

 

     In-depth knowledge of the Company

 

Mr. Stavropoulos, age 77, retired as Chairman of the Board of Dow on April 1, 2006. He had served in such capacity since November 2000. Mr. Stavropoulos was the President and Chief Executive Officer of Dow from 1995 to 2000 and was Chairman of the Board, President and Chief Executive Officer from 2002 to November 2004. He is the lead director of Univar, Inc., a global distributor of commodity and specialty chemicals. In addition, he is on the advisory board for Metalmark Capital LLC, a private equity investment firm, and is a trustee of the Fidelity Equity and High Income Funds. He also serves as a special advisor to Clayton, Dubilier & Rice, Inc., a private equity investment firm. He is the president and founder of the Michigan Baseball Foundation, serves as a trustee of the Rollin M. Gerstacker Foundation, and serves on the board of Artis–Naples. Mr. Stavropoulos served on the boards of Maersk Inc. from July 2002 to 2014 and Tyco International, Inc. from March 2007 until 2013.LOGO

Biography:

Mr. Stavropoulos, age 80, retired as Chairman of the Board of Dow in 2006. He had served in such capacity since 2000. Mr. Stavropoulos was the President and Chief Executive Officer of Dow from 1995 to 2000 and was Chief Executive Officer from 2002 to 2004. He is a director of Univar, Inc., a global distributor of commodity and specialty chemicals. In addition, he is on the advisory board for Metalmark Capital LLC, a private equity investment firm, and is a director of Kissner Global Holdings, LP. He is the Chairman and Chief Executive Officer of the Michigan Baseball Foundation, serves as a trustee of the Rollin M. Gerstacker Foundation, and serves on the board of Artis–Naples. Mr. Stavropoulos served on the boards of Maersk Inc., from 2002 to 2014, and Tyco International, Inc., from 2007 until 2013, and as a special advisor to Clayton, Dubilier & Rice, Inc., from 2006 until 2017. Mr. Stavropoulos joined our board in September 2007.

* Mr. Stavropoulos informed the board that he will retire from the board, effective upon expiration of his current term at the 2020 annual meeting, and, accordingly, he is not up forre-election at the 2020 annual meeting.

 


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2020 PROXY STATEMENT

Other



Election of Directors


Class II — Current Terms Expiring in 20182021:

 

Director

JAMES M. RINGLER

  

Former Chairman of Teradata

Corporation

Director since: 2007

Key Qualifications and
Attributes

Biography

James M. Ringler Attributes:

 

Chairman of Teradata Corporation

  Experience as the chief executive officer and chairman of the board of publicly-held, global companies

 

  Extensive experience on public company boards

 

  Excellent operational and leadership skills and business acumen

  Anin-depth knowledge of the Company’s business strategy and management team

 Mr. Ringler, age 71, was named Chairman of the Board of Teradata in September 2007.LOGO

Biography:

Mr. Ringler, age 74, was Chairman of the Board of Teradata from September 2007 until January 2019. He previously served as Chairman of the Board of NCR Corporation, from 2005 to 2007, and served as NCR’s President and Interim Chief Executive Officer for approximately 6 months in 2005. He served as Vice Chairman of Illinois Tool Works Inc., a multi-billion dollar diversified manufacturer of highly engineered components and industrial systems, from 1999 until he retired in 2004. Prior to joining Illinois Tool Works, from 1997 to 1999, Mr. Ringler was Chairman of Premark International, Inc. He also served as Premark’s Chief Executive Officer from 1995 to 1999 when it merged with Illinois Tool Works. Mr. Ringler serves as a director of Autoliv, Inc., Veoneer, Inc., TechnipFMC plc, and John Bean Technologies Corporation. He previously served as Chairman of the Board of NCR Corporation from July 2005 to September 2007, and served as NCR’s President and Interim Chief Executive Officer for approximately 6 months in 2005. He served as Vice Chairman of Illinois Tool Works Inc., a multi-billion dollar diversified manufacturer of highly engineered components and industrial systems, from 1999 until he retired in 2004. Prior to joining Illinois Tool Works, from 1997 to 1999, Mr. Ringler was Chairman of Premark International, Inc. He also served as Premark’s Chief Executive Officer from 1995 to 1999 when it merged with Illinois Tool Works. Mr. Ringler serves as a director of Autoliv, Inc., Dow, FMC Technologies, Inc., and John Bean Technologies Corporation and served on the board of The Dow Chemical Company/DowDuPont, Inc., from 2001 until February 2019, and Ingredion Incorporated, (formerly Corn Products International, Inc.) from 2002 until May 2014. He joined our board in September 2007.

 

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Director

LISA R. BACUS

  Key Qualifications and
Attributes
Biography

Lisa R. Bacus

Retired Executive Vice President and Global
Chief Marketing Officer for Cigna Corporation

 Director since: 2015

Key Qualifications and Attributes:

  Deep marketing expertise with focus on strategic planning and data analytics, andin-depth knowledge of digitalcommunication and marketing strategies and customer service operations

 

  Experience as senior executive of large global companies

 

  Diverse perspectives given gender and Hispanic heritage

 Ms. Bacus, age 52, is the Executive Vice President and Global Chief Marketing Officer of Cigna Corporation, a global health care products and services company. Prior to joining Cigna, Ms. Bacus was the Executive Vice President and Chief Marketer at American Family Insurance Group, a personal and commercial property and casualty insurance company, from February 2011 until May 2013, and its Vice President, Marketing, from 2008 to 2011. Before joining American Family Insurance, she held a number of marketing management positions with increasing responsibility at the Ford Motor Company from 1986 to 2008. She has served on the board of Shoutlet, Inc., a provider of enterprise social media management software, and currently serves on the board of another privately-held company and a number ofnon-profit boards. Ms. Bacus joined our board in January 2015.LOGO

Biography:

Ms. Bacus, age 56, served as the Executive Vice President and Chief Marketing Officer at Cigna Corporation, a global health care services company, from May 2013 until her retirement in July 2019. Her marketing role expanded with Cigna’s acquisition of Express Scripts in December 2018. Prior to joining Cigna, Ms. Bacus was the Executive Vice President and chief marketer at American Family Insurance Group, a personal and commercial property and casualty company, from 2011 until 2013, and its Vice President, Marketing, from 2008 to 2011. Before joining American Family Insurance, she was with Ford Motor Company, from 1986 to 2008, where she held a number of executive leadership positions, including Executive Director of Global Market Research and Insights, Executive Director of Global Marketing Strategy, and head of marketing for Ford in Mexico. She serves on the board of privately-held Culver Franchising System, Inc., as well as a number ofnon-profit corporations, and previously served on the board of Shoutlet, Inc., a privately-held company. Ms. Bacus joined our board in January 2015.

TimothyLOGO  7


Election of Directors


TIMOTHY C.K. ChouCHOU

RetiredFormer President of Oracle On
Demand, a division of Oracle Corporation

 Director since: 2017

Key Qualifications and Attributes:

  Extensive experience with technology companies including many years of experience in building and selling enterprise software and hardware

 

  Recognized as an industry leader in cloud computing and the Internet of Things, having published several landmark books and been featured in various publications includingForbes,,Business Week,,The Economist,, andThe New York Times as well as on CNBC and NPR

 

  Ethnic diversityExtensive experience with startup companies in both workflow and analytic applications

  Diverse perspective given Chinese heritage and experience teaching a course on cloud computing in China

 

 Mr. Chou, age 62, served as President of Oracle On Demand, a division of Oracle Corporation, a multi-billion dollar global provider of enterprise software and computer hardware products and services, from November 1999 until his retirement in January 2005. Prior to that, Mr. Chou served as Chief Operating Officer of Reasoning, Inc., an information technology services firm, and as Vice President, Server Products, of Oracle Corporation. Mr. Chou is a distinguished author and lecturer at Stanford University on cloud computing and he also serves on the board of directors of Blackbaud, Inc. He joined Teradata’sLOGO

Biography:

Dr. Chou, age 65, served as President of Oracle On Demand, a division of Oracle Corporation, from 1999 until his retirement in 2005, during which time he led the growth of Oracle’s cloud business from a nascent stage to an industry-leading position. Prior to that, he served as the Chief Operating Officer of Reasoning, Inc., a pioneering application services provider, until it was acquired by Oracle in 2000. He served on the board of Embarcadero Technologies, a provider of database tools, from 2000 until 2007. In addition to his commercial career, he has taught in the computer science department at Stanford University since 1982. In 2006, he launched the first class on cloud computing at Stanford and in 2008 started a similar class at Tsinghua University in Beijing, China. In 2013, he became the Chairman of the Alchemist, a leading enterprise software accelerator where he is focused on analytics, artificial intelligence and the Internet of Things. His landmark book,The End of Software, served to educate enterprises, operators and investors in this major shift in business models. He has been a director at Blackbaud since 2007 and joined our board in January 2017.

 

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Director

JOHN G. SCHWARZ

  

Founder and Chief Executive
Officer of Visier Inc.

Director since: 2010

Key Qualifications and
Attributes

Biography

John G. Schwarz Attributes:

 

Co-founder and Chief Executive Officer of Visier Inc.

  Extensive experience within the software and technology industries, including as the chief executive officer and director of a global, high-technology companyanalytics technology companies

 

  Operational and strategic planning experience leading a business organization that experienced high growth through both acquisitions and organic growth strategies

 

  Broad global experience and perspective

 

Mr. Schwarz, age 66,LOGO

Biography:

Mr. Schwarz, age 69, is the founder and Chief Executive Officer of Visier Inc., a business analytics software firm, a position he has held since April 2010. Previously, he served as Chief Executive Officer of SAP Business Objects, a unit of SAP AG, from 2008 to 2010, during which time he was a member of the executive board of SAP AG and also served on the board of directors of SAP Business Objects. From 2005 until its acquisition by SAP in 2008, he served as Chief Executive Officer of Business Objects S.A., a provider of business intelligence software and services. Mr. Schwarz served as President and Chief Operating Officer of Symantec Corporation, a provider of infrastructure security and storage management software, from 2001 to 2005. From 2000 to 2001, he served as President and Chief Executive Officer of Reciprocal Inc., which providedbusiness-to-business securee-commerce services for digital content distribution over the Internet. Prior to joining Reciprocal, Mr. Schwarz spent 25 years at IBM Corporation with his last position being General Manager of IBM’s Industry Solutions unit, a worldwide organization focused on building business applications and related services for IBM’s large industry customers. Mr. Schwarz serves as a director of Synopsys, Inc. and Avast Software, and served as a director of SuccessFactors, Inc. from 2010 to 2011. He is also a member of the Dalhousie University Advisory Board. He joined our board in September 2010.

 


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2020 PROXY STATEMENT



Election of Directors

 

11



Class III Nominees — Current Terms Expiring in 20192022:

 

Director

CARY T. FU

  

Key Qualifications and

Attributes

Biography

Cary T. Fu

Co-founder and retired Chairman
and Chief Executive Officer of
Benchmark Electronics, Inc.

 Director since: 2008

Key Qualifications and Attributes:

  Experience as the chief executive officer and chairman of the board of a global, publicly-traded global technology company

 

  Financial expertise and experience as a chief financial officer and certified public accountant

 

  Experienceco-founding and leading a high-growth business organization

 

  Diverse perspectiveperspectives given Taiwanese heritage and years of experience doing business in Asia

 

 Mr. Fu, age 68,LOGO

Biography:

Mr. Fu, age 71, is theco-founder of Benchmark Electronics, Inc. (“Benchmark”), a publicly-held electronics manufacturing services provider. He served as Chairman of the Board of Benchmark from 2009 until his retirement in December 2012, and was a director of Benchmark from 1990 to 2009. In 2011, Mr. Fu retired as Benchmark’s Chief Executive Officer, a position he had held since 2004. Prior to becoming Chief Executive Officer of Benchmark, he served as its President and Chief Operating Officer from 2001 to 2004, Executive Vice President from 1992 to 2001, and Executive Vice President, Financial Administration, from 1990 to 1992. He also serves on the board of directors of Littelfuse, Inc., a leading global manufacturer of circuit protection and power control technologies, and is a certified public accountant. He joined our board in July 2008.

MICHAEL P. GIANONI

Chairman of the Board of Benchmark from 2009 until his retirement in December 2012 and had been a director of Benchmark since 1990. In 2011, Mr. Fu retired as Benchmark’s Chief Executive Officer, a position he had held since September 2004. Prior to becoming Chief Executive Officer of Benchmark, he served as its Teradata Corporation

President and Chief Operating Executive

Officer from May 2001 to September 2004, Executive Vice President from 1992 to 2001, and Executive Vice President, Financial Administration, from 1990 to 1992. He also serves on the board of directors of Littelfuse,Blackbaud, Inc., and is a certified public accountant. He joined our board in July 2008.

Director since: 2015

Michael P. GianoniKey Qualifications and Attributes:

 

President and Chief Executive Officer of Blackbaud, Inc.

  Experience as the president and chief executive officer of a global, publicly-traded technologysoftware-as-a-service company

 

  Strong operational and leadership skills and business acumen

 

  Proven track record driving financial performance improvement

 

  Deep software industry knowledge

 

Mr. Gianoni, age 56, is the President and Chief Executive Officer of Blackbaud, Inc., a provider of software and services specifically designed for nonprofit organizations, a position he has held since joining the company in January 2014. Previously, Mr. Gianoni was the Executive Vice President and Group President, Financial Institutions, at Fiserv, Inc., a global technology provider serving the financial services industry, from January 2010 to December 2013. He joined Fiserv as President of its Investment Services division in 2007, where he was responsible for product, technology, sales, finance, operations, and strategy. From 2006 until its acquisition by Fiserv, Mr. Gianoni was Executive Vice President and General Manager of CheckFree Corporation, a leading provider of financiale-commerce solutions. Prior to that time, he held a number of senior management positions at DST Systems Inc., an information processing and software services company. Mr. Gianoni serves as a director of Blackbaud and joined our board in January 2015.LOGO

Biography:

Mr. Gianoni, age 59, is the President and Chief Executive Officer of Blackbaud, Inc., a provider of software and services specifically designed for nonprofit organizations, a position he has held since joining the company in January 2014. Previously, Mr. Gianoni was the Executive Vice President and Group President, Financial Institutions, at Fiserv, Inc., a global technology provider serving the financial services industry, from 2010 to 2013. He joined Fiserv as President of its Investment Services division in 2007, where he was responsible for product, technology, sales, finance, operational, and strategy. From 2006 until its acquisition by Fiserv, Mr. Gianoni was Executive Vice President and General Manager of CheckFree Corporation, a leading provider of financiale-commerce solutions. Prior to that time, he held a number of senior management positions at DST Systems Inc., an information processing and software services company. Mr. Gianoni serves as a director of Blackbaud. He joined our board in January 2015 and was appointed ournon-executive Chairman in February 2020 after serving as independent Lead Director since January 2019.

 

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Election of Directors

 

12



Director

VICTOR L. LUND

  

Key Qualifications and

Attributes

Biography

Victor L. Lund

Interim President and Chief Executive Officer
of Teradata Corporation

 Director since: 2007

Key Qualifications and Attributes:

  ServiceExperience as the President and Chief Executive Officer of the Company with extensive knowledge of and experience with, the software industry and the Company’sTeradata’s operations, strategy, customers, and financial position

 

  Significant financial expertise and business acumen

 

  Experience as the chief financial officer and chief executive officer of a large business with a high-growth model

 

  Extensive public-company board experience, particularly on audit committees

 

 Mr. Lund, age 69, isLOGO

Biography:

Mr. Lund, age 72, was appointed Interim President and Chief Executive Officer of Teradata in November 2019 and served as Executive Chairman of the Board from January 2019 until February 2020. He previously served as the Company’s President and Chief Executive Officer from May 2016 until January 2019. He served as thenon-executive Chairman of the Board of DemandTec, a publicly-held,on-demand applications company, from 2006 until 2012, and was a member of its board from 2005 until 2012. Mr. Lund wasnon-executive Chairman of the Board of Mariner Health Care, Inc., a long-term health care services company, from 2002 until December 2004 and Vice Chairman of Albertson’s, Inc. from 1999 to 2002. Prior to that, he served as Chairman and Chief Executive Officer of American Stores Company. During his extended career with American Stores, Mr. Lund also held executive positions of increasing responsibility leading to Chairman and Chief Executive Officer, including Chief Financial Officer and Executive Vice President. Earlier in his career, Mr. Lund was a practicing certified public accountant. He also serves as a director of Service Corporation International and a number of privately-held companies. He joined our board in September 2007.

JOANNE B. OLSEN

Former Executive Vice President, Cloud Services and Chief Executive OfficerSupport, Oracle Corporation

Director since: 2018

Key Qualifications and Attributes:

  Extensive experience within the software and technology industries

  Senior executive leadership of Teradata. Previously, he served as thecloud-based solutions and services

non-executive  Chairman of the Board of DemandTec from December 2006 until February 2012,Diverse perspectives given gender and was a member of its board from April 2005 until that time. Mr. Lund served as Chairman of the Board of American Stores from 1995 until its acquisition by Albertson’s, Inc. in June 1999, and as Chief Executive Officer of American Stores Company from 1992 until 1999. From 1999 until 2002, he served as Vice Chairman of Albertson’s. Prior to joining American Stores in 1977, Mr. Lund was a practicing certified public accountant. He also currently serves on the board of directors of Service Corporation International and has served on a number of publicly-traded company boards, including Del Monte Foods Company from March 2005 until 2011. He joined our board in September 2007.global management experience

LOGO

Biography:

Ms. Olsen, age 61, served as the Executive Vice President, Cloud Services and Support at Oracle Corporation, a worldwide software and services company, from November 2016 until she retired in August 2017. In that role, she drove Oracle’s cloud transformation services and support strategy, partnering with leaders across all business units, leading a team of cloud customer experience experts, covering customer success, implementation success, consulting, support, education, and managed cloud services. She previously served as Senior Vice President and leader of Oracle’s applications sales, alliances, and consulting organizations in North America from 2010 to 2016. Ms. Olsen began her career with IBM, where, over the course of more than three decades, she held a variety of executive management positions across sales, global financing and hardware. She also serves as a director of Ciena Corporation, a global supplier of telecommunications networking equipment, software, and services, and Keysight Technologies, Inc., a provider of electronic design and test solutions. She joined our board in June 2018.

No family relationship exists among any of the directors, nominees or executive officers. No arrangement or understanding exists between any director, nominee, or executive officer and any other person pursuant to which any director, nominee or executive officer was selected as a director, nominee or executive officer of the Company.


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2020 PROXY STATEMENT



 

13



ADDITIONAL INFORMATION CONCERNING THE

BOARD OF DIRECTORS

The Board of Directors oversees the overall performance of the Company on your behalf. Members of the board stay informed of our business by actively participating in numerous board and committee meetings, through discussions with the Chief Executive Officer (“CEO”) and other members of management and staff, and by reviewing other materials and communications provided to them.

Corporate Governance

Our Board of Directors is elected by the stockholders to govern our business and affairs.business. The board selects the senior management team, whichwho is charged with conducting our business. Having selected the senior management team, the boardbusiness, and acts as an advisor to senior management, and monitors its performance. The board reviews our strategies, financial objectives, operating plans, major risks,performance, and plans for mitigating such risks. It also plans for management successionapproves its compensation. Our Board of Directors engages in active discussion and oversight of the CEO,Company’s business plans and strategy. It dedicates a meeting each year as well as time at other regular meetings to cover strategic planning and monitoring. As part of this process, the board considers how best to capture opportunities and balance risks with potential stockholder returns in light of many factors such as our competitive landscape, technology developments, organizational structure, and financial objectives, among other things. The board’s responsibilities also include planning for senior management positions,succession, overseeing the integrity of our financial statements, and oversees ourmonitoring enterprise risks and compliance efforts.

To support these important duties, the board employs a strong framework of corporate governance practices, including those outlined below:

 

Independent
Leadership
and  Oversight

LOGO   All directors, except the Company’s Interim President and CEO, are independent

LOGO   Separate CEO and board chair roles

LOGO   Independentnon-executive Chairman of the Board

LOGO   Four new experienced independent directors added in the last three years, including two female and one ethnically diverse director, provides fresh perspectives

LOGO   Average board tenure of 7.4 years

LOGO   Executive sessions of independent directors scheduled at every regular board meeting

LOGO   Limit on additional board service (no director sits on more than 4 other public company boards)

LOGO   All directors possess highly relevant experience and knowledge (7 of 12 are current or former chief executive officers and 8 of 12 have software and/or technology industry experience)

Executive
Compensation Best Practices

LOGO   Emphasis on performance-based and long-term equity incentives

LOGO   2019 long-term equity program is 70% performance-based

LOGO   Prohibitions on hedging and pledging Company stock by officers and directors

LOGO   Clawback and harmful activity policies

LOGO   Annual advisory vote on compensation

LOGO   Annual incentive compensation is capped

LOGO   Approved by a fully-independent board committee using an independent consultant

Shareholder Engagement &
Alignment

LOGO   Track record of proactive, ongoing stockholder dialogue

LOGO   Significant Teradata stock ownership by officers and directors and strong stock ownership guidelines

Stockholder

Rights

LOGO   Majority vote standard for election of directors

LOGO   No poison pill in place

LOGO   Proxy access bylaw permits eligible stockholders to nominate candidates for election to the board

Ethics and
Sustainability

LOGO   Named a World’s Most Ethical Company by The Ethisphere Institute in 2020 for 11th straight year

LOGO   Comprehensive sustainability program with substantive annual reporting

LOGO

LOGO  11


Additional Information Concerning the Board of Directors

 

14


Shareholder Outreach


Stockholder Outreach

StockholderShareholder engagement is an important part of our business practices, and we greatly value the input we receive from our stockholders.shareholders. Teradata Investor Relations and members of Teradata management are in frequent communication with stockholdersshareholders on a variety of matters, including strategy, operations, corporate governance practices, and executive compensation. In November 2016, the Company hosted an Analyst Day for investors at which the management team directly engaged with stockholders regarding Teradata’s business transformation, including the Company’s strategic and financial plans. From time to time, independent members of the board also engage with stockholders.

In 2015 and 2016, at the direction of the board, Teradata has engaged in a robust stockholdershareholder outreach effort for many years to better understand and address any concerns stockholdersshareholders might have relating to the Company’s executive compensation program. InThis outreach continued through 2019 and early 2020, and in addition to compensation-related matters, a number of corporate governance matters as well as environmental and social matters were discussed with our stockholdersshareholders during the outreach process. As described below on page 3736 of the Compensation Discussion and Analysis section of this proxy statement, this engagement has been very productive and informative and, accordingly, stockholderinformative. Accordingly, shareholders’ interests have been taken into consideration in establishing or maintaining a number of meaningful changesaspects to Teradata’s executive compensation program.program and corporate governance framework as well as advancing our thinking on environmental and social matters. We have also enhanced our disclosures in this proxy statement based on input provided through our shareholder engagement process, particularly in the Compensation Discussion and Analysis and Corporate Responsibility and Sustainability sections.

Corporate Governance Guidelines

To help discharge its responsibilities, the Board of Directors has adopted Corporate Governance Guidelines on significant corporate governance issues. These guidelines address, among other things, such matters as director independence, committee membership and structure, meetings and executive sessions, the annual self-assessments of the board and its committees, and director selection, retirement, and training. The guidelines were updated in February 2020, to implement our policy with respect to the separation of the roles of our Chairman and Chief Executive Officer. The board’s Corporate Governance Guidelines which were updated in November 2016, are found on our corporate governance website athttp:https://www.teradata.com/governance-guidelines. The board’s independent directors have an opportunity to meet at each regularly scheduled meeting in executive session without management present and, as provided in the Corporate Governance Guidelines, the Board of Directors has selected the Chairman of the Board, who is anpresent. Our independent director, to presideLead Director presided at itsthese executive sessions during 2017.in 2019, and ournon-executive Chairman now presides at the executive sessions.

Board Independence and Related Transactions

We believe that the Company benefits from having a strong and independent board. For a director to be considered independent, the board must determine that the director does not have any direct or indirect material relationship with the Company that would affect his or her exercise of independent judgment. The Board of Directors has established independence standards as part of its Corporate Governance Guidelines. In general, the board must determine whether a director is considered independent, taking into account the independence guidelines of the New York Stock Exchange (“NYSE”) and the factors listed immediately following this paragraph (which are included as Exhibit B, Director Independence Standards, to the board’s Corporate Governance Guidelines referenced above) in addition to those other factors it may deem relevant. No director may qualify as independent unless the board affirmatively determines (i) under the NYSE listing standards, that he or she has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us), and (ii) under our independence standards, that the director or director candidate does not have any direct or indirect material relationship with us. Our independence standards include the following minimum criteria:

 

1.

A director will not be independent if:

at any time during the last three years, he or she has been an employee of Teradata, or an immediate family member of the director has been an executive officer of Teradata;

he or she has received, or has an immediate family member who has received, during any12-month period within the last three years, more than $120,000 in direct compensation from Teradata, other than certain limited circumstances, including: (a) compensation and other fees paid for service as a director; or (b) compensation received by an immediate family member for service as an employee of Teradata (other than as an executive officer);

he or she has certain relationships with any firm that serves as Teradata’s internal or external auditor, including (a) the director is a current partner or employee of such firm; (b) the director has an immediate family member who is a current partner of such firm; (c) the director has an immediate family member who is a current employee of such firm and personally works on Teradata’s audit; or (d) the director or an immediate family member of the director was within the last three years a partner or employee of such a firm and personally worked on Teradata’s audit within that time;

at any time within the past three years, the director or his or her immediate family member has been employed as an executive officer of another company where any of Teradata’s present executive officers at the same time serves or served on that company’s compensation committee; or

he or she is a current employee, or an immediate family member of the director is a current executive officer, of a company that has made payments to, or received payments from, Teradata for property or services in an amount which,


12    

2020 PROXY STATEMENT



Additional Information Concerning the Board of Directors


 

 (i)at any time during the last three years, he or she has been an employee of Teradata, or an immediate family member of the director has been an executive officer of Teradata;

15


(ii)he or she has received, or has an immediate family member who has received, during any12-month period within the last three years, more than $120,000 in direct compensation from Teradata, other than certain limited circumstances, including: (a) compensation and other fees paid for service as a director; or (b) compensation received by an immediate family member for service as an employee of Teradata (other than as an executive officer);

(iii)he or she has certain relationships with any firm that serves as Teradata’s internal or external auditor, including (a) the director is a current partner or employee of such firm; (b) the director has an immediate family member who is a current partner of such firm; (c) the director has an immediate family member who is a current employee of such firm and personally works on Teradata’s audit; or (d) the director or an immediate family member of the director was within the last three years a partner or employee of such a firm and personally worked on Teradata’s audit within that time;

(iv)at any time within the past three years, the director or his or her immediate family member has been employed as an executive officer of another company where any of Teradata’s present executive officers at the same time serves or served on that company’s compensation committee; or

(v)he or she is a current employee, or an immediate family member of the director is a current executive officer, of a company that has made payments to, or received payments from, Teradata for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues (in each case, as reported in the other company’s last completed fiscal year).

 

2.

A director will not be independent if he or she is an employee, or any member of the director’s immediate family is an executive officer, of a company which is indebted to Teradata or to which Teradata is indebted, and the total amount of the indebtedness exceeds the greater of $1,000,000 or 2% of the consolidated annual gross revenues of either company.

 

3.

A director will not be independent if he or she or any member of the director’s immediate family is an officer, director or trustee of a charitable or othertax-exempt organization, and donations by Teradata during any single fiscal year to the charitable or othertax-exempt organization within the last three years exceeds the greater of $1,000,000 or 2% of the organization’s consolidated annual gross revenues.

 

4.

A relationship arising solely from a director’s interest in another company or similar entity that is party to a transaction with Teradata will not be considered to be a material relationship with Teradata that would impair the director’s independence if: (i) such interest arises only from: (a) the director’s position as a director, trustee or similar position of such other company or entity, and/or (b) the direct or indirect ownership by the director and the director’s immediate family members, in the aggregate, is less than 10% of the equity or similar ownership interest in such other company or entity; and (ii) the director is not involved in the negotiation of the terms of the transaction with Teradata and does not receive any special benefits as the result of the transaction.

The board’s independence standards also provide for additional criteria for members of the Audit and Compensation and Human Resource Committees as required under applicable NYSE rules.

Our Board of Directors has affirmatively determined that all of ournon-employee directors and nominees, namely Mses.Mmes. Bacus, Nelson and Cooper,Olsen and Messrs. Chou, Fishback, Fu, Gianoni, Kepler, Ringler, Schwarz, and Stavropoulos, meet the NYSE listing independence standards and our independence standards for the board and the committees on which they serve. In making this

16


determination, the board considered transactions in 2015 and 2016 pursuant to which Cigna and its affiliate purchased data warehouse and marketing applications products and related services from Teradata, and Teradata purchased employee benefit program services, with aggregate sales attributed to such purchases significantly below 2% of the annual revenues of either company. The board concluded that Ms. Bacus’ relationship as an officer of Cigna does not disqualify her from being deemed independent under these standards. There were no other transactions, relationships or arrangements in fiscal year 20162019 that required review by the board for purposes of determining director independence.

Board Leadership Structure

WhileIn February 2020, we amended our Corporate Governance Guidelines to adopt a policy providing that the positions of Chairman of the Board and Chief Executive Officer should be held by separate persons. Our Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, ourindependent. In the event the Chairman of the Board is not independent, the Board will designate a Lead Director who is an independent,non-employee Director. The board believes that having separate positions and having an independent director serve as Chairman is the appropriatethis leadership structure, for us at this timeseparating the positions of Chairman and Chief Executive Officer, best serves the interests of Teradata and its stockholders and demonstrates our commitment to goodstrong corporate governance. Our boardgovernance practices.

Concurrent with this policy change, Mr. Gianoni was appointed ournon-executive Chairman of the Board, succeeding Mr. Lund, who is led by ancontinuing as a director and our Interim President and CEO. With his appointment asnon-executive Chairman of the Board, Mr. Gianoni is no longer serving as our independent Chairman,Lead Director. Mr. Ringler. OurLund, our Interim CEO, Mr. Lund, is the only member of the board who is not an independent director.independent. We believe that this leadership structure enhances the accountability of the CEO to the board, strengthens the board’s independence from management, and benefits independent risk oversight of the Company’sday-to-day risk management activities. In addition, separating these roles allows Mr. Lundour Interim CEO to focus his efforts on running our business, meeting with customers and investors, and managing the Company in the best interests of our stockholders, while we are able to benefit from the leadership experience of Mr. Ringler’s prior experience as a chairman of other public company boards.Gianoni.

Board Oversight of Risk

Management is responsible for the Company’sday-to-day risk management activities, and our board’s role is to engage in informed risk oversight. In fulfilling this oversight role, our Board of Directors focuses on understanding the nature of our enterprise risks, including our operations and strategic direction, as well as the adequacy of our risk management process and overall risk management system. The board’s committee structure and the collective knowledge and experience of its members promotes a broad perspective, open dialogue and useful insights regarding risk, thereby increasing the effectiveness of the board’s role in risk oversight.

There are a number of ways our board performs this risk oversight function, including the following:

 

at its regularly scheduled meetings, the board receives management updates on our business operations, financial results, and strategy and discusses risks related to the business;

 

the Audit Committee assists the board in its oversight of risk management by overseeing the Company’s enterprise risk management process and discussing with management – particularly, the Chief Financial Officer,Officer; the Vice President, Information Systems; the Vice President, Enterprise Risk and Assurance Services,Services; and the Chief Ethics, Compliance & Privacy Officer, and Director, Corporate Security –

LOGO  13


Additional Information Concerning the Company’s guidelines and policies regarding financial and enterprise risk management and risk appetite, including: (i) major risk exposures such as, for example, financial, cybersecurity, data privacy, business continuity,Board of Directors


Officer – the Company’s guidelines and policies regarding financial and enterprise risk management and risk appetite, including: (i) major risk exposures such as, for example, financial, cybersecurity, data privacy, operational, and legal and regulatory risks, and the steps management has taken to monitor and control such exposures; and (ii) internal audit and ethics and compliance updates, as well as whistleblower updates, if any;

the Audit Committee also receives quarterly reports from our Chief Information Security Officer assessing the status, adequacy and effectiveness of cybersecurity risks and twice per year, or more as needed, reviews and discusses the Chief Information Security Officer’s report on cybersecurity risks and the steps the security team has taken to monitor and control related exposures and reports to the board on these matters; and

 

through management updates and committee reports, the board monitors our risk management activities, including the enterprise risk management process, risks relating to our compensation programs, and financial and operational risks being managed by the Company.

Compensation Risk Assessment

Based on an analysis conducted by management and reviewed by the Board of Directors, we do not believe that our compensation programs for employees are reasonably likely to have a material adverse effect on the Company.

Director Education

The Company encourages directors to participate in continuing education programs focused on the Company’s business and industry, committee roles and responsibilities and legal and ethical responsibilities of directors, and the Company reimburses directors for their expenses associated with this participation. We also encourage our directors to attend Teradata events such as our annual users’ conference (Teradata Universe) and our investor day events. Continuing director education is also provided during board meetings and other board discussions as part of the formal meetings and may include internally developed materials and presentations as well as programs presented by third parties. In addition, new directors participate in extensive orientation sessions that are focused on corporate governance and the Company’s strategy and business.

17


Executive Management Succession Planning

In consultation with its Compensation and Human Resource Committee and CEO, the Board of Directors regularly reviews short- and long-term succession plans for all senior management positions and, in particular, our CEO.

The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic visionothers:

LOGO


14    

2020 PROXY STATEMENT



Additional Information Concerning the Board of Directors


As more fully discussed under the heading “CEO Transition and leadership, continuityNew Executive Leadership” on page 32 of the Compensation Discussion and Analysis section of this proxy statement, effective November 5, 2019, Mr. Ratzesberger was removed as President and CEO and replaced with Mr. Lund, our Interim President and CEO. In connection with this transition, the board promptly established an independent search committee (the “CEO Search Committee”) to advise the board on the identification and appointment of a new President and CEO. The CEO Search Committee has retained a leading independent search firm, Spencer Stuart, to assist it in identifying, vetting and contacting qualified candidates. The CEO Search Committee is undertaking a thorough and thoughtful search process to ensure that the permanent CEO to succeed Mr. Lund is the right leader to guide us through completion of our culture, operational excellence, financial management, executive officer leadership skills, ability to motivate employees, as well as an ability to develop an effective working relationship with the board and engender the confidence of our stockholders. Our current CEO, management team and Board of Directors are committed to overseeing a robust succession plan for the Company. To that end, we are identifying and developing a team of capable, willing and enthusiastic internal CEO and senior management candidates through increased responsibilities, additional opportunities to engage with investors and our board, as well as outside development education and other similar leadership enhancement activities.successful transformation.

Code of Ethics

We have a Code of Conduct that sets the standard for ethics and compliance for all of our employees, including our officers, directors, chief accounting officer, and corporate controller. Our Code of Conduct is available on our corporate governance website athttp:https://www.teradata.com/code-of-conduct.

Policy Regarding Hedging and Pledging of Teradata Securities

Pursuant to the Teradata Insider Trading Policy, Teradata associates (including employees, officers, and members of the Teradata Board of Directors) may not trade in derivative securities of Teradata or engage in hedging transactions involving Teradata securities. For purposes of this policy, “derivative securities” include publicly traded options, short sales, puts, calls, covered calls, straddles, strips, or similar derivative securities whether or not issued directly by the Company or by any stock exchange, and “hedging transactions” includepre-paid variable forwards, equity swaps, collars and exchange funds designed to hedge or offset any decrease in the market value of Teradata securities held by the Company’s employees, officers and directors.

In addition, under the Insider Trading Policy, directors and executive officers are prohibited from pledging Teradata securities as collateral for loans (including depositing such securities in margin accounts). While all other Teradata employees are not prohibited from pledging Teradata securities as collateral for loans, such employees are advised to exercise caution in holding Teradata securities in a margin account or pledging Teradata securities as collateral for a loan.

Delinquent Section 16(a) Beneficial Ownership Reporting ComplianceReports

To the best of our knowledge, in 2019 all of our executive officers and directors timely filed the reports required under Section 16(a) of the Securities Exchange Act of 1934, other than Mr. Ringler, who, because ofexcept that Scott Brown, our Chief Revenue Officer, filed one late report due to an inadvertent error in describing certain estate planning transactions, was late in filing 4 reports reporting 16 related transfers of shares to family entities for estate planning purposes. None ofadministrative oversight by the transactions resulted in any change in the total number of shares reported as beneficially owned by Mr. Ringler.Company.

Meetings and Meeting Attendance

The Board and its committees met throughout the year on a set schedule, held special meetings, and acted by written consent from time to time as appropriate. At each of its regular meetings, the board met in executive session without the CEO present. Members of the senior management team regularly attend board meetings to present information on our business and strategy, and board members are welcome and encouraged to meet with employees worldwide and to attend industry, analyst, and other major events.

The board and its committees met a total of 2930 times last year. In 2016,2019, each of the directors attended 75% or more of the total number of meetings of the board and the committee(s) on which he or she serves.serves except for Ms. Nelson, who joined our Board in November 2019 and attended two out of three meetings. In addition, under the board’s Corporate Governance Guidelines, our directors are expected to attend our annual meeting of stockholders each year. All of our directors attended the 20162019 annual meeting of stockholders.stockholders, except Ms. Nelson who did not join our board until November 2019.

Director Commitments

Under our Corporate Governance Guidelines, each board member is expected to ensure that other existing and planned future commitments do not materially interfere with the other member’s service as a director and that he or she devotes the time necessary to discharge his or her duties as a director. In assessing whether directors and nominees for director have sufficient time and attention to devote to board duties, the Governance Committee and our board consider, among other things, whether directors may be “overboarded,” which refers to the situation where a director serves on an excessive number of boards. Under our Corporate

LOGO  15


Additional Information Concerning the Board of Directors


Governance Guidelines, a director may not serve on the boards of more than four other public companies, or, if the board member is an active chief executive officer (or its equivalent), on the board of more than two other public companies. Each of our directors is in compliance with this requirement, and our board believes that each of our directors, including each of our director nominees, has demonstrated the ability to devote sufficient time and attention to board duties and to otherwise fulfill the responsibilities required of directors.

However, we understand that certain institutional investors may deem Ms. Nelson overboarded because she serves on more than one public company board. In addition to our board, Ms. Nelson serves on the board of directors of Calyxt, Inc. Our board does not believe that Ms. Nelson’s outside board or other commitments limit her ability to devote the time necessary to discharge her duties as a director of Teradata. Our board believes that Ms. Nelson has demonstrated, and will continue to demonstrate, her ability to dedicate sufficient time to discharge her board duties effectively and believes that it is in the Company’s best interest that she continue to serve as a director for the following reasons:

Ms. Nelson is a newly-appointed director and adds gender diversity to the board as well as significant financial expertise and experience in cloud-based technologies;

Ms. Nelson has assured our board that she is fully committed to continuing to dedicate the appropriate amount of time to fulfill her duties as a member of the board and the Audit Committee. Since joining the board in November 2019, she has attended six formal meetings of Teradata’s Board of Directors and Audit Committee, and has also participated in orientation-related meetings and discussions with management and a number of informal meetings with directors in connection with our CEO transition; and

Calyxt is headquartered in the Minneapolis area, where Ms. Nelson resides. Calyxt completed its initial public offering in July 2017 and is an emerging growth company under SEC rules with 2019 revenues of $7.3 million.

Selection of Nominees for Directors

The Board of Directors and the Governance Committee are responsible for recommending candidates for membership to the board. The director selection process and director qualification guidelines are described in detail in the board’s Corporate Governance Guidelines, which are posted on our corporate governance website athttp:https://www.teradata.com/governance-guidelines.

In determining candidates for nomination, the Governance Committee will seek the input of the Chairman of the Board, and the CEO and other directors, and will consider individuals recommended for board membership by our stockholders in accordance with our bylaws and applicable law. In general, we desire to have a balanced group of directors thatwho can perpetuate the Company’s long-term success and represent stockholder interests generally through the exercise of sound business judgment using itsbased on a diversity of experiences and perspectives.

As part of the selection process, the board and the Governance Committee use the qualification factors listed in our Corporate Governance Guidelines and examine candidates’ business skills and experience, personal integrity, judgment, and ability to devote the appropriate amount of time and energy to serving the best interests of stockholders, in addition to the objectives and desired

18


composition of the board as a whole and the Company’s current and future needs. Although we do not have a formal diversity policy, the Governance Committee and the board also consider the desire fordesirability of diverse perspectives that can be gained throughfrom different professional experiences, backgrounds, and education, as well as gender, race or ethnic diversity. In addition, while the board does not have age or term limits, it seeks to balance director turnover. The board believes that new perspectives and ideas are critical to a forward-looking and strategic board as is the ability to benefit from the valuable experience and familiarity that longer-serving directors bring to the board room.

As previously reported by the Company, the Governance Committee engaged the outside search firm of Spencer Stuart LLP to assist it in identifying and contacting qualified candidates, and the board decided to expand its size by appointing Ms. Nelson as a new director in 2019. In addition to her other qualifications, the board of directors considered diversity in its election of Ms. Nelson, including the value of adding additional gender diversity to our board of directors. As described under the caption “Director Qualifications” on pages 64 to 75 of this proxy statement, we believe our current directors haverepresent a highly qualified and capable board with very diverse perspectives business skills, experience, and backgrounds.balanced tenure.

Stockholders wishingIf you are a stockholder and wish to recommend individuals for consideration as directors, shouldyou can submit theiryour suggestions in writing to theour Corporate Secretary of the Companyas outlined in accordance with the provisions ofour bylaws. Under our bylaws, which require the recommending stockholderyou will need to provide, among other things, the candidate’s name, age, residential and business contact information, detailed biographical data and qualifications for service as a board member, the class or series and number of shares of Teradata’s capital stock (if any) which are owned beneficially or of record by the candidate, a document signed by the candidate indicating the candidate’s willingness to serve, if elected, and evidence of the stockholder’s ownership of our stock. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as other candidates. Stockholders who intend to nominate directors for election at our next annual


16    

2020 PROXY STATEMENT



Additional Information Concerning the Board of Directors


meeting of stockholders must follow the procedures described in our bylaws, which are available on our corporate governance website athttp:https://www.teradata.com/articles-and-bylaws. See “Procedures for Stockholder Proposals and Nominations” on page 8171 of this proxy statement for further details regarding how to nominate directors.

The directors nominated by the Board of Directors for election at the 20172020 annual meeting were recommended by each of the members of Governance Committee following the process described above. See “Director Qualifications” and “Nominees” on pages 6 through 94 to 10 of this proxy statement for further details regarding the reasons and director attributes supporting these nominations. All of these candidates for election are currently serving as our directors and have been determined by the board to be independent. Mr. Stavropoulos, one of our current directors, informed the board that he is retiring from the board at the expiration of his current term at the 2020 annual meeting and thus will not stand forre-election.

Under the board’s Corporate Governance Guidelines, if any director who is nominated for election at the 20172020 annual meeting is notre-elected by the required majority vote, such director is required to promptly offer his or her resignation. The Board of Directors, giving due consideration to the best interests of the Company and our stockholders, is required to evaluate the relevant facts and circumstances, including whether the underlying cause of the director’s failure to receive the required majority vote can be cured, and make a decision on whether to accept the offered resignation. Any director who offers a resignation pursuant to this provision cannot participate in the board’s decision process. The Board of Directors will promptly disclose publicly its decision and, if applicable, the reasons for rejecting the offered resignation. If the board accepts a director’s resignation pursuant to this process, the Governance Committee will recommend to the Board of Directors whether to fill the resulting vacancy or reduce the size of the board.

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19



COMMITTEES OF THE BOARD

Committee Structure and Responsibilities

Our Board of Directors has four standing committees: the Audit Committee, the Compensation and Human Resource Committee, the Committee on Directors and Governance, and the Executive Committee. In addition, in November 2019, the board formed a CEO Search Committee to advise the board in connection with the identification and appointment of a new President and CEO.

Audit Committee:

The Audit Committee is the principal agent of the Board of Directors in overseeing our accounting and financial reporting processes and audits of our financial statements and internal controls, including assisting in the board’s oversight of (i) the integrity of our financial statements, (ii) our compliance with ethical, legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered public accounting firm, and (iv) the qualifications and performance of our internal audit function and internal auditors.

The Audit Committee also:

 

is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm andpre-approving all audit services, as well as any audit-related, tax and othernon-audit services, to be performed by such firm;

oversees the negotiation of audit fees in connection with the retention of our independent registered public accounting firm;

reviews and discusses with our independent registered public accounting firm its quality control procedures;

The Audit Committee also:

  is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm andpre-approving all audit services, as well as any audit-related, tax and othernon-audit services, to be performed by such firm;

  oversees the negotiation of audit fees in connection with the retention of our independent registered public accounting firm;

  reviews and discusses with our independent registered public accounting firm its quality control procedures;

Current Members:

   David E. Kepler (Chair)

   Timothy C.K. Chou

   Cary T. Fu

   Kimberly K. Nelson

   Joanne B. Olsen

All members are independent.

 

regularly reviews the annual audit plan of our independent registered public accounting firm, including the scope of audit activities, and monitors the progress and results of the annual audit;

 

meets with the independent registered public accounting firm, the internal auditors and management to review and discuss the internal audit scope and plan, the results of internal audit activities, and the adequacy of our internal controls and financial, accounting and reporting processes;

 

oversees the appointment, removal performance, and compensationperformance of our chief audit executive;

 

discusses with management and the independent registered public accounting firm our annual audited financial statements and unaudited quarterly financial statements, and recommends to the board that the audited financial statements be included in the Company’s annual report filing with the SEC;U.S. Securities and Exchange Commission (“SEC”);

 

discusses with management and the independent registered public accounting firm (i) all critical accounting policies and practices used, (ii) any significant financial reporting issues and judgments made in connection with the preparation of our financial statements, including analyses of the effects of alternative accounting methods under generally accepted accounting principles that have been discussed with management and the treatment preferred by the independent registered public accounting firm, (iii) the effect of regulatory and accounting initiatives andoff-balance sheet structures on our financial statements, and (iv) any other reports required by law to be delivered by the independent registered public accounting firm, including any management letter or schedule of unadjusted differences;

 

is directly responsible for oversight of our major financial and enterprise risk exposures such as, for example, financial, cash investments, cybersecurity, information technology, (“IT”), data privacy, business continuity, and legal and regulatory risks, and regularly discusses management’s plans and actions related to these areas;

 

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receives periodic reports from our internal auditors on findings of fraud, if any, and its significant findings regarding the design and/or operation of internal control over financial reporting as well as management responses to such findings;

 

reviews our periodic SEC filings and our quarterly earnings releases;

 

oversees our ethics and compliance program;

 

prepares the committee report required pursuant to the rules of the SEC for inclusion in our proxy statements;

 

ensures that the Company has established procedures for the confidential submission of employee concerns regarding accounting or auditing matters, as required by The Sarbanes-Oxley Act of 2002;matters; and

 

reviews relationships between the Company and our independent registered public accounting firm or any of its subsidiaries to ascertain the independence of the external auditors.


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2020 PROXY STATEMENT



Committees of the Board


The Audit Committee has threefive members, Ms. CooperMmes. Nelson and Olsen and Messrs. Chou, Fu and Kepler, each of whom meets the NYSE listing independence standards, is independent under our recently-updated independence standards and financially literate, as determined by the board under applicable NYSE standards. In addition, the board has determined that because of their respective accounting and financial management expertise, two outeach of three of the members of the Audit Committee, including the committee Chair, areMs. Nelson and Mr. Fu is an “audit committee financial experts,expert,” as defined under SEC regulations. No member of the committee may receive any compensation, consulting, advisory or other fee from us, other than board compensation described belowbeginning on page 28 of this proxy statement under the caption “Director Compensation,” as determined in accordance with applicable SEC and NYSE rules. Each Audit Committee member is limited to serving on the audit committees of two other public companies, unless the Board of Directors evaluates and determines that these other commitments would not impair the director’s effective service to us.

A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Audit Committee Charter. A copy of this charter, which was last amended by the committee on November 29, 2016,July 19, 2018, can be found on our corporate governance website athttp:https://www.teradata.com/audit-committee-charter. A report of the Audit Committee is set forth below on page 7767 of this proxy statement.

Compensation and Human Resource Committee

In general, this committee (i) discharges our board’s responsibilities relating to the compensation of our executives, (ii) provides general oversight of our management compensation philosophy and practices, benefit programs, and strategic workforce initiatives, (iii) oversees succession planning and leadership development activities, and (iv) reviews and approves our overall compensation principles, objectives and programs covering executive officers and key management employees as well as the competitiveness of our total executive officer compensation practices. The Compensation and Human Resource Committee also:

 

evaluates and reviews the performance levels of our executive officers in light of the Company’s goals and objectives and determines base salaries and equity and incentive awards for such officers;

The Compensation and Human Resource Committee also:

   evaluates and reviews the performance levels of our executive officers in light of the Company’s goals and objectives and determines base salaries and equity and incentive awards for such officers;

   establishes the annual goals and objectives of the CEO, after consulting with the independent members of the board;

   at executive session of the Board of Directors, discusses its evaluation of, and

determination of compensation for, the CEO based on the CEO’s performance against annual goals and objectives;

Current Members:

   Daniel R. Fishback (Chair)

   Lisa R. Bacus

   James M. Ringler

   John G. Schwarz

All members are independent.

 

establishes the annual goals and objectives of the CEO, after consulting with the independent members of the board;

at executive session of the Board of Directors, discusses its evaluation of, and determination of compensation for, the CEO based on the CEO’s performance against annual goals and objectives;

21


reviews and, as needed, recommends to our Board of Directors for approval our executive compensation plans, including incentive compensation plans, and all equity-based compensation plans;

 

oversees our plans for management succession and development and, on an annual basis, assists the Board of Directors in reviewing and monitoring succession planning, particularly with respect to the CEO;

 

reviews and discusses with management the disclosures in our proxy statements with respect to executive compensation policies and procedures and produces the committee’s annual report related to such disclosure for inclusion in our proxy statements;

 

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

 

reviews the stock ownership guidelines and compliance of the CEO and other executive officers with such guidelines;

 

exercises administrative and oversight functions assigned to the committee under the Company’s various benefit plans, including the Company’s 401(k) savings plan;

 

oversees the Teradata Benefits Committee to which it delegated oversight and management responsibilities for U.S.-based employee benefit plans;

 

periodically reviews and monitors the Company’s diversity and inclusion practices;representations and initiatives on a bi-annual basis; and

 

reviews and makes recommendations to the board with respect to stockholder approval of executive compensation(say-on-pay (say-on-pay votes) and the frequency ofsay-on-pay votes, including review of stockholder feedback as appropriate.

The Compensation and Human Resource Committee has threefour members, Ms. Bacus and Messrs. Fishback, Ringler and Schwarz, each of whom the Board of Directors has determined meets the NYSE listing independence standards and our independence standards. The committee may form subcommittees with authority to act on the committee’s behalf as it deems appropriate and has delegated authority to our CEO and Chief Human ResourceResources Officer to award equity to individuals other than executive officers in limited instances. In addition, the CEO conducts annual performance evaluations of executives and, after consulting with the Chief Human ResourceResources Officer, provides this committee with his assessments and recommendations with respect to the amount and form of compensation for such executives.

LOGO  19


Committees of the Board


In July 2016,2019, this committee extended the engagement of Semler Brossy Consulting Group, LLCFrederic W. Cook & Co. (“FW Cook”) as its outside compensation consultant to assist the committee in the development of our executive compensation and benefit programs, including the amount and form of such compensation, and in the evaluation of our CEO. The rules for the use of the compensation consultantconsultants by the committee and management include the following: (i) only the committee and its Chair can hire or fire the consultant;consultant with respect to such services; (ii) on an annual basis, the consultant will provide the committee with a letter of the projected scope of services for the year; (iii) the consultant’s work will be coordinated with our Chief Human ResourceResources Officer and any project undertaken at management’s request will be with the knowledge and consent of the committee Chair; (iv) the consultant will have direct contact with the committee; and (v) the committee will evaluate the performance of the consultant on an annual basis. In 2016,2019, management did not engage the outside compensation consultantconsultants to perform any executive compensation consulting services for the Company. Moreover, the Compensation and Human Resource Committee reviewed the independence of the consultant in light of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that the firm’s work for the committee is independent and does not raise any conflicts of interest. A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Compensation and Human Resource Committee Charter, which was last amended on April 29, 2013, and is available on our corporate governance website athttp:https://www.teradata.com/compensation-committee-charter. A report of the committee is set forth below on page 3230 of this proxy statement.

22


Committee on Directors and Governance:

This committee is responsible for reviewing the board’s corporate governance practices and procedures, and:procedures.

 

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

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

reviews and makes recommendations to the board concerningnon-employee director compensation;

The Committee on Directors and Governance also:

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

   reviews the composition of our Board of Directors and the qualifications of persons identified as prospective directors, recommends to the board the candidates to be

nominated for election as directors, and, in the event of a vacancy on the board, recommends any successors;

   reviews and makes recommendations to the board concerning non-employee director compensation;

Current Members:

   Michael P. Gianoni (Chair)

   James M. Ringler

   William S. Stavropoulos

All members are independent.

 

sees that proper attention is given, and appropriate responses are made, to stockholder concerns regarding corporate governance matters; and

 

oversees the Company’s Related Person Transactions Policy and Corporate Governance Guidelines.Guidelines, including the standards regarding director independence.

TheIn January 2019, the Governance Committee has directly engaged Semler Brossy Consulting Group, LLCextended the engagement of FW Cook as its consultant to review our director compensation programprogram. The Governance Committee reviewed the independence of FW Cook in prior years. However, becauselight of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that the firm’s work for the committee didis independent and does not makeraise any changes to such program in 2016, it did not engage a compensation consultant last year.conflicts of interest.

The Governance CommitteeThis committee is composed entirely of independent directors, Messrs. Gianoni, Ringler and Stavropoulos. The committee approved the nomination of the candidates reflected in Proposal 1. A more detailed discussion of the committee’s mission, composition and responsibilities is contained in its charter, which was last amended on November 29, 2016, and is available on our corporate governance website athttp:https://www.teradata.com/committee-on-directors-and-governance-charter.

Executive Committee:

Executive Committee

The Executive Committee has three members, Messrs. Lund, Ringler, and Stavropoulos. This committee has the authority to exercise all powers of the full Board of Directors,
except those prohibited by applicable law, such as amending the bylaws or approving a merger
that requires stockholder approval. This committee meets between regular board meetings if
urgent action is required.

Current Members:

   Michael P. Gianoni (Chair)
   Daniel R. Fishback
   David E. Kepler
   Victor L. Lund

CEO Search Committee

The CEO Search Committee was formed in November 2019 and has four members, Ms. Olsen
and Messrs. Fishback, Gianoni, and Schwarz. This committee advises the board in connection
with the identification and appointment of a new President and CEO. This committee holds
meetings as frequently as the committee deems necessary and provides periodic reports to the
board.

Current Members: ·

   Michael P. Gianoni (Chair)
   Daniel R. Fishback
   Joanne B. Olsen
   John G. Schwarz

All members are independent.


20    

2020 PROXY STATEMENT



Committees of the full Board of Directors, except those prohibited by applicable law, such as amending the bylaws or approving a merger that requires stockholder approval. This committee meets between regular board meetings if urgent action is required.

 

23



 
Board Committee Membership as of December 31, 2016 
Name 

Executive

Committee

  

Compensation and

Human Resource

Committee

  

Audit

Committee

  

Committee on

Directors and

Governance

 

James M. Ringler

  LOGO  LOGO       LOGO 

Lisa R. Bacus

      LOGO         

Timothy C.K. Chou

                

Nancy E. Cooper

          LOGO    

Daniel R. Fishback

                

Cary T. Fu

          LOGO     

Michael P. Gianoni

              LOGO 

David E. Kepler

          LOGO     

Victor L. Lund

  LOGO             

John G. Schwarz

      LOGO        

William S. Stavropoulos

  LOGO   LOGO       LOGO

Number of meetings in 2016

  0   8   9   4 
Board Committee Membership as of December 31, 2019

  NAME EXECUTIVE
COMMITTEE (1) (2)
 COMPENSATION AND HUMAN
RESOURCE COMMITTEE (1)
 AUDIT
COMMITTEE
 COMMITTEE ON DIRECTORS
AND GOVERNANCE
 CEO SEARCH
COMMITTEE

 

Victor L. Lund

 

   LOGO        

 

Lisa R. Bacus

 

 

     LOGO      

Timothy C.K. Chou

 

 

       LOGO    

Daniel R. Fishback

 

 

   LOGO   LOGO*       LOGO

Cary T. Fu

 

 

       LOGO    

Michael P. Gianoni

 

 

   LOGO*       LOGO*   LOGO*

David E. Kepler

 

 

   LOGO     LOGO*    

Kimberly K. Nelson

 

 

       LOGO    

Joanne B. Olsen

 

 

       LOGO     LOGO

James M. Ringler

 

 

     LOGO     LOGO  

John G. Schwarz

 

 

     LOGO       LOGO

William S. Stavropoulos

 

 

         LOGO  

Number of Meetings in 2019

 

   0   10   6   5   1

*

Committee Chair

Note: Since the end of 2016, Mr. Gianoni has been appointed Chair

(1)

As of April 30, 2019, Mr. Fishback replaced Mr. Schwarz as the chair of the Compensation and Human Resource Committee and as a member of the Executive Committee.

(2)

As of February 6, 2020, Mr. Gianoni was appointed thenon-executive Chairman of the Board and replaced Mr. Lund as the chair of the Executive Committee.

Compensation Committee on DirectorsInterlocks and Governance, and Mr. Stavropoulos no longer serves on the Compensation and Human Resource Committee.

COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONInsider Participation

During our fiscal year 2016,2019, no member of the Compensation and Human Resource Committee was a current or former officer or employee of the Company. None of our executive officers served as a member of the compensation committee (or board of directors serving the compensation function) or director of another entity where such entity’s executive officers served on our Compensation and Human Resource Committee or board.

COMMUNICATIONS WITH DIRECTORSCommunications with Directors

Stockholders and interested parties wishing to communicate directly with our Board of Directors, any individual director, the Chairman of the Board or, if applicable, the independent Lead Director, or ournon-management or independent directors as a group are welcome to do so by writing our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342.17095 Via Del Campo, San Diego, CA 92127. The Corporate Secretary will forward any communications as directed. Any matters reported by stockholders or interested parties relating to our accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee as appropriate. Anonymous and/or confidential communications with the Board of Directors may also be made by writing to this address. For more information on how to contact our board, please see our corporate governance website athttp:https://www.teradata.com/contact-the-board.

LOGO  21


 

24



RELATED PERSON TRANSACTIONS

Our Related Person Transactions Policy was adopted by the Board of Directors in 2007, and the board approved minor amendments to the policy in January 2013. Under this policy, the board’s Committee on Directors and Governance (the “Governance Committee”) is responsible for reviewing and approving each transaction in which Teradata was a participant involving or potentially involving an amount in excess of $120,000 and in which a related person had a material interest. A related person is any director or executive officer, any immediate family member of a director or executive officer, a 5% or more stockholder, and any immediate family member of a 5% or more stockholder.

This policy provides for approval or ratification of each related person transaction in accordance with the procedures and policies discussed below (i) by our Governance Committee, or (ii) if the Governance Committee determines that the approval or ratification of such related person transaction should be considered by all of the disinterested members of the Board of Directors, by a majority vote of the disinterested members of the board.

The policy provides forrequires our General Counsel to advise the Chair of the Governance Committee of any potential related person transaction involving in excess of $120,000 of which the General Counsel becomes aware, including management’s assessment of whether the related person’s interest in the potential related person transaction is material. The Governance Committee is required to consider such potential related person transaction, including whether the related person’s interest in the potential related person transaction is material, unless the Governance Committee determines that the approval or ratification of such potential transaction should be considered by all of the disinterested members of the Board of Directors, in which case such disinterested members of the board will consider the potential transaction. Except as set forth below, we will not enter into a related person transaction that is not approved in advance unless the consummation of such transaction is expressly subject to ratification.

If we enter into a transaction that we subsequently determine is a related person transaction or a transaction that was not a related person transaction at the time it was entered into but thereafter becomes a related person transaction, then in either such case the related person transaction must be presented to the Governance Committee or the disinterested members of the Board of Directors, as applicable, for ratification. If the related person transaction is not ratified, then we are required to take all reasonable actions to attempt to terminate our participation in the transaction.

Factors that are reviewed by the Governance Committee or the Board of Directors, as applicable, when evaluating a potential related person transaction include: (i) the size of the transaction and the amount payable to a related person; (ii) the nature of the interest of the related person in the transaction; (iii) whether the transaction may involve a conflict of interest; (iv) whether the transaction is fair to the Company; (v) whether the transaction might impair independence of an outside director of the Company; and (vi) whether the transaction involves the provision of goods or services to us that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to us as would be available in comparable transactions with or involving unaffiliated third parties.

Since the beginning of 2019, there were no related party transactions between us and our officers, directors or any of their immediate family members or entities with which they have a position or relationship that required consideration by the Governance Committee.


22    

2020 PROXY STATEMENT



 

25


CORPORATE RESPONSIBILITY AND SUSTAINABILITY

Our Mission

We transform how businesses work and people live through the power of data.

Our Commitment

At Teradata, we are committed to fostering a corporate culture, anchored in our core values, that intentionally fosters inclusion and diversity, operating in a sustainable manner and giving back to the communities in which we operate. We are committed to a diverse and inclusive workplace. We believe that all our stakeholders – our stockholders, employees, customers, suppliers, the people in the communities in which we operate, and the environment – must be considered in our daily operations. As a result of our focus on our culture and our communities, we are committed to giving back to the places in which we operate, and we believe in doing our part to address the world’s environmental challenges. We are achieving these commitments through a number of initiatives, including those listed below.

Governance

Our board and management team set the tone for our corporate culture, and one vital element of our culture is operating as a good global citizen. Our board is actively engaged in the oversight of our corporate responsibility and sustainability. Our Audit Committee is tasked with responsibility and oversight of our ethical standards and compliance, including initiatives pertaining to corporate social responsibility, sustainability and long-term corporate strategy and performance. Our Compensation and Human Resource Committee provides board-level oversight relating to matters regarding our people, including supporting our Company’s inclusion and diversity practices, as well as overseeing our leadership development activities.

Our management is responsible for implementing the Company’s ethical standards and compliance initiatives. Representative of the importance of our commitment to Corporate Social Responsibility (CSR), we created a cross functional team of representatives across the Company to monitor our corporate social responsibility and supporting areas for ongoing efforts.

Our Chief Human Resources Officer is responsible for implementation of the Company’s human resources strategies and programs, including our inclusion and diversity initiatives, employee engagement and enhancing the employee experience, as well as career development and executive leadership planning. In addition, our Chief Ethics, Compliance and Privacy Officer is our senior leader responsible for our ethics and compliance initiatives, including administration of our Code of Conduct.

LOGO

Our People and Culture

Teradata’s strength is our people. We are an equal opportunity employer, committed to sustaining a world-class team by empowering an environment that is intentionally inclusive and fully leverages diversity in all aspects of our business. We champion each other, share our expertise and learn from each other to multiply our collective value for Teradata’s competitive advantage. We continuously strive to create an environment where differences are valued, supported and encouraged.

Teradata is committed to providing a working environment free from discrimination and harassment. We are actively engaged in nurturing an inclusive culture: one that seeks out, welcomes and values diverse people and encourages inclusiveness in our actions. In addition, we remain firmly committed to ensuring that all of our team members are compensated fairly, based on ability, job responsibilities, experience, and performance. Our people and culture initiatives, including those relating to diversity and inclusion, include the following:

   We are providing training on bias to all employees and monitor metrics for our progress. We commit to leverage our insights to uncover unconscious bias and take action to catalyze change.

   We provide resources and assets to our employees on how to engage within culturally- and geographically- dispersed work teams to ensure a culture of growth, learning and collaboration. In 2020, we plan to have each member of our workforce participate in our Culture Learning Lab, a globally delivered interactive workshop that will heighten the behaviors that contribute most to an outstanding culture.

   We have made a formal pledge, along with more than 650 CEOs of global organizations, to the CEO Action for Diversity & Inclusion, a major effort to create more equality in the workplace.

LOGO  23


Corporate Responsibility and Sustainability


   Our hiring managers and our talent acquisition team are committed to ensuring a diverse slate of candidates for all job openings. In 2020, there will be additional focus on inclusive hiring practices, including inclusive interviewing skills for recruiters and hiring managers and ensuring neutrality in job ads and recruiting materials to improve the overall candidate experience. We also maintain ongoing relationships with severalon-campus recruiting departments at top colleges and universities around the world. Additionally, we have diversity hiring goals for our summer internship programs, inviting perspectives from a wide range of diverse future leaders.

   We believe that our employees are the foundation of our Company and strive to provide an environment where they can successfully integrate professional and personal responsibilities. We promote policies and programs that support working families, such as our flexible time off policy, which allows U.S. employees unlimited paid time off for vacations or personal needs, our generous paid sick time policy, and paid parental leave for both new mothers and fathers following the birth or adoption of a child.

   Our Inclusion Communities provide networking, mentoring and learning opportunities for all employees. These employee groups provide meaningful development opportunities for our employees and are focused on inclusion and diversity goals related to fostering an inclusive workplace, attracting a diverse workforce, and enabling outreach to our communities and customers. Our Inclusion Communities include Teradata Pride, Terabytes, Women of Teradata, Blend India, and the Teradata Alliance for Black Employees.

   In 2019, we featured an Inclusion Speaker Series, bringing in experts and keynote speakers to surface topics that may be potentially challenging, difficult or complex in order to help our employees begin to have dialogues that will lead to broader understanding and inclusion practices.

   We are collaborating with the United Nations Global Compact, Athena and the New York Academy of Sciences to drive business awareness of the fundamental workforce diversity and help companies achieve gender equality by 2030.

   Through our commercial and government supplier diversity programs, we seek to integrate supplier diversity into all areas of procurement by identifying, partnering with and purchasing from small businesses and minority and women-owned businesses to support their growth and development.

LOGO

Sustainable Practices

•   Products - We design technology for the future, and the future demands powerful analytic solutions that are intended to meet increasingly stringent standards to support the earth’s precious resources, including efficient usage of power and water, as well as space efficiency. Therefore, we focus on providing customers withbest-in-class products that are not only highly scalable, but environmentally sustainable as well. To that end, we continuously search to find and leverage technology alternatives that can improveperformance-per-watt, reduce cooling requirements, and shrink floor space needs in data center requirements as part of our product design initiatives. For the tenth consecutive year, Teradata was named to the Dow Jones Sustainability North American Index for the Software and Services industry.

•   Supply Chain - Our suppliers and business partners are expected to meet or exceed the standards of our Code of Conduct which includes adherence to ethical, responsible and environmentally sustainable business practices with respect to all of their Teradata-related activities. We have also established a managed inventory program that requires suppliers to ship bulk quantities of product to local hubs near our manufacturing site, rather than discrete customer shipments. This not only reduces our inventory costs, but also greatly reduces the environmental impact of our manufacturing supply chain. In addition, our Conflicts Minerals Policy prohibits Teradata, its subsidiaries, employees, and suppliers from utilizing conflicts minerals sourced from forced labor, child labor, slavery, or violence in the region of the Democratic Republic of the Congo in Africa or those who perpetrate or support such human rights abuses.

•   Facilities - We have designed our facilities to reduce Teradata’s environmental impact and have implemented many programs in the areas of video conferencing, virtual employment, recycling and energy conservation that get the job done while using andre-using resources at the most efficient level possible. From printing all corporate business cards on stock that is 100% recycled/post-consumer waste material, to recycling all of ournon-hazardous waste and providing 100 charging stations for electric cars at our San Diego headquarters, to installing a cutting-edge building automation system to optimize efficiency in lighting and HVAC systems, to sending our annual report and proxy statement electronically to reduce unnecessary paper usage, we adopt sustainable policies and procedures at every opportunity.


24    

2020 PROXY STATEMENT



Corporate Responsibility and Sustainability


LOGO

Doing Good with Data™

   We are committed to giving back to the communities in which we operate and where we live and we believe we can build a better world by working together and improving lives through the power of data.

   In line with our mission of transforming how businesses work and people live through the power of data, we are also committed to making societal change utilizing the power of what we know best, data. We demonstrate how we help charitable organizations apply data for good, by using our technology and expertise to help nonprofits strengthen their analytics infrastructure and find the answers they need. We encourage our employees to partner with charitable organizations by offering data skills since nonprofits often lack the resources needed to analyze volumes of data that could help transform their organizations.

   We are a founding member of the 2019 – 2022 UN Global Compact, focused on setting the United States agenda for adopting and implementing sustainable and socially responsible policies in the workplace, define STEM priorities, and leadC-Suite discussions with the United Nations.

   We support local STEM education programs to ensure emerging leaders in our communities have opportunities to explore their interests. For example, our Women of Teradata Inclusion Community works with local robotics teams to provide learning opportunities to students interested in STEM careers.

   Our Teradata Cares program empowers our employees to help build strong and vibrant communities, improve quality of life and make a positive difference where we live and where we work through volunteerism and giving. Through this program, our employees volunteered more than 25,000 hours of service in 2019. We support our employees’ giving and volunteer efforts by providing matching donations for employee contributions to qualifiednot-for-profit agencies, project grants, Annual Days of Caring, supporting communities where we have large employee gatherings. To further enable employees to support the charity of their choice, we afford every employee four days a year during normal working hours for volunteer efforts of their choice.

   Also, it is important to note that our customers across the globe are using our offerings to do great things through data - from supporting the data that provides groundbreaking discoveries in medical research to facilitating lifesaving telecommunications in times of emergencies.

LOGO

Ethical Business Conduct

   Teradata has been included on the Ethisphere Institute’s list of the World’s Most Ethical Companies every year since 2010.

   In 2019, Teradata was also included on the Forbes Just 100, a list that highlights companies that do well in areas of community engagement, management performance and shareholder returns, worker treatment, customer treatment, and job opportunity and creation.

   We have azero-tolerance policy fornon-ethical behavior and expect the highest standards of compliance throughout the world. Our ethical standards run from top to bottom in our company. All employees, including our Leadership Team and directors, are bound by our Code of Conduct which establishes the minimum standards of proper conduct that must be met.

   We are committed to supporting human rights and have set high expectations and standards for our employees in locations globally. In addition, we have implemented systems and controls designed to ensure that slavery and human trafficking do not occur anywhere in our business or in that of our supply chains.

   We also have clearly defined core values that help establish and maintain our company culture where Teradata people and Teradata organizations constantly strive to exceed standards and expectations and always strive to “Dig Deep and Aim High, Rise as One, Raise up our Customers and our World.” At Teradata, we refer to this as doing the right thing...always.

For more information:

Visit our Corporate Social Responsibility website:https://www.teradata.com/About/Corporate-Social-Responsibility-en.

LOGO  25



STOCK OWNERSHIP

Ownership by OfficersDirectors and DirectorsOfficers

This table shows our common stock beneficially owned as of February 1, 2017,15, 2020, by each named executive officer includednamed in the Summary Compensation Table found on page 5652 of this proxy statement, eachnon-employee director, and the directors and executive officers and certain former executive officersofficer as a group.

 

Name Total
Shares
Beneficially
Owned(1)
  Shares Covered
by Options(2)
  

% of Class
Beneficially

Owned(3)

 

Non-Employee Directors

   

Lisa R. Bacus, Class II Director

  17,632   0   * 

Timothy C.K. Chou, Class II Director

  0   0   * 

Nancy E. Cooper, Class I Director

  48,382   18,642   * 

Daniel R. Fishback, Class I Director

  0   0   * 

Cary T. Fu, Class III Director

  57,010   29,312   * 

Michael P. Gianoni, Class III Director

  16,104   0   * 

David E. Kepler, Class I Director

  73,439   13,206   * 

James M. Ringler, Chairman of the Board and Class II Director(4)

  139,701   38,437   * 

John G. Schwarz, Class II Director

  41,730   9,423   * 

William S. Stavropoulos, Class I Director(5)

  99,183   23,954   * 

Current Named Executive Officers

   

Victor L. Lund, President, Chief Executive Officer and Class III Director

  56,605   0   * 

Stephen Scheppmann, Executive Vice President and Chief Financial Officer(6)

  312,538   244,486   * 

John Dinning, Executive Vice President and Chief Business Officer

  32,364   24,952   * 

Daniel Harrington, Executive Vice President, Consulting and Support Services(7)

  185,152   138,000   * 

Oliver Ratzesberger, Executive Vice President and Chief Product Officer

  14,230   13,091   * 

Former Named Executive Officers

   

Michael Koehler, Former President and Chief Executive Officer

  672,215   650,802   * 

Robert Fair, Former Chief Operating Officer

  275,835   246,946   * 

Richard Morton, Former President, Americas

  28,423   17,327   * 
Directors and Executive Officers and certain former Named Executive Officers as a Group (20 persons)  2,289,336   1,640,795   1.73
  NAME TOTAL SHARES
BENEFICIALLY
OWNED(1)
  SHARES
COVERED
BY OPTIONS(2)
  % OF CLASS
  BENEFICIALLY
  OWNED(3) 
   

 

  Non-Employee Directors

 

          

 

  Lisa Bacus, Class II Director

 

  

 

 

 

 

26,707

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Timothy Chou, Class II Director

 

  

 

 

 

 

4,221

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Daniel Fishback, Class I Director

 

  

 

 

 

 

23,150

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Cary Fu, Class III Director

 

  

 

 

 

 

70,973

 

 

 

   

 

 

 

 

13,206

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Michael Gianoni, Chairman of the Board and Class III Director

 

  

 

 

 

 

37,179

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  David Kepler, Class I Director

 

  

 

 

 

 

89,231

 

 

 

   

 

 

 

 

5,044

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Kimberly Nelson, Class I Director

 

  

 

 

 

 

1,548

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Joanne Olsen, Class III Director

 

  

 

 

 

 

11,814

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  James Ringler, Class II Director(4)

 

  

 

 

 

 

139,318

 

 

 

   

 

 

 

 

16,979

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  John Schwarz, Class II Director

 

  

 

 

 

 

62,805

 

 

 

   

 

 

 

 

9,423

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  William Stavropoulos, Class I Director(5)

 

  

 

 

 

 

109,510

 

 

 

   

 

 

 

 

13,206

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Named Executive Officers

 

          

 

  Victor Lund, Interim President and Chief Executive Officer and Class III   Director(6)

 

  

 

 

 

 

285,720

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Mark Culhane, Chief Financial Officer(7)

 

  

 

 

 

 

30,200

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Scott Brown, Chief Revenue Officer

 

  

 

 

 

 

0

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Kathleen Cullen-Cote, Chief Human Resources Officer

 

  

 

 

 

 

818

 

 

 

   

 

 

 

 

0

 

 

 

   

 

 

 

 

*

 

 

 

  

 

  Daniel Harrington, Chief Services Officer(8)

 

  

 

 

 

 

300,222

 

 

 

   

 

 

 

 

194,708

 

 

 

   

 

 

 

 

*

 

 

 

  

 

Oliver Ratzesberger, Former President and Chief Executive Officer (prior to November 4, 2019)

 

  

 

 

 

 

86,205

 

 

 

   

 

 

 

 

35,116

 

 

 

   

 

 

 

 

*

 

 

 

     

 

Directors and Executive Officers and former Executive Officer who is a Named Executive Officer as a Group (19 persons)

 

  

 

 

 

 

1,461,823

 

 

 

   

 

 

 

 

383,560

 

 

 

   

 

 

 

 

1.31%

 

 

 

 

     

 

*

Less than one percent.

(1)

Unless otherwise indicated, total voting power and total investment power are exercised by each individual and/or a member of his or her household. This column includes: (i)includes shares covered by options that are exercisable within sixty60 days of February 1, 201715, 2020 (as listed in the “Shares Covered by Options” column); (ii). This column also includes (a) shares granted to directors, the receipt of which have been deferred, as follows: Mr. Lund, 11,628 shares; and Mr. Stavropoulos, 16,787 shares; and (iii)(b) vested restricted share units, the receipt of which have been deferred, as follows: Mr. Fu, 14,671Fishback, 19,125 units; Mr. Kepler, 3,656;Fu, 20,887 units; Mr. Lund, 40,97743,432 units; Ms. Nelson, 648 units; Mr. Ringler, 5,192 units; and Mr. Schwarz, 30,58651,661 units. In each case, these vested deferred shares and shares subject to vested deferred restricted share units can be acquired by such person within 60 days upon such person ceasing to be a director or employee, as applicable.

26


(2)

Includes shares that the executive officer or director or his or her respective family members have the right to acquire through the exercise of stock options within sixty days after February 1, 2017.15, 2020. These shares are also included in the “Total Shares Beneficially Owned” column.

(3)

The total number of shares of our common stock issued and outstanding as of February 1, 201715, 2020 was 130,717,039.111,272,920.

(4)

Includes 93,617 shares held indirectly through a limited liability company.

(5)

Includes 2,000 shares held by Mr. Stavropoulos’ spouse, and 1,000 shares held indirectly by her through a family limited partnership.

(6)

Includes 4,83731,270 shares attributable to units held by Mr. Scheppmann inindirectly through a unitized stock fund under the Teradata 401(k) savings plan.limited liability company.

(7)

Includes 39,37514,850 shares held indirectly through a family revocable trust.

(8)

Includes 44,287 shares attributable to units held by Mr. Harrington in a unitized stock fund under the Teradata 401(k) savings plan.

 


26    

2020 PROXY STATEMENT



Stock Ownership


Other Beneficial Owners of Teradata Common Stock

To the best of our knowledge, based on filings with the SEC made in 2020 by beneficial owners of our stock, the following stockholders beneficially own more than 5% of our outstanding common stock.

 

Name and Address of Beneficial Owner  Total Number
of Shares
   

Percent 

of Class(1) 

 

First Eagle Investment Management, LLC(2)
1345 Avenue of the Americas, New York, New York 10105

   17,502,775    13.39

The Vanguard Group(3)
100 Vanguard Blvd., Malvern, Pennsylvania 19355

   14,568,536    11.15

The Bank of New York Mellon Corporation(4)
225 Liberty Street, New York, New York 10286

   8,817,453    6.75

BlackRock, Inc.(5)
55 East 52
nd Street, New York, New York 10055

   6,922,354    5.3
  NAME  TOTAL NUMBER
OF SHARES
  PERCENT OF  
CLASS(1)  

    

                

 

  First Eagle Investment Management, LLC(2)

  1345 Avenue of the Americas, New York, New York 10105

 

   

 

 

 

 

15,234,477

 

 

 

   

 

 

 

 

13.7%

 

 

 

 

  The Vanguard Group(3)

  100 Vanguard Blvd., Malvern, Pennsylvania 19355

 

   

 

 

 

 

12,331,013

 

 

 

   

 

 

 

 

11.1%

 

 

 

 

  BlackRock, Inc.(4)

  55 East 52nd Street, New York, New York 10055

 

   

 

 

 

 

11,424,840

 

 

 

   

 

 

 

 

10.3%

 

 

 

 

  Wellington Management Group LLP and affiliated entities(5)

  280 Congress Street, Boston, MA 02210

 

   

 

 

 

 

10,213,971

 

 

 

   

 

 

 

 

9.2%

 

 

 

 

  The Hartford Mutual Funds, Inc. on behalf of Hartford Midcap Fund(6)

  690 Lee Road, Wayne, Pennsylvania 19087

 

   

 

 

 

 

6,520,134

 

 

 

   

 

 

 

 

5.9%

 

 

 

 

  Ameriprise Financial, Inc.(7)

  145 Ameriprise Financial Center, Minneapolis, Minnesota 55474

 

   

 

 

 

 

6,389,142

 

 

 

   

 

 

 

 

5.7%

 

 

 

 

(1)

Percent of class is based on 130,717,039111,272,920 shares of Teradata common stock issued and outstanding as of February 1, 2017.15, 2020.

 

(2)

Information is based on Amendment No. 47 to Schedule 13G filed by First Eagle Investment Management, LLC with the SEC on February 7, 2017,11, 2020, which reported sole voting power over 16,834,36214,235,272 shares and sole dispositive power over 17,502,77515,234,477 shares. According to this filing, the First Eagle Global Fund, a registered investment company for which First Eagle Investment Management, LLC acts as investment adviser, may be deemed to beneficially own 12,190,17910,721,521 of these shares.

 

(3)

Information is based on Amendment No. 711 to Schedule 13G filed by The Vanguard Group with the SEC on February 10, 2017.12, 2020. According to this filing, The Vanguard Group has sole dispositive power over 14,386,60112,261,596 shares, shared dispositive power over 181,93569,417 shares, and sole power to vote 172,68166,760 shares, and shared power to vote 18,424 shares. According to this filing, (i) Vanguard Fiduciary Trust Company, a wholly-owned subsidiary of The Vanguard Group, Inc. and a registered investment adviser, is the beneficial owner of 166,32050,993 shares as a result of its serving as investment manager of collective trust accounts, and (ii) Vanguard Investments Australia, Ltd., a wholly-owned subsidiary of The Vanguard Group, Inc. and a registered investment adviser, is the beneficial owner of 21,97634,191 shares as a result of its serving as investment manager of Australian investment offerings.

 

(4)

Information is based on Schedule 13G filed by The Bank of New York Mellon Corporation with the SEC on February 3, 2017. According to this filing, The Bank of New York Mellon Corporation has

27


sole dispositive power over 8,422,642 shares, shared dispositive power over 390,862 shares and sole power to vote 7,996,694 shares. According to this filing, these shares are beneficially owned by the following subsidiaries of The Bank of New York Mellon Corporation: The Bank of New York Mellon (parent holding company of Mellon Overseas Investment Corporation; BNY International Financing Corporation; The Bank of New York Mellon SA/NV; and Cutwater Holdings, LLC), BNY Mellon, National Association, BNY Mellon Trust of Delaware, The Bank of New York Mellon SA/NV (parent holding company of BNY Mellon Service Kapitalanlage-Gesellschaft mbH), The Boston Company Asset Management LLC, The Dreyfus Corporation (parent holding company of MBSC Securities Corporation), Lockwood Advisors, Inc., Mellon Capital Management Corporation, Pershing LLC, B.N.Y. Holdings (Delaware) Corporation (parent holding company of BNY Mellon Trust of Delaware), MAM (MA) Holding Trust (parent holding company of Standish Mellon Asset Management Company LLC and The Boston Company Asset Management LLC), MBC Investments Corporation (parent holding company of Mellon Capital Management Corporation; BNY Mellon Investment Management (Jersey) Ltd. and BNY Mellon Investment Management APAC LP), and Pershing Group LLC (parent holding company of Lockwood Advisors, Inc and Pershing LLC).

(5)Information is based on Amendment No. 813 to Schedule 13G filed by BlackRock, Inc. with the SEC on January 27, 2017,February 10, 2020, which reported sole voting power over 6,219,70010,956,429 shares and sole dispositive power over 6,922,35411,424,840 shares. According to this filing, these shares are beneficially owned by the following subsidiaries of Blackrock, Inc.: BlackRock (Luxembourg) S.A.,Life Limited, BlackRock (Netherlands) B.V., BlackRock Advisors (UK)International Limited, BlackRock Advisors, LLC, BlackRock Asset Management Canada Limited, BlackRock Asset Management Ireland Limited, BlackRock Asset Management Schweiz AG, BlackRock Financial Management, Inc.(Netherlands) B.V., BlackRock Fund Advisors, BlackRock Institutional Trust Company, N.A.National Association, BlackRock Asset Management Ireland Limited, BlackRock Financial Management, Inc., BlackRock InternationalJapan Co., Ltd., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock (Luxembourg) S.A., BlackRock Investment Management (Australia) Limited, and BlackRock Advisors (UK) Limited.

(5)

Information is based on Amendment No. 2 to Schedule 13G filed by Wellington Management Group LLP with the SEC on January 28, 2020, which reported shared power to vote 9,086,432 shares and shared dispositive power over 10,213,971 shares. According to this filing, these shares are beneficially owned by Wellington Group Holdings LLP, Wellington Investment Advisors Holdings LLP, Wellington Management (UK)Company LLP, and one or more of the following investment advisers (the “Wellington Investment Advisers”): Wellington Management Company LLP, Wellington Management Canada LLC, Wellington Management Singapore Pte Ltd, BlackRock InvestmentWellington Management LLC, BlackRockHong Kong Ltd, Wellington Management International Ltd, Wellington Management Japan CoPte Ltd, and BlackRock Life Limited.Wellington Management Australia Pty Ltd. These securities are owned of record by clients of the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP controls directly, or indirectly through Wellington Management Global Holdings, Ltd., the Wellington Investment Advisers. Wellington Investment Advisors Holdings LLP is owned by Wellington Group Holdings LLP. Wellington Group Holdings LLP is owned by Wellington Management Group LLP.

(6)

Information is based on Schedule 13G filed by The Hartford Mutual Funds, Inc. on behalf of Hartford Midcap Fund with the SEC on February 14, 2020, which reported shared voting power over 6,520,134 and shared dispositive power over 6,520,134.

(7)

Information is based on Schedule 13G filed by Ameriprise Financial, Inc. with the SEC on February 14, 2020, which reported shared voting power over 3,995,243 shares and shared dispositive power over 6,389,142 shares. According to this filing, Columbia Management Investment Advisers, LLC reported shared voting power over 3,440,041 shares and shared dispositive power over 5,818,404 shares. According to this filing, Ameriprise Financial, Inc., as the parent company of Columbia Management Investment Advisers, LLC, may be deemed to beneficially own the shares reported herein by Columbia Management Investment Advisers, LLC. Accordingly, the shares reported herein by Ameriprise Financial, Inc. include those shares separately reported herein by Columbia Management Investment Advisers, LLC.

LOGO  27


 

28



DIRECTOR COMPENSATION

Teradata’s Director Compensation Program is designed to enhance our ability to attract and retain highly qualified directors and to align their interests with the long-term interests of our stockholders. The program consists of both a cash component, designed to compensate independent directors for their service on the board and its committees, and an equity component, designed to align the interests of independent directors and stockholders. Mr. Lund has received nodid not receive any compensation forin 2019 under the Director Compensation Program. For information regarding Mr. Lund’s compensation, including in connection with his service as Executive Chairman of the Board, see the Compensation Discussion and Analysis section beginning on page 31 of this proxy statement.

The compensation of the Company’snon-employee directors under the Director Compensation Program is reviewed on an annual basis by the Committee on Directors and Governance (the “Governance Committee”) with competitive benchmarking provided periodically by an independent compensation consultant retained by the committee. In April 2019, the Governance Committee engaged FW Cook to conduct a competitive market analysis of Teradata’s director compensation levels compared to the Company’s peers, using Teradata’s executive compensation peer group at the time. Following this process and on the board since his appointment as an officerrecommendation of FW Cook, the Company in May 2016.Governance Committee determined that the compensation levels were reasonable and within market median levels and, therefore, no changes were made to the director compensation levels.

Annual RetainerRetainers

Under theThe Director Compensation Program, for the 2016-20172019-2020 board year (the period between the Company’s annual stockholders’ meetings), eachnon-employee member of Teradata’s board receives anincludes the following annual retainer of $50,000. The Chairman of the Board of Directors (Mr. Ringler) receives an additional retainer of $100,000, and each director serving on the Audit Committee receives an additional retainer of $5,000. The Chair of the Governance Committee receives an additional retainer of $10,000. The Chair of the Audit Committee receives an additional retainer of $20,000 and the Chair of the Compensation and Human Resource Committee receives an additional retainer of $15,000.retainers:

  

Eachnon-employee director

  $60,000 

Additional retainers:

  

Non-executive Chairman of the Board of Directors

  $120,000 

Independent Lead Director

  $30,000 

Each Audit Committee member (including the Chair)

  $15,000 

Each Compensation and Human Resource Committee member (including the Chair)

  $10,000 

Each Governance Committee member (including the Chair)

  $5,000 

Governance Committee Chair

  $15,000 

Audit Committee Chair

  $35,000 

Compensation and Human Resource Committee Chair

  $25,000 

Prior to January 1 of each year, a director may elect to receive all or a portion of his or her annual retainer in Teradata common stock instead of cash. In addition, a director may elect to defer receipt of shares of common stock payable in lieu of cash. Payments for deferred stock may be made only in shares of Teradata common stock.

Annual Equity Grant

The Director Compensation Program provides that, on the date of each annual meeting of stockholders, eachnon-employee director will be granted restricted share units (“RSUs”) and/or stock options to purchase a number of shares of Teradata common stock in an amount determined by the Governance Committee and approved by the board. For the 2016-20172019-2020 board year, each of thenon-employee directors received an annual equity grant consisting of RSUs with a total dollar value of $250,000. The RSUs vest in four equal quarterly installments commencing three months after the grant date, and directors may elect to defer receipt of the shares of common stock payable when the RSUs vest.their vested shares.


28    

2020 PROXY STATEMENT



Director Compensation


Initial Equity Grant

The Director Compensation Program also provides that upon initial election to the board, eachnon-employee director will receive a grant of RSUs. ARSUs, with the same vesting schedule as the annual grant described above. Similar to the annual grant, a director may elect to defer receipt of the vested shares of common stock that would otherwise be received upon vesting ofsubject to the RSUs. The RSUs vest

Ms. Nelson was the only director to receive an initial equity grant during 2019 in four equal quarterly installments commencing three months afterconnection with her appointment to the grant date. Payment is made only in Teradata common stock.

No directorboard. In this regard, on November 14, 2019, Ms. Nelson received an initial equity grant during 2016.of RSUs with a total dollar value of $75,000.

Mid-Year Equity Grant

Under the Director Compensation Program, the board has the discretion, based on the recommendation of the Governance Committee, to grantmid-year equity grants in the form of stock

29


options and/or awards of restricted shares or RSUs to directors who are newly elected to the board after the annual meeting of stockholders. If amid-yearMid-year equity grant isgrants made in the form of RSUs a director may elect to defer receipt ofhave the shares of common stock that would otherwise be received upon vesting.same vesting schedule and deferral options as the annual grants described above. Option grants made in connection with amid-year equity grant will be fully vested and exercisable on the first anniversary of the grant. Restricted share unit grants made in connection withBecause she joined the board on November 5, 2019, the board exercised its discretion and awarded Ms. Nelson amid-year equityRSU grant vest in four equal quarterly installments commencing three months after the grant date. Payment is made only in Teradata common stock.on November 14, 2019 with a total dollar value of $104,167.

No director received amid-year equity grant during 2016.

Benefits

We do not provide any retirement or other benefit programs for our directors.

20162019 Director Compensation Table

The following table provides information on compensation paid to ournon-employee directors in 2016.2019.

 

Name  Fees Earned or
Paid in Cash(1)
($)
   Stock Awards(2)
($)
   Option Awards(3)
($)
   

Total

($)

 

James M. Ringler, Chairman

   150,000    255,687    —      405,687 

Lisa R. Bacus

   50,000    255,687    —      305,687 

Edward P. Boykin (4)

   —      13,776    —      13,776 

Nancy E. Cooper

   68,611    255,687    —      324,298 

Cary T. Fu

   55,000    255,687    —      310,687 

Michael P. Gianoni

   50,000    255,687    —      305,687 

David E. Kepler

   55,000    302,259    —      357,259 

Victor L. Lund

   23,958    255,687    —      279,645 

John G. Schwarz

   65,000    255,687    —      320,687 

William S. Stavropoulos

   60,000    255,687    —      315,687 
  NAME  

FEES EARNED OR

PAID IN CASH(1)

($)

  

STOCK
AWARDS(2)

($)

  

OPTION
AWARDS(3)

($)

  

TOTAL   

($)   

 

Lisa Bacus

 

    

 

70,000

 

 

    

 

255,905

 

 

    

 

 

 

    

 

325,905  

 

 

 

Timothy Chou

 

    

 

75,000

 

 

    

 

255,905

 

 

    

 

 

 

    

 

330,905  

 

 

 

Daniel Fishback

 

    

 

86,667

 

 

    

 

255,905

 

 

    

 

 

 

    

 

342,572  

 

 

 

Cary Fu

 

    

 

75,000

 

 

    

 

255,905

 

 

    

 

 

 

    

 

330,905  

 

 

 

Michael Gianoni, Chairman

 

    

 

110,000

 

 

    

 

255,905

 

 

    

 

 

 

    

 

365,905  

 

 

 

David Kepler

 

    

 

110,000

 

 

    

 

255,905

 

 

    

 

 

 

    

 

365,905  

 

 

 

Kimberly Nelson

 

    

 

12,500

 

 

    

 

164,229

 

 

    

 

 

 

    

 

176,729  

 

 

 

Joanne Olsen

 

    

 

78,750

 

 

    

 

255,905

 

 

    

 

 

 

    

 

334,655  

 

 

 

James Ringler

 

    

 

75,000

 

 

    

 

255,905

 

 

    

 

 

 

    

 

330,905  

 

 

 

John Schwarz

 

    

 

78,333

 

 

    

 

255,905

 

 

    

 

 

 

    

 

334,238  

 

 

 

William Stavropoulos

 

    

 

65,000

 

 

    

 

286,910

 

 

    

 

 

 

    

 

351,910  

 

 

 

(1)

Represents the annual cash retainers earned for 2016. Mr. Boykin elected to receive his cash retainer in deferred shares payable as described in footnote 2 below. These deferred shares are reported in the “Stock Awards” column.2019.

 

(2)

This column shows the aggregate grant date fair value, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation Stock Compensation, of RSU awards, of deferred shares (also referred to as “phantom shares”) paid in lieu of cash annual retainers, and current shares paid in lieu of the cash annual retainers, in each case in 2016. For Mr. Kepler, this column also includes the grant date fair value of 1,655 shares that were distributed to him in 2016 as required pursuant to applicable Internal Revenue Service procedures, in order to correct an unintentional, inadvertent error related to his deferred share account under the Director Compensation Program.2019. See Note 57 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form10-K for the year ended December 31, 20162019 (our “2016“2019 Annual Report”) for an explanation of the assumptions we made in the valuation of these awards. The grant date fair value of the annual award that was granted on April 30, 2019 for the 2016-20172019-2020 board year is $26.04.$45.47 and $26.51 for the initial andmid-year awards granted to Ms. Nelson on November 14, 2019.

The number of RSUs outstanding as of December 31, 2016, for each of thenon-employee directors is Mr. Boykin, 0; and 4,910 for each of the other directors.

The number of RSUs outstanding as of December 31, 2019 for each of thenon-employee directors is 6,195 for Ms. Nelson, and 2,814 for each of the other directors.

 

(3)

There were no options granted to thenon-employee directors for the 2016-20172019-2020 board year. The number of shares underlying each option award outstanding as of December 31, 20162019 for each of

30


thenon-employee directors is as follows: Mr. Ringler, 38,437; Ms. Bacus, 0; Mr. Boykin, 16,458; Ms. Cooper, 18,642; Mr. Fu, 29,312; Mr. Gianoni, 0;13,206; Mr. Kepler, 13,206;5,044; Mr. Lund, 0;Ringler, 16,979; Mr. Schwarz, 9,423; and Mr. Stavropoulos, 23,954.13,206, and 0 for each of the other directors.

 

(4)As reported in the Company’s 2016 Proxy Statement, Mr. Boykin did not stand forre-election at the 2016 annual stockholders’ meeting and retired as a director of the Company in April 2016.

LOGO  29


Director Compensation


Director Stock Ownership Guidelines

Under the board’s Corporate Governance Guidelines, each director should hold stock valued at no less than tenfive times the amount of the $60,000 annual retainer paid to such director within five years after he or she is first elected to the Teradata Board of Directors. Stock or stock units beneficially owned by the director, for which beneficial ownership is not disclaimed, including stock or stock units held in a deferral account, should be taken into account. However, for this purpose, the board does not believe it appropriate to include stock options granted to directors by the Company. AllAs of December 31, 2019, all of our directors arewere in compliance with these ownership guidelines.

guidelines, except Ms. Nelson, who was appointed to the board in November 2019 and is on track to meet the guideline within 2 years of her appointment.

 

31LOGO


(1)

Excludes shares owned by Interim CEO, Mr. Lund.

NO INCORPORATION BY REFERENCE

In our filings with the SEC, information is sometimes “incorporated by reference.” This means that we are referring you to information that has previously been filed with the SEC and the information should be considered as part of the particular filing. As provided under SEC regulations, the following “Board Compensation and Human Resource Committee Report on Executive Compensation” and the “Board Audit Committee Report” contained in this proxy statement specifically are not incorporated by reference into any other filings with the SEC and shall not be deemed to be “Soliciting Material” under SEC rules. In addition, this proxy statement includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this proxy statement.

BOARD COMPENSATION AND HUMAN RESOURCE

COMMITTEE REPORT ON EXECUTIVE COMPENSATION

The Compensation and Human Resource Committee of the Board of Directors (the “Committee”) manages the Company’s compensation programs on behalf of the Board of Directors. The Committee reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. In reliance on the review and discussions referred to above, the 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 Form10-K for the fiscal year ended December 31, 2016.2019.

Dated: February 22, 201727, 2020

The Compensation and Human Resource Committee:

John G. Schwarz,Daniel R. Fishback, Chair

Lisa R. Bacus, Member

James M. Ringler, Member

John G. Schwarz, Member


30    

2020 PROXY STATEMENT



 

32



COMPENSATION DISCUSSION AND ANALYSIS

Named Executive Officers

This Compensation Discussion and Analysis (this “CD&A”) describes ourthe executive compensation program for 2016 for our named executive officers, including2019 established by the individuals listed in the table below (who are referred to as our “current named executive officers”Compensation and Human Resource Committee (the “Committee”):

Name  Title

Victor Lund

President and Chief Executive Officer

Stephen Scheppmann

EVP and Chief Financial Officer

Dan Harrington

EVP, Consulting and Support Services

Oliver Ratzesberger

EVP and Chief Product Officer

John Dinning

EVP and Chief Business Officer

. Our named executive officers for 2016 also included three executives whose employment terminated during the year (who are referred to as our “former named executive officers”): Michael Koehler, who previously served as President and Chief Executive Officer, Robert Fair, who previously served as Chief Operating Officer and Richard Morton, who served for part of the year as the President of the Company’s Americas sales region.

Section 1: Business Overview and Program Highlights

Company Overview

Teradata experienced a year of significant transition in 2016 as the Company made great strides in continuing the business transformation process that was initially announced by our Board of Directors in the fourth quarter of 2015. This transition included the development and initial implementation of the following three key strategic changes during 2016:

Refocusing the Company as “business outcome led, technology enabled” by shiftingfromprimarily selling technology to IT buyerstodelivering business value to business users as a trusted advisor who can help customers leverage data and analytics to solve common challenges and drive business results.

Enabling Teradata analytics to be “easy to buy, easy to grow”, from traditionalon-premises deployments to hybrid cloud solutions, with simplified and consistent offerings that include operating expense alternatives in addition to traditionally capital intensive outlays. Through our Teradata Everywhere™ offering, customers can now get the same performance from Teradata software regardless of their choice of deployment option.

Transitioning from upfront perpetual to subscription-based Teradata database licenses with new flexible deployment options – whether in the public cloud, managed cloud oron-premises, or a hybrid combination of these – which will result in a more predictable, recurring revenue stream over time for the Company.

This last change – transitioning from perpetual to subscription-based license revenue – was a major shift in strategy that occurredmid-year after the board appointed Mr. Lund as our new Chief Executive Officer (“CEO”). As described below, he not onlyre-energized and refocused the Company, but he also accelerated our move away from our traditional sales and deployment models leading us toward

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flexible pricing and delivery options for our customers. As a result of this customer-motivated transition toward subscription-based revenue, in 2016, we were not able to recognize as much upfront revenue at the time of the customer’s purchase of Teradata software; but the total value of the sales transactions was generally maintained because the revenue will be recognized over time. The bottom line is that, while 2016 revenue was impacted by nearly $70 million due to our change in strategy in the second half of the year – a significant difference from how our financial incentive targets were established for the year – the Company and its stockholders will receive the benefit of this more stable and predictable revenue longer-term over the life of the customer agreement.

Leadership Changes

In order to drive and execute Teradata’s business transformation plan, our Board of Directors made a number of senior management changes during the year. Most significantly, on May 5, 2016, the board announced that it had elected Mr. Lund, a Teradata board member since September 2007, as President and CEO. Mr. Lund succeeded Mr. Koehler, who stepped down as Teradata’s President, CEO and director at that time. Under the leadership of Mr. Lund, management worked diligently to clarify the Company’s strategy to enhance Teradata’s marketplace relevance and to realign the organization to operate with speed, clearer ownership and accountability, and greater customer focus.

Mr. Lund’s leadership of the Company has been transformative. He has injected a level of enthusiasm and focus throughout our organization that has positively impacted our employees, customers and stockholders. Employees are motivated by his frequent, energetic communications, as well as the clear direction provided by Teradata’s new strategy that was developed with his guidance. He has also gained customers’ confidence as Mr. Lund meets with them regularly to make sure Teradata maintains its role as a business-outcome led, trusted advisor. Lastly, our stockholders have benefited from Mr. Lund’s level of conviction and commitment to the Company as evidenced by the increase in Teradata’s stock price since the day before he started in May 2016, $24.40, to the day the Company announced its 2016 earnings and first quarter 2017 guidance in February 2017, $32.74 – a 34% increase.

In connection with these efforts, our Board of Directors, in consultation with our new CEO, continued to advance the evolution of the Company’s organizational model through the following senior management changes regarding our current named executive officers:2019 include:

 

NameNAME

POSITION

Victor Lund

 

  

  New Role

Interim President and Chief Executive Officer (effective November 5, 2019)

Former Executive Chairman of the Board (January 14, 2019 to February 5, 2020)

 

Oliver Ratzesberger

He was promoted to Executive Vice President and Chief Product Officer in July 2016, with expanded responsibilities, which now include leading the Company’s research and development organization with strategic direction and quality management for all Teradata database, integrated data warehousing, big data analytics, and associated solutions, including cloud engineering and offerings.
John DinningHis role evolved during the year as he was promoted in early 2016 to serve as the Company’s Chief Transformation Officer and then, in July 2016, he became Executive Vice President and Chief Business Officer, with expanded responsibility and oversight in the areas of strategy, product and services marketing, and corporate marketing.

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Name

 

  

  New Role

Former President and Chief Executive Officer (January 14, 2019 to November 5, 2019)

 

Stephen ScheppmannHis role as Executive Vice President and Chief Financial Officer was expanded in July 2016 to include responsibility and oversight in the areas of IT services and operations.
Dan Harrington

Mark Culhane

  

During the year, he stepped up to serve on an interim basis as the head of our International sales region. In August 2016, a new executive was named for that role and Dan continued to lead the Company’s customer and professional services organizations as Executive Vice President, Consulting and Support Services.

Chief Financial Officer

Scott Brown

Chief Revenue Officer (effective June 17, 2019)

Kathleen Cullen-Cote

Chief Human Resources Officer (effective July 29, 2019)

Daniel Harrington

Chief Services Officer

 

A detailed discussion of our CEO transition and other executive leadership changes in 2019 and early 2020 is found below in this CD&A.

Business HighlightsSECTION 1: EXECUTIVE SUMMARY

TheBusiness Transformation Highlights and Key Compensation Decisions

In 2019, we continued our transition to a subscription-based business, progressing at a rate that exceeded our expectations. This transition, while positioning the Company achieved a number of key accomplishments during 2016for future growth, impacted reported financial results for 2019 as partdescribed below. To align executive pay with our strategy, the execution of our business transformation including the following:

We completed the development and began the implementation ofcontinues to be factored into our comprehensive business transformation plan that will drive the execution of our strategy.executive compensation program.

 

In the fourth quarter,Our business model reflects our strategy as we announced (1)shift to subscription-based transactions that Teradata would be providing its full-scalebest-of-breed technology solutions via flexible deployment options in the public cloud, managed cloud,on-premises, or a hybrid combination of these – with our Teradata database software portable across all deployment options, through Teradata Everywhere,build an attractive recurring revenue stream and (2) the release of our IntelliFlex™ platform which simplifies our offerings by more efficiently allowing customers to expand their Teradata analytic environments.

We shared our new strategic direction, financial plans, and the actions we are taking to return Teradata to revenue growth and improving long-term profitability with stockholders at a successful and well-received Analyst Day on November 17, 2016.

Teradata completed the sale of its marketing applications business (the “TMA business”) in the third quarter of 2016, allowing us to focus all our attention, human and financial capital on our core data and analytics business.

During the year, Teradata successfully reduced costs by over $100 million which, going forward, will allowposition the Company to reinvest infor long-term growth. In 2019, our new strategic initiatives, including the changes described above. This cost-takeout achievement was approximately 43% better than originally planned for the year.

For the year, Teradata met or exceeded its guidance to investorsshift accelerated at an unprecedented rate with respect to revenue and earnings per share expectations. The Company’s revenue results continued to be slightly down in 2016 from the prior year on88% subscription-based product bookings. As a constant currency basis. This expected decline was primarily the result, of the continued market shifts in our industry as customers’ buying patterns were delayed due to the additional technology deployment and pricing options available for their analytic solutions. This challenge was magnified during the year as Teradata’s strategy evolved, and revenue from subscription-based software licenses and cloud-based solutions was accelerated. This shift away from perpetual licenses resulted in lower revenue recognition during 2016 as revenue isthese transactions will be recognized over the multi-year life of subscription-basedthe customer agreements. However, this trend will benefit the Company in the longer-term withagreement rather than all upfront, as was our historical practice. As customers rapidly convert to purchase Teradata offerings via subscription, we are building a more stable and predictable recurring revenue stream over time. Accordingly, recurring revenue growth is one of the key factors that investors use to measure our success, particularly in the current period, as our reported revenue is negatively impacted in the near term.

 

35LOGO


We are developing a team of capable, dedicated and respected leaders and introducing a new culture to the Company with an emphasis on responsibility and accountability, and our new CEO is committed to leading Teradata through our transformation process. We realize that the hardest part of Teradata’s business transformation is still ahead of us, and we are working diligently and enthusiastically to execute on our plan.

Key Changes to our Executive Compensation Program

In connection with the execution of Teradata’s business transformation plan, our executive compensation program has continued to evolve with the goal of balancing the Company’s business objectives with shareholder interests while aligning pay and performance more closely than ever. To that end, the key design changes approved in 2016 to our executive compensation program for our current named executive officers include the following:

 

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Compensation Discussion and Analysis


In 2019, our executive compensation program continued to be heavily weighted to performance-based compensation that was tied to our strategy – annual cash incentives were designed to drive annual recurring revenue (“ARR”) growth and profitability, and long-term equity awards were tied to key financial measures that are critical to the execution of our transformation and long-term growth. See pages 40 and 43 of this CD&A for a description of these metrics.

PLANMEASUREWEIGHTINGTIE TO STRATEGY

Annual Incentive Plan

ARR Growth

  Key changesNon-GAAP Operating Income (adjusted for percentage of subscription-based bookings)

60%

40%

Drive annual recurring revenue, critical to our 2016-2017transformation

Achieve profitable growth through business transformation

Long-Term Incentive Plan

Compounded ARR Growth over3-year period

Free Cash Flow as a Percentage of Revenue

50%

50%

Drive recurring revenue over multi-year period

Focus on long-term cash-generating ability

Annual Incentive Plan - The shift to a recurring revenue model was factored into our 2019 annual incentive plan which was weighted heavily on the achievement of double-digit ARR growth. This plan was also built on the achievement of operating income objectives based on planned subscription bookings mix. For 2019, we believe that our performance on this profitability measure is best measured by taking the revenue shift to annual recurring revenue into consideration (see page 40 of this CD&A for more information on this calculation). However, we will not be adjusting for this item going forward, as the Company will no longer be reporting bookings mix on a subscription versus perpetual license revenue basis. While our transition to subscription-based transactions accelerated in 2019, our 2019 results fell short of our ARR growth andnon-GAAP operating income targets for our 2019 annual incentive plan, resulting in an overall achievement of 70%. Consequently, our named executive officers received below-target payouts under the Teradata Management Incentive Plan.

Long-Term Incentive Program - Our 2019 long-term incentive program was designed to drive the evolution of our business transformation. Payment of the performance-based equity awards is based on the extent to which we achieve key performance metrics over a3-year

1. period (2019 to 2021) of: (a) compounded double digit ARR growth and (b) free cash flow as a percentage of revenue. Both of these metrics had target-level goals that were in line with our guidance to investors at the time the goals were established. We increased the percentagealso continued our firmpay-for-performance commitment by allocating 70% of the long-term incentive opportunity allocated to performance-based share unit awards. With respect to our performance-based equity awards granted as part of our 2017 long-term incentive program, our total shareholder return performance over the3-year period ending on December 31, 2019 came in below threshold and, consequently, our named executive officers who were employed by the Company at that time received no payout from 50%these awards.

As explained in this CD&A, while Teradata has made significant progress transforming our business in 2019, our results for the year fell short of our expectations, and the compensation of our executives is consistent with this level of performance. The Committee has demonstrated its commitment to setting challenging performance goals under our executive compensation program that will drive our strategic direction for the coming years and that will provide our executives with pay that reflects the extent to which these performance goals are achieved.

CEO Transition and New Executive Leadership

On January 14, 2019, Oliver Ratzesberger was named the Company’s President and Chief Executive Officer (“CEO”), replacing Victor Lund, who served in that role since 2016 and who was appointed Executive Chairman of the Board at that time. Mr. Ratzesberger had previously served in various executive roles with Teradata since 2013, including Chief Operating Officer and Chief Product Officer, and his vision was pivotal in defining the Company’s strategy through our business transformation. In determining Mr. Ratzesberger’s compensation in connection with his election as CEO, the Committee considered the fact that he was a first-time CEO. Thus, his compensation was set at a level commensurate with his lack of CEO experience and, therefore, below the peer group median.

By the fourth quarter of 2019, the Company had progressed through its transition to a subscription-based business model at a rate faster than we expected. At the same time, our board recognized that execution on the elements of the Company’s strategy, which was of paramount importance to drive a successful and timely completion of the Company’s transformation to a subscription-based business, was not occurring at the expected and planned rate. This recognition led to prompt action by the board. Following a thorough review and analysis of Mr. Ratzesberger’s performance during 2019, effective November 5,


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2020 PROXY STATEMENT



Compensation Discussion and Analysis


2019, Mr. Ratzesberger was removed as President and CEO and replaced with Mr. Lund, our Interim President and CEO, while we conduct a search for the next CEO to 100% becauselead us through completion of our successful transformation.

The board also promptly established an independent search committee to advise the board on the identification and appointment of a new CEO. The board believed it was critical for Mr. Lund to step in and serve as CEO in an interim capacity to provide leadership through the CEO transition. Key factors in this decision were that Mr. Lund is a proven executive leader, had served as the Company’s CEO during the initiation of our business transformation, and has a deep understanding of the Company’s technological strengths, customer needs and competitive differentiation. Accordingly, the board viewed Mr. Lund as uniquely positioned to serve in this interim capacity. With respect to Mr. Ratzesberger, the board determined that the receipt of separation benefits to which Mr. Ratzesberger was legally entitled to receive under our Executive Separation Plan was appropriate under the circumstances, and that no additional benefits were warranted. More information on the Executive Severance Plan is provided in Section 5 of this CD&A under the heading “Executive Severance Plan,” starting on page 48.

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Other senior management changes were made during 2019 as the Company identified top talent who could help further our business transformation. To that end, in June 2019, Scott Brown was appointed as our Chief Revenue Officer, and, in July 2019, Kathleen Cullen-Cote was appointed as our Chief Human Resources Officer. The board viewed Mr. Brown, a seasoned executive with significant experience in successfully leading global sales organizations through business transformation and demonstrated ability in converting organizations to subscription-based business models, and dedicated focus on customer success, as the right leader to guide Teradata’sgo-to-market organization. Similarly, the board viewed Ms. Cullen-Cote, a senior executive with significant management experience in successfully guiding employee engagement and cultural transformation of a global and diverse technology workforce, as the right leader for our human resources organization. The Committee designed a competitive, market-based compensation package for each of these executives that reflected each executive’s skills and senior leadership experience and accounted for the fact that these executives were either forfeiting compensation from prior employment (including annual bonus and long-term incentive awards in the case of Ms. Cullen-Cote) or heavily recruited for other senior executive global sales positions (in the case of Mr. Brown).

Effective February 6, 2020, Michael Gianoni was appointednon-executive Chairman of the Board of Directors, succeeding Mr. Lund. Mr. Lund continued as Interim President and CEO and as a director. Mr. Gianoni had previously served as independent Lead Director of the board since January 2019. As discussed in “Additional Information Concerning the Board of Directors” on page 11 of this proxy statement, the board believes that this leadership structure, separating the positions of Chairman and CEO, best serves the interests of Teradata and its shareholders.

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Compensation Discussion and Analysis


2019 Strategic and Financial Performance at a Glance

In 2019, Teradata continued to make meaningful progress executing our strategic initiatives and delivering value to our stockholders, as evidenced by achieving significant ARR and recurring revenue growth, although falling short of the goals that we set for the year. (Annual recurring revenue – or ARR – is the annual value at a point in time of all of our recurring revenue contracts.)

In 2019, we continued to make several strategic advancements, including the following:

  LOGO

In support of our goal of delivering long-term shareholder value, wereaffirmed our strategy to be the leading hybrid cloud analytics software provider by helping companies leverage all of their data across an enterprise, whether on premises, in the cloud or anywhere in between, to uncover real-time intelligence, at scale. In 2019, we made progress on the following strategic imperatives:

RELENTLESSLY
FOCUS ON
CONSUMPTION

We drove
consumption of
Vantage (our analytics
platform) through new
use cases and
capabilities and
continued to enhance
Vantage to deliver
meaningful answers to
customers’ toughest
analytics needs.

ACCELERATE
TRANSITION TO
CLOUD

We expanded our
offering capabilities
and partnerships and
doubled the number of
customers leveraging
Teradata data
analytics solutions in
the public cloud.

EXPAND GO-TO-
MARKET REACH

We expanded our
go-to-market reach
through focused
vertical investments,
deepening customer
success programs and
strengthening our
partner relationships.

DELIVER
OPERATIONAL
EXCELLENCE

We improved
efficiency and
execution throughout
the organization
through the
implementation of new
processes and
systems.

  LOGOIn 2019, we observed strong demand and adoption ofTeradata Vantage, our ground-breaking hybrid cloud analytics platform launched in the fourth quarter of 2018 that helps companies move forward from analytics to answers. We believe that Vantage provides the following key benefits to our customers:

UNIFIES AND SIMPLIFIES
ANALYTIC ECOSYSTEMS

Vantage offers full integration with
multiple tools and languages, leading
analytic engines, and new sources of
data to deliver analytics that matter to
create better business outcomes.

DE-RISKS CUSTOMER
BUYING DECISIONS

Through Vantage, customers can
access descriptive, predictive and
prescriptive analytics can be deployed
on-premises, in public or private cloud
environments, or“as-a-service”.

DELIVERS MASSIVE SCALE
AND INTEGRATION

Vantage allows customers to leverage
all of their data throughout the
enterprise to deliver real-time, intelligent
answers to their toughest business
questions regardless of the scale or
volume of the queries.


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2020 PROXY STATEMENT



Compensation Discussion and Analysis


LOGOAt the core of our progress during the year, and a key element of our strategy, was a focus on reinvigorating the people and culture of Teradata. Our executive leadership team has also been further strengthened with a number of new leaders onboarded to execute our strategy. Our following core values inspire our people to deliver on our stated mission – “We transform how businesses work and people live through the power of data”:

WE DIG DEEP AND AIM HIGH

As a trusted advisor for our customers,
we tackle their toughest challenges by
going “all in” across every function in
the organization. We dig deep with all
our talent and experience to find and
support solutions and services through
collaboration and the high standards
we set for ourselves.

WE RAISE UP OUR CUSTOMERS
AND THE WORLD

We want to challenge the status quo
and crack the code on the future. We
thrive on challenges and the
opportunity they present to innovate,
learn new skills, gain new insights, and
raise our game. We act ethically with
urgency and agility, to meet the
demands of our customers and the
needs of our colleagues. We give back
and make a meaningful contribution to
our community and our world.

WE RISE AS ONE

We are on a mission to disrupt current
thinking and to make the world a better
place. When we champion and respect
one another, share our expertise, and
learn from each other – regardless of
department or expertise – we multiply
our value. We are one team with a
single vision.

In 2019, we made progress on our business transformation as

demonstrated by improvements in several key financial metrics; however, our reported

revenues continued to be impacted over prior-year results:

LOGOOur business model transformation is largely complete as the mix of our subscription-based bookings increased significantly to88% of total bookings for the year, up from 79% in 2018.

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The acceleration of subscription bookings mix drove total reported ARR growth of9%over prior year.

LOGO

Total reported revenues decreased12% from 2018, falling short of our expectations. However, we believe that anall-performance plan will deliver better results.

2.our shift to subscription-based transactions and focus on product versus consulting revenues positions the Company for long-term profitable growth.

  We eliminated service-based restricted share units and stock options.
3.

LOGO

  

We increased the weightingbuilt future recurring product revenue, demonstrated in part by reported recurring revenue growth of performance-based equity awards based on relative total shareholder return9% over prior year, and providing a more stable future revenue stream. In addition, our backlog grew3-year7% performance period (2017-2019) from 25% to approximately 37%.over prior year, which we believe should translate into future revenue growth.

4.We added achievement of important business transformation financial and operational measures as key performance metrics for approximately 63% of the performance-based equity awards.

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In December 2016, the


Compensation Discussion and Human Resource Committee (referred to in this CD&A as the “Committee”) took the bold step of basing 100% of the long-term incentive opportunityAnalysis


Shareholder Engagement and Compensation Program Enhancements

Teradata received strong support from our shareholders for our current named executive officers on performance-based equity awards. This decision was based on the Committee’s desire to motivate and drivecompensation program, with a98% FAVORABLE“SAY-ON-PAY” VOTE at our executives to develop and execute a winning business transformation plan, and then to reward them for their successes when they meet the Company’s key strategic goals. By allocating 100% of the long-term incentive opportunity to performance-based equity awards and eliminating service-based restricted share units and stock options,2019 annual meeting. The Committee views this strong result as confirmation that our compensation program is more closely aligned with Company performance than ever before, as described below and under the heading“Pay-For-Performance Commitment:”

Increasing the weighting underappropriately structured to support our 2016-2017 long-term incentive program of performance-based restricted share units based on total shareholder return performance over a3-year period (from 25% to approximately 37% of total long-term incentive award value) demonstrates our commitment to align compensation with longer-term shareholder interests.

Our performance-based equity awards for the 2017 performance period are based on keyongoing business transformation financial and operational measures aligned toreflects ourpay-for-performance commitment.

We greatly value the input received from our shareholders and engage with them on a variety of matters – including execution against our strategy, with equal weighting between financialexecutive compensation and operational measures. The financial measures are intended to drive growth and profitability in our core database software across different deployments, revenue growth in our consulting services business, and overall profitability. The operational measures are designed to drive the execution of our strategy through key actions for the year that cover pricing,go-to-market, implementation of Teradata Everywhere, consulting development activities, and developmentcorporate governance – as part of a new sales incentive program for 2018.

year-round engagement process described below:

 

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Stockholder EngagementLOGO

In 2016 — both as

We reach out to largest investors to engage in discussions regarding issues that are important to them and to seek their input on executive compensation and corporate governance matters. Our outreach team includes Investor Relations, Executive Compensation and Corporate Governance representatives from Teradata’s management team, including the Chief Human Resources Officer and, if requested, independent directors of the board.As we prepare for the proxy season, we consider investor feedback and perspectives in evaluating and structuring our executive compensation program and preparing proxy statement disclosures.After proxy materials are filed, we invite our largest investors to discuss proposals to be considered at the next annual meeting of shareholders. As outlined on page 21 of this proxy statement, there are also a number of established channels that any investor may use to communicate with the Company.

As part of the proxy solicitation process, and following our 20162019 annual meeting, — we continued our practice of soliciting input from our largest 25 institutional investors, representing nearlyover 75% of our outstanding shares, and answering their questions regarding a variety of topics of interest to those investors, including executive compensation. Our outreach team includes Investor Relations, Executive Compensation and Corporate Governance representatives from Teradata’s management team and, if requested,them, such as the independent Chairdesign of the Committee.

We conducted conference calls with those investors who responded to our outreach efforts (and others who reached out to us) to understand their views regarding topics of interest to those investors, such as our executive compensation program, the CEO transition and search, board refreshment,diversity and to respond to their questions. During these discussions, some common themes emerged:

A meaningful portion of long-term incentive value should be allocated to performance-based equity awards,corporate governance best practices, corporate social responsibility and

Although investors generally prefer3-year performance periods over1-year performance periods for long-term incentive awards,1-year performance periods are acceptable if a strong rationale is provided sustainability matters, and the applicable performance goals are directly linked to the Company’sexecution of our business transformation strategy.

The changes tofeedback we received from investors through this engagement process was generally positive and constructive. Investors expressed support for our executive compensation program, that were approved in 2016, as described above, were consistent with the common themes expressed by our stockholders and generally have been viewed very favorably by investors, because they reinforced the performance-oriented structure of the program. In addition, through our engagement process, shareholders reiterated their general view that there should be a reasonable basis for compensation levels for our executives as well as linkage betweenincluding the design of the Company’s executive compensation programour annual bonus plan and Teradata’s future strategic direction. To that end, in Section 2 of this CD&A, we have provided detailed disclosureslong-term incentive plan and its emphasis on performance-based equity. The feedback from investors regarding the basis for the total compensation levels awarded to our current named executive officers and how our executive compensation program, is designedas well as other governance matters, was reported to meet the Company’s business transformation goals.

our board. We will continue to engage with our stockholders on variety of matters, including executive compensation,shareholders in order to receive any feedback they may have regarding the Company.


36    

2020 PROXY STATEMENT



Compensation Discussion and take into account investor feedback in evaluating and structuring our executive compensation program.

Analysis

 

37



Pay-For-Performance Commitment

Teradata is committed to rewarding talent that drives our organizational success. As part of our business transformation, in 2019, we emphasized a culture of high performance, and our talent and rewards strategies centered on incentive programs that provided rewards based on meaningful demonstrations of business achievements and individual performance contributions to the Company. Moving forward, we will continue to drive this philosophy in all of our talent and rewards programs.

The Committee has designed the compensation program for our current named executive officers to bereflect the importance placed on Company and business achievement in a high-performing culture. To that end, our core compensation program is closely aligned with Company performance. Our core compensation programperformance and consists of base salary, annual incentives and long-term equity incentives (performance-based restricted share units).incentives. As illustrated below, in 2016,2019, approximately 92%91% of the target total direct compensation for our former CEO, Mr. Lund,Ratzesberger, who served as our CEO for most of 2019, and 76%approximately 89% for the other named executive officers (excluding Mr. Lund, our Interim CEO) was performance-based.

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LOGOLOGO

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38



SectionSECTION 2: Compensation Philosophy, Policies and PracticesCOMPENSATION PHILOSOPHY

AND GOVERNANCE

Our executive compensation program is designed to achieve the Company’s goal of attracting, retainingattract, retain and developing globalalign our business leaders with proven capabilitiesour goals to drive financial and strategic growth, while also delivering long-term stockholder value. We focus on providing compensation opportunities that are alignedLike our business, this program must be dynamic and adjusted regularly to align with our stockholders’ interests,intensely competitive and changing business, particularly as the Company is undergoing a strategic transformation. Underlying this evolving structure, all of our compensation programs promote sound governance practices, and deliverpay-for-performance. Thebalance, driving results while mitigating risks. To that end, the Committee has also implemented policies andgovernance best practices to reduce compensation risks and to align compensation with industry norms.

 What We Do

Establish Competitive Compensation Levels.We target the total direct compensation for our named executive officers at levels that are competitive in the high–technology industry — generally within a range of 15% above or below the median target level for our peer group. We also strive to maintain internal pay equity among our executives in order to retain, motivate and, as necessary, attract executive talent.

Maintain a “Double Trigger”.Our “change in control” arrangements provide benefits on a “double trigger,” meaning that the severance benefits are paid, and equity awards vest, if our executives incur a qualifying termination in connection with a change in control.

       Minimize Compensation Risks.We periodically review our compensation program to confirm that our compensation policies and practices are not encouraging excessive or inappropriate risk-taking by our employees. Potential incentive payouts are capped and we retain discretion to adjust payouts based on the quality of Company and individual performance and adherence to our ethics and compliance programs.

       Impose Robust Stock Ownership Guidelines.Our stock ownership guidelines require our executives to achieve robust ownership requirements, ranging from 20,000 to 35,000 shares for executives other than the CEO and 135,000 shares for the CEO, and they provide that our executives generally cannot sell Teradata stock until they meet such guidelines. These guidelines encourage our executives to maintain a meaningful equity interest in the Company and a shared commitment to value creation, while satisfying their needs for portfolio diversification. Mr. Harrington and Mr. Scheppmann have each exceeded his required ownership level as of December 31, 2016, and the other current named executive officers are on track to meet the guidelines based on the timing of when they were hired and/or promoted into their current positions.

       Equity Holding Requirements.In general, our executives are required to hold 100% of the shares, net of taxes, received upon the exercise of stock options or payout of restricted share units until the minimum stock ownership guidelines are satisfied. Mr. Lund has committed to hold all shares earned under his performance-based restricted share units (net of dispositions to pay taxes incurred) while he serves as President and CEO.

norms and stockholder interests. See Section 6 of this CD&A for more details regarding some of these key policies and practices.

 

39


 What We Do

       Maintain a “Clawback” and “Harmful Activity” Policy.We maintain a Compensation Recovery Policy (commonly referred to as a clawback policy), which generally provides that the Company may recover cash and equity-based compensation if payout or vesting was based on financial results that were subsequently restated. The policy supports the accuracy of our financial statements and helps to align the interests of our executive officers with those of our stockholders. We also retain the right to cancel outstanding equity awards and recover realized gains if executives are terminated for cause or engage in certain other “harmful activity,” such as violating anon-competition ornon-solicitation covenant or other misconduct.

       Retain an Independent Compensation Consultant.The Committee retains an independent consultant to assist in developing and reviewing our executive compensation strategy and to confirm that the design and pay levels of our compensation programs are consistent with market practices.

       Consider the Impact of Tax and Accounting Rules.The Committee takes into account the effect of tax and accounting rules in structuring our executive compensation program. For example, the 2016 annual incentive awards paid under our Management Incentive Plan and the performance-based restricted share units granted for the 2016-2017 long-term incentive program generally were intended to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code and thus generally were intended to be fully deductible for federal income tax purposes. However, the Committee has not adopted a policy that requires all compensation to be deductible because we want to preserve the ability to provide cash or equity compensation to an executive that is not deductible under Section 162(m) if we believe that it is in our stockholders’ best interests.

       Review Share Utilization.We regularly review overhang levels (the dilutive impact of equity awards on our stockholders) and burn rates (the aggregate shares awarded as a percentage of total outstanding shares), and our average burn rate for the last three completed fiscal years is consistent with industry norms.

What We Don’t Do

×        No Excise TaxGross-Ups.Our management is not entitled to receive any “gross up” payments related to excise taxes that may be imposed in connection with golden parachute arrangements under the Teradata Change in Control Severance Plan.

×        No Hedging or Pledging of Company Stock.Our insider trading policy restricts our employees, officers and directors from engaging in hedging transactions involving Teradata stock or from pledging Teradata securities.

×       No “Timing” of Equity Grants.We maintain a disciplined equity approval policy. We do not grant equity awards in anticipation of the release of material,non-public information. Similarly, we do not time the release of material,non-public information based on equity grant dates. Under our equity grant approval policy, we generally grant annual equity awards at the regular meeting of the Committee that occurs during the fourth quarter before our blackout period begins on December 15, and we do not grant equity during our quarterly blackout periods.

Best Practices We Follow

 

40


Section 3: Core Compensation Program

Summary of 2016 Compensation Decisions

Mr. Lund

As noted above, in 2016 we began a management transition, including the appointment of Mr. Lund as President and CEO following the departure of Mr. Koehler, our former CEO, on May 5, 2016. In connection with his appointment as President and CEO, Mr. Lund received the following compensation:

a base salary of $800,000 per year,

a target annual incentive opportunity of 125% of his base salary (prorated for 2016),

pro-rated 2015-2016 long-term incentive awards with a target award value of $4,000,000 (based on an annual award value of $6,000,000), which were 100% performance-based and split equally between performance-based restricted share units subject to the same3-year total shareholder return performance goals established for other executive officers for the 2016-2018 performance period and performance-based restricted share units subject to the samenon-GAAP earnings per share performance goals established for other executive officers for the 2016 performance period, and

participation in the health, welfare, retirement and other benefit plans (but not including our Change in Control Severance Plan) generally made available to other senior executives.

The terms of this compensation package were negotiated between Mr. Lund and the Committee. They were believed to be necessary to induce Mr. Lund to assume his role immediately upon the termination of Mr. Koehler, and the Committee retained the advice of its independent compensation consultant when establishing Mr. Lund’s compensation levels.

The Committee increased Mr. Lund’s 2016-2017 long-term incentive opportunity from $6,000,000 (annualized) to $8,400,000 to align his total compensation with competitive market median levels and in recognition of the many contributions he made in leading and driving the Company’s business transformation and shift in strategy as described above in Section 1. Prior to this increase, Mr. Lund’s total compensation was significantly below the Company’s compensation peer group’s median level. Moreover, the Committee recognized the importance of retaining Mr. Lund through the completion of the Company’s business transformation process, including Mr. Lund’s vital role both with respect to the development of operational plans to execute our new strategy and the development of a management team who is capable, willing and enthusiastic to drive this strategy forward. Based on its desire to align pay and performance, the Committee allocated this market-based increase entirely to Mr. Lund’s long-term performance-based incentive opportunity rather than base salary.

Mr. Lund’s long-term incentive awards are generally subject to the terms of the Company’s standard equity award agreements, except that a termination of Mr. Lund’s employment for any reason (other than for cause) will be treated as his retirement, given his age and tenure with the Company, with full (rather thanpro-rata) vesting of any performance-based restricted share units earned if his employment terminates after 2016 (for the awards granted in May 2016) and after December 31, 2017 (for the awards granted in November 2016). However, in the event he is no longer employed by the Company, any payout of Mr. Lund’s performance-based equity awards will continue to be subject to the achievement of the performance criteria for such awards over the entire performance period. In other words, Mr. Lund would not receive any payout for his vested equity until after the completion of the applicable performance period when the Committee determines whether and to what extent those criteria have been achieved.

41


Other Named Executive Officers

The Committee believes that the current named executive officers should be paid at competitive market levels and, as outlined below, took steps to better align the total compensation of certain of our named executive officers with the market in light of their new roles and responsibilities. These pay actions were considered critical to maintaining a fairly compensated senior management team committed to taking the difficult and transformative steps necessary to change so many aspects of the Company’s business, including our technology deployments,go-to-market strategy and license models. These changes were also intended to preserve continuity in the senior management team during the transition period, as any unplanned departures could jeopardize the successful execution of our new strategy.

The 2016 total direct compensation levels for our named executive officers, other than Mr. Lund and our former CEO, Mr. Koehler, were determined by the Committee as set forth in the following table. In 2016, the total direct compensation opportunity for Mr. Koehler, prior to his departure, was not changed from prior-year levels:

 

  Element

LOGO

ESTABLISH
COMPETITIVE
COMPENSATION
LEVELS

for our named executive
officers within the
technology industry

 2016 Decisions – Total Direct Compensation Levels (not including Mr. Lund)
  Base Salary  

•       In connection with an annual competitive market review, the Committee authorized modest base salary increases of approximately 2% LOGO

MAINTAIN A
“DOUBLE TRIGGER”

for Messrs. Scheppmann, Harrington, Ratzesberger, Dinningchange in control
severance benefits and Fair, consistent with our general employee merit pool guidelines.

•       After the annual review, Mr. Dinning received a 14% increase in base salary to reflect his appointment as Chief Transformation Officer, effective February 15, 2016, and based on competitive market data for his new role.

•       In connection with the Company’s organizational restructuring in July 2016, the roles and responsibilities for Messrs. Dinning, Ratzesberger and Scheppmann were expanded as described above in “Leadership Changes” of Section 1. At that time, each of Mr. Scheppmann and Mr. Dinning received a salary increase of 12.5% and Mr. Ratzesberger received a salary increase of 16.4%, in each case generally based on median competitive market data for their new roles.
equity award vesting

  Annual Bonus  

•       In light of the expansion of their responsibilities resulting from the restructuring described above, Mr. Ratzesberger received an increase in his 2016 target annual incentive opportunityLOGO

MINIMIZE
COMPENSATION
RISKS

by periodically reviewing our
compensation program to 100% (from 80%)
confirm that our
compensation policies and Mr. Dinning received an increase in his 2016 target annual incentive opportunity to 80% (from 40%).
practices are not
encouraging excessive or
inappropriate risk-taking

 

•       The Committee did not increase the target annual incentive opportunities for any other named executive officer in connection with the annual competitive market review.

  Long-Term

  Incentives

 

•       In connectionLOGO

MAINTAIN STOCK
OWNERSHIP
GUIDELINES

in line with an annual competitive market review, the Committee increased the target award value of long-term incentives granted to the current named stockholder
interests requiring robust
ownership levels for
executive officers

LOGO

MAINTAIN A
CLAWBACK AND
HARMFUL ACTIVITY
POLICIES

so that we can recover cash
or equity incentive
compensation based on
financial results that were
later restated and can
cancel outstanding equity
awards and recover
realized gains if executives
are terminated for the 2016-2017 annual grant cycle cause or
engage in certain other
harmful activity

LOGO

RETAIN AN
INDEPENDENT
COMPENSATION
CONSULTANT

to amounts representing roughlyprovide expert objective,
third-party advice regarding
executive pay programs
and competitive
market practices

LOGO

HOLD ANNUAL ADVISORY
VOTE ON EXECUTIVE
COMPENSATION

to give investors the median market levels
opportunity to express their
views on pay on a
regular basis

LOGO

REVIEW OVERHANG
LEVELS AND BURN
RATES

to confirm that would appropriately motivateour standards
are consistent with industry
norms and retain these executives during the business transformation. In addition, when determining the size shareholder
expectations

LOGO

NO EXCISE TAX
GROSS-UPs

in Company severance plans

LOGO

NO HEDGING OR
PLEDGING

of their annual equity awards, the Committee also considered the meaningful contributions these executives made in driving the Company’s business transformation and shift in strategy as described under “Business Highlights” Company stock by executive officers

LOGO

NO “REPRICING”

of Section 1.stock options or
granting of discounted
stock options

LOGO

NO FIXED TERM
EMPLOYMENT
AGREEMENTS OR
DEFINED BENEFIT
PLANS

 

42



  Element2016 Decisions – Total Direct Compensation Levels (not including Mr. Lund)
38     

•       Mr. Scheppmann’s long-term award value was increased to $2,700,000 (from $1,800,000), which was primarily based on competitive market data, with $400,000 of such increase intended to recognize Mr. Scheppmann’s increased strategic role within the Company.

•       Mr. Ratzesberger’s long-term award value was increased to $2,250,000 (from $1,600,000), and Mr. Dinning’s long-term award value was increased to $1,600,000 (from $1,250,000), which was primarily based on competitive market data in light of their expanded and critical roles in connection with Teradata’s business transformation.

•       Mr. Harrington’s long-term award value was increased by 12% to $2,350,000.

•       Earlier in the year, in connection with his appointment as President of the Americas sales region, the Committee approved a grant of equity to Mr. Morton with a value equal to $1.0 million, which was allocated 20% to stock options, 50% to performance-based restricted share units, and 30% to service-based restricted share units. The Committee also granted him service-based restricted share units with a value of $200,000, subject to a three year graded vesting schedule. These grants were intended to enhance his retention incentives and align his long-term incentive compensation with market levels. In connection with his planned retirement, Mr. Morton will receive apro-rated portion of the performance-based restricted share units earned based on actual performance, and he received an extra year of vesting credit for purposes of calculating the vesting of his service-based restricted share units and stock options.2020 PROXY STATEMENT

The following is a brief summary




SECTION 3: CORE COMPENSATION PROGRAM

Summary of each element of our core compensation program for our named executive officers as of December 31, 2016.2019 Compensation Decisions

Base Salary

We provide a base salary to retain and as necessary, attract key executive talent and to align our compensation with market practices. Base salaries are reviewed and established by the Committee on a competitive basis each year to ensure they are appropriate and consistent with competitive market median levels.

Annual Bonus AwardsEffective January 14, 2019, Mr. Ratzesberger received an increase in his base salary in connection with his election as President and CEO. In determining Mr. Ratzesberger’s compensation in connection with his election as CEO, the Committee considered the fact that he was a first-time CEO. Thus, his compensation was set at a level commensurate with his lack of CEO experience and, therefore, below the peer group median. Also effective January 14, 2019, Mr. Lund’s salary was reduced to reflect his new role with the Company as Executive Chairman of the Board. In February 2019, Mr. Culhane and Mr. Harrington each received a 7% increase in his base salary to bring his base salary closer to competitive market levels, and, in the case of Mr. Culhane, commensurate with his experience and scope of responsibility at Teradata. The respective base salary level for Mr. Brown and Ms. Cullen-Cote was negotiated at the time each executive joined the Company in 2019 and was based on competitive market data, taking into consideration his or her relative degree of experience and new hire incentive considerations.

AllEffective November 5, 2019, Mr. Lund’s base salary was increased from $600,000 as Executive Chairman to $1,000,000 in connection with his election as Interim President and CEO following the departure of Mr. Ratzesberger. As noted above on page 33 of this CD&A, the board believed it was critical for Mr. Lund to step in and serve as CEO in an interim capacity to provide leadership through the CEO transition. In setting Mr. Lund’s compensation, the Committee, in consultation with its compensation consultant, sought to provide Mr. Lund with compensation that was consistent with competitive market data for interim CEOs, particularly former CEOs who assume an interim role. Accordingly, the Committee set Mr. Lund’s total direct compensation at a level that was significantly below his compensation level when he previously served as the Company’s CEO and approximately 30% below the total direct compensation for the outgoing CEO, Mr. Ratzesberger.

The base salary levels for our named executive officers except Mr. Morton participated in our 2016 annual bonus program. The target incentive opportunity generally remained unchanged from 2015, with the exception of Mr. Ratzesberger and Mr. Dinning who received increases2019 were as noted in the summary above in connection with their expanded responsibilities, and Mr. Lund who assumed the role as President and CEO in 2016.follows:

 

Name

NAME

  

Opportunity

(as % of base salary)

ANNUAL BASE
SALARY*
 

Victor Lund

   125

Stephen Scheppmann

$1,000,000    
   100

Dan Harrington

100

Oliver Ratzesberger

   100$750,000    

John Dinning Mark Culhane

   80$510,000    

Michael Koehler Scott Brown

   125$550,000    

Robert Fair Kathleen Cullen-Cote

   110$450,000    

 Daniel Harrington

$500,000    

*Annual Base salary levels effective as of December 31, 2019, except for Mr. Ratzesberger, who was terminated as CEO on November 5, 2019.

2019 Annual Bonus Awards

Our named executive officers, other than Mr. Lund, participated in our 2019 annual bonus program under the Teradata Corporation Management Incentive Plan (“2019 Management Plan”) with target incentive opportunities as set out in the table below.

Effective January 14, 2019, Mr. Ratzesberger received an increase in his target incentive opportunity to 125% of base salary in connection with his election as President and CEO. The target incentive opportunity for each of Mr. Brown and Ms. Cullen-Cote was negotiated at the time the executive joined the Company in 2019 based on competitive market data, taking into consideration his or her relative degree of experience and new hire incentive considerations. The target incentive opportunity for each of Mr. Culhane and Mr. Harrington remained unchanged from 2018.

LOGO ��39


Section 3: Core Compensation Program

 

43



NAME

TARGET OPPORTUNITY    

(AS % OF BASE SALARY)    

 Victor Lund

Did not participate

 Oliver Ratzesberger

125%

 Mark Culhane

100%

 Scott Brown

100%

 Kathleen Cullen-Cote

  80%

 Daniel Harrington

100%

Total payouts under the 2016 annual bonus program2019 Management Plan are generally determined by the weighted measurebased primarily on our achievement of three different components:two key financial measures: ARR growth and(i) non-GAAP revenue (i.e.,excluding revenue earned by the TMA business, which was sold on July 1, 2016, and any impact of foreign currency exchange rates frompre-established plan levels);(ii) non-GAAP operating income, which are calculated as reported in the Company’s 2016 earnings release (i.e., excluding stock-based compensation expense, the TMA business and other special items identified in our earnings release); and (iii) strategic objectives. No single component is given disproportionate weight and each has a specific business objective.described below.

 

MeasureWeightBusiness Objective
Non-GAAP RevenueMEASURE  30%WEIGHT  Reward our executives for achievement of revenue objectivesBUSINESS OBJECTIVEDEFINITION

ARR Growth

60%ARR growth is a measure that stockholders use to determine the extent to which we are shifting to a more predictable business model that is intended to drive consistent revenue growth over time.ARR growth equals the year-over-year growth of the contract value for all active and contractually binding term-based contracts at the end of a period (including maintenance, software upgrades, cloud offerings, subscription licenses, rentals and managed services).

Non-GAAP Operating Income

  30%

40%

  

Incent our executives to deliver attractive contribution margins and stockholder value

Strategic Objectives40%Motivate our executives to focus on the advancement of strategic objectives to position the Company for future growth (see below)

When establishing the performance objectives under our 2016 annual bonus program in February 2016, the Committee formulated the targets for the financial measures on the Company’s guidance to investors with respect to its projected revenue and operating income plan for the year based on our traditional perpetual upfront license revenue model. Thenon-GAAP revenue target represented a 1% increase from prior-year results on a constant currency basis, and thenon-GAAP operating income target was a 19% increase over 2015 results. As mentioned above in Section 1, although the level of rigor with respect to the revenue goals for the year stayed the same, they were generally down from the prior year due to the expected continued downward pressure on large capital IT investments and changing customer buying patterns, particularly delayed purchases as customers explored increased deployment and pricing alternatives. The projected significant improvement in operating income for the year was based on the Company’s exit from the TMA business and major cost takeout efforts.value.

In addition, the Committee identified a number of strategic initiatives that were important to accomplish in 2016 based on the Company’s then-current business plan, and decided to continue to weigh thenon-GAAP revenue andnon-GAAP operating income measures at 30% each and the strategic objectives at 40%. The Committee continued to believe that this allocation appropriately stressed the importance of achieving certain key strategic objectives and investment initiatives that would be critical to building the foundation for our business transformation strategy, but that might not be reflected appropriately in our short-term financial results. Other strategic objectives were intended to position the Company for growth in future years.

Following the appointment of Mr. Lund as Teradata’s new President and CEO in May, the Company’s strategy was shifted as part of the ongoing business transformation process. As discussed above in Section 1, a new emphasis was placed on driving recurring revenue streams by providing alternative pricing models and deployment options for customers, such as subscription licenses and hybrid cloud offerings which are priced as a service. As a result of this move from perpetual, upfront revenue to subscription-license based revenue, a meaningful portion of the Company’s revenue, nearly $70 million, was driven into future years but the related expenses were incurred in 2016. In other words, while we were not able to recognize as much upfront revenue at the time of the customer’s purchase of Teradata software during the year, the Company and its stockholders generally will receive the benefit of the sales transactions as revenue is recognized over the life of the sales agreements. To account for this shift and to reflect the strategic importance of this new model on the Company’s long-term growth, the Committee chose to determine the performance achievement for the

44


2016 annual bonus financial measures(non-GAAP revenue andnon-GAAP operating income) by measuring the Company’s results on a perpetual-license basis. The Committee believed that this approach would provide a fair and more comparable determination of the Company’s performance achievement for the year.

To determine the value of the shift from perpetual, upfront revenue to subscription-license based revenue that occurred during 2016, the Committee applied the following objective methodology (the “Conversion Methodology”):

  

ReportedDetermine whether revenue meets the following criteria (“Qualifying Revenue”): (a) revenue recognized based on new software subscription license, rental and cloud offering agreements, excluding revenue based on renewals of existing customer agreements, (b) with a minimum of1-yearnon-GAAP commitment, and (c) an effective date in 2016.

For Qualifying Revenue based on software subscription license and rental agreements, calculate the impact that the conversion from perpetual to subscription licenses had on pricing for each order based on the financial terms for each deal as part of our established bid review process.

For Qualifying Revenue based on cloud offerings, calculate the annual recurring revenue for each order and multiply by the weighted average contract term and the Company’s average renewal rate for such orders.

For all Qualifying Revenue, subtract the recognized revenue for each order so that there is no “double counting”.

To adjust the operating income convert Qualifying Revenue usingminus actual subscription-based gross margin (for rental, ratable and upfront subscription-based product bookings) minus actual cloud gross margin, plus subscription TCV (the total contract value for subscription-based product bookings), multiplied by the above methodology and then apply the Company’s actual standard product gross margin rate in 2016.(actual gross margin before corporate allocations).

ThroughIn 2019, the applicationCommittee moved away from applying normalizing adjustments to reported results for purposes of the performance measures for the 2019 Management Plan. Rather than using pro forma performance goals and approved adjustments to actual results compared to such goals, which was the case in 2018, for 2019 the Committee determined that it was better aligned with stockholder expectations and added greater transparency to set as performance measures ARR growth andnon-GAAP operating income. The financial performance goals for these measures were set at levels that were consistent with the financial plan for the year, subject to approved adjustments, including the impact of foreign currency exchange rates and, in the case ofnon-GAAP operating income, adjustments to account for the shift to subscription-based transactions.

In developing both the 2019 Management Plan and the 2019-2021 long-term incentive program (described below), the Committee established ARR growth as a performance measure in both plans. The Committee established overlapping ARR growth measures between the plans because it believes that ARR growth is the paramount measure for our business and strategy. This overlap highlights the importance of measuring and motivating the achievement of ARR growth annually to track the overall health of our Company, while also measuring ARR growth with different metrics that are compounded over a3-year period to gauge our long-term growth and momentum. The Committee also believes that the overlap of this Conversion Methodology,measure reduces the level of achievement for therisk that any actions would be taken to sacrifice long-term growth to meet annual bonus was able to be determined by comparing the actual results to the performance metrics that were set by the Committee before the significant shift in strategy during the year to move toward a subscription revenue model, which is key to our long-term success, as we believe this shift will increase our recurring revenue over time.targets or vice versa.

Financial Measures

The following chart sets forth thenon-GAAP revenue 2019 ARR growth andnon-GAAP operating income targets under the 2019 Management Plan. The Committee believed that the target levels for 2016the financial measures were sufficiently rigorous and aligned with stockholder interests for the related achievement levels after the application of the Conversion Methodology described above.following reasons:

 

Financial Measure
(in millions)

(60% of total weighting
for payout)

 0%
(Threshold)(1)
  100%
(Target)
  

200%

(Maximum)

  Actual
Performance
(2)(3)
  Achievement
Level
 

Non-GAAP Revenue

 $ 2,192  $ 2,369  $2,584  $2,312   84%  

Non-GAAP Operating Income

 $409  $486  $583  $513   129% 
LOGOOur 2019 ARR growth target of 11% was set above the 2019 actual result of 9%;
LOGOThe 2019non-GAAP operating income target was based on the Company’snon-GAAP operating income plan, which was $46 million more than the $210 million achieved in 2018;
LOGOThe Committee imposed a profitability gate on payout of the ARR growth goal, such that (i) ARR growth payout was capped at “Target” unless and until the Company achieved threshold performance fornon-GAAP operating income of $210 million, which was our actual result for 2018; and (ii) ARR growth could not payout at maximum unless and until the Company achievednon-GAAP operating income of $233 million (with payout of the ARR growth performance metric between “Target” and “Maximum” determined on straight line interpolation fornon-GAAP operating income results of between $210 million and $233 million); and
LOGOThe target levels for the financial measures were consistent with guidance provided by management to stockholders at the beginning of 2019 when the goals were established by the Committee.


40    

2020 PROXY STATEMENT



Section 3: Core Compensation Program


FINANCIAL MEASURE  50%
(THRESHOLD)
  100%
(TARGET)
  200%
(MAXIMUM)
  ACTUAL
PERFORMANCE (1)
 ACHIEVEMENT
LEVEL

ARR Growth(1)

    9%     11%     13%     9%   58%

Non-GAAP Operating Income(1) (in millions)

   $210   $256    $276     $246   89%

Total

                           70%

(1)No payout can be earned for either financial measure if the threshold level of operating income is not achieved.
(2)The actual performance was adjusted by the Committee based on the change in the Company’s strategy during the year using the Conversion Methodology described above, which resulted in a $68 million adjustment to actualnon-GAAP revenue and a $42 million adjustment tonon-GAAP operating income.
(3)

When establishing the revenue performance metrics,objectives under the 2019 annual bonus plan, the Committee authorized an adjustmentalso approved adjustments to actual performance to exclude (i) the impact of foreign currency exchange rates frompre-established plan rate levels, which resulted in a $90.2% adjustment to ARR growth and a $3 million adjustment to actual results.non-GAAP

45


Strategic Objectives

As described above, 40% of the 2016 annual bonus opportunity was allocated to the achievement ofpre-established strategic objectives to further our long-term strategy and position the Company for future success. The 96% achievement level for this portion of the bonus program was based on the Committee’s subjective assessment of overall performance relative to a mix ofpre-established strategic performance criteria, as illustrated below:

ObjectivesKey Strategic
Performance Criteria
Results

Execute Transformation operating income, and Foundational Initiatives

        Achievement of cost savings objectives

LOGO Achieved significant cost reductions of over $100 million which far exceeded $70 million cost takeout goal. The benefit of these costs savings going forward are important because they will allow us to rebuild our organization with skill sets that meet the criteria of our new strategy.

        Completion of sale of TMA business

LOGO Successfully completed complex sale and transition of this exited business; however, sale price was less than desired.

        Execution of public cloud and repeatable analytic solutions strategy

LOGO Completed deployment of Teradata database software on Amazon Web Service (“AWS”) and completed development and testing work on Microsoft’s Azure® platform ahead of schedule; also made good progress(ii) in the developmentcase ofnon-GAAP operating income, subscription-bookings mix, which resulted in a repository for capturing intellectual property and standardizing analytic solutions for reuse with customers.

$60 million adjustment tonon-GAAP Effective management of business transformation process and talent management strategy

LOGO Developed and announced new strategic plan at the Analyst Day in November 2016 that was well-received by investors. Completely reorganized our management structure during the year and implemented programs to reduce attrition.

       Drive integration and differentiation of our product and services offerings

LOGO Teradata’s Intelliflex (our next-generation integrated data warehouse platform) and public cloud offerings include key unique features and strong performance, and we expanded our differentiation in managed cloud, consulting and analytic ecosystem offerings particularly through Teradata Everywhere which is setting new standards for performance on major cloud platforms.

Execute Revenue-Generating Transformation Initiatives

        Meet key program milestones for cloud-based offerings including research and development (“R&D”), availability, sales, security, and customer reference goals

LOGO Generally exceeded goals with respect to R&D program milestones, particularly with respect to Intelliflex, AWS and international cloud offerings, as well as customer reference and availability objectives, but fell short of sales and new account targets.operating income.

46


ObjectivesKey Strategic
Performance Criteria
Results

        Meet key program milestones foron-premises, analytical and ecosystem solutions including R&D, sales, and market leadership goals

LOGO R&D program milestones were met for these solutions, particularly Intelliflex and ecosystem architecture releases, and we were on track with analyst ranking objectives, but we generally did not achieve targets with respect to sales and new account targets.

Solutions Compensation Incentive Program

Mr. Morton participated in the Company’s solutions compensation incentive program, which provides for incentive payments based on attainment of specified financial objectives. For 2016, Mr. Morton’s target incentive opportunity was 70% of annual base salary and 50% of his specific financial sales objectives were based on Americas sales revenue and 50% on Americas contribution gross margin. Performance was measured by comparing actualyear-to-date results through July 31, 2016 (per his separation agreement) against full-year objectives and paid upon the first and continued point of attainment against the objectives.

Payouts of Annual Bonuses

Each named executive officer, other than Mr. Morton,Lund, was entitledeligible to receive a payout under the annual bonus programour 2019 Management Plan equal to 102%the maximum level of his or her target annual incentive opportunity, which reflectedbased on our performance relative to the financial measures described above. However, this achievement level was subject to a 106.5%+/- 25% modifier based on specific individual performance objectives. Although the Committee had the discretion to apply this modifier, the Committee did not make any adjustments for individual performance for any of the named executive officers as a result of the achievement level for the financial measures and a 96%Company’s performance being considerably below target, with the exception of Mr. Ratzesberger. The Committee adjusted Mr. Ratzesberger’s achievement level to 0%, which the Committee viewed as appropriate in light of the termination of his employment in November 2019. These adjustments, along with the final achievement level for thepre-established strategic objectives, based on the Committee’s subjective assessment of performance relative to those objectives. Pursuant to their separation agreements and the Company’s standard practice, the 2016 annual bonuses paid to Messrs. Koehler and Fair werepro-rated for the portion of the year in which they were employed.

Mr. Morton received a payout of $127,752 under the 2016 solutions compensation incentive program equal to approximately 48% of his target incentive opportunity,pro-rated for the period prior to his departure which was determined as follows:each named executive officer, are listed below:

 

Performance Objective  Performance   Achievement Level

Americas Solutions Revenue

  $712,149,313   48.1%

Americas Contribution Gross Margin

  $380,619,354   47.9%
Name  Achievement Level After
Financial Performance
 Adjustment for
Individual
Performance
 Final    
Achievement    
Level    

Victor Lund

  

Did Not Participate

Oliver Ratzesberger

  

70%

 

-70%

 

0%

Mark Culhane

  

70%

 

0%

 

70%

Scott Brown

  

70%

 

0%

 

70%

Kathleen Cullen-Cote

  

70%

 

0%

 

70%

Daniel Harrington

  

70%

 

0%

 

70%

The amount of the 20162019 annual bonus payments ispayment amounts are set forth in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table of this proxy statement on page 56.52. For more information on the 20162019 annual bonus program for our named executive officers, please refer to the “Grants of Plan-Based Awards” section on page 5954 of this proxy statement.

LOGO  41


Section 3: Core Compensation Program


Long-Term Incentives (Equity Awards)

The total direct compensation levels for our named executive officers are heavily weighted to long-term incentive opportunities, which vest over a period of three years. This structure is intended to align executives’ interests with those of our stockholders, enhance our retention incentives and focus our executives on delivering sustainable performance over the longer-term.

The design of this program has evolved over the past several years to reflect the core performance metrics and incentive structure the Committee believed was necessary to drive our long-term success through the business transformation in a manner that was reflective of feedback received from investors during our shareholder engagement process. The following chart includes a high-level summary of the elements of the performance-based and serviced-based restricted share unit (“RSU”) equity vehicles and performance criteria, as applicable, for our long-term incentive program since 2017.

 

47

Long-Term Equity Program Evolution

LOGO

EQUITY VEHICLES AND WEIGHTING

All performance-based RSUs

Mix of performance-based RSUs and service-based RSUs, heavily weighted to performance-based RSUsMix of performance-based RSUs and service-based RSUs, heavily weighted to performance-based RSUsMix of performance-based RSUs and service-based RSUs, heavily weighted to performance-based RSUs

PERFORMANCE MEASURES FOR PERFORMANCE-BASED EQUITY

40% TSR based on3-year period ending 12/31/2019

60% various financial and operational measures for1-year period ending 12/31/2017

50% Compounded ARR Growth over a 3-year period ending 12/31/2020

50% Based on annual percent of subscription-based product bookings over a 3-year period ending 12/31/2020

50% Compounded ARR Growth over a3-year period ending 12/31/2021

50% Free Cash Flow as a % of Revenue as measured at the end of a 3-year period on 12/31/2021

50% Compounded ARR Growth over a3-year period ending 12/31/2022

50% Free Cash Flow as a % of Revenue as measured at the end of a3-year period on 12/31/2022

GRANT TIMING

Grant DateNovember 2016November 2017March 2019March 2020
Effective Date of Grant for Performance-based Equity

November 2016 (40% TSR)

February 2017
(60% other)

February 2018March 2019March 2020


42    

2020 PROXY STATEMENT



Section 3: Core Compensation Program


Annual Grants (2016-2017– 2019

Mr. Ratzesberger received a target award cycle)

Our executives are generally awardedopportunity for his annual equity grantsgrant under the Company’s 2019 long-term incentive program equal to $6.5 million in connection with his election as President and CEO. The target award opportunity level for each of Mr. Brown and Ms. Cullen-Cote was negotiated at the end of each year that aretime the executive joined the Company in 2019 based on performance periods that commencecompetitive market data, taking into consideration his or her relative degree of experience and new hire incentive considerations. The target award level for each of Mr. Culhane and Mr. Harrington was set at a level intended to bring his total direct compensation levels closer to competitive market levels, and, in the startcase of Mr. Culhane, commensurate with his experience and level of responsibility at Teradata. Mr. Lund did not participate in the following fiscal year. When the Committee established the2019 long-term incentive program. The 2019 target long-term incentive opportunities for our current named executive officers as part of our 2016-2017 annual grant cycle (awards granted in 2016 for performance periods starting January 1, 2017), it considered a number of factors, including our goals of setting long-term incentive opportunities at more competitive levels, increasing the retentive nature of the incentive program, and appropriately managing our dilution and run rate levels. Moreover, before finalizing long-term incentive award opportunities, the Committee assessed each current named executive officer’s general performance during the year and efforts taken to drive the Company’s change in strategy as part of our business transformation, as well as his relative roles and responsibilities within the Company, along with internal equity considerations. After reviewing these factors, the Committee allocated a greater percentage of total direct compensation to long-term incentives and established the current named executive officers’ respective target long-term incentive award levels as follows:

Name  2016-2017  Long-Term
Incentive Opportunity
 

Victor Lund

  $8,400,000 

Stephen Scheppmann

  $2,700,000 

Dan Harrington

  $2,350,000 

Oliver Ratzesberger

  $2,250,000 

John Dinning

  $1,600,000 

The Committee decided to allocate the entire 2016-2017 long-term incentive award opportunity to performance-based restricted share units to signal the urgency of our business transformation and to motivate and drive our leadership team to execute key strategic objectives in connection with our transformation plan, using two separate performance-based restricted share unit awards. The following table describes each of the performance-based restricted share unit awards usedare set out in the 2016-2017 long-term incentive program, along with its weighting and the rationale for its use.table below.

 

   Equity Award and Description and RationaleNAME  Approximate   LONG-TERM
WeightINCENTIVE OPPORTUNITY    
One-Year Financial and Operational Business Transformation Objectives. The Committee approved the use of performance-based restricted share units with a1-year performance period for roughlytwo-thirds of the 2016-2017 long-term incentive award opportunity. The Committee believes that during our ongoing business transformation, it is important to continue to tie a portion of our executives’ long-term incentive opportunities to the achievement of financial (50%) and operational (50%) performance objectives measured over a1-year performance period (fiscal 2017), with a3-year graded vesting schedule for the earned portion of the award based on continued employment with Teradata.63%

•              Teradata operates in a highly competitive industry that is changing rapidly, and our Company is in the midst of a significant business transformation. Using a1-year performance period for roughlytwo-thirds of the total target long-term incentive opportunity allows the Committee to assess the execution of our business transformation and the impact of ongoing developments in our rapidly changing industry.Victor Lund

  

Did not participate

Oliver Ratzesberger

$6,500,000

Mark Culhane

$3,600,000

Scott Brown

$3,100,000

Kathleen Cullen-Cote

$2,200,000

Daniel Harrington

$2,000,000

In 2019, we continued our commitment to pay for performance by allocating70% of the long-term incentive opportunity to performance-based RSUsand 30% to service-based RSUs. These equity awards are summarized in the chart above. The performance-based RSUs will be earned if Teradata achieves two equally weighted financial goals during the3-year performance period ending December 31, 2021, which were designed to help position the Company as a consumption-based technology leader in the analytics andsoftware-as-a-service industry as described below. The service-based awards vest in equal annual installments over three years and are designed to provide a meaningful retention incentive for our executives in line with competitive market practices.

 

48


   Equity Award and Description and Rationale2019-2021 PERFORMANCE MEASURES  Approximate   
Weight   
RATIONALE

•              The diversified financial and operational performance metrics will provide clearer goals and flexibility forCompounded ARR Growth. 50% of the leadership team and are aligned with the key steps articulated to stockholders that will drive our business transformation. The financial measures include “TCore” growth and profitability, a metric that tracks growth in the consumption of Teradata software by our customers, which can be calculated for all deployment options andaward is critical to our long-term success. The other financial measures are based on double-digit target level compounded annual ARR growth over the3-year period.

ARR growth is a measure that stockholders use to determine the extent to which we are shifting to a more predictable business model that is intended to drive more consistent revenue growth of our consulting services business and earnings per share growth, calculated on a perpetual license basis using our established Conversion Methodology that allows us to measure performance regardless of the customer’s deployment choice. The operational measures are based on key actions in driving the execution of our strategy for the year and cover pricing,go-to-market, implementation of Teradata Everywhere, consulting development activities, and development of a new sales incentive program for 2018.over time.

  

•              The units earned, if any, vestone-thirdFree Cash Flow as a Percentage of Revenue. on the date the Committee certifies performance results,one-third on the first anniversary50% of the certification date, and the remaining thirdaward is based on the second anniversarydouble-digit free cash flow as a percent of the certification date. This vesting schedule helpsCompany’s total reported revenue over the3-year period. Free cash flow is defined as cash provided by/used in operating activities, less capital expenditures for property and equipment, and additions to focus our executives on generating performance results that translate into sustained, long-term stockholder value.capitalized software as reported in the Company’s earnings release for the full-year ending December 31, 2021.

  The free cash flow as a percent of revenue measure was chosen for this plan versus the percent of subscription-based bookings metric used for the 2018 program, because the Committee believes it better reflects our long-term ability to generate cash and profitability.

Annual Grants – 2020

The annual equity grants made to Messrs. Brown, Culhane and Harrington and Ms. Cullen-Cote in March 2020 are a mix of performance-based RSUs and service-based RSUs, heavily weighted to performance-based RSUs. Mr. Lund did not receive an annual equity grant in March 2020. The performance-based RSUs are equally weighted based on ARR growth and free cash flow as a percentage of revenue, both based on a three-year performance period ending December 31, 2022. The Committee aligned the performance goals for these awards to the same financial measures as the performance-based RSUs granted in 2019, as these measures continue to be essential to executing our strategy and completing our business transformation, and they are based on driving strong ARR and free cash flow growth over and above prior-year levels.

Three-Year Relative Total Shareholder Return (TSR). In order to strengthen our focus

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Section 3: Core Compensation Program


Sign-on Grants

In connection with his election as Interim President and Chief Executive Officer, Mr. Lund received a grant of service-based RSUs on November 15, 2019, with a target value of $5 million (the “Interim CEO Award”), converted to a number of share units based on the closing price of Teradata common stock prior to announcement of the CEO transition. The RSUs generally vest in equal annual installments over three years, except that the following vesting terms apply (the “Special Vesting Provisions”):

Mr. Lund’s continued service on the creationboard constitutes employment for vesting purposes; and

The vesting of long-term stockholder value, the Committee approved the use of a3-year performance period for roughlyone-third of the 2016-2017 long-term incentive award opportunity. The3-year performance-based restricted share units will be earned based on our TSR relative to the other companiesany unvested RSUs shall accelerate in full in the S&P 1500 Technology Indexevent that:

¡

the Company’s terminates Mr. Lund’s employment for any reason (other than for cause),

¡

Mr. Lund resigns as a director after, or in connection with, the election of a successor President and CEO, provided that Mr. Lund agrees to cooperate in good faith to transition his duties as President and CEO, or

3-year¡

Mr. Lund is not nominated by the board forre-election period ending December 31, 2019. The payout opportunity ranges from 50% of target for TSR at the 25th percentile, 100% of target for TSR at the 50th percentile, 150% of target for TSR at the 75th percentile, and 200% of target for TSR at or above the 90th percentile.as a director.

Such vesting terms, which apply to all of the awards that Mr. Lund received when he previously served as President and CEO from 2016 to 2019, did not change with the exception of accelerated vesting in the event of Mr. Lund’s resignation after, or in connection with, the election of a successor President and CEO. The intent of this provision was to address the extraordinary circumstances regarding Mr. Lund’s tenure as former CEO, Executive Chairman of the Board, and Interim CEO, and the unlikely scenario that his position on the board would not be viewed as desirable by the new CEO given his extensive involvement in the management of the Company. In addition, Mr. Lund is not eligible for any long-term incentive awards until November 5, 2020, and he did not receive an annual grant in March 2020.

The Committee, in consultation with its compensation consultant, set the value and nature of Mr. Lund’s compensation consistent with competitive market data for interim CEOs, particularly former CEOs who assume an interim role. Accordingly, the Committee set Mr. Lund’s total direct compensation at a level that was significantly below his compensation level when he previously served as the Company’s CEO and approximately 30% below the total direct compensation for the outgoing CEO, Mr. Ratzesberger. The Committee also considered the fact that the board asked Mr. Lund to serve as Interim CEO for up to one year and thus he would likely not be serving as CEO for a full performance period for our incentive plans, including performance-based RSUs, and the fact that he would not be receiving an annual grant in 2020.

In connection with his hire as Chief Revenue Officer, Mr. Brown received a grant of service-based restricted RSUs with a target value of $4.9 million that generally vests in equal annual installments over three years. The Committee, in consultation with its independent compensation consultant, set a grant value that reflected the fact the board viewed Mr. Brown, a seasoned executive with significant experience in successfully leading global sales organizations through business transformation and demonstrated ability in converting organizations to subscription-based business models, and dedicated focus on customer success, as the right leader to guide Teradata’sgo-to-market organization, in addition to the fact that Mr. Brown was heavily recruited for other senior executive global positions.    

In connection with her hire as Chief Human Resources Officer, Ms. Cullen-Cote received a grant of service-based restricted RSUs with a target value of $2.2 million that generally vests in equal annual installments over three years. The Committee, in consultation with its independent compensation consultant, set a grant value that reflected the fact that Ms. Cullen-Cote that the board viewed Ms. Cullen-Cote, a senior executive with significant management experience in successfully guiding employee engagement and cultural transformation of a global and diverse technology workforce, as the right leader for the Company’s human resources organization, in addition to the fact that Ms. Cullen-Cote was forfeiting compensation from her prior employment.

Retention Grants

In March 2020, each of Mr. Culhane and Mr. Harrington received a grant of service-based RSUs with a grant value of $2.4 million. The RSUs generally vest in equal annual installments over three years, except that any unvested RSUs shall accelerate in full in the event that the Company terminates such executive’s employment without cause. The Committee, in consultation with its independent compensation consultant, awarded these special retention grants based on the view that Mr. Culhane and Mr. Harrington are both critical to the successful execution of the Company’s strategy, particularly in light of the current CEO


•              Based on Company TSR performance over the past few years, the Committee continues to believe that achievement at or above the 50th percentile of the S&P 1500 Technology Index would represent significant performance improvement, while also representing a realistic, yet challenging, performance goal.

44    
 

2020 PROXY STATEMENT

•              As with last year’s TSR award, the Committee (i) approved a cap on the absolute level of payout that could be earned under these awards, and (ii) capped any payout at the target level results if absolute TSR is negative (but relative TSR is greater than the 25th percentile). Given that the comparator group includes over 200 companies, the Committee continued to believe that a negative TSR that was above the 25th percentile would only occur during a significant technology-wide economic downturn and, in such event, it would be appropriate to motivate executives to perform as well as possible, even if the TSR were negative.

37%

For more information on the 2016-2017 long-term incentive awards for our named executive officers, please refer to the “Grants of Plan-Based Awards” section on page 59 of this proxy statement.



Section 3: Core Compensation Program

 

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transition and other factors including: (i) in the case of Mr. Culhane, his market positioning and proven financial experience and expertise, and (ii) in the case of Mr. Harrington, his deep knowledge of the Company and his added responsibilities with respect to the Company’s cloud-based initiatives.

The Committee’s decision to grant service-based RSUs was made upon consideration of competitive market practices with respect to the nature of retention grants for key executives.

Payout of 2015-2016 Performance-Based Restricted Share UnitsRSUs for the 2017 – 2019 Performance Period

In December 2015, asAs part of our annual grant cycle,2017 long-term incentive program, we granted performance-based restricted share unitsRSUs to our named executive officers (other than Mr. Lund, who received his award in May 2016,were employed by the Company at that time (i.e., Messrs. Ratzesberger, Harrington and Mr. Morton, who received his award at the time of his appointment in February 2016),Lund) providing them with the opportunity to be credited with a number of unitsearn shares based on our total shareholder return (“TSR”) performance relative to the extent to which anon-GAAP earnings per share goal was achieved during fiscal 2016.Non-GAAP earnings per share was defined as earnings per share excluding stock-based compensation expense and any other special items identifiedcompanies in the Company’s earnings releasesS&P 1500 Information Technology Index for 2016.

The payout opportunity for these performance-based restricted share units ranged from 25% to 200% of the units subject to the award; although, consistent with ourpay-for-performance culture, no payout for financial goals could have been earned if performance was below the threshold level.

The following chart sets forth thenon-GAAP3-year earnings per share target for the 2015-2016 performance-based restricted share units and related achievement level.

Performance Goal  25%
(Threshold)
   50%   100%
(Target)
   

200%

(Maximum)

   Actual
Performance(1)
   Achievement
Level
 

Non-GAAP Earnings per Share

  $2.25   $2.32   $2.60   $3.13   $2.55    91.1
(1)Non-GAAP EPS results for 2016 were calculated assuming that there were 132 million weighted shares outstanding as of December 31, 2016, to avoid any distortions due to share repurchases being above or below 2016 plan levels, and were adjusted by less than $0.01 per share to reflect the impact of foreign currency exchange rates relative topre-established rates.

Based on actual performance results as adjusted, our current named executive officers earned a payout equal to 91.1% of their target 2016 performance-based share unit awards. The units earned by our current named executive officers vestone-third on the date the Committee certified performance results,one-third on the first anniversary of the certification date, and the remaining third on the second anniversary of the certification date. The payout of 2016 performance-based share unit awards to Messrs. Fair and Morton waspro-rated for the portion of their employment during the three-year vesting period. Mr. Koehler did not receive any payout with respect to his 2016 performance-based share unit award.

No Payout of Special 2016 PBRSUs and Long-Term Strategic PBRSUs

In December 2012, the Committee approved a special grant of performance-based restricted share units for the period ending December 31, 2016, which were made in connection with2019.

The payout levels for the restructuring of our management team2017-2019 performance-based RSUs, as an additional incentive to retain participating executives and drive strong performance. In February 2013,well as the result that was certified by the Committee amendedin February 2020, are as follows:

Relative TSR
Performance Percentile
 

Percent Payout of

Target

 
Result
 Payout of
Target

90th or Higher

 200%  

50th (Target)

 100%  

25th

 50%  

Below 25th

 0% 20th percentile 0%

In establishing the special grant to allocate it between two separate awards: (i) 70%threshold and target performance levels for the 2017-2019 performance cycle, the Committee took into account that the Company had performed at or below the 25th percentile level of the units were allocated to 2016 performance-based restricted share units (“Special 2016 PBRSUs”);S&P 1500 Information Technology Index during the 2013-2015 period and (ii) 30% ofat the units were allocated to special long-term strategic performance-based restricted share units (“Long-Term Strategic PBRSUs”). Only three of our named executive officers received these special equity awards: Messrs. Fair, Harrington and Scheppmann.

50


Each of these named executive officer’s opportunity to earn38th percentile during the Special 2016 PBRSUs was based2014-2016 period. As a result, in taking into consideration stockholder interests, the Committee believed that achievement at or above the 50th percentile would represent significant performance improvement, while also representing a realistic, yet challenging, performance goal. In further alignment with stockholder interests, the Committee also (i) approved a cap on the extent to which Teradata achieved certain financial goals during 2016 as a functionabsolute level of both a GAAP revenue target and anon-GAAP earnings per share target. However, no payout that could be earned for either financial metricunder these awards, and (ii) capped any payout at median results if we did not attainabsolute TSR were negative (but relative TSR greater than the threshold level for the25th percentile).

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non-GAAP earnings per share metric of $4.50 per share.SECTION 4: COMPENSATION CONSULTANT AND PEER GROUP

The executives’ opportunity to earnCompensation Consultant

For 2019, the Long-Term Strategic PBRSUs was based on a subjective assessment of performance over a four-year period ending in 2016 relative to a mix of long-term strategic measures with respect to such mattersCommittee retained Frederic W. Cook & Co., Inc. (“FW Cook”) as data warehousing technology and offerings and integrated marketing management solutions, among other things, provided that a $4.50non-GAAP earnings per share threshold was achieved.

We did not achieve the thresholdnon-GAAP earnings per share metric for 2016 and therefore these special PBRSU awards were forfeited in their entirety.

Section 4: Compensation Consultant and Peer Group

Compensation Consultant

The Committee directly retains Semler Brossy Consulting Group, LLC (“Semler Brossy”) to assist in developing and reviewing our executiveCommittee’s independent compensation strategy and program. Semler Brossy reportsconsultant, reporting directly to the Committee and servesserving at the sole discretion of the Committee. ItThe consulting firm does not perform any other services for the Company, other than as an adviser toadvising the Board of Directors on its director compensation program. The Committee has assessed the independence of Semler BrossyFW Cook pursuant to SEC rules and NYSE listing standards and concluded that there was no conflict of interest exists that would prevent the consulting firm from independently advising the Committee.

Semler Brossy hasDuring its engagement, FW Cook provided information to the Committee regarding the target market compensation levels, pay mix, and overall design for the components of total direct compensation based on the pay practices of companies in our executive compensation peer group, as established by the Committee, and from a compensation survey described below.Committee.

Compensation Peer Group

The Committee examines the Company’scompensation peer group on an annual basis. In orderbasis, with input from management and its independent compensation consultant. When establishing base salary and annual and long-term incentive levels in early 2019, the Committee continued to be included in ouruse the following criteria to select the compensation peer group, a company generally must meet the following criteria: (i) be software focused or storage focused with a software component; (ii) have revenuesgroup:

Revenue of betweenone-third to three times our size; (iii) be publicly traded in the United States; (iv) sell predominatelysize

Market capitalization of betweenone-third to businesses (i.e., business-to-business);six times our size

U.S.-based (or Canada-based with a U.S.-style pay model and (v) conduct business globally.disclosure)

Based on these factors, as well as input received during our stockholder outreach efforts, in 2016, the Committee reviewed our compensation peer group. Software, internet software and services, or IT consulting industries

The compensation peer group used by the Committee in 2016 iseffect in 2019 until July 27, 2019 was as follows:

 

 
Compensation Peer Group

Adobe Systems Incorporated

Akamai Technologies, Inc.
  Cadence Design SystemsFair Isaac Corporation  salesforce.com,Sabre Corporation
Autodesk, Inc.Fortinet, Inc.ServiceNow, Inc.

Akamai Technologies,

Broadridge Financial Solutions, Inc.

Gartner, Inc.Splunk Inc.
CA, Inc.  NetApp, Inc.  Symantec Corporation

Autodesk,

Cadence Design Systems Inc.

Nuance Communications, Inc.Synopsis, Inc.
Citrix Systems, Inc.  Open Text Corporation  Synopsys,Tableau Software, Inc.

CA, Inc.

Rackspace Hosting, Inc.*Unisys

Citrix Systems,CoreLogic, Inc.

  Red Hat, Inc.  VMware,Total Systems Services, Inc.

* As of November 3, 2016, Rackspace Hosting, Inc. is no longer a public company.

51


For purposes of analyzingOn July 28, 2019, the pay levelsCommittee, after consulting with FW Cook, approved certain adjustments to the compensation peer group. Based on Teradata’s reclassification into the software general industry code and continued transformation, the Committee removed companies from the IT consulting industry (Broadridge Financial, CoreLogic, Gartner, Sabre and Total Systems Services) and replaced them with software companies. The Committee, after consulting with FW Cook, determined that software companies are more reflective of our peers, the Committee’s review encompassed two views of the market data: one including all ofcurrent growth strategy, business model and competition for executive talent. The Committee also removed companies from the peer group membersthat had been recently acquired, such as Red Hat.


46    

2020 PROXY STATEMENT



Section 4: Compensation Consultant and one excluding the two largest peer companies by revenue (VMware, Inc., and salesforce.com, Inc.). The chart below compares our revenue with the revenues of our compensation peer group for the last completed fiscal year.Peer Group

 

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Radford Compensation Survey

The Committee also reviewed survey information collected from Radford in designing the components of long-term incentive compensation for our executives. The Radford survey was used because it is focused on technology companies and technology-specific positions, and all offollowing chart lists the companies in our current compensation peer group, participatedalong with their revenue and approximate number of employees as reported in the survey.most recently-filed Annual Report on Form 10-K.

Section 5: Severance and Change in Control Benefits

COMPANY  REVENUE
(in millions)
   APPROX. # OF
EMPLOYEES
   COMPANY  REVENUE
(in millions)
   APPROX. # OF
EMPLOYEES
 

LOGO

  

 

$2,894

 

  

 

7,724

 

  

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$4,731

 

  

 

11,900

 

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$3,274

 

  

 

10,100

 

  

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$1,823

 

  

 

6,700

 

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$2,336

 

  

 

8,100

 

  

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$2,869

 

  

 

13,100

 

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$3,010

 

  

 

8,400

 

  

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$2,899

 

  

 

7,014

 

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$701

 

  

 

3,023

 

  

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$1,255

 

  

 

6,055

 

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$1,661

 

  

 

2,801

 

  

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$3,460

 

  

 

10,371

 

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$1,160

 

  

 

4,009

 

  

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$1,803

 

  

 

4,400

 

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$2,156

 

  

 

7,082

 

  

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$3,361

 

  

 

13,896

 

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$6,416

 

  

 

10,500

 

  

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$1,899

 

  

 

8,535

 

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Severance Agreements


We generally do not maintain employment agreements with any of our current named executive officers. However, we entered into an offer letter with Mr. Dinning at the time of his promotion to Product Marketing & Management, VP in December 2011, pursuant to which we were obligated to provide certain benefits to Mr. Dinning in 2016; namely: (i) cash salary differential payments of $833.33 on abi-weekly basis as a result of his assignment in San Diego, California, which salary differential payments ceased at the time of Mr. Dinning’s promotion to Chief Transformation Officer in February 2016; and (ii) mortgage subsidy payments over a five-year period ending in 2017.

 

52



Prior to the termination of his employment, we maintained an offer letter with Mr. Koehler, and as described below, we entered into severance agreements with each of our former named executive officers, the terms of which were negotiated at the time of termination of employment.

Severance Agreement with Mr. KoehlerSECTION 5: SEVERANCE, CHANGE IN CONTROL AND OTHER BENEFITS

Mr. Koehler’s employment with the Company was terminated effective May 5, 2016. Under the terms of an offer letter that was negotiated with Mr. Koehler in 2007, and upon review and approval by the Committee, Mr. Koehler was provided the following severance package: (i) a cash payment of $2,700,000, which represented 1.5 times his annual base salary, plus the approved target bonus opportunity; (ii) apro-rated bonus for 2016 based on the actual 2016 Company performance; (iii) subsidized health insurance coverage for 18 months. In addition to these benefits, the severance agreement that was negotiated with Mr. Koehler at the time of his termination provides for unsubsidized health insurance coverage for the period from the end of the18-month subsidized coverage period until he and his spouse each reaches age 65. In connection with his termination, Mr. Koehler forfeited all unvested stock options, restricted share units and other equity awards, although his vested stock options remained exercisable until the earlier of three years after May 5, 2016, or their expiration date. In exchange for these severance benefits, Mr. Koehler provided a release of claims to the Company, agreed to abide by the terms of restrictive covenants, includingnon-competition requirements in connection with his equity awards, and agreed to be available for consultation by the Company until December 31, 2016, for no additional compensation.

Severance Agreement with Mr. Fair

In July 2016, the Company implemented a new organizational model and determined that Mr. Fair’s position as Chief Operating Officer of the Company was no longer required. Since the Company did not have a comparable senior officer position available for Mr. Fair, we mutually agreed that Mr. Fair would resign from his employment effective November 1, 2016. Pursuant to the terms of a negotiated separation agreement, Mr. Fair received cash severance of $1,472,625, payable in installments over a fifteen-month period, and was entitled to continued health and dental coverage for eighteen months, with a subsidy by the Company such that Mr. Fair will be obligated to pay only the insurance premium contributions required of active employees. Mr. Fair also was eligible to receive his annual incentive bonus for 2016 under the Company’s Management Incentive Plan, based on the Company’s actual 2016 performance and prorated for the portion of the year through the separation date. In accordance with the terms of the Company’s stock incentive plans and award agreements as applicable in areduction-in-force, Mr. Fair was entitled topro-rated vesting of his outstanding restricted share unit awards. Mr. Fair also received accelerated vesting of 14,791 of the stock options granted to him on December 1, 2015, which otherwise would have vested on December 1, 2016, if his employment had continued through that date. Otherwise, Mr. Fair forfeited any unvested Teradata stock options as of the separation date, and his vested stock options remain exercisable until the earlier of three years after the separation date or the applicable expiration date. For up to one year following the separation date, Mr. Fair will be entitled to participate in the Company’s outplacement assistance program, as applicable to Teradata officers and senior executives in the event of areduction-in-force. In exchange for these benefits, Mr. Fair provided a release of claims to the Company and agreed that his restrictive covenants continue to apply after the separation date.

Severance Agreement with Mr. Morton

The board also accepted the retirement of Mr. Morton, who had been placed in the role of head of the Company’s Americas sales region as part of the business transformation efforts earlier in the year. Mr. Morton retired from the Company and ceased to be an executive officer as of August 1, 2016. Pursuant to the terms of a separation agreement negotiated in connection with his departure from the

53


Company, Mr. Morton received cash severance of $380,000, payable in installments over a12-month period, and was entitled to continued health and dental coverage for eighteen months, with a subsidy by the Company such that Mr. Morton will be obligated to pay only the insurance premium contributions required of active employees. Mr. Morton also was eligible to receive his incentive under the Solutions Compensation Plan based on performance through July 31, 2016. In addition, Mr. Morton (i) received an extra year of vesting credit for purposes of calculating the vesting of service-based restricted share units and stock options (but not for purposes of determining the vesting treatment of performance-based restricted share units), (ii) was treated as having terminated employment as a result of his retirement for purposes of determining the vesting treatment of the equity awards, and (iii) is entitled to have all vested stock options remain exercisable until the earlier of three years after the separation date or the applicable expiration date. For up to one year following the separation date, Mr. Morton will be entitled to participate in the Company’s outplacement assistance program, as applicable to Teradata officers and senior executives in the event of areduction-in-force. In exchange for these benefits, Mr. Morton provided a release of claims to the Company and agreed that his restrictive covenants continue to apply after the separation date.

Change in Control Severance Plan

Each of our current named executive officers – other than Mr. Lund – participates in the Teradata Change in Control Severance Plan (the “CIC Plan”), the objectives and provisions of which are summarized below:

 

Business

Objectives

  

•    Increased Retention Incentives.Incentives. The CIC Plan enhances our retention incentives by reducing the personal uncertainty that arises from the possibility of a future business combination and promotes objectivity in the evaluation of transactions that are in the best interests of our stockholders.

 

•    Alignment with Market Practices.Practices. Based on information provided by Semler Brossy,the Committee’s independent compensation consultant, change in control severance arrangements are used by a vast majority of the companies included in our compensation peer group, and the terms of our CIC Plan are consistent with prevailing market practices.

Severance

Provisions

  

•    Severance Protections on Double Trigger.Trigger. The CIC Plan provides for separation payments and benefits to our current named executive officers, (other than Mr. Lund), which were established by the Committee at the time of the spin off from NCR and are reviewed annually by the Committee. The CIC Plan provides benefits on a “double trigger,” meaning that the severance benefits are paid, and equity awards vest, if our executives incur a qualifying termination in connection with a change in control. The threshold for an acquisition of Teradata stock that would constitute a change in control is an acquisition of 50% or more of the Company’s outstanding common stock or voting securities.

 

•    No Excise Tax Gross Ups.Ups. The CIC Plan does not allow for“gross-up” payments related to excise taxes that may be imposed under Section 280G of the Internal Revenue Code.

Executive Severance Plan

The Company maintains the Teradata Executive Severance Plan (the “Executive Severance Plan”), in which each of our current named executive officers participates, other than Mr. Lund. This plan promotes retention incentives for our executives by establishing severance protections for participants that are consistent with both market levels and Teradata’s past practices, while eliminating the need to negotiate individual severance agreements in connection with an executive’s termination or at the time of hire.

For our participating named executive officers, the Executive Severance Plan provides severance protections, as described below, in the event of termination of employment by the Company without cause (and not because of the participant’s disability or death) prior to (and not in connection with) a change in control of the Company. As described above, each of our current named executive officers participates in the CIC Plan, and in the event of a termination of employment by the Company without cause or by the participant for good reason in connection with a change in control, those participants would be entitled to receive severance benefits as provided under the CIC Plan. Each of our participating named executive officers would be entitled to receive the following top level of benefits under the Executive Severance Plan in the event of a qualifying termination of employment:

Severance

Benefits

   Salary and target bonus continuation for one year;

   A prorated annual cash incentive bonus for the year of termination (generally based on the executive’s “target” bonus opportunity and actual Company performance as determined under the Company’s Management Incentive Plan);

   Continued medical, dental and visual care coverage, with the Company continuing to subsidize its share of the premium during the1-year salary continuation period;

   Outplacement services for up to one year;

   Pro-rata vesting of service-based and performance-based RSUs (subject to achievement of applicable performance goals for performance-based RSUs); and

   For all retirement-eligible participants (i.e., participants aged 55 or older), an additional year of vesting service for stock options and service-based RSUs (but not performance-based RSUs), and the opportunity to exercise vested stock options until the earlier of three years after termination or the original option expiration date.*


48    

2020 PROXY STATEMENT



Section 5: Severance, Change in Control and Other Benefits

 

54



*As an additional retention incentive given the CEO transition, a limited number of service-based RSUs granted in 2019 to Mr. Brown (up to 70,000 shares) and Ms. Cullen-Cote (up to 50,000 shares) are eligible for additional accelerated vesting treatment in the event that they are terminated without cause prior to July 1, 2021.

To receive severance benefits under the Executive Severance Plan, a participant must agree to a release of claims against the Company. As a condition of participation in the Executive Severance Plan, each eligible employee must also agree to comply with certain restrictive covenants, includingnon-competition,non-solicitation,non-disparagement and confidentiality provisions to the extent permissible under applicable law.

More information on our use of severance agreementsthe CIC Plan and the CICExecutive Severance Plan, including the estimated payments and benefits payable to the current named executive officers, is provided under the “Potential Payments Upon Termination or Change in Control” section beginning on page 6458 of this proxy statement.

Section 6: Tax and Accounting ConsiderationsLimited Perquisites

In structuring our executive compensation program, the Committee takes into the account the tax and accounting treatment of our executive compensation arrangements. One such consideration is the potential impact of the limitation on Teradata’s federal income tax deduction for certain compensation over $1 million paid to covered employees under Section 162(m) of the Internal Revenue Code (“Section 162(m)”). In cases that it deems appropriate, the Committee may structure our incentive compensation arrangements with the intention that such arrangements will qualify for an exemption from Section 162(m) as performance-based compensation. However, the Committee has not adopted a policy that requires all compensation to be deductible becauseFromtime-to-time we want to preserve the ability to provide cash or equity compensation to an executive that is not deductible under Section 162(m) if we believe that it is in our stockholders’ best interests.

For example, annual incentive opportunities granted in 2016offer limited, travel-related perquisites to our named executive officers (other thanofficers. In particular, during 2019, Teradata covered the commuting expenses for Mr. Morton) were paid underCulhane, including the cost of housing and transportation in connection with his travel to our Management Incentive Plan (the “MIP”), which is structuredheadquarters in San Diego. During 2019, Teradata similarly provided Ms. Cullen-Cote with an allowance for travel to our headquarters in San Diego, reimbursing her for expenses up to $5,000 per month. Also, in 2019, we covered the intention that bonuses paid under the MIP will qualify as deductible performance-based compensation for purposescost of Section 162(m). The MIP provides annual incentive opportunitiesspousal travel for each participating executive officer based on an incentive formula: 1.5%of Mr. Culhane and Mr. Harrington in connection with a Company recognition event.

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SECTION 6: OTHER COMPENSATION POLICIES AND PRACTICES

We maintain several key compensation policies and practices that reinforce our pay for performance culture and promote the CEO and 0.75% foralignment of the other participantsinterests of our earnings before income taxes (“EBIT”). EBIT was selected asexecutives and our stockholders, including the appropriate performance measure under the MIP since the level of EBIT reflects the operating strengthfollowing:

POLICY/PRACTICE

DESCRIPTION

Stock Ownership   Guidelines

On July 28, 2019, after consulting with FW Cook about market practices, the Committee revised our stock ownership guidelines. Prior to the revision, our CEO was required to hold at least 135,000 shares and our other named executive officers were required to own 35,000 shares. The Committee revised the guidelines to require each covered executive to hold shares with a value that equals or exceeds a multiple of his or her base salary: 6x for the CEO and 3x for the other named executive officers. The Committee also adopted retention guidelines so that each covered executive must retain at least 50% of vested shares, net of taxes, until he or she attains the required ownership threshold. Executives generally have 5 years to attain the required ownership level. During his service as Interim President and CEO, Mr. Lund will remain subject to ownership guidelines applicable to directors, which generally requires him to own shares with a value equal to 5x the $60,000 cash retainer paid to directors. As demonstrated in the chart below, as of December 31, 2019, Mr. Lund substantially exceeds not only his minimum ownership guideline as a director, but also the guideline that would be applicable to him if he were CEO of the Company on anon-interim basis:

LOGO

Clawback and Harmful   Activity Policies

We maintain a Compensation Recovery Policy (commonly referred to as a clawback policy), which generally provides that we may recover performance-based compensation if the payout was based on financial results that were subsequently restated. This policy supports the accuracy of our financial statements and, in conjunction with our stock ownership guidelines, helps to align the interests of our named executive officers with those of our stockholders. In light of ourpay-for-performance culture, we felt strongly that our executives should be held to this higher standard of accountability.

We also retain the right to cancel outstanding equity awards and recover realized gains if executives are terminated for cause or engage in certain “harmful activity,” such as violating anon-competition ornon-solicitation covenant.

Prohibition on   Pledging   and Hedging

Our insider trading policy prohibits our named executive officers from hedging and from pledging Teradata securities. For more information regarding our policy with respect to hedging and pledging of Teradata securities, see “Policy Regarding Hedging and Pledging of Teradata Securities” on page 15 of this proxy statement.


50    

2020 PROXY STATEMENT



Section 6: Other Compensation Policies and efficiency of the Company. The EBIT incentive formula establishes the maximum amount payable each year under the MIP for each participating executive officer; but the executives are not assured of earning this maximum amount, and it was not paid in prior years. Instead, the Committee has the authority to reduce the annual amount payable under the EBIT incentive formula based on its assessment of the extent to which the applicable financial and strategic goals are achieved under our annual bonus program, as described above. The Committee also retains discretion to adjust payouts under the MIP based on the quality of Company and individual performance and adherence to our ethics and compliance programs, among other things.

Practices

 

55


POLICY/PRACTICE

DESCRIPTION

Compensation Risk   Assessment

Members of management from our human resources, legal and risk management groups assess whether our compensation policies and practices encourage excessive or inappropriate risk taking by our employees. This assessment includes a review of the risk characteristics of our business, our internal controls and related risk management programs, the design of our incentive plans and policies, and the impact of risk mitigation features. Management reports its findings to the Board of Directors and, based on that analysis, we do not believe that our compensation programs for employees are reasonably likely to have a material adverse effect on the Company.

Tax Considerations

The Tax Cuts and Jobs Act, enacted in December 2017, included a number of significant changes to Section 162(m) of the Internal Revenue Code, as amended (“Section 162(m)”), such as the repeal of the qualified performance-based compensation exemption and the expansion of the definition of “covered employees” (for example, by including the chief financial officer and certain former named executive officers as covered employees). As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation paid to any of our covered employees generally will not be deductible in 2018 or future years, to the extent that it exceeds $1 million. As has historically been the case, the Committee reserves the ability to pay compensation to our executives in appropriate circumstances, even if such compensation is not deductible under Section 162(m).

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COMPENSATION TABLES

20162019 Summary Compensation

The following table summarizes the total compensation paid to, or earned by, each of our named executive officers for the fiscal year ended December 31, 20162019, and the prior two fiscal years. The 2016 Target Compensation supplemental table following this table also provides additional information regarding the 2016 total direct compensation levels for our current named executive officers as approved by the board’s Compensation and Human Resource Committee (the “Committee”).

 

Name and Principal
Position
  Year  Salary
 ($)
  Stock
  Awards(1)
 ($)
  Option
  Awards(2)
 ($)
  Non-Equity
 Incentive Plan
 Compensation(3)
 ($)
  All Other
 Compensation(4)
 ($)
  Total
 ($)
               

Victor Lund
President and Chief
Executive Officer

 2016 526,776 8,104,841   680,000        1,930   9,31,547

Stephen Scheppmann
EVP and Chief
Financial Officer

 2016 512,947 1,863,346   523,068      16,465 2,915,826
 2015 478,215 1,038,332    403,635 152,907      14,374 2,087,463
 2014 470,000    783,862    465,675 148,050      14,602 1,882,189

Daniel Harrington
EVP, Consulting and
Support Services

 2016 467,737 1,816,809   477,041      16,591 2,778,178
 2015 443,633 2,198,178    470,900 142,308      14,569 3,269,588
 2014 410,000    919,062    598,713 129,150      14,397 2,071,322

Oliver Ratzesberger
EVP and Chief
Product Officer

 2016 434,719 1,431,715   429,675      16,398 2,312,507

John Dinning
EVP and Chief
Business Officer

 2016 409,836 1,083,802   326,740      23,582 1,843,960

Michael Koehler
Former President and
Chief Executive Officer

 2016 273,224 2,567,096   340,000 2,730,999 5,911,319
 2015 800,000 3,892,068 1,345,435 320,000      15,180 6,372,683
 2014 800,000 3,322,368 1,995,720 315,000      15,045 6,448,133

Robert Fair
Former Chief
Operating Officer

 2016 467,260 1,283,548   522,478 1,519,592 3,792,878
 2015 528,384 2,306,558    672,717 185,387      14,569 3,707,615
 2014 410,000    919,062    598,713 129,150      14,397 2,071,322

Rick Morton
Former President,
Americas

 2016 222,186 1,011,214    199,628 127,752    419,512 1,980,292
Name and Principal
Position (1)
 Year  Salary (2)
($)
  Bonus (3)
($)
 Stock
Awards (4)
($)
  Option
Awards (5)
($)
  Non-Equity
Incentive Plan
Compensation
(6)
($)
  All Other
Compensation
(7)
($)
  Total
($)
 
   

 

Victor Lund

 

 

 

 

2019

 

 

 

 

 

 

660,000

 

 

 

 

-

 

 

 

 

4,280,196

 

 

 

 

 

 

-

 

 

 

 

 

 

    -    

 

 

 

 

 

 

855    

 

 

 

 

 

 

4,941,051

 

 

   

Interim President and Chief Executive Officer

  2018   800,000  -  6,153,372   -   1,812,500       1,206       8,767,078 
  

 

2017

 

 

 

  

 

800,000

 

 

 

 -

 

  

 

8,693,440

 

 

 

  

 

-

 

 

 

  

 

1,110,000    

 

 

 

  

 

1,206    

 

 

 

  

 

10,604,646

 

 

 

   

 

Oliver Ratzesberger

 

 

 

 

2019

 

 

 

 

 

 

721,154

 

 

 

 

-

 

 

 

 

 

 

6,899,003

 

 

 

 

 

 

 

-

 

 

 

 

 

 

    -    

 

 

 

 

 

 

2,351,860    

 

 

 

 

 

 

9,972,017

 

 

   

Former President and Chief Executive Officer

  2018   518,936  -  2,026,986   -   951,563       15,278       3,512,762 
  

 

2017

 

 

 

  

 

475,000

 

 

 

 -

 

  

 

2,458,941

 

 

 

  

 

-

 

 

 

  

 

527,250    

 

 

 

  

 

25,670    

 

 

 

  

 

3,486,861

 

 

 

   

 

Mark Culhane

 

 

 

 

2019

 

 

 

 

 

 

502,731

 

 

 

 

-

 

 

 

 

3,820,974

 

 

 

 

 

 

-

 

 

 

 

 

 

357,000    

 

 

 

 

 

 

88,776    

 

 

 

 

 

 

4,769,481

 

 

   

Chief Financial Officer

  2018   475,000  -  2,171,778   -   757,625       57,957       3,462,361 
  

 

2017

 

 

 

  

 

67,671

 

 

 

 -

 

  

 

930,773

 

 

 

  

 

-

 

 

 

  

 

83,250    

 

 

 

  

 

8,004    

 

 

 

  

 

1,089,698

 

 

 

   

 

Scott Brown

 

 

 

 

2019

 

 

 

 

 

 

275,000

 

 

 

 

-

 

 

 

 

8,324,083

 

 

  

 

 

 

207,900    

 

 

 

 

 

 

5,485    

 

 

 

 

 

 

8,812,468

 

 

   

Chief Revenue Officer

                              
   

 

Kathleen Cullen-Cote

 

 

 

 

2019

 

 

 

 

 

 

173,077

 

 

 

 

300,000

 

 

 

 

4,045,548

 

 

  

 

 

 

108,360    

 

 

 

 

 

 

28,451    

 

 

 

 

 

 

4,655,436

 

 

   

Chief Human Resources Officer

                                 
   

 

Daniel Harrington

 

 

 

 

2019

 

 

 

 

 

 

493,607

 

 

 

 

-

 

 

 

 

2,122,785

 

 

 

 

 

 

-

 

 

 

 

 

 

350,000    

 

 

 

 

 

 

29,850    

 

 

 

 

 

 

2,996,242

 

 

   

Chief Services Officer

  2018   469,220  -  1,266,889   -   748,407       15,350       2,499,866 
  

 

2017

 

 

 

  

 

469,220

 

 

 

 -

 

  

 

2,236,648

 

 

 

  

 

-

 

 

 

  

 

520,834    

 

 

 

  

 

15,502    

 

 

 

  

 

3,242,204

 

 

 

 

(1)

This column shows each named executive officer’s position as of December 31, 2019, except as of November 4, 2019 for Mr. Ratzesberger.

(2)

This column shows base salary earned during the year. In the case of Mr. Lund, the amount shown for 2019 includes the prorated amount of his $600,000 base salary for his service as Executive Chairman between January 14, 2019 and November 5, 2019.

(3)

This column shows thesign-on bonus paid to Ms. Cullen-Cote upon joining the Company to compensate her for a bonus she was foregoing at her former employer.

(4)

This column shows the aggregate grant date fair value, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation Stock Compensation (“FASB ASC Topic 718”), of performance-based restricted share units (“PBRSUs”) and service-based restricted share units (“RSUs”) granted toin the applicable year.

(5)

There were no stock options granted in 2019.

(6)

This column reflects the cash bonus earned by our named executive officers inunder the annual bonus program for the applicable year. For more information concerning the 2019 annual incentive, see the 2019 Annual Bonus Awards discussion in the Compensation Discussion and Analysis section beginning on page 39 of this proxy statement.


52    

2020 PROXY STATEMENT



Compensation Tables

 

56



(7)

The amounts reported in this column for 2019 include the following:

  Termination / CIC Benefits Other Compensation  
Name CIC /
Severance
(paid or
accrued)
 Subsidized
health and
dental
(COBRA
after term)
 Outplace-
ment
benefits
 Spousal
Travel
 Housing
Subsidy
 Commuting
Expense
 Company
Contributions
to 401(k)
 Value of Life
Insurance
Premiums
Paid by
Company
 Tax
Gross-
Ups
 Total

Victor Lund

                  855             855
Oliver Ratzesberger 2,299,520 18,972 18,000          14,000 1,368    2,351,860

Mark Culhane

       12,397 51,024 10,500 14,000    855        88,776

Scott Brown

               4,231 1,254          5,485

Kathleen Cullen-Cote

           25,000   2,596    855        28,451

Daniel Harrington

       14,780     14,000 1,070        29,850

For the performance-based RSUs granted in 2019, the following table sets forth the target number of units, their “target” grant date fair value reflected in the Stock Awards column above, and their grant date fair value assuming that the highest level of performance would be achieved.

 

Name  Target Number
of Annual
PBRSUs (#)
   

Probable Grant

Date Fair Value

   Maximum Grant
Date Fair Value
 

Victor Lund

   266,294   $8,104,841    $16,209,682 

Stephen Scheppmann

   68,141   $1,863,346    $ 3,726,692 

Daniel Harrington

   67,650   $1,816,809    $ 3,633,618 

Oliver Ratzesberger

   51,714   $1,431,715    $ 2,863,430 

John Dinning

   39,469   $1,083,802    $ 2,167,604 

Michael Koehler

   106,232   $2,567,096    $ 5,134,192 

Robert Fair

   53,116   $1,283,548    $ 2,567,096 

Rick Morton

   21,386   $516,793    $ 1,033,586 

See Note 5 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form10-K for the year ended December 31, 2016 (our “2016 Annual Report”) for an explanation of the assumptions made in valuing the awards reported in this column.

Name  Target Number of
Annual PBRSUs
  Probable Grant Date
Fair Value
  Maximum Grant Date
Fair Value

  Victor Lund

  -  -  -

  Oliver Ratzesberger

  97,997  $4,829,292  $9,658,584

  Mark Culhane

  54,275  $2,674,672  $5,349,344

  Scott Brown

  61,473  $2,257,903  $4,515,806

  Kathleen Cullen-Cote

  42,778  $1,415,952  $2,831,904

  Daniel Harrington

  30,153  $1,485,940  $2,971,880

 

(2)This column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of the stock options granted to our named executive officers for the applicable year. See Note 5 of the Notes to Consolidated Financial Statements contained in our 2016 Annual Report for an explanation of the assumptions made in valuing these awards.

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Compensation Tables

 

(3)This column reflects the cash bonus paid to our named executive officers under the annual bonus program for the applicable year. For more information concerning the 2016 annual incentive, see the Annual Bonus Awards discussion in the Compensation Discussion and Analysis section beginning on page 43 of this proxy statement.

 

(4)The amounts reported in this column for 2016 include the following:

 

The dollar value of premiums paid to maintain life insurance for the benefit of each of Messrs. Lund, Scheppmann, Harrington, Ratzesberger, Dinning, Koehler, Fair, and Morton in the amount of $1,930, $1,542, $1,479, $1,286, $997, $1,930, $1,769 and $669, respectively, under the Company’s life insurance program that is generally available to all U.S. employees;

The dollar value of matching contributions to our 401(k) savings plan, which are generally available to all plan participants and were made in 2016 on behalf of each of Messrs. Scheppmann, Harrington, Ratzesberger, Dinning, Koehler, Fair, and Morton in the amount of $13,195, $13,250, $13,250, $12,899, $13,250, $13,250 and $13,024 respectively;

The dollar value of a mortgage subsidy for Mr. Dinning in the amount of $9,686, pursuant to his December 2011 offer letter;

For Messrs. Scheppmann, Harrington and Ratzesberger: the dollar value of spousal travel in connection with Company business events in the amounts of $1,687, $1,230 and $1,230, and related tax gross up payments of $41, $632 and $632 respectively; and

For Messrs. Koehler, Fair and Morton: the dollar value of cash severance in the amounts of $2,700,000, $1,472,623 and $380,000, respectively, the dollar value of subsidized health and dental insurance coverage for 18 months after termination in the amounts of $15,819, $21,948, and $15,819, respectively, and for Messrs. Fair and Morton, outplacement benefits with a dollar value of $10,000. In addition, Mr. Fair and Mr. Morton received accelerated vesting of equity awards with a value of $933,181 and $521,834, respectively. See “Potential Payments Upon Termination or Change in Control” for additional information.

57


2016 Target Compensation

The Committee approved the long-term incentive award opportunity for each of the current named executive officers for the 2016-2017 grant cycle (the “2017 Equity Program”) in November 2016 and February 2017. The Committee decided to allocate the entire 2016-2017 long-term incentive award opportunity to PBRSUs, allocated as follows: (i) approximatelyone-third based on three-year relative total shareholder return (“TSR”), and, (ii) approximatelytwo-thirds based on1-year financial and operational business transformation measures. The1-year PBRSUs that were approved in connection with the 2017 Equity Program are not reflected in the “Stock Awards” column for 2016 because they do not have a “grant date” for financial accounting purposes until the Committee established the performance goals in the first quarter of 2017. Instead, the “Stock Awards” column for 2016 includes the TSR PBRSUs that were approved by the Committee in November 2016 and also includes both the1-year PBRSUs and the TSR PBRSUs that were approved by the Committee on December 2015 and for which the Committee established the applicable performance goals on February 7, 2016. As a result, the Summary Compensation Table does not reflect the manner in which the Committee viewed or determined the 2016-2017 long-term incentive opportunity or the total direct compensation values for our named executive officers. The following table, which is not required under the SEC’s rules and is not a substitute for any of the tables required under the SEC’s rules, provides an alternative presentation of the target total direct compensation levels for our current named executive officers as viewed by the Committee during the annual award cycle.

Name Salary
($)
  

Target Value
Annual
Incentive

($)

  

Target Value
of PBRSU
Awards

($)

  

Target Value of

RSU Awards
($)

  Target Value of
Option Awards
($)
  Total Direct
Compensation
($)
 

Victor Lund

  800,000   1,000,000   8,400,000   0   0   10,200,000 

Stephen Scheppmann

  550,000   550,000   2,700,000   0   0   3,800,000 

Daniel Harrington

  469,220   469,220   2,350,000   0   0   3,288,440 

Oliver Ratzesberger

  475,000   475,000   2,250,000   0   0   3,200,000 

John Dinning

  450,000   360,000   1,600,000   0   0   2,410,000 

58


20162019 Grants of Plan-Based Awards

The following table summarizes information for each named executive officer regarding (i) estimated payouts under the 20162019 annual bonus program, (ii) estimated payouts for the PBRSUsperformance-based RSUs (also referred to as PBRSUs) that were granted in 2016,2019, and (iii) stock options andservice-based RSUs that were granted in 2016.2019.

 

Name Grant
Date
  Approval
Date(1)
  Estimated Possible Payouts
UnderNon-Equity Incentive
Plan Awards(2)
  

Estimated Possible
Payouts

Under Equity Incentive
Plan Awards(3)

  All
Other
Stock
Awards:
Number
of
Shares
of
Stock
Units(4)
  Option
Awards:
Number of
Shares
Underlying
Options(5)
  Exercise
or Base
Price of
Option
Awards(6)
  Grant
Date Fair
Value of
Stock
and
Option
Awards(7)
 
   Threshold
($)
  

Target

($)

  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  (#)  (#)  ($/sh)  ($) 

Victor Lund

                       

Bonus program

      —     666,667   1,333,334              

PBRSUs

  5/6/2016     5/1/2016           19,685   78,740   157,480         2,215,744 

PBRSUs

  5/6/2016     5/1/2016           19,685   78,740   157,480         2,609,444 

PBRSUs

  11/28/2016   11/28/2016               27,204   108,814   217,628               3,279,654 

Stephen Scheppmann

                       

Bonus program

      —     512,812   1,025,624              

PBRSUs

  2/7/2016     12/1/2015           3,984   15,935   31,870         368,417 

PBRSUs

  2/7/2016     12/1/2015           3,984   15,935   31,870         401,721 

PBRSUs

  11/28/2016   11/28/2016               9,068   36,271   72,542               1,093,208 

Daniel Harrington

                       

Bonus program

      —     467,687   935,374              

PBRSUs

  2/7/2016     12/1/2015           4,648   18,591   37,182         429,824 

PBRSUs

  2/7/2016     12/1/2015           4,648   18,591   37,182         468,679 

PBRSUs

  11/28/2016   11/28/2016               7,617   30,468   60,936               918,306 

Oliver Ratzesberger

                       

Bonus program

      —     421,250   842,500              

PBRSUs

  2/7/2016     12/1/2015           2,656   10,623   21,246         245,604 

PBRSUs

  2/7/2016     12/1/2015           2,656   10,623   21,246         267,806 

PBRSUs

  11/28/2016   11/28/2016               7,617   30,468   60,936               918,306 

John Dinning

                       

Bonus program

      —     320,333   640,666              

PBRSUs

  2/7/2016     12/1/2015           2,213   8,853   17,706         204,681 

PBRSUs

  2/7/2016     12/1/2015           2,213   8,853   17,706         223,184 

PBRSUs

  11/28/2016   11/28/2016               5,441   21,763   43,526               655,937 

Michael Koehler

                       

Bonus program

      —     333,333   666,666              

PBRSUs

  2/7/2016     12/1/2015           13,279   53,116   106,232         1,228,042 

PBRSUs

  2/7/2016     12/1/2015                 13,279   53,116   106,232               1,339,054 

Robert Fair

                       

Bonus program

      —     512,233   1,024,466              

PBRSUs

  2/7/2016     12/1/2015           6,640   26,558   53,116         614,021 

PBRSUs

  2/7/2016     12/1/2015                 6,640   26,558   53,116               669,527 

59


Name Grant
Date
  Approval
Date(1)
  Estimated Possible Payouts
UnderNon-Equity Incentive
Plan Awards(2)
  

Estimated Possible
Payouts

Under Equity Incentive
Plan Awards(3)

  All
Other
Stock
Awards:
Number
of
Shares
of
Stock
Units(4)
  Option
Awards:
Number of
Shares
Underlying
Options(5)
  Exercise
or Base
Price of
Option
Awards(6)
  Grant
Date Fair
Value of
Stock
and
Option
Awards(7)
  Grant
Date
 Approval
Date(1)
  Estimated Possible Payouts Under
Non-Equity Incentive Plan Awards (2)
 Estimated Possible Payouts
Under Equity Incentive Plan
Awards(3)
 All Other
Stock
Award:
Number
of
Shares
of Stock
Units
 Option
Awards:
Number
of Shares
Underlying
Options
 Exercise
or Base
Price of
Option
Awards
 Grant Date
Fair Value
of Stock
and Option
Awards(4)
 
  Threshold
($)
  

Target

($)

  Maximum
($)
  Threshold
(#)
  Target
(#)
  Maximum
(#)
  (#)  (#)  ($/sh)  ($)  Threshold
($)
 Target
($)
 Maximum
($)
 Threshold
(#)
 Target
(#)
 Maximum
(#)
 (#) (#) ($/sh) ($) 

Rick Morton

                       

Bonus program

      —     155,317   310,635              

Options

  2/8/2016     2/7/2016                  23,822   23.12   199,628 

Victor Lund

                  

Bonus Program

      -   -   -               

PBRSUs

            -   -   -         - 

RSUs

  2/8/2016     2/7/2016                21,385       494,421  11/15/2019   11/15/2019                 160,668        4,280,196 

Oliver Ratzesberger

                  

Bonus Program

     -   937,500  1,875,000            

PBRSUs

  2/8/2016     2/7/2016           2,673   10,693   21,386         247,222  3/1/2019   1/14/2019       48,999  97,997   195,994       4,829,292 

RSUs

 3/1/2019   1/14/2019           41,999      2,069,711 

Mark Culhane

                              

Bonus Program

     -   510,000  1,020,000            

PBRSUs

  2/8/2016     2/7/2016              2,673   10,693   21,386            269,571  3/1/2019   2/4/2019       27,138  54,275   108,550       2,674,672 

RSUs

 3/1/2019   2/4/2019                 23,261        1,146,302 

Scott Brown

                  

Bonus Program

     -   550,000  1,100,000            

PBRSUs

 7/1/2019   6/11/2019       30,737  61,473   122,946       2,257,903 

RSUs

 7/1/2019   6/11/2019           165,156      6,066,180 

Kathleen Cullen-Cote

                              

Bonus Program

     -   360,000    720,000            

PBRSUs

 8/5/2019   7/11/2019       21,839  42,778   85,556       1,415,952 

RSUs

 8/5/2019   7/11/2019                 79,444        2,629,596 

Daniel Harrington

                  

Bonus Program

     -   500,000  1,000,000            

PBRSUs

 3/1/2019   2/4/2019       15,077  30,153   60,306       1,485,940 

RSUs

 3/1/2019   2/4/2019                 12,923        636,845 

 

(1)The Committee approves

With the annual equity awards for our named executive officers other than Mr. Lund. In consultation with the Committee, the independent membersexception of the board approveRSUs granted to Mr. Lund’s annual equity award. In general,Brown and Ms. Cullen-Cote, the grant date of the annual equity awards is the date of the meeting of the independent members of the board. The grant date of the PBRSUs approved on December 1, 2015, however, occurred on February 7, 2016, which is when the Committee established the applicable performance goals.

 

(2)

The information included in the “Threshold”, “Target” and “Maximum” columns reflects the range of potential payouts under the 20162019 annual bonus program (i.e.,non-equity incentive plan awards) when the performance goals were established by the Committee. The actual amounts of the annual incentive awards earned for 20162019 are reflected in the“Non-Equity Incentive Plan Compensation” column in the Summary Compensation Table.

 

(3)

The information included in the “Threshold”, “Target” and “Maximum” columns reflects the range of potential payouts under the PBRSUs. The first row of PBRSUsperformance-based RSUs granted in 2019. Those performance-based RSUs are earned based on the extent to which anon-GAAP earnings per sharespecified financial goal wasperformance goals are achieved for fiscal 2016.over a three-year period ending December 31, 2021. The units earned generally vest in three equal installments over aon the date, following the end of the3-year performance period, withthat the Committee certifies the achievement of the applicable performance determination date being the first vesting date,goals, provided the executive remains employed by the Company. The second row of PBRSUs are earned based on our TSR relative to the other companies in the S&P 1500 Technology Index for the3-year period ending December 31, 2018. The third row of PBRSUs are earned based on our TSR relative to the other companies in the S&P 1500 Technology Index for the3-year period ending December 31, 2019. In each case, dividends, if any, paid on the underlying shares during the vesting period are accumulated and reinvested in additional units.

 

(4)

Reflects the number of service-based RSUs granted in 2016,2019, which generally vest in three equal installments on the firstover three anniversaries ofyears from the date of grant, provided that the executive remains employed by the Company. Dividends, if any, paidCompany, with special terms for accelerated vesting of the service-based RSUs granted to Mr. Lund as described on the underlying shares during the vesting period are accumulated and reinvested in additional units.page 44 of this proxy statement.

 

(5)Reflects the number of common shares that may be issued on exercise of stock options granted in 2016. These options generally vest in four equal installments on the first four anniversaries of the date of grant for so long as the executive remains employed by the Company.

(6)Reflects the exercise price for each stock option reported in the table, which equals the fair market value of the underlying shares on the date of grant.

(7)Reflects the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of the stock options, PBRSUsperformance-based and RSUs.service-based RSUs granted during 2019. See footnotes 1 and 2footnote 4 of the Summary Compensation Table beginning on page 5652 of this proxy statement for the assumptions used to calculate these values.


54    

2020 PROXY STATEMENT



Compensation Tables

 

60



20162019 Outstanding Equity Awards at FiscalYear-End

The following table sets forth information for each named executive officer with respect to (i) each stock option that had not been exercised and remained outstanding as of December 31, 2016,2019, and (ii) each award of performance-based RSUs and PBRSUsservice-based RSUs that had not vested and remained outstanding as of December 31, 2016.2019.

 

Name 

Grant

Date

  Option Awards  Stock Awards  Equity Incentive Plan
Awards
 
  Number of
Securities
Underlying
Unexercised
Options(1)
(#)
  Number of
Securities
Underlying
Unexercised
Options(2)
(#)
  Option
Exercise
Price(3)
($)
  Option
Expiration
Date
  Number
of
Shares
or Units
of Stock
That
Have Not
Vested(4)
(#)
  Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested(5)
($)
  Number
of
Unearned
Shares,
Units or
Other Rights
that have not
Vested(4)
(#)
  Market
Value of
Unearned
Shares, Units
or Other
Rights that
have not
Vested(5)
($)
 
  Exercisable  Unexercisable       

Victor Lund

  11/28/2016           108,814         2,956,476 
   5/6/2016                     71,732   1,948,958   19,685         534,841 

Stephen Scheppmann

  11/28/2016           36,271         985,483 
   2/7/2016         14,517   394,427   3,984         108,245 
   12/1/2015     8,875   26,625   30.63   11/30/2025     19,122   519,545    
   2/9/2015         1,065   28,936    
   12/1/2014     13,177   13,177   44.43   11/30/2024     3,550   96,454    
   12/3/2013     26,112   8,704   45.35   12/2/2023        
   11/27/2012     26,122    61.55   11/26/2022        
   11/29/2011   28,606    50.70   11/28/2021        
   11/30/2010   32,579    41.09   11/1/2019        
   12/1/2009     39,632    30.68   11/30/2019      
   12/2/2008     18,631    13.77   12/1/2018        
   10/1/2007     50,752       27.98   9/30/2017                   

Daniel Harrington

  11/28/2016           30,468         827,816 
   2/7/2016         16,936   460,151   4,648         126,286 
   12/1/2015     10,354   31,062   30.63   11/30/2025     14,873   404,099    
   5/15/2015         23,196   630,235    
   2/9/2015         913   24,806    
   12/1/2014     16,941   16,942   44.43   11/30/2024     4,565   124,031    
   12/3/2013     26,112   8,704   45.35   12/2/2023        
   11/27/2012     26,122    61.55   11/26/2022        
   11/29/2011     28,606    50.70   11/28/2021      
   11/30/2010     29,865    41.09   11/29/2020      
   1/3/2000                     7,777   211,301         

Oliver Ratzesberger

  11/28/2016           30,468         827,816 
   2/7/2016         9,678   262,951   2,656         72,164 
   12/1/2015     5,916   17,550   30.63   11/30/2025   8,499   230,918    
   7/1/2015         10,433   283,465    
   12/1/2014     2,823   2,824   44.43   11/30/2024   2,282   62,002    
   12/3/2013     4,352   1,451   45.35   12/2/2023                   

John Dinning

  11/28/2016           21,763         591,301 
   2/7/2016         8,065   219,126   2,213         60,127 
   12/1/2015     4,930   14,792   30.63   11/30/2025   7,082   192,418    
   7/1/2015         6,521   177,176    
   12/1/2014     1,623   1,624   44.43   11/30/2024   1,313   35,674    
   12/3/2013     2,175   726   45.35   12/2/2023        
   11/27/2012   2,177    61.55   11/26/2022      
   11/29/2011   1,714    50.70   11/28/2021      
   11/30/2010   3,077    41.09   11/29/2020      
   12/1/2009     3,963    30.68   11/30/2019      
   12/2/2008     5,293       13.77   12/1/2018                   

Michael Koehler

  12/1/2014     28,236    44.43   5/4/2019        
   12/3/2013     72,532    45.35   5/4/2019        
   11/27/2012   81,630    61.55   5/4/2019        
   11/29/2011   124,434    50.70   5/4/2019        
   11/30/2010   157,467    41.09   5/4/2019        
   12/1/2009     186,503       30.68   5/4/2019                   

61


Name 

Grant

Date

  Option Awards  Stock Awards  Equity Incentive Plan
Awards
 
  Number of
Securities
Underlying
Unexercised
Options(1)
(#)
  Number of
Securities
Underlying
Unexercised
Options(2)
(#)
  Option
Exercise
Price(3)
($)
  Option
Expiration
Date
  Number
of
Shares
or Units
of Stock
That
Have Not
Vested(4)
(#)
  Market
Value of
Shares or
Units of
Stock
That
Have Not
Vested(5)
($)
  Number
of
Unearned
Shares,
Units or
Other Rights
that have not
Vested(4)
(#)
  Market
Value of
Unearned
Shares, Units
or Other
Rights that
have not
Vested(5)
($)
 
  Exercisable  Unexercisable       

Robert Fair

  2/7/2016         7,393   200,868       6,640         180,409 
   12/1/2015     14,791    30.63   11/1/2019        
   12/1/2014     8,470    44.43   11/1/2019        
   12/3/2013     17,408    45.35   11/1/2019        
   11/27/2012   19,591    61.55   11/1/2019        
   11/29/2011     28,606    50.70   11/1/2019        
   11/30/2010     39,819    41.09   11/1/2019        
   12/1/2009     41,963    30.68   11/1/2019        
   12/2/2008     60,922    13.77   12/1/2018        
   10/1/2007     15,376       27.98   9/30/2017                   

Rick Morton

  2/8/2016     5,955    23.12   8/1/2019     2,165   58,823   2,673   72,625 
   12/1/2015     771    30.63   8/1/2019        
   12/1/2014     882    44.43   8/1/2019        
   12/3/2013     1,088    45.35   8/1/2019        
   11/27/2012   1,929    61.55   8/1/2019        
   11/29/2011   2,304    50.70   8/1/2019        
   11/30/2010   4,525    41.09   8/1/2019        
   12/1/2009     5,828       30.68   8/1/2019                   
Name     Grant Date     Option Awards  Stock Awards  Equity Incentive Plan Awards 
 Number of
Securities
Underlying
Unexercised
Options(1)
(#)
  Number of
Securities
Underlying
Unexercised
Options(2)
(#)
  Option
Exercise
Price(3)
($)
  

Option

  Expiration  

Date

  Number of
Shares or
Units of
Stock
That Have
Not
Vested(4)
(#)
  Market
Value of
Shares or
Units of
Stock That
Have Not
Vested(5)
($)
  Number of
Unearned
Shares, Units
or Other
Rights that
have not
Vested (4)
(#)
  Market Value
of Unearned
Shares,
Units or
Other Rights
that have not
Vested(5)
($)
 
 Exercisable  Unexercisable 

Victor Lund

 

11/15/2019

       

 

160.668

 

 

 

4,301,082

 

    
  

2/20/2018

          

 

336,158

 

 

 

8,998,950

 

  

11/27/2017

       

 

72,034

 

 

1,928,350

    

Oliver Ratzesberger

 

3/1/2019

                         

 

32,666

 

 

 

874,469

 

 

2/20/2018

          

 

73,824

 

 

 

1,976,268

 

  

12/1/2015

 

 

23,666

 

  

 

30.63

 

 

 

2/24/2020

       
  

12/1/2014

 

 

5,647

 

  

 

44.43

 

 

 

2/24/2020

       
  

12/3/2013

 

 

5,803

 

  

 

45.35

 

 

 

2/24/2020

       

Mark Culhane

 

03/01/2019

                         

 

54,275

 

 

 

1,452,942

 

      
  

03/01/2019

       

 

23,261

 

 

 

622,697

 

    
      
  

02/20/2018

          

 

118,644

 

 

 

3,176,100

 

      
  

11/27/2017

                 

 

25,424

 

 

 

680,600

 

        

Scott Brown

 

7/1/2019

       

 

165,156

 

 

 

4,421,226

 

    
  

7/1/2019

          

 

61,473

 

 

 

1,645,632

 

Kathleen Cullen-Cote

 

8/5/2019

                 

 

79,444

 

 

 

2,126,716

 

        
 

8/5/2019

                         

 

42,778

 

 

 

1,145,167

 

Daniel Harrington

 

3/1/2019

          

 

30,153

 

 

 

807,196

 

 

3/1/2019

       

 

12,923

 

 

 

345,949

    
  

2/20/2018

          

 

69,210

 

 

 

1,852,752

 

  

11/27/2017

       

 

14,831

 

 

 

397,026

    
  

2/22/2017

       

 

2,755

 

 

 

73,751

    
  

2/22/2017

       

 

15,279

 

 

 

409,019

    
  

12/1/2015

 

 

41,416

 

  

 

30.63

 

 

 

11/30/2025

       
  

12/1/2014

 

 

33,883

 

  

 

44.43

 

 

 

11/30/2024

       
  

12/3/2013

 

 

34,816

 

  

 

45.35

 

 

 

12/2/2023

       
  

11/27/2012

 

 

26,122

 

  

 

61.55

 

 

 

11/26/2022

       
  

11/29/2011

 

 

28,606

 

  

 

50.70

 

 

 

11/28/2021

       
  

11/30/2010

 

 

29,865

 

     

 

41.09

 

 

 

11/29/2020

                

 

(1)

This column shows the number of common shares underlying outstanding stock options that have vested as of December 31, 2016.2019.

 

(2)

This column shows the number of common shares underlying outstanding stock options that have not vested as of December 31, 2016. The remaining vesting dates for2019. As of such date, all outstanding stock options held by each award are as follows:

named executive officer had vested in full.

Grant DateRemaining Vesting DatesVesting Schedule
12/3/201312/3/201725% vests each year for four years after the date of grant
12/1/201412/1/2017, 12/1/201825% vests each year for four years after the date of grant
12/1/201512/1/2017, 12/1/2018, 12/1/201925% vests each year for four years after the date of grant

 

(3)

This column shows the exercise price for each stock option reported in the table, which equaled the fair market value per share on the date of grant.

 

LOGO  55


Compensation Tables


(4)

These columns show the aggregate number of performance-based RSUs and PBRSUsservice-based RSUs outstanding as of December 31, 2016.2019. The remaining vesting dates for each award are as follows:

 

Grant DateGRANT DATE  Remaining Vesting DatesREMAINING VESTING DATES  Vesting ScheduleVESTING SCHEDULE
1/3/20004/30/2018100% vests on 55th birthday
12/1/201412/1/

2/22/2017

1/3 increments each year for three years after the date of the grant
2/9/2015

  2/7/2017, 2/7/2018*22/2020  1/3 increments over a3-year time period after performance level determination is made by the Committee
5/15/2015

11/27/2017

  5/15/201811/27/2020  100% vests three years from the date of grant
7/1/20157/1/2018100% vests three years from the date of grant
12/1/201512/1/2017, 12/1/20181/3 increments each year for three years after the date of the grant

62


Grant DateRemaining Vesting DatesVesting Schedule

2/7/2016*

2/22/2017, 2/22/20/2018 2/22/20191/3 increments over a3-year time period after performance level determination is made by the Committee (* Mr. Morton’s grant is dated 2/8/2016)
5/6/2016NA100% vested at December 31, 2016, but paid in 1/3 increments over a3-year time period after performance level determination is made by the Committee
11/28/2016

  Q1 20202021*  2018-2020 performance period: 100% vests after performance level determination is made by the Committee

3/1/2019

3/1/2020, 3/1/2021, 3/1/20221/3 increments over three years from the date of grant

3/1/2019

Q1 2022*2019-2021 performance period: 100% vests after performance level determination is made by the Committee

7/1/2019

7/1/2020, 7/1/2021, 7/1/20221/3 increments over three years from the date of grant

7/1/2019

Q1 2022*2019-2021 performance period: 100% vests after performance level determination is made by the Committee

8/5/2019

8/5/2020, 8/5/2021, 8/5/20221/3 increments over three years from the date of grant

8/5/2019

Q1 2022*2019-2021 performance period: 100% vests after performance level determination is made by the Committee

11/15/2019

11/15/2020, 11/15/2021, 11/15/20221/3 increments over three years from the date of grant

Additionally, this column under the “Equity Incentive Plan Awards” heading shows the number of outstanding PBRSUs at the “threshold” level, for awards with grant dates of February 7, 2016, February 8, 2016 and May 6, 2017, because our relative TSR performance through December 31, 2016 was below the “threshold” level for those awards, and at the “target” level, for awards with a grant date of November 28, 2016.

 

*

Additionally, this column under the “Equity Incentive Plan Awards” heading shows the number of outstanding performance-based RSUs at the “target” level for awards with grant dates of March 1, 2019, July 1, 2019, and August 5, 2019 because our performance through December 31, 2019 was above “threshold” level for those awards. For awards with a grant date of February 20, 2018, the number of outstanding performance-based RSUs is reported at the “maximum” level (200%) because our performance through December 31, 2019 was above “maximum” level for those awards.

(5)

These columns show the aggregate dollar value of the performance-based RSUs and PBRSUsservice-based RSUs using the closing stock price on December 30, 201631, 2019 of $27.17$26.77 per share.

20162019 Option Exercises and Stock Vested

The following table sets forth information for each named executive officer with respect to (i) the exercise of stock options in 2016,2019, and (ii) the vesting of PBRSUsperformance-based RSUs and service-based RSUs during 2016.2019.(1)

 

Name Option Awards  Stock Awards 
   Number of
Shares
Acquired
on
Exercise
(#)
  Value
Realized  on
Exercise(1)
($)
  Number of
Shares
Acquired
on Vesting
(#)
   Value
Realized on
Vesting(2)
($)
 

Victor Lund

   —    —   —        —      

Stephen Scheppmann

   —    —   16,995    453,276 

Daniel Harrington

   —    —   19,172    510,459 

Oliver Ratzesberger

   —    —   16,476    457,042 

John Dinning

   —    —   8,211    219,655 

Michael Koehler

 827,998  9,479,621   1,812    42,580 

Robert Fair

 75,000  1,227,460   6,060    150,363 

Rick Morton

     —   —        —      
  Option Awards Stock Awards
Name 

Number of Shares

  Acquired on Exercise(1)  

(#)

 

  Value Realized on  

Exercise

($)

 

Number of Shares

Acquired on Vesting    

(#)

 

Value Realized on    

Vesting(2)

($)

   Victor Lund

 

-

 

-

 

148,239

 

6,849,953

   Oliver Ratzesberger

 

-

 

-

 

71,900

 

2,422,617

   Mark Culhane

 

-

 

-

 

-

 

-

   Scott Brown

 

-

 

-

 

-

 

-

   Kathleen Cullen-Cote

 

-

 

-

 

-

 

-

   Daniel Harrington

 

-

 

-

 

37,810

 

1,747,356

 

(1)The value realized on exercise equals the number of shares exercised multiplied by the excess

None of the closing market price of our commonnamed executive officers exercised any stock on the exercise date over the exercise price per share.options during 2019.

 

(2)

The value realized on vesting equals the number of shares acquired multiplied by the closing market price of our common stock on the acquisition date.

Non-qualifiedNon-Qualified Deferred Compensation

We doThe Company does not maintain anyanon-qualified defined contribution plansplan or other deferred compensation plans. However, the1-year performance-based RSU awards granted to Mr. Lund for the 2016 and 2017 fiscal year performance periods were fully vested at December 31, 2016 and December 31, 2017, respectively, but generally are payable on a deferred basis in 1/3 installments (except for certain termination of employment scenarios described further in the Potential Payments Upon Termination or Change in Control section on page 58 of this proxy statement) on the date that the applicable performance level determination was made by the Committee and on each of first and second anniversaries of the applicable performance level determination date. As a result, theNon-Qualified Deferred Compensation Table below includes information about Mr. Lund’s 2016 and 2017 performance-based RSUs.


56    

2020 PROXY STATEMENT



Compensation Tables


Name  Executive
Contributions in
Last Fiscal Year
($)
  Registrant
Contributions
in Last
Fiscal Year ($)
  Aggregate
Earnings in
Last Fiscal  Year(1)
($)
  Aggregate
Withdrawals /
Distributions(2)
($)
  Aggregate
Balance at Last
Fiscal Year End(3)
($)

  Victor Lund

  -  -  (32,699)  2,984,366  6,229,433

  Oliver Ratzesberger

  -  -  -  -  -

  Mark Culhane

  -  -  -  -  -

  Scott Brown

  -  -  -  -  -

  Kathleen Cullen-Cote

  -  -  -  -  -

  Daniel Harrington

  -  -  -  -  -

(1)

Represents the appreciation (or depreciation) in value in the number of shares of our common stock underlying Mr. Lund’s vested 2016 and 2017 performance-based RSUs from December 31, 2018 through December 31, 2019 (or, if earlier, until the time of settlement of those performance-based RSUs). No portion of this amount was reported as compensation to Mr. Lund in the Summary Compensation Table for 2019.

(2)

Represents the payment date value of the number of shares of our common stock that were delivered in settlement of Mr. Lund’s vested 2016 and 2017 performance-based RSUs during fiscal 2019.

(3)

Represents the aggregate dollar value of the outstanding vested 2017 performance-based RSUs held by Mr. Lund on December 31, 2019, using our closing stock price on December 31, 2019 of $26.77 per share. The grant date fair value of the target number of Mr. Lund’s 2017 performance-based RSUs was previously reported as compensation to Mr. Lund in the Summary Compensation Table for the 2017 fiscal year.

Pension Benefits

We do not maintain any qualified ornon-qualified defined benefit plans.

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63



POTENTIAL PAYMENTS UPON

TERMINATION OR CHANGE IN CONTROL

Background

We have entered into agreements and maintain plans and arrangements that may require us to pay or provide compensation and benefits to our named executive officers in the event of certain terminations of employment or a change in control. For example, all of our currentcurrently employed named executive officers other than Mr. Lund are participants in our CIC Plan, which provides “double-trigger” severance protections in the event that a participating executive’s employment is terminated under qualifying circumstances in connection with a change in control.control, and all of our currently employed named executive officers other than Mr. Lund are participants in our Executive Severance Plan, which provides severance protections in the event that a participant’s employment is terminated by the Company without cause (other than as a result of death, disability or a change in control). Estimates of the amounts to be paid or provided to each of our current named executive officers in connection with a termination of employment or a change in control are provided below.

The benefits actually payable to our former named executive officers (Messrs. Koehler, Fair and Morton) as a result of the termination of their employment in 2016 are also described below.

Estimated Payments to Current Named Executive Officers

The estimates set forth below of the amounts payable to our current named executive officers upon termination of employment or in connection with a change in control are based on the assumption that the various triggering events occurred on the last day of 2016,2019, along with other material assumptions noted below. The actual amounts that would be paid to a named executive officer upon termination or a change in control can only be determined at the time the actual triggering event occurs. With respect to Mr. Ratzesberger, only the severance benefits actually received in connection with his removal as President and CEO are reported below.

The estimated amount of compensation and benefits described below for our current named executive officers generally does not take into account compensation and benefits that were already earned at the time of the applicable triggering event, such as equity awards that have previously vested in accordance with their terms or vested benefits otherwise payable under our compensation programs. As a result, except with respect to Mr. Ratzesberger, the estimates below for our current named executive officers do not provide information on the payout of 20162019 incentive awards under ourthe annual bonus programs,program for our named executive officers or payout of performance-based RSUs earned based on Teradata’s TSR for the period from January 1, 2016 through December 31, 2018, because those awards were earned as of December 31, 2016,2019, subject to Committee approval, regardless of whether the executive terminated employment or a change in control occurred on that date. Please refer to the Outstanding Equity Awards at FiscalYear-End table for a complete summary of each named executive officer’s vested equity awards as of December 31, 2016, and to the Summary Compensation Table for the annual incentives earned by our named executive officers in 2016.2019 and to the Outstanding Equity Awards at FiscalYear-End and the Option Exercises and Stock Vested tables for more information about the named executive officer’s equity awards.

Non-Change in Control Scenarios

Executive Severance Plan

Each of our named executive officers other than Mr. Lund participates in our Executive Severance Plan.

For our participating named executive officers, the Executive Severance Plan generally provides severance benefits in the event of termination of employment by the Company without cause (but not as a result of the participant’s disability or death). However, in the event of the termination of a participating named executive officer’s employment in connection with a change in control of Teradata, severance benefits generally would be provided under the CIC Plan, as discussed below.

In the event of a qualifying termination of employment without cause (not in connection with a change in control), each of our participating named executive officers would be entitled to receive the following severance benefits under the terms of the Executive Severance Plan. Mr. Ratzesberger received these severance benefits in connection with his removal as President and CEO, which the Committee determined to be a termination without cause, as defined in the Executive Severance Plan.

Salary and target bonus continuation for one year;

A prorated annual cash incentive bonus for the year of termination, based on the executive’s “target” bonus opportunity and actual performance as determined under the Company’s Management Incentive Plan;

Continued medical, dental and vision care coverage, with the Company continuing to subsidize its share of the premium during the1-year salary continuation period;

Outplacement services for up to one year;


58    

2020 PROXY STATEMENT



Potential Payments Upon Termination or Change in Control


Pro-rata vesting of service-based and performance-based RSUs (subject to achievement of applicable performance goals for performance-based RSUs); and

For all retirement-eligible participants (i.e., participants aged 55 or older), an additional year of vesting service for any unvested stock options and service-based RSUs (but not performance-based RSUs), and the opportunity to exercise vested stock options until the earlier of three years after termination or the original option expiration date. As an additional incentive given the CEO transition, a limited number of service-based RSUs granted in 2019 to Mr. Brown (up to 70,000 shares) and Ms. Cullen-Cote (up to 50,000 shares) are eligible for additional accelerated vesting treatment in the event that they are terminated without cause prior to July 1, 2021.

Severance benefits under the Executive Severance Plan are conditioned upon the participant’s release of claims against the Company, as well as compliance with certain restrictive covenants, includingnon-competition,non-solicitation,non-disparagement and confidentiality provisions to the extent permissible under applicable law.

Treatment of Equity Awards on Termination of Employment (not in Connection with a Change in Control)

The following chart summarizes the vesting treatment of our employeethe equity awards held by our named executive officers (other than Mr. Lund) in the event of termination of employment, other than termination in connection with a change in control. The vesting treatment described below is conditioned upon the participant’s compliance withnon-competition andnon-solicitation provisions, to the extent permissible under applicable law, for a twelve-month12-month period (or, if applicable law requires a shorter period, for the maximum period allowed under applicable law), as well as confidentiality restrictions. Our PBRSUsperformance-based RSUs and service-based RSUs generally pay out upon vesting. However, toAll stock options currently held by our named executive officers are fully vested.

The vesting of Mr. Lund’s RSUs will accelerate in full (based on actual performance during the extent necessary to comply with Section 409A of the Internal Revenue Code and avoid triggering adverse tax consequences to our executives, payment of vested PBRSUs and RSUs may be delayed until termination ofentire performance period for performance-based RSUs) if Teradata terminates his employment six months after termination of employment,for any reason other than for cause, or the end of the scheduled performance or service period.

64


While he was anon-employee member of Teradata’s Board of Directors,if Mr. Lund participatedresigns as a director after, or in our compensation program fornon-employee directors, including receiving equity awardsconnection with, the election of a successor President and CEO, provided that he agrees to cooperate in good faith in the formtransition of restricted share units that generally vestduties to his successor, or if he is not nominated by the Board forre-election as a director. If Mr. Lund voluntarily resigns as Interim President and CEO other than in four installments on a quarterly basis overconnection with theone-year period after the date of grant, which awards would become vested in full upon Mr. Lund’s death or the occurrence election of a change in control of Teradata prior to a quarterly vesting date. The chart below describes the vesting terms of the equity awards granted to our employees, which differ from those applicable tonon-employee director awards.successor, his unvested RSUs would be forfeited.

 

SituationSITUATION  PBRSUsPERFORMANCE-BASED RSUs Service-Based
SERVICE-BASED RSUs
  Stock OptionsSTOCK OPTIONS

Death and Long-Term Disability (LTD)(“LTD”)

  

In the event of death or LTD during the performance period, apro-rata portion of the award, calculated as of the date of death or LTD, will become vested based on actual results during the performance period.

 

In the event of death or LTD after the end of the performance period and prior to payment, awards vest in full, to the extent earned, upon the date of death or LTD.

 

Awards vest in full upon the date of death or LTD.

  

Awards vest in full upon the date of death or LTD. Awards granted after 2008 remain exercisable until the later of the expiration of theten-year10-year term or three years after death or LTD. Awards granted in 2007 and 2008 remain exercisable until the later of the expiration of theten-year term or (a) one year after death or LTD, if death or LTD occurs prior to age 55, or (b) three years after death or LTD, if death or LTD occurs on or after age 55.

Retirement (termination on or after age 55, with the consent of the Committee, where applicable)

  

A

Generally, apro-rata portion of the award, calculated as of retirement, will become vested based on actual results during the performance period.

 

For Mr. Lund, who is retirement-eligible without Committee consent, the full number of PBRSUs earned based on actual results during the entire performance period, withoutpro-ration, will become vested if his employment terminated after the first year of the applicable performance period for any reason other than a termination by Teradata for cause.

 A

Generally, apro-rata portion will become vested as of date of retirement.

  Unvested awards are forfeited. Vested awards expire

Awards remain exercisable until the earlier of three years following retirement date or the expiration date.

65


Situation

Termination without Cause

  PBRSUsService-Based
RSUs
Stock Options
Termination due toReduction-in-Force (RIF)

Apro-rata portion of the award, calculated as of the date of RIFtermination, will become vested based on actual results during the performance period.

 

Apro-rata portion will become vested as of the date of RIF.termination, and retirement-eligible participants (i.e., participants aged 55 or older) may be credited with an additional year of vesting service.

  Unvested awards are forfeited. Vested awards expire

Awards generally remain exercisable until the earlier of the fifty-ninth day after termination or the expiration date.

However, awards held by retirement-eligible participants (i.e., participants aged 55 or older) remain exercisable until the earlier of 3 years after termination or the original option expiration date.

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Potential Payments Upon Termination or Change in Control


SITUATION  PERFORMANCE-BASED RSUs SERVICE-BASED RSUsSTOCK OPTIONS

Voluntary Resignation (other than retirement, as described above)

  

Unvested awards are forfeited.

 

Unvested awards are forfeited.

  Unvested awards are forfeited. Vested awards expire

Awards remain exercisable until the earlier of the fifty-ninth day after termination or the expiration date.

The tables below quantify the amounts that would be payable to our current named executive officers in the event of termination of employment, other than termination in connection with a change in control. The severance benefits received by Mr. Ratzesberger in connection with his removal as President and CEO are reported in the table below quantifying severance benefits upon Termination without Cause (not in Connection with a Change in Control).

Death or Disability

We would have provided each current named executive officer (or his or her beneficiary), other than Mr. Ratzesberger, with the following estimated payments or benefits had he or she died or become disabled on December 31, 2016.2019.

 

Executive  

Life

Insurance ($)(1)

   

Disability

Payments ($)(2)

   

Stock

Options ($)(3)

   

Restricted

Share Units ($)(3)

   Total ($) 

Victor Lund

   1,200,000      636,898    —      4,221,733     6,058,631 

Stephen Scheppmann

   958,800      532,079    —      1,000,865     2,491,744 

Daniel Harrington

   920,000      566,415    —      1,811,721     3,298,136 

Oliver Ratzesberger

   3,300,000      501,014    —      935,532     4,736,546 

John Dinning

   1,240,000      515,000    —      704,592     2,459,592 
  EXECUTIVE  LIFE
INSURANCE ($)(1)
   DISABILITY
PAYMENTS ($)(2)
   STOCK
OPTIONS ($)(3)
   RESTRICTED
SHARE UNITS ($)(3)
   TOTAL ($) 

  Victor Lund

   —         12,455,974         —         —         12,455,974 

  Mark Culhane

   1,020,000         3,533,333         17,232         18,000         4,588,565 

  Scott Brown

   1,100,000         1,239,703         17,304         18,000         2,375,007 

  Kathleen Cullen-Cote

   810,000         1,794,979         1,044         18,000         2,624,023 

  Daniel Harrington

   1,000,000         2,024,780         17,304         18,000         3,060,084 

 

(1)

Proceeds would be payable by a third-party insurer. Benefits provided upon death depend on the individual level of benefits chosen by the named executive officer during the annual benefits enrollment process. The named executive officers receive the same Company-provided life insurance coverage as is generally offered to U.S.-based employees. The coverage generally is 200% of base salary for life insurance.insurance (but capped at $1,200,000, or at $750,000 in the absence of evidence of insurability). Each U.S.-based employee has the option of choosing a higher level of coverage at his own expense. Each currentparticipating named executive officer opted for core coverage for 2016,2019, except for Messrs. Ratzesberger and Dinning,Mr. Brown, who opted for higher coverage.

 

(2)

Benefits provided upon disability generally depend on the individual level of benefits chosen by the named executive officer during the annual benefits enrollment process. The current named executive officers receive the same short-term and long-term disability coverage as is generally offered to U.S.-based employees. The core coverage is (i) for short-term disability, 100% of base salary for two to eighteen18 weeks depending on years of service and 66 2/3% of base salary for the remainder of atwenty-six26-week week period, and (ii) for long-term disability, 50% of base salary (up to a maximum monthly payment of $15,000) for the duration of an employee’s long-term disability. Each U.S. employee has the option of choosing a higher level of coverage at his own expense. Each currentparticipating named executive officer opted for core coverage for 2016, except for Messrs. Ratzesberger and Dinning, who opted for higher coverage.2019. The payments above assume maximum payout based on the named executive officer’s coverage election fortwenty-six 26 weeks of short-term disability plus two years of long-term disability.

 

66


(3)

Equity valuations are based on a closing price of our stock on December 30, 201631, 2019 of $27.17, which was less than$26.77, with performance-based RSUs for ongoing performance periods included at the exercise price of all of the current named executive officers’ outstanding, unvested stock options on that date.“target” level.

Retirement

We would have provided each current named executive officer, other than Mr. Ratzesberger, with the following estimated payments if he or she had retired (with Committee consent, where applicable) on December 31, 2016.2019. For Mr. Lund, the table below assumes that he had retired on December 31, 2019 in connection with the election of a successor President and CEO. On any other voluntary termination, Mr. Lund’s unvested restricted share units would have been forfeited.

 

Executive  

Restricted Share

Units ($)(1)(2)

     Total ($) 

Victor Lund

   4,088,328      4,088,328 

Stephen Scheppmann

   307,111      307,111 

Daniel Harrington

   —        —   

Oliver Ratzesberger

   —        —   

John Dinning

   —        —   
  EXECUTIVE  RESTRICTED SHARE
UNITS ($)(1)(2)
   TOTAL ($) 

  Victor Lund

 

   

 

12,455,974

 

 

   

 

12,455,974

 

 

  Mark Culhane

 

   

 

2,104,138

 

 

   

 

2,104,138

 

 

  Scott Brown

 

   

 

1,239,703

 

 

   

 

1,239,703

 

 

  Kathleen Cullen-Cote

 

   

 

704,360

 

 

   

 

704,360

 

 

  Daniel Harrington

 

   

 

1,210,289

 

 

   

 

1,210,289

 

 

  

 

(1)

Equity valuations are based on a closing price of our stock on December 30, 201631, 2019 of $27.17.$26.77.

 

(2)Only Mr.

Messrs. Lund, Culhane and Mr. ScheppmannHarrington and Ms. Cullen-Cote were eligible for retirement (age 55 or older) on December 31, 2016.2019. Committee consent generally would be required for retirement vesting of Mr. Scheppmann’s restricted share unit awards, but not for Mr. Lund’s restricted share unitRSU awards.

Reduction-in-Force Severance


60    

2020 PROXY STATEMENT



Potential Payments Upon Termination or Change in Control


Termination without Cause (not in Connection with a Change in Control)

Each current named executive officer, other than Mr. Ratzesberger, would have been entitled to the following estimated payments and benefits if, on December 31, 2016,2019 and not in connection with a change in control, we terminated the executive’s employment without cause (and not as a result of death or disability). Mr. Ratzesberger received the payments and benefits reported below under the Executive Severance Plan in connection with areduction-in-force priorhis removal as President and CEO, which the Committee determined to or more than two years after,be a changetermination without cause, as defined in control.the Executive Severance Plan.

 

Executive Cash  ($)(1)   

Restricted

Share

Units ($)(2)

   

Out-

placement
Counseling ($)

   Total ($) 
EXECUTIVE CASH ($)(1) RESTRICTED
SHARE UNITS ($)(2)
 

WELFARE

BENEFITS ($)

 

OUT-PLACEMENT

COUNSELING ($)

 TOTAL ($) 

Victor Lund

  400,000    4,088,328    10,000    4,498,328     12,455,974        —      —       12,455,974 

Stephen Scheppmann

  275,000    307,111    10,000    592,111 

Oliver Ratzesberger

 2,299,520  2,841,209       18,972    18,000      5,177,701 

Mark Culhane

 1,020,000  3,533,333       17,232    18,000      4,588,565 

Scott Brown

 1,100,000  1,239,703       17,304    18,000      2,375,007 

Kathleen Cullen-Cote

 810,000  1,794,979       1,044    18,000      2,624,023 

Daniel Harrington

  234,610    697,638    10,000    942,248  1,000,000  2,024,780       17,304    18,000      3,060,084 

Oliver Ratzesberger

  237,500    340,375    10,000    587,875 

John Dinning

  225,000    246,713    10,000    481,713 

 

(1)

Mr. Lund does not participate in the Executive Severance Plan and is not a party to any agreement with the Company that provides for cash severance upon a termination without cause, although he does participate in the CIC Plan. The cash amounts reported in this column for participating named executive officers other than Mr. Lund reflect cash severance paymentsbenefits under the Executive Severance Plan, but do not reflect anypro-rata annual bonuses for 2019 for any named executive officer. This is because for named executive officers other than Mr. Ratzesberger, we are required to assume a termination date of December 31, 2019, on which date bonuses for 2019 were already vested, regardless of termination of employment. For Mr. Ratzesberger, the maximum amounts payableCommittee determined the amount of the annual incentive bonus under ourthe 2019 Management Plan earned for 2019 to be zero; however, he was entitled to receive areduction-in-forcepro-rata programs that are generally availableannual incentive payment pursuant to salaried, U.S.-based employees.the terms of the Executive Severance Plan. Please refer to the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the amount of the 2019 bonus paid to each executive.

 

(2)

Equity valuations are based on a closing price of our stock on December 30, 201631, 2019 of $27.17.$26.77, with performance-based RSUs for ongoing performance periods included at the “target” level, and withpro-rated awards for Mr. Ratzesberger as provided under the Executive Severance Plan and the applicable award agreements. For Messrs. Lund, Culhane and Harrington and Ms. Cullen-Cote, who were retirement-eligible (age 55 or older) on December 31, 2019, the equity values reported above include an additional 12 months of vesting service for service-based equity awards.

Change in Control Scenarios

Change in Control Severance Plan

We maintain the CIC Plan to help retain key executives by reducing personal uncertainty that may arise from the possibility of a change in control and to promote their objectivity and neutrality in evaluating transactions that may be in the best interest of the Company and its stockholders. This plan establishes objective criteria to determine whether a change in control has occurred and provides for severance payments and benefits on a “double trigger” basis, (including vesting ofwhich also applies, under the Stock Incentive Plan, to our equity awards that are assumed in a change in control transaction, other thannon-employee director restricted share units

67


held by Mr. Lund, which, by their terms, vest on a “single-trigger” basis on the occurrence of a change in control).compensation awards. The “double trigger” design is intended to further our goals to retain key executives upon a change in control.

Each current named executive officer other than Mr. Lund —Ratzesberger, who is no longer an employee, participates in the CIC Plan. In the event of an involuntary termination of his employment in connection with areduction-in-force, Mr. Lund would be eligible to receive severance benefits under our reduction in force programs that are generally available to the Company’s salaried, U.S.-based employees.

Under the CIC Plan, if a participating executive’s employment is terminated by us other than for “cause”, death or disability or if the executive resigns for “good reason” within two years after a “change in control” (or within six months prior to a change in control, if the executive can demonstrate that the termination occurred in connection with a change in control), then Teradata or its successor will be obligated to pay or provide the following benefits:

 

A lump sum payment equal to 2.0 times (for Messrs. Scheppmann and Harrington) or 1.0 times (for Messrs. Ratzesberger and Dinning) the executive’s annual base salary and annual incentive. For this purpose, annual incentive generally means the average annual incentive earned for the prior three years;

 

A lump sum payment equal to apro-rata portion of the average annual incentive earned for the prior three years;

 

Continued medical, dental and life insurance coverage for two years (for Messrs. Scheppmann and Harrington) or one year (for Messrs. Ratzesberger and Dinning);years; and

 

Continued outplacement and financial counseling services, if such services are offered at such time, for one year.

The CIC Plan provides that upon termination of employment, each participant is prohibited from soliciting our employees for aone-year1-year period and is subject to confidentiality restrictions. Moreover, each participant is required to sign a release of all claims against the Company prior to receiving severance benefits under the plan. The CIC Plan does not provide for any“gross-up” payments related to excise taxes that may be imposed on an executive in connection with a change in control.

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Potential Payments Upon Termination or Change in Control


For purposes of the plan, the term “cause” generally means the willful and continued failure to perform assigned duties or the willful engaging in illegal or gross misconduct that materially injures the Company. The term “good reason” generally meansmeans: (i) the assignment of duties inconsistent with the executive’s position, authority, duties or responsibilities as in effect prior to a change in

control; (ii) a reduction in base salary; (iii) failure to pay incentive compensation when due; (iv) a reduction in target or maximum incentive opportunities; (v) a failure to continue the equity compensation plan or other employee benefit programs; (vi) a relocation of the executive’s office by more than forty miles (provided that it also increases the executive’s commute by more than 20 miles); or (vii) failure to require a successor to assume the plan.

The term “change in control” generally means any of the following: (i) an acquisition of 50% or more of our stock by any person or group, other than the Company, our subsidiaries or employee benefit plans; (ii) a change in the membership of our Board of Directors, such that the current incumbents and their approved successors no longer constitute a majority; (iii) a reorganization, merger, consolidation or sale or other disposition of substantially all of our assets in which any one of the following is true — true—our old stockholders do not hold at least 50% of the combined enterprise, there is a50%-or-more stockholder of the combined enterprise (other than as a result of conversion of the

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stockholder’spre-combination interest in the Company), or the members of our Board of Directors (immediately before the combination) do not make up a majority of the board of the combined enterprise; or (iv) stockholder approval of a complete liquidation.

Treatment of Equity Awards

As described above, the CICStock Incentive Plan generally provides for “double trigger” vesting of employee equity awards in connection with a change in control, meaning that, if the awards are assumed by the surviving entity in the change of control, vesting of the awards will not accelerate unless the executive also has a qualifying termination of employment (by the Company without cause or by the executive for good reason). In contrast, if the surviving entity does not assume the equity awards upon the change in control, unvested awards will become vested upon the occurrence of the change in control. The treatment ofchart below generally summarizes how the unvested equity awards held by our employee equity awardscurrent named executive officers on December 31, 2019 would be treated in connection with a change of control is summarized in the chart below.

As noted above, while he was anon-employee member of Teradata’s Board of Directors, Mr. Lund participated incontrol. All stock options held currently held by our compensation program fornon-employee directors, including receiving equity awards in the form of restricted share units that generally vest in four installments on a quarterly basis over theone-year period after the date of grant, which awards would become vested in full on a “single-trigger” basis upon the occurrence of a change in control prior to a quarterly vesting date.

named executive officers are fully vested.

 

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Change in Control (“CIC”)

1-Year Performance Period

PBRSUs

  PERFORMANCE-BASED RSUs
  

3-Year Performance Period

PBRSUs

Service-BasedSERVICE-BASED RSUsStock Options

If the award is not assumed by the surviving entity, then the award will vest in full, either at the “target” level, if the CIC occurs during the performance period, or based on actual performance, if the CIC occurs after the end of the performance period and prior to payment.

If the award is assumed, then, subject to the executive’s continued employment (except for Mr. Lund, whose PBRSUs will be fully vested based on service through December 31 of the applicable1-year performance period), the award will continue to vest, either at the “target” level, if the CIC occurs during the performance period, or based on actual performance, if the CIC occurs after the end of the performance period and prior to payment. However, vesting of the award will be accelerated if the executive’s employment is terminated without “cause,” terminated on account of death, disability, retirement or reduction in force, or the executive terminates his employment for “good reason,” within twenty-four months after the CIC.

If the award is not assumed by the surviving entity, then the award will vest in full, either at the “target” level, if the CIC occurs during the first year of the performance period, or based on actual performance up to the date of the CIC, if the CIC occurs during the second or third year of the performance period.

If the award is not assumed by the surviving entity, then vesting accelerates upon the CIC.

If the award is assumed, then, subject to the executive’s continued employment, (except for Mr. Lund, whose PBRSUs will be fully vested based on service through December 31 of the first year of the applicable3-year performance period), the award will continue to vest, either at the “target” level, if the CIC occurs during the first year of the performance period, or based on actual performance up to the date of the CIC, if the CIC occurs during the second or third year of the performance period. However, vesting of the award will be accelerated if the executive’s employment is terminated without “cause,” terminated on account of death, disability, retirement or reduction in force, or the executive terminates his or her employment for “good reason,” within twenty-four24 months after the CIC.

 

  

If the award is not assumed by the surviving entity, then vesting accelerates upon the CIC.

If the award is assumed, then vesting accelerates if the executive’s employment is terminated other than for “cause” or disability or the executive terminates his or her employment for “good reason,” within twenty-four months after the CIC.


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If the option is not assumed by the surviving entity, then vesting accelerates upon the CIC.

If the option is assumed, then vesting accelerates if the executive’s employment is terminated other than for “cause” or disability, or the executive terminates his employment for “good reason”, within twenty-four months after the CIC.2020 PROXY STATEMENT



Potential Payments Upon Termination or Change in Control

 

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The tables below quantify the amounts that would be payable to our current named executive officers, other than Mr. Ratzesberger, who is no longer an employee, in the event of a change in control or in the event of termination of employment in connection with a change in control.

Qualifying Termination Within Two Years After a Change in Control

Our current named executive officers, other than Mr. Ratzesberger, would have been entitled to the following estimated payments and benefits if a change in control occurred on December 31, 2016,2019 and (i) for the current named executive officers other than Mr. Lund, the executive’s employment was terminated without “cause” or the executive terminated his or her employment for “good reason” immediately following such change in control, or (ii) for Mr. Lund, his employment was involuntarily terminated in areduction-in-force immediately following such change in control.

 

Executive Cash ($)(1)  Stock Options ($)(2)  

Restricted Share

Units ($)(2)

  

Welfare

Benefits ($)

  Out-placement
Counseling  ($)
  Total ($) 

Victor Lund

  400,000   —     4,221,733   —         10,000   4,631,733 

Stephen Scheppmann

  1,418,138   —     1,289,501   23,840   10,000   2,741,479 

Daniel Harrington

  1,221,913   —     2,148,466   32,223   10,000   3,412,602 

Oliver Ratzesberger

  536,987   —     1,127,950   16,194   10,000   1,691,131 

John Dinning

  481,229   —     864,949   15,629   10,000   1,371,807 
  EXECUTIVE  CASH ($)(1)   RESTRICTED
SHARE
UNITS ($)(2)
   

WELFARE

BENEFITS ($)

   

OUTPLACEMENT
AND FINANCIAL

COUNSELING ($)

  TOTAL ($) 

  Victor Lund

   4,401,667    12,455,974        3,006       18,000   16,878,647 

  Mark Culhane

   2,373,434    4,344,289        36,174       18,000   6,771,897 

  Scott Brown

   2,200,000    6,066,858        37,116       18,000   8,321,974 

  Kathleen Cullen-Cote

   1,620,000    3,271,883        3,798       18,000   4,913,681 

  Daniel Harrington

   2,164,188    2,959,316        36,748       18,000   5,178,252 

 

(1)Mr. Lund does not participate in the CIC Plan and is not a party to any agreement with the Company that provides for cash severance upon a termination without cause or for good reason in connection with a change in control. However, as described above, Mr. Lund participates in our reduction in force programs that are generally available to the Company’s salaried, U.S.-based employees, and the cash amount reported for Mr. Lund in this column reflects the maximum cash severance benefits provided under those programs.

The cash amounts reported in this column for current named executive officers other than Mr. Lund reflect cash severance benefits under the CIC Plan, but do not reflect anypro-rata annual bonuses for 2016.2019. This is because we are required to assume a termination date of December 31, 2016.2019. On that date, each current named executive officer, other than Mr. Ratzesberger, would have already earned a bonus for 20162019 regardless of whether he or she terminated employment. Please refer to the“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table for the amount of the 20162019 bonus paid to each executive.

 

(2)

Equity valuations are based on the following assumptions: (i) a closing price of our stock on December 30, 201631, 201 of $27.17 (which was less than the exercise price of all of the current named executive officers’ outstanding, unvested stock options on that date);$26.77; (ii) the awards are assumed in the corporate transaction and vest immediately prior to the change in control (at the “target” level, in the case of the relative TSR PBRSUs, and based on actualperformance-based RSUs with ongoing performance for the 2016 performance period PBRSUs)periods as of December 31, 2019); and (iii) each named executive officer’s employment is terminated without “cause” or by the executive for “good reason” immediately after the corporate transaction.

Change in Control and Equity Awards are not Assumed by Surviving Entity

Our current named executive officers, other than Mr. Ratzesberger, who is no longer an employee, would have been entitled to the following estimated payments and benefits in the event that a “change in control” occurred on December 31, 2016,2019, and the named executive officer’s equity awards were not assumed by the surviving entity. If the awards were assumed by the surviving entity, then the awards would not vest on a change in control but would vest on a qualifying termination within two years after the change in control as illustrated in the table immediately above.

 

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Executive Stock Options ($)(1)  

Restricted Share

Units ($)(1)

  Total ($) 

Victor Lund

  —     4,221,733   4,221,733 

Stephen Scheppmann

  —     1,289,501   1,289,501 

Daniel Harrington

  —     2,148,466   2,148,466 

Oliver Ratzesberger

  —     1,127,950   1,127,950 

John Dinning

  —     864,949   864,949 
  NAME  RESTRICTED SHARE
UNITS ($)(1)
   TOTAL ($) 

  Victor Lund

   12,455,974       12,455,974 

  Mark Culhane

   4,344,289       4,344,289 

  Scott Brown

   6,066,858       6,066,858 

  Kathleen Cullen-Cote

   3,271,883       3,271,883 

  Daniel Harrington

   2,959,316       2,959,316 

 

(1)

Equity valuations are based on the following assumptions: (i) a closing price of our stock on December 30, 201631, 2019 of $27.17 (which was less than the exercise price of all of the current named executive officers’ outstanding, unvested stock options on that date);$26.77; and (ii) the awards are not assumed in the corporate transaction, vest immediately prior to the change in control (at the “target” level, in the case of the relative TSR PBRSUs, and based on actualperformance-based RSUs with ongoing performance for the 2016 performance period PBRSUs)periods as of December 31, 2019) and are cashed out.

Payments to Former Named Executive Officers

The following table quantifies the benefits payable to Messrs. Koehler, Fair and Morton in connection with their respective terminations of employment during 2016, which are described above in Section 5 of the Compensation Discussion and Analysis.

Executive Cash ($)(1)  Stock Options ($)(2)  

Restricted Share

Units ($)(2)

  

Welfare

Benefits ($)(3)

  Out-placement
Counseling  ($)
  Total ($)  

Michael Koehler

  3,040,000   —       —             15,819   —           3,055,819 

Robert Fair

  1,995,103   —       933,181   21,948   10,000    2,960,232 

Richard Morton

  507,752   24,118   497,646   15,819   10,000    1,055,335 

(1)The cash severance amounts includepro-rated 2016 annual incentive bonuses of $340,000 for Mr. Koehler, $522,478 for Mr. Fair, and $127,752 for Mr. Morton.

 

(2)Equity valuations are based on the following assumptions: (i) a closing price of our stock on December 30, 2016 of $27.17 (which was less than the exercise price of all of the current named executive officers’ outstanding stock options on that date other than 5,955 of Mr. Morton’s options); and (ii) the value reported forpro-rata vesting of PBRSUs is based on actual performance through December 31 2016 (and as a result does not reflect anypro-rated value for the relative TSR PBRSUs for the 2016-2018 performance period, because our TSR performance as of that date was below the threshold level).

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CEO PAY RATIO DISCLOSURE

We are providing the following information regarding the relationship of the annual total compensation of our CEO and that of our “median employee,” as required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K. The pay ratio information provided below is a reasonable estimate calculated in a manner consistent with the pay ratio disclosure rules.

For our 2019 fiscal year:

The estimated median of the annual total compensation of all of our employees, excluding the CEO, was $76,892;

The annual total compensation of Mr. Lund, who was serving as our Interim CEO on December 31, 2019, was $4,941,051, as reported in the Summary Compensation Table on page 52 of this proxy statement, but annualized in accordance with Item 402(u) of RegulationS-K; and

The ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees was estimated to be 64 to 1.

In determining the 2019 pay ratio information provided above, as permitted by the SEC’s pay ratio disclosure rules, we used the same “median employee” who had been identified for the 2017 fiscal year through the following methodology:

December 31, 2017 was selected as the date upon which we would identify our employee population and median employee, and, from our tax and payroll records, we compiled a list of all full-time, part-time, temporary and seasonal employees who were employed on that date, including employees working both within and outside of the United States.

Total cash compensation during the 2017 fiscal year was used as a consistently applied compensation measure to identify our median employee from the employees on the list. For this purpose, we define total cash compensation as the sum of base wages and annual incentives payable in cash during the year. We did not annualize the total cash compensation of any permanent employees who were employed for less than the full year. For employees working outside of the United States, total cash compensation was converted to U.S. dollars using 2017 exchange rates.

Applying the methodology described above, we determined that our median employee for fiscal 2017 was a Customer Service Representative located in the United States.

For fiscal year 2019, we calculated the annual total compensation of the median employee using the same methodology that we used to determine the annual total compensation of the CEO, as reported in the Summary Compensation Table on page 52 of this proxy statement.

It should be noted that the SEC’s pay ratio disclosure rules provide reporting companies with a great deal of flexibility in determining the methodology used to identify the median employee and the pay ratio. As such, our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures, which may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our industry.

As described in the Compensation Discussion and Analysis beginning on page 31 of this proxy statement, Mr. Lund served as our Interim CEO for only a portion of fiscal 2019, and he did not participate in all of the executive compensation programs available to our other named executive officers for 2019. Therefore, in addition to the CEO pay ratio disclosed above, we have calculated an alternative CEO pay ratio, which compares the compensation of the median employee, as disclosed above, to the compensation that we estimate would have been earned by our former CEO, Mr. Ratzesberger, if he had continued to serve as CEO through December 31, 2019. Adjusting Mr. Ratzesberger’s 2019 annual total compensation, as reported in the Summary Compensation Table on page 52 of this proxy statement, to (i) reflect an annualized base salary of $750,000, (ii) include a hypothetical annual incentive amount of $656,250 (equal to 70% of the “target” level) to reflect an amount that could have become payable if Mr. Ratzesberger’s employment had continued for the full fiscal year, and (iii) exclude any compensation payable in connection with his removal as President and CEO, would result in an annual total compensation amount of $8,320,621. Using this dollar amount for the annual total compensation of our CEO, the ratio of the annual total compensation of our CEO to the median of the annual total compensation of all other employees would be 108 to 1. This alternative CEO pay ratio is not a substitute for the required CEO pay ratio disclosure, but we believe it may be helpful to stockholders in considering the ratio of the compensation of our CEO to that of our median employee.


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2020 PROXY STATEMENT

 

(3)Reflects the value of subsidized health and dental insurance coverage for 18 months after termination.


 

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ADVISORY(NON-BINDING) VOTE

ON EXECUTIVE COMPENSATION

(Item 2 on Proxy Card)

The foundation of our executive compensation program is to pay for performance. Our executive officers are compensated based on the key financial and strategic drivers of our business and in a manner that is consistent with competitive practices and sound corporate governance principles. We believe that our executive compensation program aligns our incentive compensation with the long-term interests of our stockholders because it is designed to motivate our executives to deliver long-term sustainable growth and stockholder value, and to provide retention incentives. The board encourages you to review the Executive Compensation section of this proxy statement, including the Compensation Discussion and Analysis and related tables and narratives, beginning on page 3331 of this proxy statement, for additional details on our executive compensation program.

As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders are able to vote to approve, on an advisory(non-binding) basis no less than once every three years, the compensation of our named executive officers (a“say-on-pay” vote). Since our annual meeting of stockholders in 2011, we have provided our stockholders with annualsay-on-pay voting opportunities. In connection with our 20162019 annual meeting, our advisorysay-on-pay proposal was approved by approximately 87.1% of the votes cast at the meeting.received a 98% favorable vote.

Since 2015, our Board of Directors haswe have regularly engaged stockholders to solicit their input regarding the Company’s executive compensation program. This past year, we again sought feedback from our largest 25 institutional investors, representing approximately 72%over 75% of Teradata’s outstanding shares. Discussions with investors who responded to our outreach efforts (and others who reached out to us) touched on a number of themes including stockholders’ desire that a meaningful portion of long-term incentive value continue to be allocated to performance-based equity awards forthat are based on longer-term performance goals with a strong rationale and linkage between applicable performance goals and the Company’sto our business strategy. The changes toIn designing our executive compensation that were approved in 2016, as described below, were consistent withprogram, we have taken into account the common themes expressed by our stockholdersstockholders. For example, as described in the Compensation Discussion and generally have been viewed very favorably by investors because they reinforce the performance-oriented structureAnalysis, beginning on page 29 of our program:this proxy statement:

 

1.We increased the percentage

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A substantial majority (70%) of theour 2019 long-term incentive opportunity is allocated to performance-based equity awards, from 50%with the remaining 30% providing balance to 100% because we believe that anthe program through service-based awards withall-performance3-year plan will deliver better results.graded vesting for retention purposes.

 

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 2.We eliminated service-based restricted share units and stock options.

3.We increased the weightingAll of our 2019 performance-based equity awards based on relative total shareholder returnare once again tied to financial goals over a3-year performance period (2017-2019) from 25%that are key to approximately 37%.the execution of our business transformation and valued by stockholders.

4.We added achievement of important business transformation financial and operational measures as key performance metrics for approximately 63% of the performance-based equity awards.

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We are now providing our stockholders with the opportunity to castnon-binding advisory votes to approve the compensation of our named executive officers for 2016,2019, and are asking stockholders to vote to adopt the following resolution:

RESOLVED, that the stockholders of Teradata Corporation approve, on an advisory basis, the compensation of the Company’s named executive officers, as such compensation is described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure and related material, set forth in the Company’s definitive proxy statement for the 20172020 annual meeting of stockholders.

Thissay-on-pay proposal vote is intended to provide an overall assessment of our executive compensation program rather than focus on any specific item of compensation. As an advisory vote, this proposal isnon-binding. However, the board and our Compensation and Human Resource Committee, which is responsible for designing and overseeing the administration of our executive compensation program, values the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.

 

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The Board of Directors recommends that you vote FOR this proposal.

Proxies will be so voted unless stockholders specify otherwise in their proxies. Abstentions will have the same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote. Approval of this resolution requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business. However, the results of this vote are not binding on the board, whether or not any resolution is passed under this voting standard. To the extent there is any significant vote against our executive compensation program, the Compensation and Human Resource Committee will evaluate whether any actions are necessary and appropriate to address stockholder concerns.

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ADVISORY(NON-BINDING) VOTE

ON FREQUENCY OFSAY-ON-PAY VOTE

(Item 3 on Proxy Card)

Under SEC rules in connection with thesay-on-pay vote described in Proposal 2 above, we are required to solicit stockholder votes on the frequency of futuresay-on-pay proposals at least once every six years. In 2011, our stockholders were given an opportunity to cast an advisory,non-binding vote on the frequency of futuresay-on-pay votes conducted by the Company. At that meeting, the most votes were cast for the frequency period of every one year and the Company has since provided stockholders with an opportunity to approve its executive compensation on an annual basis.

We are now providing our stockholders with the opportunity to castnon-binding advisory votes to approve the frequency of futuresay-on-pay votes. The Board of Directors continues to feel that annualsay-on-pay votes are an appropriate means to obtain stockholders’ views on the Company’s executive compensation program for consideration in making decisions with respect to such program. Therefore, the board is recommending that we continue the practice of annualsay-on-pay votes.

 

The Board of Directors recommends that you vote FOR the option of once every year as the preferred frequency for advisorysay-on-pay votes on executive compensation.

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Proxies will be so voted unless stockholders specify otherwise in their proxies. Approval of this resolution requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business. However, the results of this vote are not binding on the board, whether or not this item is passed under this voting standard. In evaluating the vote on this advisory resolution, the board will consider the voting results in their entirety.


 

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DIRECTORS’ PROPOSAL TO RATIFY THE

APPOINTMENT OF INDEPENDENT REGISTERED

PUBLIC ACCOUNTING FIRM FOR 20172020

(Item 43 on Proxy Card)

The Audit Committee of the Board of Directors, which is composed entirely of independent directors, appointed PricewaterhouseCoopers (“PwC”) as our independent registered public accounting firm for 20172020 to audit our consolidated financial statements. The board has approved this appointment and, as a matter of good corporate governance, is asking you to ratify this appointment.

In determining whether to reappoint PwC as our independent auditor, the Audit Committee considers, among other things, the length of time PwC has been engaged, in addition to considering the quality of the discussions with the independent auditor and an assessment of past performance of PwC. The Audit Committee annually reviews PwC’s independence and performance in deciding whether to retain PwC or engage another firm as our independent registered public accounting firm. In the course of these reviews, the Audit Committee considers, among other things:

 

PwC’s historical and recent performance on the Teradata audit;

 

PwC’s capability and expertise in handling the breadth and complexity of our worldwide operations;

 

The appropriateness of PwC’s fees for audit andnon-audit services;

 

PwC’s independence;

 

The potential impact of changing auditors; and

 

PwC’s tenure as our independent auditor, including the benefits of having a long-tenured auditor and controls and processes that help ensure PwC’s independence.

Based on its“Pre-Approval Policy” (as defined on page 7868 of this proxy statement) and applicable SEC rules and guidance, the Audit Committee has considered whether the provision of the tax and othernon-audit services described below under the caption “Fees Paid to Independent Registered Public Accounting Firm” was compatible with maintaining PwC’s independence and concluded that it was. Based on its review of the above factors, the Audit Committee believes that it is in the best interests of Teradata and our stockholders to retain PwC as our independent registered public accounting firm for 2017.2020.

PwC has been our independent registered public accounting firm since 2007. The firm is considered a leader in providing audit services to the high-technology industry. The board believes that PwC is well-qualified to serve as our independent registered public accounting firm given its experience, global presence with offices or affiliates in or near most locations where we do business, and quality audit work in serving us. PwC rotates its audit partners assigned to audit us at least once every five years in accordance with SEC rules, and the Audit Committee oversees the selection of PwC’s lead engagement partner. In addition,To further ensure the independence of our independent registered public accounting firm, the Audit Committee has placed restrictions on our ability to hireadopted a policy regarding the hiring of any employees or former employees of PwC or its affiliates.

Representatives of PwC will be at the annual meeting to answer questions, and they may also make any statement they wish at the meeting.

 

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The Board of Directors recommends that you vote FOR this proposal.

Approval of this proposal requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business. If the stockholders do not approve this proposal, the Audit Committee and the Board of Directors will reconsider the appointment but may decide to maintain its appointment of PwC. Proxies solicited by the board will be voted FOR this proposal, unless you specify otherwise in your proxy. Abstentions will have the same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote.


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2020 PROXY STATEMENT



 

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BOARD AUDIT COMMITTEE REPORT

The Company’s management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. PricewaterhouseCoopers LLP (“PwC”), the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. A more detailed discussion of the factors considered by the Audit Committee in appointing PwC as Teradata’s independent auditor is found on page 7668 of this proxy statement.

In the course of fulfilling its oversight responsibilities for the Company, the Audit Committee has reviewed and discussed with management the Company’s audited financial statements for fiscal year 2016,2019, as well as quarterly earnings releases and quarterly reports on Form10-Q, and, together with the Board of Directors, has reviewed and discussed the Company’s annual report on Form10-K for the fiscal year ended December 31, 20162019 and this proxy statement. In addition, as part of their oversight responsibility, the Audit Committee members have reviewed and discussed with management the adequacy and effectiveness of the Company’s internal control over financial reporting. PwC has also discussed with the Audit Committee significant matters regarding internal control over financial reporting that have come to its attention during the course of its audit of the consolidated financial statements. The Audit Committee also discussed with the Company’s management the process used for certifications by the Company’s Chief Executive and Chief Financial Officers for the Company’s quarterly andyear-end filings with the SEC, as well as the clarity and completeness of the Company’s financial disclosures. Further, the Audit Committee discussed with PwC the matters required to be discussed under the applicable requirements of the Public Company Accounting Oversight Board (PCAOB), Auditing Standard No. 16 (Communications with Audit Committees). and the Securities and Exchange Commission. These matters include: (i) the overall scope and plans for PwC’s independent audit as well as approval of the terms of PwC’s engagement letter; (ii) review of Teradata’s internal audit plan; (iii) review of PwC’s audit strategy and approach, including accounting policies, practices and estimates; and (iv) PwC’s evaluation of our financial reporting and other key findings related to the audit. The Audit Committee also has received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence and has discussed with PwC its independence from management and the Company. Pages 2018 to 2119 of this proxy statement contain a detailed listing of the Audit Committee’s areas of responsibility.

The Audit Committee methad an opportunity to meet in executive session periodicallyat each regularly scheduled meeting in 20162019 with PwC, the Company’s Chief Financial Officer, and Vice President of Enterprise Risk and Assurance Services, and Chief Ethics & Compliance and Privacy Officer, each of whom has unrestricted access to the committee.

Based on the reviews and the discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 20162019 for filing with the Securities and Exchange Commission.SEC.

Dated: February 22, 201727, 2020

The Audit Committee:

NancyDavid E. Cooper,Kepler, Chair

Timothy C.K. Chou, Member

Cary T. Fu, Member

David E. Kepler,Kimberly K. Nelson, Member

Joanne B. Olsen, Member

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FEES PAID TO INDEPENDENT REGISTERED PUBLIC

ACCOUNTING FIRM

The following table presents the fees accrued or billed for professional audit services rendered by our independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), for the audit of our consolidated financial statements for fiscal years 20162019 and 2015,2018, as well as the worldwide fees accrued or billed for other services rendered by PwC in 20162019 and 2015.2018.

 

Service  2016 ($)   2015 ($) 
NAME  2019 ($)   2018 ($) 

Audit Fees

   2,253,241(1)    2,349,954(2)    2,498,180(1)    2,475,340(2) 

Audit-Related Fees

   64,075    0    46,000(3)    210,000(4) 

Tax Fees

   50,000(3)    69,416(4)    0    0(5) 

All Other Fees

   4,500(5)    4,500(5)    4,000(6)    4,000(6) 

Total Fees

   2,371,816    2,423,870    2,548,180    2,689,340 

 

(1)

Includes fees related to the annual audit and quarterly review of our consolidated financial statements, the audit of internal control over financial reporting, attestation services and review services associated with our filings with the SEC, and consultations with management as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by regulatory and standard setting bodies (“consultation services”). Also includes $154,289$157,930 for the 20152018 statutory audits of the financial statements of select foreign subsidiaries.

(2)

Includes fees related to the annual audit and quarterly review of our consolidated financial statements, the audit of internal control over financial reporting, attestation services and review services associated with our filings with the SEC, and consultations with management as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by regulatory and standard setting bodies (“consultation services.services”). Also includes $194,954$150,340 for the 20142017 statutory audits of the financial statements of select foreign subsidiaries.

(3)

Includes fees related to the Company’s adoption of the new accounting leasing standard (ASC 842).

(4)

Includes fees related to the Company’s adoption of the new revenue recognition accounting standard as of January 1, 2018, and the new leases accounting standard as of January 1, 2019.

(5)

Includes tax fees for state tax consulting work.work related to the U.S. Tax Cuts and Job Act of 2017.

(4)

Includes tax fees for tax compliance services related to our subsidiaries in Mexico.

(5)(6)

Includes license fees for PwC software products used to assist in conducting accounting research and other service tools.

The Audit Committee has adopted policies and procedures regarding itspre-approval of the audit, audit-related, tax and all othernon-audit services to be provided by our independent registered public accounting firm or its affiliates to us or our consolidated subsidiaries (the“Pre-Approval Policy”). This policy is designed to assure that the provision of such services does not impair the independence of our independent registered public accounting firm. Under thePre-Approval Policy, at the beginning of each fiscal year, the Audit Committee will review the services proposed by management and our independent registered public accounting firm to be provided during that year. The Audit Committee will then provide itspre-approval based on the limitations set forth in thePre-Approval Policy. These limitations include the following:

 

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

 

78


Unless a type of service to be provided by the independent registered public accounting firm has received generalpre-approval, it will require specificpre-approval by the Audit Committee. Any othernon-audit services and tax consulting services will require specificpre-approvals by the Audit Committee and a determination that such services would not impair the independence of our independent registered public accounting firm. Specificpre-approvals by the Audit Committee will also be required for any material changes or additions to thepre-approved services.

 

The Audit Committee recommends that the ratio of total tax and all othernon-audit services to total audit and audit-related services procured by us in a fiscal year be less thanone-to-one.

 

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

 

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

 


68    

2020 PROXY STATEMENT



Fees Paid to Independent Registered Public Accounting Firm


Our Chief Accounting Officer will report to the Audit Committee on a quarterly basis regarding the status of allpre-approved audit, audit-related, tax and all othernon-audit services provided by our independent registered public accounting firm or its affiliates to us or our consolidated subsidiaries.

 

Back-up documentation will be provided as appropriate to the Audit Committee by management and/or the independent registered public accounting firm when requestingpre-approval of services by our independent registered public accounting firm. At the request of the Audit Committee, additional detailed documentation regarding the specific services will be provided.

 

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

Under thePre-Approval Policy, the Audit Committee has delegated to its Chair limited authority to grantpre-approvals for audit, audit-related, tax and othernon-audit services in the event that immediate approval of a service is needed. The Chair shall report anypre-approval decisions to the Audit Committee at its next scheduled meeting for its review and approval. The Audit Committee has not delegated to management its responsibilities topre-approve services performed by the independent registered public accounting firm.

The audit, tax and all othernon-audit services provided by PwC to us, and the fees charged for such services, will be actively monitored by the Audit Committee as set forth in thePre-Approval Policy on a quarterly basis to maintain the appropriate level of objectivity and independence in the firm’s audit work for us. Part of the Audit Committee’s ongoing monitoring includes a review of any de minimis exceptions as provided in the applicable SEC rules fornon-audit services that were notpre-approved by the Audit Committee. All services provided by PwC in the fiscal years 20162019 and 20152018 werepre-approved or ratified by the Audit Committee.

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79



OTHER MATTERS

The Board of Directors does not know of any matters that will be brought before the 20172020 annual meeting other than those listed in the notice of meeting. If any other matters are properly introduced at the meeting for consideration, including consideration of a motion to adjourn the meeting to another time or place, the individuals named on the proxy card will have authority to vote on such matters in their discretion.

HOUSEHOLDING OF PROXY MATERIALS

The SEC has adopted rules that permit companies and intermediaries (e.g., banks and brokers) to satisfy the delivery requirements for annual reports, proxy statements, and Notice of Internet Availability of Proxy Materials (“Notice”) with respect to two or more stockholders sharing the same address by delivering one annual report, proxy statement and Notice addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.

A number of brokers with account holders who are Teradata’s stockholders will be “householding” our proxy materials. A single annual report, proxy statement andand/or Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. If you have multiple Teradata common stock record accounts and/or share an address with a family member who is a Teradata stockholder and want to receive more than one copy of the annual report, proxy statement or Notice, you may contact our mailing agent, Broadridge Financial Solutions, at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 (phone:1-800-542-1061). Broadridge will remove you from the householding program within thirty30 days after receipt of this request and will mail you a separate copy of the annual report, proxy statement, and Notice. Stockholders who hold their stock through a bank or broker and currently receive multiple copies of the annual report, proxy statement or Notice at their address and would like to request “householding” of their communications should contact their bank or broker.


70    

2020 PROXY STATEMENT



 

80



ADDITIONAL INFORMATION

Cost of Proxy Solicitation

We will pay the expenses of soliciting proxies in connection with the annual meeting. Proxies may be solicited on our behalf through the mail, in person, by telephone, electronic transmission, or facsimile transmission. We have hired Okapi Partners LLC to assist in the solicitation of proxies and related services, at an estimated cost of $12,000$25,000 plus reimbursement of reasonableout-of-pocket expenses. In accordance with SEC and NYSE rules, we will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses of sending proxies and proxy materials as intermediaries to the beneficial owners of our common stock.

Procedures for Stockholder Proposals and Nominations

Under our bylaws, nominations for directors at an annual meeting may be made only by (i) the Board of Directors or a committee of the board, or (ii) a stockholder entitled to vote who has delivered notice to us within 90 to 120 days before the first anniversary of the date of the preceding year’s annual meeting and complied with the additional requirements set forth in our bylaws.

Proxy Access

Our bylaws permit stockholders to nominate director candidates through proxy access for inclusion in our proxy statement.

In general, a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding stock continuously for at least three years, may nominate and include in the Company’s proxy materials director nominees constituting up to 20% of the Board, provided that such stockholder(s) and nominee(s) satisfy the requirements set forth in our bylaws, which generally include the following three conditions.

   

1

 

  

2

 

  3

LOGO

a single stockholder, or qualified

group of up to 20 stockholders

 

3% for3 years

 

owning three percent outstanding
stock for at least three

consecutive years

 

   

LOGO

the individual or qualified group

may submit

 

up to20%

 

of the directors then in office
(after giving effect to reduction in
board size before the meeting)

but in no case less than one nominee

 

   

LOGO

stockholders and nominees who
satisfy the requirements specified
by our bylaws are included in the
proxy statement

To be timely for our 2021 annual meeting of stockholders, the nomination must be received by our Corporate Secretary at the Company’s address provided on page 21 of this proxy statement no sooner than October 26, 2020 and no later than the close of business on November 23, 2020. For additional information regarding the Company’s proxy access provisions, please refer to the bylaws.

Advance Notice Procedure

Our bylaws also provide that, other than the nomination of directors, business may not be brought before an annual meeting unless it is (i) specified in our proxy materials (i.e., proposals brought by the Board of Directors and stockholder proposals that we are required to include in our proxy statement under SEC Rule14a-8), (ii) brought before the meeting by or at the direction of the board, or (iii) brought by a stockholder entitled to vote who has delivered notice to us (containing certain information specified in the bylaws) within 90 to 120 days before the first anniversary of the date of the preceding year’s annual meeting and complied with the additional requirements set forth in our bylaws. In order to include a proposal in our notice of meeting and proxy materials pursuant to SEC Rule14a-8, you must comply with the requirements of that rule.

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Additional Information


A copy of the full text of our bylaws may be obtained upon written request to the Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342.17095 Via Del Campo, San Diego, CA 92127. A copy of our bylaws, which were last amended by the Board of Directors on July 26, 2016, is also available on our corporate governance website athttp:https://www.teradata.com/articles-and-bylaws.

Stockholder Proposals for 20182021 Annual Meeting

To include a stockholder proposal in our 20182021 notice of meeting and proxy materials pursuant to SEC Rule14a-8, a stockholder must satisfy all applicable requirements of that rule, and the proposal must be received by our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342,17095 Via Del Campo, San Diego, CA 92127, no later than November 1, 2017.21, 2020. To present any other proposal at the 20182021 annual meeting of stockholders, or to nominate a candidate for director election at the 20182021 annual meeting, a stockholder must submit an advance written notice of such proposal and/or nomination (as applicable) to us that complies with certain requirements set forth in our bylaws. Such advance written notice must be received by our Corporate Secretary at the Company’s address provided on page 1 of this proxy statementabove no sooner than the close of business on December 18, 2017,January 5, 2021, and no later than the close of business on January 17, 2018.February 4, 2021.


72    

2020 PROXY STATEMENT




OTHER GENERAL INFORMATION

LOGOWho may vote at the meeting?
Only stockholders of record may vote at the meeting. A stockholder of record is a stockholder as of the close of business on March 6, 2020, the record date for the meeting. On the record date, there were 110,559,668 shares of common stock outstanding,
LOGOHow many votes do I have?
For each share of common stock you own, you are entitled to cast one vote on each director candidate submitted for election and to cast one vote on each other matter properly brought before the meeting,
LOGOWhen will I receive my proxy materials?
Proxy materials for the 2020 annual meeting of stockholders are being made available in printed form on or about March 23, 2020. They will be available online on or about March 26, 2020.
LOGOHow do I access my proxy materials?

Notice and Access. Proxy materials (including our 2019 annual report, notice of the 2020 annual meeting of stockholders and proxy statement, and proxy card) are being made available via the Internet pursuant to the “notice and access” rules of the SEC. A Notice of Internet Availability of Proxy Materials (“Notice”) is being mailed to most of our record and beneficial stockholders. The Notice includes instructions on how to access the proxy materials on the Internet or request printed copies of these materials. To receive future proxy materials by mail or email, follow the instructions included with the Notice. If you previously elected to receive materials via mail or email delivery, you will not receive the Notice, but you will receive your materials via the delivery method you requested.

Electronic Delivery. At their request, many stockholders are receiving an email providing them with links to receive the Notice and Internet access to the proxy materials rather than receiving a printed copy of the Notice or printed proxy materials.

Paper Copies. If you have previously requested paper copies of your proxy materials, or are otherwise required to receive paper copies, you will receive the 2020 proxy materials, including notice of the meeting, in printed form unless you consent to receive these documents electronically in the future.

LOGOHow do I receive my proxy materials electronically?

If you are a stockholder of record (i.e., you directly own your common stock through an account with our transfer agent, Computershare Investor Services), you can choose to access your Teradata proxy materials electronically and save the cost of producing and mailing a Notice and other documents by following the instructions provided athttps://www.investordelivery.comor by following the prompt if you choose to authorize your proxy over the Internet. You must provide your sixteen-digit control number listed on your Notice or proxy card to make this election.

Your election to receive proxy materials by electronic access will remain in effect until you revoke your consent athttps://www.proxyvote.com, or your consent is deemed to be revoked under applicable law. You must provide your sixteen-digit control number to revoke your consent.

If you are a beneficial owner (i.e., you indirectly hold your common stock through a nominee such as a bank or broker), please review the information provided by your nominee for instructions on how to elect to view future proxy statements and annual reports over the Internet.

Please keep in mind that choosing electronic delivery saves the Company and its stockholders money and preserves natural resources

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Other General Information


LOGOHow do I obtain a separate set of proxy materials?
To save costs, only one set of proxy materials is being printed and mailed to stockholders who have requested printed copies and share an address, unless otherwise requested or required under applicable law. If you have multiple Teradata common stock record accounts and/or share an address with a family member who is a Teradata stockholder and want to receive more than one copy of the Notice and/or proxy materials, you may contact our mailing agent, Broadridge Financial Solutions, at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 (phone:1-800-542-1061). Broadridge will mail you a separate copy of the proxy materials and will remove you from the householding program within thirty days after receipt of this request.
LOGOHow can I vote my shares of Teradata stock?

Your vote is important. Your shares can be voted at the annual meeting only if you are a record stockholder and present in person or represented by proxy. Even if you plan to attend the meeting, we urge you to authorize your proxy in advance. You may vote your shares by authorizing a proxy over the Internet or by telephone. In addition, if you received paper copies of the proxy materials by mail, you can also submit a proxy by mail by following the instructions on the proxy card. Voting your shares by authorizing a proxy over the Internet, by telephone or by written proxy card will ensure your representation at the annual meeting regardless of whether you attend in person.

If you are a stockholder of record, please authorize your proxy electronically by going to thehttps://www.proxyvote.comwebsite or by calling the toll-free number (for residents of the United States and Canada) listed on your Notice and proxy card. Please have your Notice or proxy card in hand when going online or calling. If you authorize your proxy via the Internet, you do not need to return your proxy card. If you choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided.

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

LOGOHow do I revoke my proxy for the annual meeting?

You may revoke your proxy at any time before it is voted at the meeting by:

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

   voting by ballot at the meeting; or

   sending a written notice of revocation to the inspectors of election in care of our Corporate Secretary at Teradata Corporation, 17095 Via Del Campo, San Diego, CA 92127.

LOGOWhat if I want to vote in person at the meeting?
The method by which you vote and authorize your proxy will in no way limit your voting rights if you later decide to vote in person at the meeting. If you beneficially own your shares through a nominee (such as a bank or broker), you must obtain a proxy executed in your favor from your nominee to be able to vote at the meeting
LOGOWhat are the requirements for ensuring that my shares are voted by proxy at the meeting?
Your shares will be voted at the meeting as directed by the instructions on your proxy card, voting instructions or electronic proxy if (1) you are entitled to vote, (2) your proxy was properly executed or properly exercised electronically, (3) we received your proxy prior to the voting deadlines for the annual meeting (May 4, 2020 at 11:59 p.m. for record stockholders who do not vote at the meeting, such time as directed by the nominee for beneficial owners, and April 30, 2020 for participants in our 401(k) savings plan), and (4) you did not revoke your proxy prior to or at the meeting.
LOGOHow do I vote the shares I hold in the Teradata 401(k) savings plan?
If you are a participant in the Teradata 401(k) savings plan, your proxy includes the number of Teradata common stock units (share interests) allocated to your plan account. You may instruct the trustee how to vote the number of share interests allocated to your plan account. The trustee will vote the share interests allocated to your plan account in accordance with your instructions. If you do not vote your share interests in the Teradata 401(k) savings plan, the trustee will vote the unallocated share interests, as well as any allocated share interests held by the plan, in the same proportion as the share interests for which it received timely voting instructions.


74    

2020 PROXY STATEMENT



Other General Information


LOGOWhat is considered a quorum to conduct the annual meeting?
To have a quorum necessary to conduct business at the meeting, it is necessary to have shares that represent (in person or by proxy) the holders of a majority of our shares of common stock outstanding on the record date, which is the close of business on March 6, 2020. Shares of common stock represented in person or by proxy (including shares that abstain with respect to a particular proposal to be voted upon and “brokernon-votes”) will be counted as present for the purpose of determining whether a quorum exists at the meeting for that proposal. If a quorum is not present, the meeting will be adjourned until a quorum is obtained.
LOGOHow many votes are required to approve each item?

With respect toProposal 1 (the election of directors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on the election of directors is required to elect each director.

With respect toProposal 2 (the advisory“say-on-pay” vote on executive compensation), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such question is required to adopt this advisory resolution in accordance with Teradata’s bylaws. However, the results of this vote are not binding on the board, whether or not any resolution is passed under this voting standard.

With respect toProposal 3 (the ratification of the appointment of the Company’s independent auditors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item of business is required to ratify the appointment.

Abstentions effectively count as votes “against” the adoption of a proposal and the election of a director. Moreover, if you do not instruct your nominee (such as your bank or broker) how to vote your shares with respect to the election of directors and the advisory vote on executive compensation, the nominee may not vote on these proposals. However, broker“non-votes” will have no effect on the outcome of the vote for any proposal or the election of any director. Broker“non-votes” occur when a nominee returns a properly executed proxy but does not vote on a particular item because the nominee has not received voting instructions from the beneficial owner and, therefore, does not have the authority to vote on a proposal.

LOGOHow does the Board recommend that I vote my shares?

The Teradata Board of Directors recommends that you vote:

   FOR the election of each of the three Class I director nominees, Ms. Nelson and Messrs. Fishback and Kepler (see page 4);

   FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement (see page 65);

   FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2020 (see page 66).

If you submit your proxy without specific voting instructions, your shares represented by that proxy will be voted as recommended by our board. As discussed above, if you hold your shares beneficially through a nominee (such as a bank or a broker) and fail to provide specific voting instructions to that nominee, your shares will not be voted in the election of directors or the advisory“say-on-pay” vote on executive compensation.

LOGO  75


Other General Information


LOGOWhat do I need to do if I want to attend the annual meeting?

If you plan to attend the meeting in person, please send an email to us atinvestor.relations@teradata.com to request a meeting reservation request form. You may attend the meeting if you are a stockholder of record, hold a proxy for a stockholder of record, or are a beneficial owner of our common stock with evidence of ownership. If you are a beneficial owner (i.e., you hold your common stock through a nominee such as a bank or broker), please include evidence of your ownership of common stock with the form (such as an account statement showing you own Teradata common stock as of the record date). If you do not have a reservation for the meeting, you may still attend if we can verify your stock ownership at the meeting.

We will include the results of the votes taken at the meeting, in a quarterly report on Form10-Q or a current report on Form8-K that we expect to file with the SEC within four business days after the date of the annual meeting or any adjournment or postponement thereof. You may also find information on how to obtain a transcript of the meeting by writing to our Corporate Secretary at Teradata Corporation, 17095 Via Del Campo, San Diego, CA 92127.

LOGOCould emerging developments regarding the coronavirus — or COVID-19 — affect our ability to hold anin-person annual meeting?

We are monitoring the COVID-19 situation closely, and if we determine that holding anin-person annual meeting could pose a risk to the health and safety of our stockholders, employees, and directors, or otherwise is counter to public health directives, the Company may decide instead to hold a Virtual Annual Meeting. If we decide to use that format, we will make a public announcement, which will be available at https://www.teradata.com, as soon as practicable prior to the meeting.

In such event, to attend and participate in the Virtual Annual Meeting, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders of record will need to visit www.virtualshareholdermeeting.com/TDC2020 and use their16-digit Control Number provided in the Notice to log in to this website, and beneficial owners of shares held in street name will need to follow the instructions provided by the broker, bank or other nominee that holds their shares. We would encourage stockholders to log in to this website and access the webcast before the Virtual Annual Meeting’s start time. Further instructions on how to attend, participate in and vote at the Virtual Annual Meeting, including how to demonstrate your ownership of Teradata common stock as of the record date, are available at www.virtualshareholdermeeting.com/TDC2020. Please note you will only be able to participate in the meeting using this website if the Company decides to hold a Virtual Annual Meeting, instead of holding anin-person annual meeting in San Diego, California.

The above notice and proxy statement are sent by order of the Board of Directors.

Laura NyquistMargaret A. Treese

Deputy General Counsel and Secretary

Dated: March 1, 2017

20, 2020

 


81

76    

2020 PROXY STATEMENT



 

 

 

LOGOLOGO


    

LOGOLOGO

 

TERADATA CORPORATION

10000 INNOVATION DRIVE17095 VIA DEL CAMPO

DAYTON, OH 45342SAN DIEGO, CA 92127

 

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

 

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 on April 18, 2017May 4, 2020 (April 14, 201730, 2020 for participants in Teradata’s 401(k) Savings Plan). 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

Transmit your voting instructions via telephone up until 11:59 P.M. on April 18, 2017May 4, 2020 (April 14, 201730, 2020 for participants in Teradata’s 401(k) Savings Plan). 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.

 

ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS

If you would like to help TeradataTeradata’s sustainability efforts and reduce the costs incurred printing and mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-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 or go towww.investordelivery.com.

TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:

E17975-P87031-Z69440D03916-P32658-Z76274             KEEP THIS PORTION FOR YOUR RECORDS

— — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — — —

DETACH AND RETURN THIS PORTION ONLY

THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.

 

 

TERADATA CORPORATION

              
 

 

                  
  

The Board of Directors recommends that you vote FOR the Director Nominees listed below FOR the1-year voting option for the advisory(non-binding) vote to approve the frequency ofsay-on-pay vote, and FOR each of the other proposals listed below:

 

           

Vote on Directors

  

Vote on Directors

For

Against

Abstain

  

1.    Election of Directors

 

 For Against AbstainFor  Against  Abstain

        Class I Nominees:

        1a.     Daniel R. Fishback

   

2.

  

An advisory(non-binding) vote to approve executive compensation.

     

        Class I Nominees:

        1a.     Nancy E. Cooper1 Year2 Years3 YearsAbstain
  

 1b.     Daniel R. Fishback

        

        1c.1b.     David E. Kepler

  

 

 

3.

An advisory(non-binding) vote to approve the frequency ofsay-on-pay vote. *PLEASE SELECT ONLY ONE OPTION*

ForAgainstAbstain
        1d.     William S. Stavropoulos   

 

4.3.

  

 

Approval of the ratification of the appointment of independent registered public accounting firm for 2017.2020.

 

 

 

 

 

 

  
  

        1c.     Kimberly K. Nelson

For address changes and/or comments, please check this box and write them on the back where indicated.

   

     

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

 

This proxy card confers on the proxyholders discretionary authority with respect to matters not known or determined at the time of the mailing of the notice of the 20172020 Annual Meeting of Stockholders.

     
  

Please sign exactly as your name(s) appear(s) on this proxy card. 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            

     

V.1.1


Annual Meeting of Stockholders

Teradata’s 2020 Annual Meeting of Stockholders will be held at 8:00 a.m. local time on April 19, 2017,May 5, 2020, at the Waldorf Astoria Chicago, 11 East Walton Street, Chicago, Illinois 60611.InterContinental San Diego, 901 Bayfront Court, San Diego, California 92101.* Please see your proxy statement for instructions should you wish to attend the meeting.

*Depending on conditions associated with the coronavirus or COVID-19, the company might hold a Virtual Annual Meeting instead of holding the meeting in San Diego, California. If the company decides to hold a Virtual Annual Meeting, the company will make a public announcement, which will be available at https://www.teradata.com as soon as practicable before the meeting. In that event, Teradata’s 2020 Annual Meeting of Stockholders would be conducted solely virtually, at the above date and time, via live audio webcast. You or your proxyholder could participate, vote and examine our stockholder list at the Virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/TDC2020 and using your 16-digit control number, but only if the meeting is not held in San Diego, California.

Important Notice Regarding the Availability of Proxy Materials for the 20172020 Annual Meeting:

The Notice and Proxy Statement and Annual Report are available atwww.proxyvote.com.

 

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E17976-P87031-Z69440D03917-P32658-Z76274         

 

 

 

TERADATA CORPORATION

Proxy/Voting Instruction Card

 

 

THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS

FOR TERADATA’S 20172020 ANNUAL MEETING OF STOCKHOLDERS

  

 

The undersigned stockholder of Teradata Corporation, a Delaware corporation (“Teradata” or the “Company”), hereby appoints Victor Lund,Stephen Scheppmann Mark Culhane and Laura Nyquist, and each of them, proxies, with full power of substitution, to vote all shares of common stock of Teradata that the undersigned is entitled to vote at Teradata’s Annual Meeting of Stockholders to be held in Chicago, IllinoisSan Diego, California (or at any alternate location and/or by means of communication determined by or on April 19, 2017,behalf of the board of directors) on May 5, 2020, and at any postponement or adjournment thereof, in the manner indicated on the reverse side and in such proxyholders’ sole discretion, upon any matter that may properly come before the meeting, or any postponement or adjournment thereof, including to vote for the election of a substitute nominee for director as such proxyholders may select in the event any nominee named on this proxy card is unable to serve. This proxy card also provides voting instructions to the trustee of theTeradatathe Teradata Corporation Savings Plan, the Company’s 401(k) plan (the “Teradata Savings Plan”) and to the trustees and administrators of other plans, with regard to shares of Teradata common stock the undersigned may hold under such plans for which the undersigned is entitled to vote at said meeting to the extent permitted by such plans and their trustees and administrators. By executing this proxy card, the undersigned acknowledges receipt from the Company of the notice of the 20172020 Annual Meeting of Stockholders and accompanying proxy statement and hereby revokes any previously granted proxy that relates to the aforementioned annual meeting.

 

The proxyholders or the trustees and administrators of the plans, as the case may be, will vote the shares in accordance with the directions on this proxy card. If you do not indicate your choices on this proxy card, the proxyholders will vote the shares in accordance with the directors’ recommendations. If you are a Teradata Savings Plan participant entitled to vote at the 20172020 Annual Meeting of Stockholders and do not indicate your choices on this proxy card, those shares will be voted by the trustee of such plan.

 

 

  
   
  

 

Address Changes/Comments:

 

 

 

     
 
   

 

    
 
     

 

                

     
  

 

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

 

(Continued and to be signed on the reverse side.)

 

 

  

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