UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
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Teradata Corporation
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MESSAGE TO SHAREHOLDERSSTOCKHOLDERS
March 20, 202023, 2022
Dear Fellow Shareholder:Stockholder:
I am pleased to invite you to attend Teradata Corporation’s 2020 Annual Meeting2022 annual meeting of Stockholdersstockholders on May 5, 2020.10, 2022 at 8:00 a.m. Pacific Time. The meeting will begin promptly at 8:00 a.m. local time atbe held virtually via a live webcast and can be accessed by following the 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 noteinstructions provided in the Notice of Meeting that follows this letter for more information.proxy statement. This proxy statement, which includes a notice of the 20202022 annual meeting, tells you more about the agenda and procedures for the meeting.meeting, including how shareholders can participate. It also describes how our Board of Directors operates and gives information about director candidates and general compensation, and corporate governance, and other matters.
At Teradata,2021 was a strong year for Teradata. Our results show that “we did what we transformsaid we would do” by focusing our efforts in support of our purpose of transforming how businesses work and people live through the power of data. AsIn particular, we made strides in broadening our market opportunity by evolving from an on-premises only, enterprise data warehouse company, to a leading hybrid cloud analytics software provider weof a connected multi-cloud, data platform for enterprise analytics.
Our robust strategy transformation and focus on helpingthe cloud is critical to Teradata’s success, and Teradata had many significant accomplishments in this regard. In particular, the Teradata team met or beat all the 2021 financial outlook elements that we provided – showing that we achieved significant growth in our cloud business, attracted new customers, leverage all of their data across an enterprise, whether on premises,both in the cloud or anywhereand on-premises, released innovative technology, and delivered profitable growth. Noteworthy financial results are included in between, to uncover real-time intelligence, at scale.the Form 10-K that comprises our 2021 Annual Report, and I expect you will be pleased, just as I am. In doing so,addition, we enabledelivered stock price improvement of 89% for our customers to find answersshareholders in 2021.
During 2021, we also experienced executive leadership team transitions. Our refreshed executive team brings a breadth and depth of technology experience, in addition to their toughest challenges.functional expertise, as well as experience leading successful transformations. In addition, the composition of our executive team demonstrates our commitment to, and focus on, diversity – we have achieved gender parity, added a person of color, and also have LGBTQ+ representation. I’m confident that Teradata’s experienced, diverse, and strategy focused executive leadership team, under the leadership of Steve McMillan, is the right team to guide Teradata through the next phase of our cloud and business strategy transformation.
We areOur cloud capabilities and leadership were amplified in 2021 as well. For instance, we strengthened our partnerships with the top public cloud service providers (Amazon Web Services, Google Cloud, and Microsoft Azure). In addition, we demonstrated our technology capabilities and un-paralleled enterprise scale in the midstcloud, including by our Innovation Labs proving that our scale is capable of handling the current and future data and analytics demands of all enterprises. We received many accolades this year – such as being recognized as a transformationleader in the Cloud Database Management Magic Quadrant by Gartner, as well as scoring first in four analytical use cases in Gartner’s Critical Capabilities for Cloud Database Management Systems, and being recognized by Forrester Wave as a leader in Cloud Data Warehouse.
Being a responsible corporate citizen is a crucial part of our ethos – it’s the right thing to do for our world, and it makes Teradata a subscription-based business. In 2019, Teradata continuedplace where people really want to make meaningfulwork. As you will see in this proxy statement, we made significant progress executingon our strategic objectivesESG journey during 2021:
As we progress through our transformation, we 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 Chief 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:
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As always, we execute our strategy and transform our Company, we continue to greatly value the input we receive from our investors on our progressbusiness and future direction.strategy. Shareholder engagement remains an integral part of Teradata’s business practices,a priority for Teradata, and we are in frequent communication with our largest investors on key business matters, including our strategic direction, corporate governance practicesexecutive compensation, and executive compensation. Moreover, ourESG activities and practices. Our executive compensation program has been designed and continues to evolve in a manner that addressesreflect the feedback provided through our shareholder outreach efforts.efforts and received high-level support pursuant to last year’s say-on-pay vote. Our goal is to continue to connect pay and performance and enhance the alignment of our executive compensation program with your long-term interests.
Our Board of Directors, remainsconsisting of a diverse set of highly accomplished and experienced leaders, is committed to ensuring that it includes a highly qualified and diverse group of directors who are well-equipped to oversee the successengaged oversight of Teradata’s business, and effectively represent your interests.acting in the best interests of our shareholders and other key stakeholders. We encourage you to review the qualifications, skills and experience that each of our directors contributes to our Board of Directors, including as described beginning on page 4part of the qualifications matrix that we have included in the proxy statement this proxy statement.year.
Mr. LundMcMillan and I look forward to your 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 arewe encourage and welcome to share your thoughts or concerns with usshareholder feedback on any topic.topic related to the Company. Communications can be addressed to directors in care of the Chief Legal Officer and Corporate Secretary, Margaret A. Treese, at 17095 Via Del Campo, San Diego, California 92127 or by email at the address listed above.to investor.relations@teradata.com.
Every vote is important. Whether or not you plan to virtually attend the annual meeting, I urge you to authorize your proxy as soon as possible so that your stockshares may be represented at the meeting.
We value your support and thank you for joining Teradata on this transformational journey.
Sincerely,
Michael P. Gianoni
Chairman of the Board
NOTICE OF VIRTUAL ANNUAL MEETING
OF STOCKHOLDERS
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TIME
8:00 a.m. | DATE
Tuesday, May | PLACE
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* 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.
Purpose
Elect Messrs. Fu and Gianoni and Ms. Nelson and Messrs. Fishback and KeplerOlsen to serve as Class IIII directors for three-year terms expiring at the 20232025 annual meeting of stockholders and to hold office until their respective successors are duly elected and qualified;
Consider an advisory(non-binding) vote to approve executive compensation (a“say-on-pay” vote);
Consider and vote upon the approval of Amendment No. 1 to the Teradata 2012 Stock Incentive Plan;
Consider and vote upon the ratification of the appointment of our independent registered public accounting firm for 2020;2022; 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 Information
| • | We will hold a virtual annual meeting. Stockholders will be able to listen, vote and submit questions from their home or from any remote location that has internet connectivity. There will be no physical location for stockholders to attend. Stockholders may participate online by logging in at www.virtualshareholdermeeting.com/TDC2022. We believe that this format is appropriate for the health and safety of our stockholders, employees, and directors and will facilitate stockholder attendance and participation. Please refer to “Other General Information” for more information about attending the virtual meeting. |
Record holders of Teradata common stock at the close of business on March 6, 2020,14, 2022 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 virtual meeting, please submit a proxy to ensure that your shares are represented at the meeting.
Internet Availability
Important Notice Regarding the Availability of Proxy Materials for the 2020 Annual Meeting2022 annual meeting of Stockholdersstockholders to be held on May 5, 2020:10, 2022: This notice of the 20202022 annual meeting of stockholders and proxy statement, our 20192021 annual report, and form of proxy and voting instruction card are available athttps://www.proxyvote.com.
By order of the Board of Directors,
Margaret A. Treese
Deputy General CounselChief Legal Officer and Secretary
March 20, 202023, 2022
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This summary highlights information contained elsewhere in the proxy statement that is being provided to you by Teradata Corporation (“Teradata,” the “Company,” “we,” or “us”) in connection with its 20202022 annual meeting of stockholders. This summary is not a complete description, and you should read the entire proxy statement carefullybefore voting.
This proxy statement contains important information about the 20202022 annual meeting of stockholders, as well as information regarding the voting process, director elections, our corporate governance programs, and executive and director compensation, and other environmental, social and governance (“ESG”) matters, among other things. We are furnishing this proxy statement together with our 20192021 annual report and form of proxy and voting instruction card (“proxy card”). We intend to send a Notice Regarding the Availability of Proxy materialsMaterials for the 2020 annual meeting and make proxy materials available to stockholders (or for certain stockholders, and for those who request, a paper copy of stockholders are being made available in printed formthis proxy statement and proxy card) on or about March 23, 2020, and they will be available online on or about March 26, 2020.2022. On behalf of the Teradata Board of Directors, we are requesting your proxy for the 20202022 annual meeting of stockholders and any adjournments or postponements that follow.
Business Overview
Teradata Corporation is a provider of a leading connected multi-cloud data platform for enterprise analytics, focused on helping companies leverage all their data across an enterprise, at scale. In doing so, we help companies to find answers to their toughest business challenges. All of our efforts are in support of our purpose of transforming how businesses work and people live through the power of data. Our data platform, Teradata Vantage™, allows companies to leverage all of their data across an enterprise, whether in public or private clouds, on-premises, or in a multi-cloud environment. It is designed to connect multiple sources of data to drive ecosystem simplification, deliver multi-dimensional scale and integration, and support customers on their journey to the cloud through an integrated migration. Teradata Vantage also contains a secure, highly concurrent and resilient analytics engine that addresses the scalability demands of our target market, the global 10,000 enterprises. Vantage is an open platform offering full integration of datasets, tools, analytical languages and functions, including leading commercial and open source technologies. Teradata operates from numerous locations within the United States with the primary locations being San Diego, California, and Atlanta, Georgia. In addition, we have sales, services, research and development, and administrative offices located in 32 countries.
At Teradata, we are:
2021 Financial Highlights vs. Prior Year
ANNUAL RECURRING REVENUE (“ARR”) YEAR-OVER-YEAR GROWTH(1) |
PUBLIC CLOUD ARR YEAR- OVER-YEAR GROWTH(2) |
TOTAL RECURRING REVENUE YEAR-OVER-YEAR GROWTH | 76% RECURRING REVENUE AS A % OF TOTAL REVENUE
YEAR-OVER-YEAR AS A % OF TOTAL REVENUE GROWTH | |||
$1.30 GAAP EPS
| $2.43 NON-GAAP EPS(3)
| $432 MILLION FREE CASH FLOW(3)
FROM 2021 |
| (1) | ARR is defined as the annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance. ARR does not include managed services and third-party software. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q. |
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Proxy Summary
| (2) | Public cloud ARR is defined as the annual value at a point in time of all contracts related to public cloud implementations of Teradata Vantage and does not include ARR related to private or managed cloud implementations. Teradata believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q. |
| (3) | Non-GAAP EPS and free cash flow are non-GAAP financial measures. Please refer to the Investor Relations section of our website for the investor presentation for the fiscal year ended December 31, 2021 for definitions and reconciliations to the GAAP financial measures. |
Voting Methods – Your Vote is Important!
Even if you plan to attend the 20202022 annual meeting of stockholders in person,virtually, we urge you to vote in advance of the meeting using one of these advance voting methods.
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By Internet: www.proxyvote.com | By Phone: 1-800-690-6903 | By Mail: 51 Mercedes Way Edgewood, NY 11717
| By Mobile Device: Scan the QR code on your | |||||||||
20202022 Virtual Annual Meeting Information
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| May 10, 2022 at 8:00 a.m. (Pacific Time) | ||
| Format: | We will hold a virtual annual meeting. Stockholders will be able to listen, vote and submit questions from their home or from any remote location that has internet connectivity. We believe that this format is appropriate for the health and safety of our stockholders, employees, and directors and provides the opportunity for broader stockholder attendance and participation, while reducing the costs and environmental impact associated with planning, holding and arranging logistics for an in-person meeting. | |
| Record Date: | All common stockholders of record as of March | |
| Admission: | Attend the annual meeting online, including to vote and/or submit questions, at www.virtualshareholdermeeting.com/TDC2022. You will need | |
| Logistics: | We encourage you to access the annual meeting prior to the start time. Please allow ample time for online check-in, which will begin at 7:45 a.m. Pacific Time. We will offer live technical support during the meeting. If you encounter any technical difficulties accessing the meeting, please call 844-986-0822 (US) or 303-562-9302 (International). | |
| Voting During Meeting: | Stockholders should follow the instructions to vote during the annual meeting at www.virtualshareholdermeeting.com/TDC2022. Shares held in your name as the stockholder of record may be voted electronically during the annual meeting. Shares for which you are the beneficial owner also may be voted during the annual meeting. However, even if you plan to attend the virtual annual meeting, the Company recommends that you vote your shares in advance, so that your vote will be counted if you later decide not to attend the virtual annual meeting. | |
| Asking Questions: | Stockholders may submit a question online during the meeting at www.virtualshareholdermeeting.com/TDC2022. We will answer questions as time permits at the meeting. Rules governing the conduct of the annual meeting (including the question and answer session) will be posted on the virtual meeting platform along with an agenda. | |
| Post Meeting: | Following the meeting, we will post to the Investor Relations section of our website (www.teradata.com) a replay of the annual meeting (including the question and answer session). We will include the results of the votes taken at the meeting in a quarterly report on Form 10-Q or a current report on Form 8-K, as applicable, which will also be posted to the Investor Relations section of our website. 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. | |
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Proxy Summary
Meeting Agenda
MATTER | BOARD VOTE RECOMMENDATION | |||||
Proposal 1 | Consider and vote upon the election of Messrs. Fu and Gianoni and Ms.
| FOR each nominee | ||||
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Proposal 2 | Consider an advisory(non-binding) vote to approve executive compensation (a“say-on-pay” vote)
| FOR | ||||
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Proposal 3 | Consider and vote upon the approval of Amendment No. 1 to the Teradata 2012 Stock Incentive Plan | FOR | ||||
Proposal 4 | Consider and vote upon the ratification of the appointment of our independent registered public accounting firm for
| FOR |
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2019 Financial Highlights vs. Prior Year
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Board of Directors
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Daniel R. | I | Director | |||||||
| I | President and Chief Executive Officer and Director | |||||||
Kimberly K. | I | Director | |||||||
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Lisa R. Bacus | II | Director | |||||||
Timothy C.K. Chou | II | Director | |||||||
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John G. Schwarz | II | Director | |||||||
Cary T. Fu* | III | 73 | Director | ||||||
Michael P. Gianoni* | III | 61 | Chairman | ||||||
Joanne B. Olsen* | III | 63 | Director | ||||||
* 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.
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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 2020 annual meeting, the terms for the directors in Classes I, II and III of the Board of Directors expire in 2020, 2021 and 2022, respectively.
Ms. Nelson and Messrs. Fishback, Kepler, and Stavropoulos currently are Class I directors whose terms are expiring at the 2020 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 2023 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 instruct otherwise on your proxy. Each of the nominees is 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 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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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 election. If a nominee does not receive a majority vote, he or she is required to tender his or her resignation for consideration by the disinterested members of the Board of Directors in accordance with our Corporate Governance Guidelines as described on page 12 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 twelve members who we believe are extremely well-qualified to serve on the board and represent our stockholders’ best interests. As described on 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
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Proxy Summary
Governance Highlights
Teradata has adopted many governance practices that establish strong independent leadership in our boardroom and provide our stockholders with meaningful rights, including:
INDEPENDENT BOARD • 8 of 9 are independent directors • All audit, compensation, and governance committee members are independent |
DIVERSE AND QUALIFIED BOARD AND MANAGEMENT • Extensive executive experience at global, public companies • Knowledge of software and technology industries, including cloud-based technologies • Gender and ethnic diversity |
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SEPARATE CEO AND CHAIR ROLES • Independent non-executive Chairman |
BOARD REFRESHMENT AND SUCESSION PLANNING • 4 new independent directors in the past 5 years • Ongoing succession planning | |||||||
REGULAR EXECUTIVE SESSIONS of independent directors at board and committee meetings |
INDEPENDENT COMPENSATION CONSULTANT engaged to advise on compensation of our executives and directors | |||||||
ACTIVE BOARD OVERSIGHT • Strategy • Risk and operational plans, including ESG matters |
ROBUST STOCK OWNERSHIP GUIDELINES for directors and executive officers | |||||||
ANTI-HEDGING/PLEDGING AND CLAWBACK POLICIES prohibitions on hedging and pledging, stock compensation clawback, and anti-harmful activity policies |
ONGOING results in impactful changes to executive compensation and corporate governance programs and informs on ESG initiatives | |||||||
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Election of DirectorsProxy Summary
Environmental, Social and Governance (ESG) Highlights
 | ESG Governance and Disclosures | |||||||
• Formed cross-functional Corporate Citizenship Council with Chief Legal Officer and Chief Financial Officer as executive sponsors to enhance our ESG program and to provide enterprise-wide oversight to our ESG efforts and disclosure • Updated board committee charters to provide clarity as to oversight for various ESG topics and to ensure alignment with best practices and our corporate strategy • Launched enterprise-wide materiality assessment conducted by external third-party with expertise in ESG • Conducted benchmarking analysis with external third-party with expertise in ESG • Enhanced ESG disclosures with refreshed ESG report • Launched refreshed ESG website • Incorporated ESG messaging into 2021 Investor Day and other investor and stakeholder content | ||||||||
 | Diversity, Equity, and Inclusion (DEI) | |||||||
• Received a perfect score of 100% on the Human Rights Campaign Foundation’s Corporate Equality Index and designated as one of the Best Places to Work for LGBTQ+ Equality • Added coverage for domestic partners to employee benefit plans • Received Best Company / Technology Company for Women ratings from Fairygodboss • Executive team pledged commitment to DEI and anti-racism • DEI Advisory Board remained active and helped establish a Zero-Tolerance for Racism section as part of our Global Policy Against Discrimination, Harassment, and Bullying • Added an Anti-Racism section to the Code of Conduct • Sponsored Diversity in Technology Scholarship for underrepresented students • Continued the Culture Learning Lab, Inclusion Leadership Learning Lab, and Diversity Dialogues programs • Continued to operate under the policy promoting use of small businesses, minority, women, veteran, and LGBTQ+ owned business enterprises as sources of supply • Recognize Juneteenth and Martin Luther King Day as corporate holidays in the United States | ||||||||
 | Doing Good With DataTM | |||||||
• Worked directly with agencies to leverage data analytics to predict where new outbreaks of the COVID-19 virus are likely to occur, pinpoint populations most at risk, and estimate which resources will be needed in specific geographies • Continued partnership with nonprofit organizations to match data scientists with social agencies, civil groups, and non-governmental agencies | ||||||||
• Teradata Cares volunteer program • Annual Days of Caring • Charitable giving matching program • Additional giving committed for social injustice causes in 2021 |
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 | Environmental Stewardship | |||||||
• Affirmed carbon net-zero commitment and developing plans on when and how it will be achieved • Committed to environmental sustainability in our products, supply chain, and facilities • Established Greenhouse Gas (GHG) management program goal of 100% improvement in reduction of Scope 1 and Scope 2 GHG emissions by 2033 • Adopted Flexible Work model that provides employees choice of fully remote or hybrid work locations allowing us to continue to reduce our real estate footprint and significantly reduce commuting activities by our employees | ||||||||
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Recognition and Ratings | ||||||||
• Named as one of the Best Places to Work for LGBTQ+ Equality • Received Best Company / Technology Company for Women ratings from Fairygodboss • Named a World’s Most Ethical Company by The Ethisphere Institute in 2022 for 13th straight year • Named to Dow Jones Sustainability North American Index for Software and Services for 12th straight year; also named to Dow Jones Sustainability World Index • Received high ISS Quality Score: |
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• Governance: 2 • Environmental: 1 • Social: 2 | ||||||||
• Attained MSCI ESG GovernanceMetrics rating of AA • Received Sustainalytics “Low” ESG risk rating | ||||||||
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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 2022 annual meeting, the terms for the directors in Classes I, II and III of the Board of Directors expire in 2023, 2024 and 2022, respectively.
Messrs. Fu and Gianoni and Ms. Olsen currently are Class III directors whose terms are expiring at the 2022 annual meeting.
For the reasons described below, each of the Class III directors has been nominated by the board for re-election through the 2025 annual meeting of stockholders and until their respective successors are elected and qualified.
Proxies solicited by the board will be voted for the election of the nominees, unless you instruct otherwise on your proxy. Each of the nominees is willing to serve if elected. The board has no reason to believe that these nominees will be unable to serve. However, if any one of them should 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.
| The Board of Directors recommends that you vote FOR the election of each of the Class III 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 election. If a nominee does not receive a majority vote, he or she is required to tender his or her resignation for consideration by the disinterested members of the Board of Directors in accordance with our Corporate Governance Guidelines. 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 nominees 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 and Attributes
Our Board of Directors currently consists of nine members whom we believe are extremely well-qualified to serve on the board and represent our stockholders’ best interests. As described 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 diversity of experiences, expertise and backgrounds, including but not limited to, racial, ethnic and gender diversity,
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.
We believe that each of the director nominees and other directors bring these qualifications to our Board of Directors. Moreover, as reflected in the below qualifications matrix, 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, theexperience, and gender, racial and ethnic diversity.
| 6 | 2022 PROXY STATEMENT |
Election of Directors
| Stephen McMillan | Lisa R. Bacus | Timothy C.K. Chou | Daniel R. Fishback | Cary T. Fu | Michael P. Gianoni | Kimberly K. Nelson | Joanne B. Olsen | John G. Schwarz | ||||||||||
Qualifications and Expertise | ||||||||||||||||||
Cloud technology, data analytics, and/or software as a service expertise | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Executive leadership experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||
Financial/Accounting literacy | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Global business experience | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||
Sales, marketing, or branding background | ✓ | ✓ | ✓ | ✓ | ||||||||||||||
Tenure and Independence | ||||||||||||||||||
Tenure (as of annual meeting) | 1 | 7 | 5 | 5 | 13 | 7 | 2 | 3 | 11 | |||||||||
Independent | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||
Demographics (Self-Identification) | ||||||||||||||||||
Gender Identity | M | F | M | M | M | M | F | F | M | |||||||||
Asian (excluding Indian/South Asian) | ✓ | ✓ | ||||||||||||||||
Hispanic/Latinx | ✓ | |||||||||||||||||
Caucasian/White | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||
The board believes that each of the director nominees and other directors hashave 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 describesbiographies describe 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.above. Based on all of these qualifications and attributes, we believe that the directors and nominees have the appropriate set and complement of skills to serve as members of the board.
20202022 Director Nominees
Class I — Current Terms Expiring in 2020:
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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.
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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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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:
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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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Election of Directors
Class II — Current Terms Expiring in 2021:
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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 on the board of The Dow Chemical Company/DowDuPont, Inc., from 2001 until February 2019, and Ingredion Incorporated, from 2002 until 2014. He joined our board in September 2007.
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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.
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Election of Directors
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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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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 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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Election of Directors
Class III Nominees — Current Terms Expiring in 2022:
CARY T. FU | Co-founder and retired Chairman
| Director since: 2008 |
Key Qualifications and Attributes:
• Experience as the chief executive officer and chairman of the board of a global, publicly-traded 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 perspectives given Taiwanese heritage and years of experience doing business in Asia
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Biography:
Mr. Fu, age 71,73, 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.
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Election of Directors
MICHAEL P. GIANONI | Chairman of the Board of Teradata Corporation President and Chief Executive Officer of Blackbaud, Inc.
| Director since: 2015 |
Key Qualifications and Attributes:
• Experience as the president and chief executive officer of a global, publicly-tradedsoftware-as-a-service company
• Strong operational and leadership skills and business acumen
• Proven track record driving financial performance improvement
• Deep software industry knowledge
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Biography:
Mr. Gianoni, age 59,61, is the President and Chief Executive Officer of Blackbaud, Inc., a provider of cloud-based 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
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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 Support, Oracle Corporation
| Director since: 2018 |
Key Qualifications and Attributes:
• Extensive experience within the software and technology industries
• Senior executive leadership of cloud-based solutions and services
• Diverse perspectives given gender and global management experience
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Biography:
Ms. Olsen, age 61,63, served as the Executive Vice President, Cloud Services and Support at Oracle Corporation, a worldwideglobal 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.
| 8 | 2022 PROXY STATEMENT |
Election of Directors
Class I — Current Terms Expiring in 2023:
DANIEL R. FISHBACK | Co-Chief Executive Officer and Chairman of the Board of Directors of UserZoom | Director since: 2017 |
Key Qualifications and Attributes: • Experience as the chief executive officer of a global, publicly-traded company in the software-as-a service industry • Strong leadership skills and a proven track record driving financial growth and product development • Technology industry expertise, including cloud-based technologies |  | |||||
Biography:
Mr. Fishback, age 60, has served as Co-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 cloud-based 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.
STEPHEN MCMILLAN | President and Chief Executive Officer of Teradata Corporation | Director since: 2020 |
Key Qualifications and Attributes: • Experience as Teradata’s President and Chief Executive Officer • Extensive knowledge of the Company’s operations, strategy, customers, and financial position • Experience as a seasoned technology executive with a track record of transforming enterprise product and services businesses into industry-leading cloud portfolio offerings • Expertise in cloud-based technologies |  | |||||
Biography:
Mr. McMillan, age 51, is Teradata’s President and Chief Executive Officer and has served in this role since joining the Company in June 2020. Previously, he served as the Executive Vice President of Global Services for F5 Networks, Inc., a transnational company that specializes in application services and application delivery networking, from October 2017 when he joined F5 until May 2020. Prior to joining F5, from September 2015 until October 2017, he was Senior Vice President, Customer Success and Managed Cloud Services at Oracle Corporation, a global software and services company, where he was responsible for developing, overseeing, and expanding a customer success organization focused on the company’s strategic SaaS portfolio. From May 2012 to September 2015, he served as Senior Vice President, Managed Cloud Services at Oracle. Prior to joining Oracle, Mr. McMillan spent 19 years at IBM, where he held a number of leadership roles focused on global managed services, consulting, and IT. He joined our board in June 2020.
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Election of Directors
KIMBERLY K. NELSON | Executive Vice President and Chief Financial | Director 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 financial expertise |  | |||||
Biography:
Ms. Nelson, age 54, 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 micro-cap public company. She joined our board in November 2019.
Class II — Current Terms Expiring in 2024:
LISA R. BACUS | Retired Executive Vice President and Chief Marketing Officer for Cigna Corporation | Director since: 2015 |
Key Qualifications and Attributes: • Deep marketing expertise with focus on strategic planning and data analytics, in-depth knowledge of communication and marketing strategies and customer service operations • Experience as senior executive of large global companies • Diverse perspectives given gender and Hispanic heritage |  | |||||
Biography:
Ms. Bacus, age 58, 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 also serves on the boards of Selective Insurance Group, Inc. and Douglas Dynamics, Inc. and on the board of privately-held Culver Franchising System, Inc., as well as a number of non-profit corporations, and previously served on the board of Shoutlet, Inc., a privately-held company. Ms. Bacus joined our board in January 2015.
| 10 | 2022 PROXY STATEMENT |
Election of Directors
TIMOTHY C.K. CHOU | Former President of Oracle On | 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 including Forbes, Business Week, The Economist, and The New York Times as well as on CNBC and NPR • Extensive experience with startup companies in both workflow and analytic cloud-based applications • Diverse perspective given Chinese heritage and experience in teaching at universities in the US and China |  | |||||
Biography:
Dr. Chou, age 67, 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 Accelerator, 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.
JOHN G. SCHWARZ | Co-Founder and Chairman of the | Director since: 2010 |
Key Qualifications and Attributes: • Extensive experience within the software and technology industries, including as the chief executive officer and director of global, analytics 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 |  | |||||
Biography:
Mr. Schwarz, age 71, is the co-founder and Chairman of the Board of Visier Inc., a business analytics cloud-based software firm, a position he has held since 2010. From 2010 until May 2020, he served as the Chief Executive Officer at Visier. 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 provided business-to-business secure e-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 PLC, 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.
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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ADDITIONAL INFORMATION CONCERNING THE BOARD OF DIRECTORSOUR CORPORATE GOVERNANCE
Corporate GovernanceOverview
Our Board of Directors is elected by the stockholders to governprovide oversight for the management of our business. The board selects the senior management team, who is charged with conducting our business, and acts as an advisor to senior management, monitors its performance, and approves its compensation. Our Board of Directors engages in active discussion and oversight of the 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 succession, overseeing the integrity of our financial statements, and monitoring 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 |
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| Separate CEO and board chair roles | |||
| Independentnon-executive Chairman of the Board | |||
| Four new experienced independent directors added in the last | |||
| Average board tenure of | |||
| Executive sessions of independent directors scheduled at every regular board meeting | |||
| Limit on additional board service (no continuing director currently sits on more than | |||
| Directors possess highly relevant experience and knowledge | |||
Executive Best Practices |
| Emphasison performance-based and long-term equity incentives
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| 2021 and 2022 long-term equity | |||
| Prohibitions on hedging and pledging Company stock by executive officers and directors | |||
| Clawback and harmful activity policies | |||
| Annual advisory vote on compensation | |||
| Annual incentive compensation is capped | |||
| Approved by a fully-independent board committee using an independent consultant
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Stockholder
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| Significant Teradata stock ownership by officers and directors and strong stock ownership guidelines
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Stockholder Rights |
| Majority vote standard for election of directors | ||
| No poison pill in place | |||
| Proxy access bylaw permits eligible stockholders to nominate candidates for election to the board
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Additional Information Concerning the Board of DirectorsOur Corporate Governance
Investor and Shareholder Outreach
Shareholder engagementEngagement with existing stockholders and potential investors is an important part of our business practices, and we greatly value the input we receive from our shareholders.stockholders in addition to the quarterly meetings between management and the analysts that cover Teradata. Teradata Investor Relations and members of Teradata management are in frequent communication with shareholdersstockholders on a variety of matters, including strategy, operations, corporate governance, ESG practices, and executive compensation.compensation as part of a year-round engagement process described below:
Teradata has engaged in a robust shareholder outreach effort for many years to better understand and address any concerns shareholders might have relating to the Company’s executive compensation program. This 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 shareholders during the outreach process.
| We reach out to our largest investors to engage in discussions regarding issues that are important to them and to seek their input on executive compensation, corporate governance, and ESG matters. Our outreach team includes Investor Relations, Executive Compensation and Corporate Governance representatives from Teradata’s management team, including the Chief Legal Officer and, if requested, independent directors of the board. | 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 described below on page 36part of the Compensation Discussionproxy solicitation process, and Analysis sectionfollowing our 2021 annual meeting, we continued our practice of this proxy statement, this engagement has been very productivesoliciting input from our largest 25 institutional investors, representing over 80% of our outstanding shares, and informative. Accordingly, shareholders’ interests have been taken into consideration in establishing or maintaininganswering their questions regarding a numbervariety of meaningful aspectstopics of interest to Teradata’sthem, such as, the design of our executive compensation program, board diversity and corporate governance framework as well as advancing our thinking on environmentalsuccession planning, and socialESG matters. We have also enhanced our disclosures in
The feedback we received from investors through this proxy statement based on input provided through our shareholder engagement process particularlywas positive and constructive. This feedback was reported to our board. We will continue to engage with our stockholders in order to receive any feedback they may have regarding the Company.
Say-On-Pay Results
Teradata received strong support from our stockholders for our executive compensation program, with a 92% favorable “Say-On-Pay” vote at our 2021 annual meeting. The board’s Compensation Discussion and AnalysisHuman Resource Committee views this strong result as confirmation that our compensation program is appropriately structured to support our strategic initiatives and Corporate Responsibility and Sustainability sections.reflects our pay-for-performance commitment.
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. Our Corporate Governance Guidelines provide, among other things, that:
The guidelines were updated in February 2020, to implement our policy with respect to the separationboard believes at least two-thirds of the rolesdirectors should meet the criteria for independence required by law, the SEC and the NYSE listing standards (as detailed in the Corporate Governance Guidelines);
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Our Corporate Governance
Directors are elected under a majority vote standard and any director that does not receive a majority vote is required to promptly submit an offer to resign as a director;
No director who is an active CEO of ouranother public company may sit on the board of directors of more than two other publicly held companies, and no other director may sit on the board of more than four publicly held companies, in each case without the approval of the Committee on Directors and Governance;
The positions of Chairman of the Board and Chief Executive Officer. Officer should be held by separate persons and, 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’sCEO will annually review with the board top management succession plans, including development plans for succession candidates, and will periodically review with the board an emergency leadership preparedness plan applicable in the event the CEO unexpectedly becomes incapacitated or otherwise is unable to serve; and
The board conducts an annual self-evaluation and the Committee on Directors and Governance oversees the annual evaluation of the performance of each committee of the board.
From time to time the Board of Directors, upon recommendation of the Committee on Directors and Governance, reviews and updates our Corporate Governance Guidelines as appropriate. Our Corporate Governance Guidelines are found on our corporate governance website athttps://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. Our independent Lead Director presided at these executive sessions 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, which are reflected in 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)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:
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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,
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Additional Information Concerning the Board of Directors
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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 Mmes.Mses. Bacus, Nelson and Olsen and Messrs. Chou, Fishback, Fu, Gianoni, Kepler, Ringler,and Schwarz, and Stavropoulos, meet the NYSE listing independence standards and our independence standards for the board and the committees on which they serve. There were no transactions, relationships or arrangements in fiscal year 20192021 that required review by the board for purposes of determining director independence.
Board Leadership Structure
In February 2020, we amended ourOur Corporate Governance Guidelines to adopt a policy providingprovide that the positions of Chairman of the Board and Chief Executive OfficerCEO should be held by separate persons. Our Corporate Governance Guidelines do not require that our Chairman be independent. In the event the Chairman of the Board is not independent, the Boardboard will designate a Lead Director who is an independent,non-employee Director.director. The board believes that this leadership structure, separating the positions of Chairman and Chief Executive Officer,CEO, best serves the interests of Teradata and its stockholders and demonstrates our commitment to strong corporate governance practices.
Concurrent with this policy change, Mr. Gianoni was appointedis ournon-executive Chairman of the Board, succeedingBoard. Mr. Lund, who is continuing as a director andMcMillan, our Interim President and CEO. With his appointment asnon-executive Chairman of the Board, Mr. Gianoni is no longer serving as our independent Lead Director. Mr. Lund, our Interim CEO, is the only member of the board who is not 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 our 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. Gianoni.
| 14 | 2022 PROXY STATEMENT |
Our Corporate Governance
Board Oversight of Risk
Management is responsible for the Company’sday-to-day risk management activities (including the identification, assessment, and mitigation of risks), 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
We engage in an enterprise risks, including our operations and strategic direction, as well as the adequacy of our risk management process, which is coordinated primarily through our internal audit function, and involves:
identification by the executive team and other senior leaders of the risks relevant to Teradata;
to the extent prudent and feasible, development of strategies and plans to monitor, mitigate and control such risks; and
reports of the identified risks as part of the applicable strategy review or separately as a particular risk review, as considered necessary, to the board and/or relevant board committee, as applicable.
The board’s oversight of these risks primarily occurs in connection with the exercise of its responsibility to oversee our business, including through the review of our business transformation, long-term strategic plans, annual operating plans, financial results, material legal proceedings, and executive succession plans. In addition, during fiscal 2021, the board and its committees reviewed and approved the allocation of responsibilities among the various board committees to further facilitate its oversight of our ESG efforts, initiatives and progress, with the board having oversight for the overall risk management system.ESG strategy and its alignment with our business strategy. 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 increasingincreases 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 transformation, go-to-market activities, product and product development activities, 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, including major risk exposures such as financial, cybersecurity, privacy and discussing with management – particularly, the Chief Financial Officer; the Vice President, Information Systems; the Vice President, Enterprise Riskdata protection, operational, sustainability and Assurance Services;other ESG risks, and legal and regulatory, and the Chief Ethics, Compliance & Privacysteps management has taken to monitor and control such exposures; quality and integrity of financial reports; compliance with applicable legal and regulatory requirements; quality and performance of our external auditor; our general policies and procedures regarding accounting and financial matters and internal controls; and our code of conduct and ethics program, including whistleblower updates, if any;
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Additional Information Concerning the Board of Directors
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;
the Compensation and Human Resource Committee (the “Compensation Committee”) annually receives reports and discusses with management risks relating to executive compensation, people management activities, including talent acquisition, retention management and development, corporate culture and employee engagement; and diversity, equity, and inclusion practices; and
through management updates and committee reports,the Governance Committee assists the board monitorswith oversight of our risk managementcorporate governance framework, board effectiveness, board composition and succession planning, and ESG program, including related program activities, including the enterprise risk management process, risks relatingpublic disclosure, and shareholder feedback with respect to our compensation programs,corporate responsibility, human rights, environmental stewardship, community outreach, and financial and operational risks being managed by the Company.philanthropy.
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
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Our Corporate Governance
our annual users’ conference (Teradata Universe) and our investor dayInvestor 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.
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 criteriaCriteria used when assessing the qualifications ofin our succession planning for potential CEO successors include, among others:
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Additional Information Concerning the Board of Directors
As more fully discussed under the heading “CEO Transition and New 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 successful transformation.
Code of Ethics
We have a Code of Conduct that sets the standard for ethics and compliance for all of our directors, and employees, including our officers, directors, chief accounting officer, and corporate controller. Our Code of Conduct is available on our corporate governance website athttps://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) Reports
| 16 | 2022 PROXY STATEMENT |
To
Our Corporate Governance
Political Activities
Teradata’s Political Activities Policy Statement reinforces and declares our commitment to responsible corporate citizenship while also complying with applicable laws and related regulations regarding the bestuse of corporate resources in connection with political activities.
We generally encourage our knowledge,employees to feel free to participate in 2019 all of our executive officerspermitted political activities where they live and directors timely filed the reports required under Section 16(a)work, provided such activities occur solely in an individual and private capacity and not on behalf of the Securities Exchange ActCompany. In furtherance of 1934, exceptthese principles, the Political Activities Policy Statement provides that Scott Brown, our Chief Revenue Officer, filed one late report due to an inadvertent administrative oversight by the Company.Company and its affiliates will not make political contributions, or use any corporate funds or assets, for any candidates or political parties, including campaign committees and funds, caucuses, independent expenditure committees, or special interest groups engaged in lobbying activities. It further provides that employees who engage in partisan political activities, including the election process, must do so solely on their own behalf and not on the Company’s behalf or using Teradata resources.
Meetings and Meeting Attendance
The Boardboard 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 methad an opportunity to meet 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 3021 times last year. In 2019,2021, 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 except for Ms. Nelson, who joined our Board in November 2019 and attended two out of three meetings.serves. 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 20192021 virtual annual meeting of stockholders, except Ms. Nelson who did not join our board until November 2019.stockholders.
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 othersuch 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
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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 We 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 aperiodically review our director for the following reasons:commitment policies.
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Selection of Nominees for Directors
The Board of Directors and the Governance Committee areis 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 athttps://www.teradata.com/governance-guidelines.
In determining candidates for nomination, the Governance Committee will seek the input of the Chairman of the Board, the CEO and other directors, anddirectors. In addition, the Governance Committee will consider individuals recommended for board membership by our stockholders in accordance with our bylaws and applicable law. law and may consider candidates put forth by external search or placement firms and/or formally engage such firms to assist it in identifying and evaluating qualified nominees.
In general, we desire to have a balanced group of directors who can perpetuate the Company’s long-term success and represent stockholder interests generally through the exercise of sound business judgment based 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 desired composition of the board as a whole and the Company’s current and future needs.
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Our Corporate Governance
The Governance Committee and the board are committed to having a Board of Directors that is diverse from a gender, race and/or ethnicity perspective and will look to add individuals to our board that have such diversity attributes, along with requisite experience, to further bolster the diversity of our board as opportunities arise. Although we do not have a formal diversity policy, the Governance Committee and the board also consider the desirability of diversity from under-represented communities, including women, people of color and different ethnicities, and LGBTQ+. The board also values diverse perspectives from different business and professional experiences, skills, backgrounds, geographical representation, and education, as well as gender, race or ethnic diversity. In addition, while theeducation.
While our 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,Once a proposed candidate is identified, the Governance Committee engagedmay solicit the outside search firmviews of Spencer Stuart LLPvarious board members, our CEO, and any other individuals it believes may have insight into a particular candidate. The Governance Committee may designate one or more of its members and/or other board members to assist it in identifying and contacting qualified candidates, andinterview any proposed candidate. The Governance Committee then will recommend a director nominee to the board decided to expandbased on its size by appointing Ms. Nelson as a new director in 2019. In addition to her other qualifications, the boardevaluation of directors considered diversity in its election of Ms. Nelson, including the value of adding additional gender diversity to our board of directors. such criteria.
As described under the caption “Director Qualifications” on pages 4 to 5 of this proxy statement,Qualifications and Attributes”, we believe our current directors represent a highly qualified and capable board with very diverse perspectives and balanced tenure.
If you are a stockholder and wish to recommend individuals for consideration as directors, you can submit your suggestions in writing to our Corporate Secretary as outlined in our bylaws. Under our bylaws, you 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
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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 athttps://www.teradata.com/articles-and-bylaws. See “Procedures for Stockholder Proposals and Nominations” on page 71 of this proxy statement for further details regarding how to nominate directors.
The directors nominated by the Board of Directors for election at the 20202022 annual meeting were recommended by the Governance Committee and approved by our board following the process described above. See “Director Qualifications”Qualifications and “Nominees” on pages 4 to 10 of this proxy statementAttributes” and “2022 Director Nominees” 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 20202022 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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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,
Listed below is the current membership of our board formedcommittees. Following the table is a CEO Searchsummary of each’s committee’s responsibilities. Each of the Audit Committee, to adviseCompensation and Human Resource Committee, and Committee on Directors and Governance has a charter describing its specific responsibilities, which can be found on the board in connection with the identification and appointmentcorporate governance section of a new President and CEO.our website as follows:
| • | Audit Committee: www.teradata.com/audit-committee-charter |
| • | Compensation and Human Resource Committee: www.teradata.com/compensation-committee-charter |
| • | Committee on Directors and Governance: www.teradata.com/committee-on-directors-and-governance-charter |
Board Committee Membership
| NAME | EXECUTIVE COMMITTEE | COMPENSATION AND HUMAN RESOURCE COMMITTEE | AUDIT COMMITTEE | COMMITTEE ON DIRECTORS AND GOVERNANCE | ||||||||||||||||
Stephen McMillan |  | |||||||||||||||||||
Lisa R. Bacus | | |||||||||||||||||||
Timothy C.K. Chou | | |||||||||||||||||||
Daniel R. Fishback | | | * | |||||||||||||||||
Cary T. Fu | | E | ||||||||||||||||||
Michael P. Gianoni | | * | | * | ||||||||||||||||
Kimberly K. Nelson | | | *E | |||||||||||||||||
Joanne B. Olsen | | |||||||||||||||||||
John G. Schwarz | | |||||||||||||||||||
Number of Meetings in 2021 | 0 | 5 | 6 | 5 | ||||||||||||||||
| * | Committee Chair |
| E | Audit Committee Financial Expert |
Audit Committee
The Audit Committee is the
Acts as principal agent of the Board of Directorsour board in overseeing our accounting and financial reporting processesprocess, disclosure controls and procedures, 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.
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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;controls.
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 and performance of our chief audit executive;
discussesDiscusses with management and theour independent registered public accounting firmauditor our annual audited financial statements and unaudited quarterly financial statements and recommends to our board the board that theinclusion of our annual audited financial statements be included in the Company’s annual report filing with the U.S. Securities and Exchange Commission (“SEC”);SEC.
discusses with managementResponsible for the appointment, compensation, retention, 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 preparationoversight 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 onauditor engaged to audit 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;internal control over financial reporting.
is directly responsible for oversight ofOversees our major financial and enterprise risk exposures such as, for example,(including financial, cash investments, cybersecurity, information technology, privacy and data privacy,protection, business continuity, sustainability and other ESG risks, and legal and regulatory risks,risks) and regularly discusses management’senterprise risk management program and reviews with management plans and actions related to address these areas;risks.
receives periodic reports fromOversees the qualifications and performance of our internal audit function and internal auditors, on findings of fraud, if any, and its significant findings regardingreviews with our management, our independent auditor, and the design and/or operation of internal control over financial reporting as well as management responses to such findings;auditors the internal audit plan and activities.
reviewsReviews and discusses with management our periodic SEC filings and our quarterly earnings releases;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; 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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Committees of the Board
Oversees our compliance with ethical, legal and regulatory requirements, including oversight of our ethics and compliance program. The Audit Committee has five members, Mmes. Nelsonrelies on the expertise and Olsenknowledge of management, the internal auditor, and Messrs. Chou, Futhe independent auditor in carrying out its oversight responsibilities and Kepler, eachmeets with representatives of whommanagement, the internal auditor, and the independent auditor in executive session on a regular basis.
Each Audit Committee member meets the NYSE listing independence standards, is independent under our recently-updated independence standards and is 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, each of Ms. Nelson and Mr. Fu is an “audit committee financial 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 beginning 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 July 19, 2018, can be found on our corporate governance website athttps://www.teradata.com/audit-committee-charter.
A report of the Audit Committee is set forth below on page 67 ofin this proxy statement.
Compensation and Human Resource Committee
In general, this committee (i) discharges our
Discharges the board’s responsibilitiesresponsibility relating to the compensation of our executives, (ii) provides general oversightexecutives.
Establishes the annual goals and objectives of our managementCEO, after consulting with the independent members of the board.
Evaluates our CEO’s performance and, along with the independent members of the board, determines the compensation philosophy and practices, benefit programs, and strategic workforce initiatives, (iii) oversees succession planning and leadership development activities, and (iv) reviews and approvesof our overall compensation principles, objectives and programs coveringCEO.
Evaluates the performance of our other executive officers and key management employees as well asapproves the competitiveness ofannual compensation for our totalother executive officer compensation practices.officers.
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reviews and, as needed, recommendsRecommends to our Board of Directorsboard for approval our executive compensation plans, including incentive compensation plans, and all equity-based compensation plans;plans.
overseesOversees our plans forexecutive management succession planning and leadership development and,efforts, including advising the board on an annual basis, assists the Board of Directors in reviewing and monitoring succession planning particularly with respect to the CEO;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 complianceOversees administration 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;plan.
overseesOversees the Teradata Benefits Committee to which it delegated oversightCompany’s diversity, equity, and management responsibilities for U.S.-based employee benefit plans;inclusion initiatives and other people and culture initiatives.
periodically reviews and monitors the Company’s diversity and inclusion representations and initiativesReviews stockholder feedback on a bi-annual basis; and
reviews and makes recommendations to the board with respect to stockholder approval ofour executive compensation (say-on-pay votes) and the frequency of say-on-pay votes, including review of stockholder feedback as appropriate.program.
TheEach Compensation and Human Resource Committee has four members, Ms. Bacus and Messrs. Fishback, Ringler and Schwarz, each of whom the Board of Directors has determinedmember 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 ResourcesPeople 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 ResourcesPeople Officer, provides this committee with his assessments and recommendations with respect to the amount and form of compensation for such executives.
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CommitteesIndependent Compensation Consultant. The Compensation Committee retained the human capital practice of the Board
In July 2019, this committee extended the engagement of Frederic W. Cook & Co.Aon, plc (“FW Cook”Aon”) as its outsideindependent compensation consultant throughout fiscal year 2021. The committee retained Aon 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 consultants by the committee and management include the following: (i) only the committee and its Chair can hire or fire the 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 ResourcesPeople 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 2019, management did not engageAs discussed in the outsideCompensation Discussion and Analysis section of this proxy statement, in 2021, our Human Resources department purchased compensation consultantssurveys and reports from Aon at a cost of approximately $60,000. Aon also advises our board on its director compensation program. Management also engaged with Aon affiliates for various insurance-related products and services, covering health and benefits, pension-related services, other insurance brokerage services and risk services to perform any executive compensation consulting services for the Company. Moreover, thebusiness. The Compensation and Human Resource Committee reviewed the independence of the consultantAon in light of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that the firm’sAon’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 athttps://www.teradata.com/compensation-committee-charter.
A report of the committeeCompensation Committee is set forth below on page 30 ofin this proxy statement.
| 20 | 2022 PROXY STATEMENT |
Committees of the Board
Committee on Directors and Governance
This committee is responsible
Determines and recommends to the board the director nominees for reviewingelection to our board at our annual stockholder meetings and the filling of any vacancies on our board.
Reviews board composition and succession planning.
Reviews and makes recommendation to the board regarding the composition of board committees.
Annually assesses the independence of each director.
Oversees the annual performance evaluation of the board.
Reviews the board’s corporate governance practices and procedures.
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sees that proper attention is given,Reviews and appropriate responses are made,makes recommendations to stockholder concerns regarding corporate governance matters; andthe board concerning non-employee director compensation.
overseesOversees the Company’s shareholder engagement program and ESG-related activities.
Reviews the Company’s Related Person Transactions Policy and Corporate Governance Guidelines, including the standards regarding director independence.Guidelines.
In January 2019,Each member of the Governance Committee extendedmeets the engagement of FW CookNYSE listing independence standards and our independence standards.
The Governance Committee retained Aon as its independent compensation consultant to review our director compensation program.program in 2021. The Governance Committee reviewed the independence of FW CookAon 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.
Executive Committee
The Executive 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 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 athttps://www.teradata.com/committee-on-directors-and-governance-charter.
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Committees of the Board
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
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Lisa R. Bacus
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Timothy C.K. Chou
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Daniel R. Fishback
| | | * | | |||||||||||||||||||||
Cary T. Fu
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Michael P. Gianoni
| | * | | * | | * | |||||||||||||||||||
David E. Kepler
| | | * | ||||||||||||||||||||||
Kimberly K. Nelson
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Joanne B. Olsen
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James M. Ringler
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John G. Schwarz
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William S. Stavropoulos
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Number of Meetings in 2019
| 0 | 10 | 6 | 5 | 1 | ||||||||||||||||||||
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Compensation Committee Interlocks and Insider Participation
During 2019,2021, no member of the Compensation and Human Resource Committee was a current or former officer or employee of the Company. NoneDuring 2021, 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.board, except that Mark Culhane, our former Chief Financial Officer, served as a director of UserZoom, Inc., a private company in which Dan Fishback, Chair of our Compensation and Human Resource Committee, serves as Co-Chief Executive Officer.
Communications 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, 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 athttps://www.teradata.com/contact-the-board.
| ||
OurUnder our Related Person Transactions Policy, was adopted by the Board of Directors in 2007, and the board approved minor amendments to the policy in 2013. Under this policy, the board’sGovernance Committee on Directors and Governance 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 requires our General CounselChief Legal Officer to advise the Chair of the Governance Committee of any potential related person transaction involving in excess of $120,000 of which the General CounselChief Legal Officer 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 2019,2021, there were no related partyperson transactions, between us and our officers, directors orthere are not currently any of their immediate family members or entities with which they have a position or relationshipproposed related person transactions, that required consideration bywould require disclosure under the Governance Committee.SEC rules.
| 22 |
|
CORPORATE RESPONSIBILITYENVIRONMENTAL, SOCIAL AND SUSTAINABILITYGOVERNANCE (ESG)
Our MissionPurpose
We transform how businesses work and people live through the power of data.
Our Commitment
At Teradata, we are committed to furthering our purpose by fostering a strong corporate culture, anchored in our core values and principles. Being a responsible corporate citizen is a crucial part of our ethos – it’s the right thing to do for our world, and it makes Teradata a place where people really want to work.
Our culture is one that intentionally fosterspromotes and encourages diversity, equity and inclusion and diversity,(“DEI”), operating in a sustainable manner, and giving back to the communities in which we operate. We are committed to a diverselive and inclusive workplace.do business. We believe that the interests of all our stakeholders – our stockholders, employees, customers, partners, suppliers, the people in theour communities, in which we operate, and the environment – must be considered in our daily operations. As a result of our focus on our culturestrategy and our communities,daily operations.
To that end, we actively engage with our people to create a workplace where our employees feel a sense of belonging and can thrive by bringing their authentic and genuine selves to work. We are working to have a more diverse workforce and are firmly committed to advancing DEI. We are committed to giving back to the people and places in which we operate, and we believe in doing our part to address the world’s environmental challenges.challenges and are working to put plans in place to achieve our ambition of reaching carbon net-zero. We are achievingaccomplishing these commitments through a number of initiatives, including those listed below.
Governance and Oversight
Our board and management team set the tone for our corporate culture, and one vital element of our culture is operating as a goodresponsible global citizen. Our board is actively engaged in the oversight of our corporate responsibilitysustainability and sustainability. other ESG matters. To provide clarity as to the oversight for our various ESG activities and disclosure, each board committee charter was amended in 2021 to ensure alignment with best practices and our ESG strategy.
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. In addition, our Audit Committee assists the board in its oversight of risk management by overseeing the Company’s enterprise risk management program, which includes ESG-related risks.
Our Compensation and Human Resource Committee provides board-level oversight relating to matters regarding our people management, including supporting our Company’s inclusionDEI practices. In addition, this committee receives updates and diversityconfers with management on programs and risks related to executive compensation, talent acquisition, retention and talent management, and corporate culture.
Our Governance Committee is responsible for reviewing the board’s corporate governance practices as well as overseeingand procedures, including the board’s self-evaluation process, board composition, shareholder engagement, and our leadership development activities.governance policies. In addition, the Governance Committee receives updates from management with respect to the Company’s overall ESG activities, including third-party ratings and our ESG-related public disclosures.
Our board regularly receives updates from our committees with respect to these activities and engages with management on our corporate culture, talent acquisition, talent management, risk oversight, and strategy matters, with consideration of sustainability and other ESG priorities.
For a further description of these activities, see “Our Corporate Governance—Board Oversight of Risk” and “Committees of the Board”.
Our management team is responsible for implementing the Company’s ethical standardsESG activities.
Our management team is actively engaged in ESG-related initiatives and compliance initiatives. Representative ofduring 2021 formalized our ESG program with the importancecreation of our commitment to Corporate Citizenship Council that is composed of senior leaders from our functions and business operations with both our Chief Legal Officer and Chief Financial Officer serving as executive sponsors. The Corporate Citizenship Council is responsible for the identification, coordination and advancement of our ESG priorities and objectives.
| ||
Environmental, 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.Governance
Our Chief Human ResourcesPeople Officer is responsible for implementation of the Company’s human resourcespeople strategies and programs, including our inclusion and diversity initiatives,DEI, employee engagement and enhancing the employee experience, wellness efforts, as well as career development and executive leadership succession planning. In addition, our
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.
Our Chief Marketing Officer is responsible for our community outreach activities, including our Teradata Cares program described below, as well as ESG-related customer-facing activities and support.
Our Chief Financial Officer oversees our Operations department, which is responsible for our sustainability initiatives relating to our supply chain and facilities as well as the publication of our annual ESG report.
We are continually advancing our ESG efforts as we become more robust in our ESG practices. In this regard, we have focused on enhancing our ESG disclosures to better communicate our strategy, focus, and achievements. As such, in 2021 we issued our 2020 ESG Report, which was substantially refreshed from reports we had issued in the past on ESG topics. In connection with the issuance of our 2020 ESG Report, we also launched a refreshed ESG website and incorporated refreshed ESG disclosure into the presentation materials for our 2021 Investor Day and other investor content. We also are working with third parties with expertise in ESG to help us benchmark our disclosures and ESG practices, conduct an enterprise-wide materiality assessment, and collect data on our global carbon footprint, including direct and indirect greenhouse gas emissions.
 | Our People and Culture Diversity, Equity, and Inclusion.Teradata’s core strength is our | |
• Teradata earned a perfect score of 100% on the Human Rights Campaign Foundation’s 2022 Corporate Equality Index and is designated as one of the Best Places to • Our executive team has signed a pledge committing to DEI and
• We • Our DEI Advisory Board remained active in 2021 to • We
• We provide resources and
• We | ||
• In further support of the communities where we operate and live, we maintained and continued to support a • We transformed our executive leadership team with | ||
| 24 |
|
Corporate ResponsibilityEnvironmental, Social and SustainabilityGovernance
• • We recognize Juneteenth and Martin Luther King Day as corporate holidays in the United States. We believe that a diverse workforce is critical to the Company’s success, and we will continue to focus on the hiring, | ||
Health, Safety, and Wellness. We are committed to Talent Development. Teradata is continuously focused on promoting the professional development of our employees and providing tools that enable employees to manage their careers. Our talent development programs provide employees with the resources to advance their careers, build leadership skills, and lead within their organizations. We have launched on-demand learning resources, such as LinkedIn Learning and Country Navigator. Our Learning Labs focus on | ||
| Environmental Stewardship • Climate Change Commitments. We
• Products.
| |
 |
• In 2021, for the
• Supply In addition, our Conflicts Minerals Policy prohibits Teradata,
As part of our commitment to DEI, Teradata recognizes the need for and the benefits of sourcing and stimulating the growth of diverse suppliers, including small businesses, minority, women, veteran, and LGBTQ+ owned business enterprises. We have adopted a proactive policy of promoting the use of such businesses as sources of supply with an initial focus largely in the United States and longer-term plans for global adoption. • | |
| ||
Environmental, Social and Governance
• Teradata has adopted a Flexible Work model. As a result of the COVID pandemic, our workforce is more agile, and the Flexible Work model is designed to reflect the positive productivity and employee choice considerations that were learned through that experience. In connection with our Flexible Work model, we have substantially reduced our global real estate footprint, significantly reduced commuting activities by our employees, and provided employees with the ability to choose where they are most productive by offering fully remote or hybrid work locations. |
Corporate Responsibility and Sustainability
 | Community Engagement - Doing Good With Data™ • We have worked directly with • We believe that building connections between our employees, their families, and our communities creates a more meaningful, fulfilling, and enjoyable workplace. • 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.
• | ||
• 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 • 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, and supporting communities where we have • 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.
• • To strengthen our | |||
  | Ethical Business Conduct •
• 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 • Teradata has been included on the Ethisphere Institute’s list of the World’s Most Ethical Companies every year since 2010. | ||
For more information:
| 26 | 2022 PROXY STATEMENT |
Visit our Corporate
Environmental, Social Responsibility website:and Governance
 | Recognition and Ratings • Named as one of the Best Places to Work for LGBTQ+ Equality • Received Best Company / Technology Company for Women ratings from Fairygodboss • Named a World’s Most Ethical Company by The Ethisphere Institute in 2022 for 13th straight year • Named to Dow Jones Sustainability North American Index for Software and Services for 12th straight year; also named to Dow Jones Sustainability World Index • Received high ISS Quality Score: • Governance: 2 • Environmental: 1 • Social: 2 • Attained MSCI ESG GovernanceMetrics rating of AA • Received Sustainalytics “Low” ESG risk rating | |||
   | ||||
Reporting
Teradata publishes an annual ESG report. We also maintain an ESG website which provides additional information relating to ESG activities.
Teradata’s 2020 ESG Report: https://www.teradata.com/About/Corporate-Social-Responsibility-enAbout-Us/Corporate-Social-Responsibility/Teradata-ESG-Report.pdf .
For more information, Visit our ESG website: https://www.teradata.com/About-Us/Environmental-Social-Governance
| ||
Ownership by Directors and Officers
This table shows our common stock beneficially owned as of February 15, 2020,2022, by each executive officer named in the Summary Compensation Table found on page 52 of this proxy statement, eachnon-employee director, and the directors and executive officers and former executive officerofficers as a group.
| NAME | TOTAL SHARES BENEFICIALLY OWNED(1) | SHARES COVERED BY OPTIONS(2) | % OF CLASS BENEFICIALLY OWNED(3) | 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
|
|
|
*
|
| 43,269 | 0 | * | ||||||||||||||||||||||||||||
Timothy Chou, Class II Director
|
|
4,221
|
|
|
0
|
|
|
*
|
| 4,530 | 0 | * | ||||||||||||||||||||||||||||
Daniel Fishback, Class I Director
|
|
23,150
|
|
|
0
|
|
|
*
|
| 35,687 | 0 | * | ||||||||||||||||||||||||||||
Cary Fu, Class III Director
|
|
70,973
|
|
|
13,206
|
|
|
*
|
| 74,329 | 0 | * | ||||||||||||||||||||||||||||
Michael Gianoni, Chairman of the Board and Class III Director
|
|
37,179
|
|
|
0
|
|
|
*
|
| 53,741 | 0 | * | ||||||||||||||||||||||||||||
David Kepler, Class I Director
|
|
89,231
|
|
|
5,044
|
|
|
*
|
| |||||||||||||||||||||||||||||||
Kimberly Nelson, Class I Director
|
|
1,548
|
|
|
0
|
|
|
*
|
| 21,350 | 0 | * | ||||||||||||||||||||||||||||
Joanne Olsen, Class III Director
|
|
11,814
|
|
|
0
|
|
|
*
|
| 13,221 | 0 | * | ||||||||||||||||||||||||||||
James Ringler, Class II Director(4)
|
|
139,318
|
|
|
16,979
|
|
|
*
|
| |||||||||||||||||||||||||||||||
John Schwarz, Class II Director
|
|
62,805
|
|
|
9,423
|
|
|
*
|
| 69,944 | 0 | * | ||||||||||||||||||||||||||||
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%
|
| |||||||||||||||||||||||||||||||
Stephen McMillan, President and Chief Executive Officer and Class I Director | 97,961 | 0 | * | |||||||||||||||||||||||||||||||||||||
Claire Bramley, Chief Financial Officer | 18,606 | 0 | * | |||||||||||||||||||||||||||||||||||||
Hillary Ashton, Chief Product Officer | 24,175 | 0 | * | |||||||||||||||||||||||||||||||||||||
Todd Cione, Chief Revenue Officer | 0 | 0 | ||||||||||||||||||||||||||||||||||||||
Kathleen Cullen-Cote, Chief People Officer | 61,196 | 0 | * | |||||||||||||||||||||||||||||||||||||
Mark Culhane, Former Chief Financial Officer(4) | 164,736 | 0 | * | |||||||||||||||||||||||||||||||||||||
Directors and Executive Officers and former Executive Officers who are Named Executive Officers as a Group (17 persons) | 704,647 | 14,282 | * | |||||||||||||||||||||||||||||||||||||
| * | 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 shares covered by options that are exercisable within 60 days of February 15, |
| (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 |
| (3) | The total number of shares of our common stock issued and outstanding as of February 15, |
| (4) | Includes |
|
|
|
|
|
Stock Ownership
Other Beneficial Owners of Teradata Common Stock
To the best of our knowledge, based on filings with the SEC made in 20202022 by beneficial owners of our stock, the following stockholders beneficially own more than 5% of our outstanding common stock.
| NAME | TOTAL NUMBER OF SHARES | PERCENT OF CLASS(1) | 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%
|
| 13,030,275 | 12.7 | % | |||||||||
The Vanguard Group(3) 100 Vanguard Blvd., Malvern, Pennsylvania 19355
|
|
12,331,013
|
|
|
11.1%
|
| 12,231,015 | 11.9 | % | |||||||||
BlackRock, Inc.(4) 55 East 52nd Street, New York, New York 10055
|
|
11,424,840
|
|
|
10.3%
|
| 10,132,960 | 9.9 | % | |||||||||
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%
|
| ||||||||||||
Ameriprise Financial, Inc.(5) 145 Ameriprise Financial Center, Minneapolis, Minnesota 55474 | 8,557,131 | 8.3 | % | |||||||||||||||
Wellington Management Group LLP and affiliated entities(6) 280 Congress Street, Boston, MA 02210 | 5,953,186 | 5.8 | % | |||||||||||||||
| (1) | Percent of class is based on |
| (2) | Information is based on Amendment No. |
| (3) | Information is based on Amendment No. |
| (4) | Information is based on Amendment No. |
| (5) | Information is based on Amendment No. 2 to Schedule 13G filed by Ameriprise Financial, Inc. with the SEC on February 14, 2022, which reported shared voting power over 6,419,323 shares and shared dispositive power over 8,557,131 shares. According to this filing, Columbia Management Investment Advisers, LLC reported shared voting power over 4,189,798 shares and shared dispositive power over 6,322,839 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 in such filing by Columbia Management Investment Advisers, LLC. Accordingly, the shares reported in this filing by Ameriprise Financial, Inc. include those shares separately reported in such filing by Columbia Management Investment Advisers, LLC. |
| (6) | Information is based on Amendment No. 6 to Schedule 13G filed by Wellington Management Group LLP with the SEC on |
|
|
| ||
Teradata’s Director Compensation Program is designed to enhance our ability to attract and retain highly qualified independent 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 did not receive any compensation in 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”)Committee with competitive benchmarking provided periodically by an independent compensation consultant retained by the committee. In April 2019,For 2021, the Governance Committee engaged FW CookAon 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 recommendation of FW Cook,Aon, the 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 Retainers
The Director Compensation Program, for the 2019-20202021-2022 board year (the period between the Company’s annual stockholders’ meetings), includes the following annual retainers:
Eachnon-employee director | $ | 60,000 | $ | 60,000 | ||||
Additional retainers: | ||||||||
Non-executive Chairman of the Board of Directors | $ | 120,000 | $ | 120,000 | ||||
Independent Lead Director | $ | 30,000 | ||||||
Each Audit Committee member (including the Chair) | $ | 15,000 | $ | 15,000 | ||||
Each Compensation and Human Resource Committee member (including the Chair) | $ | 10,000 | $ | 10,000 | ||||
Each Governance Committee member (including the Chair) | $ | 5,000 | $ | 5,000 | ||||
Governance Committee Chair | $ | 15,000 | $ | 15,000 | ||||
Audit Committee Chair | $ | 35,000 | $ | 35,000 | ||||
Compensation and Human Resource Committee Chair | $ | 25,000 | $ | 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 2019-20202021-2022 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 over a one-year period in four equal quarterly installments, commencing three months after the grant date, and directors may elect to defer receipt of their vested shares.
|
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, with the same vesting schedule as the annual grant described above. For the 2021-2022 board year, the initial equity grant consisted of RSUs with a total dollar value of $75,000. Similar to the annual grant, a director may elect to defer receipt of the vested shares subject to the RSUs.
Ms. Nelson was the onlyNo director to receivereceived an initial equity grant during 2019 in connection with her appointment to the board. In this regard, on November 14, 2019, Ms. Nelson received an initial equity grant of RSUs with a total dollar value of $75,000.2021.
Mid-Year Equity Grant
Under the Director Compensation Program, for directors that are newly elected to the Board after the annual meeting of stockholders, the board has the discretion, based on the recommendation of the Governance Committee, to grant a mid-year
| 30 | 2022 PROXY STATEMENT |
Director Compensation
equity grantsgrant in the form of stock options and/or awards of restricted shares or RSUs to such newly elected directors. A mid-year equity grant, if awarded, can be made in lieu of an annual equity grant for new directors who are newly elected to the boardbegin service after the annual meeting of stockholders.grants described above are awarded and historically have been made to establish pay equity for directors. Mid-year equity grants made in the form of RSUs have the same vesting schedule and deferral optionsalternatives 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. Because she joined the board on November 5, 2019, the board exercised its discretion and awarded Ms. Nelson
No director received amid-year RSUequity grant on November 14, 2019 with a total dollar value of $104,167.in 2021.
Benefits
We do not provide any retirement or other benefit programs for our directors.
20192021 Director Compensation Table
The following table provides information on compensation paid to ournon-employee directors in 2019.2021.
| NAME | FEES EARNED OR PAID IN CASH(1) ($) | STOCK ($) | OPTION ($) | TOTAL ($) | FEES EARNED OR PAID IN CASH(1) ($) | STOCK AWARDS(2)(3) ($) | TOTAL ($) | |||||||||||||||||||||||||
Lisa Bacus
|
| 70,000
|
|
| 255,905
|
|
| —
|
|
| 325,905
|
| 70,000 | 274,365 | 344,365 | |||||||||||||||||
Timothy Chou
|
| 75,000
|
|
| 255,905
|
|
| —
|
|
| 330,905
|
| 70,000 | 274,365 | 344,365 | |||||||||||||||||
Daniel Fishback
|
| 86,667
|
|
| 255,905
|
|
| —
|
|
| 342,572
|
| 95,000 | 274,365 | 369,365 | |||||||||||||||||
Cary Fu
|
| 75,000
|
|
| 255,905
|
|
| —
|
|
| 330,905
|
| 75,000 | 274,365 | 349,365 | |||||||||||||||||
Michael Gianoni, Chairman
|
| 110,000
|
|
| 255,905
|
|
| —
|
|
| 365,905
|
| 200,000 | 274,365 | 474,365 | |||||||||||||||||
David Kepler
|
| 110,000
|
|
| 255,905
|
|
| —
|
|
| 365,905
|
| ||||||||||||||||||||
David Kepler(4) | 18,750 | — | 18,750 | |||||||||||||||||||||||||||||
Kimberly Nelson
|
| 12,500
|
|
| 164,229
|
|
| —
|
|
| 176,729
|
| 110,000 | 274,365 | 384,365 | |||||||||||||||||
Joanne Olsen
|
| 78,750
|
|
| 255,905
|
|
| —
|
|
| 334,655
|
| 75,000 | 274,365 | 349,365 | |||||||||||||||||
James Ringler
|
| 75,000
|
|
| 255,905
|
|
| —
|
|
| 330,905
|
| ||||||||||||||||||||
James Ringler(4) | 16,250 | — | 16,250 | |||||||||||||||||||||||||||||
John Schwarz
|
| 78,333
|
|
| 255,905
|
|
| —
|
|
| 334,238
|
| 70,000 | 274,365 | 344,365 | |||||||||||||||||
William Stavropoulos
|
| 65,000
|
|
| 286,910
|
|
| —
|
|
| 351,910
|
| ||||||||||||||||||||
| (1) | Represents the annual cash retainers earned for |
| (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 the annual award of an RSU |
The number of RSUs outstanding as of December 31, |
| (3) | There were no options granted to thenon-employee directors for the |
| (4) | Each of |
| ||
Director Compensation
Director Stock Ownership Guidelines
Under the board’s Corporate Governance Guidelines, each director should hold stock valued at no less than five 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 beare taken into account. However, for this purpose, the board does not believe it appropriate to include stock options granted to directors by the Company. As of December 31, 2019,2021, all of our directors were in compliance with these ownership 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.guidelines.
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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, 2019.2021.
Dated: February 27, 202025, 2022
The Compensation and Human Resource Committee:
Daniel R. Fishback, Chair
Lisa R. Bacus, Member
James M. Ringler,Timothy C.K. Chou, Member
John G. Schwarz, Member
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COMPENSATION DISCUSSION AND ANALYSIS
Named Executive Officers
This Compensation Discussion and Analysis (this “CD&A”) describes the executive2021 compensation program for 2019 established by the Compensation and Human Resource Committee (the “Committee”). for our named executive officers. Our named executive officers for 20192021 include:
NAME | POSITION | |
Stephen McMillan |
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Claire Bramley |
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Todd Cione | Chief | |
Hillary Ashton | Chief | |
Kathleen Cullen-Cote | Chief | |
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A detailed discussion ofOur named executive officers for 2021 also include Mark Culhane, who served as the Company’s Chief Financial Officer until he was terminated in June 2021. This CD&A focuses primarily on the compensation earned by our CEO transition and othercurrent named executive leadership changesofficers listed in 2019 and early 2020 is found below in this CD&A.the table above, but also describes, where appropriate, the compensation earned by Mr. Culhane.
Our Strategy and Business Transformation Highlights and Key Compensation Decisions
In 2019, we continued ourTeradata is in a period of exciting transformation. With the transition to aour subscription-based business progressing atmodel largely complete, we shifted our focus and drive to our cloud-first strategy, and 2021 was a rate that exceeded our expectations. This transition, while positioning the Company for future growth, impacted reported financial results for 2019 as described below. critical and successful year of achievement in this regard.
To align executive pay with our strategy, the execution of our business transformation continues to be factored into our executive compensation program.
Our business model reflects our strategy as we shift to subscription-based transactions that build an attractive recurring revenue stream and position the Company for long-term growth. In 2019, our shift accelerated at an unprecedented rate with 88% subscription-based product bookings. As a result, revenue from these transactions will be recognized over the multi-year life of the customer agreement rather than all upfront, as was our historical practice. As customers rapidly convert to purchase Teradata offerings via subscription, we are building a more predictable revenue stream over time. Accordingly, recurring revenue growth is one of the key factors that investors use to measurefacilitate our success, particularly in the current period, as our reported revenue is negatively impacted in the near term.
we are:
 | In support of our goal of delivering long-term shareholder value and the commitment to our cloud-first strategy, in 2021, we launched our new strategy to be the connected multi-cloud data platform for enterprise analytics. |
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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.
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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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Compensation Discussion and Analysis
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.
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.
| ||
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:
|
| We executed on our strategy and culture objectives in 2021, including by: • Simplified the customer’s journey to • • Hired executive leaders to oversee our marketing and sales functions who have significant experience with cloud technology and leading successful business transformations. • Delivered ongoing technology innovations, and demonstrated our technology capabilities and un-paralleled enterprise • Demonstrated our commitment to continued environmental stewardship with our target for reducing our Scope 1 and Scope 2 greenhouse gas emissions by 100%. • Kept DEI at the forefront, as we added diverse talent, incorporated domestic partner coverage into our employee benefits, and earned recognition in |
| | These and other advancements helped Teradata to be recognized as a
• Teradata was included in the Cloud Database Management System Magic Quadrant by Gartner™ in 2021, achieving the highest scores in ALL four cloud categories: Cloud Data Warehousing, Cloud Logical Data Warehousing, Cloud Data Lakes, and • Teradata was recognized as a leader in the • Teradata was ranked a Top 100 Global provider of | |||||||||||
| By constant focus, vigilance and execution of our corporate strategy, we had very strong financial results for 2021 as noted below. | ||||||||||||
2021 Financial Highlights and Key Compensation Decisions
During 2021, we achieved significant growth in our cloud business, attracted new customers, both in the cloud and on-premises, released innovative technology, and delivered profitable growth.
Our strong performance is reflected in our financial results for 2021 and demonstrates that we are delivering value to shareholders through growing revenue, increasing profitability, and providing durable streams of free cash flow. A summary of our strong 2021 financial results, as reported, is as follows:
| (1) |
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| (2) | Public cloud ARR is defined as the annual value at a point in time of all contracts related to public could implementations of Teradata Vantage and does not include ARR related to private or managed cloud implementations. The Company believes this is a useful metric to investors as it demonstrates progress toward achieving our strategic objectives as outlined in the Form 10-K and Form 10-Q. |
| (3) |
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| 34 |
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Compensation Discussion and Analysis
| Since 2015, we 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 institutional investors, representing over 80% of Teradata’s outstanding shares. Our discussions with investors have historically touched on a number of themes, including stockholders’ desire that a meaningful portion of long-term incentive value continue to be allocated to equity awards that are based on longer-term performance goals with a strong rationale and linkage to |
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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:
 |
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Compensation Discussion and Analysis
strategy.
Shareholder Engagement and Compensation Program Enhancements
TeradataWe received strong support from our shareholdersstockholders for our executive compensation program, with a98% FAVORABLE92% favorable “SAY-ON-PAY”Say-On-Pay” VOTEvote at our 20192021 annual meeting. The Committee views this strong result as confirmation that our compensation program is appropriately structured to support our ongoing business transformationstrategic initiatives and reflects ourpay-for-performance commitment.
We greatly value
To align our strategy and performance with compensation, our executive compensation program is heavily weighted to compensation that is tied to performance and the input receivedexecution of our strategy. Specifically, our Teradata Corporation Management Incentive Plan (“2021 Management Plan”) is an annual cash incentive that is designed to drive annual recurring revenue (“ARR”) growth, public cloud ARR growth, and profitability. In addition, our Long-Term Incentive Plan consists of 3-year performance based restricted share unit awards for the 2021 – 2023 performance period that are tied to the cloud percentage of total ARR and free cash flow as a percentage of revenue (“2021-2023 LTIP”).
Our transition to a cloud-first strategy is critical to our future success and the transition of our customers from using Teradata Vantage on-premises to the cloud, as well as attracting new cloud customers, will occur over time. As part of our commitment to this cloud-first strategy and to provide metrics for shareholders to track and understand our success in this regard, as of 2021, we externally report our public cloud ARR growth results. To align pay and performance, in developing both the 2021 Management Plan and the 2021-2023 LTIP, the Committee established certain public cloud metrics as performance measures in both plans.
The performance metrics in our 2021 plans are designed to measure and reward for different aspects of our cloud-first strategy. Accordingly, the 2021 Management Plan includes a public cloud ARR growth metric that is designed to focus specifically on ARR growth in the cloud during the year resulting from migrations of workloads from existing customers from on-premises to the cloud, expansions of existing workloads in the cloud, and the growth of new customers in the cloud. Total ARR growth continues to be an important metric for us as we execute our strategy and support a hybrid model for our customers that allows them to use Teradata Vantage across different clouds and on premises. Likewise, our long-term equity program is aligned to our cloud-first strategy. Specifically, the 2021 – 2023 LTIP includes a cloud percentage of total ARR metric that is designed to assess how much of our total ARR is from our shareholderspublic cloud business – this helps us understand our mix of revenue and engage with themthe growth of the public cloud portion of our overall business over the 3-year performance period. The Committee believes that having public cloud metrics in each of the 2021 annual and long-term incentive plans reduces the risk that any actions would be taken to sacrifice long-term growth to meet annual targets or vice versa.
Our 2021 Management Plan and 2021 – 2023 LTIP are designed to ensure we are focused on a variety of mattersour cloud-first strategy, while also achieving total recurring revenue growth, profitability, and liquidity. The specific measures and weightings, and how such items tie to our corporate strategy for our 2021 Management Plan and 2021 – including execution against our strategy, executive compensation and corporate governance – as part of a year-round engagement process described below:2023 LTIP are detailed below.
| PLAN | TIE TO STRATEGY | |||||
Annual Incentive Plan – 2021 Management Plan(1) | ARR Growth(1)(3) Public Cloud ARR Growth(2)(3) Non-GAAP Operating Margin(4) as a Percentage of Revenue | 30% 30% 40% | Drive annual Drive cloud-first strategy Maintain focus on profitability while growing recurring revenue | |||
Long-Term Incentive | Cloud Percentage of Free Cash Flow(4) as a Percentage of Revenue | 60% 40% | Drive recurring revenue over multi-year period with a focus on Focus on long-term cash-generating ability | |||
As part of the proxy solicitation process, and following our 2019 annual meeting, we continued our practice of soliciting input from our largest 25 institutional investors, representing over 75% of our outstanding shares, and answering their questions regarding a variety of topics of interest to them, such as the design of our executive compensation program, the CEO transition and search, board diversity and corporate governance best practices, corporate social responsibility and sustainability matters, and the execution of our business transformation strategy.
The feedback we received from investors through this engagement process was generally positive and constructive. Investors expressed support for our executive compensation program, including the design of our annual bonus plan and long-term incentive plan and its emphasis on performance-based equity. The feedback from investors regarding our executive compensation program, as well as other governance matters, was reported to our board. We will continue to engage with our shareholders in order to receive any feedback they may have regarding the Company.
| (1) | ARR is defined as the annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance. ARR does not include managed services and third-party software. |
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Compensation Discussion and Analysis
| (2) | Public cloud ARR is defined as the annual value at a point in time of all contracts related to public cloud implementations of Teradata Vantage and does not include ARR related to private or managed cloud implementations. |
| (3) | To ensure profitable growth, ARR growth and public cloud ARR growth are subject to a minimum threshold attainment of non-GAAP operating margin as a percentage of revenue before any funding of the ARR growth and public cloud ARR growth performance measures. |
| (4) | Non-GAAP financial measure. See the Investor Relations section of our website for the investor presentation for fiscal year ended December 31, 2021 for definition and reconciliation to GAAP financial measure. |
| (5) | Performance will be determined based on the achievement of cumulative annual goals over the 3-year performance period and subject to the achievement of annual threshold levels of operating margin and total ARR growth. |
Our 2021 financial performance resulted in payouts under each of our 2021 Management Plan and our Long-Term Incentive Plan consisting of 3-year performance based restricted share unit awards for the 2019 – 2021 performance period (“2019-2021 LTIP”) of 105% and 100%, respectively. The specific measures, weightings and goals, actual performance, and achievement level for our 2021 Management Plan and 2019 – 2021 LTIP are detailed below.
| 2021 MANAGEMENT PLAN PERFORMANCE AND RESULTS | ||||||||||||||||||||
| FINANCIAL MEASURE(1) | 50% (THRESHOLD) | 100% (TARGET) | 200% (MAXIMUM) | ACTUAL PERFORMANCE(1)(2) | ACHIEVEMENT LEVEL | |||||||||||||||
ARR Growth | 6 | % | 7 | % | 10 | % | 6.7 | % | 84 | % | ||||||||||
Public Cloud ARR Growth | 108 | % | 120 | % | 138 | % | 92.3 | % | 0 | % | ||||||||||
Non-GAAP Operating Margin(3) as a Percentage of Revenue | 12.5 | % | 14 | % | 17 | % | 20.5 | % | 200 | % | ||||||||||
Total Payout Percentage |
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| 105 | % | ||||||
| (1) | No payout could be earned for ARR growth or public cloud ARR growth unless the Company achieved the threshold level of non-GAAP operating margin as a percentage of revenue. |
| (2) | When establishing the performance objectives under the 2021 Management Plan, the Committee approved adjustments to actual performance for ARR growth and public cloud ARR growth to exclude the impact of foreign currency exchange rates from pre-established plan rate levels, which resulted in a $28 million adjustment to ARR growth. As a result, the actual performance for purposes of the 2021 Management Plan was slightly higher than our as reported results. The Committee also established adjustments to actual performance for non-GAAP operating margin as a percentage of revenue, such that actual results would be increased or decreased, as applicable, by the product of the impact of foreign exchange rates on revenue from pre-established plan rate levels, multiplied by 33%, which resulted in a 0.17% adjustment to the reported non-GAAP operating margin as a percentage of revenue. |
| (3) | Non-GAAP financial measure. See the Investor Relations section of our website for the investor presentation for fiscal year ended December 31, 2021 for definition and reconciliation to GAAP financial measure. |
| 2019 – 2021 LTIP PERFORMANCE AND RESULTS | ||||||||||||||||||||
| 2019-2021 Performance Goals | Results and Payouts | |||||||||||||||||||
| FINANCIAL MEASURE(1) | Threshold Payout) | Target Payout) | Maximum Payout) | Actual Results | Payout Percentage | |||||||||||||||
Free Cash Flow as a Percentage of Revenue(2) | 12 | % | 15 | % | 18 | % | 22.5 | % | 200 | % | ||||||||||
Compounded Annual ARR Growth | 9 | % | 11 | % | 13 | % | 8.3 | % | 0 | % | ||||||||||
Total Payout Percentage |
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| (1) | One half of the RSUs provided an opportunity to earn shares based on the extent to which the Company achieves the established levels of free cash flow as a percent of the Company’s total revenue during the 3-year period ending December 31, 2021. The other half of the RSUs provided an opportunity to earn shares based on the extent to which the Company achieved the established levels of compounded annual ARR growth over the 3-year period ending December 31, 2021. |
| (2) | Non-GAAP financial measure. See the Investor Relations section of our website for the investor presentation for fiscal year ended December 31, 2021 for definition and reconciliation to GAAP financial measure. |
Our 2019 – 2021 LTIP was designed to drive the evolution of our business transformation to the largely subscription-based model with healthy liquidity that exists at Teradata today. As such, payment of the performance-based equity awards was based on the extent to which we achieved key performance metrics over the 2019 – 2021 performance period of: (a) compounded double digit ARR growth and (b) free cash flow as a percentage of revenue. While we fell short of the aggressive 3-year ARR target, the Company has achieved excellent cash flow results, which have in turn resulted in considerable value for our stockholders through our capital allocation activities.
As more fully explained below, in 2021, approximately 92% of the target total direct compensation for our CEO, Mr. McMillan, and approximately 89% for the other named executive officers was performance-based further reflecting our focus on pay for performance.
The CD&A reflects a normalized level of compensation for Mr. McMillan as 2021 was his second year, and first full year, as our CEO.
| 36 | 2022 PROXY STATEMENT |
Compensation Discussion and Analysis
Executive Leadership Transitions
We have continued to transform our executive leadership team so that it consists of top talent who can further drive our cloud transformation.
In particular, the following executive leadership changes occurred in 2021 and early 2022:
Effective January 4, 2021, Todd Cione was appointed Chief Revenue Officer, succeeding our former Chief Revenue Officer, who departed the Company on October 30, 2020. Mr. Cione is a seasoned business executive, with more than 25 years of experience in global sales, marketing, channel, and operations at large multi-national technology organizations, including successfully leading organizations through cloud-based transformations. His experience includes senior sales and revenue leadership roles at Apple Inc., Oracle, and Microsoft.
Effective June 14, 2021, Claire Bramley was appointed Chief Financial Officer, succeeding Mark Culhane, who was terminated in June 2021. Ms. Bramley brings extensive senior leadership experience and deep acumen in corporate finance and accounting, as well as significant knowledge of the technology industry. She joined Teradata after a nearly 15-year career at HP Inc., most recently serving as Global Controller where she was responsible for financial controls and compliance, external reporting, and coordinating directly with the audit committee. Additionally, she headed HP’s Finance Strategy and Transformation efforts and oversaw Corporate Financial Planning and Analysis.
Effective December 6, 2021, Jacqueline Woods was appointed Chief Marketing Officer, succeeding Martyn Etherington, who departed the Company on December 31, 2021. Ms. Woods has thirty years of experience leading corporate transformations and leveraging modern marketing approaches that utilize data and insights to accelerate business outcomes. Ms. Woods’ experience covers both business-to-business and business-to-consumer initiatives. She joins Teradata from NielsenIQ where she served as Global Chief Marketing & Communications Officer and her career includes senior marketing leadership roles at IBM, GE, and Oracle.
Effective January 11, 2022, Michael Hutchinson was appointed Chief Customer Officer leading the Company’s new Global Customer Services Organization dedicated to maximizing customer service and value, succeeding Dan Harrington, our former Chief Services Officer. Mr. Hutchinson joined Teradata in June 2021 as Senior Vice President of Worldwide Customer Success, Consulting and Renewals. Prior to joining the Company, he held senior customer roles, including cloud operations, at Verint and Oracle.
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Compensation Discussion and Analysis
Pay-For-Performance Commitment
Teradata is committed to rewarding talent that drives our organizational success. As part of our business transformation, in 2019,In 2021, we emphasizedcontinued to emphasize 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 and our core principles in all of our talent and rewards programs.
The Committee has designed the compensation program for our current named executive officers to reflect 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 and consists of base salary, an annual incentivescash incentive, and long-term equity incentives.incentives as assessed over a 3-year period. As illustrated below, in 2019,2021, approximately 91%92% of the target total direct compensation for our former CEO, Mr. Ratzesberger, who served as our CEO for most of 2019,McMillan, and approximately 89% for the other named executive officers (excluding Mr. Lund, our Interim CEO) was performance-based.
| 38 |
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Compensation Discussion and Analysis
SECTION 2: COMPENSATION PHILOSOPHY
AND GOVERNANCE
Our executive compensation program is designed to attract, retain and align our business leaders with our goals to drive financial and strategic growth, while also delivering long-term stockholder value. Like our business, this program must be dynamic and adjusted regularly to align with our intensely competitive and changing business, particularly as the Company is undergoing a strategicpursues its business transformation. Underlying this evolving structure, all of our compensation programs promote sound governance and balance, driving results while mitigating risks. To that end, the Committee has implemented governance best practices to reduce compensation risks and to align compensation with industry norms and stockholder interests. See Section 6 of this CD&A for more details regarding some of these key policies and practices.
Best Practices We Follow
ESTABLISH for our named executive |
MAINTAIN A for change in control |
MINIMIZE by periodically reviewing our
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MAINTAIN STOCK in line with stockholder | |||||||||
MAINTAIN so that we can recover cash
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RETAIN AN to provide expert objective, |
HOLD ANNUAL ADVISORY to give investors the |
REVIEW OVERHANG to confirm that our standards | |||||||||
NO EXCISE TAX in Company severance plans |
NO HEDGING OR of Company stock by executive officers |
NO “REPRICING” of stock options or |
NO FIXED TERM
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Compensation Discussion and Analysis
SECTION 3: CORE COMPENSATION PROGRAM
Summary of 20192021 Compensation Decisions
Base Salary
We provide a base salary to retain and 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 appropriatecommensurate with executives with similar experience levels and consistent with competitive market levels.capabilities in the marketplace.
Effective January 14, 2019, Mr. Ratzesberger receivedThe Committee approved an increase in hisinitial 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$500,000 for each of the Board. In February 2019, Mr. CulhaneMs. Bramley 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-CoteCione, which was negotiated at the time each executive joined the Company in 2019she or he was hired and was based on competitive market data, taking into consideration his or her relative degree of experience and new hire incentive considerations.
Effective 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.
data. The base salary levels for each of our other current named executive officers in 2019remained unchanged from 2020 levels as they were as follows:already reflective of the market 50th percentile.
NAME | ANNUAL BASE SALARY | |||||||
| $ | |||||||
| $ | |||||||
| $ | |||||||
| $ | |||||||
Kathleen Cullen-Cote | $450,000 | |||||||
| $ |
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*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 BonusCash Incentive Awards and Sign-On Bonuses
Our named executive officers other than Mr. Lund, participated in our 20192021 annual bonuscash incentive program under the Teradata Corporation Management Incentive Plan (“2019(the “2021 Management Plan”) with.
When determining the target incentive opportunities as set out inaward for each executive officer, the table below.
Effective January 14, 2019, Mr. Ratzesberger received an increase in hisCommittee reviews the market 50th percentile for target incentive opportunity to 125%total cash compensation (sum of base salary and target annual cash incentive) for the position in connection with his electionwhich such executive officer serves. Our objective is that when we achieve target levels of performance for each measure, resulting total cash compensation paid to our executive officers is within a reasonable range of the market 50th percentile. Actual total cash compensation will generally exceed the market 50th percentile if actual performance for each measure exceeds the pre-established target annual financial business goals and will generally be less than the market 50th percentile if actual performance for each measure is below the pre-established target annual financial business goals. In addition to considering the market data, the Committee also considers experience, tenure, scope and complexity of the executive officer’s position, individual contributions and performance, as Presidentwell as internal pay equity. Actual awards can range from 0% (if threshold levels of performance are not met) to 200% of the target award (if maximum levels of performance are met for all of the performance measures) and CEO.the resulting competitiveness of total cash compensation will also vary accordingly.
The Committee approved an initial 2021 target annual cash incentive opportunity of 80% of base salary for Ms. Bramley and 100% of base salary for Mr. Cione, each of which was negotiated at the time she or he was hired and was based on the peer group competitive market data. The target incentive opportunity for each of Mr. Brown and Ms. Cullen-Cote was negotiated at the time theother named 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. Harringtonofficers remained unchanged from 2018.2020 levels as such targets where within a reasonable range of the 50th percentile.
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Section 3: Core Compensation Program
NAME | TARGET OPPORTUNITY (AS % OF BASE SALARY) | |
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| 125% | |
| 80% | |
Todd Cione | 100% | |
| 100% | |
Kathleen Cullen-Cote | 80% | |
| 100% |
* As a result of his termination from the Company in June 2021, under the terms of the Teradata Executive Severance Plan, Mr. Culhane received an annual incentive payment for 2021 at the same time the annual incentive payments were made to our current executives. Such payment was based on actual Company performance; however, Mr. Culhane’s payment was prorated based on the time he was employed at the Company.
| 40 | 2022 PROXY STATEMENT |
Compensation Discussion and Analysis
Total payouts under the 20192021 Management Plan are based primarily on our achievement of twothree key financial measures: ARR growth, public cloud ARR growth, andnon-GAAP operating income,margin as a percentage of revenue, each of which are calculated asis reported in our earnings releases and further described below.
| MEASURE | WEIGHT | BUSINESS OBJECTIVE | DEFINITION | |||||
ARR Growth | 30% | A key metric for subscription-based businesses, which is the model we have transitioned to over the last few years. It is a measure that stockholders use to determine the extent to which we are shifting to | The annual value at a point in time of all recurring contracts, including subscription, cloud, software upgrade rights, and maintenance and does not include managed services and third-party software. | |||||
Public Cloud ARR Growth | 30% | To reflect our cloud-first strategy, the Committee introduced a cloud-related financial measure for our 2021 annual cash incentive program. In addition, this aligns with the public cloud ARR growth | The year-over-year growth of | |||||
Non-GAAP Operating |
| 40% |
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Reported | ||||
In 2019, the Committee 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 measure reduces the risk that any actions would be taken to sacrifice long-term growth to meet annual targets or vice versa.
The following chart sets forth the 2019ARR growth, public cloud ARR growth and non-GAAPoperating incomemargin as a percentage of revenue targets under the 20192021 Management Plan.
| FINANCIAL MEASURE (1) | 50% (THRESHOLD) | 100% (TARGET) | 200% (MAXIMUM) | ACTUAL PERFORMANCE (1)(2) | ACHIEVEMENT LEVEL | |||||||||||||||
ARR Growth | 6% | 7% | 10% | 6.7% | 84% | |||||||||||||||
Public Cloud ARR Growth | 108% | 120% | 138% | 92.3% | 0% | |||||||||||||||
Non-GAAP Operating Margin as a Percentage of Revenue (3) | 12.5% | 14% | 17% | 20.5% | 200% | |||||||||||||||
Total | 105% | |||||||||||||||||||
| (1) | No payout can be earned for ARR growth or public cloud ARR growth unless the Company achieves the threshold level of non-GAAP operating margin as a percentage of revenue. |
| (2) | When establishing the performance objectives under the 2021 Management Plan, the Committee approved adjustments to actual performance for ARR growth and public cloud ARR growth to exclude the impact of foreign currency exchange rates from pre-established plan rate levels, which resulted in a $28 million adjustment to ARR growth. As a result, the actual performance for purposes of the 2021 Management Plan was slightly higher than our as reported results. The Committee also established adjustments to actual performance for non-GAAP operating margin as a percentage of revenue, such that actual results would be increased or decreased, as applicable, by the product of the impact of foreign exchange rates on revenue from pre-established plan rate levels, multiplied by 33%, which resulted in a 0.17% adjustment to the reported non-GAAP operating margin as a percentage of revenue. |
| (3) | Non-GAAP financial measure. See the Investor Relations section of our website for the investor presentation for fiscal year ended December 31, 2021 for definition and reconciliation to GAAP financial measure. |
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Compensation Discussion and Analysis
The Committee believed that the target levels for the financial measures were sufficiently rigorous and aligned with stockholder interestsinterests. In particular:
ARR Growth: The range for our ARR growth was aligned to market levels based on our executive compensation peer group. While the ARR growth target was set slightly below our ARR growth achieved in 2020, the 7% growth target was consistent with investor guidance for the following reasons:year and the Committee believed it was sufficiently meaningful, rigorous and in line with shareholder interests due to a number of considerations:
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As noted previously, we have largely completed our transition to a subscription-based business; and, accordingly, in 2021, we anticipated somewhat lower customer conversion rates than we experienced in 2020. This is because there was a lesser amount of ARR to convert to the subscription-based model in 2021 as compared to 2020.
Given our recent transition to our subscription business model, we did not have an extensive historical perspective to predict renewal rates when our goals were set for 2020, or the effort required to attain such customer renewals. The achievement of 9.2% of ARR growth in 2020 required significant effort by our workforce and the Committee determined, with the benefit of hindsight, that our 2020 ARR growth target was set at a more aggressive level than intended. As such, the Committee set the 2021 ARR growth target to what it believed was an appropriately rigorous goal based on the Company’s 2021 financial plan for the year.
A target ARR growth rate in the mid- to high- single digits clearly demonstrates our commitment and expectations for ARR growth in 2021 and was aligned with the guidance for 2021 that we provided to our shareholders.
Public Cloud ARR Growth: We are in a period of business transformation to a cloud-first strategy. As such, our executive officers need to be keenly focused on executing on this strategy through migrating existing customers to the cloud, expanding customer workloads in the cloud, and winning new logos. To show our commitment to our cloud-first strategy and to provide metrics where shareholders can understand our success in this regard, as of 2021, we externally report public cloud ARR growth metrics. Likewise, given its importance, we introduced public cloud ARR growth as a performance measure in the 2021 Management Plan. Our achievement of public cloud ARR growth of 92.3% (as adjusted for the 2021 Management Plan) took incredible focus, dedication, and fortitude in 2021. However, as noted below, we did not achieve the rigorous threshold level for this metric:
As Teradata continues on its business transformation journey and executes on our cloud-first strategy, our ability to have meaningful, sufficiently rigorous and achievable financial goals, particularly in the long-term is also evolving with our business.
Based on the benefit of hindsight, the threshold and target public cloud ARR growth rates of 108% and 120%, respectively, were extremely ambitious and were not achieved. While certainly disappointing considering how committed and effective the Teradata team was in pushing forward our cloud-first strategy in 2021, when certifying the payouts of the 2021 Management Plan, the Committee chose not to exercise discretion to adjust this metric to recognize the significant growth that was achieved because, in looking at the year in totality, the overall 2021 Management Plan payout was reflective of the attainment of a comprehensive set of rigorous goals.
Non-GAAP Operating Margin as a Percentage of Revenue: We are committed to profitable growth. To align our incentives with this objective, we required that the non-GAAP operating margin as a percentage of revenue threshold level be achieved for any payout to occur under the 2021 Management Plan. In 2021, we raised each of our threshold, target and maximum goals for this measure from what was set in 2020. In addition, in 2021, the threshold goal was set above what we achieved in 2020 (which was more than the 2020 target). The Committee believed that these metrics demonstrate our disciplined approach to profitable growth and commitment to setting rigorous goals for our executive team to achieve.
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Section 3: Core Compensation ProgramDiscussion and Analysis
| 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 | % | |||||||||||||||||||||||
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Payouts of Annual BonusesIncentive Compensation
Each named executive officer other than Mr. Lund,who remained employed through the end of the year was eligible to receive a payout under our 20192021 Management Plan equal to the maximum level105% of his or her target annual incentive opportunity, based on our Company’s performance relative to the financial measures described above. However, this achievement level was subject to a +/- 25% modifier based on specificIn addition, our 2021 Management Plan design provides the Committee an individual performance objectives. Althoughmodifier that can adjust the company performance factor positively or negatively up to 25%. The plan design provides this feature to align our pay for performance culture and reward extraordinary contributions that may be made by individuals during the year. In evaluating performance and whether to use this permitted adjustment, the Committee hadconsiders contributions that are above and beyond what could have been planned or anticipated when the discretionfinancial plan was established, in addition to apply this modifier, the Committee did not make any adjustments for individual performance for any of thewhere our named executive officers as a result ofmay have fallen short in their contributions during the achievement level for the Company’s performance being considerably below target, with the exception of Mr. Ratzesberger.year. 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 each named executive officer, and any adjustments for individual performance, if any, are listed below:
| 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% | |||
| Name | Achievement Level After Financial Performance | Adjustment for Individual Performance | Final Achievement Level | |||
Stephen McMillan | 105% | 25% | 130% | |||
Claire Bramley | 105% | 25% | 130% | |||
Todd Cione | 105% | 0% | 105% | |||
Hillary Ashton | 105% | 25% | 130% | |||
Kathleen Cullen-Cote | 105% | 25% | 130% | |||
Mark Culhane* | 105% | 0% | 105% |
| * | Mr. Culhane’s annual cash incentive was pro-rated due to his termination in June 2021. |
As noted above, the 2021 Management Plan payouts for Mr. McMillan and each of Mses. Bramley, Ashton, and Cullen-Cote were positively adjusted by 25%. The Committee considered the successful business transformation that was led by each of Mr. McMillan and Mses. Ashton and Cullen-Cote in 2021, in addition to other aspects of their extraordinary individual performance in 2021. In addition, Ms. Bramley’s positive impact as the Company’s new Chief Financial Officer was immediate and significantly beyond expectations, especially considering she just joined Teradata in June 2021. Additional specific factors considered included the following accomplishments for each individual:
| Stephen McMillan | Claire Bramley | Hillary Ashton | Kathleen Cullen-Cote | |||
• Developed compelling and transformative strategy for Teradata, which is clearly reflected by our performance | • Improved quality and clarity of earnings communications | • Transformed product organization and capability | • Implemented programs to significantly advance Teradata’s culture transformation | |||
• Achieved rapid and significant increase in public cloud ARR in 2021 | • Successful execution of investor day event and related activities within the first three months of employment | • Delivered on goals for migrating customers to the cloud | • Advanced DEI efforts, reflected by the 100% score on the Equality Index and other best place to work accolades received | |||
• Positioned Teradata as a modern and relevant company | • Transformed finance organization and capabilities | • Successful testing of cloud capabilities and next generation architecture, including the historic 1,000 node test | • Facilitated multiple key leadership transitions during the year – including Chief Revenue Officer, Chief Financial Officer and Chief Marketing Officer |
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Compensation Discussion and Analysis
| Stephen McMillan | Claire Bramley | Hillary Ashton | Kathleen Cullen-Cote | |||
• Transformed go-to-market and other executive leadership, including hiring of new Chief Revenue Officer with extensive technology and cloud experience, Chief Financial Officer, and Chief Marketing Officer | • Co-sponsor of ESG program | • Achieved number 1 product rating in Gartner Magic Quadrant | • Achieved meaningful year over year increase in employee engagement score |
The 2019 annual bonus2021 Management Plan payment amounts are set forth in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table of this proxy statement on page 52.statement. For more information on the 2019 annual bonus program2021 Management Plan for our named executive officers, please refer to the “Grants of Plan-Based Awards” section on page 54 of this proxy statement.
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Section 3: CoreThe Committee may approve bonuses in connection with the hiring of new executive officers. During 2021, in connection with the elections of Ms. Bramley as Chief Financial Officer and Mr. Cione as Chief Revenue Officer, each was paid a $500,000 signing bonus. Each bonus is subject to a repayment obligation of $250,000 (net of taxes) if his or her employment is terminated with cause or he or she resigns for any reason other than good reason during his or her first year of employment, and $125,000 (net of taxes) if his or her employment is terminated with cause or he or she resigns for any reason other than good reason during his or her second year of employment. This signing bonus was intended to replace incentive compensation that both Ms. Bramley and Mr. Cione forfeited at their prior employer and as an inducement to join the Company. The 2021 signing bonus amounts are set forth in the Bonus column of the Summary Compensation ProgramTable of this proxy statement.
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 evolvedstabilized 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 transition to a subscription-based business transformation in a manner that wasmodel. The long-term incentive program design is also 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”)RSU equity vehicles and performance criteria, as applicable, for our long-term incentive program since 2017.2020. As noted in the chart below, consistent with our cloud-first strategy, the Committee has moved towards a cloud-based financial performance measure for our long-term incentive program.
Long-Term Equity Program Evolution
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Section 3: Core Compensation ProgramDiscussion and Analysis
Annual Grants – 20192021 – 2023 Performance Based RSU Grants
Mr. Ratzesberger received a target award opportunity for his annual equity grant underIn 2021, the Company’s 2019Committee made long-term incentive program equalgrants that consisted of a grant of 2021-2023 performance-based RSUs (“2021-2023 LTIP”) 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 negotiatedeligible named executive officers 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 award level for each of Mr. Culhane and Mr. Harrington was set at a levellevels that were intended to bring hisalign their total direct compensation levels closer to competitivewith the market levels, and,data. The target opportunity for each of the named executive officers who participated in the case of Mr. Culhane, commensurate with his experience and level of responsibility at Teradata. Mr. Lund did not participate in the 2019 long-term incentive program. The 2019 target long-term incentive opportunities are set out in the table below.2021-2023 LTIP were as follows:
| NAME | LONG-TERM INCENTIVE OPPORTUNITY | |
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| $ | |
Claire Bramley(1) | $2,500,000 | |
Todd Cione | $3,000,000 | |
Hillary Ashton | $2,900,000 | |
Kathleen Cullen-Cote | $2,000,000 | |
Mark Culhane | $ | |
| (1) |
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In 2019,2021, we continued our commitment to pay for performance by allocating70%60% of the long-term incentive opportunity to performance-based RSUsand 30%40% to service-based RSUs. These equityThis allocation between performance-based and time-based awards are summarized in the chart above.is consistent with market data provided by our independent compensation consultant and feedback received from stockholders as part of our engagement program. The performance-based RSUs will be earned ifbased on the extent to which Teradata achieves two equally weighted financial goals during the3-year performance period ending December 31, 2021,2023, which were designed to help positiondrive the Company toward profitable cloud growth as a consumption-based technology leader in the analytics andsoftware-as-a-service industry as described below.industry. 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.
| RATIONALE | ||
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Free Cash Flow as a Percentage of Revenue. 2023. | The free cash flow as a percent of revenue measure | |
Annual Grants – 2020
The annual equity grants made to Messrs. Brown, CulhaneCommittee established threshold, target and Harrington and Ms. Cullen-Cote in March 2020 are a mix ofmaximum goals for each performance measure for the 2021-2023 performance-based RSUs and service-based RSUs, heavily weighted to performance-based RSUs. Mr. Lund did not receive anat the beginning of our 2021 fiscal year. In addition, for the annual equity grant in March 2020. Thecomponents of the 2021-2023 performance-based RSUs, such components are equally weighted based on ARR growth and free cash flow as a percentagealso established at the beginning of revenue, both based on a three-year performance period ending December 31, 2022.the applicable fiscal year. The Committee aligned thespecific performance goals for the three-year award period are maintained by us as proprietary and confidential. The Committee believes that disclosure of these awardsspecific performance goals would represent competitive harm to the same financial measuresus as the performance-based RSUs granted in 2019, as these measures continue to be essential to executing our strategysuch corporate goals and completing our business transformation, and theyresults are based on driving strong ARR and free cash flow growth over and above prior-year levels.not publicly disclosed
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Section 3: Core Compensation ProgramDiscussion and Analysis
and are competitively sensitive. The Committee believes the attainment of target performance levels, while uncertain, could be reasonably anticipated. Threshold goals represent the minimum level of performance necessary for there to be a payout for that performance measure and the Committee believes the threshold goals are rigorous, but likely to be achieved. Maximum goals represent the performances at which payouts are 200% of the target award. Even if actual results exceed the maximum goals, the payouts are capped at 200% of the target award. Maximum goals represent levels of performance at which the Committee determined a payout of 200% of target would be appropriate. The Committee believes that the maximum goals established are more aggressive goals. Consistent with the disclosure in this proxy statement, we expect to provide the goals and performance attained for the 2021-2023 LTIP in the proxy statement for our 2024 Annual Meeting.
In addition to approving performance measures, goals and weightings, the Committee also established specific corporate adjustment events for determining payouts under the 2021-2023 performance based RSUs. The adjustment events include certain acquisitions, divestitures, and foreign currency fluctuations.
Sign-onSign-On Grants
The Committee will approve awards of RSUs for use in certain situations, including hiring of new executive officers, mid-year promotions of existing executive officers, leadership transition, or retention purposes. Vesting for these types of grants in typically time-based. During 2021, the Committee granted the following restricted share units to our named executive officers:
In connection with her election as Chief Financial Officer, and in addition to her 2021 annual grant, Ms. Bramley received a new-hire grant of service-based RSUs, with a target value equal to $3,500,000, which was intended to offset compensation that she was forfeiting from her prior employer, as well as to maintain internal pay equity. This new hire award was subject to the following vesting schedule that was negotiated with Ms. Bramley: 50% of the RSUs vested on December 15, 2021, 30% of the RSUs vest on the first anniversary of the date of grant, and 20% of the RSUs vest on the second anniversary of the date of grant, in each case subject to continued employment.
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”):
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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 thathis 2021 annual grant, Mr. Brown was heavily recruited for other senior executive global positions.
In connection with her hire as Chief Human Resources Officer, Ms. Cullen-CoteCione 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 anew-hire grant of service-based RSUs, with a granttarget value of $2.4 million. The RSUs generally vest in equal annual installmentsto $7,000,000, which was intended to offset compensation that he was forfeiting from his prior employer and as an inducement to accept our offer over three years, exceptcompeting offers. This new hire award was subject to the following vesting schedule that any unvested RSUs shall accelerate in full in the event that the Company terminates such executive’s employment without cause. The Committee, in consultationwas negotiated with its independent compensation consultant, awarded these special retention grants basedMr. Cione: 25% on the viewdate that Mr. Culhane and Mr. Harrington are both critical tois six months after the successful executiondate of grant, 25% on the first anniversary of the Company’s strategy, particularly in lightdate of grant, 30% on the second anniversary of the current CEO
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Section 3: Core Compensation Program
transitiondate of grant and other factors including: (i) in20% on the case of Mr. Culhane, his market positioning and proven financial experience and expertise, and (ii) in the case of Mr. Harrington, his deep knowledgethird anniversary of the Company and his added responsibilities with respectdate of grant, in each case subject to the Company’s cloud-based initiatives.continued employment.
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 Performance-Based RSUs for the 20172019 – 20192021 Performance Period (“2019-2021 LTIP”)
As part of our 2017 long-term incentive program,2019-2021 LTIP, we granted performance-based RSUs to our named executive officers who were employed by the Company at that time (i.e., Messrs. Ratzesberger, HarringtonMs. Cullen-Cote and Lund) providing them withMr. Culhane).
One half of the 2019-2021 LTIP provided an opportunity to earn shares based on ourthe extent to which the Company achieved certain target levels of free cash flow as a percent of the Company’s total shareholder return (“TSR”) performance relative toreported revenue during the other companies in the S&P 1500 Information Technology Index for the3-year period ending December 31, 2019.
2021. The payoutother half of the 2019-2021 LTIP provided an opportunity to earn shares based on the extent to which the Company achieved target levels of free cash flow as a percentage of revenue and compounded annual ARR growth over the 3-year period ending December 31, 2021. These measures were designed to help position the Company as a consumption-based technology leader in the analytics and software-as-a-service industry and to facilitate long-term cash generation and profitability. The performance goals and targets for the 2017-2019 performance-based RSUs, as well as the result that was certified by the Committee in February 2020,2019-2021 LTIP, along with actual results for each year, 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% |
| 2019-2021 LTIP PERFORMANCE AND RESULTS | ||||||||||
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| FINANCIAL MEASURE | Threshold (50% Payout) | Target (100% Payout) | Maximum (200% Payout) | Actual Results | Payout Percentage | |||||
Free Cash Flow as a Percentage of Revenue(1) | 12% | 15% | 18% | 22.5% | 200% | |||||
Compounded Annual ARR Growth | 9% | 11% | 13% | 8.3% | 0% | |||||
Total Payout Percentage |
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| (1) | Non-GAAP financial measure. See the Investor Relations section of our website for the investor presentation for the related fiscal year for definition and reconciliation to GAAP financial measure. |
| 46 | 2022 PROXY STATEMENT |
Compensation Discussion and Analysis
When establishing the threshold and targettargets in 2019, the Committee approved adjustments to actual performance for ARR growth to exclude the impact of foreign currency exchange rates from pre-established 2021 plan exchange rate levels, which resulted in a $3 million adjustment to ARR growth.
Based on the actual results for the 2017-20192019-2021 performance cycle,period relative to the Committee took into account that the Company had performed at or below the 25th percentile level of the S&P 1500 Information Technology Index during the 2013-2015 period and at the 38th percentile during the 2014-2016 period. As a result, in taking into consideration stockholder interests, the Committee believed that achievement at orgoals outlined above, the 50th percentile would represent significant performance improvement, while also representing a realistic, yet challenging, performance goal. In further alignment with stockholder interests,weighted average payout percentage for each of Mr. Culhane and Ms. Cullen-Cote for the Committee also (i) approved a cap on the absolute level of payout that could be earned under these awards, and (ii) capped any payout at median results if absolute TSR were negative (but relative TSR greater than the 25th percentile)2019-2021 performance-based RSUs was 100%.
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Compensation Discussion and Analysis
SECTION 4: COMPENSATION CONSULTANT AND PEER GROUP
Compensation Consultant
For 2019,When setting 2021 compensation levels for the named executive officers, the Committee retained Frederic W. Cook & Co., Inc.the human capital practice of Aon, plc (“FW Cook”Aon”) as the Committee’sits independent compensation consultant, reporting directly to the Committee and serving at the sole discretion of the Committee. The consulting firm does not perform any other services for the Company, other than advising the Board of Directors on its director compensation program. The Committee has assessed the independence of FW Cook pursuant to SEC rules and NYSE listing standards and concluded that there was no conflict of interest that would prevent the consulting firm from independently advising the Committee.
During its engagement, FW CookAon 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 compensation peer group, as established by the Committee. In addition, our Human Resources department purchased compensation surveys and reports from Aon during 2021 at a cost of approximately $60,000. With regard to other compensation services, Aon also advises our board on its director compensation program. With regard to services that are not compensation related, Aon affiliates also provide to us insurance-related products and services, covering health and benefits, pension-related services, other insurance brokerage services and risk services to the business. The aggregate fees we paid to Aon for (i) its service as our independent executive officer and board of director compensation consultant was approximately $190,000 and (ii) for the additional services paid to various of its affiliates was approximately $520,000. Although the Committee was aware of the nature of the services performed by Aon affiliates, the Committee did not review and approve such services and insurance premiums and policies, as those were reviewed and approved by management in the ordinary course of business.
Aon maintains certain policies and practices to protect the independence of the executive compensation consultants engaged by the Committee. In particular, Aon provides an annual update to the Committee on the financial relationship between Aon and the Company, and provides written assurances that, within Aon, the Aon consultants who perform executive compensation services for the Committee have compensation determined separately from Aon’s other lines of business and from the other services it provides to the Company. These safeguards were designed to help ensure that the Committee’s executive compensation consultants continued to fulfill their role in providing independent, objective advice. In light of the foregoing, the Committee has assessed the independence of Aon pursuant to SEC rules and NYSE listing standards and concluded that there was no conflict of interest that would prevent the consulting firm from independently advising the Committee.
Peer Group
The Committee examines the compensation peer group on an annual basis, with input from management and its independent compensation consultant. When establishing base salary and annual and long-term incentive levels in early 2019,In late 2020, with the selection of Aon as its new independent compensation consultant, the Committee continued to use the following criteria to select the compensation peer group:
Revenueundertook a thorough review process of betweenone-third to three times our size
Market capitalization of betweenone-third to six times our size
U.S.-based (or Canada-based with a U.S.-style pay model and disclosure)
Software, internet software and services, or IT consulting industries
The compensation peer group in effect in 2019 until July 27, 2019 wasand as follows:
On July 28, 2019,a result revised the Committee, after consulting with FW Cook,peer group’s framework and methodology and approved certain adjustmentsthe current peer group 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 ofbetter reflect our current cloud growth strategy, business model, and competitionmarket for executive talent. The Committee also removed companies from thecontinued to use this updated peer group that had been recently acquired,when establishing base salary, annual incentive levels and long-term incentive levels for our executives in 2021.
The peer group framework and criteria utilized are as follows:
Identify companies within the following sub-industries, based on the Global Industry Classification Standard: internet services and infrastructure; application software; systems software; and technology hardware, storage and peripherals;
From those sub-industries, focus on the following business areas: cloud and storage; analytics; and security;
Include companies with revenue generally above $700 million with a soft cap of $10 billion, with exceptions based on the market for executive talent; and
Consider market capitalization on an absolute basis, but also examine other metrics such as Red Hat.revenue to market capitalization.
|
Section 4: Compensation ConsultantDiscussion and Peer GroupAnalysis
The following chart lists the companies in our current compensation peer group along with their revenue and approximate number of employees as reported in the most recently-filed Annual Report on Form 10-K.for 2021 compensation decisions:
| COMPANY | REVENUE (in millions) | APPROX. # OF EMPLOYEES | COMPANY | REVENUE (in millions) | APPROX. # OF EMPLOYEES | |||||||||||||
|
| $2,894 |
|
| 7,724 |
|
|
| $4,731 |
|
| 11,900 |
| |||||
|
| $3,274 |
|
| 10,100 |
|
|
| $1,823 |
|
| 6,700 |
| |||||
|
| $2,336 |
|
| 8,100 |
|
|
| $2,869 |
|
| 13,100 |
| |||||
|
| $3,010 |
|
| 8,400 |
|
|
| $2,899 |
|
| 7,014 |
| |||||
|
| $701 |
|
| 3,023 |
|
|
| $1,255 |
|
| 6,055 |
| |||||
|
| $1,661 |
|
| 2,801 |
|
|
| $3,460 |
|
| 10,371 |
| |||||
|
| $1,160 |
|
| 4,009 |
|
|
| $1,803 |
|
| 4,400 |
| |||||
|
| $2,156 |
|
| 7,082 |
|
|
| $3,361 |
|
| 13,896 |
| |||||
|
| $6,416 |
|
| 10,500 |
|
|
| $1,899 |
|
| 8,535 |
| |||||
| COMPANY | REVENUE (in millions) | APPROX. # OF EMPLOYEES | COMPANY | REVENUE (in millions) | APPROX. # OF EMPLOYEES | |||||||||||||||||
|
| $11,767 |
|
| 34,000 |
|
|
| $1,684 |
|
| 3,800 |
| |||||||||
|
| $10,681 |
|
| 40,000 |
|
|
| $1,394 |
|
| 6,080 |
| |||||||||
|
| $5,744 |
|
| 11,000 |
|
|
| $1,327 |
|
| 904 |
| |||||||||
|
| $4,256 |
|
| 10,473 |
|
|
| $1,316 |
|
| 3,662 |
| |||||||||
|
| $3,386 |
|
| 14,307 |
|
|
| $1,274 |
|
| 4,300 |
| |||||||||
|
| $3,342 |
|
| 10,195 |
|
|
| $1,050 |
|
| 3,658 |
| |||||||||
|
| $3,217 |
|
| 9,700 |
|
|
| $940 |
|
| 3,400 |
| |||||||||
|
| $3,009 |
|
| 6,600 |
|
|
| $869 |
|
| 2,728 |
| |||||||||
|
| $2,551 |
|
| 2,800 |
|
|
| $835 |
|
| 2,806 |
| |||||||||
|
| $2,229 |
|
| 6,500 |
|
|
| $771 |
|
| 1,934 |
| |||||||||
|
| $1,917 |
|
| 7,200 |
|
|
| $592 |
|
| 2,495 |
| |||||||||
|
| $1,713 |
|
| 2,667 |
|
|
|
|
|
|
|
| |||||||||
| ||
Compensation Discussion and Analysis
SECTION 5: SEVERANCE, CHANGE IN CONTROL AND OTHER BENEFITS
Change in Control Severance Plan
Each of our currentcurrently employed named executive officers 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. 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. Based on information provided by 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. The CIC Plan provides for separation payments and benefits to our current named executive officers, which 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. 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 currentcurrently employed named executive officers participates, other than Mr. Lund.participates. 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), and, in the case of Mr. McMillan only, upon his resignation for good reason, in either case 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
• A prorated annual cash incentive
• 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. | |
|
Section 5: Severance, Change in ControlCompensation Discussion and Other BenefitsAnalysis
*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.
• For Mr. McMillan only, enhanced vesting of any outstanding but unvested service-based or performance-based RSUs, such that he will be treated as receiving an additional year of vesting for both types of awards (with payout of any performance-based RSUs subject to actual performance results during the applicable performance period). Mr. McMillan’s New Hire Award is subject to accelerated vesting in full, and each of his time-based and performance-based RSUs granted under the 2020 long-term incentive program is subject to pro-rated vesting (subject to a minimum of two years of vesting credit), upon a termination of Mr. McMillan’s employment by Teradata without cause or by Mr. McMillan with good reason (with the performance-based award vesting based on actual performance results for the entire performance period). |
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.
To facilitate the continuing refreshment of the executive leadership team to include leaders with the relevant experiences to lead us through our transformation efforts, on June 8, 2021, the Company announced that, effective as of June 13, 2021, Mark Culhane was terminated as the Company’s Chief Financial Officer and principal accounting officer. Mr. Culhane remained an employee as part of his severance obligations to assist with a short transition period through June 30, 2021. The board determined that Mr. Culhane’s removal constituted a termination without “cause” under the ESP. As such, he was entitled to the severance benefits set forth above. In addition, the Company paid to him the sum of $35,525, which represented the remaining amount due under his real estate lease in the San Diego, California area.
More information on the CIC Plan and the Executive Severance Plan, including the estimated payments and benefits payable to the named executive officers, is provided under the “Potential Payments Upon Termination or Change in Control” section beginning on page 58 of this proxy statement.
Limited Perquisites
Fromtime-to-time we offer limited, travel-related perquisites to our named executive officers. In particular, during 2019, Teradata covered theFrom January through December 31, 2021, Mr. McMillan received a gross monthly allowance of $15,000 to cover his commuting expenses for Mr. Culhane, including the cost of housing and transportation in connection with his travel to our headquarters in San Diego. During 2019, Teradata similarly providedDiego and Ms. Cullen-Cote with anreceived a commuting allowance of up to $5,000 per month for travel to our headquarters in San Diego.
To demonstrate executive commitment and support for our new Flexible Work model that is designed to transition Teradata to a work model that embraces modern workforce productivity and technology expectations and capabilities by providing employees autonomy over where they work and are most productive, the Committee adopted an executive travel allowance policy that was effective in June 2021 for all named executive officers, other than Mr. McMillan, and March 2022 for Mr. McMillan. The executive travel allowance policy is designed to facilitate executive officer travel to San Diego, reimbursing herbased on business needs. The travel allowance provided to each named executive officer, other than Mr. McMillan, is $4,000 per month and for expensesMr. McMillan is $12,500 per month. This monthly allowance is to cover air fare, lodging, and ground transportation when traveling to San Diego for business purposes.
Health and Wellbeing Benefits
We believe that providing competitive health and wellbeing benefits at a reasonable cost is an important part of any employee’s compensation package and promotes employee health. Our executive officers participate in the same health and wellbeing benefits as our United States based full-time salaried employees. Health-related benefits for fiscal 2021 included medical, vision, and dental insurance; life, accidental death and dismemberment insurance; and disability insurance. These benefits, including plan design and cost, are analyzed annually. In addition, to encourage and support employee wellbeing we provide the following benefits to our executive officers as well as our United States based full-time salaried employees: flexible time off and birthday day off.
Retirement Benefits
We believe that it is important to allow our employees, including our executive officers, the opportunity to save for retirement through our Teradata Savings Plan, a 401(k) plan (the “Retirement Plan”). Pursuant to the Retirement Plan, Teradata will match employee contributions dollar for dollar up to $5,000the first 4% of eligible pay and then will match 50¢ of the next 2% of eligible pay contributed each pay period. Employee contributions and the investment earnings on such contributions are always 100% vested and Teradata contributions and investment earnings become fully vested on the employee’s anniversary date after completing three full years of service at Teradata. Teradata contributions for fiscal 2021 to our Retirement Plan on behalf of our named executive officers can be found under “All Other Compensation for Fiscal 2021”.
Charitable Giving
We support charitable organizations for our employees through our matching gift program. The program for our executive officers provides that a gift or gifts by an executive officer to one or more tax exempt 501(c)(3) charitable organizations will be matched by Teradata in an aggregate amount of up to $750 – $1,000 per month. Also, in 2019, we covered the cost of spousal travel for each of Mr. Culhane and Mr. Harrington in connection with a Company recognition event.year, as applicable.
| ||
Compensation Discussion and Analysis
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 alignment of the interests of our executives and our stockholders, including the following:
POLICY/PRACTICE | DESCRIPTION | |
Stock Ownership Guidelines |
| |
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” | |
|
Section 6: Other Compensation Policies and Practices
| ||
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 $1 million. As has historically been the case, the Committee reserves the ability to pay compensation to our executives in appropriate circumstances, even if such compensation is not deductible under Section 162(m). In addition, consistent with our executive compensation philosophy of linking pay to performance and aligning executive interests with those of our shareholders, we currently expect that we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our Company even though amounts in excess of the Code Section 162(m) limit are no longer deductible.
| |
| 52 |
|
20192021 Summary Compensation
The following table summarizes the total compensation paid to, or earned by, each of our named executive officers for the fiscal year ended December 31, 2019,2021, and the prior two fiscal years.
| Name and Principal Position (1) | Year | Salary (2) ($) | 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
|
| |||||||||
Name and Principal Position | Year | Salary (1) ($) | Bonus (2) ($) | Stock Awards (3) ($) | Option Awards (4) ($) | Non-Equity Incentive Plan Compensation (5) ($) | All Other Compensation (6) ($) | Total ($) | ||||||||
Stephen McMillan |
2021 |
800,000 | -
|
9,261,606 |
- |
1,312,500 |
196,532 |
11,570,638 | ||||||||
Chief Executive Officer | 2020 | 446,154 | 500,000 | 12,539,602 | - | 714,575 | 129,200 | 14,329,531 | ||||||||
Claire Bramley |
2021 |
269,231 |
500,000 |
5,911,434 |
- |
289,110 |
62,722 |
7,032,497 | ||||||||
Chief Financial Officer (7) | ||||||||||||||||
Mark Culhane |
2021 |
260,885 | -
|
2,984,278 |
- |
264,082 |
1,079,324 |
4,588,569 | ||||||||
Former Chief Financial Officer |
2020 |
529,616 | - |
5,249,683 | - |
642,600 |
85,916 |
6,507,815 | ||||||||
| 2019
| 502,731
| -
| 3,820,974
| -
| 357,000
| 88,776
| 4,769,481
| |||||||||
Hillary Ashton |
2021 |
430,000 | -
|
2,984,278 |
- |
564,375 |
16,540 |
3,995,193 | ||||||||
Chief Product Officer | 2020
| 442,981
| 300,000
| 2,616,768
| -
| 469,956
| 143,493
| 3,973,198
| ||||||||
Todd Cione |
2021 |
490,385 |
500,000 |
10,226,031 |
- |
520,685 |
15,568 |
11,752,669 | ||||||||
Chief Revenue Officer (7) | ||||||||||||||||
Kathleen Cullen-Cote |
2021 |
450,000 | - |
2,058,134 |
- |
472,500 |
58,000 |
3,038,634 | ||||||||
Chief People Officer | 2020 | 467,308 | - | 1,924,888 | - | 453,600 | 61,943 | 2,907,739 | ||||||||
| 2019
| 173,077
| 300,000
| 4,045,548
| -
| 108,360
| 28,451
| 4,655,436
| |||||||||
| (1) | This column shows |
| (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 (“FASB ASC Topic 718”), of performance-based and service-based restricted share units (“RSUs”) granted in the applicable year. |
|
|
|
Compensation Tables
|
| 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 | - | - | - | |||
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 | |||
| ||
Compensation Tables
| Name | Target Number of 2021-2023 LTIP | Target Grant Date Fair Value | Maximum Grant Date Fair Value | |||
Stephen McMillan | 131,900 | $5,556,947 | $11,113,894 | |||
Claire Bramley | 31,632 | $1,477,847 | $ 2,955,694 | |||
Mark Culhane | 42,501 | $1,790,567 | $ 3,581,134 | |||
Hillary Ashton | 42,501 | $1,790,567 | $ 3,581,134 | |||
Todd Cione | 43,967 | $1,852,330 | $ 3,704,660 | |||
Kathleen Cullen-Cote | 29,311 | $1,234,872 | $ 2,469,744 | |||
2019
| (4) | There were no stock options granted in 2019-2021. |
| (5) | This column reflects the annual cash incentive earned by our named executive officers under the annual cash incentive program for the applicable year. For 2020, each participating named executive officer elected to receive payment in shares. For information concerning the 2021 annual cash incentive, see the Annual Cash Incentive Awards discussion in the Compensation Discussion and Analysis section of this proxy statement. |
| (6) | The amounts reported in this column for 2021 include the following: |
| Termination / CIC Benefits | Other Compensation | |||||||||||||||
| Name | CIC / ($) | Subsidized ($) | Charitable ($) | Commuting Expense ($) | Relocation Expenses ($) | Company Contributions to 401(k) ($) | Value of Life Insurance Premiums Paid by Company ($) | Total ($) | ||||||||
| Stephen McMillan | - | - | 750 | 180,000 | - | 14,500 | 1,282 | 196,532 | ||||||||
| Claire Bramley | - | - | 500 | 52,500 | - | 8,654 | 1,068 | 62,722 | ||||||||
| Mark Culhane | 1,020,000 | 12,708 | - | 35,525 | - | 10,690 | 401 | 1,079,324 | ||||||||
| Hillary Ashton | - | - | 750 | - | 372 | 14,500 | 918 | 16,540 | ||||||||
| Todd Cione | - | - | - | - | - | 14,500 | 1,068 | 15,568 | ||||||||
| Kathleen Cullen-Cote | - | - | 1,000 | 41,539 | - | 14,500 | 961 | 58,000 | ||||||||
| (7) | Ms. Bramley was elected Chief Financial Officer effective as of June 14, 2021, and Mr. Cione was elected Chief Revenue Officer effective as of January 4, 2021. |
| 54 | 2022 PROXY STATEMENT |
Compensation Tables
2021 Grants of Plan-Based Awards
The following table summarizes information for each named executive officer regarding (i) estimated payouts under the 20192021 annual bonuscash incentive program, (ii) estimated payouts for the performance-based RSUs (also referred to as PBRSUs) that were granted in 2019,2021, and (iii) service-based RSUs that were granted in 2019.2021.
| Name | 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) | Grant Date | Approval Date | Estimated Possible Payouts Under Non-Equity Incentive Plan Awards (1) | Estimated Possible Payouts Under Equity Incentive Plan Awards (2) | All Other Stock Awards: Number of of Stock Units (3) | 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 (#) | (#) | (#) | ($/sh) | ($) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Victor Lund | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bonus Program | - | - | - | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stephen McMillan | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | - | - | 500,000 | 1,000,000 | 2,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | - | - | - | - | 03/01/2021 | 02/26/2021 | 65,950 | 131,900 | 263,800 | 5,556,947 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 11/15/2019 | 11/15/2019 | 160,668 | 4,280,196 | 03/01/2021 | 02/26/2021 |
|
|
|
|
|
|
|
|
| 87,934 |
|
|
| 3,704,659 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Oliver Ratzesberger | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bonus Program | - | 937,500 | 1,875,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Claire Bramley | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | - | - | 200,000 | 400,000 | 800,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 3/1/2019 | 1/14/2019 | 48,999 | 97,997 | 195,994 | 4,829,292 | 6/15/2021 | 5/18/2021 | 15,816 | 31,632 | 63,264 | 1,477,847 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs – Sign On | 6/15/2021 | 5/18/2021 | 73,809 | 3,448,356 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 3/1/2019 | 1/14/2019 | 41,999 | 2,069,711 | 6/15/2021 | 5/18/2021 |
|
|
|
|
|
|
|
|
| 21,088 |
|
|
| 985,231 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Mark Culhane | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bonus Program | - | 510,000 | 1,020,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | - | - | 255,000 | 510,000 | 1,020,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 3/1/2019 | 2/4/2019 | 27,138 | 54,275 | 108,550 | 2,674,672 | 03/01/2021 | 02/26/2021 | 21,251 | 42,501 | 85,002 | 1,790,567 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 3/1/2019 | 2/4/2019 | 23,261 | 1,146,302 | 03/01/2021 | 02/26/2021 |
|
|
|
|
|
|
|
|
| 28,334 |
|
|
| 1,193,711 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Scott Brown | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bonus Program | - | 550,000 | 1,100,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Hillary Ashton | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | - | - | 215,000 | 430,000 | 860,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 7/1/2019 | 6/11/2019 | 30,737 | 61,473 | 122,946 | 2,257,903 | 03/01/2021 | 02/26/2021 | 21,251 | 42,501 | 85,002 | 1,790,567 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 7/1/2019 | 6/11/2019 | 165,156 | 6,066,180 | 03/01/2021 | 02/26/2021 |
|
|
|
|
|
|
|
|
| 28,334 |
|
|
| 1,193,711 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Todd Cione | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | - | - | 250,000 | 500,000 | 1,000,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 03/01/2021 | 02/26/2021 | 21,984 | 43,967 | 87,934 | 1,852,330 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 03/01/2021 | 02/26/2021 | 29,311 | 1,234,872 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs – Sign On | 01/05/2021 | 12/18/2020 |
|
|
|
|
|
|
|
|
| 308,506 |
|
|
| 7,138,829 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Kathleen Cullen-Cote | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Bonus Program | - | 360,000 | 720,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Annual Incentive | - | - | 180,000 | 360,000 | 720,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 8/5/2019 | 7/11/2019 | 21,839 | 42,778 | 85,556 | 1,415,952 | 03/01/2021 | 02/26/2021 | 14,656 | 29,311 | 58,622 | 1,234,872 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 8/5/2019 | 7/11/2019 | 79,444 | 2,629,596 | 03/01/2021 | 02/26/2021 |
|
|
|
|
|
|
|
|
| 19,541 |
|
|
| 823,262 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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) |
|
| (2) | The information included in the “Threshold”, “Target” and “Maximum” columns reflects the range of potential payouts under the |
|
Reflects the number of service-based RSUs granted in |
Reflects the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of the performance-based and service-based RSUs granted during |
| ||||
Compensation Tables
20192021 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, 2019,2021, and (ii) each award of performance-based RSUs and service-based RSUs that had not vested and remained outstanding as of December 31, 2019.2021.
| 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 | ||||||||||||||||||||||||||
Name | Grant Date | Stock Awards | Equity Incentive Plan Awards | |||||||||||||||
Number of Shares or Units of Stock That Have Not (#) | Market Value of Shares or Units of Stock That Have Not ($) | Number of Unearned Shares, Units or Other Rights that have not (#) | Market Value of Unearned Shares, ($) | |||||||||||||||
Stephen McMillan | 03/01/2021 |
| 87,934 |
|
| 3,734,557 |
|
| - |
|
| - |
| |||||
03/01/2021 |
| - |
|
| - |
|
| 131,900 |
|
| 5,601,793 |
| ||||||
06/09/2020 |
| 97,492 |
|
| 4,140,485 |
|
| - |
|
| - |
| ||||||
06/09/2020 |
| 26,068 |
|
| 1,107,108 |
|
| - |
|
| - |
| ||||||
06/09/2020 |
| - |
|
| - |
|
| 219,355 |
|
| 9,316,007 |
| ||||||
Claire Bramley | 06/15/2021 |
| 36,905 |
|
| 1,567,355 |
|
| - |
|
| - |
| |||||
06/15/2021 |
| 21,088 |
|
| 895,607 |
|
| - |
|
| - |
| ||||||
06/15/2021 |
| - |
|
| - |
|
| 31,632 |
|
| 1,343,411 |
| ||||||
Mark Culhane | 03/01/2021 |
| - |
|
| - |
|
| 7,084 |
|
| 300,857 |
| |||||
03/01/2020 |
| - |
|
| - |
|
| 47,390 |
|
| 2,012,653 |
| ||||||
03/01/2019 |
| - |
|
| - |
|
| 45,230 |
|
| 1,920,918 |
| ||||||
Todd Cione | 03/01/2021 |
| 29,311 |
|
| 1,244,838 |
|
| - |
|
| - |
| |||||
03/01/2021 |
| - |
|
| - |
|
| 43,967 |
|
| 1,867,278 |
| ||||||
01/05/2021 |
| 231,380 |
|
| 9,826,709 |
|
| - |
|
| - |
| ||||||
Hillary Ashton | 03/01/2021 |
| 28,334 |
|
| 1,203,345 |
|
| - |
|
| - |
| |||||
03/01/2021 |
| - |
|
| - |
|
| 42,501 |
|
| 1,805,017 |
| ||||||
09/01/2020 |
| 14,542 |
|
| 617,599 |
|
| - |
|
| - |
| ||||||
09/01/2020 |
| - |
|
| - |
|
| 32,718 |
|
| 1,389,533 |
| ||||||
03/01/2020 |
| 17,552 |
|
| 745,433 |
|
| - |
|
| - |
| ||||||
03/01/2020 |
| - |
|
| - |
|
| 39,491 |
|
| 1,677,183 |
| ||||||
12/01/2019 |
| 24,269 |
|
| 1,030,704 |
|
| - |
|
| - |
| ||||||
Kathleen Cullen-Cote | 03/01/2021 |
| 19,541 |
|
| 829,906 |
|
| - |
|
| - |
| |||||
03/01/2021 |
| - |
|
| - |
|
| 29,311 |
|
| 1,244,838 |
| ||||||
03/01/2020 |
| 25,742 |
|
| 1,093,263 |
|
| - |
|
| - |
| ||||||
03/01/2020 |
| - |
|
| - |
|
| 57,921 |
|
| 2,459,905 |
| ||||||
08/05/2019 |
| 6,111 |
|
| 259,534 |
|
| - |
|
| - |
| ||||||
08/05/2019 |
| 20,371 |
|
| 865,156 |
|
| - |
|
| - |
| ||||||
08/05/2019 |
| - |
|
| - |
|
| 42,778 |
|
| 1,816,782 |
| ||||||
|
|
|
| 56 |
|
Compensation Tables
These columns show the aggregate number of performance-based RSUs and service-based RSUs outstanding as of December 31, |
| GRANT DATE | REMAINING VESTING DATES | VESTING SCHEDULE | ||
| ||||
| ||||
| ||||
3/ | ||||
| ||||
| ||||
| Q1 2022* | 2019-2021 performance period: 100% vests after performance level determination is made by the Committee | ||
8/5/2019 | 1/3 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 | ||
| 1/3 increments over three years from the date of grant | |||
3/1/2020 | 3/1/2022, 3/1/2023 | 1/3 increments over three years from the date of grant | ||
3/1/2020 | Q1 2023* | 2020-2022 performance period: 100% vests after performance level determination is made by the Committee | ||
6/9/2020 | 6/9/2022 | 42% vests on 6/9/2021, 13% vests on 6/9/2022 | ||
6/9/2020 | Q1 2023* | 2020-2022 performance period: 100% vests after performance level determination is made by the Committee | ||
6/9/2020 | 6/9/2022, 6/9/2023 | 1/3 increments over three years from the date of grant | ||
9/1/2020 | 9/1/2022, 9/1/2023 | 1/3 increments over three years from the date of grant | ||
9/1/2020 | Q1 2023* | 2020-2022 performance period: 100% vests after performance level determination is made by the Committee | ||
1/5/2021 | 1/5/2022, 1/5/2023, 1/5/2024 | 60% vests on 1/5/2022, 25% vests on 2nd and 3rd anniversary of date of grant | ||
3/1/2021 | 3/1/2022, 3/1/2023, 3/1/2024 | 1/3 increments over three years from the date of grant | ||
3/1/2021 | Q1 2024* | 2021-2023 performance period: 100% vests after performance level determination is made by the Committee | ||
6/15/2021 | 6/15/2022, 6/15/2023, 6/15/2024 | 1/3 increments over three years from the date of grant | ||
6/15/2021 | Q1 2024* | 2021-2023 performance period: 100% vests after performance level determination is made by the Committee | ||
6/15/2021 | 6/15/2022, 6/15/2023 | 50% vests on 12/15/2021, 30% vests on 6/15/2022, 20% vests on 6/15/2023 | ||
| * | 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, |
These columns show the aggregate dollar value of the performance-based RSUs and service-based RSUs using the closing stock price on December 31, |
20192021 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 2019,2021, and (ii) the vesting of performance-based RSUs and service-based RSUs during 2019.(1)2021.
| 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) ($) | ||||
Victor Lund | - | - | 148,239 | 6,849,953 | ||||
Oliver Ratzesberger | - | - | 71,900 | 2,422,617 | ||||
Mark Culhane | - | - | - | - | ||||
Scott Brown | - | - | - | - | ||||
Kathleen Cullen-Cote | - | - | - | - | ||||
Daniel Harrington | - | - | 37,810 | 1,747,356 | ||||
| Option Awards | Stock Awards | |||||||||||
| Name | Number of Shares Acquired on Exercise(1) (#) | Value Realized on Exercise ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(2) ($) | ||||||||
Stephen McMillan | - | - |
| 150,384 |
|
| 7,063,800 |
| ||||
Claire Bramley | - | - |
| 36,904 |
|
| 1,592,039 |
| ||||
Mark Culhane | - | - |
| 291,354 |
|
| 12,001,115 |
| ||||
Hillary Ashton | - | - |
| 51,768 |
|
| 2,272,342 |
| ||||
Todd Cione | - | - |
| 77,126 |
|
| 3,684,309 |
| ||||
Kathleen Cullen-Cote | - | - |
| 50,407 |
|
| 2,336,840 |
| ||||
| (1) | None of the named executive officers exercised any stock options during |
| (2) | The value realized on vesting equals the number of shares acquired multiplied by the closing market price of our common stock on the acquisition date. |
Non-Qualified Deferred Compensation
The Company does not maintain aany non-qualified defined contribution planplans or other deferred compensation plans. However, the1-year performance-based RSU awards granted to Mr. Lundplans for the 2016 and 2017 fiscal year performance periods were fully vested at December 31, 2016 and December 31, 2017, respectively, but generally are payable on a deferred basis in 1/3 installments (except for certain termination of employment scenarios described further in the Potential Payments Upon Termination or Change in Control section on page 58 of this proxy statement) on the date that the applicable performance level determination was made by the Committee and on each of first and second anniversaries of the applicable performance level determination date. As a result, theNon-Qualified Deferred Compensation Table below includes information about Mr. Lund’s 2016 and 2017 performance-based RSUs.employees.
|
Compensation Tables
| Name | Executive Contributions in Last Fiscal Year ($) | 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 | - | - | - | - | - |
|
|
|
Pension Benefits
We do not maintain any qualified ornon-qualified defined benefit plans.
| ||
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 currently employed named executive officers 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, 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)., or in the case of Mr. McMillan, if he terminates his employment for good reason. Estimates of the amounts to be paid or provided to each of our named executive officers in connection with a termination of employment or a change in control are provided below.
Estimated Payments to Named Executive Officers
The estimates set forth below of the amounts payable to our named executive officers upon termination of employment or in connection with a change in control generally are based on the assumption that the various triggering events occurred on the last day of 2019,2021, 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,Culhane, only the severance benefits actually received in connection with his removaldeparture as President and CEOChief Financial Officer during fiscal 2021 are reported below.
The estimated amount of compensation and benefits described below for our 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 named executive officers do not provide information on the payout of 20192021 incentive awards under the annual bonuscash incentive 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, 2019,2021 for participating executives, subject to Committee approval, regardless of whether the executive terminated employment or a change in control occurred on that date. Please refer to the Summary Compensation Table for the annual incentives earned by our named executive officers in 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.2021.
Non-Change in Control Scenarios
Executive Severance Plan
Each of our currently employed named executive officers other than Mr. Lund participates in our Executive Severance Plan.
For our participating named executive officers, theThe 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 case of Mr. McMillan, the Executive Severance Plan also provides severance benefits in the event of his termination of employment for good reason. For this purpose, “good reason” for Mr. McMillan’s termination of his employment generally is defined to mean any of the following events or conditions: (a) a material reduction in his authority, duties and responsibilities (other than an isolated, insubstantial and inadvertent action that is not taken in bad faith); (b) any reduction in his annual base salary; (c) the Company’s failure to timely pay annual or long-term incentive compensation to which he is otherwise entitled; (d) a reduction of five percent or more in his “target” or “maximum” annual or long-term incentive opportunity (other than an across-the-board reduction applicable to senior Teradata executives); (e) the Company’s failure to continue any equity compensation plan in which he participates (or a substantially equivalent alternative compensation plan), or the Company’s failure to continue his participation in any such equity compensation plan on substantially the same basis (other than as a result of any isolated, insubstantial and inadvertent action not taken in bad faith); or (f) the Company’s failure, unless otherwise required by law, to continue to provide employee benefits that are substantially equivalent, in the aggregate, to those provided under the Company’s qualified and nonqualified employee benefit and welfare plans of the Company (other than a reduction of less than 5% of the aggregate value of such benefits).
Notwithstanding the foregoing, in the event of the termination of a participating named executive officer’s employment without cause or for good reason in connection with a change in control of Teradata, severance benefits generally would be provided under the CIC Plan, as discussed below.
| 58 | 2022 PROXY STATEMENT |
Potential Payments Upon Termination or Change in Control
In the event of a qualifying termination of employment without cause (not in connection with a change in control), eachor a termination of employment by Mr. McMillan for good reason, 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 bonusannual cash incentive continuation for one year;
A prorated annual cash incentive bonuspayment for the year of termination, generally based on the executive’s “target” bonusannual cash incentive 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;
|
Potential Payments Upon Termination or Change in Control
| • | For |
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 standard vesting treatment of theour 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.control, and other than special vesting terms for certain awards as further described below. The general vesting treatment described below is conditioned upon the participant’s compliance withnon-competition andnon-solicitation provisions, to the extent permissible under applicable law, for a12-month period (or, if applicable law requires a shorter period, for the maximum period allowed under applicable law), as well as confidentiality restrictions. Our performance-based RSUs and service-based RSUs generally pay out upon vesting. All stock options currently held byCurrently, none of our named executive officers are fully vested.
The vesting of Mr. Lund’s RSUs will accelerate in full (based on actual performance during the entire performance period for performance-based RSUs) if Teradata terminates his employment forhold any reason other than for cause, or if Mr. Lund resigns as a director after, or in connection with, the election of a successor President and CEO, provided that he agrees to cooperate in good faith in the transition of duties 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 connection with the election of a successor, his unvested RSUs would be forfeited.stock options.
| SITUATION | PERFORMANCE-BASED RSUs | SERVICE-BASED RSUs | STOCK OPTIONS | |||
Death and Long-Term Disability (“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 remain exercisable until the later of the expiration of the10-year term or three years after death or LTD. | |||
Retirement (termination on or after age 55, with the consent of the Committee, where applicable) |
Generally, apro-rata portion of the award, calculated as of retirement, will become vested based on actual results during the performance period. |
Generally, apro-rata portion will become vested as of date of retirement. |
Awards remain exercisable until the earlier of three years following retirement date or the expiration date. |
| ||
Potential Payments Upon Termination or Change in Control
| SITUATION | PERFORMANCE-BASED RSUs | SERVICE-BASED RSUs | STOCK OPTIONS | |||
Termination without Cause |
Apro-rata portion of the award, calculated as of the date of termination, will become vested based on actual results during the performance period. |
Apro-rata portion will become vested as of the date of termination, and retirement-eligible participants (i.e., participants aged 55 or older) may be credited with an additional year of vesting service. |
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. |
| ||
Potential Payments Upon Termination or Change in Control
Voluntary Resignation (other than retirement, as described above) |
Unvested awards are forfeited. |
Unvested awards are forfeited. |
Awards remain exercisable until the earlier of the fifty-ninth day after termination or the expiration date. |
Notwithstanding the general equity vesting terms described above, certain of our equity awards are subject to special vesting terms, as described below:
Mr. McMillan’s new hire grant of service-based RSUs—which was intended to offset compensation that he was forfeiting from his prior employer—is subject to accelerated vesting in full in the event of the termination of his employment by the Company without cause or by Mr. McMillan for good reason.
Pursuant to his Offer Letter and the Executive Severance Plan, in the event of the termination of his employment by the Company without cause or by Mr. McMillan for good reason (and not in connection with a change of control), Mr. McMillan would be entitled to an additional year of vesting service for purposes of determining pro-rated vesting of his other service-based and performance-based RSUs (with performance-based awards vesting based on actual performance results for the entire performance period).
Pursuant to an Offer Letter and the Executive Severance Plan, in the event of the termination of employment by the Company without cause (and not in connection with a change of control), each of Ms. Bramley and Mr. Cione would be entitled to an additional year of vesting service for purposes of determining pro-rated vesting of her or his service-based RSUs.
The service-based RSUs granted to Mr. Culhane in March 2020 vested in full upon termination of his employment.
The tables below quantify the amounts that would be payable to our 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. RatzesbergerCulhane in connection with his removaldeparture as President and CEOChief Financial Officer are reported in the table below quantifying severance benefits upon Terminationa termination without Cause (not in Connection with a Change in Control).cause.
Death or Disability
We would have provided each named executive officer (or his or her beneficiary), other than Mr. Ratzesberger,Culhane, with the following estimated payments or benefits had he or she died or become disabled on December 31, 2019.2021.
| EXECUTIVE | LIFE INSURANCE ($)(1) | DISABILITY PAYMENTS ($)(2) | STOCK OPTIONS ($)(3) | RESTRICTED SHARE UNITS ($)(3) | TOTAL ($) | |||||||||||||||
Victor Lund | — | 12,455,974 | — | — | 12,455,974 | |||||||||||||||
Mark Culhane | 1,020,000 | 3,533,333 | 17,232 | 18,000 | 4,588,565 | |||||||||||||||
Scott Brown | 1,100,000 | 1,239,703 | 17,304 | 18,000 | 2,375,007 | |||||||||||||||
Kathleen Cullen-Cote | 810,000 | 1,794,979 | 1,044 | 18,000 | 2,624,023 | |||||||||||||||
Daniel Harrington | 1,000,000 | 2,024,780 | 17,304 | 18,000 | 3,060,084 | |||||||||||||||
| EXECUTIVE | LIFE INSURANCE ($)(1) | DISABILITY PAYMENTS ($)(2) | RESTRICTED SHARE UNITS ($)(3) | TOTAL ($) | ||||||||||||
Stephen McMillan | 1,950,000 | 760,000 | 15,766,168 | 18,476,168 | ||||||||||||
Claire Bramley | 3,500,000 | 526,650 | 2,724,182 | 6,750,832 | ||||||||||||
Todd Cione | 1,000,000 | 526,650 | 11,693,973 | 13,220,623 | ||||||||||||
Hillary Ashton | 860,000 | 503,319 | 6,706,381 | 8,069,700 | ||||||||||||
Kathleen Cullen-Cote | 900,000 | 509,985 | 6,919,524 | 8,329,509 | ||||||||||||
| (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 (but capped at $1,200,000, or at $750,000 in the absence of evidence of |
| 60 | 2022 PROXY STATEMENT |
Potential Payments Upon Termination or Change in Control
| insurability). Each U.S.-based employee has the option of choosing a higher level of coverage at his own expense. Each participating named executive officer opted for core coverage for |
| (2) | Benefits provided upon disability generally depend on the individual level of benefits chosen by the named executive officer during the annual benefits enrollment process. The named executive officers receive the same short-term and long-term disability coverage as is generally offered to U.S.-based employees. The core coverage is (i) for short-term disability, |
| (3) | Equity valuations are based on a closing price of our stock on December 31, |
Retirement
We would have provided each named executive officer, other than Mr. Ratzesberger,Culhane, with the following estimated payments if he or she had retired (with Committee consent, where applicable) on December 31, 2019. For Mr. Lund, the table below assumes that he had retired on December 31, 2019 in connection with the election of a successor President and CEO. On any other voluntary termination, Mr. Lund’s unvested restricted share units would have been forfeited.2021.
| EXECUTIVE | RESTRICTED SHARE UNITS ($)(1)(2) | TOTAL ($) | ||||||
Victor Lund
|
| 12,455,974
|
|
| 12,455,974
|
| ||
Mark Culhane
|
| 2,104,138
|
|
| 2,104,138
|
| ||
Scott Brown
|
| 1,239,703
|
|
| 1,239,703
|
| ||
Kathleen Cullen-Cote
|
| 704,360
|
|
| 704,360
|
| ||
Daniel Harrington
|
| 1,210,289
|
|
| 1,210,289
|
| ||
| EXECUTIVE | RESTRICTED SHARE UNITS ($)(1)(2) | TOTAL ($) | ||||||||
Stephen McMillan | — | — | ||||||||
Claire Bramley | — | — | ||||||||
Todd Cione | — | — | ||||||||
Hillary Ashton | — | — | ||||||||
Kathleen Cullen-Cote | 6,317,706 | 6,317,706 | ||||||||
| (1) | Equity valuations generally are based on a closing price of our stock on December 31, |
| (2) |
|
|
Potential Payments Upon Termination or Change in Control
Termination without Cause (not in Connection with a Change in Control)
Each named executive officer other than Mr. Ratzesberger, would have been entitled to the following estimated payments and benefits if, on December 31, 20192021 and not in connection with a change in control, we terminated the executive’s employment without cause (and not as a result of death or disability)., or, in the case of Mr. RatzesbergerMcMillan, he terminated his employment for good reason. For Mr. Culhane, the table below reflects benefits received the payments and benefits reported below under the Executive Severance Plan in connection with his removaltermination as President and CEO, which the Committee determined to be a termination without cause, as definedChief Financial Officer in the Executive Severance Plan.June 2021.
| EXECUTIVE | CASH ($)(1) | RESTRICTED SHARE UNITS ($)(2) | WELFARE BENEFITS ($) | OUT-PLACEMENT COUNSELING ($) | TOTAL ($) | |||||||||||||||
Victor Lund | — | 12,455,974 | — | — | 12,455,974 | |||||||||||||||
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 | 1,000,000 | 2,024,780 | 17,304 | 18,000 | 3,060,084 | |||||||||||||||
| EXECUTIVE | CASH ($)(1) | RESTRICTED SHARE UNITS ($)(2) | WELFARE BENEFITS ($) | OUT-PLACEMENT COUNSELING ($) | TOTAL ($) | ||||||||||||||||||||
Stephen McMillan | 1,800,000 | 19,717,709 | 19,080 | 18,000 | 21,554,789 | ||||||||||||||||||||
Claire Bramley | 900,000 | 3,083,639 | 18,168 | 18,000 | 4,019,807 | ||||||||||||||||||||
Todd Cione | 1,000,000 | 8,261,802 | 19,080 | 18,000 | 9,298,882 | ||||||||||||||||||||
Hillary Ashton | 860,000 | 3,479,795 | 19,080 | 18,000 | 4,376,875 | ||||||||||||||||||||
Kathleen Cullen-Cote | 810,000 | 6,505,661 | 1,116 | 18,000 | 7,334,777 | ||||||||||||||||||||
Mark Culhane | 1,319,607 | 11,666,880 | 20,808 | 18,000 | 13,025,295 | ||||||||||||||||||||
| (1) |
|
| (2) | Equity valuations are based on a closing price of our stock on December 31, |
| ||
Potential Payments Upon Termination or Change in Control
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, which also applies, under the Stock Incentive Plan, to our equity compensation awards. The “double trigger” design is intended to further our goals to retain key executives upon a change in control.
Each named executive officer, other than Mr. Ratzesberger,Culhane who is no longer ana Teradata employee, participates in the CIC Plan.
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 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; 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 a1-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.
| ||
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 means: (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—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 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.
| 62 | 2022 PROXY STATEMENT |
Potential Payments Upon Termination or Change in Control
Treatment of Equity Awards
As described above, the Stock Incentive Plan 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 chart below generally summarizes how the unvested equity awards held by our current named executive officers on December 31, 20192021 would be treated in connection with a change of control. All stock options held currently held byCurrently, none of our named executive officers are fully vested.hold any stock options.
| PERFORMANCE-BASED RSUs | SERVICE-BASED RSUs | |
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, 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 24 months after 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 | |
|
Potential Payments Upon Termination or Change in Control
The tables below quantify the amounts that would be payable to our named executive officers, other than Mr. Ratzesberger, who is no longer an employee,Culhane, 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 named executive officers, other than Mr. Ratzesberger,Culhane, would have been entitled to the following estimated payments and benefits if a change in control occurred on December 31, 20192021 and 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.
| EXECUTIVE | CASH ($)(1) | RESTRICTED SHARE UNITS ($)(2) | WELFARE BENEFITS ($) | OUTPLACEMENT 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 | |||||||||||||
| EXECUTIVE | CASH ($)(1) | RESTRICTED SHARE UNITS ($)(2) | WELFARE BENEFITS ($) | OUTPLACEMENT AND FINANCIAL COUNSELING ($) | TOTAL ($) | |||||
Stephen McMillan | 3,029,150 | 23,899,922 | 40,723 | 18,000 | 26,987,795 | |||||
Claire Bramley | 1,800,000 | 3,806,374 | 38,472 | 18,000 | 5,662,846 | |||||
Todd Cione | 2,000,000 | 12,938,825 | 40,296 | 18,000 | 14,997,121 | |||||
Hillary Ashton | 1,799,912 | 8,468,787 | 39,997 | 18,000 | 10,326,696 | |||||
Kathleen Cullen-Cote | 1,554,369 | 8,569,384 | 1,922 | 18,000 | 10,143,675 | |||||
| (1) | The cash amounts reported in this column reflect cash severance benefits under the CIC Plan, but do not reflect anypro-rata annual |
| (2) | Equity valuations are based on the following assumptions: (i) a closing price of our stock on December 31, |
| ||
Potential Payments Upon Termination or Change in Control
Change in Control and Equity Awards are not Assumed by Surviving Entity
Our named executive officers, other than Mr. Ratzesberger, who is no longer an employee,Culhane, would have been entitled to the following estimated payments and benefits in the event that a “change in control” occurred on December 31, 2019,2021, and the named executive officer’s equity awards were not assumed by the surviving entity. If the awards were assumed by the surviving entity, then the awards would not vest on a change in control but would vest on a qualifying termination within two years after the change in control as illustrated in the table immediately above.
| NAME | RESTRICTED SHARE UNITS ($)(1) | TOTAL ($) | ||||||
Victor Lund | 12,455,974 | 12,455,974 | ||||||
Mark Culhane | 4,344,289 | 4,344,289 | ||||||
Scott Brown | 6,066,858 | 6,066,858 | ||||||
Kathleen Cullen-Cote | 3,271,883 | 3,271,883 | ||||||
Daniel Harrington | 2,959,316 | 2,959,316 | ||||||
| NAME | RESTRICTED SHARE UNITS ($)(1) | TOTAL ($) | ||||||||
Stephen McMillan | 23,899,922 | 23,899,922 | ||||||||
Claire Bramley | 3,806,374 | 3,806,374 | ||||||||
Todd Cione | 12,938,825 | 12,938,825 | ||||||||
Hillary Ashton | 8,468,787 | 8,468,787 | ||||||||
Kathleen Cullen-Cote | 8,569,384 | 8,569,384 | ||||||||
| (1) | Equity valuations are based on the following assumptions: (i) a closing price of our stock on December 31, |
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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 20192021 fiscal year:
The estimated median of the annual total compensation of all of our employees, excluding the CEO, was $76,892;$74,646;
The annual total compensation of Mr. Lund,McMillan, who was serving as our Interim CEO on December 31, 2019,2021, was $4,941,051,$11,570,638, 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;statement; 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 64155 to 1.
In determining the 2019 pay ratio information provided above, we identified our “median employee” by using the following methodology, 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:rules:
December 31, 20172021 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 20172021 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 20172021 exchange rates.
Applying the methodology described above, we determined that our median employee for fiscal 2017 was a Customer Service RepresentativeExperience Manager located in the United States.France.
For fiscal year 2019,2021, 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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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 31 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 20192021 annual meeting, our advisorysay-on-pay proposal received a 98%92% favorable vote.
Since 2015, we 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 over 75%80% of Teradata’s outstanding shares. DiscussionsOur discussions with investors who responded to our outreach efforts (and others who reached out to us)have historically touched on a number of themes, including stockholders’ desire that a meaningful portion of long-term incentive value continue to be allocated to equity awards that are based on longer-term performance goals with a strong rationale and linkage to our business strategy. In designing our executive compensation program, we have taken into account the common themes expressed by our stockholders. For example, as described in the Compensation Discussion and Analysis, beginning on page 29 of this proxy statement:Analysis:
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We also ensure that all of the annual cash incentive is performance based by being tied to the achievement of three key financial measures that support the strategic focus of our business. As described in the Compensation Discussion and Analysis section, for the annual cash incentive awards granted in 2021, the financial measures were ARR growth, public cloud ARR growth and non-GAAP operating margin as a percentage of revenue.
We are providing our stockholders with the opportunity to castnon-binding advisory votes to approve the compensation of our named executive officers for 2019,2021, 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 20202022 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 executive officers. The next say-on-pay vote will occur at our 2023 annual meeting.
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| The Board of Directors recommends that you vote FOR this proposal. |
| 66 | 2022 PROXY STATEMENT |
Advisory (Non-Binding) Vote on Executive Compensation
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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CURRENT EQUITY COMPENSATION PLAN INFORMATION
The following table provides information as of December 31, 2021 about Shares issuable under the Teradata Stock Incentive Plan (“SIP”), Teradata New Employee Stock Inducement Plan (“NESIP”), Teradata Corporation 2007 Stock Incentive Plan, Teradata Employee Stock Purchase Plan and certain inducement awards.
| PLAN CATEGORY | NUMBER OF SECURITIES TO BE ISSUABLE UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (a) | WEIGHTED- AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS (b) | NUMBER OF SECURITIES REMAINING AVAILABLE FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) (c) | ||||||||||||
Equity compensation plans approved by security holders | 8,152,170 | (1) | $ 40.88 | (2) | 6,574,173 | (3) | |||||||||
Equity compensation | 260,017 | (4) | N/A | 198,539 | (5) | ||||||||||
Total | 8,412,187 | $ 40.88 | 6,772,712 | ||||||||||||
| (1) | Represents the number of Shares that may be issued under performance-based restricted share units (at target), service-based restricted share units and deferred shares granted under the SIP to our employees and non-employee directors, along with the number of Shares that may be issued in connection with the exercise of outstanding stock options granted under the SIP and the Teradata Corporation 2007 Stock Incentive Plan. |
| (2) | Represents the weighted average exercise price of outstanding stock options listed in column (a) (Equity compensation plans approved by security holders) and does not take into account the performance-based restricted share units, service-based restricted share units and deferred shares. |
| (3) | Represents the number of Shares available for issuance under the SIP and the Teradata Employee Stock Purchase Plan, other than Shares available for issuance in connection with the exercise of outstanding stock options and the settlement of performance-based restricted share units, service-based restricted share units and deferred shares. |
| (4) | Includes the number of Shares that may be issued under performance-based restricted share units (at target) and service-based restricted share units granted to Mr. McMillan upon his commencement of employment on June 9, 2020 that were unvested as of December 31, 2021. The awards were made as a material inducement for Mr. McMillan joining Teradata as President and Chief Executive Officer and a member of the Board of Directors. The awards are as follows: (i) a make-whole award consisting of service-based restricted share units covering 200,530 shares, of which 44,524 vested on December 1, 2020, 42% will vest on the first anniversary of the date of grant, and 13% will vest on the second anniversary of the date of grant, (ii) an annual grant of service-based restricted share units covering 146,237 shares, which shall vest in equal amounts on the first, second and third anniversaries of the grant date, and (iii) an annual grant of performance-based restricted share units covering 219,355 shares, which shall vest based on the extent to which the Company achieves two equally weighted financial goals (year-over-year growth of reported annual recurring revenue and free cash flow as a percent of total reported revenue) during the 3-year performance period ending December 31, 2022. These restricted share units were all granted outside of the SIP (but generally have terms and conditions consistent with those set forth in that plan) and were approved by the independent members of the Board of Directors in reliance on the employment inducement exemption under the NYSE’s Listed Company Manual Rule 303A.08. Also includes the following awards to the extent they were unvested as of December 31, 2021: (x) 42,955 service-based restricted share units granted to Nicolas Chapman under the NESIP upon his commencement of employment on September 22, 2020, which was made as a material inducement for Mr. Chapman joining Teradata as EVP and Chief Strategy Officer and was subject to the following vesting schedule: 33.3% will vest on the first, second, and third anniversary of the date of grant, in each case subject to continued employment, and (y) 308,506 service-based restricted share units granted to Todd Cione under the NESIP upon his commencement of employment on January 4, 2021, which was made as a material inducement for Mr. Cione joining Teradata as Chief Revenue Officer and was subject to the following vesting schedule: 25% on the date that is six months after the date of grant, 25% on the first anniversary of the date of grant, 30% on the second anniversary of the date of grant and 20% on the third anniversary of the date of grant, in each case subject to continued employment. |
| (5) | Includes 198,539 Shares available for issuance under the NESIP, under which the Company may grant equity incentive compensation as a material inducement for certain individuals to commence employment with Teradata within the meaning of Rule 303A.08 of the NYSE Listed Company Manual. Awards granted under the NESIP may be in the form of stock options, stock appreciation rights, restricted shares, restricted share units, other share-based awards or any combination of those awards. The only individuals eligible to receive grants of awards under the NESIP are individuals who satisfy the standards for “inducement awards” under Rule 303A.08 of the NYSE Listed Company Manual. |
| 68 | 2022 PROXY STATEMENT |
VOTE ON APPROVAL OF AMENDMENT NO. 1 TO THE
TERADATA 2012 STOCK INCENTIVE PLAN
(Item 3 on Proxy Card)
The Board of Directors is asking our stockholders to approve an amendment to the Teradata 2012 Stock Incentive Plan (the “SIP”). Our stockholders initially approved the SIP on April 20, 2012. The SIP has since been amended and restated and was most recently approved by our stockholders on May 4, 2021. On February 25, 2022, the Board of Directors, upon the recommendation of the Compensation and Human Resource Committee (the “Committee”), approved an additional amendment of the SIP, effective as of February 25, 2022, but subject to stockholder approval as required at the 2022 annual meeting, in order to:
Increase the number of shares of our common stock (“Shares”) reserved for issuance or delivery under the SIP by 2,500,000 Shares; and
Extend the term of the SIP from March 1, 2024 to March 1, 2027.
| The Board of Directors recommends that you vote FOR this proposal. |
The complete text of the amendment to the SIP is attached as Appendix A to this proxy statement. The following summary of the plan does not purport to be complete and is qualified in its entirety by reference to Appendix A and the full text of the SIP (prior to the proposed amendment) incorporated herein by reference to Appendix A to Teradata Corporation’s Definitive Proxy Statement, as amended, for its 2021 Annual Meeting of Stockholders filed with the SEC on March 18, 2021 (SEC File No. 001-33458).
Summary of Amendments
We are seeking stockholder approval of the amendment to the SIP to authorize an additional 2,500,000 Shares for issuance as awards under the SIP and to extend the term of the SIP from March 1, 2024 to March 1, 2027. The Board of Directors believes that the proposed amendment to the SIP is an integral part of our long-term incentive philosophy and is necessary to continue providing the appropriate levels and types of equity compensation for our employees and non-employee directors.
Factors Regarding Our Equity Usage and Needs
Increased Market Volatility Driving Need for More Shares: Stock price volatility, combined with equity award issuances in connection with new hires, has reduced the pool of Shares we have available under the SIP. To continue to attract and retain employees and align their interests with those of our stockholders, we are seeking stockholder approval to make an additional 2,500,000 Shares available for issuance under the SIP (in addition to the 2,817,256 Shares remaining available for grant as of March 1, 2022). We would expect this increased Share pool under the SIP to be sufficient for equity grants to our employees for up to the next 2 fiscal years at the current stock price, or longer if our stock price increases as we execute on our business strategy.
Equity is Essential to Talent Acquisition and Retention: It is essential that we continue the use of equity compensation to better position us in the market and allow us to retain our skilled employees while attracting talented new employees to help us achieve our objectives, which include increasing stockholder value by growing the business. Without the approval of an addition to our Share reserve, we will not be able to continue to compete in this highly competitive market. This would ultimately result in the loss of critical talent and inhibit our ability to meet our future growth objectives. In addition, we may be required to increase the cash compensation of our compensation programs to remain at competitive levels in the marketplace. We intend to use the additional Shares to recruit and retain employees.
Historic Use of Equity and Outstanding Awards
In determining the size of this Share request, the Committee considered, among other things, our outstanding equity awards, our burn rate, our stock price and volatility, our projected recruiting and retention needs, the potential dilution of our equity compensation program, the voting guidelines of certain institutional investors and proxy advisory firms, and the advice of the
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
Committee’s independent consultant. The results of this comprehensive analysis were presented to the Committee and the Board of Directors for its consideration. Certain of these factors are outlined below:
Outstanding Awards
As of March 1, 2022, when aggregating the SIP and NESIP (as defined below), there were 6,023,222 Shares subject to outstanding service-based restricted share unit awards, 1,598,741 Shares subject to outstanding performance-based restricted share unit awards (calculated at target) and 738,135 Shares subject to outstanding stock options. As of that date, the weighted average exercise price of the outstanding stock options was $41.10, the weighted average remaining contractual term for the stock options was 2.88 years, and the closing market price of a Share as reported on the NYSE was $49.45 per share.
Burn Rate
We use our burn rate to measure the potential life expectancy of our equity plan and stockholder dilution. Our burn rate experience is summarized in the table below, which provides data on our Share usage under our SIP and NESIP for the last three completed fiscal years.
| FISCAL YEAR | STOCK OPTIONS GRANTED | SERVICE-BASED RSUs GRANTED | PERFORMANCE- BASED RSUs EARNED(2) | TOTAL SHARES | BURN RATE | ||||||||||||||||||||
2021(1) | 0 | 3,386,314 | 623,321 | 4,009,635 | 3.70 | % | |||||||||||||||||||
2020(1) | 0 | 5,402,996 | 116,062 | 5,519,058 | 5.05 | % | |||||||||||||||||||
2019 | 0 | 3,268,013 | 279,010 | 3,547,023 | 3.11 | % | |||||||||||||||||||
3-year Average Burn Rate (2019-2021) |
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| (1) | On May 29, 2020, the board adopted the Teradata Incentive Stock Purchase Plan (the “ISPP”), effective as of June 1, 2020. The ISPP provides eligible employees an opportunity to purchase Shares from the Company at fair market value using cash compensation that was otherwise due under the Company’s 2020 annual incentive programs. The purchase date for the Shares was February 25, 2021. The ISPP terminated on June 1, 2021. We have not included the Shares available under the ISPP in the burn rate calculation, as it is a so-called “fair market value purchase plan” (or a “stock in lieu of cash” plan). The ISPP is not intended to be treated as an “equity-compensation plan” within the meaning of Rule 303A.08 of the Listed Company Manual of the NYSE, and, as such, stockholders were not required to approve the plan. |
| (2) | The total amount of performance-based RSUs granted in each year was as follows (calculated at target): (i) 517,719 in 2021, (ii) 851,063 in 2020, and (iii) 558,719 in 2019. |
Our burn rate is calculated as the total amount of equity granted in any year, divided by the weighted average number of common shares outstanding as of the end of each fiscal year. For purposes of this calculation (i) stock options and service-based restricted share unit awards were counted in the year granted, and (ii) performance-based restricted share unit awards were counted in the year earned (and only to the extent earned).
Our burn rate in recent years has been impacted by, among other factors, volatility in our stock price along with the granting of new-hire equity awards, including to senior executives as we continued to refresh our executive leadership team. We expect that our burn rate will normalize going forward. Our future burn rate will depend on a number of factors, including the number of participants in the SIP, our stock price, changes to our compensation strategy, changes in business practices or industry standards, changes in our capital structure due to stock splits or similar events, the compensation practices of our competitors or changes in compensation practices in the market generally, and the methodology used to establish the equity award mix.
Dilution and Overhang
We measure the dilutive impact of our equity program (i.e., overhang) by dividing (i) the number of Shares subject to outstanding equity awards, plus the number of Shares available to be granted under the SIP and the Teradata New Employee Stock Inducement Plan (the “NESIP”), described below (the “numerator”), by (ii) the total number of Shares outstanding, plus the Shares included in the numerator. As of March 1, 2021, our fully diluted overhang was approximately 9.97%. The 2,500,000 additional Shares being requested under the SIP would bring our fully diluted overhang to approximately 11.90% as of March 1, 2022, which we believe to be within industry norms.
As noted above, we have included in the overhang calculation Shares available for issuance under the NESIP, which was adopted by the board on May 29, 2020. Under the NESIP, the Company may grant equity incentive compensation as a material inducement for certain individuals to commence employment with Teradata within the meaning of Rule 303A.08 of the NYSE Listed Company
| 70 | 2022 PROXY STATEMENT |
Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
Manual. Awards granted under the NESIP may be in the form of stock options, stock appreciation rights, restricted shares, restricted share units, other share-based awards or any combination of those awards. The only individuals eligible to receive grants of awards under the NESIP are individuals who satisfy the standards for “inducement awards” under Rule 303A.08 of the NYSE Listed Company Manual. A total of 550,000 Shares are reserved for grant under the NESIP, subject to adjustment as provided in the NESIP, of which 198,539 remained for issuance as of March 1, 2022. Shares issued under the NESIP may include authorized but unissued shares, treasury shares, shares purchased in the open market, or a combination of the foregoing. The NESIP is scheduled to terminate on June 1, 2023, or such earlier date that the board shall determine. The NESIP is not intended to be treated as an “equity-compensation plan” within the meaning of Rule 303A.08 of the Listed Company Manual of the NYSE, and, as such, stockholders were not required to approve the plan.
Plan Highlights
The SIP contains provisions that are consistent with our compensation philosophy and designed to protect the interests of our stockholders, including the following:
FEATURE | DESCRIPTION | |
Prohibition on Liberal Share Recycling | The SIP prohibits liberal share recycling, meaning that Shares tendered in payment of the exercise price of a stock option, Shares withheld to satisfy a tax withholding obligation, and Shares that are repurchased by the Company with stock option proceeds will not be added back to the SIP. In addition, when a SAR is settled in Shares, all of the Shares underlying the SAR will be counted against the share limit of the SIP. | |
No Discounted Stock Options or SARs | The SIP does not permit the use of “discounted” stock options or SARs. | |
No Re-Pricing of Stock Options or SARs; No Reload Awards | The SIP does not permit the “repricing” of stock options and SARs without stockholder approval. This includes a prohibition on cash buyouts of underwater options or SARs and “reloads” in connection with the exercise of options or SARs. | |
No “Liberal” Change in Control Definition | The SIP does not provide a “liberal” change in control definition, which means that a change in control must actually occur in order for the change in control provisions in the SIP to be triggered. | |
“Double Trigger” Vesting in Connection with a Change in Control | The SIP provides for “double trigger” vesting of equity awards that are assumed in a change in control transaction, which means that awards assumed in a transaction will continue to vest on their regularly-scheduled vesting date or, if earlier, upon a qualifying termination of employment within 2 years after a change in control. | |
Forfeiture Provisions | Awards granted under the SIP and certain payouts will be subject to forfeiture as provided by the Committee if a participant is terminated for cause. | |
Clawback Provisions | Awards granted under the SIP are subject to recoupment under our Compensation Recovery Policy, which provides that Teradata may recover compensation provided to certain executives under performance-based equity awards if the payment, grant or vesting of such award was based on financial results that were subsequently restated. | |
No Dividends or Dividend Equivalents on Unvested Awards or Stock Options/SARs | Dividends or dividend equivalents payable with respect to any awards granted under the SIP will be accumulated or reinvested until such award is earned, and the dividends or dividend equivalents shall not be paid if the underlying award does not become vested. Additionally, no dividend equivalents will be granted with respect to Shares underlying a stock option or SAR. | |
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
FEATURE | DESCRIPTION | |
Stock Ownership and Holding Guidelines | Shares issued pursuant to the SIP are subject to the Company’s stock ownership guidelines. Executives are required to retain 50%, during an initial compliance period, and, thereafter, 100% of their Shares net of taxes received under awards granted under the SIP until the applicable minimum ownership level requirement has been achieved. | |
Summary of the Plan
General
Awards granted under the SIP may be in the form of stock options, SARs, restricted shares, restricted share units, other share-based awards or any combination of those awards. No awards may be made under the SIP after February 28, 2027.
Administration
The SIP will be administered by the Committee, or by such other committee or subcommittee as may be appointed by our Board of Directors, and which consists entirely of two or more individuals who are “independent directors” within the meaning of NYSE rules and “non-employee directors” within the meaning of Rule 16b-3 under the Securities Exchange Act of 1934. The Committee can make rules and regulations and establish such procedures for the administration of the SIP as it deems appropriate and may delegate any of its authority to one or more directors or executive officers of the Company, to the extent permitted by applicable laws. Our board retains authority to administer and issue awards under the SIP and, specifically reserves the exclusive authority to approve and administer all awards granted to non-employee directors under the SIP.
Eligibility
The SIP provides for awards to our non-employee directors and to officers, employees and consultants of the Company and our subsidiaries, except that incentive stock options may only be granted to employees of the Company and our subsidiaries. It is currently anticipated that approximately 2,288 employees and consultants and 8 non-employee directors will be eligible for awards under the SIP. The Committee is authorized to select the employees and consultants who will receive awards under the SIP from time-to-time. Under our current director compensation program, each of the non-employee directors receives a grant of equity awards at the conclusion of the annual meeting.
Shares Available
The maximum number of Shares that may be issued or transferred with respect to awards under the SIP is 33,900,000 subject to adjustment as provided below. Shares issued under the SIP may include authorized but unissued shares, treasury shares, shares purchased in the open market, or a combination of the foregoing.
Shares underlying awards that are settled in cash or that terminate or are forfeited, cancelled or surrendered without the issuance of Shares or the release of a substantial risk of forfeiture will again be available for issuance under the SIP. Shares surrendered to pay the exercise price of stock options, repurchased by us with option proceeds, or withheld for taxes upon exercise or vesting of an award, will not again be available for issuance under the SIP. In addition, when a SAR is exercised and settled in Shares, all of the Shares underlying the SAR will be counted against the share limit of the SIP regardless of the number of Shares used to settle the SAR.
Shares delivered under awards that are granted in assumption of, or in substitution or exchange for, outstanding awards previously granted by an entity acquired directly or indirectly by the Company or with which the Company directly or indirectly combines (“Substitute Awards”), shall not count against the SIP’s share limit, except as may be required by the rules and regulations of any stock exchange or trading market.
| 72 | 2022 PROXY STATEMENT |
Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
Individual Award Limits under Section 162(m)
To comply with the performance-based exception from Section 162(m) of the Internal Revenue Code (“Section 162(m)”) that was in effect prior to Tax Reform and Jobs Act of 2017, the SIP imposes the following additional individual sub-limits on awards that was intended to satisfy the exception:
Although the Tax Reform and Jobs Act of 2017 generally eliminated the ability to deduct compensation qualifying for the “performance-based compensation” exemption to Section 162(m) for tax years commencing after December 31, 2017, these provisions remain in the SIP. We will not make future awards under the SIP that are intended to qualify for this exemption and therefore these limits will not apply.
Non-Employee Director Award Limits
The SIP includes limits on awards to non-employee directors. In particular, the aggregate grant date fair value (computed as of the date of grant in accordance with applicable financial accounting rules) of the awards granted under the SIP during any one calendar year to any one non-employee director may not exceed $500,000. This limitation does not apply to awards made at the election of the non-employee director in lieu of all or a portion of annual and committee cash retainers.
Stock Options
Subject to the terms and provisions of the SIP, options to purchase Shares may be granted to eligible individuals at any time and from time to time as determined by the Committee. Options may be granted as incentive stock options (all of the Shares available for issuance under the SIP may be issued pursuant to incentive stock options), or as non-qualified stock options. Subject to the limits provided in the SIP, the Committee or its delegate determines the number of options granted to each recipient. Each option grant will be evidenced by a stock option agreement that specifies whether the options are intended to be incentive stock options or non-qualified stock options and such additional limitations, terms and conditions as the Committee may determine.
The exercise price for each option (other than Substitute Awards) may not be less than 100% of the fair market value of a Share on the date of grant.
All options granted under the SIP will expire no later than ten years from the date of grant. The method of exercising an option granted under the plan will be set forth in the stock option agreement for that particular option and may include payment of cash or cash equivalent, tender of previously acquired shares with a fair market value equal to the exercise price, a cashless exercise (including withholding of shares otherwise deliverable on exercise or a broker-assisted arrangement as permitted by applicable laws), a combination of the foregoing methods, or any other method approved by the Committee in its discretion.
At the discretion of the Committee, the stock option agreement evidencing an award of stock options may contain limitations on the exercise of options under certain circumstances upon or after the termination of employment or in the event of death, disability or retirement. The granting of an option does not accord the recipient the rights of a stockholder, and such rights accrue only after the exercise of an option and the registration of Shares in the recipient’s name. The Committee last granted stock options in 2017.
Stock Appreciation Rights
The Committee in its discretion may grant SARs under the SIP. A SAR entitles the holder to receive from us upon exercise an amount equal to the excess, if any, of the aggregate fair market value of a specified number of Shares that are the subject of such SAR over the aggregate exercise price for the underlying Shares. At the discretion of the Committee, the award agreement evidencing an award of SARs may place limitations on the exercise of such SARs under certain circumstances upon or after the termination of employment or in the event of death, disability, or retirement.
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
The exercise price for each SAR (other than Substitute Awards) may not be less than 100% of the fair market value of a Share on the date of grant.
We may make payment of the amount to which the participant exercising SARs is entitled by delivering Shares, cash or a combination of Shares and cash, as set forth in the applicable award agreement. Each SAR will be evidenced by an award agreement that specifies the date and terms of the award and such additional limitations, terms and conditions as the Committee may determine.
Restricted Shares
Under the SIP, the Committee may grant or sell to participants Shares that are subject to forfeiture and restrictions on transferability. Except for these restrictions and any others imposed by the Committee, upon the grant of restricted shares, the recipient will have rights of a stockholder with respect to the restricted shares, including the right to vote the restricted shares and to receive all dividends and other distributions paid or made with respect to the restricted shares. During the applicable restriction period, the recipient may not sell, transfer, pledge, exchange or otherwise encumber the restricted shares. Each award of restricted shares will be evidenced by an award agreement that specifies the terms of the award and such additional limitations, terms and conditions, which may include restrictions based upon the achievement of performance objectives, as the Committee may determine. Any award of restricted shares will provide that receipt of any dividends paid on those restricted shares will be subject to the same terms and conditions as the underlying award (including service-based vesting conditions and performance objectives) and will not be paid unless the underlying award becomes vested.
Restricted Share Units
Under the SIP, the Committee may grant or sell to plan participants restricted share units, which constitute an agreement to deliver Shares to the participant in the future at the end of a restriction period and subject to such other terms and conditions as the Committee may specify. Restricted share units are not Shares and do not entitle the recipients to the rights of a stockholder. Restricted share units granted under the SIP may or may not be subject to performance conditions. Restricted share units will be settled in cash or Shares, in an amount based on the fair market value of a Share on the settlement date. Each restricted share unit award will be evidenced by an award agreement that specifies the terms of the award and such additional limitations, terms and conditions as the Committee may determine, which may include restrictions based upon the achievement of performance objectives.
Other Share-Based Awards
The SIP also provides for grants of other share-based awards under the plan, which may include unrestricted Shares or service-based or performance-based unit awards that are settled in Shares or cash. Each other share-based award will be evidenced by an award agreement that specifies the terms of the award and such additional limitations, terms and conditions as the Committee may determine.
Dividend Equivalents
Awards (other than stock options and SARs) may provide the participant with dividend equivalents, on a deferred and contingent basis, and payable either in cash or in additional Shares, as determined by the Committee in its sole discretion and set forth in the related award agreement. Any such dividend equivalents will be subject to the same terms and conditions as the underlying award (including service-based vesting conditions and performance objectives) and will not be paid unless the underlying award becomes vested. No dividend equivalents may be granted with respect to Shares underlying a stock option or SAR.
Performance Objectives
The plan provides that performance objectives may be established by the Committee in connection with any award granted under the SIP. Performance objectives may relate to performance of the Company or one or more of our subsidiaries, divisions, departments, units, functions, partnerships, joint ventures or minority investments, product lines or products, or the performance of an individual participant, and performance objectives may be made relative to the performance of a group of companies or a special index of companies.
The performance objectives applicable to an award granted under the SIP shall be based on such criteria as the Committee may determine, in its discretion, which may include (but shall not be limited to) one or more of the following: revenues; revenue growth; product revenue growth; earnings (including earnings before taxes, earnings before interest and taxes or earnings before interest,
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
taxes, depreciation and amortization); earnings per share; operating income; pre- or after-tax income (before or after allocation of corporate overhead and bonus); cash flow (before or after dividends); cash flow per share (before or after dividends); gross margin; return on equity; return on capital (including return on total capital or return on invested capital); cash flow return on investment; return on assets or operating assets; economic value added (or an equivalent metric); stock price appreciation; total stockholder return (measured in terms of stock price appreciation and dividend growth); cost control; gross profit; operating profit; cash generation; unit volume; stock price; market share; new account wins; capital structure; sales; asset quality; product and services quality or delivery goals; cost saving levels; marketing-spending efficiency; core non-interest income; debt reductions; stockholder equity; regulatory achievements; implementation, completion or attainment of measurable objectives with respect to strategy, research, development, products or projects; business transformation objectives; recruiting and maintaining personnel; or change in working capital. For the avoidance of doubt, any performance objectives that are financial metrics, may be determined in accordance with United States Generally Accepted Accounting Principles (“GAAP”) if applicable or may be adjusted when established to include or exclude any items otherwise includable or excludable under GAAP.
The Committee may provide in any award agreement that any evaluation of attainment of a performance objective may include or exclude any of the following events that occurs during the relevant period: (i) asset write downs; (ii) litigation or claim judgments or settlements; (iii) the effect of changes in tax laws, accounting principles or other laws or provisions affecting reported results; (iv) any reorganization and restructuring programs; (v) unusual or infrequently occurring items as described in Financial Accounting Standards Board Accounting Standards Update No. 2015-01 and/or in management’s discussion and analysis of financial condition and results of operations appearing in the Company’s Annual Report on Form 10-K for the applicable year; (vi) acquisitions or divestitures; (vii) foreign exchange gains and losses; and (viii) other events identified by the Committee.
Change in Control
The SIP provides for “double-trigger” vesting of equity awards in connection with a change in control of Teradata, as described below.
To the extent that outstanding awards granted under the SIP Plan are assumed, converted or replaced by the entity resulting from the change in control, then, except as otherwise provided in the applicable award agreement or in an applicable severance plan or written agreement with the participant, all outstanding awards will continue to vest and become exercisable (as applicable) based on continued service during the remaining vesting period, with performance-based awards being converted to service-based awards at the “target” level (if the change in control occurs before the end of the applicable performance period) or based on actual performance (if the applicable performance period has been completed). Vesting and exercisability of awards that are assumed in connection with a change in control generally would be accelerated in full, on a “double-trigger” basis, if, within 24 months after the change in control, the participant’s employment is involuntarily terminated due to death, disability or termination without “cause”, or, for a participant who is entitled to “good reason” protections under an applicable Teradata severance plan or similar arrangement, the participant terminates his or her employment for “good reason.” Any such awards that are stock options or SARs generally would remain exercisable until the earlier of one year after the termination of the participant’s employment or the expiration date of the award.
To the extent outstanding awards granted under the SIP are not assumed, converted or replaced by the entity resulting from the change in control, then such awards would become vested in full, effective immediately upon the date of the change in control, with performance-based awards becoming vested at the “target” level (if the change in control occurs before the end of the applicable performance period) or based on actual performance (if the applicable performance period has been completed). Any such awards that are stock options or SARs would remain exercisable until the earlier of one year after the termination of the participant’s employment or the expiration date of the award. The Committee also has the right to cancel any awards that are not assumed in connection with a change in control, in exchange for a payment in cash or other property (including shares of the resulting entity) in an amount equal to the excess of the fair market value of the shares subject to the award over any exercise price related to the award, including the right to cancel any “underwater” stock options and SARs without payment therefor.
A change in control generally means (i) the acquisition of 50% or more of our outstanding stock; (ii) our incumbent directors ceasing to constitute at least a majority of the members of our board; (iii) a reorganization, merger, disposition of substantially all of our assets, unless (a) substantially all of the beneficial owners of our outstanding stock prior to the transaction continue to own (in the same proportions) more than 50% of the outstanding stock of the resulting corporation, (b) no person owns 50% or more of the outstanding stock of the resulting corporation, and (c) at least a majority of the members of the board of the resulting corporation are individuals who were our incumbent directors prior to the transaction; or (iv) stockholder approval of our complete liquidation or dissolution.
For purposes of the SIP, “cause” as a reason for termination of employment or service shall have the meaning provided in any applicable employment, consulting or similar agreement with the participant, or, if not so defined, generally shall mean (i) conviction of a felony, (ii) dishonesty in the course of the participant’s duties, (iii) failure to perform the participant’s duties in any material
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
respect, (iv) a material violation of our ethics and compliance program, or (v) such other events specified in an applicable award agreement. The term “good reason” shall have the meaning provided in our Change in Control Severance Plan or an applicable severance policy or employment, consulting or other applicable agreement between us and the participant. If “good reason” is not defined with respect to a participant in accordance with the foregoing sentence, it shall have no application under the SIP for that participant.
Forfeiture of Awards
If we terminate a participant’s employment or service for “cause” (as defined above), then, as determined in the discretion of the Committee, the participant shall (i) forfeit outstanding awards granted under the SIP; (ii) return all Shares then held by the participant that were acquired pursuant to awards under the SIP within 2 years prior to the participant’s date of termination (in exchange for repayment of any purchase price actually paid by the participant for those Shares); and (iii) repay us the value of any Shares that the participant has disposed of that were acquired pursuant to awards under the SIP within 2 years prior to the participant’s date of termination, less the amount of any purchase price actually paid by the participant for those Shares.
Awards granted under the SIP are also subject to forfeiture or repayment to us as provided pursuant to our compensation recovery (or “clawback”) policy.
Adjustments
In the event of any equity restructuring, such as a stock dividend, stock split, spin off, rights offering or recapitalization through a large, nonrecurring cash dividend, the Committee will adjust the number and kind of Shares that may be delivered under the SIP, the individual award limits, and, with respect to outstanding awards, the number and kind of Shares subject to outstanding awards and the exercise price or other price of Shares subject to outstanding awards, to prevent dilution or enlargement of rights. In the event of any other change in corporate capitalization, such as a merger, consolidation or liquidation, the Committee may, in its discretion, make such equitable adjustment as described in the foregoing sentence, to prevent dilution or enlargement of rights. However, unless otherwise determined by the Committee, we will always round down to a whole number of Shares subject to any award. Moreover, in the event of any such transaction or event, the Committee, in its discretion, may provide in substitution for any or all outstanding awards such alternative consideration (including cash) as it, in good faith, may determine to be equitable in the circumstances and may require in connection therewith the surrender of all awards so replaced.
Transferability
Except as the Committee otherwise determines, awards granted under the SIP will not be transferable by a participant other than by will or the laws of descent and distribution. Except as otherwise determined by the Committee, stock options and SARs will be exercisable during a participant’s lifetime only by him or her or, in the event of the participant’s incapacity, by his or her guardian or legal representative. Any award made under the SIP may provide that any Shares issued as a result of the award will be subject to further restrictions on transfer.
Amendment
Our Board of Directors may amend, alter or discontinue the SIP at any time, with stockholder approval to the extent required by applicable laws. No such amendment or termination, however, may adversely affect in any material way any holder of outstanding awards without his or her consent, except for amendments made to cause the plan to comply with applicable law, stock exchange rules or accounting rules. No award may be amended or otherwise subject to any action that would be treated as a “repricing” of such award, unless such action is approved by our stockholders.
Federal Income Tax Consequences
The following is a summary of certain U.S. federal income tax consequences of awards made under the SIP, based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of the circumstances of a particular participant under the plan. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.
Non-Qualified Stock Options. A participant will not recognize taxable income at the time of grant of a non-qualified stock option, and we will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) upon exercise of a non-qualified stock option equal to the excess of the fair market value of the Shares purchased over their exercise price, and we generally will be entitled to a corresponding deduction.
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
Incentive Stock Options. A participant will not recognize taxable income at the time of grant of an incentive stock option. A participant will not recognize taxable income (except for purposes of the alternative minimum tax) upon exercise of an incentive stock option. If the Shares acquired by exercise of an incentive stock option are held for the longer of two years from the date the option was granted and one year from the date the Shares were transferred, any gain or loss arising from a subsequent disposition of such Shares will be taxed as long-term capital gain or loss, and we will not be entitled to any deduction. If, however, such Shares are disposed of within either of such two- or one-year periods, then in the year of such disposition the participant will recognize compensation taxable as ordinary income equal to the excess of the lesser of the amount realized upon such disposition and the fair market value of such Shares on the date of exercise over the exercise price, and we generally will be entitled to a corresponding deduction, except to the extent the deduction limits may be applicable under Section 162(m).
Stock Appreciation Rights. A participant will not recognize taxable income at the time of grant of a SAR, and we will not be entitled to a tax deduction at such time. Upon exercise, a participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) equal to the fair market value of any Shares delivered and the amount of cash paid by us, and we generally will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Restricted Shares. A participant will not recognize taxable income at the time of grant of restricted shares, and we will not be entitled to a tax deduction at such time, unless the participant makes an election under Section 83(b) of the Internal Revenue Code to be taxed at such time. If such election is made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of the grant equal to the excess of the fair market value of the Shares at such time over the amount, if any, paid for such Shares. If such election is not made, the participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time the restrictions lapse in an amount equal to the excess of the fair market value of the Shares at such time over the amount, if any, paid for such Shares. We are entitled to a corresponding deduction at the time the ordinary income is recognized by the participant, except to the extent the deduction limits of Section 162(m) apply.
Restricted Share Units. A participant will not recognize taxable income at the time of grant of a restricted share unit award, and we will not be entitled to a tax deduction at such time. A participant will recognize compensation taxable as ordinary income (and subject to income tax withholding in respect of an employee) at the time of settlement of the award equal to the fair market value of any Shares delivered and the amount of cash paid by us, and we will be entitled to a corresponding deduction, except to the extent the deduction limits of Section 162(m) apply.
Section 162(m). Prior to 2018, Section 162(m) generally provided that the Company may not deduct compensation paid to a “covered employee” (generally our named executive officers serving on the last day of the year other than the chief financial officer) to the extent it exceeds $1 million. Performance-based compensation paid pursuant to stockholder approved plans generally was not subject to the $1 million deduction limit, provided that certain requirements were satisfied. The Tax Cuts and Jobs Act, which was enacted on December 22, 2017, includes a number of significant changes to Section 162(m), such as the repeal of the 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, awards granted under the SIP to a covered employee after the proposed amendment generally will not be deductible, to the extent that the total compensation paid to that employee for a year exceeds $1 million. The proposed amendment to the SIP is not intended to affect the availability of transition relief for awards previously granted under the SIP that were intended to qualify as qualified performance-based compensation. In addition, consistent with our executive compensation philosophy of linking pay to performance and aligning executive interests with those of our shareholders, we currently expect that we will continue to structure our executive compensation program so that a significant portion of total executive compensation is linked to the performance of our Company even though amounts in excess of the Code Section 162(m) limit are no longer deductible.
Section 409A. Section 409A of the Internal Revenue Code imposes certain restrictions upon the payment of nonqualified deferred compensation. We intend that awards granted under the SIP will be designed and administered in such a manner that they are either exempt from the application of, or comply with, the requirements of Section 409A of the Internal Revenue Code.
Registration with the SEC
The Company intends to file a Registration Statement on Form S-8 relating to the issuance of additional Shares under the SIP with the Securities and Exchange Commission pursuant to the Securities Act of 1933, as amended, after approval of the amendment to the SIP by the Company’s stockholders.
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Vote on Approval of Amendment No. 1 To The Teradata 2012 Stock Incentive Plan (Item 3 on Proxy Card)
New Plan Benefits
The Committee and the board retain discretion under the SIP to determine which directors, officers, employees and consultants will receive awards and the amount and type of awards. Therefore, we are not able to determine the total number of individuals who will participate in the SIP or the total amount of awards granted thereunder.
Current Equity Compensation Plan Information
For information regarding our Shares issuable under the SIP, NESIP, Teradata Corporation 2007 Stock Incentive Plan, Teradata Employee Stock Purchase Plan and certain inducement awards to our Chief Executive Officer, see Current Equity Compensation Plan Information.
| 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. Proxies solicited by the Board of Directors 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.
| 78 | 2022 PROXY STATEMENT |
DIRECTORS’ PROPOSAL TO RATIFY THE
APPOINTMENT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM FOR 20202022
(Item 34 on Proxy Card)
The Audit Committee of the Board of Directors, which is composed entirely of independent directors, appointed PricewaterhouseCoopers LLP (“PwC”) as our independent registered public accounting firm for 20202022 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 68 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 2020.2022.
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. To further ensure the independence of our independent registered public accounting firm, the Audit Committee has adopted a policy regarding the hiring of any employees or former employees of PwC or its affiliates.
Representatives of PwC will be atattend 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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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 68 of this proxy statement.above.
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 2019,2021, 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, 20192021 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) 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 18 to 19 of thisThis proxy statement containcontains a detailed listing of the Audit Committee’s areas of responsibility.
The Audit Committee had an opportunity to meet in executive session at each regularly scheduled meeting in 20192021 with PwC, the Company’s Chief Financial Officer, Chief Legal Officer, 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, 20192021 for filing with the SEC.
Dated: February 27, 202025, 2022
The Audit Committee:
David E. Kepler,Kimberly K. Nelson, Chair
Timothy C.K. Chou, Member
Cary T. Fu, Member
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 20192021 and 2018,2020, as well as the worldwide fees accrued or billed for other services rendered by PwC in 20192021 and 2018.2020.
| NAME | 2019 ($) | 2018 ($) | 2021 ($) | 2020 ($) | ||||||||||||
Audit Fees | 2,498,180 | (1) | 2,475,340 | (2) | 2,341,008 | (1) | 2,405,273 | (2) | ||||||||
Audit-Related Fees | 46,000 | (3) | 210,000 | (4) | 50,000 | (3) | 95,000 | (4) | ||||||||
Tax Fees | 0 | 0 | (5) | 104,000 | (5) | 370,000 | (5) | |||||||||
All Other Fees | 4,000 | (6) | 4,000 | (6) | 51,903 | (6) | 4,838 | (7) | ||||||||
Total Fees | 2,548,180 | 2,689,340 | 2,546,911 | 2,875,111 | ||||||||||||
| (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 |
| (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”). Also includes |
| (3) | Includes fees related to the Company’s |
| (4) | Includes fees related to the Company’s |
| (5) | Includes tax fees for consulting work related to the |
| (6) | Includes fees for an ESG landscape and benchmark assessment and education session as well as license fees for PwC software products used to assist in conducting accounting research and other service tools |
| (7) | 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.
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.
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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 20192021 and 20182020 werepre-approved or ratified by the Audit Committee.
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The Board of Directors does not know of any matters that will be brought before the 20202022 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 and/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 30 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.
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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 $25,000$30,000 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,board, provided that such stockholder(s) and nominee(s) satisfy the requirements set forth in our bylaws, which generally include the following three conditions.
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a single stockholder, or qualified group of up to 20 stockholders
3% for3 years
owning three percent outstanding consecutive years
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the individual or qualified group may submit
up to20%
of the directors then in office but in no case less than one nominee
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stockholders and nominees who |
the individual or qualified group may submit
up to 20%
of the directors then in office but in no case less than one nominee
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stockholders and nominees who | ||||||||||||
To be timely for our 20212023 annual meeting of stockholders, the nomination must be received by our Corporate Secretary at the Company’s address provided on page 21under “Stockholder Proposals for 2023 Annual Meeting” of this proxy statement not later than the 120th day nor earlier than the 150th day prior to the first anniversary of the date we commenced mailing of our proxy materials for the preceding year’s annual meeting. As such, any proxy access nominations are required to be submitted no sooner than October 26, 202024, 2022 and no later than the close of business on November 23, 2020.2022. 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
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Additional Information
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, 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 athttps://www.teradata.com/articles-and-bylaws.
Stockholder Proposals for 20212023 Annual Meeting
To include a stockholder proposal in our 20212023 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, 17095 Via Del Campo, San Diego, CA 92127, no later than November 21, 2020.23, 2022. To present any other proposal at the 20212023 annual meeting of stockholders, or to nominate a candidate for director election at the 20212023 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 address provided above no sooner than the close of business on January 5, 2021,10, 2023, and no later than the close of business on February 4, 2021.9, 2023.
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  | Who 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 | ||
| How 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 | ||
| When will I receive my proxy materials? | |
| We intend to send a Notice Regarding the Availability of Proxy | ||
| How do I access my proxy materials? | |
Notice and Access. Proxy materials (including our
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 | ||
| How 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 at
Your election to receive proxy materials by electronic access will remain in effect until you revoke your consent at
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
| How 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. | ||
| How can I vote my shares of Teradata stock? | |
Your vote is important.
If you are a stockholder of record, please authorize your proxy electronically by going to the
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. | ||
| How 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:
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• properly executing and delivering a later-dated proxy (including a telephone or Internet proxy authorization);
• voting by casting a ballot electronically at the annual 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. | ||
| What if I want to vote | |
| The method by which you vote and authorize your proxy will in no way limit your voting rights if you later decide to vote | ||
| 2022 PROXY STATEMENT |
Other General Information
| What 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 | ||
| How 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 | ||
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Other General Information
| What 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 | ||
| How 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 approval of Amendment No. 1 to the Teradata 2012 Stock Incentive Plan), 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 approve the plan. 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, | ||
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Other General Information
| How does the Board of Directors recommend that I vote my shares? | |
The Teradata Board of Directors recommends that you vote:
• FOR the election of each of the three Class
• FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy • FOR the approval of Amendment No. 1 to the Teradata 2012 Stock Incentive Plan; and
• FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for
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, | ||
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Other General Information
| The 2022 annual meeting is being held virtually. What do I need to do | |
In consideration of the health and safety of our stockholders, employees, and directors, the 2022 annual meeting will be held virtually via a live webcast. In addition, holding the annual meeting of stockholders in a virtual format provides the opportunity for participation by a broader group of stockholders, while reducing the costs and environmental impact associated with planning, holding and arranging logistics for an in-person meeting. To attend the annual meeting, including to vote and/or submit questions, stockholders will need to access the live audio webcast of the meeting. To do so, stockholders will need to visit www.virtualshareholdermeeting.com/TDC2022 and use their 16-digit Control Number provided in the Notice, proxy card or instructions that accompanied your proxy materials, to log in to this website and access the live audio webcast of the meeting. We encourage stockholders to log in to this website and access the webcast before the annual meeting’s start time. Please allow ample time for online check-in, which will begin at 7:45 a.m. Pacific Time. We will offer live technical support during the meeting. If you | ||
| Will I be able to ask questions at the annual meeting? How do | |
Stockholders may submit a
Following the meeting, we will post to the Investor Relations section of our website (www.teradata.com) a replay of the annual meeting (including the question and answer session). 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, as applicable, 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. | ||
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The above notice and proxy statement are sent by order of the Board of Directors.
Margaret A. Treese
Deputy General CounselChief Legal Officer and Secretary
Dated: March 20, 202023, 2022
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Other General Information
Cautionary Note on Forward-Looking Statements
Statements in this proxy statement relating to Teradata’s future plans, expectations, beliefs, intentions and prospects, such as statements regarding our ongoing business transformation and future business, operating and ESG-related goals, use of shares in our equity plan and sufficiency of the amount of shares issued under that plan are forward-looking statements. These forward-looking statements are based upon current expectations and assumptions and involve risks and uncertainties that could cause actual results to differ materially, including the factors described from time to time in Teradata’s filings with the U.S. Securities and Exchange Commission, including its annual report on Form 10-K for the year ended December 31, 2021 and subsequent quarterly reports on Forms 10-Q, as well as the Company’s annual report to stockholders. Teradata does not undertake any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.
In addition, the forecasts regarding our future share usage and burn rate set forth in Proposal No. 3 (Approval of Amendment No. 1 to the Teradata 2012 Stock Incentive Plan) include embedded assumptions which are highly dependent on the public trading price of Teradata common stock and other factors, which we do not control. These forecasts reflect various assumptions regarding our future operations. The inclusion of the forecasts set forth in Proposal No. 3 should not be regarded as an indication that these forecasts will be predictive of actual future outcomes, and the forecasts should not be relied upon as such.
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AMENDMENT NO. 1
TERADATA 2012 STOCK INCENTIVE PLAN
(Amended and Restated as of March 1, 2021)
The Teradata 2012 Stock Incentive Plan (amended and restated as of March 1, 2021) (the “Plan”) is hereby amended, effective as of the date of approval by the shareholders of Teradata Corporation (the “Company”) at the Company’s 2022 Annual Meeting of Shareholders, as follows:
1. Section 1(c) of the Plan is hereby deleted in its entirety and replaced with the following:
“(c) Duration. No Award may be granted under the Plan after March 1, 2027, or such earlier date as the Board shall determine. The Plan will remain in effect with respect to outstanding Awards until no Awards remain outstanding.”
2. Section 3(a) of the Plan is hereby deleted in its entirety and replaced with the following:
“(a) Shares Available for Awards. The maximum number of Shares that may be issued or delivered pursuant to Awards under the Plan shall be 33,900,000, all of which may be granted as Incentive Stock Options. Shares issued or delivered pursuant to an Award may be authorized but unissued Shares, treasury Shares, including Shares purchased in the open market, or a combination of the foregoing. The aggregate number of Shares available for issuance or delivery under the Plan shall be subject to adjustment as provided in Section 15.”
3. Except as explicitly set forth herein, the Plan will remain in full force and effect.
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TERADATA CORPORATION 17095 VIA DEL CAMPO SAN 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 May
During The Meeting - Go to www.virtualshareholdermeeting.com/TDC2022 You may attend the meeting via the Internet and vote during the meeting. Have the information that is printed in the box marked by the arrow available and follow the instructions. VOTE BY PHONE - 1-800-690-6903 Transmit your voting instructions via telephone up until 11:59 P.M. on May
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 Teradata’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 via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years or go towww.investordelivery.com. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
D03916-P32658-Z76274D35915-P48843-Z78998 KEEP THIS PORTION FOR YOUR RECORDS
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DETACH AND RETURN THIS PORTION ONLY
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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The Board of Directors recommends that you vote FOR the Director Nominees listed below and FOR each of the other proposals listed below: | ||||||||||||||||||||||||||||||||||||
1. Election of Directors | For | Against | Abstain | |||||||||||||||||||||||||||||||||
Class III Nominees: | ||||||||||||||||||||||||||||||||||||
| 1a. Cary T. Fu | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||
| 1b. Michael P. Gianoni | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||
| 1c. �� Joanne B. Olsen | ☐ | ☐ | ☐ | |||||||||||||||||||||||||||||||||
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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. | ||||||||||||||||||||||||||||||||||||
| For | Against | Abstain | ||||||||||
2. An advisory (non-binding) vote to approve executive compensation. | ☐ | ☐ | ☐ | |||||||||
3. Approval of Amendment No. 1 to the Teradata 2012 Stock Incentive Plan. | ☐ | ☐ | ☐ | |||||||||
4. Approval of the ratification of the appointment of the independent registered public accounting firm for 2022. | ☐ | ☐ | ☐ | |||||||||
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 2022 Annual Meeting of Stockholders. | ||||||||||||
Signature [PLEASE SIGN WITHIN BOX]
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Annual Meeting of Stockholders
Teradata’s 20202022 Annual Meeting of Stockholders will be held at 8:00 a.m. local time, Pacific Time on May 5, 2020, at the 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 Virtual10, 2022. The 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.held in a virtual format only. You or your proxyholder couldmay participate, vote and examine our stockholder list at the Virtual Annual Meeting by visiting www.virtualshareholdermeeting.com/TDC2020TDC2022 and using your 16-digit control number, but only ifnumber. Please see your Proxy Statement for additional instructions should you wish to attend the meeting is not held in San Diego, California.meeting.
Important Notice Regarding the Availability of Proxy Materials for the 20202022 Annual Meeting:
The Notice and Proxy Statement and Annual Report are available atwww.proxyvote.com.
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D03917-P32658-Z76274D35916-P48843-Z78998
TERADATA CORPORATION Proxy/Voting Instruction Card
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR TERADATA’S 2022 ANNUAL MEETING OF STOCKHOLDERS The undersigned stockholder of Teradata Corporation, a Delaware corporation (“Teradata” or the “Company”), hereby appoints Stephen McMillan, Claire Bramley and Margaret A. Treese, 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 virtual Annual Meeting of Stockholders to be held at www.virtualshareholdermeeting.com/TDC2022 (or at any alternate location and/or by means of communication determined by or on behalf of the Board of Directors) on May 10, 2022, 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 the Teradata Savings Plan, the Company’s 401(k) 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 2022 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 2022 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. (Continued and to be signed on the reverse side.)
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