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| March |
NCR Stockholders,
2020 wasOver the last four years, NCR has transformed. We have become a year full of challenges for NCR, our customers, our partnerssoftware-led as-a-Service company that transforms, connects and our employees. The coronavirus pandemic impactedruns stores, restaurants and challenged us all. Our response to the crisis was consistent – take care of our employees, take care ofdigital-first retail banking. We have built strong relationships with our customers and take careposted steady growth.
Across all five of our company.
business segments, our products are winning in the marketplace. In Commerce, we saw continued growth in NCR took rapidEmeraldTM among retailers and decisive action early on to weatherongoing momentum in NCR Aloha across enterprise and SMB restaurant customers. Digital Banking continues winning in the uncertainty and come out of this global crisis stronger. We acted quickly to set up communication channels and programs, including a COVID-19 task force, to remain in frequent contact with our workforce and customers. We took steps to improve our overall financial flexibility, including salary reductionsmarket, demand for our senior managers,ATM-as-a-Service solution is accelerating and we are gaining traction in merchant acquiring and our Allpoint network.
We had a very good year in 2022, with 10% total revenue growth (up 13% on a constant currency basis), recurring revenue growth of 16% (up 20% on a constant currency basis) and Adjusted EBITDA growth of 10% (up 16% on a constant currency basis). We also improved our Net Promoter Score to 52, showing we have created happy customers that view us as a valuable partner that transforms, connects and runs their technology platforms.
Our success has paved the way for our plan to separate into two independent, separately traded companies – one focused on digital commerce, the other on ATMs – by the end of 2023.
The separation will create two strong companies at scale, each with distinctive business goals and capital structures and allocation, as well as actionsincreased flexibility to improve short-term liquidity. We focused on the health, safetyinnovate. Each company can simplify operations and retention of our people.
2020 was also a year of social awareness around the world. At NCR we took several significant steps forward to advance diversity, equity and inclusion and heightened our Board-level focus on Environmental, Social & Governance (ESG) matters. In 2021, wewhat it does best. Because they will continue our progresshave different growth profiles and economic models, separating will also provide investors with greater transparency and a better ability to value each of the adoption of ESG metrics as part of our 2021 Annual Incentive Plan.
Despite the challenges presented through the pandemic, I am pleased with the progress made toward our NCR-as-a-Service strategy and our 80/60/20 goals. In 2020, NCR expanded our percentage of software and services revenue and recurring revenue, and drove efficiency and margin improvement programs. Our focus on managing our cash at NCR resulted in meaningful improvement to our free cash flow position and ensured that we can continue to investbusinesses. Importantly, this approach will put us in the best position to drive the most competitive products that will shapeand solutions for our future.customers.
In 2021,As we prepare for a successful separation, our goal is to return NCR to growth. We will accomplish this through continued focus on our customers will not change. We will continue delivering high-quality products and advancing our vision to be the provider of choice to run the store, run the restaurant and run self-directed banking. I am also very excited by the prospects of our proposed transaction with Cardtronics, which I expect will further accelerate these goals.best customer experience.
Thank you for your confidence in NCR, as well as your continued feedbacktrusting NCR. The future is bright, and for sharing our vision of NCR’s future. I would likewe are eager to closeshare it with a thank-you to all of the NCR associates around the globe who kept commerce running during 2020; I could not be prouder of how our employees responded with care, empathy and resilience.you.
Michael D. Hayford
President and Chief Executive Officer
NCR CORPORATION
 | March |
NOTICE OF 20212023 ANNUAL MEETING
AND PROXY STATEMENT
Dear Fellow NCR Stockholder:
I am pleased to invite you to attend the 20212023 Annual Meeting of Stockholders (the “Annual Meeting”) for NCR Corporation, a Maryland corporation (“NCR” or the “Company”), that will be held on April 20, 2021May 2, 2023 at 12:00 p.m. Eastern Time. This year’s Annual Meeting will again be a virtual meeting of stockholders. You will be able to attend the Annual Meeting and vote and submit questions during the Annual Meeting via a live webcast by visiting www.proxydocs.com/NCR to register prior to the deadline of April 16, 2021 at 5:00 p.m. Eastern Time.Time on April 21, 2023. As in the past, prior to the Annual Meeting you will be able to authorize a proxy to vote your shares on the matters submitted for stockholder approval at the Annual Meeting, and we encourage you to do so.
The accompanying notice of the Annual Meeting and proxy statement (“Notice”) tell you more about the agenda and procedures for the Annual Meeting. The proxy statement also describes how the Board of Directors of the Company operates and provides information about, among other matters, our director candidates, director and executive officer compensation and certain corporate governance matters. I look forward to sharing more information with you about NCR at the Annual Meeting.
As in prior years, we are offering our stockholders the option to receive NCR’s proxy materials via the Internet. We believe this option allows us to provide our stockholders with the information they need in an environmentally conscious form and at a reduced cost.
Your vote is important. Whether or not you plan to virtually attend the Annual Meeting, I urge you to authorize a proxy to vote your shares as soon as possible. You may authorize a proxy to vote your shares on the Internet or by telephone, or, if you received the proxy materials by mail, you may also authorize a proxy to vote your shares by mail. Your vote will ensure your representation at the Annual Meeting regardless of whether you attend via webcast on April 20, 2021.May 2, 2023.
Sincerely,
Frank R. Martire
Executive Chairman
NCR CORPORATION
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS OF NCR CORPORATION
Time:
Time:
12:00 p.m. Eastern Time
Date:
Tuesday, April 20, 2021May 2, 2023
Place:
Virtual Meeting via webcast at www.proxydocs.com/NCR
Purpose:The Annual Meeting will be held in a virtual format only on the Internet. You will be able to participate in the Annual Meeting online and submit your questions during the meeting by visiting www.proxydocs.com/NCR. You will also be able to vote your shares electronically at the Annual Meeting. For more information about our virtual meeting process, please see the Questions Relating to this Proxy Statement – Information about our Virtual Annual Meeting section of this proxy statement.
Purpose:
The holders of shares of common stock, par value $0.01 per share (the “common stock”), and shares of Series A Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference $1,000 per share (the “Series A Convertible Preferred Stock”), of NCR Corporation a Maryland corporation (“NCR” or the “Company”) will, voting together as a single class, be asked to:
1.Consider and vote upon the election of |
2.Consider and vote to approve, on a non-binding and advisory basis, the compensation of the named executive officers (Say |
3. Consider and vote, on an advisory basis, on the frequency of future advisory votes on the compensation of our named executive officers (“Say on Frequency”), as described in these proxy materials; 4.Consider and vote upon the ratification of the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, |
5. Consider and vote upon a proposal to amend the NCR Corporation 2017 Stock Incentive Plan; and 6.Transact such other business as may properly come before the |
Other Important Information:
• | Record holders of NCR’s common stock and Series A Convertible Preferred Stock at the close of business on February |
• | Your shares cannot be voted unless you virtually attend the Annual Meeting via webcast or they are represented by proxy. |
By orderCopies of these proxy materials are available at SEC Filings | NCR Corporation and www.proxydocs.com/NCR. You may also obtain these materials on the Board of Directors,SEC website at www.sec.gov or by contacting the Company’s Corporate Secretary at NCR Corporation 864 Spring Street NW, Atlanta, Georgia 30308-1007.
By order of the Board of Directors,
James M. Bedore Executive Vice President, General Counsel and Secretary |
March 21, 2023
James M. Bedore
Executive Vice President, General Counsel and Secretary
March 10, 2021
Important Notice Regarding the Availability of Proxy Materials for the
Stockholder Meeting to Be Held on April 20, 2021May 2, 2023
This proxy statement and NCR’s 20202022 Annual Report on Form 10-K are available at www.proxypush.com/www.proxydocs.com/NCR.
NCR Corporation
864 Spring Street NW
Atlanta, Georgia 30308-1007 Except to the extent specifically referenced herein, information contained or referenced on our website is not incorporated by reference into and does not form a part of the proxy statement. The Company’s 2022 Annual Report is not proxy soliciting material.
NCR CORPORATION
NCR CORPORATION | 20212023 Proxy Statement
NCR CORPORATION
864 Spring Street NW
Atlanta, GA 30308-1007
PROXY STATEMENT
20212023 Annual Meeting of Stockholders
Time and Date | Location | Record Date | ||
12:00 p.m. Eastern Time | www.proxydocs.com/NCR | Close of Business on February | ||
How to Vote
| Proxy Voting Methods | ||||
Internet
www.proxypush.com/NCR |
Telephone
1-866-250-6196 |
Sign, date and mail your proxy card or your voting instruction form | ||
Proposals and Voting Recommendations
The holders of shares of common stock and shares of Series A Convertible Preferred Stock, voting together as a single class, are being asked to consider and vote upon the following threefive proposals:
Proposal No. | Description | Votes Required | Board Recommendation | |||
1 | Election of | Majority of the total votes cast for each nominee | ✓ VOTE FOR EACH NOMINEE | |||
2 | Say on Pay: Advisory Vote on the Compensation of the Named Executive Officers as described in these proxy materials | Majority of votes cast | ✓ VOTE FOR | |||
3 | Say on Frequency: Advisory Vote on the Frequency of Future Advisory Votes on the Compensation of the Named Executive Officers as described in these proxy materials | Majority of votes cast | ✓ VOTE FOR 1 YEAR | |||
4 | Ratification of the Appointment of Independent Registered Public Accounting Firm for the year ending December 31, | Majority of votes cast | ✓ VOTE FOR | |||
5 | Second Amendment to the 2017 Stock Incentive Plan | Majority of votes cast | ✓ VOTE FOR | |||
NCR CORPORATION | 20212023 Proxy Statement | 1
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NCR is a software-led as-a-Service enterprise technology provider that runs stores, restaurants, and self-directed banking for our customers. 2022 was a challenging year as macro headwinds, which were almost all external uncontrollable impacts, had a significant effect on our business. The continued pandemic and the war in Ukraine had substantial impact on our transaction volumes and our ability to operate, including our exit from Russia. Supply chain disruptions and inflation negatively impacted our margins through higher component and transportation costs as well as escalating wages. Interest rates increased at an accelerated pace and led to higher operating expense for the vault cash we rent in our ATM fleet. Foreign exchange rates moved against American companies, including NCR, with the stronger dollar negatively impacting our revenue growth by 300 basis points and Adjusted EBITDA by 600 basis points.
Despite these challenges, we continued to make progress on our strategic initiatives while lowering our costs from operations. We reduced our staffing levels by approximately 7%, with roughly half of those reductions from attrition and the remainder from reductions in force. Our Net Promoter Score increased from 48 to 52, a major achievement from where we began in 2018 at 14. Happy customers make the rest of our strategy of transforming NCR into a software-led-as a-Service company possible.
We generated revenue of $7.8 billion, an increase of 10% compared to the prior year (up 13% on a constant currency basis). Recurring revenue grew by 16% compared to the prior year (up 20% on a constant currency basis) and now makes up 62% of our total revenue. Adjusted EBITDA increased 10% compared to the prior year (up 16% on a constant currency basis).
Overall, we made significant progress executing our strategic growth initiatives. Our key strategic metrics trended in the right direction and we made headway transforming NCR to a software-led as-a-Service company with higher recurring revenue streams.
NCR CORPORATION | 2023 Proxy Statement | 2
Board Composition Highlights |
Our Board holds a diverse range of backgrounds, viewpoints and skills that enable its effectiveness and proactiveness and is committed to actively seeking underrepresented director candidates for consideration. Additionally, our Board continues to uphold and focus on the independence of Board members, exceeding the New York Stock Exchange (NYSE) listing standards. Even though our Chief Executive Officer, Michael D. Hayford, and Executive Chairman, Frank R. Martire, are both current members of the Board, neither of them serves as a member of any of the Board’s standing committees described in this proxy statement.
| NCR’s Director Nominees: | ||||||||
91% are independent | 18% self-identify as an ethnic minority | 36% self-identify as women | 3.05 years average tenure (as of the Record Date) | 57.82 years average age (as of the Record Date) | ||||
| NCR’s Board: | ||||||||
| 75% of Board Committee Chairs self-identify as women | ||||||||
| Current NCR Directors | Independent | Audit Committee | Committee on Directors and Governance | Compensation and Human Resource Committee | Risk Committee | |||||
Mark W. Begor | ✓ | ✓ | ✓ | |||||||
Gregory Blank | ✓ | ✓ | ✓ | |||||||
Catherine L. Burke | ✓ | Chair | ✓ | |||||||
Deborah A. Farrington | ✓ | ✓ | Chair | |||||||
Georgette D. Kiser | ✓ | ✓ | Chair | |||||||
Michael D. Hayford Chief Executive Officer | ||||||||||
Kirk T. Larsen | ✓ | Chair | ✓ | |||||||
Frank R. Martire Executive Chairman | ||||||||||
Martin Mucci | ✓ | ✓ | ✓ | |||||||
Joseph E. Reece Independent Lead Director | ✓ | |||||||||
Laura J. Sen | ✓ | ✓ | ✓ | |||||||
Glenn W. Welling | ✓ | ✓ | ✓ | |||||||
NCR CORPORATION | 2023 Proxy Statement | 3
Executive Compensation Highlights |
Executive Compensation Philosophy and Design
Our executive compensation program is designed to align executive pay with company performance and stockholders’ interests. In 2022, we made significant changes in our executive pay programs to achieve better alignment. These changes included: (1) a redesign of our long-term incentive plan to be 100% performance-based, and incorporate a rigorous relative total shareholder return (rTSR) measure, weighted at 40%, into the plan; (2) a redesign of our Annual Incentive Plan (AIP) by adding a revenue measure as an important driver of stockholder value; (3) enhanced goal rigor; and (4) avoiding special awards outside of our plans.
Pay for Performance Results
The Compensation and Human Resource Committee made no changes to the salary, target bonus, or long-term incentive grant values of any of our named executive officers, except to increase the target long-term incentive grant value for Mr. Layden(1).
As reflected in our Business Highlights above, 2022 was a solid year in most respects, considering the impact of the continuing pandemic, the war in Ukraine, supply chain disruptions, inflation and rising interest rates. We achieved 10% total revenue growth against a goal of 12% and achieved a four-point improvement in our Net Promoter Score (NPS), signaling customer enthusiasm for our products, platforms, and services. However, our AIP requires that we meet threshold performance on EBITDA(2) in order to fund executive awards, and because we did not meet this funding gate, we did not pay annual bonuses for fiscal year 2022 performance.
For the three years ending on December 31, 2022, we generated above-target performance on recuring revenue growth and approximated target performance on EBITDA(2) growth. As a result, our 2020-2022 performance-based restricted stock unit (PBRSU) grant paid out 108.7% of target.
Our pay for performance, as reflected in the new disclosure shown in the Executive Compensation—Compensation Discussion & Analysis section of this proxy statement, shows strong alignment with realized/realizable CEO pay tracking total shareholder return (TSR) over the last three years.
“Say on Pay” Vote Result
At NCR’s 2022 Annual Meeting, stockholders approved the Company’s “Say on Pay” proposal with 94% of the votes cast in support of our executive compensation program. In 2022, we continued to conduct significant stockholder outreach. We met with several of our largest institutional stockholders, representing approximately 23%(3) of the shares outstanding. These outreach efforts reaffirmed the integrity of our 2022 executive pay programs.
Looking Forward to the 2023 AIP and 2023-2025 PBRSU Plans
For the year ahead, we are undertaking bold actions designed to benefit our stockholders. As a result, we have designed our 2023 AIP as well as our 2023-2025 PBRSU plan to further align with these efforts and reinforce the importance of delivering results to our stockholders. These changes include:
| ● | For 2023, the AIP will be entirely focused on meeting rigorous financial and customer performance requirements. ESG factors will be captured in the individual ratings of our executive team members |
| ● | The 2023-2025 PBRSU plan will be focused on driving our strategic process and achieving superior TSR outcomes for our stockholders. To galvanize our team efforts and enhance retention during this process, we delivered our 2023-2025 PBRSU grant earlier to non-Section 16 participants in December 2022. This grant will increase our share usage for fiscal year 2022, but will be offset by no grant in fiscal year 2023 for these participants. Grants to Section 16 participants have been made in February 2023 on our normal grant time. |
(1) Mr. Layden was a consultant prior to October 1, 2021 at which point he become a full-time employee of NCR. His LTI grant increased in February 2022 to compensate for that period when no awards were granted to Mr. Layden.
(2) “EBITDA” means earnings before interest, tax and depriciation and amoritization adjusted for our incentive plan purposes as set forth in the Executive Compensation—Compensation Discussion & Analysis section.
(3) The calculation of the percentage represents stockholder outreach throughout 2022 and is based on the number of outstanding Company shares as of December 31, 2022. This percentage may include stockholder outreach to persons who held stock at the time of the outreach but no longer held stock as of December 31, 2022.
NCR CORPORATION | 2023 Proxy Statement | 4
Environmental, Social and Governance Highlights |
After establishing our environmental, social and governance (ESG) priorities in 2020, we have delivered on, are working towards, and are continuing to expand on our ESG efforts and commitments. Some notable highlights from 2022 include:
| ● | A commitment for NCR to be a net-zero emitter of greenhouse gas (GHG) emissions by 2050 |
| ● | First-ever public disclosure of GHG emissions baseline data (2019 – 2021) and implementation of an inventory management plan for Scope 1 and 2 emissions informed by the GHG Protocol Corporate Accounting and Reporting Standard |
| ● | Aligning our ESG priorities with the Sustainability Accounting Standards Board (SASB) standards for the Software & IT Services industry and publishing our first company SASB-aligned ESG report |
| ● | Publishing our first Inclusion, Diversity, Equity, Allyship & Storytelling (IDEAS) report including our commitment to promoting a diverse and equitable workforce and our baseline diversity data which includes global gender and US-based race/ethnicity reporting |
| ● | An upgrade to ‘A’ rating in MSCI Inc.’s annual assessment of NCR’s overall ESG program, including an achievement of an 8.7 on a 10-point scale, relative to the Software and Services industry average of 6.7, in MSCI Inc.’s assessment of NCR’s privacy and data security programs |
| ● | Achieving a top security rating of ‘Advanced’ on BitSight Technologies Inc.’s Company Overview Report of NCR |
| ● | A two-step rating improvement from CDP (formerly Carbon Disclosure Project) regarding NCR’s score on our annual CDP climate questionnaire submission |
| ● | Being recognized by The Human Rights Campaign Foundation as one of the best places to work for LGBTQ Equality in 2022, for which we scored 100 percent on the corporate equality index |
| ● | Continuing our strong commitment to expand the work of the NCR Foundation and increase giving centered around three focus areas: STEM education; economic development; and disaster recovery. In 2022, The NCR Foundation approved 42 grants totaling approximately $4 million |
Our Commitment to ESG
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We are making this proxy statement, notice of annual meetingAt NCR, we, our Board, our Executive Officers and our 2020 annual report availablepeople, remain committed to stockholders beginning on or about March 10, 2021creating positive change that supports an innovative and sustainable future in connectiona responsible way. Our business strategy directly aligns with the solicitationESG priorities that we established in 2020 and having a greater focus on software and services offers us a new and different environmental footprint profile. This business strategy concentrates on customer satisfaction and harnessing our culture of innovation. Our concentrated approach to customer satisfaction is two-fold: we intend to represent the ESG qualities our customers are expecting, and we intend and encourage for our employees to fulfill and answer these expectations.
To highlight the importance of the customer-first culture, each employee participating in our Annual Incentive Plan has a portion of his or her compensation linked to Net Promoter Score (NPS), a measure of customer experience. These efforts have shown results. We have increased our NPS scores by 271 percent since 2018.
While our Annual Incentive Plan historically included an NPS goal that accounted for 20 percent of the Boardannual payout for our NEOs and other eligible executives, we modified that plan in 2021 to include a +/- 20 percent “Stakeholder Metrics” modifier to address both ESG goals (+/- 10%) and NPS goals (+/- 10%). This Stakeholder Metrics modifier could increase or decrease 2021 bonus payouts by 20 percent based on our ESG and NPS performance. In 2022, we have strengthened our commitment to meeting our ESG goals by shifting the annual incentive payout modifier to independent, stand-alone metrics for ESG and NPS
NCR CORPORATION | 2023 Proxy Statement | 5
performance (instead of Directors (the “Board”)a modifier) representing 10 percent of the final 2022 annual incentive payout for each category (combined ESG and NPS goals weighted 20% in the aggregate). ESG goals include measures related to employee satisfaction (eNPS), workforce diversity reporting, data privacy and security program performance and GHG emissions reporting and reduction commitments. The performance results for these updated Stakeholder Metrics under the 2022 Annual Incentive Plan can be found in the Executive Compensation – Compensation Discussion & Analysis section below.
To align our customers’ expectations and our ESG priorities with those of our key stakeholders, NCR Corporation,conducted a Maryland corporation (“NCR,”comprehensive ESG materiality assessment and used the “Company,” “we” or “us”), of proxies for the 2021 Annual Meeting of Stockholders, and any postponement or adjournment thereof (the “Annual Meeting”),findings from our study to be held via a live webcast, for the purposes set forthinform our ESG strategic priorities. In addition, we intend to publish our first-ever annual company ESG report in these proxy materials.2023.
ESG Oversight
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NCR is committed to a strong oversight mechanism of ESG issues. We believe that ESG considerations should be fully integrated within an organization and start at the top with that philosophy. The Annual Meeting will be a virtual meetingBoard has direct oversight of stockholders, which allows stockholdersESG activities through its Risk Committee. However, the ability to attend the Annual Meeting without incurring safety risks dueoversight of ESG activities is not confined solely to the pandemic, travel costs or other inconveniences. If youRisk Committee. For example, the Committee on Directors and Governance is responsible for the oversight of ethics and compliance programs. The Audit Committee may liaise with the Risk Committee on matters relating to compliance, risk management and information security, and also shares a number of additional oversight responsibilities with the Risk Committee with clearly delineated responsibilities. Finally, the Compensation and Human Resource Committee has included ESG metrics in its compensation decisions.
Our Chief Risk Officer has primary oversight for the Company’s Enterprise Risk Management (ERM) programs, including business continuity planning (BCP) and third-party risk management (TPRM), details of which are a stockholder as of the close of business on February 17, 2021 (the “Record Date”), a proxy for a record stockholder or a beneficial owner of either (i) NCR’s common stock, par value $0.01 per share (the “common stock”), or (ii) NCR’s Series A Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference $1,000 per share (the “Series A Convertible Preferred Stock”), in either case with evidence of ownership, you will be able to attend the Annual Meeting and vote and submit questions during the Annual Meeting via a live webcast by registering at www.proxydocs.com/NCR priorreported to the deadline of April 16, 2021 at 5:00 p.m. Eastern Time, which provides our stockholders with rightsRisk Committee. NCR’s ERM programs support NCR’s strategic objectives and opportunities to vote and ask questions equivalent to in-person meetings of stockholders.corporate governance responsibilities. The Annual Meeting will convene at 12:00 p.m. Eastern Time, on April 20, 2021.
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We are providing access to our proxy materials (including this proxy statement, notice of annual meeting and our 2020 annual report) overERM programs include the Internet pursuant to rules adopted by the Securities and Exchange Commission (“SEC”). Beginning on or about March 10, 2021, we will send Notices of Internet Availability of Proxy Materials (each, a “Notice”) by mail to stockholders entitled to notice of or a vote at the Annual Meeting. The Notice includes instructions on how to view the electronic proxy materials on the Internet, which will be available to all stockholders beginning on or about March 10, 2021. The Notice also includes instructions on how to elect to receive future proxy materials by email. If you choose to receive future proxy materials by email, next year you will receive an email with a link to the proxy materials and proxy voting site, and you will continue to receive proxy materials in this manner until you terminate your election. We encourage you to take advantage of the availability of our proxy materials on the Internet.
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You will not receive a printed copy of the proxy materials unless you specifically request one. Each Notice includes instructions on how to request a printed copy of the proxy materials, including the applicable proxy card (or cards) for the Annual Meeting if you are a record holder or the applicable voting instruction form (or forms) if you are a beneficial owner, at no cost to you. In addition, by following the instructions on the Notice, you can elect to receive future proxy materials in printed form by mail. If you choose to receive future proxy materials in printed form by mail, we will continue to send you printed materials pursuant to that election until you notify us otherwise.
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We are taking advantage of the householding rules adopted by the SEC that permit us to deliver only one Notice to stockholders who share an address, unless otherwise requested. This allows us to reduce the expense of delivering duplicate Notices to our stockholders who may have more than one stock account or who share an address with another NCR stockholder.
NCR CORPORATION | 2021 Proxy Statement | 2
If you have multiple common stock record accounts or multiple Series A Convertible Preferred Stock record accounts and you have received only one Notice with respect to your common stock or Series A Convertible Preferred Stock, and/or if you share an address with another NCR stockholder and you have received only one Notice:primary objectives:
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If you have multiple NCR common stock record accounts or multiple Series A Convertible Preferred Stock record accounts and you have received multiple copies of the Notice with respect to either your common stock or Series A Convertible Preferred Stock, and/or if you share an address with another NCR stockholder and you have received multiple copies of the Notice, and you wish to participate in the householding program, please call 1-866-540-7095 to “opt-in.”
Please note that if you hold both common stock and Series A Convertible Preferred Stock, you can expect to receive a separate Notice for each class of stock. These notices are separate and will not be combined even if you have opted in or consented to householding. See “What if I hold both common stock and Series A Convertible Preferred Stock” below.
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Record holders of our common stock and/or Series A Convertible Preferred Stock on the Record Date are entitled to notice of and to vote at the Annual Meeting.
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Each record holder of common stock will have one vote for each share of common stock held at the close of business on the Record Date on each matter that is properly brought before the Annual Meeting and on which holders of common stock are entitled to vote. There were 130,254,815 shares of common stock outstanding on the Record Date.
Each record holder of Series A Convertible Preferred Stock will have a number of votes equal to the largest number of whole shares of common stock into which such shares are convertible on the Record Date on each matter that is properly brought before the Annual Meeting and on which holders of Series A Convertible Preferred Stock are entitled to vote together with common stock as a single class. As of the Record Date, there were 275,867 shares of Series A Convertible Preferred Stock outstanding, which as of such date were convertible into 9,195,474 shares of common stock.
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Each record holder of Series A Convertible Preferred Stock is entitled to vote in his, her or its discretion on all matters described in this proxy statement.
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Your vote is important. Your shares can be voted at the Annual Meeting only if you are present (via attendance at the Annual Meeting by webcast) or if your shares are represented by proxy. Even if you plan to attend the Annual Meeting webcast, we urge you to authorize a proxy to vote your shares in advance.
If you hold both common stock and Series A Convertible Preferred Stock, you will need to vote, or authorize a proxy to vote, each class of stock separately. Please be sure to vote or authorize a proxy to vote for each class of stock separately so that all your votes can be counted. For more information, see “What if I hold both common stock and Series A Convertible Preferred Stock” below.
You can authorize a proxy to vote your shares of common stock or Series A Convertible Preferred Stock electronically by going to www.proxypush.com/NCR, or by calling the toll-free number (for residents of the
NCR CORPORATION | 2021 Proxy Statement | 3
United States and Canada) listed on the applicable proxy card. Please have your proxy card (or cards) in hand when going online or calling. If you authorize a proxy to vote your shares electronically, you do not need to return the applicable proxy card. If you received proxy materials by mail and want to authorize your proxy by mail, simply mark the applicable proxy card, and then date, sign and return it in the applicable postage-paid envelope provided so it is received no later than April 19, 2021.
Your shares of common stock or Series A Convertible Preferred Stock will be voted at the Annual Meeting as directed by your electronic proxy, the instructions on your proxy card or voting instruction form if: (i) you are entitled to vote those shares; (ii) your proxy for those shares was properly executed or properly authorized electronically; (iii) we received your proxy for those shares prior to the Annual Meeting; and (iv) you did not revoke your proxy for those shares prior to or at the Annual Meeting. The method by which you vote or authorize a proxy to vote your shares will in no way limit your right to attend and vote at the Annual Meeting webcast if you later decide to do so.
Please note that if you hold any of your shares through a bank, broker or other nominee (i.e., in street name), you may be able to authorize your proxy for those shares by telephone, the Internet or mail. You should follow the instructions you receive from your bank, broker or other nominee to vote these shares. Also, if you hold any of your shares in street name, you must obtain a “legal proxy” executed in your favor from your bank, broker or nominee to be able to vote those shares in person via attendance at the virtual Annual Meeting. Obtaining a legal proxy may take several days.
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Some of our stockholders may hold both common stock and Series A Convertible Preferred Stock. If you are a holder of both common stock and Series A Convertible Preferred Stock, you can expect to receive a separate Notice for each class of stock (or a separate set of printed proxy materials if you previously elected to receive proxy materials in printed form).
You will need to vote, or authorize a proxy to vote, each class of stock separately in accordance with the instructions set forth herein and on the applicable proxy cards or voting instruction forms. Voting, or authorizing a proxy to vote, only your common stock will not also cause your shares of Series A Convertible Preferred Stock to be voted, and, similarly, voting, or authorizing a proxy to vote, only your Series A Convertible Preferred Stock will not also cause your shares of common stock to be voted.
If you hold both common stock and Series A Convertible Preferred Stock, please be sure to vote or authorize a proxy to vote for each class of stock separately so that all of your votes can be counted.
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If you are a participant in the Direct Stock Purchase and Sale Plan (the “DSPP”) administered by our transfer agent, Equiniti Trust Company, any proxy you authorize will also have the authority to vote the shares of NCR common stock held in your DSPP account. Equiniti Trust Company, as the DSPP administrator, is the stockholder of record of the plan and will not vote those shares unless you provide it with instructions, which you may do by telephone, the Internet or mail.
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Yes, you may revoke a proxy at any time before it is exercised at the Annual Meeting by:
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OnlyOur Chief Risk Officer also supports the most recent proxy will be exercisedExecutive Leadership Team’s ESG initiatives and all others will be disregarded regardlessreports on those activities to the Risk Committee. In addition to the Chief Risk Officer, our Chief Ethics & Compliance Officer has a direct channel to the Board. Further, our Chief Ethics & Compliance Officer oversees investigations pertaining to fraud, conflicts of interest, violations of laws, and other similar matters, and reports on those activities to one or more Committees of the method by whichBoard. All of these channels to the proxies were authorized.
If sharesBoard are designed to: prevent ESG risks and initiatives from being siloed into one channel and provide a clear and accurate picture of NCR’s voting securities are held on your behalf by a broker, bank or other nominee, you must contact it to receive instructions as to how you may revoke your proxy instructions for those shares.ESG developments.
Business Ethics and Integrity
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Our Code of Conduct sets forth standards designed to uphold our values and foster integrity in our relationships with one another and our valued stakeholders. Our Code of Conduct is available at https://www.ncr.com/company/corporate-governance/code-of-conduct.
Everyone at NCR is required to annually take our Code of Conduct training, available in 17 languages. Since 2008, NCR has achieved 100% timely completion of its Code of Conduct training. The presence atCode of Conduct
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training is revised annually, taking into account the Annual Meeting (in person via attendance atprior year’s compliance matters and the virtual Annual Meeting by proxy)Company’s compliance risks.
Our Ethics and Compliance Program is responsible for managing the Company’s adherence to the Code of stockholders entitledConduct. Further, our Chief Ethics & Compliance Officer oversees investigations pertaining to cast a majorityfraud, conflicts of allinterest, violations of laws, and other similar matters, and reports on those activities to one or more Committees of the votes entitled to be cast at the Annual Meeting constitutes a quorum.Board.
Data Protection, Privacy and Security
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A majority of all the votes cast by holdersAt NCR, we are proud of our common stockdata protection, cybersecurity, and Series A Convertible Preferred Stock voting togetherprivacy programs. These initiatives receive oversight from the Risk Committee, as well as several members of our Executive Leadership Team including the Chief Operating Officer, General Counsel, Chief Security Officer, and Chief Information Officer. NCR’s Chief Information Security Officer and Chief Privacy Officer are responsible for management of these programs. Additional support is provided by our Chief Ethics & Compliance Officer.
In December 2022, in connection with our broader ESG efforts, MSCI Inc., a single class (in person via attendance atleading provider of decision support tools for the virtual Annual Meeting orglobal investment community, assessed NCR’s privacy and data security programs as an 8.7 on a 10-point scale, relative to the software and services industry average of 6.7.
NCR supports appropriate privacy protections for those with whom we interact. We foster a culture that values the privacy rights of individuals. Under the direction of NCR’s Chief Privacy Officer, the program offers thought leadership, advice and guidance on privacy practices such as: complying with privacy laws and regulations; designing solutions with privacy in mind; implementing contracts governing intracompany activities; minimizing the collection of data; providing meaningful notice and choice; and safeguarding information. The program is supported by proxy),privacy attorneys, privacy program managers within the business, and data protection officers in various locations internationally. Many of these privacy professionals have industry recognized privacy certifications from the International Association of Privacy Professionals.
Under the direction of NCR’s Chief Security Officer and Chief Information Security Officer, the Global Information Security organization is responsible for implementing and maintaining an information security program with the holdersgoal to protect information technology resources and protect the confidentiality and integrity of Seriesdata gathered on our people, partners, customers, and business assets. Also, we employ various information technology and protection methods designed to promote data security including firewalls, intrusion prevention systems, denial of service detection, anomaly-based detection, anti-virus/anti-malware, endpoint encryption and detection and response software, Security Information and Event Management system, identity management technology, security analytics, multi-factor authentication and encryption.
To further our commitment to data privacy and cybersecurity:
| ● | NCR maintains the ISO 27001 certification for certain NCR locations throughout the United States, Europe, and India |
| ● | Third-party audits for PCI-DSS, PA-DSS and SSAE-18 SOC2 are conducted for certain service offerings |
| ● | NCR maintains a robust information security awareness and training program. Employees and contingent workers are required to complete training within 30 days of hire, as well as an annual refresher course. Additionally, NCR performs regular testing to help ensure employees can identify email “phishing” attacks |
| ● | NCR’s corporate insurance policies include certain information security risk policies that cover network security, privacy and cyber events |
| ● | Our NCR Privacy Policy can be found on the Company website for further viewing at https://www.ncr.com/privacy |
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Diversity, Equity and Inclusion
At NCR, we believe diversity is a fact, and inclusion is an act. A Convertible Preferred Stock voting on an as-converted basis, is requireddiverse workforce not only promotes a culture of inclusiveness but ensures that various perspectives are expressed, leading to elect eachgreater creativity and productivity. A diverse workforce will also improve our customer relationships, as the culture of inclusiveness we foster helps our employees understand the nuances of the director nominees (Mark W. Begor, Gregory Blank, Catherine L. Burke, Deborah A. Farrington, Michael D. Hayford, Georgette D. Kiser, Kirk T. Larsen, Frank R. Martire, Martin Mucci and Matthew A. Thompson), to approve the Say on Pay proposal, and to ratify the appointment of our independent registered public accounting firm. Under Maryland law, abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the votesmarkets in which we operate. We believe in the electionpower and value of diversity and strive to build a globally inclusive workplace where all people are treated fairly. We seek to include everyone, lead with empathy, and make our communities better. We encourage IDEAS (Inclusion, Diversity, Equity, Allyship, and Storytelling) and inspire each other to be our authentic selves.
We are proud to have four female directors the Sayserving on Pay proposal or the proposal to ratify the appointment of our independent registered accounting firm.
A broker “non-vote” occurs when a broker returns a properly executed proxy but does not vote on a particular proposal because the broker does not have the discretionary authority to vote on the proposal and has not received voting instructions from the beneficial owner regarding the proposal. Under the rulesBoard. Notably, 75% of the New York Stock Exchange (“NYSE”)Board’s committees are chaired by women.
Diversity by the numbers
We continue to publish our global and U.S. diversity data*, brokers havewhich is reported in alignment with the discretionary authority to voteSASB framework for the Software & IT services industry. Below are a few highlights:
| 63 | 24% | 42% | 28% | |||
| countries in which approximately 35,000 of our employees reside | of our global workforce self-identify as women | of our U.S. workforce self-identify as ethnically and/or racially diverse | of our U.S. management positions are held by people who self-identify as women |
* Based on the ratificationdata as of our independent registered public accounting firm, but not in the election of our directors or on the Say on Pay proposal.November 30, 2022, for NCR Corporation and its subsidiaries.
Environmental Management
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We will includehave set the resultsambitious goal to achieve Net-Zero by 2050 by developing science-based plans and targets to help us meet that goal. To help us achieve this goal, we have started working on transitioning our fleet of vehicles to Electric Vehicles (EV).
We are committed to managing our environmental footprint and protecting the votes taken atglobal communities in which we operate. We strive to minimize the Annual Meetingenvironmental impact of our products and operations while also delivering innovative technologies and solutions designed to support businesses and consumers in their efforts to operate responsibly. For example, NCR uses remote sensing technology to solve customer equipment issues, which reduces the number of maintenance visits and reduces our carbon footprint. In the past two years, our remote monitoring and diagnostics capabilities and other dispatch avoidance programs resulted in over 1.1 million eliminated service dispatch trips.
We recognize the importance of minimizing our environmental footprint through energy and greenhouse gas (GHG) management. That is why we continue to report our Scope 1 and Scope 2 emissions from our global facilities and service operations through CDP (formerly Carbon Disclosure Project). We complete the annual CDP climate change questionnaire and evaluate our environmental management progress annually to better understand our areas of opportunity to make a Current Reporttrue impact. In 2022, we achieved a two-step rating improvement from CDP on Form 8-K filedour annual submission.
We are proud to continue public disclosure of our Scope 1 and Scope 2 greenhouse gas (GHG) emissions data, which has been measured and calculated in alignment with the SEC within four business days followingGHG Protocol Standard. Our emissions data for the Annual Meeting.past three years is as follows:
| Metric tons CO2e | ||||||||||||||
| 2020 | 2021 | 2022 | ||||||||||||
Scope 1 | 119,989 | 128,016 | 158,365 | |||||||||||
Scope 2 | 10,172 | 10,717 | 12,558 | |||||||||||
We are committed to continued accuracy and transparency and regularly refine our data collection and calculation methodology. In 2022, our scope 1 and 2 emissions increased with the inclusion of emissions related to our recent acquisition of Cardtronics plc (Cardtronics), improvements in data collection systems and enhancements of our calculation and reporting methodologies.
To learn more about our ESG strategy and key initiatives, including updates on our latest progress, we encourage you to visit our ESG Hub (www.ncr.com/about/ESG).
Proposal 1 – Election of Directors
The Board of Directors recommends that you vote FOR each of Mark W. Begor, Gregory Blank, Catherine L. Burke, Deborah A. Farrington, Michael D. Hayford, Georgette D. Kiser, Kirk T. Larsen, Frank R. Martire, Martin Mucci, Joseph E. Reece, Laura J. Sen and Matthew A. Thompson for terms that expire atGlenn W. Welling, each to serve until the 2022 Annual Meeting and whennext annual meeting of stockholders following his or her election and until his or her respective successor is duly elected and qualifies.
The holders of shares of common stock and Series A Convertible Preferred Stock, voting together as a single class, are being asked to consider and vote on each of the teneleven director nominees up for election, each to serve until the 2022 Annual Meetingnext annual meeting of stockholders following his or her election and until his or her successors arerespective successor is duly elected and qualifies. Proxies solicited by the Board and properly authorized will be exercised for the election of each of the teneleven nominees: Mark W. Begor, Gregory Blank, Catherine L. Burke, Deborah A. Farrington, Michael D. Hayford, Georgette D. Kiser, Kirk T. Larsen, Frank R. Martire, Martin Mucci, Joseph E. Reece, Laura J. Sen and Matthew A. Thompson,Glenn W. Welling, unless you elect to vote against or abstain from voting with regard to any nominee. The Board has no reason to believe
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that any of these nominees will be unable to serve. However, if one of them should become unable to serve prior to the Annual Meeting, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute nominee, shares represented by properly authorized proxies that were voted in favor of the nominee that became unable to serve will be voted FOR the substitute nominee.
Chinh E. Chu, who is currently serving on theMr. Frank Martire, Jr., a member of NCR Corporation’s Board of Directors since 2018, will not be standing for re-election and whosehis term is expiring onas director will cease effective as of the date of the Company’s 2023 Annual Meeting, which is not standingscheduled to be held on May 2, 2023. Mr. Martire is leaving to pursue other opportunities. NCR thanks Mr. Martire for re-election athis many contributions to NCR during his service as Executive Chairman and as a member of the Annual Meeting.NCR Board of Directors.
How Does the Board Recommend that I Vote on this Proposal? |
OurThe Board of Directors holds a diverse rangerecommends that you vote FOR the election of backgrounds, viewpointseach of Mark W. Begor, Gregory Blank, Catherine L. Burke, Deborah A. Farrington, Michael D. Hayford, Georgette D. Kiser, Kirk T. Larsen, Martin Mucci, Joseph E. Reece, Laura J. Sen and skills that enable its effectivenessGlenn W. Welling as directors, each to serve until the next annual meeting of stockholders following his or her election and proactiveness. As set forth in our NCR Corporationuntil his or her respective successor is duly elected and qualifies. Properly authorized proxies received by the Board of Directors Corporate Governance Guidelines (the “Corporate Governance Guidelines”), our Board considers numerous factors when assessingwill be voted FOR all nominees for which the qualifications for each Board nominee, including diversity of thought and perspective such as on the basis of age, race, gender and ethnicity, or on the basis of geographic knowledge, industry experience, board tenure or culture. Our Board is committed to actively seeking women and minority director candidates for consideration. The graphs and charts below illustrate, as of the Record Date, our diverse Board representation, as well as the qualifications, attributes, skills and experiences represented on the Board.stockholder may vote unless they specify otherwise.
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The affirmative vote of a majority of the total votes cast for and against each nominee by holders of our common stock and Series A Convertible Preferred Stock, voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy), with the holders of Series A Convertible Preferred Stock voting on an as-converted basis, is required to elect each nominee. Abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the vote required to elect each of these director nominees.
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Nominees for Election
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The name, age, principal occupation, other business affiliations and certain other information regarding each nominee for election as a director are set forth below, along with a description of the qualifications that led the Committee on Directors and Governance to conclude that he or she meets the needs of the Board and supports the advancement of the Company’s long-term strategy. The age reported for each director is as of the filing date of this proxy statement.
Age: DIRECTOR SINCE: 2020 NCR COMMITTEES: Compensation and Human Resource,
| Mark W. Begor is Chief Executive Officer and a member of the Board of Directors of Equifax, Inc.
Qualifications: Mr. Begor’s qualifications include extensive leadership roles; his industry expertise; his current and prior experience as a director and committee member of other public companies; and his independence. Other Current Public Directorships: Equifax, Inc. | |
Gregory Blank
Age: DIRECTOR SINCE: 2015 NCR COMMITTEES: Audit, | Gregory Blank is a Senior Managing Director of The Blackstone Group, Inc.
Qualifications: Mr. Blank’s qualifications include his significant private equity and mergers and acquisitions experience with Blackstone; his experience evaluating and managing acquisitions and investments in the technology and telecommunications industries; his experience as a director of other public and private companies; his financial expertise and literacy; his prior service on Travelport’s Audit Committee; and his independence. | |
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Catherine L. Burke
Age: DIRECTOR SINCE: 2019 NCR COMMITTEES:
| Catherine L. Burke is
Qualifications: Mrs. Burke’s qualifications include her extensive experience and senior leadership roles in marketing, communications strategy and execution, and operations; her domestic and international experience in those areas; her financial literacy; her current public company board experience; and her independence. Other Current Public Directorships: Black Knight, Inc. | |
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Deborah A. Farrington
Age: DIRECTOR SINCE: 2017 NCR COMMITTEES: Compensation and Human Resource (Chair), Directors and Governance
| Deborah A. Farrington is a founder and President of StarVest Management, Inc.,
Qualifications: Ms. Farrington’s qualifications include her significant software industry and entrepreneurial experience as a long-time investor in emerging software and business services companies as a founder and general partner of StarVest Partners; her management experience as President of StarVest Partners management, as President and Chief Executive Officer of Victory Ventures, and her prior management roles; her leadership experience, including as Lead Director of NetSuite; her current and prior public company board and board committee experience; her financial literacy and expertise; and her independence. Other Current Public Directorships: Ceridian HCM Holding Inc., Cumulus Media, Inc. Former Public Company Directorships Held in the Past Five Years: Collectors Universe, Inc., RedBall Acquisition Corp. | |
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Michael D. Hayford
Age: DIRECTOR SINCE: 2018 | Michael D. Hayford is
Qualifications: Mr. Hayford’s qualifications include his significant leadership and management experience in his previous roles at FIS and Metavante, as well as his current role at NCR; his industry expertise including in the financial services industry and bank technology processing; and his current and prior experience as a director and committee member of other public companies. Former Public Company Directorships Held in the Past Five Years: Endurance International Group Holdings, Inc., West Bend Mutual Insurance Company | |
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Georgette D. Kiser
Age: DIRECTOR SINCE: 2020 NCR COMMITTEES: Risk (Chair), Directors and Governance
| Georgette D. Kiser is an independent advisor who helps lead due diligence and technical strategies across various private equity and venture capital firms. Since May 2019, she has served as an Operating Executive at The Carlyle Group
Qualifications:Ms. Kiser’s qualifications include her extensive Other Current Public Directorships: Aflac Inc., Adtalmen Global Education Inc., Jacobs Engineering Group, Inc. | |
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Kirk T. Larsen
Age: DIRECTOR SINCE: 2019 NCR COMMITTEES: Audit (Chair), Compensation and Human Resource | Kirk T. Larsen is the
Qualifications: Mr. Larsen’s qualifications include his significant experience in leadership roles in publicly held technology companies including Black Knight and FIS; his expertise in mergers and acquisitions, technology and software; his financial literacy and expertise; and his independence. | |
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Martin Mucci
Age:
| Martin Mucci is
Qualifications: Mr. Mucci’s qualifications include his significant experience in leadership roles in technology and telecommunications companies; his current role as Other Current Public Directorships: Paychex, Inc. | |
Independent Lead Director Age: DIRECTOR SINCE:
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Qualifications: Mr. Reece’s qualifications include his current and prior experience as a director of other public companies; his significant finance and investment experience; his broad industry experience; his experience leading companies in operational, financial and strategic matters; and his independence. Other Current Public Directorships: Compass Minerals, Inc., Quotient Technology, Inc. | |
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Laura J. Sen
Age: 66 DIRECTOR SINCE: 2022 NCR COMMITTEES: Audit, Risk | Laura J. Sen most recently served as the Non-Executive Chairman of the Board of Directors of BJ’s Wholesale Club, Inc. (“BJ’s”), a membership-only warehouse chain, from January 2016 to April 2018 and was Chief Executive Officer of BJ’s from 2009 to 2016. Ms. Sen served as BJ’s Chief Operating Officer from 2008 to 2009 and served as BJ’s Executive Vice President
Qualifications: Other Current Public Directorships: Burlington Stores, Inc. Former Public Company Directorships Held in | |
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How Does the Board Recommend that I Vote on this Proposal?
The Board of Directors recommends that you vote FOR each of Mark W. Begor, Gregory Blank, Catherine L. Burke, Deborah A. Farrington, Michael D. Hayford, Georgette D. Kiser, Kirk T. Larsen, Frank R. Martire, Martin Mucci and Matthew A. Thompson as directors to serve until the next annual meeting of stockholders following their election and until their respective successors are duly elected and qualify. Properly authorized proxies received by the Board will be voted FOR all nominees for which the stockholder may vote unless they specify otherwise.
Glenn W. Welling
Age: 52 DIRECTOR SINCE: 2022 NCR COMMITTEES: Audit, Compensation and Human Resource | Glenn W. Welling is the Founder and Chief Investment Officer of Engaged Capital, LLC (“Engaged Capital”), an investment company he founded in 2012. From 2008 to 2012, Mr. Welling was a Principal and Managing Director at Relational Investors (“Relational”), an investment fund, where he was responsible for Qualifications: Mr. Welling’s qualifications include his current and prior experience as a director of other public companies; his significant finance and investment experience; his broad industry experience; his experience leading companies in operational, financial and strategic matters; and his independence. Other Current Public Directorships: BRC, Inc. Former Public Company Directorships Held in the Past Five Years: The Hain Celestial Group, Inc., Medifast, Inc., Jamba, Inc., TiVo Corporation | |
The affirmative vote of a majority of all
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Qualifications, Attributes, Skills and Experiences Represented by the votes cast with respect to a nominee by holders of our common stock and Series A Convertible Preferred Stock, voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy), with the holders of Series A Convertible Preferred Stock voting on an as-converted basis, is required to elect such nominee. Abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the vote required to elect each of these director nominees.Director Nominees
More Information About Our Board of Directors
The Board oversees management in directing the overall performance of the Company on behalf of the stockholders of the Company. Members of the Board stay informed of the Company’s business by participating in Board and committee meetings (including regular executive sessions of the Board), by reviewing materials provided to them prior to the meetings and otherwise, and through discussions with the Chief Executive Officer and other members of management and staff.
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The Board is elected by the stockholders of the Company to oversee and direct the management of the Company. The Board selects the senior management team, also currently known as the Executive Leadership Team, which is charged with managing the Company’s business and affairs. Having selected the senior management team, the Board acts as an advisor to senior management and monitors its performance. The Board reviews the Company’s strategies, financial objectives, and operating plans. It also plans for management succession of the Chief Executive Officer, as well as other senior management positions, and oversees the Company’s compliance efforts.
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To help discharge its duties and responsibilities, the Board has adopted the Corporate Governance Guidelines that address significant corporate governance issues, including, among other things: the size and composition of the Board; director independence; Board leadership; roles and responsibilities of the Board; risk oversight; director compensation and stock ownership; committee membership and structure, meetings and executive sessions; and director selection, training and retirement. The Corporate Governance Guidelines, as well as the Board’s committee charters, are found under “Corporate Governance” on the “Company” page of NCR’s website at https://www.ncr.com/about/corporate-governance. You also may obtain a written copy of the Corporate Governance Guidelines, or any of the Board’s committee charters, by writing to NCR’s Corporate Secretary at the address listed in the Communications with Directors section of this proxy statement.
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Independence |
In keeping with the policy contemplated in our Corporate Governance Guidelines policy, a substantial majority of our Board is independent, which exceeds the NYSE listing standards. Under the standards of independence set forth in Exhibit B to the Corporate Governance Guidelines, which reflect the independence standards provided in the NYSE listing standards, a Board member may not be independent unless the Board affirmatively determines that the Board member has no material relationship with the Company (whether directly or indirectly), taking into account, in addition to those other factors it may deem relevant, whether the director:
| ● | has not been an employee of the Company or any of its affiliates, or otherwise affiliated with the Company or any of its affiliates, within the past five years; |
| ● | has not been affiliated with or an employee of the Company’s present or former independent auditors or its affiliates for at least five years after the end of such affiliation or auditing relationship; |
| ● | has not for the past five years been a paid advisor, service provider or consultant to the Company or any of its affiliates or to an executive officer of the Company, or an employee or owner of a firm that is such a paid advisor, service provider or consultant; |
| ● | does not directly or indirectly, have a material relationship (such as being an executive officer, director, partner, employee or significant stockholder) with a company that has made payments to or received payments from the Company that exceed, in any of the previous three fiscal years, the greater of $1 million or 2% of the other company’s consolidated gross revenues; |
| ● | is not an executive officer or director of a foundation, university or other non-profit entity receiving significant contributions from the Company, including contributions in the previous three years that, in any single fiscal year, exceeded the greater of $1 million or 2% of such charitable organization’s consolidated gross revenues; |
| ● | has not been employed by another corporation that has (or had) an executive officer of the Company on its board of directors during the past five years; |
| ● | has not received compensation, consulting, advisory or other fees from the Company, other than director compensation and expense reimbursement or compensation for prior service that is not contingent on continued service for the past five years; and |
| ● | is not and has not been for the past five years a member of the immediate family of: (i) an officer of the Company; (ii) an individual who receives or has received during any twelve-month period more than $120,000 per year in direct compensation from the Company, other than director and committee fees and pension or other forms of deferred compensation for prior service that is not contingent on continued service; (iii) an individual who, with respect to the Company’s independent auditors or their affiliates, is a current partner or a current employee personally working on the Company’s audit or was a partner or employee and personally worked on the Company’s audit; (iv) an individual who is an executive officer of another corporation that has (or had) an executive officer of the Company on its board of directors; (v) an executive officer of a company that has made payments to, or received payments from, the Company in a fiscal year that exceeded the greater of $1 million or 2% of the other company’s consolidated gross revenues; or (vi) any director who is not considered an independent director. |
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Consistent with theour Corporate Governance Guidelines and the NYSE listing standards, on an annual basis the Board, with input from the Committee on Directors and Governance, determines whether each non-employee Board member is considered independent. In doing so, the Board takes into account the factors listed above and such other factors as it may deem relevant.
The Board has determined that all of the Company’s non-employee directors and nominees, namely Mark W. Begor, Gregory Blank, Catherine L. Burke, Deborah A. Farrington, Georgette D. Kiser, Kirk T. Larsen, Martin Mucci, Joseph E. Reece, Laura J. Sen and Matthew A. Thompson,Glenn W. Welling, are independent in accordance with the NYSE listing standards and the Corporate Governance Guidelines.
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Corporate Governance Practices and Developments |
NCR continues to demonstrate a strong commitment to corporate governance practices and policies that reinforce the Board’s alignment with, and accountability to, our stockholders. In 2020, NCR’s Board of Directors focusedThis commitment includes its continued focus on expanding and improving the Company’s practices relating to enterprise risk management (ERM), environmental, social, and governance (ESG) strategy, sustainability, and diversity, equity and inclusion. Specifically, the Board developed a new committee of the Board, the Risk Committee, to assist the Board with oversight of these matters. In connection with these efforts, NCR established the Office of Risk Management and appointed a Chief Risk Officer, as well as an Executive Director of Diversity, Equity and Inclusion. Details regarding these developments are included in the Board Leadership Structure, Risk Oversight and Our Commitment to ESG sections below.
These efforts complement our historical approach to corporate governance to align with and be accountable to our stockholders, some of which are outlined below.
Annual election of all directors | In 2016, we eliminated the classification of the Board, twice adjourning our annual meeting of stockholders to solicit votes to obtain the requisite stockholder approval. | |
Majority voting in director elections | Since IPO and enhanced in 2021 to provide for a plurality voting standard in director elections where there are more nominees than directorships, consistent with market practice. | |
Board efforts to remove super majority voting provisions | In 2020, the Board | |
In 2019, the Board included a proposal in the Company’s proxy statement that was substantially similar to the 2020 proposal described above |
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Stockholder right to amend the Bylaws |
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Proxy Access Bylaw | Since | |
Stockholder right to call special meetings upon request of the holders of 25% of the votes entitled to be cast | For decades our stockholders have had the right to call special | |
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Annual Say on Pay vote | Since inception of | |
New Director Orientation |
As provided in the Corporate Governance Guidelines, the Company has an orientation process for new directors that includes background material, visits to Company facilities, and meetings with senior management to familiarize the directors with the Company’s strategic and operating plans, key issues, corporate governance, Code of Conduct, and the senior management team. When four directors joined the Board in late 2019 and early 2020, NCR createdmanages an extensive director orientation program designed to meet the objectives above and comprehensively brief new board members. We expect any new director who joins the Board to complete a similar program. ThisThe program includes the provision of written materials to the new directors and onsite or virtual meetings and training with members of the Company’s Executive Leadership Team, including, among others, the President and Chief Executive Officer, President and Chief Operating Officer, Chief Financial Officer, General Counsel and Secretary, Chief Information Officer, Chief Audit Executive and various business leaders, as well as other key senior management employees. The program enables the new directors to thoroughly understand the Company’s business and strategic initiatives, and strategy activation plans, as well as overall governance and processes, including, among other things, the Company’s organization, the Company charter, bylaws, Board committee charters, the Company Code of Conduct, and Corporate Governance Guidelines. The design of the program also ensures directors have a direct line of communication to the Company’s key management leaders.
Board Leadership Structure, Board Committees and Risk Oversight and Our Commitment to ESG
Leadership Structure |
Our Board is committed to independent leadership and acknowledges there are different structures available to achieve that objective. Our Board has the flexibility to determine a leadership structure as it deems best for the Company from time to time. Under our Corporate Governance Guidelines, the Board shall appoint a Chair of the Board and the Board does not have a guideline on whether the role of Chair should be held by a non-employee or independent director. Also under our Corporate Governance Guidelines, the independent directors of the Board will select a Lead Director from the independent directors. Additionally, if the positions of Chair of the Board and Chief Executive Officer are held by the same person or if the Chair is a management employee or a non-independent director, the roles of the Chair and the independent Lead Director will be as set forth in Exhibit C to the Corporate Governance Guidelines.
Currently the roles of Chair and Chief Executive Officer are separated, with Frank R. Martire serving as Executive Chairman and Michael D. Hayford serving as Chief Executive Officer, with ChinhOfficer. To provide further
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independent oversight, Joseph E. Chu servingReece serves as the Board’s independent Lead Director. Mr. Chu is not standing for re-election to the Board and thus his service as a director andThe independent Lead Director will end ashas a prominent role in the Company’s oversight, with broad purview and responsibilities to counterbalance and complement the roles of the date of the 2021 Annual Meeting. AsChairman and Chief Executive Officer.
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provided in more detail below, the Board has appointed, subject to his election as a director at the 2021 Annual Meeting and effective as of the date of the 2021 Annual Meeting, Mark W. Begor to serve as the Board’s independent Lead Director.
The Board believes that the determination of whether to have an executive or non-executive Chair and whether to combine or split the roles of Chair and Chief Executive Officer, should be made based on the best interests of the Company and its stockholders in light of the circumstances of the time. TheAccordingly, the Board will periodically evaluate its leadership structure accordingly.structure.
Duties and Responsibilities of the Independent Lead Director
As described above, the independent directors of the Board have appointed our current director, Mark W. Begor, CEO of Equifax,Joseph E. Reece, to serve as the independent Lead Director following the conclusion of the current term ofDirector. Mr. Chu, who is not standing for re-election to the Board. Mr. BegorReece has extensive knowledge of NCR’s industry and is an experienced board member. The Board believes the independent Lead Director should have a prominent role in the Company’s oversight, with broad purview and responsibilities to counterbalance and complement the roles of Chair and Chief Executive Officer. Mr. Begor’sReece’s experience and knowledge will ensure an appropriate distribution of power and responsibilities among directors. Pursuant to the Corporate Governance Guidelines, our independent Lead Director has broad authority and clearly defined responsibilities, as follows:
| ● | Presides at all Board meetings at which the Chair is not |
| ● | Leads executive sessions of the independent directors, normally at every meeting. He or she may ask the Chair and Chief Executive Officer to join portions of the executive |
| ● | Serves as liaison between the Chair and the independent |
| ● | Frequently communicates with the Chair and Chief Executive |
| ● | Is authorized to call meetings of the independent |
| ● | Obtains Board member and management input and, with the Chief Executive Officer, sets the agenda for the Board |
| ● | Approves meeting schedules to assure that there is sufficient time for discussion of all agenda |
| ● | Works with the Chief Executive Officer to ensure that Board members receive the right information on a timely |
| ● | Stays current on major risks and focuses the Board members on such |
| ● | Molds a cohesive Board to support the success of the Chief Executive |
| ● | Works closely with the Committee on Directors and Governance to evaluate Board and committee |
| ● | Facilitates communications among |
| ● | Assists in the recruiting and retention of new Board members (with the Committee on Directors and Governance, the Chair and the Chief Executive Officer) |
| ● | In conjunction with the Chair, the Chief Executive Officer and the Committee on Directors and Governance, ensures that committee structure and committee assignments are appropriate and |
| ● | Works with the Committee on Directors and Governance to ensure outstanding governance |
| ● | Leads discussions, along with the chair of the Compensation and Human Resource Committee, regarding Chief Executive Officer performance, personal development and |
| ● | Is the primary point of contact between the Board and stockholders of the Company and is available for consultation and direct communication with such stockholders. |
Additionally, further structural balance is provided by the Company’s well-established corporate governance policies and practices, including its Corporate Governance Guidelines:
| ● | Board Independence: Independent directors |
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| ● | Board Diversity: We believe our |
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Board Responsiveness: In |
| ● | Board Refreshment: In 2022, three new independent directors were elected to NCR’s Board. These changes added highly competent members with expertise in strategic areas of focus for the Company, including Laura Sen, Joseph E. Reece and Glenn Welling. |
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The Board has four standing committees: the Audit Committee, the CHRC, the CODG, and the Risk Committee. All members of each of these committees are independent Board members.
The Board has adopted a written charter for each standing committee that sets forth the committee’s mission, composition and responsibilities. Each charter can be found under “Committee Memberships and Charters” on the “Corporate Governance” page of NCR’s website at https://www.ncr.com/company/corporate-governance/board-of-directors-committee-membership-and-charters.
The Board met twenty-three times in 2022 and each incumbent member of the Board attended 75% or more of the aggregate of: (i) the total number of meetings of the Board (held during the period for which such person was a director); and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served). The Company has no formal policy regarding director attendance at its annual meeting of stockholders. All of the Company’s directors then in office were in attendance at the Company’s 2022 Annual Meeting of Stockholders, which was a virtual, and not an in-person, meeting.
The Audit Committee, CHRC, CODG, and Risk Committee met 11, 9, 4, and 4 times, respectively, during fiscal year 2022.
Audit Committee |
The Audit Committee is the principal agent of the Board in overseeing: (i) the quality and integrity of the Company’s financial statements; (ii) the independence, qualifications, engagement and performance of the Company’s independent registered public accounting firm; (iii) the performance of the Company’s Internal Audit Department; (iv) the integrity and adequacy of internal controls; and (v) the quality and adequacy of disclosures to stockholders. Among other things, the Audit Committee also:
| ● | selects, evaluates, sets compensation for and, where appropriate, replaces the Company’s independent registered public accounting firm; |
| ● | pre-approves all audit and non-audit services provided to the Company by its independent registered public accounting firm; |
| ● | reviews and discusses with the Company’s independent registered public accounting firm its services and quality control procedures and the Company’s critical accounting policies and practices; |
| ● | regularly reviews the scope and results of audits performed by the Company’s independent registered public accounting firm and internal auditors; |
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| ● | prepares the report required by the SEC to be included in the Company’s annual proxy statement; |
| ● | meets with management to review the adequacy of the Company’s internal control framework and its financial, accounting, reporting and disclosure control processes; |
| ● | reviews the Company’s periodic SEC filings and quarterly earnings releases; |
| ● | discusses with the Company’s Chief Executive Officer and Chief Financial Officer the procedures they follow to complete their certifications in connection with NCR’s periodic filings with the SEC; |
| ● | reviews the Company’s compliance with legal and regulatory requirements; and |
| ● | reviews the effectiveness of the Internal Audit function, including compliance with the Institute of Internal Auditors’ International Professional Practices Framework for Internal Auditing consisting of the Definition of Internal Auditing, Code of Ethics and the Standards. |
All members of the Audit Committee during 2022 were, and the current members are, independent and financially literate as determined by the Board under applicable SEC rules and NYSE listing standards. In addition, the Board has determined that the current members of the Audit Committee, Mr. Blank, Mr. Larsen, Mr. Mucci, Ms. Sen and Mr. Welling, are each an “audit committee financial expert,” as defined under SEC regulations. The Board has also determined that each member of the Audit Committee is independent based on independence standards set forth in the Corporate Governance Guidelines, the listing standards of the NYSE and the applicable rules of the SEC. No member of the Audit Committee may receive any compensation, consulting, advisory or other fees from the Company, other than the Board compensation described below under the Director Compensation section in this proxy statement, as determined in accordance with applicable SEC rules and NYSE listing standards. Members serving on the Audit Committee are limited to serving on no more than two other audit committees of public company boards of directors, unless the Board evaluates and determines that these other commitments would not impair the member’s effective service to the Company.
Compensation and Human Resource Committee |
The Compensation and Human Resource Committee (“CHRC”) provides general oversight of the Company’s management compensation philosophy and practices, benefit programs and strategic workforce initiatives, and leadership development plans. In doing so, the CHRC reviews and approves executive officer total compensation goals, objectives and programs, and the competitiveness of total compensation practices. Among other things, the CHRC also:
| ● | evaluates executive officer performance levels and determines their base salaries, incentive awards and other compensation; |
| ● | discusses its evaluation and compensation determinations for the Chief Executive Officer at Board executive sessions; |
| ● | reviews executive compensation plans and recommends them for Board approval; |
| ● | oversees our compliance with SEC and NYSE compensation-related rules; |
| ● | reviews and approves executive officer employment, severance, change in control and similar agreements and plans; |
| ● | reviews management proposals for significant organizational changes; |
| ● | annually assesses compensation program risks; and |
| ● | oversees management succession and development. |
The CHRC may delegate its authority to the Company’s Chief Executive Officer and/or other appropriate delegates to make equity awards to individuals (other than executive officers) in limited instances.
To assist in review and oversight of our executive compensation programs, the Committee currently retains and is advised by Farient Advisors LLC (“Farient”). Farient is an independent national executive
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compensation consulting firm. The CHRC directly engaged Farient to review the Company’s long-term incentive program, the NCR Corporation 2017 Stock Incentive Plan, as amended (the “Stock Plan”), the Annual Incentive Plan pursuant to the Second Amended and Restated NCR Management Incentive Plan, and other key programs related to the compensation of executive officers. As directed by the CHRC, Farient provides a competitive assessment of our executive compensation programs relative to our compensation philosophy; reviews our compensation peer group companies; provides expert advice and competitive market rate information relating to executive officer compensation; assists in designing variable incentive, perquisite and other compensation programs, including advice regarding performance goals; assists with compliance with applicable tax laws, disclosure matters and other technical matters; conducts an annual risk assessment of our compensation programs; and regularly consults with the CHRC regarding such matters. Farient did not perform any additional work for the Company or its management in 2022. The CHRC retained Farient in 2021 after reviewing all factors relevant to its independence from management under applicable SEC rules and NYSE listing standards, and concluding that Farient was independent and its work for the CHRC did not raise any conflict of interest.
The Board has determined that each member of the CHRC is independent based on independence standards set forth in the Corporate Governance Guidelines which reflect NYSE listing standards and satisfies the additional provisions specific to compensation committee membership set forth in the NYSE listing standards.
Committee on Directors and Governance |
The Committee on Directors and Governance (the “CODG”) is responsible for reviewing the Board’s corporate governance practices and procedures, including the review and approval of each related party transaction under the Company’s Related Person Transaction Policy (unless the CODG determines that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board), and the Company’s ethics and compliance program. Among other things, the CODG also:
| ● | recommends to the Board the principles of director compensation and compensation to be paid to directors, and reviews and makes recommendations to the Board concerning director compensation; |
| ● | reviews the composition of the Board and the qualifications of persons identified as prospective directors, recommends the candidates to be nominated for election as directors, and, in the event of a vacancy on the Board, recommends any successors; |
| ● | recommends to the Board the assignment of directors to various committees of the Board; |
| ● | recommends criteria and process to assess the Board’s performance, and conducts an evaluation of the Board based on such criteria; |
| ● | reviews the Company’s charter, bylaws and Corporate Governance Guidelines, including the Director Qualification Guidelines and independence standards, and makes any recommendations for changes, as appropriate; and |
| ● | monitors compliance with independence standards established by the Board. |
The CODG is authorized to engage consultants to review the Company’s director compensation program.
The Board has determined that each member of the CODG is independent based on independence standards set forth in the Corporate Governance Guidelines, which reflect the listing standards of the NYSE.
Risk Committee |
The Risk Committee assists the Board with its oversight of executive management’s responsibilities to design, implement and maintain an effective ERM framework for the Company’s overall operational,
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information security, strategic, reputational, technology, ESG, and other risks. In addition, the Risk Committee assists the Board in fulfilling its oversight responsibilities for matters relating to diversity, equity and inclusion, as well as matters relating to the health, environment, safety, sustainability, and the security of personnel and physical assets. Among other things, the Risk Committee also:
| ● | monitors all enterprise risks and reviews and discusses with management the Company’s policies, procedures, and standards for identifying and managing enterprise risk, and the Company’s compliance with and performance against those policies, procedures and standards; |
| ● | reviews and discusses with executive management the Company’s ERM strategy and ERM controls, including the Company’s business continuity plans; |
| ● | oversees the Company’s technology planning and strategy, including integration, investments, expenditures, innovation, modernization and response to client, competitor, market and industry trends and disruptions; |
| ● | reviews and discusses with executive management and oversees the Company’s data security risk strategy and data security risk policies and controls; |
| ● | conducts periodic assessments of the state of the Company’s management culture; |
| ● | reviews and discusses with executive management the Company’s major risk exposures and the steps taken to monitor and control such exposures; |
| ● | considers the Company’s risk capacity and strategic risks; and |
| ● | oversees emerging risks presented by economic, societal, environmental, regulatory, geo-political, competitive landscape or other conditions, and the business opportunities arising from such emerging risks. |
Risk Oversight |
As a part of its oversight responsibilities, the Board regularly monitors management’s processes for identifying and addressing areas of material risk to the Company, including operational, financial, cybersecurity, legal, regulatory, strategic, ESG and reputational risks. In doing so, the Board receives regular assistance and input from its committees, as well as regular reports from members of the Executive Leadership Team and other members of senior management. While the Board and its committees provide oversight, management is responsible for implementing risk management programs, supervising day-to-day risk management and reporting to the Board and its committees on these matters.
Audit Committee:The Audit Committee, with the assistance of the Risk Committee, reviews in a general manner the guidelines and policies governing the process by which the Company conducts risk assessment and risk management. In addition, the Audit Committee reviews and reassesses the adequacy of the Risk Committee charter on an annual basis. The Audit Committee also liaises with the Risk Committee as appropriate. Matters relating to the responsibilities of the Audit Committee could assist the Risk Committee in its decision-making process for matters for which it is responsible; and matters relating to the responsibilities of the Risk Committee could assist the Audit Committee in its decision-making process for matters for which it is responsible. Thus, the Audit Committee Chair may liaise with the Risk Committee Chair in his or her discretion regarding such matters.for matters where the Risk Committee can assist the Audit Committee in its decision-making process for matters for which the Audit Committee is responsible. The Audit Committee also receives periodic updates on compliance and regulatory risk items from the Company’s Chief Ethics & Compliance Officer.
CHRC and CODG: The CHRC regularly considers potential risks related to the Company’s compensation programs, as discussed below, and the CODG considers risks within the context of its responsibilities (as such responsibilities are defined in the committee charter), including legal and regulatory compliance risks. The CODG also receives periodic updates on compliance and regulatory risk items from the Company’s Chief Ethics and& Compliance Officer.
Risk Committee:In 2020, the Board created a new committee, the Risk Committee. The Risk Committee assists the Board with its oversight of executive management’s responsibilities to design, implement and maintain an effective enterprise risk management (ERM) framework for the Company’s overall operational, information security, strategic, reputational, technology, ESG, and other risks. In addition, the Risk Committee reviews and reassesses the adequacy of the Risk Committee charter on
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an annual basis. The Risk Committee also assists the Board with its oversight responsibilities for matters relating to diversity, equity and inclusion (DE&I), environment, health and safety (EHS), sustainability, and the security of our personnel and physical assets. In addition, the Risk Committee reviews and reassesses the adequacy of the Risk Committee charter on an annual basis. See additional details regarding ESG in the Our Commitment to ESG section below. Alsoabove. The Risk Committee Chair may liaise with the Chair of any other Board committee in 2020,his or her discretion for matters where such committee can assist the Risk Committee in its decision-making process for matters for which the Risk Committee is responsible, and vice versa.
At the management level, NCR also established the Office of Risk Management and appointed a Chief Risk Officer to assist NCR and the Risk Committee in fulfilling its objectives relating to ERM, ESG, third partythird-party risk management (TPRM) and business continuity planning (BCP). The Company’s Chief Risk Officer is responsible for developing and managing formal ERM, ESG, TPRM and BCP programs designed to identify, assess and respond to material and emerging risks and opportunities that may impact the achievement of the Company’s strategic objectives. NCR has also established an Executive Risk Committee made up of senior executives across the Company that will meetmeets routinely to monitor material risks, opportunities and NCR’s response plans thereto.
The Risk Committee also regularly receives management reports on information security and enhancements to cybersecurity protections, including benchmarking assessments, which it then shares with the
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Board. The Risk Committee also approves on an annual basis certain Company information security policies and methodology, scope, metrics and measures to be used in connection with information security reporting relating to the Company’s business lines that service regulated entities. Included among the members of both the Board and the Risk Committee are directors with substantial expertise in cybersecurity matters, and Board members actively engage in dialogue on the Company’s information security plans, and in discussions of improvements to the Company’s cybersecurity defenses. When, in management’s or the Board’s judgment, a threatened cybersecurity incident has the potential for material impacts, management, the Board and applicable committees of the Board will engage to assess and manage the incident.
After each committee meeting, the Audit Committee, CHRC, CODG, and Risk Committee each report at the next meeting of the Board all significant items discussed at each committee meeting, which includes a discussion of items relating to risk oversight where applicable.
We believe the leadership structure of the Board also contributes to the effective facilitation of risk oversight as a result of: (i) the role of the Board committees in risk identification and mitigation; (ii) the direct link between management and the Board achieved by having one or more management directors serve as Executive Chair and Chief Executive Officer; and (iii) the role of our active independent Lead Director whose duties include ensuring the Board reviews and evaluates major risks to the Company, as well as measures proposed by management to mitigate such risks.
All of the above elements work together to ensure an appropriate focus on risk oversight.
At NCR, we believe in creating positive change that supports an innovative future – but even more so, we believe in creating that future in a responsible way. Through our ESG strategy, we are committed to addressing key areas that our employees, customers, stockholders, suppliers, and communities care about most.
In 2020, NCR established the key ESG priorities detailed below to drive our ESG strategy. These priorities were selected due to their impact on our business and our ability to drive ESG strategy. As we look to fiscal year 2021, these priorities will be incorporated into our annual incentive plan. The CHRC will use a modifier to increase or decrease bonus payouts by up to 20% based on our performance with respect to these priorities in 2021.
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The Board has direct oversight of ESG activities through its Risk Committee. The Risk Committee assists the Board in managing ESG priorities. The Risk Committee and other committees of the Board oversee components of ESG, including, business ethics and integrity, data protection and security, DE&I, environmental management, our people, product innovation and management, and supplier responsibility. Further, our Chief Risk Officer provides senior-level ESG ownership of and execution on our ESG priorities, and reports on those activities to the Board’s Risk Committee.
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Our Code of Conduct sets forth standards designed to uphold our values and foster integrity in our relationships with one another and our valued stakeholders. Our Code of Conduct is available at https://www.ncr.com/company/corporate-governance/code-of-conduct.
All our employees are required to complete Code of Conduct training during the onboarding period. All employees are required to complete annual refresher Code of Conduct training. The Code of Conduct training is revised annually, taking into account the prior year’s compliance matters and the Company’s compliance risks.
Our Ethics and Compliance Program is responsible for managing the Company’s adherence to the Code of Conduct. Further, our Chief Ethics and Compliance Officer oversees ethical reporting and investigations pertaining to fraud, conflicts of interest, violations of laws, and other similar matters, and reports on those activities to one or more Committees of the Board.
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At NCR, we are proud of our data protection, cybersecurity, and privacy programs. These initiatives receive oversight from the Board’s Risk Committee, as well as several members of our executive leadership team including the Chief Operations Officer, General Counsel, Chief Information Officer, and Chief Technology Officer. NCR’s Chief Information Security Officer and Chief Privacy Officer are responsible for management of these programs. Additional support is provided by our Chief Ethics & Compliance Officer.
NCR supports appropriate privacy protections for those with whom we interact. We foster a culture that values the privacy rights of individuals. The program is supported by privacy attorneys, privacy program managers within the business, and data protection officers in various locations internationally. Many of these privacy professionals have industry recognized privacy certifications from the International Association of Privacy Professionals.
Under the direction of NCR’s Chief Information Security Officer, the Global Information Security organization is responsible for implementing and maintaining an information security program with the goal to protect information technology resources and protect the confidentiality and integrity of data gathered on our people, partners, customers, and business assets. Also, we employ various information technology and protection methods designed to promote data security including firewalls, intrusion prevention systems, denial of service detection, anomaly based detection, anti-virus/anti-malware, endpoint encryption and detection and response software, Security Information and Event Management system, identity management technology, security analytics, multi-factor authentication and encryption.
To further our commitment to data privacy and cybersecurity:
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At NCR, we believe in the power and value of diversity and strive to build a globally inclusive workplace where all people are treated fairly.
In 2020, we appointed our new Diversity, Equity and Inclusion leader to oversee NCR’s DE&I programs and goals. Our progress to date includes:
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We also support and encourage our colleagues to expand their professional networks through our several inclusive business resource groups and various mentoring programs.
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We are committed to managing our environmental footprint and protecting the global communities in which we operate. We strive to minimize our operations and products’ environmental impact while also delivering innovative technologies and solutions designed to support businesses and consumers in their efforts to operate responsibly.
We also recognize the importance of minimizing our environmental footprint through energy and greenhouse gas (GHG) management. That is why we report our Scope 1 and Scope 2 emissions from our global facilities and service operations through the CDP (formerly Carbon Disclosure Project). We complete the annual CDP climate change questionnaire and evaluate our environmental management progress annually to better understand our areas of opportunity to make a true impact.
Our commitment to environmental management extends into our products and operational footprint. Our Brazil, Hungary, and India facilities maintain the ISO 14001 certification. The NCR Global Headquarters in Midtown Atlanta has been awarded two Leadership in Energy and Environmental Design (LEED) Platinum certifications:
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We value the health and safety of our employees and have adopted workplace policies that are designed to protect their health and safety.
Our People
At NCR, we believe that investment in our employees has a positive impact on our employees and our customers.
We put that into action with several employee development and engagement programs, including:
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Product Innovation and Management
Delivering solutions and services that provide value to our customers in an environmentally responsible way is critical to NCR’s ongoing success. As such, we strive to develop and recycle our products in a responsible way. One example of how we are already doing this is that certain of our applications, such as Intelligent Deposit and Self-Service Diagnostic Gateway (SSDG), enable our SelfServ ATM customers to better handle the increasing volume – cutting down on costs, maintenance, fuel and materials associated with them.
Supplier Responsibility
We believe in creating positive change responsibly, and our supplier partners play a critical role in bringing that vision to life.
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We not only expect high quality products and services from our suppliers, we also expect them to conduct their businesses consistent with our Supplier Code of Conduct.
Our Supplier Code of Conduct, available at https://www.ncr.com/company/suppliers/manuals-forms-and-templates, sets forth our expectation that our suppliers will meet ethical standards consistent with NCR’s Code of Conduct and policies.
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Additionally, we take a risk-based approach to supply chain due diligence. We engage with the majority of our largest suppliers on a quarterly basis to identify potential risk exposure. As part of our supplier partner onboarding process, supplier partners are required to certify compliance with International Electrotechnical Commission 62474 standards. NCR requires its supplier partners to maintain compliance with the Restriction of Hazardous Substances (RoHS) Directive, Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH) Regulation, and other applicable regulations.
Further, we expect our suppliers to meet these standards as we work together to create a more responsible supply chain.
The coronavirus pandemic and government-imposed lockdowns had a significant impact on the Company’s workforce, its financial structure and overall strategy. The pandemic caused us to experience a decline in most of our markets and offerings. Since there was a significant amount of uncertainty in the first few months of the pandemic, our Board and its Committees oversaw and our management pursued several actions to serve our customers, maintain the health and safety of our employees, preserve cash, and continue our strategic business transformation. To that end, as described in detail in the Executive Compensation – Compensation Discussion & Analysis section of this proxy statement, actions were taken in the following areas:
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The Company takes a prudent and risk-balanced approach to its incentive compensation programs to ensure that these programs promote the long-term interests of our stockholders and do not contribute to unnecessary risk-taking. The CHRC regularly evaluates the Company’s executive and broad-based compensation programs, including the mix of cash and equity, balance of short-term and longer-term performance focus, balance of revenue and profit-based measures, stock ownership guidelines, clawback policies and other risk mitigators. The CHRC directly engages its independent compensation consultant Frederic W. Cook & Co., Inc., to assist inwith this evaluation process. Based on this evaluation, the CHRC concluded that none of the Company’s compensation policies and plans are reasonably likely to have a material adverse effect on the Company.
The Board has four standing committees: the Audit Committee, the Compensation and Human Resource Committee (also referred to as the CHRC), the Committee on Directors and Governance (also referred to as the CODG), and the Risk Committee.
The Board has adopted a written charter for each such committee that sets forth the committee’s mission, composition and responsibilities. Each charter can be found under “Committee Memberships and Charters” on the “Corporate Governance” page of NCR’s website at https://www.ncr.com/company/corporate-governance/board-of-directors-committee-membership-and-charters .
The Board met ten times in 2020 and each incumbent member of the Board attended 75% or more of the aggregate of: (i) the total number of meetings of the Board (held during the period for which such person was a director); and (ii) the total number of meetings held by all committees of the Board on which such person served (during the periods that such person served). The Company has no formal policy regarding director attendance at its annual meeting of stockholders. All of the Company’s directors then in office were in attendance at the Company’s 2020 Annual Meeting of Stockholders, which was a virtual, and not an in-person, meeting.
The members of each committee as of the end of fiscal 2020 and the number of meetings held in fiscal 2020 are shown below.
| Director | Audit Committee | Committee on Directors and Governance |
Compensation | Risk Committee | ||||
Mark W. Begor | ✓ | ✓ | ||||||
Gregory Blank | ✓ | ✓ | ||||||
Catherine L. Burke | ✓ | ✓ | ||||||
Chinh E. Chu | ✓ | ✓ | ||||||
Deborah A. Farrington | Chair | ✓ | ||||||
Georgette D. Kiser | ✓ | Chair | ||||||
Kirk T. Larsen | Chair | ✓ | ||||||
Matthew A. Thompson | ✓ | Chair | ||||||
Number of Meetings in 2020 | 10 | 5 | 7 | 3 | ||||
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The Audit Committee is the principal agent of the Board in overseeing: (i) the quality and integrity of the Company’s financial statements; (ii) the independence, qualifications, engagement and performance of the Company’s independent registered public account firm; (iii) the performance of the Company’s Internal Audit Department; (iv) the integrity and adequacy of internal controls; and (v) the quality and adequacy of disclosures to stockholders. Among other things, the Audit Committee also:
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All members of the Audit Committee during 2020 were, and the current members are, independent and financially literate as determined by the Board under applicable SEC rules and NYSE listing standards. In addition, the Board has determined that Mr. Blank, Mr. Larsen and Mr. Thompson are each an “audit committee financial expert,” as defined under SEC regulations. The Board has also determined that each member of the Audit Committee is independent based on independence standards set forth in the Corporate Governance Guidelines, which reflect the listing standards of the NYSE and the applicable rules of the SEC. No member of the Audit Committee may receive any compensation, consulting, advisory or other fees from the Company, other than the Board compensation described below under the Director Compensation section in this proxy statement, as determined in accordance with applicable SEC rules and NYSE listing standards. Members serving on the Audit Committee are limited to serving on no more than two other audit committees of public company boards of directors, unless the Board evaluates and determines that these other commitments would not impair the member’s effective service to the Company.
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The Compensation and Human Resource Committee (“CHRC”) provides general oversight of the Company’s management compensation philosophy and practices, benefit programs and strategic workforce initiatives, and leadership development plans. In doing so, the CHRC reviews and approves executive officer total compensation goals, objectives and programs, and the competitiveness of total compensation practices. Among other things, the CHRC also:
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The CHRC may delegate its authority to the Company’s Chief Executive Officer and/or other appropriate delegates to make equity awards to individuals (other than executive officers) in limited instances.
The CHRC retainsDirector Selection, Communications, Code of Conduct and is advised by an independent compensation consultant, Frederic W. Cook & Co., Inc. (“FWC”). The CHRC has directly engaged FWC to review the Company’s long-term incentive program, the NCR Corporation 2017 Stock Incentive Plan, as amended (the “Stock Plan”), the Second Amended and Restated NCR Management Incentive Plan (which includes the Annual Incentive Plan and the NCR Strategic Transformation Fitness Plan), and other key programs related to the compensation of executive officers. As directed by the CHRC, FWC provides a competitive assessment of our executive compensation programs relative to our compensation philosophy; reviews our compensation peer group companies; provides expert advice and competitive market rate information relating to executive officer compensation; assists in designing variable incentive, perquisite and other compensation programs, including advice regarding performance goals; assists with compliance with applicable tax laws, disclosure matters and other technical matters; conducts an annual risk assessment of our compensation programs; and regularly consults with the CHRC regarding such matters. FWC did not perform any additional work for the Company or its management in 2020. The CHRC retained FWC after reviewing all factors relevant to its independence from management under applicable SEC rules and NYSE listing standards, and concluding that FWC was independent and its work for the CHRC did not raise any conflict of interest.
The Board has determined that each member of the CHRC is independent based on independence standards set forth in the Corporate Governance Guidelines which reflect NYSE listing standards and satisfy the additional provisions specific to compensation committee membership set forth in the NYSE listing standards.Compensation
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The Committee on Directors and Governance (the “CODG”) is responsible for reviewing the Board’s corporate governance practices and procedures, including the review and approval of each related party transaction under the Company’s Related Person Transaction Policy (unless the CODG determines that the approval or ratification of such transaction should be considered by all of the disinterested members of the Board), and the Company’s ethics and compliance program. Among other things, the CODG also:
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The CODG is authorized to engage consultants to review the Company’s director compensation program.
The Board has determined that each member of the CODG is independent based on independence standards set forth in the Corporate Governance Guidelines, which reflect the listing standards of the NYSE.
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The Risk Committee assists the Board with its oversight of executive management’s responsibilities to design, implement and maintain an effective ERM framework for the Company’s overall operational, information security, strategic, reputational, technology, ESG, and other risks. In addition, the Risk Committee assists the Board in fulfilling its oversight responsibilities for matters relating to diversity, equity and inclusion, as well as matters relating to the health, environment, safety, sustainability, and the security of personnel and physical assets. Among other things, the Risk Committee also:
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The CODG and our other directors are responsible for recommending nominees for membership to the Board. The director selection process is described in detail in the Corporate Governance Guidelines. In determining candidates for nomination, the CODG will seek the input of the Chair of the Board and the Chief Executive Officer, and, in the event the positions of Chair of the Board and Chief Executive Officer are held by the same person, the independent Lead Director, and will consider individuals recommended for Board membership by the Company’s stockholders. In addition, periodically the Board engages a third-party search firm, including most recently Ridgeway Partners, to assist to identify candidates who have desired experience and expertise, and meet the qualification guidelines described below.
NCR CORPORATION | 2021 Proxy Statement | 26
Exhibit A to the Corporate Governance Guidelines includes qualification guidelines for directors standing for re-election and new candidates for membership on the Board. All candidates are evaluated by the CODG using these qualification guidelines. In accordance with the guidelines, as part of the selection process, in addition to such other factors as it may deem relevant, the CODG will consider, among other things, a candidate’s:
| ● | management experience (including with major public companies with multinational operations); |
| ● | other areas of expertise or experience that are desirable given the Company’s business and the current make-up of the Board (such as expertise or experience in information technology businesses, manufacturing, international, financial or investment banking or scientific research and development, senior level government experience, and academic administration or teaching); |
| ● | desirability of range in age so that retirements are staggered to permit replacement of directors of desired skills and experience in a way that will permit appropriate continuity of Board members; |
| ● | independence, as defined by the |
| ● | diversity of thought and perspectives, such as on the basis of age, race, gender, and ethnicity, or on the basis of geographic knowledge, industry experience, board tenure, or culture; |
| ● | knowledge and skills in accounting and finance, business judgment, general management practices, crisis response and management, industry knowledge, international markets, leadership, and strategic planning; |
| ● | personal characteristics matching the Company’s values such as integrity, accountability, financial literacy and high performance standards; |
| ● | willingness to commit the time required to fully discharge responsibilities to the Board; and |
| ● | the number of commitments to other entities, with one of the more important factors being the number of other public-company boards on which the individual serves. |
The Board and the CODG are committed to finding proven leaders who are qualified to serve as NCR directors and may from time to time engage outside search firms to assist in identifying and contacting qualified candidates.
NCR CORPORATION | 2023 Proxy Statement | 28
All of the candidatesnominees for election are currently serving as directors of the Company, other than our new director nominee, Martin Mucci. Company. Joseph E. Reece was recommended for appointment to the Board by a non-employee director. After review and consideration by the CODG, the CODG recommended to the Board that Mr. Reece be appointed, and he was appointed to the Board effective November 4, 2022.
Other than Frank R. Martire, NCR’s Executive Chairman, and Michael D. Hayford, NCR’s Chief Executive Officer, all of the candidates for election have been determined by the Board to be independent.independent under the standards of independence set forth in the Corporate Governance Guidelines, which reflect the independence standards provided in the NYSE listing standards.
Stockholders wishing to recommend individuals for consideration as directors should contact the CODG by writing to the Company’s Corporate Secretary at NCR Corporation 864 Spring Street NW, Atlanta, Georgia 30308-1007. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as other candidates.
Stockholders who wish to nominate directors for inclusion in NCR’s proxy statement pursuant to the proxy access provisions in the Company’s bylaws, or to otherwise nominate directors for election at NCR’s next annual meeting of stockholders, must follow the procedures described in the Company’s bylaws, the current form of which is available under “Corporate Governance” on the “Company” page of NCR’s website at https://www.ncr.com/about/corporate-governance. See Procedures for Nominations Using Proxy Access, Procedures for Stockholder Proposals and Nominations for 20212024 Annual Meeting Outside of SEC Rule14a-8 and Procedures for Stockholder Proposals and Nominations for 20212024 Annual Meeting Pursuant to SEC Rule14a-8 in this proxy statement for further details regarding how to nominate directors.
NCR CORPORATION | 2021 Proxy Statement | 27
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Stockholders or interested parties wishing to communicate directly with the Board, the independent Lead Director or any other individual director, the Chair of the Board, or NCR’s independent directors as a group are welcome to do so by writing to the Company’s Corporate Secretary at NCR Corporation, 864 Spring Street NW, Atlanta, Georgia 30308-1007. The Corporate Secretary will forward appropriate communications. Any matters reported by stockholders relating to NCR’s accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee as appropriate. Anonymous and/or confidential communications with the Board may also be made by writing to this address. For more information on how to contact the Board, please see the Company’s Corporate Governance website at https://www.ncr.com/about/corporate-governance.
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The Company has a Code of Conduct that sets forth the standard for ethics and compliance for all of its directors and employees. The Code of Conduct is available on the Company’s Corporate Governance website at https://www.ncr.com/company/corporate-governance/code-of-conduct. To receive a copy of the Code of Conduct, please send a written request to the Corporate Secretary at the address provided above.
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Director Compensation Program
The Committee on Directors and Governance (CODG) adopted the 2017oversees our NCR Director Compensation Program (the “Program”) pursuant to authority granted by our Board.. In adoptingrecommending compensation under the Program, the CODG considered peer group director pay practices and other relevant data and considerations, including material provided by Frederick W. Cook & Co., Inc. (“FWC”),Farient, the independent compensation consultant at that time for the Compensation and Human Resource Committee. The Program provides for the payment of annual retainers and annual equity grants to non-employee Board members in accordance with our Stock Plan. Our Stock Plan generally caps non-employee director pay at $1 million per calendar year (including cash and grant date fair value of equity).
NCR CORPORATION | 2023 Proxy Statement | 29
Mr. Martire and Mr. Hayford, our current employee directors, do not receive compensation under the Program for their service on the Board. Mr. Hayford’s 20202022 compensation is disclosed in the Summary Compensation Table in the Executive Compensation Tables section below. Because heEven though Mr. Martire is not a named executive officerNEO for 2020,2022, the director compensation tables below include Mr. Martire’s 20202022 compensation under our executive compensation program, which was paid to him for his services as our Executive Chairman of the Board.
Mr. Clemmer, Mr. DeRodes, Mr. Kuehn and Ms. Levinson retired from NCR Board service effective on the date of our 2020 Annual Meeting of Stockholders (“2020 Annual Meeting”) and received no further compensation under the Program thereafter.
Mr. Blank received no compensation under the Program for the portion of 2019 and earlier years that he was the Board designee of The Blackstone Group L.P., due to this entity’s ownership of certain NCR Series A Convertible Preferred Stock (“Preferred Stock”). Mr. Blank began receiving standard compensation under the Program (on a prorated basis) on substantially the same terms as the other NCR directors for his continued director service following Blackstone’s divestiture of the Preferred Stock effective September 20, 2019. His first payment of such compensation was made in 2020.Retainer
NCR CORPORATION | 2021 Proxy Statement | 28
Annual Retainer
In 2020,2022, the CODG recommended, and the Board evaluated peer group pay data and other material provided by FWC, and determinedapproved, that the value of the annual retainer for each non-employee director under the Program for the 2020-2021 Board Yearperiod between the 2022 Annual Meeting to the 2023 Annual Meeting (the “Board Year”) would remain unchanged at $80,000, and that the additional annual retainer for independent Lead Director service would be remain unchanged at $40,000.$75,000. Also remaining unchanged for such Board Year were theall additional annual retainers for committee Chair and committee member services, except that additional annual retainers were approved for the Chair and members of the newly established Risk Committee:
Additional Annual Retainers for Board Committee Service ($)
| Committee | Committee Chair | Committee Members | ||
Audit Committee | 34,000 | 15,000 | ||
| Compensation and Human Resource Committee | 27,000
| 11,000
| ||
| Committee on Directors and Governance | 18,000
| 8,000
| ||
Risk Committee | 18,000 | 8,000 | ||
services. The CODG and the Board determined that the foregoing amounts were and continued to be appropriate based on, among other things, amaterials relating to competitive pay practices and related matters provided by Farient, and the desire to retainensure that NCR non-employee director compensation remains competitive and attract highly qualified and experienced directors, andgenerally aligned at approximately the findingsmedian of its review of competitive board pay practices.peer group.
Additional Annual Retainers for Board Committee Service ($)
| Committee | Committee Chair | Committee Members | ||
Audit Committee | 34,000 | 15,000 | ||
| Compensation and Human Resource Committee | 27,000
| 12,500
| ||
| Committee on Directors and Governance | 20,000
| 10,000
| ||
| Risk Committee | 20,000 | 10,000 | ||
The Program also provides for Board grants of prorated annual cash retainers for Board service to directors who join the Board mid-year or in other appropriate circumstances. Ms. Kiser and Mr. Begor, who joined our Board in February 2020, were granted these prorated annualmid-year. Cash retainers for their Board Service during our 2019-2020 Board Year commencing with their February 2020 appointments and ending with our 2020 Annual Meeting: Ms. Kiser ($16,000 for Board service), and Mr. Begor ($12,000 for Board service). Mr. Blank, who began receiving NCRCommittee service are prorated in the event a director compensation effective as of September 20, 2019, was granted these prorated annual retainers for the 2019-2020 Board Year: $47,200 for Board service; and $8,850 for Auditcommences or ceases service on a particular Committee service. All of the above prorated retainers were paid in full and in cashBoard mid-year. In each case, proration is based on March 31, 2020, excluding the portionnumber of Mr. Begor’s prorated retainer that he elected to receive in NCR deferred common stock as noted below.days served on the Board or the applicable Committee during the applicable payment period.
The annual retainers for Board and committee service are generally paid in four equal installments on approximately June 30, September 30, December 31 and March 31. They may be received at the director’s election in: (i) cash; (ii) shares of NCR common stock; (iii) one-half cash and one-half shares of NCR common stock; or (iv) deferred NCR restricted stock units (RSUs) distributable in shares of NCR common stock after director service ends. For annual retainers earned in 2020:2022: Mr. Blank, Mrs. Burke, Ms. Farrington, Ms. Kiser, Mr. Kuehn,Larsen, Mr. LarsenMucci and Mr. ThompsonMs. Sen elected to receive cash retainers; Mr. Chu and Ms. LevinsonWelling elected to receive one-half of their retainers in cash and one-halfhis retainer in shares of NCR common stock; and Mr. Begor Mr. Clemmer and Mr. DeRodesReece elected to receive their retainers in deferred shares of NCR common stock. However a portion of Mr. Begor’s prorated retainer for Board service during the 2019-2020 Board Year (approximately 2/3) was paid in cash as required by IRS rules.
Given their retirement from Board service effective on our 2020 Annual Meeting date, Mr. Clemmer, Mr. DeRodes, Mr. Kuehn and Ms. Levinson received no further annual retainer amounts after such date.Equity Grant
NCR CORPORATION | 2021 Proxy Statement | 29
Annual Equity Grant
Under the Program, the CODG and the Board determine the value of the annual equity grant made to non-employee directors elected at the annual meeting of NCR stockholders. For the 2020-20212022-2023 Board Year, based on an evaluation of the peer group pay data and other material provided by FWC,Farient, the CODG recommended, and the Board agreed, that the annual equity grant value under the Program should remain
NCR CORPORATION | 2023 Proxy Statement | 30
unchanged at $225,000 for the same reasons noted above for continuing the annual retainersretainer unchanged. Accordingly, on the 20202022 Annual Meeting date, each then serving non-employee director received an annual equity grant of restricted stock units (RSUs)RSUs valued at $225,000, excluding Mr. Clemmer, Mr. DeRodes, Mr. Kuehn and Ms. Levinson who retired from Board service on that date.
$225,000. The Program also permits prorated mid-year equity grants for non-employee directors who join our Board mid-year and in other appropriate circumstances. On March 1, 2020, Ms. Kiser and Mr. Begor, who joined our Board mid-year as noted above, were awarded prorated mid-year equity grants under the Program with the following values for Board service during the 2019-2020 Board Year: Ms. Kiser: $45,000; and Mr. Begor: $33,750. Mr. Begor elected to receive a portion of his prorated annual equity grant (approximately 2/3) in the form of deferred NCR RSUs as permitted by the Program and IRS rules. Mr. Blank was awarded a prorated mid-year equity grant valued at $132,750 on February 1, 2020 for Board service during the 2019-2020 Board Year.
Annual equity grants made to directors on theour 2022 Annual Meeting date generally vest in four equal quarterly installments beginning three months after the grant date, anddate. Annual equity grants may be deferred at the director’s election. Mr. Begor, Ms. Kiser and Mr. Larsen elected to defer receipt of their 2022 annual equity grant shares until director service ends. Mid-year equity grants generally vest on the same quarterly vesting dates that apply to full year directors (as applicable). Mr. Begor and Mr. Larsen elected to defer receipt of their 2020 annual equity grant shares until director service ends to the extent noted herein.directors.
Director Stock Ownership Guidelines
TheOur Corporate Governance Guidelines (Guidelines) include stock ownership guidelines promoting commonality of interest with our stockholders by encouraging non-employee directors to accumulate a substantial stake in NCR common stock. Under our Corporate Governancethe Guidelines, non-employee directors are encouraged to accumulate NCR stock ownership equal to five times the annual retainer amount. Newly elected directors have five years to attain this ownership level. Ownership includes shares owned outright, restricted stock, and interests in RSUs or deferred shares, and excludes stock options. As of December 31, 2020,2022, all of our non-employee directors exceeded the Guidelines except Ms. Kiser and Mr. Begor who joined our Board in 2020, and Mr. Blank who became subject toor were within the Guidelines effective September 20, 2019.five-year compliance period.
Director Compensation Tables
NCR CORPORATION | 2021 Proxy Statement | 30
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Compensation for 20202022 ($)
| Director Name | Fees Earned or | Stock Awards(2) | All Other Compensation(3) | Total | Fees Earned or Paid in Cash(1) | Stock Awards(2) | All Other Compensation(3) | Total | ||||||||||||||||||||||||||||
Mark W. Begor | 7,886 | 337,143 | - | 345,029 | - | 390,982 | - | 390,982 | ||||||||||||||||||||||||||||
Gregory Blank | 106,396 | 357,771 | - | 464,167 | 105,000 | 225,016 | - | 330,016 | ||||||||||||||||||||||||||||
Catherine L. Burke | 103,000 | 225,015 | - | 328,015 | 110,000 | 225,016 | - | 335,016 | ||||||||||||||||||||||||||||
Chinh E. Chu | 69,500 | 294,560 | - | 364,060 | ||||||||||||||||||||||||||||||||
Richard L. Clemmer | - | 27,258 | - | 27,258 | ||||||||||||||||||||||||||||||||
Robert P. DeRodes | - | 23,753 | - | 23,753 | ||||||||||||||||||||||||||||||||
Deborah A. Farrington | 103,250 | 225,015 | - | 328,265 | 120,750 | 225,016 | - | 345,766 | ||||||||||||||||||||||||||||
Georgette D. Kiser | 95,500 | 270,022 | - | 365,522 | 110,000 | 225,016 | - | 335,016 | ||||||||||||||||||||||||||||
Kurt P. Kuehn | 28,500 | - | - | 28,500 | ||||||||||||||||||||||||||||||||
Kirk T. Larsen | 120,250 | 225,015 | - | 345,265 | 126,500 | 225,016 | - | 351,516 | ||||||||||||||||||||||||||||
Linda Fayne Levinson | 14,375 | 14,390 | - | 28,765 | ||||||||||||||||||||||||||||||||
Martin Mucci | 106,250 | 225,016 | - | 331,266 | ||||||||||||||||||||||||||||||||
Matthew A. Thompson | 115,250 | 225,015 | - | 340,265 | ||||||||||||||||||||||||||||||||
Joseph E. Reece | - | 401,289 | (4) | - | 401,289 | |||||||||||||||||||||||||||||||
Laura J. Sen | 78,750 | 225,016 | - | 303,766 | ||||||||||||||||||||||||||||||||
Glenn W. Welling | - | 305,673 | - | 305,673 | ||||||||||||||||||||||||||||||||
Frank R. Martire
|
| -
|
|
| -
|
|
| 2,366,783
|
|
| 2,366,783
|
| - | - | 1,980,558 | 1,980,558 | ||||||||||||||||||||
(1) For non-employee directors, this column shows annual retainers earned in cash in 2020.2022.
(2)For non-employee directors, this column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of annual equity grants (including deferred grants), and annual cash retainers received as current or deferred shares (also
NCR CORPORATION | 2023 Proxy Statement | 31
referred to as “phantom stock units”). See Note 78 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020,2022, where we explain assumptions made in valuing equity awards.
(3) For Mr. Martire, the amount shown in this column consists of amounts provided under our executive compensation program. For more details, see the Executive Compensation – Compensation Discussion & Analysis section and our Perquisites – 2020 Table. The total amount includes base salary earnedpaid in 20202022 ($229,769)750,000), the value of Company-paid premiums for life insurance ($52), Company matching contributions to our broad-based qualified 401(k) plan ($9,750)10,250), Company-paid amounts for medical diagnostic services under our Executive Medical Exam Program and for financial planning assistance under our Executive Financial Planning Program ($10,000 and $12,000 respectively), the Company’s incremental cost for personal use of the corporate aircraft for the reasons set forth in footnote (1) to our Perquisites – 20202022 Table below ($105,212)792,345), a 2020 Premium-priced option2022 rTSR RSU award ($1,299,999;195,905; aggregate grant date fair value determined as noted in the preceding footnote (4) of our Summary Composition Table below)(2)), and a 2020 performance-based RSU2022 PBRSU award ($700,001;210,006; aggregate grant date fair value determined as noted in the preceding footnote (2) above)). For general details, see the disclosures with respect to our Executive Compensation – Compensation Discussion & Analysis section and our Perquisites – 2022 Table.
(4) Upon appointment, Mr. Reece was awarded RSUs, comprising of prorated annual equity grants under the Program and a special appointment equity grant under the NCR Special Appointment Equity Grant; vesting in two (2) and four (4), respectively, equal quarterly installments beginning on February 4, 2023; and subject to Mr. Reece’s continued service as a director on each vesting date.
NCR CORPORATION | 2021 Proxy Statement | 31
This Table shows the grant date fair value of non-employee director annual equity grants and other equity granted in 20202022 under the Program.
Grant Date Fair Value(1) of Director(2) 20202022 Retainers and Equity Grant Shares ($)
| Director Name | Annual Equity RSU Grant | Current Stock in lieu of cash | Deferred Stock in lieu of cash | Annual Equity RSU Grant | Current Stock in lieu of cash | Deferred Stock in lieu of cash | ||||||
Mark W. Begor | 258,758 | - | 78,386 | 225,016 | - | 165,966 | ||||||
Gregory Blank | 357,771 | - | - | 225,016 | - | - | ||||||
Catherine L. Burke | 225,015 | - | - | 225,016 | - | - | ||||||
Chinh E. Chu | 225,015 | 69,545 | - | |||||||||
Richard L. Clemmer | - | - | 27,258 | |||||||||
Robert P. DeRodes | - | - | 23,753 | |||||||||
Deborah A. Farrington | 225,015 | - | - | 225,016 | - | - | ||||||
Georgette D. Kiser | 270,022 | - | - | 225,016 | - | - | ||||||
Kurt P. Kuehn | - | - | - | |||||||||
Kirk T. Larsen | 225,015 | - | - | 225,016 | - | - | ||||||
Linda Fayne Levinson | - | 14,390 | - | |||||||||
Martin Mucci | 225,016 | - | - | |||||||||
Matthew A. Thompson
| 225,015
| -
| -
| |||||||||
Joseph E. Reece | 362,522 | - | 38,767 | |||||||||
Laura J. Sen | 225,016 | - | - | |||||||||
Glenn W. Welling
| 225,016
| 80,657
| -
| |||||||||
(1) Grant date fair value, as determined in accordance with FASB ASC Topic 718, of annual equity grants (including deferred grants), and annual cash retainers received in the form of current shares or deferred shares (also referred to as “phantom stock units”). See Note 78 of the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 20202022 for an explanation of the assumptions we make in the valuation of our equity awards.
(2) For Mr. Martire, 20202022 equity grants under our executive compensation program included these awards with associated grant date fair values determined as provided in the preceding footnote (1) above:: (i) relative Total Shareholder Return RSUs – $195,905; and (ii) performance-based RSUs – $700,001; and (ii) Premium-priced options – $1,299,999.$210,006.
NCR CORPORATION | 20212023 Proxy Statement | 32
This Table shows the shares of NCR common stock underlying director equity awards as of December 31, 2020.2022.
Shares of NCR Common Stock
Underlying Director(1) Equity Awards as of December 31, 20202022 (#)
| Director Name | Outstanding Options | RSUs Outstanding | Deferred Shares Outstanding | ||||||||||||
Mark W. Begor | - | - | 17,115 | ||||||||||||
Gregory Blank | - | 6,429 | - | ||||||||||||
Catherine L. Burke | - | 6,429 | - | ||||||||||||
Chinh E. Chu | - | 6,429 | - | ||||||||||||
Richard L. Clemmer | 21,051 | - | - | ||||||||||||
Robert P. DeRodes | 21,051 | - | - | ||||||||||||
Deborah A. Farrington | - | 6,429 | - | ||||||||||||
Georgette D. Kiser | - | 6,429 | - | ||||||||||||
Kurt P. Kuehn | 10,039 | - | 35,670 | ||||||||||||
Kirk T. Larsen | - | - | 12,858 | ||||||||||||
Linda Fayne Levinson | 21,051 | - | - | ||||||||||||
Matthew A. Thompson | - | 6,429 | - | ||||||||||||
| Director Name | Outstanding Options | RSUs Outstanding | Deferred Shares Outstanding | |||
Mark W. Begor | - | - | 37,935 | |||
Gregory Blank | - | 3,240 | - | |||
Catherine L. Burke | - | 3,240 | - | |||
Deborah A. Farrington | - | 3,240 | - | |||
Georgette D. Kiser | - | - | 12,078 | |||
Kirk T. Larsen | - | - | 24,936 | |||
Martin Mucci | - | 3,240 | - | |||
Joseph E. Reece | - | - | 18,018 | |||
Laura J. Sen | - | 3,240 | - | |||
Glenn W. Welling | - | 3,240 | - | |||
(1) For Mr. Martire, equity awards under our executive compensation program outstanding as of December 31, 20202022 included 774,504 nonqualified stock options and 183,36336,753 RSUs.
NCR CORPORATION | 20212023 Proxy Statement | 33
Proposal 2 – Say Onon Pay: Advisory Vote on the Compensation of the Named Executive Officers
The Board of Directors recommends that you vote FOR the proposal to approve, on a non-binding and advisory basis, the compensation of the named executive officers as disclosed in these proxy materials.
| ● |
|
| ● | The 2022 incentive plans adopted by the |
| ● |
|
For 2022 – Added new AIP Revenue metric (25% weight), independent stand-alone ESG and NPS metrics (20% weight), together with |
Long-term Incentive Plan: |
| o |
|
| o | For 2022 – 100% performance-based restricted stock unit awards, new relative total shareholder return (rTSR) metric for 40% of award value, with aggressive rTSR goals, absolute rTSR governor, and remaining 60% of award value subject to LTI Recurring Revenue and LTI EBITDA goals |
| ● | No special one-time incentive plans were adopted for our named executive officers in 2022. |
| ● | No 2022 increases in salary, bonus target or long-term incentive grant values – Total Direct Executive Compensation for all named executive officers generally held flat in total and by component for 2022. |
Proposal Details
We conduct a Say Onon Pay vote at our annual meeting of stockholders as required by Section 14A of the Securities Exchange Act of 1934, as amended. We currently conduct the Say Onon Pay vote every year. Unless our Board changes its policy, our next Say Onon Pay vote following the 20212023 Annual Meeting of Stockholders will be held at our 20222024 Annual Meeting of Stockholders. While this vote is non-binding, the Board and the Compensation and Human Resource Committee (the “Committee” as referenced throughout the various sections of this Proposal 2, including the Executive Compensation – Compensation Discussion & Analysis section) highly value the opinions of our stockholders. The Committee will consider the outcome of the Say Onon Pay vote as part of its annual evaluation of our executive compensation program.
Please read the following Executive Compensation – Compensation Discussion & Analysis section and our Executive Compensation Tables for information necessary to inform your vote on this proposal.
How Does the Board Recommend that I Vote on this Proposal?
The Board of Directors recommends that you vote to approve, on a non-binding and advisory basis, the compensation of the named executive officers as disclosed in these proxy materials. Properly authorized proxies received by the Board will be voted FOR this proposal unless they specify otherwise.
NCR CORPORATION | 2023 Proxy Statement | 34
Vote Required for Approval
Under applicable Maryland law and the Company’s Charter and Bylaws, a majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual meeting or by proxy), with the Series A Convertible Preferred Stock voting on an as-converted basis, is required to approve, on a non-binding and advisory basis, the compensation of the named executive officers as disclosed in these proxy materials. Under Maryland law, abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the approval of this proposal. Properly authorized proxies received by the Board will be voted FOR this proposal unless they specify otherwise.
NCR CORPORATION | 2023 Proxy Statement | 35
| Letter from the Chair of Our Compensation and Human Resource Committee |
March 21, 2023
NCR Stockholders,
As Chair of the Compensation and Human Resource Committee (“CHRC” or “Committee”), I am pleased to present our 2023 Report on Executive Compensation, covering our 2022 fiscal year. In 2022, we followed through on our commitment to better align our executives’ pay with our company’s performance.
Our Say on Pay vote at last year’s Annual Meeting of Stockholders at 94% in favor represented a strong show of support for the changes we were making to our executive pay program, including those planned. These planned changes were fully implemented in 2022. Specifically, we:
● Redesigned our Long-term Incentive Plan (LTIP) O Changed our LTIP to be entirely performance-based (i.e., weighted 100% on performance-based RSUs (PBRSUs)) O Incorporated relative total shareholder return (rTSR) metric in our PBRSU plan as a weighted measure (weighted 40%) to supplement our EBITDA(1) growth and recurring revenue growth measures (each weighted 30%) O Required above median rTSR performance (55th percentile) to earn a target award and 80th percentile to earn a maximum award on this component of the PBRSU ● For our Annual Incentive Plan (AIP), we: O Added a new financial metric, AIP Revenue (weighted 25%) as it is a key driver of stockholder value, and reduced the weighting on EBITDA(1) (from 80% to 55%) accordingly O Changed our Stakeholder Metric from a scorecard modifier to independent, standalone Stakeholder metrics (collectively weighted 20%) ● Enhanced our goal rigor, requiring NCR to meet aggressive performance conditions to earn awards and retaining the provision in the AIP that threshold EBITDA(1) funding gate needed to be met for AIP funding ● Extended the performance and vesting periods to the end of 2022 on our RSUs to our named executive officers granted in 2020, which exposed those awards to downside risk and resulted in lower funding ● Did not make any special awards |
Although we performed well against our EBITDA(1) and revenue goals on a constant currency basis as well as our NPS and ESG goals, we fell just short of our EBITDA(1) funding gate due to several factors, including the effects of the pandemic, the war in Eastern Europe, rising interest rates and inflationary pressures. Therefore, the AIP payout factor for 2022 was 0%. In our long-term incentive plan from 2020 – 2022, we performed above target on our recurring revenue and close to target on our EBITDA(1) earning a 108.7% of target payout.
Despite the continuing challenges ahead, including escalating labor costs, continued supply chain disruptions, and softening global economic conditions, our 2023 AIP and PBRSU plans will reinforce the importance of delivering results to our stockholders. Specifically, the 2023 AIP will be entirely focused on meeting rigorous financial and customer performance requirements. Environmental, social, and governance factors will be captured in the individual ratings of our team members. Our 2023-2025 PBRSU Plan will be focused on driving our strategic process and achieving rTSR performance.
The feedback provided by our stockholders in the past has proven to be invaluable in helping us shape and strengthen today’s executive pay program. We look forward to continued discussions with our stockholders to ensure sustained alignment between our executives’ and stockholders’ interests.
Sincerely,
Deborah A. Farrington
Chair, Compensation and Human Resource Committee
(1) “EBITDA” means earnings before interest, tax, depreciation and amoritization adjusted for our incentive plan purposes as set forth in this Executive Compensation—Compensation Discussion & Analysis section.
NCR CORPORATION | 2023 Proxy Statement | 36
Executive Compensation |
Board and Compensation and Human Resource Committee Report on Executive Compensation
The Compensation and Human Resource Committee of our Board of Directors, comprised of all independent directors, reviewed and discussed the below Executive Compensation – Compensation Discussion & Analysis (“CD&A”) with management. Based on that review and those discussions, the Committee recommended to our Board of Directors that the CD&A be included in these proxy materials.
The Compensation and Human Resource Committee | ||
Deborah A. Farrington (Chair) | ||
Mark W. Begor | ||
Kirk T. Larsen | ||
Martin Mucci | ||
Glenn W. Welling | ||
Executive Compensation – Compensation Discussion & Analysis |
Our Named Executive OfficersIntroduction
This Executive Compensation - Compensation Discussion & Analysis section describes NCR’s 2020CD&A provides an overview of the Company’s strategy and performance, stockholder engagement process, and our 2022 executive compensation program for our Named Executive Officers (the “named executives”), who are listed
NCR CORPORATION | 2021 Proxy Statement | 34
below. The Compensationprograms and Human Resource Committee (the “Committee”) has sole authority over the program and makes all compensation decisions for our named executives. For more aboutdecisions. This CD&A focuses on the compensation of our named executives, seeexecutive officers (NEOs) shown below for the fiscal year 2022. The Committee has the authority to establish the Company’s executive compensation programs and make compensation decisions for our NEOs.
Our Named Executive Compensation Tables below.Officers
Michael Hayford – |
Owen Sullivan – President and Chief Operating Officer (COO) |
Timothy Oliver – Senior Executive Vice President and Chief Financial Officer (CFO) |
Adrian Button – Executive Vice President, Product and Service Operations
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Executive SummaryAdditional Information and Definitions
This CD&A uses capitalized terms, certain of which are defined in the Glossary of Key Terms Used in Our CD&A and Executive Compensation Tables section below, including certain terms used with respect to the metrics established by our Committee for the Company’s executive incentive plans. NCR CORPORATION | 2023 Proxy Statement | 37 CD&A Quick Reference Guide
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NCR is a leading software- and services-led enterprise provider in the financial, retail, hospitality and telecom and technology industries. NCR is a global company that is headquartered in Atlanta, Georgia. NCR offers a range of solutions that help businesses of all sizes run the store, run the restaurant and run self-directed banking. Our portfolio includes digital first offerings for banking, retailers and restaurants, as well as payments processing, multi-vendor connected device services, automated teller machines (ATMs), point of sale (POS) terminals and self-service technologies. We also resell third-party networking products and provide related service offerings in the telecommunications and technology sectors. Our solutions are designed to support our transition to an NCR-as-a-Service company and enable us to be the technology-based enterprise provider of choice to our customers.
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Core Sections |
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| Stockholder Engagement, Our Responses to Stockholder Feedback, and Business Overview | Stockholder Engagement and 2022 Say on Our Responses to Business Overview | 39 39 41 | ||
| Governance of Our Compensation Programs | Compensation Philosophy and Committee Role Best Practices in Executive Compensation – What We Do and Don’t Do Role of Our Independent Compensation Consultant Our Process for Establishing 2022 Compensation | 41 43 44 44 | ||
Our Executive Compensation Program Elements, Pay Mix and Payouts | Compensation Mix for 2022 2022 Compensation Program Elements and Payouts 2022 Salaries 2022 Annual Incentive Plan Long-Term Incentive Program | 46 46 47 47 50 | ||
Our Other Compensation Policies and Practices | Other Benefits and Perquisites Severance Benefits – Standard Severance and Change in Control (CIC) Severance Stock Ownership Requirements Compensation Clawback Policy Hedging and Pledging Policy Tax Considerations in Setting Executive Compensation | 53 54 54 55 55 55 | ||
| Glossary of Key Terms | Glossary of Key Terms Used In Our CD&A, Executive Compensation Tables and Pay versus Performance | 55 | ||
NCR CORPORATION | 20212023 Proxy Statement | 3538
2020 Focus Areas
In 2020, NCR continued its strategic business transformation by focusing on NCR-as-a-Service, and driving the following strategy:
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Company 2020 Financial Performance
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(1) Free cash flow is a non-GAAP measure. Net cash provided by operating activities is the most directly comparable GAAP measure. Refer to the Supplementary Non-GAAP Information section of this proxy statement for the reconciliation of free cash flow.
In 2020, NCR continued implementation of our strategic business transformation to enhance stockholder value by shifting our business mix from hardware to more software and services and driving increased
NCR CORPORATION | 2021 Proxy Statement | 36
recurring revenue through investments in our strategic growth platforms and by shifting to a subscription-based model.
The Committee structured the Company’s executive compensation program to focus behaviors in support of these business objectives, including several new operational goals to address short-term cash challenges in 2020, and an enhanced focus on achievement of sustainable business efficiencies and recurring EBITDA improvement.
As demonstrated by the financial highlights above, even in a challenging economic environment brought on by the global pandemic NCR has begun a successful implementation of the strategic business transformation strategy outlined in 2019. NCR’s executive leadership team adapted to evolving economic conditions and customer needs, while also accelerating internal expense management and organizational changes.
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Stockholder Engagement and |
We regularly engage with our stockholders to understand their perspectives and views on our Company, including our executive compensation program, corporate governance and other strategic initiatives. Our annual Say Onon Pay vote is one avenue for the Board to receive feedback from stockholders regarding our executive compensation program. During
In 2022, over 94% of the springshares voted were in support of the annual advisory vote on the Say on Pay proposal. While support for our 2022 Say on Pay proposal was clear, we continued to proactively engage with our stockholders to understand their perspectives and fallviews on our Company, including our executive compensation program, corporate governance, ESG and other strategic initiatives.
Stockholder engagement during 2022 was conducted to determine specific investor concerns and ensure the incorporation of 2020, we proactively reached out to stockholders owning approximately 52%valuable inputs in executive compensation structure and oversight. All such meetings were attended by one or more of our outstanding shares and spoke with stockholders owning approximately 19% of our outstanding shares. A memberthe following independent directors: Chair of the Committee participated in meetings with stockholders owning approximately 15% of shares outstanding.
Deborah Farrington, Committee member Kirk Larsen and the then Lead Independent Director Mark Begor. All feedback from this engagement initiative was shared with the full Board and helped to inform the changes approved by the Committee forevaluate and review our executive compensation program.programs.
Our Responses to Stockholder Feedback – 2022 Highlights |
NCR CORPORATION |Following our extensive Board-led investor outreach in 2021 Proxy Statement | 37
At our 2020 Annual Meeting, we received 84.67% of votes cast “FOR”and early 2022, to address stockholder concerns and further improve our executive compensation program. These results reflectprogram, the Committee adopted revised executive compensation program designs for both 2021 and 2022, including multiple changes that were directly responsive to stockholder feedback and aligned with our stockholders’ support forstrategic priorities. This stockholder feedback and these changes were communicated in the 2022 Proxy Statement and are summarized below. A new round of investor outreach to inform our executive compensation philosophy and pay practices and actionsprograms will begin in early 2023.
In 2022, we took in part due tothe following actions that significantly improved our engagement with stockholders. Over the course of engagement, we learned that stockholders were supportive of the 2020 compensation program design, which included:pay and performance alignment:
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Ongoing Total Direct Executive Compensation for all named executives generally held flat in total and by component (i.e., salary, bonus target, and long-term incentive grant values) |
NCR CORPORATION | 2023 Proxy Statement | 39
| ● | Diversified the Annual Incentive Plan (AIP) metrics to include top and bottom-line growth and ESG & NPS |
| ● | Added an AIP Revenue metric, weighted 25%, to further drive the Company’s growth strategy |
| ● | Reduced the weighting of AIP EBITDA from 80% to 55%, with target set at 10% over 2021 results |
| ● | Changed Stakeholder Metrics (ESG & NPS) from a modifier to 20% independently weighted measures, in aggregate |
| ● | Re-designed the Long-Term Incentive Plan |
| ● | Increased the weighting of performance-based RSUs for named executives from 60% to 100% of total 2022 LTI awards |
| ● | Discontinued the use of one-time and off-cycle incentive plans and awards absent extraordinary circumstances |
| ● | Added an rTSR metric, weighted 40% (replacing performance share RSUs), with rigorous performance conditions where above market performance is needed for target and maximum awards, and capped awards at target unless absolute TSR ≥ 0%. See the table below: |
rTSR Percentile Achieved Relative to S&P MidCap 400 Value Index | RSUs Earned as % of Target(1) | |||
Maximum | ≥ 80th | 200% | ||
Target | 55th | 100% | ||
Threshold | 25th | 50% | ||
< Threshold | < 25th | 0% | ||
(1) Interpolate for performance between discrete points
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| ● | Required competitive performance and growth over 2021 performance |
| ● | LTI EBITDA target for 2022 set at 10% over 2021 results |
| ● | LTI Recurring Revenue target for 2022 set at 8% over 2021 results |
We incorporated ESG and NPS Stakeholder Metrics into our 2022 Annual Incentive Plan Designs:
| ● | Elevated Stakeholder Metrics to independent, stand-alone metrics with an aggregate 20% weighting |
| ● | Used improvement in |
| ● | Used ESG measures with a 10% weighting, consisting of four qualitative and specific objective ESG goals covering DEI, Workforce & Talent, Information Security, and Environmental Sustainability: |
| ¡ | Social – Sustainability Accounting Standards Board (SASB) disclosure |
| ¡ | Social Workforce: eNPS |
| ¡ | Data Privacy / Security – BitSight Score |
| ¡ | Environmental – Disclosure and targeted reduction of our Greenhouse Gas Emissions |
The Committee views stockholderaffirmed its expectation that severance under our Executive Severance Plan will not be paid to named executives who voluntarily resign from Company service and no additional amounts will be paid under this Plan unless required to obtain additional covenants, transition services, or similar additional consideration determined to be proportionate and necessary and appropriate to protect the interests of the Company and our stockholders.
NCR CORPORATION | 2023 Proxy Statement | 40
We maintained our 2021 independent consultant for continued work in 2022.
The Board and our Compensation and Human Resource Committee highly value investor engagement and consider the feedback received from our stockholders during outreach meetings as essential to developing and improving our executive compensation program as well as getting general feedback on governance and other matters. We planprograms. Further, we are committed to continuecontinuing our stockholder outreach at least annually so we can continuein order to gain valuable feedback. Outreach with respectelicit critical investor feedback to our 2021 executive compensation program began in late 2020 and will continue in early 2021.guide the evolving parameters of these programs.
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The Committee approved changes toNCR is a software- and services-led enterprise technology provider that runs stores, restaurants and self-directed banking for our customers, which includes businesses of all sizes. Our software platform, which runs in the 2020 program design which were responsive to stockholder feedback and/or alignedcloud and includes microservices and APIs that integrate with our strategic priorities. The changescustomers’ systems, and our NCR-as-a-Service solutions bring together all of the capabilities and competencies of NCR to power the technology to run our customers’ operations. Our portfolio includes digital first software and services offerings for banking, retailers and restaurants, as well as payments processing and networks, multi-vendor connected device services, automated teller machines, self-checkout kiosks and related technologies, point of sale terminals, and other self-service technologies. We also resell third-party networking products and provide related service offerings in the telecommunications and technology sector. Our solutions are listed below:designed to support our transition to becoming a software platform and payments company. NCR is a global company that is headquartered in Atlanta, Georgia.
Company 2022 Financial Performance
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| Our revenue increased 10% from the prior year (up 13% on a constant currency basis) | ||
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(1) Non-GAAP diluted EPS is a non-GAAP measure. Diluted EPS is the most directly comparable GAAP measure. Refer to the Supplementary Non-GAAP Information section of this proxy statement for the reconciliation of Non-GAAP diluted EPS.
(2) Free cash flow is a non-GAAP measure. Net cash provided by operating activities is the most directly comparable GAAP measure. Refer to the Supplementary Non-GAAP Information section of this proxy statement for the reconciliation of free cash flow.
As demonstrated by the financial highlights above, even in a challenging economic environment where interest rates rose and the U.S. dollar was strong, and where material, labor and freight costs escalated due to supply chain challenges brought on by a global pandemic and the war in Ukraine, NCR CORPORATION | 2021 Proxy Statement | 38continued to successfully implement its strategic business transformation strategy. NCR’s executive leadership team adapted to drive strong growth and higher profitability, while also improving customer satisfaction.
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Our executive compensation program rewards executives for achieving and exceeding the Company’s strategic business and financial goals. We accomplishgoals in furtherance of stockholder interests. The Committee accomplishes this by generally linking executive compensation to Company-wide metrics and operational results for areas that each member of our executive team directly controls. The Committee regularly evaluates the elements
NCR CORPORATION | 2023 Proxy Statement | 41
of our program to ensure that they appropriately align executive pay with Company performance, reflect the feedback shared by our stockholders, and are consistent with both Company and stockholder short-term and long-term goals given the dynamic nature of our business and the markets where we compete for talent. The Committee annually approves the design of our executive compensation program, performance objectives, performance andspecific goals, results, compensation levels and final compensation for our named executives. For more details on the materials and data considered by the Committee in establishing our 20202022 executive compensation program, including a description of our peer group for compensation purposes, see the Our Process for Establishing 20202022 Compensation section below.
Executive Compensation Program Design – Factors We Consider
When designing our executive compensation program, the Committee considers actions that:
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Best Practices in |
Our executive compensation program features many best practices:
WHAT WE DO | WHAT WE DON’T DO | |||||||
✓Clarified Severance Policy. Severance will not be paid under the NCR Executive Severance Plan to named executives who voluntarily resign from Company service and no additional amounts will be paid unless required to obtain additional covenants, transition services, or similar additional consideration determined to be proportionate and necessary and appropriate to protect the interests of the Company and our stockholders. ✓Independent Compensation Consultant. The Committee retains an independent compensation consultant to evaluate and advise on our executive compensation programs and practices, as well as pay mix and levels for our named executives. ✓Double Trigger Benefits in the Event of a Change in Control. Assumed equity awards do not vest in a change in control of NCR unless employment also ends in a qualifying termination. ✓Reasonable Change in Control Severance.Change in control cash severance benefits range from one to three times target cash pay depending upon the executive’s position. ✓Compliant Procedures for Trading of NCR Stock. We only permit executive officers to trade in NCR common stock with appropriately protective pre-clearance procedures, including pursuant to a Rule 10b5-1 trading plan. ✓Strong Compensation Clawback Policy. Executive awards are subject to clawback in specified circumstances as described herein. ✓Robust Stock Ownership Guidelines. We require our executive officers to meet our guidelines, which range from two to six times salary, and to maintain the guideline ownership level after any transaction. |
| X | No Guaranteed Annual Salary Increases or Guaranteed Bonuses. Salary increases and bonuses are not guaranteed for our named executives. Salaries are instead based on individual performance evaluations and
XNo Compensation Plans that Encourage Excessive Risk Taking. Based on the Committee’s annual review, none of our pay practices incentivize executives or employees to engage in unnecessary or excessive risk-taking.
XNo Hedging or Pledging of NCR Securities. Our policies prohibit hedging and pledging of the Company’s equity securities as described in the Hedging and Pledging Policy section below.
XPerquisites. We offer only perks we believe important to be competitive, to attract and retain highly talented executives, enhance productivity and ensure
XNo Dividends or Dividend Equivalents Paid on Unvested Equity Awards. Equity awards must vest before dividends are payable.
XNo Special Executive Pension Benefits. There are no special executive or broad-based pension benefits for any named executives. | |||||
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XNo Excise Tax Gross-ups. Our named executives are not eligible for excise tax gross-ups or tax gross-ups on any perquisites other than standard relocation benefits.
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Overview
The coronavirus pandemic and government-imposed lockdowns had a significant impact on the Company’s workforce, its financial structure and overall strategy. The pandemic caused us to experience a decline in most of our markets and offerings. Since there was a significant amount of uncertainty in the first few months of the pandemic, our Board and its Committees oversaw and our management pursued several actions to serve our customers, maintain the health and safety of our employees, preserve cash, and continue our strategic business transformation. To that end, actions were taken in the following areas as described further below.
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Our Independent Compensation |
Communication with a Global Workforce
The initial phase of the pandemic in the United States and around the world posed an unprecedented communication challenge for NCR. The nature of the novel coronavirus and its origins, as well as the dynamic of social media, created an environment where false information spread quickly, impacting the Company’s workforce and our customers. With employees in approximately 65 countries, NCR had to act quickly to set up communication channels and programs to remain in frequent contact with its workforce. In order to prevent any disturbance, NCR management set up multiple new “task force” meetings per week to monitor the extent to which COVID-19 was affecting NCR’s workforce, with a focus on continuing to engage and cultivate talent. New meetings were also safely set up across the Company to communicate relevant updates about COVID-19 and its effects on the economy and on the Company. These weekly all-hands webcasts became a channel for internal employee engagement and NCR’s external outreach efforts kept customers engaged and well-updated on relevant developments regarding the virus and the availability of programs for assistance to their businesses.
The internal and external outreach initiatives taken by NCR during this crisis enhanced the Company’s communication practices and provided a template for the leadership team on how to prepare for extraordinary situations in the future.
Short-Term Liquidity
On April 4, 2020, as a response to the COVID-19 pandemic’s impact on the global economy, in order to preserve cash and retain human capital as a result of the pandemic, the Committee, at the request of Mr. Hayford, reduced the base salaries of our named executives and all senior managers employed at that time. Mr. Hayford’s (CEO) and Mr. Martire’s (Executive Chairman) base salaries were reduced to zero (except for amounts to cover their healthcare insurance premiums under broad-based employee benefit plans) for the remainder of 2020; Mr. Sullivan’s and Mr. Fernandez’s were reduced by 50%; and Mr. Button’s and Mr. Campbell’s were reduced by 20% (see the Base Salaries for 2020 section below). The base salaries of our senior managers were reduced by amounts up to 20%. These pay cuts were done quickly at the beginning of the pandemic, and were put into place for the remainder of 2020 for the foregoing named executives and certain senior managers.
These are some of the other actions taken to preserve short-term liquidity:
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Human Capital Retention
The well-being of NCR’s employees has been the number one priority since the first cases of coronavirus were identified. The Company-wide calls described above were also a key element in providing a sense of certainty to employees during an extremely unprecedented time period. In response to the pandemic, the Company took actions to improve short-term liquidity, including the salary reductions of our senior managers described above, in order to retain employees, including in units where the level of business activity suffered significant reduction. The management team deferred any type of broad-based employee terminations until August of 2020. The Company’s senior leadership team safely set multiple “task force” meetings per week to monitor the extent to which COVID-19 was affecting NCR’s workforce, with a focus on continuing to engage and cultivate talent.
As the pandemic made an impact on stock prices and the value of LTI awards and increased the likelihood of no bonuses being awarded under the 2020 Annual Incentive Plan, talent motivation and retention, including for current leadership who are critical to our strategic business transformation, rose to the top of the priority list. During this time period, NCR’s stock price fell to a ten-year low. There was extreme uncertainty around the possibility of a global economic crisis. Instead of modifying the performance targets under our 2020 LTI Program or 2020 Annual Incentive Plan, the Committee approved a one-time incentive grant to approximately 420 of our key executives and employees on July 1, 2020. The Committee awarded the grant in order to motivate and maintain employees during the crisis and felt this one-time grant recognized some of the unique external challenges of 2020 and its impact on the 2020 executive compensation program, while maintaining a direct performance link between compensation and our value creation strategy for our shareholders (see the One-Time Performance Share RSU Grant section below).
Compensation Plans
The unprecedented business environment of 2020 required several adjustments to the Company’s compensation practices to support and motivate management. During the peak of uncertainty caused by the global pandemic, the Company took measures to enable itself to withstand a prolonged economic crisis. This led to a focus on preserving cash. The Committee had approved the NCR Strategic Transformation Fitness Plan in 2019 prior to the pandemic, a long-term strategic transformation compensation plan. In light of the economic uncertainty caused by the pandemic and the focus on preserving cash, the NCR Strategic Transformation Fitness Plan previously approved by the Committee was adjusted to include a new goal of achieving short-term cash savings in excess of $250 million. The Committee took the following steps to adjust the remuneration framework, incentivize the achievement of short- and long-term goals and retain management essential to our continuing strategic business transformation:
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Our compensation philosophy requires that a significant portion of total compensation for our named executives be strongly aligned with Company performance. We accomplish this by placing a large portion of our executives’ total compensation “at risk” and by requiring our executives to stretch to meet very challenging internal financial metrics that, if achieved, translate into shared value creation with our stockholders.
The Committee structured the 2020 executive compensation program to focus behaviors in support of our business strategy to enhance shareholder value by shifting our business mix from hardware to more software and services and driving increased recurring revenue through investments in our strategic growth platforms and by shifting to a subscription-based model.
After consideration of the external market factors (e.g. impact of COVID-19 and the global pandemic on the global economy) and taking into account shareholder interests, the Committee chose not to make any adjustments to the terms of the 2020 Annual Incentive Plan or 2020 LTI Program design or performance targets established for awards made prior to the pandemic.
As NCR did not achieve the threshold 2020 Adjusted EBITDA performance goal established by the Committee under the 2020 Annual Incentive Plan, the Committee determined that there would be no payouts under this Plan as further described below.
The 2020 LTI Program established in early 2020 was comprised 100% in performance-based compensation, with the target mix weighted 35% in performance-based RSUs and 65% in Premium-priced options with a 115% price premium. The Performance-Based RSUs will be earned based on performance over a three-year period using revenue and earnings goals, with cliff-vesting at the end of the three-year performance period. For the performance-based RSUs, year one performance came in at 64.2% of target due to the impact of the global pandemic. The Premium-priced options were granted with a strike price of 115% of the grant date closing price, just prior to the global spread of the COVID-19 virus and corresponding impact to the financial markets.
Awards under our 2020 LTI Program were made on February 12, 2020, at the time of our annual award cycle, and due to the impact of COVID-19 and the ongoing pandemic, NCR’s stock price dropped significantly after these awards were made. With a drop in stock price, motivation and retention of our top performers was a significant concern, since the current leadership is critical to our continuing strategic business transformation.
The Committee did not modify performance targets or otherwise adjust equity awards made in early 2020.
In February 2021, the Committee reviewed and considered various ESG metrics to incorporate into our executive incentive programs. The Committee reviewed ESG metrics based on material environmental and
NCR CORPORATION | 2021 Proxy Statement | 43
social factors in our industry, peer benchmarking, and our long-term corporate strategy. In February 2021, the Compensation Committee approved the incorporation of ESG metrics into our 2021 Annual Incentive Plan. The ESG metrics will function as a +/- 20% modifier under the plan, with approximately half of this amount based on quantitative measures, and the remaining half based on qualitative progress toward achieving our ESG priorities.
Summary of Compensation Program Actions by our Committee
The Committee’s compensation program actions noted below were consistent with its philosophy and objectives of paying for performance, aligning the interests of executives with the interests of stockholders, attracting, motivating and retaining executive talent, and adopting competitive, best-practice compensation programs that are appropriate for our Company:
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The goals under our 2020 Annual Incentive Plan were not adjusted or modified during the pandemic, and accordingly when such goals were not achieved there was no payout under the Plan for 2020.
As a result of this non-funding, and the elimination of Mr. Hayford’s base salary after April 4, 2020, Mr. Hayford’s cash compensation for 2020 was $317,102.
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The performance goals for performance-based RSUs were not adjusted and the Premium-priced options were not modified as a result of the pandemic.
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Early in 2020, as the impact of the global pandemic began to come into focus and cause extreme uncertainty surrounding the global economy, the Committee adjusted the plan to include a new goal of achieving short-term cash savings in excess of $250M for 2020 (the remainder of the previously approved plan would stay focused on recurring EBITDA run rate improvements). Per the terms of the program, payout could be made in either stock or cash at the discretion of the Committee. No cash was paid to the named executives for these awards. In order to preserve cash/liquidity, incentivize NCR stock price appreciation and enhance retention, the Committee determined to settle all awards earned by eligible named executives under the Fitness Plan in the form of RSU awards under our Stock Plan, subject to additional vesting terms as well as a further one year restriction period on transfer of the underlying shares. As discussed below, performance achieved under the Fitness Plan resulted in permanent improvements to recurring annual EBITDA run rates in excess of $150 million and cash savings in excess of $250 million during a time of uncertainty, such that the total award value earned by eligible participants under the Fitness Plan should represent a small percentage of the shareholder value such improvements could create.
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The Committee retains and is advised by Frederic W. Cook & Co., Inc. (“FWC”), a national executive compensation consulting firm, to assist in review and oversight of our executive compensation programs. Theprograms, the Committee considers FWC’s adviceretains and recommendations when makingis advised by Farient Advisors LLC (“Farient”). Farient is a nationally recognized executive compensation decisions. FWCconsulting firm that is independent of the Company’s management and reports directly to the Committee. FWC representativesWhen making executive compensation decisions, the Committee considered the advice and recommendations of Farient. Farient attended all meetings of the Committee in 2020.during 2022. Our CEO and our Executive Chair arewere not present during Committee and FWCFarient discussions about their respectiveown compensation. Also, FWC reports on CEO and Executive Chair compensation are not shared with these officers. For more information about FWC’sthe role of the independent compensation consultant as an advisor to the Committee in 2022, see the Compensation and Human Resource Committee section above.
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The portion of performance-based “at risk” compensation increases directly with an executive’s role and responsibility within the Company, ensuring that our senior executives are held accountable to our stockholders. Consistent with our pay for performance philosophy, a very significant portion of our CEO’s 2020 target total pay, 95%, is directly linked to the performance of the Company through quantitative performance metrics and Net Promoter Score goals that support the strategy of the organization and are approved each year by the Committee. For our CEO, this percentage of 2020 target total pay includes unreduced 2020 base salary of $1 million, target 2020 Annual Incentive Plan award of $1.5 million, and target 2020 equity award values for all equity awards made under our Stock Plan in 2020 ($18,045 million, consisting of 2020 Premium-priced options, 2020 performance-based RSUs and 2020 performance share RSUs). The percentage of target total pay directly linked to the performance of the Company for our other named executives other than Mr. Oliver (based on the same pay elements noted for Mr. Hayford) averaged 91% for 2020. Mr. Oliver’s compensation was determined under his negotiated new hire agreement with the Company. Taking into account his sign-on equity awards and other new hire compensation, the percentage of his target total pay that is directly linked to the performance of the Company was 89% for 2020.
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Base Salaries for 2020
We endeavor to set base salaries at a level competitive with our peer group. This helps us attract and retain top quality executive talent, while keeping our overall fixed costs at a reasonable level.
On April 4, 2020, as a swift response to the COVID-19 pandemic’s impact on the global economy, in order to preserve cash, improve short-term liquidity and enable the Company to retain employees, the Committee, at the request of Mr. Hayford, reduced the base salaries of each of our named executive officers and all senior managers (excluding Mr. Oliver, who joined the Company in July 2020). Mr. Hayford’s (CEO) and Mr. Martire’s (Executive Chairman) base salaries were reduced to zero (except for amounts to cover their healthcare insurance premiums under broad-based employee benefit plans) for the remainder of 2020; Mr. Sullivan’s and Mr. Fernandez’s were reduced by 50%; and Mr. Button’s and Mr. Campbell’s were reduced by 20%. The base salaries of other Company senior managers were also reduced by amounts up to 20%. These base salary reductions were put into place for the remainder of 2020 for the foregoing named executives and certain senior managers.
2020 Base Salary Actions ($)
Named Executive | Effective Date of Most Recent Base Salary Action | Base Salary Prior to April 4, 2020 | Base Salary from April 4, | Rationale for Base Salary Actions | ||||||||
Michael Hayford | April 4, 2020 | $ | 1,000,000 | $ | 12,876 | Response to COVID-19 | ||||||
Owen Sullivan | April 4, 2020 | $ | 725,000 | $ | 362,500 | Response to COVID-19 | ||||||
Timothy Oliver | July 13, 2020 | N/A | $ | 625,000 | New Hire – Competitive Position | |||||||
Adrian Button | April 4, 2020 | $ | 525,000 | $ | 420,000 | Response to COVID-19 | ||||||
Daniel Campbell | April 4, 2020 | $ | 575,000 | $ | 460,000 | Response to COVID-19 | ||||||
Andre Fernandez | April 4, 2020 | $ | 625,000 | $ | 312,500 | Response to COVID-19 | ||||||
(1) Mr. Oliver’s unreduced base salary pursuant to his negotiated new hire agreement with the Company is shown as of his 7/13/2020 hire date through December 31, 2020. Mr. Fernandez’s reduced salary continued through his October 1, 2020 date of separation from Company service.
As a result of this elimination of base salary after April 4, 2020, and the failure of the 2020 Annual Incentive Plan to fund due to the impact of the COVID-19 global pandemic, Mr. Hayford’s cash compensation for 2020 was $317,102.
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Annual Incentive Plan Opportunity for 2020
In 2020, our named executives participated in the 2020 Annual Incentive Plan established pursuant to the Second Amended and Restated NCR Management Incentive Plan (MIP). The 2020 Annual Incentive Plan is an annual short-term cash incentive plan designed to support NCR’s strategic business objectives, promote the attainment of our 2020 NCR Financial Plan, reward achievement of organizational objectives and effective collaboration across teams.
At the beginning of the performance year, the Committee establishes an annual target bonus for each named executive as a percentage of base salary. The target opportunities for our named executives in 2020 did not change from 2019, except for Mr. Button (whose 2019 opportunity was 110%) and Mr. Oliver (who joined NCR in July 2020). The target bonus opportunities were applied to the salary levels in place prior to the reductions described above:
2020 Annual Incentive Plan Target Opportunity
(% of Base Salary)
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For all named executives, the maximum potential payout is limited to two times their target annual incentive.
Calculating Annual Incentive Awards
Awards under our 2020 Annual Incentive Plan are determined by the achievement of corporate and strategic goals that tie payouts directly to key measures of our overall business performance:
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The calculation of 2020 Annual Incentive Plan awards includes the Corporate Objectives and the Business Unit Performance Modifier (where applicable) as follows:
Calculation of Total 2020 Annual Incentive Plan Bonus
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Setting Annual Incentive Targets
Each year the Committee sets rigorous performance targets for the Annual Incentive Plan, while providing meaningful value to our executives upon achieving performance goals. Some of the factors that are considered when setting performance targets include our corporate strategy, our annual financial plan, our performance history, the industry outlook and other factors.
Annual Incentive Plan Corporate Objectives for 2020
Each year the Committee establishes Corporate Objectives and weightings based on our strategic and business direction for the year as laid out in our annual NCR Financial Plan. For 2020, the Committee established the Corporate Objectives based on the following two metrics, which the Committee believes are the right metrics because they incentivize strong operational performance and customer satisfaction:
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Adjusted EBITDA Corporate Objective
For 2020, the Committee established Adjusted EBITDA as 80% of the 2020 Annual Incentive Plan Corporate Objectives because it is:
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Net Promoter Score Corporate Objective
The Committee established our Net Promoter Score as 20% of the 2020 Annual Incentive Plan Corporate Objectives due to the critical importance of customer retention, customer referrals, customer relationships and driving customer satisfaction in our business.
NCR CORPORATION | 2021 Proxy Statement | 50
The 2020 Annual Incentive Plan Corporate Objectives, including the definitions and impact of each, are shown in this chart:
2020 Annual Incentive Plan – Corporate Objectives
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(1) Adjusted EBITDA is a non-GAAP measure. Net income from continuing operations attributable to NCR is the most directly comparable GAAP measure.
As described in the Supplementary Non-GAAP Information section, NCR management uses Adjusted EBITDA (adjusted earnings before interest, taxes, depreciation and amortization) because it provides useful information to investors as an indicator of strength and performance of the Company’s ongoing business operations, including funding discretionary spending such as capital expenditures, strategic acquisitions and other investments.
We exclude the impact of the items described above from our Adjusted EBITDA Corporate Objective because they do not relate directly to a named executive’s performance or the Company’s operational success.
2020 Annual Incentive Plan Corporate Objectives – 2020 Funding
The Committee approves threshold, target, and maximum funding levels for the Corporate Objectives which, if achieved, would result in preliminary funding of the Annual Incentive Plan bonus at 50%, 100%, and 200%, respectively. Awards are interpolated between these points. The threshold for a particular Corporate Objective must be achieved before any payment will be made with respect to it, and no payment will be made if the Adjusted EBITDA threshold Corporate Objective is not met.
NCR CORPORATION | 2021 Proxy Statement | 51
In no event can the 2020 funding exceed 200%. The maximum 2020 funding for achievement of the Corporate Objectives is 200%, which consists of Adjusted EBITDA maximum funding at 160% (80% weighting x 200%) plus Net Promoter Score maximum funding at 40% (20% weighting x 200%).
Performance results are determined on a constant currency basis to eliminate the impact of foreign currency fluctuations during the performance period, based on the same foreign exchange rates used to establish the Company’s 2020 financial plan, and exclude the impact of mergers and acquisitions.
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2020 Annual Incentive Plan Corporate Objectives – Funding Results
The coronavirus pandemic and government-imposed lockdowns and shelter in place orders had a significant impact on the Company’s financial performance. Although the 2020 Annual Incentive Plan Corporate Objectives were approved in February 2020, prior to the pandemic, the Committee decided not to change the 2020 Corporate Objectives.
The Adjusted EBITDA achieved for 2020 on a constant currency basis adjusted for the impact of mergers and acquisitions was $896 million which was below the threshold Adjusted EBITDA Corporate Objective of $976 million on a constant currency basis and adjusted to exclude the impact of mergers and acquisitions. This resulted in 0% funding for the Adjusted EBITDA Corporate Objective under the 2020 Annual Incentive Plan. The Net Promoter Score result for 2020 improved by a historic 100%, which exceeded the 2020 Net Promoter Score improvement target by 63.6%. However, the Net Promoter Score Corporate Objective did not apply since the Adjusted EBITDA threshold was not met. Thus, these performance results against our 2020 Annual Incentive Plan financial metrics resulted in an earned payout of 0% of target.
The 2020 Annual Incentive Plan objectives, results, earned payout and funded payout are shown in this Chart:
| 2020 Annual Incentive Plan Funding | ||||||||||||
| Performance for Corporate Objectives | ||||||||||||
Corporate Objectives | Weighting | Threshold
(50% Funded) | Target
(100% Funded) | Maximum
(200% Funded) | Performance Results | Funding | ||||||
Adjusted EBITDA(1) | 80% | $976M | $1,084M | $1,301M | $896M | 0% | ||||||
Net Promoter Score | 20% | 11.1% Increase | 22.2% Increase | 122.2% Increase | 100.0% Increase | 0% | ||||||
Payout (% of Target) | 100% | — | — | — | — | 0% | ||||||
(1) The Adjusted EBITDA Corporate Objective is shown on a constant currency basis and neutral to the impact of mergers and acquisitions as determined appropriate by the Committee.
The coronavirus pandemic had a significant impact on the Company’s results. Although our 2020 Net Promoter Score was well above target, and Mr. Hayford and other named executives did achieve and exceed many of their 2020 individual objectives, the Committee certified that the Company’s 2020 Adjusted EBITDA did not meet the threshold performance goal established under the 2020 Annual Incentive Plan. Therefore, it was determined that no annual incentive awards would be paid to the CEO or any other named executives for 2020 in keeping with our pay-for-performance philosophy. Mr. Fernandez was not eligible to receive any 2020 Annual Incentive Plan award due to his October 2020 separation from service with the Company.
NCR CORPORATION | 2021 Proxy Statement | 52
2020 Annual Incentive Plan – Corporate Objectives Payouts:
For each named executive, annual incentive payouts are determined partially or fully based on the achievement of rigorous corporate goals.
The Committee’s establishment of challenging performance thresholds requires our named executives to achieve significant Adjusted EBITDA and Net Promoter Scores in order to receive any payout under the 2020 Annual Incentive Plan.
Since the individual performance of each of Mr. Hayford, Mr. Sullivan, and Mr. Oliver impacts NCR results at the corporate level given their Company roles, their performance was measured against the results on the 2020 Corporate Objective targets. Accordingly, based on 2020 performance achieved for the Adjusted EBITDA and Net Promoter Score metrics noted above, the bonus payout percentage for 2020 for each of Mr. Hayford, Mr. Sullivan, and Mr. Oliver was determined by the Committee to be zero. Though Mr. Button and Mr. Campbell were each subject to additional Business Unit Performance Modifiers as detailed further below, the bonus payout percentage for 2020 for each executive was also determined by the Committee to be zero as explained below. Mr. Fernandez received no bonus payout due to his October 2020 separation from service with the Company.
2020 Annual Incentive Plan - Payouts for Business Unit Modifier:
In addition to the Corporate Objectives, as noted above we may establish business unit performance objectives for each of our named executives. These performance objectives are assigned to our named executives based on their areas of influence, and/or on strategic initiatives that are critical for the Company’s achievement of its overall financial goals and stretch internal goals, as applicable. Based on the extent to which such a named executive satisfies his or her performance objectives, the Committee determines a Business Unit Performance Modifier that increases or decreases the preliminary bonus determined by the Corporate Objectives. The Business Unit Performance Modifier can range from 0% for poor performance to 200% for exceptional performance. For 2020, Mr. Button and Mr. Campbell were the only named executives with specific Business Unit oversight. Therefore, each of their annual incentive payouts is subject to a Business Unit Performance Modifier, calculated on the basis of results for the Global Sales and Product and Service Operations business units which they respectively lead. However, since the Adjusted EBITDA Corporate Objective was not met, business unit performance has no impact on the bonus calculation and the Business Unit Performance Modifier is not applicable.
NCR CORPORATION | 2021 Proxy Statement | 53
For 2020, Mr. Button’s Business Unit Performance Modifier objectives were:
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(1) The Hardware/Services Revenue and Controllable Operating Income objectives are shown on a constant currency basis as determined appropriate by the Committee.
For 2020, Mr. Campbell’s Business Unit Performance Modifier objectives were:
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(1) The Adjusted EBITDA objectives are shown on a constant currency basis as determined appropriate by the Committee.
2020 Annual Incentive Plan – Final Total Payouts
The total bonus payments approved for each named executive for the 2020 performance year were:
| Named Executive | Target Bonus(1) | Funded Payout (% of Target) | Business Unit Performance Modifier(2) | Total Bonus Payout (After | ||||||||||||
Michael Hayford |
$ |
1,500,000 |
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0 |
% |
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N/A |
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$ |
0 |
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Owen Sullivan | $ | 1,087,500 | 0 | % | N/A | $ | 0 | |||||||||
Timothy Oliver |
$ |
432,693 |
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0 |
% |
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N/A |
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$ |
0 |
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Adrian Button | $ | 616,875 | 0 | % | N/A | $ | 0 | |||||||||
Daniel Campbell |
$ |
632,500 |
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0 |
% |
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N/A |
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$ |
0 |
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Andre Fernandez | $ | 434,195 | 0 | % | N/A | $ | 0 | (3) | ||||||||
(1) Based on salary prior to salary reduction as a response to the COVID-19 pandemic for all named executives, except that the amount for Mr. Oliver who joined the Company in July 2020 is based on actual salary paid in 2020.
(2) Due to the Corporate Objective of Adjusted EBITDA not being achieved, business unit performance and the Business Unit Performance Modifiers for Mr. Button and Mr. Campbell are not applicable, and the remaining named executives do not have such modifiers as noted above.
(3) Mr. Fernandez did not receive a 2020 Annual Incentive Plan payout due to his October 2020 separation from service with the Company.
As a result of this non-funding, and the elimination of Mr. Hayford’s base salary after April 4, 2020, Mr. Hayford’s cash compensation for 2020 was $317,102.
NCR CORPORATION | 2021 Proxy Statement | 54
For 2021, for all currently employed named executives with corporate oversight, which includes our CEO, the Annual Incentive Plan design will remain similar to the 2020 Annual Incentive Plan that was supported by our stockholders, except that new for 2021, ESG metrics have been incorporated into the plan as discussed above. The ESG metrics will function as a +/- 20% modifier under the Plan, with approximately half of this amount based on quantitative measures, and the remaining half based on qualitative progress toward achieving our ESG priorities. In addition, for named executives with specific business unit oversight, the annual incentive will be determined based 60% on achievement of financial performance metrics related to his or her business unit, and 40% on individual performance on key strategic goals in order to focus those executives on key business initiatives within their purview for the year that ultimately drive shareholder value creation.
As part of the Company’s strategic multi-year goal to reach permanent EBITDA margin improvements and to shift to a recurring revenue business model, ultimately driving value creation for shareholders, the Committee established a one-time long-term strategic transformation compensation plan in 2019 (the “Fitness Plan”) pursuant to the MIP. The Fitness Plan was designed to drive acceleration of NCR’s strategic business transformation from a traditional hardware company to a technology services corporation through the achievement of sustainable business efficiencies and recurring annual EBITDA improvements. The Fitness Plan goals had to be achieved no later than December 31, 2021. Upon establishing the Fitness Plan, the Committee determined a target opportunity for each eligible named executive, as a percentage of the total pool that would be funded based on the Company meeting the financial objectives of the Fitness Plan. Payouts can be paid in cash or equity, per the discretion of the Committee.
Highlights
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Delivered Results
The NCR Strategic Transformation Fitness Plan was calculated action taken by NCR to incentivize its executives to increase efficiencies and recurring annual EBITDA during a strategic business transformation, which in turn should significantly increase long-term shareholder value. The approach was a success: the Company delivered permanent improvements to NCR’s financial profile, such as:
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NCR CORPORATION | 2021 Proxy Statement | 55
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Alignment with Short-Term and Long-Term Strategy
The NCR Strategic Transformation Fitness Plan was designed to drive change and efficiency while transitioning the Company to an NCR-as-a-Service corporation. The plan’s goal was to secure permanent, reoccurring annual improvements in EBITDA run rates and resulting shareholder value. However in 2020, the COVID-19 pandemic required an adjustment in the Company’s strategy to mitigate near-term challenges surrounding the global pandemic and corresponding economic crisis. The Fitness Plan was adjusted to include a new goal of achieving short-term cash savings in excess of $250 million in order to position the Company to withstand unpredictable economic conditions. With the extraordinary business environment of 2020, the Fitness Plan was an important factor to motivate and reward the achievement of short-term operational synergy and cash flow goals during a challenging time, while positioning NCR to achieve long-term strategic objectives. While this change drove significant cash savings in 2020, it did not impact awards under the plan as the Company exceeded the original $150 million recurring annual EBITDA target. The plan helped the Company’s short- and long-term goals in the following areas:
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The initial target goal of the Fitness Plan was the achievement of $100M - $150M of recurring annual impact to EBITDA during the performance period beginning in 2019 and ending no later than December 31st, 2021. Early in 2020, as a response to the impact of the global pandemic, the Committee updated the Fitness Plan
NCR CORPORATION | 2021 Proxy Statement | 56
with the addition of a cash savings target of $200M - $250M for 2020 (the remainder of the previously approved plan would stay focused on recurring annual EBITDA run rate improvements). While this change drove significant cash savings in 2020, it did not impact awards under the plan as the Company exceeded the original $150 million recurring annual EBITDA target.
Within the extraordinary business environment of 2020, the Fitness Plan was an important factor to motivate and reward achievement of short-term operational synergy goals and recurring earnings improvements, positioning NCR to achieve short-term objectives through a challenging time as well as broader transformational objectives and long-term strategy. The Fitness Plan led to improvements in the Company’s financial profile including significant cash savings and recurring annual improvements to EBITDA run rates. The Company achieved greater than $150M of recurring annual EBITDA run rate improvements and greater than $250M of cash savings, and accordingly, max funding, as detailed in the table below. These improvements, savings and results were tracked and then verified by an independent third-party multinational accounting firm, and reported to the Committee for consideration in determining the performance results achieved under the Fitness Plan.
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NCR Strategic Transformation Fitness Plan – Final Earned Awards
The total NCR Strategic Transformation Fitness Plan earned award value approved by the Committee for eligible named executives was $21,731,250. No cash was paid to the named executives for these awards.
Consistent with the Company focus on preserving cash and improving liquidity, and in order to incentivize NCR stock price appreciation and enhance retention, the Committee determined to settle all Fitness Plan awards earned by eligible named executives solely in the form of RSU awards under our Stock Plan. These awards vest 100% on December 31, 2021 and remain subject to a one-year restriction period following vesting during which the underlying shares may not be sold or otherwise alienated.
Named Executive Officer | Fitness Plan Target (as a % of Total Funded Pool) |
Total Funded Pool |
Total Earned | |||
Michael Hayford | 17.5% | $56.25M | $9,843,750 | |||
Owen Sullivan | 10.2% | $56.25M | $5,700,000 | |||
Timothy Oliver | 5.0% | $56.25M | $2,812,500 | |||
Adrian Button | 4.0% | $56.25M | $2,250,000 | |||
Daniel Campbell | 2.0% | $56.25M | $1,125,000 | |||
Andre Fernandez | 5.0% | $56.25M | $ 0(1) | |||
(1) Mr. Fernandez was not eligible to receive any Fitness Plan award due to his October 1, 2020 separation from service with the Company.
With permanent improvements to recurring annual EBITDA run rates in excess of $150 million and cash savings in excess of $250 million during a time of uncertainty, the total award value earned by eligible participants under the NCR Strategic Transformation Fitness Plan should represent a small percentage of the shareholder value such improvements could create.
The NCR Strategic Transformation Fitness Plan served its purpose and was terminated in 2021.
NCR CORPORATION | 2021 Proxy Statement | 57
Our Long-Term Incentive Program directly aligns a large portion of the total compensation of our named executives with Company performance and changes in stockholder value. In February 2020, the Committee approved the 2020 annual LTI awards under our Stock Plan of which 100% were performance-based for all named executives, except for Mr. Oliver who joined the Company in July 2020. Such awards consisted of 35% performance-based RSUs, and 65% nonqualified Premium-priced stock options with a 115% price premium. The Premium-priced options further increase management alignment with stockholder long-term interests with this rigorous 115% price premium. Our award mix reflects input from our stockholders supporting options, and their expressed preference to see a greater proportion of our annual long-term incentives granted as performance-based equity (compared to our 2019 program). Mr. Oliver received sign-on 2020 LTI awards under his negotiated new hire agreement with an award mix and terms described further below.
We generally use equity awards in our LTI Program to create commonality of interests with stockholders and to help attract and manage our ability to retain our key executives. These awards also provide a good balance for our executives and protection for our stockholders, because wealth creation can be realized by an executive only upon achievement of performance goals, service-based milestones and/or long-term Company stock price performance.
The key features of 2020 annual LTI equity awards are:
Performance-Based RSUs (35% of Target 2020 award) with a three-year performance period from January 1, 2020 through December 31, 2022 were awarded to all named executives in February 2020 as a direct response to stockholder feedback, except for Mr. Oliver who received sign-on equity awards under his negotiated new hire agreement when he joined NCR in July 2020. The final earned award can range from 0% to 200% of the target units, based on the Company’s achievement of the 2020 LTI performance metrics of LTI Recurring Revenue (50% weighting) and LTI EBITDA (50% weighting). Units earned from achieving these performance goals will cliff vest on the third anniversary of the grant date, so long as the executive continues Company service through that date. The maximum share payout is capped at 200% of target. If performance for both metrics falls below the thresholds noted below, the entire award is forfeited. Under Mr. Oliver’s agreement, on August 1, 2020 he received a grant of sign-on time-based RSUs comprising 50% of his sign-on 2020 LTI award mix. These RSUs vest 1/3 on each anniversary of the grant date, generally subject to his continued Company service through the vesting dates.
Premium-Priced Stock Options (65% of Target 2020 award) were awarded to all named executives as nonqualified options with premium exercise price equal to 115% of the closing market price of NCR common stock on the February 2020 grant date, except for Mr. Oliver who received sign-on equity awards under his negotiated new hire agreement. Mr. Oliver was awarded sign-on Premium-priced options with a premium exercise price equal to 110% of the closing market price of NCR common stock on his August 1, 2020 grant date. For Mr. Oliver, this award comprised 50% of his sign-on 2020 LTI award mix. Awards for all named executives have a three-year restriction period and vest 1/3 on each anniversary of the grant date, generally subject to continued Company service through the vesting dates.
Special Vesting Rules provide that early vesting can occur only if employment ends because of death, disability or other limited reasons described in the Potential Payments Upon Termination or Change in Control section below.
The number of RSUs for an award is determined by converting the Committee approved award value to shares based on the grant date closing price of our common stock. The number of stock options for an award is determined using the Committee approved award value and the Monte-Carlo simulation valuation method.
NCR CORPORATION | 2021 Proxy Statement | 58
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For 2020, 35% of our annual LTI equity awards for named executives consisted of performance-based RSUs, other than Mr. Oliver as noted above. The performance metrics for these awards, which are independently weighted, were:
LTI Recurring Revenue (50% weighting):
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LTI EBITDA (50% weighting):
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Setting Long-Term Incentive Targets:
At the time we set targets for the 2020 LTI Program metrics, a key component of NCR’s long-term strategy and Company transformation was the shift from selling perpetual software licenses, for which we record revenue and margin upfront, to term and subscription licenses with respect to which we record revenue and margin over time. In implementing this shift, NCR’s leadership team and Board understood that, while we expected that in the longer-term this would significantly accelerate our growth, in the near-term this would have a dampening effect on our revenue and margins. The Company has reflected this expectation in our public guidance and messaging to our investors.
Therefore, in setting targets for the 2020 Annual Long-Term Incentive program metrics for performance-based RSUs awarded in early 2020, the Committee determined to set targets that were in-line with our expectations for business performance for 2020 within the context of this expected near-term dampening effect of our strategic shift on our results. The Committee thus set targets for these metrics in line with our 2019 results, as this would require underlying growth of our business to offset the dampening effect from shifting to subscription-based revenue.
NCR CORPORATION | 2021 Proxy Statement | 59
Accordingly, the Committee set the following targets for our LTI Program metrics for our February 2020 performance-based RSU awards:(1)
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(1) The LTI Recurring Revenue and LTI EBITDA objectives are shown on a constant currency basis and adjusted to eliminate the impact of mergers and acquisitions as determined appropriate by the Committee. LTI EBITDA shall further be adjusted to eliminate the net impact of the shift to recurring revenue by treating all new contracts as if they would have been accounted for as revenue upfront during the year of signing in accordance with prior practice versus the amount to be recognized during the year of signing on a recurring revenue basis. Performance between these goal levels will be interpolated on a linear basis, with payout capped at 200% of target.
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This Chart shows the 2020 total annual LTI equity award values approved by the Committee during the February award cycle for all named executives, except for Mr. Oliver whose values were approved when he joined the Company in July 2020:
| Named Executive | Premium-Priced Stock Options | Performance- Based RSUs(1) | Total 2020 Annual LTI Award Value(2) | ||||||||||||
Michael Hayford | $ | 7,150,000 | $ | 3,850,004 | $ | 11,000,004 | |||||||||
Owen Sullivan | $ | 4,290,001 | $ | 2,310,003 | $ | 6,600,004 | |||||||||
Timothy Oliver | $ | 1,999,999 | $ | 2,000,005 | $ | 4,000,004 | |||||||||
Adrian Button | $ | 1,624,997 | $ | 875,001 | $ | 2,499,998 | |||||||||
Daniel Campbell | $ | 1,624,997 | $ | 875,001 | $ | 2,499,998 | |||||||||
Andre Fernandez | $ | 2,599,999 | (3) | $ | 1,400,002 | (3) | $ | 4,000,001 | (3) | ||||||
(1) This column shows performance-based RSUs for all named executives made during our early 2020 annual LTI award cycle, except that with respect to Mr. Oliver, who did not receive performance-based RSUs in 2020, this column shows his 2020 sign-on time-based RSUs awarded on August 1, 2020 pursuant to his negotiated new hire agreement with the Company.
(2) Represents the grant date fair value of the RSUs and Premium-priced stock options, as shown in the Grants of Plan-Based Awards –2020 Table.
(3) Due to his separation from Company service on October 1, 2020, Mr. Fernandez forfeited 220,807 of his 2020 Premium-priced options (amounting to $1,733,335 of the grant date value shown in this Table) and 33,135 of his 2020 performance-based RSUs (amounting to $1,102,401 of the grant date value shown in this Table) in accordance with the terms of his 2020 equity award agreements together with his Employment Agreement with the Company dated August 27, 2018 and his Separation Agreement with the Company dated July 8, 2020. For more details about Mr. Fernandez’s agreements, see the Employment Agreement with Our Former Chief Financial Officer section and the Separation Agreement with Our Former Chief Financial Officer section below.
As noted above, due to the impact of the global pandemic, year one performance for these three-year cliff vesting awards came in at 64.2% of target. The Committee did not modify the performance targets for these awards or otherwise adjust the foregoing equity awards made in early 2020.
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NCR’s 2020 annual LTI Awards were granted prior to the pandemic, on February 12, 2020. The performance metric targets for the 2020 performance-based RSUs and the 115% premium on the 2020 Premium-priced options were approved by the Committee prior to the onset of the COVID-19 pandemic for all named executives, except Mr. Oliver as noted below.
NCR CORPORATION | 2021 Proxy Statement | 60
As the pandemic and resulting global uncertainty continued to significantly impact our 2020 performance, the Compensation Committee continuously evaluated the appropriate actions to ensure key executives and employees remained motivated to continue to accelerate our NCR-as-a-Service strategic business transformation.
Due to the impact of the pandemic on our stock price, which underpins a significant portion of our executive and employee incentives, the Committee weighed the strategy of taking no action against the need to adjust the broad-based compensation structure.
The Committee took into the consideration that our stock price dropped to a 10-year low within weeks of executives having received Premium-priced options as part of 2020 performance equity incentives. In addition, the Committee recognized that the pandemic had heightened the likelihood that there would be no bonuses under the 2020 Annual Incentive Plan. The Committee believed this significant impairment of incentive value was a risk to shareholder value, as the retention and motivation of our leadership team during a challenging time was crucial for the following reasons:
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Hence, the Committee believed that retention of our leadership team needed to remain a high priority, especially with existing incentives largely having lost retention and incentive value. At the end of the second quarter of our fiscal year, the Committee determined that given the vast majority of executive compensation was at-risk and linked to stock price, it was imperative to take action to ensure that executives remain motivated to continue to execute our multi-year strategic business transformation.
The Committee decided that adjusting cash compensation or existing incentives was not in the best interests of the Company or its long-term stockholders. Hence, even with the uncertainty of future stock price movements, the Committee agreed that any one-time grants should be denominated in long-vesting stock, ideally with a stock performance orientation.
Accordingly, on July 1, 2020, the Committee approved a one-time Performance Share RSU grant to 420 eligible key executives and employees, thereby balancing the motivation and retention of our leadership team during this challenging time with the commitment to performance-based equity incentives. Further, denominating the awards in equity conserved cash and ensured the further alignment of executives’ interests with those of long-term stockholders.
The key features of this one-time grant include an eighteen-month performance period from July 1, 2020 through December 31, 2021. The target number of performance share RSUs is determined by converting the Committee approved award value to shares based on the grant date (July 1, 2020) closing price of our common stock. The final earned award can range from 0% to 200% of the target units, and will be determined by taking the target performance share RSUs and multiplying by the stock price multiplier, which is defined as the closing market price of NCR common stock on December 31, 2021, divided by the closing market price on the Grant Date. Vesting will be 50% in 18 months on December 31, 2021, and 50% in 30 months on December 31, 2022, generally subject to the executive’s continued Company service through the vesting dates.
NCR CORPORATION | 2021 Proxy Statement | 61
This Chart shows the number of one-time performance share RSUs granted by the Committee to our named executives in 2020.
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(1) Mr. Oliver joined NCR in July 2020 and did not receive a performance share RSU grant.
(2) Due to his expected transition to the position of Senior Advisor effective in July 2020, Mr. Fernandez did not receive a performance share RSU grant.
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2021 LTI Program – For 2021, for all currently employed named executives the Committee determined to provide a mix of 60% performance-based RSUs with the same performance metrics as in 2020, and 40% performance share RSUs in which the final payout will be determined based on achievement of an NCR stock price appreciation goal by the end of the performance period. Performance-based RSU awards have a 3-year performance period (2021-2023), and cliff-vest 100% at the end of that period. For performance share RSUs, the stock price appreciation goal must be achieved by December 31, 2022, with vesting to occur 50% in 22 months on December 31, 2022, and 50% in 34 months on December 31, 2023. Vesting for both types of RSU awards is generally subject to continued Company service through the vesting dates. These changes to our 2021 LTI Program are responsive to and/or consistent with stockholder feedback, and are designed to drive strong long-term performance on key goals and tightly link our executives’ pay with our stockholders’ experience.
| Our Process for Establishing |
Our Committee has the sole authority to establish compensation levels for our named executives. When making compensation decisions, the Committee carefully examines:
| ● | External Market Analysis – Peer Group and Survey Data – including reports by the Committee’s independent compensation consultant on peer group member pay data and external market surveys; |
| ● | Internal Compensation Analysis – Tally Sheets and Internal Equity – including management reports on comparable internal compensation levels and compensation history; and |
| ● | Recommendations – from certain members of management concerning compensation for named executives in the limited circumstances noted below. |
External Market Analysis
In general, the Committee considers the median of the peer group data described below when establishing baseWhen determining salary and target annual incentive and long-term incentive opportunities.opportunities, the Committee evaluates broad-based survey and proxy data and reviews a competitive pay range prepared by its independent compensation consultant. The Committee retains the flexibility to make adjustments to compensation opportunities that respond to market conditions, promotions or expansion of scope of responsibilities, individual performance and internal equity. The Committee also reviews broad-based survey data prepared by its independent compensation consultant and considers key business decisions that can impact compensation.
NCR CORPORATION | 2021 Proxy Statement | 62
Compensation Peer Group Selection
Group.The Committee reviews the Company’s compensation peer group annually with its independent compensation consultant and makes changes to the group, toas needed. This review includes ensuring the extent determined appropriate based on changes in peer business attributes. The consultant then produces for the Committee’s review an independent analysis of the cash and equity compensation for the five highest compensated executives at each company within the final peer group, and a comparison of our similarly ranked named executives to the 25th, 50th and 75th percentilessuitability of the peer group. The analysis also includes comprehensive modelinggroup for gauging the competitiveness of long-term incentive costsour pay levels and resulting levels of stockholder value transferpractices and reviewing our relative dilution which the Committee considers when developing the aggregate annual budget for equity compensation awards.
The unique combination of industries represented by our core business creates challenges in identifying comparable companies for executive compensation analysis. We select our peer group by examining other companies in terms of industry, size and recruiting in our GICS (Global Industry Classification Standard) industry group that are in the software and services or technology hardware industries, and are of reasonably similar size based primarily on annual revenues, market capitalization, operating income and enterprise value. In addition, we look at variances to these metrics based on unique circumstances.revenues. We also consider other companies outside our GICS industry group where we compete for talent.
Final 2020 Peer Group
NCR CORPORATION | 2023 Proxy Statement | 44
Final 2022 Peer Group.The Committee carefully reviewed our prior2021 peer group, and with the advice of its independent compensation consultant, made these changescontinued in 2022 to our 2019use the same peer group for purposes of benchmarking our 2020 executive compensation program:
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After these changes, our final 2020 peer group consisted of the following companies:
ACI Worldwide (ACIW)
Black Knight (BKI)
Citrix Systems (CTXS)
Diebold Nixdorf (DBD)
Fidelity
Fiserv (FISV)
| Global Payments (GPN)
Intuit (INTU)
Juniper Networks (JNPR)
Keysight Technologies (KEYS)
NetApp (NTAP)
| Paychex (PAYX)
Sabre (SABR)
Seagate Technology (STX)
Western Digital (WDC)
Xerox Holdings (XRX)
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External Market Surveys
Surveys.The Committee reviewed a comprehensive analysis and assessment prepared by its independent compensation consultant, which showed the competitive position of our named executiveexecutives’ pay mix and levels compared to the marketplace using a combination of survey data provided by the Company as well as proxy data from our peer group as well as general market data provided byfor the Company.CEO and CFO positions. Market survey data includes surveys concentrated on companies in both general and high-tech industries, which encompasses the Company’s competitors and non-competitors.for talent. The broad-based surveys give the Committee access to market data for numerous
NCR CORPORATION | 2021 Proxy Statement | 63
companies under a consistent methodology to assist our understanding of market trends and practices. The market surveysFor 2022, the Willis Towers Watson Executive Compensation Survey was used, were:which included data on corporate-wide roles for general industry and high-tech companies.
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The Committee considers a market median levelscompetitive range when setting compensation butand retains flexibility to set compensation above or below the medianrange based on individual considerations. When setting 20202022 compensation levels for Mr. Hayford Mr. Sullivan,and Mr. Oliver, and Mr. Fernandez, the Committee considered our peer group’s executive compensation data. For Mr. Button and Mr. Campbell, the Committee considered both our peer group’s executive compensation data and general market survey data, for similar positions, weighted at 50% and 50% respectively. For Mr. Sullivan, Mr. Layden, and Mr. Button, the Committee considered general market survey data for similar positions.
| Internal Compensation Analysis – |
Tally Sheets and Internal Equity
At each regular Committee meeting considering compensation changes, theTally Sheets. The Committee reviews comprehensive internal tally sheets showing the total compensation opportunity provided to each of our named executives over a three-year period. The tally sheets allow the Committee to review the degree to which historic, current and projected compensation, including unvested equity awards, support the Company’s pay for performance philosophy and retention objectives. The Committee uses the data in the tally sheets to assess actual and projected compensation levels. TheIn addition, the tally sheets are also used to compare year-over-year compensation as part of the process of establishing competitive compensation levels for the following year.
Internal Equity
Equity.The Committee also reviews internal reports on named executive base salaries and incentive plan targets compared to internal peers. To maintain a fair balance throughout the executive level at the Company, we strive for a level of consistency in compensation. Differences in compensation are based on degree of judgment associated with and the strategic nature of particular executive roles, as well as individual performance measured both quantitatively and qualitatively.
Recommendations
In 2020,2022, the Committee also considered recommendations from our CEO, Executive Chair, COO, and CHROChief Human Resources Officer when establishing compensation levels for named executives other than the CEO and the Executive Chair. No member of management other than the Executive Chair participates in Committee discussions about CEO compensation. No member of management provides recommendations or participates in discussions regarding his or her own compensation.
NCR CORPORATION | 2023 Proxy Statement | 45
Compensation Mix for 2022 |
Compensation Mix for CEO
The portion of performance-based “at risk” compensation increases directly with an executive’s role and responsibility within the Company, ensuring that more senior executives have greater accountability for performance. Consistent with our pay for performance philosophy, the Committee directly linked a very significant percentage of our CEO’s 2022 target total pay, 92%, to Company performance through quantitative financial metrics, together with non-financial Stakeholder Metrics including NPS and ESG goals that support the strategy of the organization. For our CEO, this percentage of 2022 target total pay includes salary of $1 million, a target 2022 Annual Incentive Plan award of $1.5 million, and a target value for 2022 LTI Plan equity awards of $10 million, consisting of PBRSUs and rTSR RSUs.
Compensation Mix for Other Named Executive Officers
The percentage of target total pay directly linked by the Committee to Company performance for our other named executives averaged 88% for 2022.
2022 Target Total Direct Compensation Mix
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The following describes the elements of our 2022 executive compensation program established by the Committee for our named executives, as well as the payouts earned and funded under the program for our named executives.
NCR CORPORATION | 2023 Proxy Statement | 46
2022 Salaries |
The Committee endeavors to set salaries at a level competitive with our peer group. This helps us attract and retain top quality executive talent, while keeping our overall fixed costs at a reasonable level.
For 2022, the Committee approved the following salaries for our NEOs which remained unchanged from 2021:
2022 Salary ($)
| Named Executive Officer | 2022 Salary | |||
Michael Hayford | $ | 1,000,000 | ||
Owen Sullivan | $ | 825,000 | ||
Timothy Oliver | $ | 625,000 | ||
Don Layden | $ | 600,000 | ||
Adrian Button | $ | 600,000 | ||
| 2022 Annual Incentive Plan |
Our 2022 Annual Incentive Plan (AIP) established pursuant to the Second Amended and Restated NCR Management Incentive Plan is an annual short-term cash incentive plan designed to promote the attainment of our 2022 NCR Financial Plan, and reward achievement of organizational objectives and effective collaboration across teams.
The Committee established annual target bonuses for our named executives based on market pay ranges and positioning within the senior leadership team. The 2022 target AIP opportunities for our NEOs remained the same as in 2021.
2022 Annual Incentive Plan Target Opportunity
(% of Salary)
| Named Executives | Target Bonus | |
Michael Hayford | 150% | |
Owen Sullivan | 150% | |
Timothy Oliver | 150% | |
Don Layden | 150% | |
Adrian Button | 125% | |
NCR CORPORATION | 2023 Proxy Statement | 47
2022 Annual Incentive Plan Metrics
Our AIP metrics and goals strongly link stockholder and executive interests, support NCR’s strategic business objectives, including non-financial environmental, social and governance goals (ESG) and customer satisfaction (NPS) goals.
No bonuses are paid unless threshold EBITDA performance is met.
AIP EBITDA continues to be our primary financial performance objective and key corporate compensation metric, but the weighting was reduced from 100% in 2021 to 55% in 2022 in order to provide for other measures that the Committee considered important to our strategy.
New for 2022, the Committee adopted an “Annual Incentive Plan Revenue” metric as an additional corporate financial goal weighted 25%. The addition of this metric directly addresses stockholder input and further differentiates the goals we use for our annual and long-term incentives.
In addition, for 2022 our Committee incorporated Stakeholder Metrics comprised of Environmental, Social and Governance Goals and Net Promoter Score as independent, stand-alone metrics, each weighted 10%, as opposed to a modifier as in 2021. These metrics were designed to measure the ability of our executives to address ESG concerns raised by our main stakeholders, as well as NPS which is a critical measure of success for our business. ESG objectives for 2022 included four categories, each weighted 2.5% out of the total 10% weighting for ESG:
| ● | Social Workforce – eNPS score |
| ● | Social – Sustainability Accounting Standards Board Disclosure |
| ● | Data Privacy / Security – BitSight Score |
| ● | Environmental – Disclosure and targeted reduction of our Greenhouse Gas (GHG) Emissions |
Each of these metrics is defined in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section.
| 2022 Annual Incentive Plan Goals |
Each year the Committee sets rigorous performance targets for our AIP based on an evaluation of various factors such as corporate strategy, alignment with stockholder interests, corporate responsibility, our annual financial plan, our performance history, and industry outlook. The Committee established Stakeholder Metrics, including ESG and NPS goals, as qualitative and quantitative measures designed to drive progress toward environmental sustainability, diversity, equity and inclusion, workforce and talent enhancement, information security and customer satisfaction goals.
For 2022, the Committee adopted threshold, target, and maximum funding levels for the AIP objectives which, if achieved, would result in funding at 50%, 100%, and 200%, respectively, funding interpolated between levels. Individual payout for each achieved AIP objective is capped at 200% of target.
Annual Incentive Plan Payout for 2022
The AIP EBITDA achieved by the Company for 2022 was $1.367 billion, which was below the threshold AIP Objective of $1.412 billion as shown in the table below (with each amount shown after constant currency and other Committee approved adjustments noted with respect to the definition of this metric in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section). This resulted in 0% funding for the AIP EBITDA objective under the 2022 Annual Incentive Plan.
NCR CORPORATION | 2023 Proxy Statement | 48
The AIP Revenue achieved by the Company for 2022 was $7.821 billion, which was above the threshold AIP objective of $7.469 billion (with each amount shown after constant currency and other Committee approved adjustments noted with respect to the definition of this metric in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section). However, the AIP Revenue objective did not apply since the AIP EBITDA funding gate was not met.
Three of the four Stakeholder Metrics were achieved at either target or above target performance. However, the Stakeholder Metric results did not apply since the AIP EBITDA funding gate was not met.
While the other AIP objectives were met or exceeded in 2022, since the AIP EBITDA funding gate did not exceed threshold performance, the AIP objectives resulted in an earned payout of 0% of target as shown in the chart below.
| 2022 AIP Objectives(1) and Performance Results | ||||||||||||||
Weight | Modifier Range |
Performance |
Potential |
Net | ||||||||||
Threshold (50% Earned) | Target (100% Earned) | Maximum (200% Earned) | ||||||||||||
AIP EBITDA |
55% |
$1,412M |
$1,485M |
$1,622M |
$1,367M |
0% |
0% | |||||||
| AIP Revenue |
25% |
$7,469M |
$7,916M |
$8,364M |
$7,821M |
89% |
0% | |||||||
| ESG |
10% |
Below |
Achieve |
Exceed |
Achieved |
0%(3) |
0% | |||||||
| NPS |
10% |
0% |
8.3% |
16.7% |
8.3% |
100% |
0% | |||||||
(1) The AIP EBITDA and AIP Revenue objectives are shown after constant currency and other Committee approved adjustments noted with respect to the definition of this metric in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section.
(2) Three (3) of four (4) ESG AIP objectives achieved or exceeded expectations in 2022.
(3) Threshold results must be met on all four (4) ESG AIP objectives for funding to occur.
Consequently, the total 2022 Annual Incentive Plan funded payouts for our named executives are shown in the chart below.
| Named Executive | Target Bonus(1) | Earned and
| Total Funded Bonus Payout | |||||||
Michael Hayford | $ | 1,500,000 | 0% of Target | $ | — | |||||
Owen Sullivan | $ | 1,237,500 | $ | — | ||||||
Timothy Oliver | $ | 937,500 | $ | — | ||||||
Don Layden | $ | 900,000 | $ | — | ||||||
Adrian Button | $ | 750,000 | $ | — | ||||||
(1) Based on salary for Mr. Hayford, Mr. Sullivan, Mr. Oliver, Mr. Layden and Mr. Button.
NCR CORPORATION | 2023 Proxy Statement | 49
Long-Term Incentive Program |
Our Long-Term Incentive Program (LTIP) directly aligns a large portion of the total compensation of our named executives with Company performance and changes in stockholder value. In direct response to stockholder feedback, our Committee granted 100% of our 2022 LTI award value for named executives in the form of performance-based RSUs (PBRSUs). New for 2022, the Committee adopted a rTSR metric for PBRSU (40% weighting). These rTSR RSUs can only be earned if rigorous rTSR performance conditions are met by achieving above market goals for target and maximum awards. For the remaining 60% of our 2022 PBRSU award value, we continued to use the LTI Recurring Revenue and LTI EBITDA metrics, which continue to be key indicators of our strategic execution, foundational to our long-term success, and supported by our stockholders. See definitions of these metrics in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section.
2022 – 2024 PBRSUs
As in prior years, PBRSUs based on LTI EBITDA and LTI Recurring Revenue with a three-year performance period from January 1, 2022 through December 31, 2024 were awarded to all named executives in February 2022. The final earned award can range from 0% to 200% of the target RSUs, based on the Company’s achievement of the performance metrics. RSUs earned from achieving performance goals will cliff-vest on the three-year anniversary of the grant date, generally subject to continued Company service through that date.
The Committee set rigorous performance targets for our PBRSUs based on an evaluation of various factors such as corporate strategy, alignment with stockholder interests, corporate responsibility, our annual financial plan, our performance history, and industry outlook. For the 2022 – 2024 performance cycle, the Committee adopted threshold, target, and maximum funding levels for the PBRSU objectives which, if achieved, would result in funding at 50%, 100%, and 200%.
LTI Recurring Revenue- and LTI EBITDA-based RSUs may be earned based on the following terms:
| ● | Progress against LTI Recurring Revenue and LTI EBITDA metrics will be measured annually and interpolated between discrete points |
| ● | In each successive year, the baseline is reset with prior year’s actual results and increased using specified levels of growth |
| ● | Each individual year’s payout calculation would range from 0%-200% of target payout based on performance |
| ● | Final payout will be calculated as the average of the three (3) individual year’s performance payout measurements, ranging from 0%-200% of target payout |
NCR CORPORATION | 2023 Proxy Statement | 50
Also in February of 2022, the Committee awarded rTSR RSUs to all named executives. These rTSR RSUs may be earned based on the performance of the TSR of our common stock relative to the S&P MidCap 400 Value Index, over the performance period between February 25, 2022 and December 31, 2024. This index tracks the investment results of similarly sized U.S public companies and of which we are a constituent.
| FY22-24 | rTSR Percentile Achieved Relative to S&P MidCap 400 Value Index | Payout (% of Target)(1) | ||||
Maximum | ≥ 80 | th%ile | 200% | |||
Target | 55 | th%ile | 100% | |||
Threshold | 25 | th%ile | 50% | |||
< Threshold | < 25 | th%ile | 0% | |||
(1) Interpolate for performance between discrete points.
The rTSR-based RSUs may be earned based on the following terms:
| ● | Shares are earned if the Company achieves >25th percentile rTSR with the percent of target payout based on an interpolation between discrete points up to 200% |
| ● | An absolute rTSR governor caps awards at Target unless absolute TSR is greater than or equal to 0%. |
Performance Goals for Performance Period Ending in 2022
The Committee established the goals for the first year in the performance period of the January 1, 2022 – December 31, 2024 PBRSUs as follows:
2022 PBRSUs-Goals for 2022
(in millions)
| LTI Recurring Revenue(1) (50% Weighting) | LTI EBITDA(1) (50% Weighting) | Percent of Target | ||
| $5,192 M | $1,564 M | 200% of target | ||
| $4,910 M | $1,472 M | 100% of target | ||
| $4,645 M | $1,377 M | 50% of target | ||
(1) Performance between goal levels shown in the Chart above will be interpolated on a linear basis, with payout capped at 200% of target.
| ● | Prior to Committee approved adjustments, the 2022 LTI Recurring Revenue and 2022 LTI EBITDA targets represent an increase of 8% and 10%, respectively, over the applicable 2021 LTI Recurring Revenue and 2021 LTI EBITDA results. |
| ● | The LTI Recurring Revenue and LTI EBITDA goals noted above are each shown after constant currency and other Committee approved adjustments noted with respect to the definitions of these metrics in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section. |
Because subsequent years will require specified levels of growth, upon completion of the three-year performance period the final payout will be calculated as the average of the three annual payout results, subject to the Committee’s evaluation of cumulative growth, and may be adjusted downward by the Committee as determined necessary or appropriate in its discretion.
NCR CORPORATION | 2023 Proxy Statement | 51
2022 LTI Program – Equity Award Values
This chart shows the target value and the accounting grant date fair values of the 2022 LTI equity awards approved by the Committee for all named executives. The target values approved by the Committee as shown in the first column of the chart differ from the total values shown in the last column because the target values were converted to a number of RSUs based on the closing price of NCR common stock on the date of grant.
| Named Executive | Target Value Approved by the Committee | Performance- Based RSUs(1) | rTSR RSUs(1) | Total 2022 Annual LTI Award Value(2) | ||||||||||||
Michael Hayford | $ | 10,000,000 | $ | 6,000,011 | $ | 5,597,681 | $ | 11,597,692 | ||||||||
Owen Sullivan | $ | 6,000,000 | $ | 3,600,023 | $ | 3,358,585 | $ | 6,958,608 | ||||||||
Timothy Oliver | $ | 4,000,000 | $ | 2,399,988 | $ | 2,239,095 | $ | 4,639,083 | ||||||||
Don Layden | $ | 4,000,000 | $ | 2,399,988 | $ | 2,239,095 | $ | 4,639,083 | ||||||||
Adrian Button | $ | 2,500,000 | $ | 1,500,003 | $ | 1,399,420 | $ | 2,899,423 | ||||||||
(1) These columns show the valuation of performance-based RSUs and rTSR RSUs for all named executives made in early 2022, as determined in accordance with FASB ASC Topic 718. rTSR RSUs are valued using a Monte Carlo valuation, which simulates a distribution of stock prices for equity awards throughout the remaining performance period for the awards, based on certain assumptions of NCR common stock price behavior. PBRSUs are valued by applying the applicable NCR common stock price on the grant date. The grant date fair value for the rTSR RSU awards is $57.67.
(2) Represents the grant date fair value of the RSUs, as shown in the Grants of Plan-Based Awards Table section of this proxy statement.
2020 – 2022 PBRSU Goals and Results
In February 2020, the Committee granted PBRSUs based on LTI Recurring Revenue and LTI EBITDA.
In February 2023, the Committee approved the performance results for the 2020 PBRSUs, for the performance period of January 1, 2020 through December 31, 2022 at 108.7% of their target award based on achieving the following results:
| Performance Period | 1st Year (1/1/2020 – | 2nd Year (1/1/2021 – | 3rd Year (1/1/2022 – | |||||||||||||||||||||
| Metric(1) | LTI | LTI EBITDA | LTI | LTI EBITDA | LTI | LTI EBITDA | ||||||||||||||||||
Maximum (200% of target payout) | $ | 3,571M | $ | 1,199M | $ | 3,845M | $ | 1,135M | $ | 5,193M | $ | 1,685M | ||||||||||||
Target (100% of target payout) | $ | 3,246M | $ | 1,090M | $ | 3,495M | $ | 1,032M | $ | 4,721M | $ | 1,532M | ||||||||||||
Threshold (50% of target payout) | $ | 2,921M | $ | 981M | $ | 3,146M | $ | 929M | $ | 4,249M | $ | 1,379M | ||||||||||||
Actual | $ | 3,340M | $ | 973M | $ | 3,572M | $ | 1,220M | $ | 4,741M | $ | 1,525M | ||||||||||||
Annual Result (% of Target Payout) | 64.2% | 161.0% | 101.1% | |||||||||||||||||||||
Avg. of Annual Results | 108.7% | |||||||||||||||||||||||
(1) The LTI Recurring Revenue and LTI EBITDA results are shown after constant currency and other Committee approved adjustments noted with respect to the applicable definition of these metrics in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables sections.
NCR CORPORATION | 2023 Proxy Statement | 52
2020 and 2021 Performance Share RSUs Results
2021 Performance Share RSU Results
On February 23, 2021, performance share RSUs (replaced in 2022 with the rTSR-based PBRSUs) with an NCR stock price appreciation goal were awarded to all named executives.
The final earned payout for these 2021 performance share RSUs could have ranged from 0% to 200% of the target RSUs, determined by multiplying the target RSUs by the “stock price multiplier,” which was defined as the average closing market price of NCR common stock for the ten trading days ending on December 30, 2022, divided by the closing market price of such stock on the date of grant (stock price on February 23, 2021 was $35.41), up to 200% of target.
The Committee approved the final earned payout of the 2021 performance share RSUs at 65.26% of target, as the average stock price for the ten trading days ending on December 30, 2022 was $23.11, resulting in a stock price multiplier of 65.26% ($23.11/$35.41). 50% of the 2021 performance shares RSUs vested on December 31, 2022, with the remaining 50% vesting on December 31, 2023.
2020 Performance Share RSU Results
In August 2021, the Committee took the unusual step of retroactively amending the outstanding 2020 performance share RSU grants for our named executives who received such awards by subjecting the RSUs to greater downside risk and extending the vesting date to December 15, 2022. These 2020 performance share RSUs originally vested 50% on December 31, 2021 and 50% on December 31, 2022.
The performance period was also extended from 18 to 30 months. Performance had been achieved at maximum at the time of the amendment and at the original performance measurement date, so the amendment added downside risk with no additional upside opportunity.
The final earned payout could have ranged from 0% to 200% of the target RSUs, determined by multiplying the target RSUs by the “stock price multiplier,” which was defined as NCR’s stock price on December 15, 2022, divided by the closing market price the date of grant (stock price on July 1, 2020 was $16.97), up to 200% of target.
The Committee approved the final earned payout of the 2020 performance share RSUs for the named executives at 136.36% of target, as the stock price on December 15, 2022 was $23.14, resulting in a stock price multiplier of 136.36% ($23.14/$16.97). All of the 2020 performance shares for the named executives vested on December 15, 2022.
If these performance share RSUs had not been retroactively amended, they would have paid out at 200% rather than the final payout of 136.36%.
Other Benefits and Perquisites |
Like our other full-time salaried U.S. employees, the named executives participate in a variety of 401(k) and health and welfare benefit programs designed to attract, retain and motivate our workforce and keep us competitive with other employers. Our 401(k) plan encourages employees to save and prepare financially for retirement. Health and welfare and paid time-off benefits help our workforce stay healthy, focused and productive.
NCR CORPORATION | 2021 Proxy Statement | 64
The named executives are eligible for other limited benefits that the Committee considers reasonable and appropriate under our executive compensation philosophy. These benefits, which do not represent a significant portion of our named executives’ total compensation, are intended to attract and retain highly qualified talent, minimize distractions from critical Company business and ensureprotect the health, safety and security of our key executives. These benefits are shown in our Perquisites – 2022Table and reported as “All Other Compensation” in our Summary Compensation Table. They include financial counseling, executive medical exams, relocation benefits, and with respect to Mr. Hayford, Mr. Sullivan, Mr. Oliver, and Mr. Oliver,Layden, certain personal use of corporate aircraft. The Committee prohibits all tax reimbursements (or
NCR CORPORATION | 2023 Proxy Statement | 53
tax gross-ups) with the exception of those provided in connection with relocations required by the Company, which are generally also provided to non-executive employees, employees. In respect to financial counseling and limited reimbursements in connection with negotiated separations.executive medical exams, the Committee discontinued these perquisites for all new executives.
Severance Benefits – Standard Severance and Change in Control |
Change in Control (CIC) Severance Benefits
If the Company considers potential change in control transactions, we want to ensure that key executives are incentivized to remain with us during this process and evaluate the transactions in an objective and undistracted way in order to support stockholder value. For these reasons, we maintain the Amended and Restated NCR Change in Control Severance Plan (the “Change in Control Severance Plan”) for our senior executive team. Under this plan, we pay only “double-trigger” separation benefits, that is, benefits pay out only if both a change in control occurs and employment ends in a qualifying termination. There are no tax gross-ups under the plan for any named executives.
Our Change in Control Severance Plan has two benefit levels that apply to our named executives. There are no tax gross-ups under the plan for any named executives.
For more about plan benefit levels for the named executives and double-trigger benefits, see the Potential Payments Upon Termination or Change in Control section below.
Standard Severance Benefits(Non-CIC)
We provide our key executives reasonable severance benefits to ensure that we remain competitive with other employers, and to help us attract and retain top talent. Our Executive Severance Plan provides certain severance benefits in the event employment ends in a qualifying termination not connected to a change in control. For more about these severance benefits and the multipliers used to determine the executives’ benefits, see the Potential Payments Upon Termination or Change in Control section below.
Robust Stock Ownership RequirementsThe Committee has affirmed its expectation that severance will not be paid under the Executive Severance Plan to named executives who voluntarily resign from Company service and no additional amounts will be paid under this Plan unless required to obtain additional covenants, transition services, or similar additional consideration determined to be proportionate and necessary and appropriate to protect the interests of the Company and our stockholders.
Stock Ownership Requirements |
The Committee recognizes that executive stock ownership plays a critical role in aligning the interests of management with those of stockholders. We also believe that our most senior executives should maintain a significant personal financial stake in NCR to promote a long-term perspective in managing our business. For these reasons, we require that our named executives own NCR common stock worth a guideline multiple of base salary. Shares that count toward the guideline include shares owned personally, restricted stock andtime-based RSUs, PBRSUs, performance share RSUs, and stock acquired through our Employee Stock Purchase Plan. Stock options do not count toward the guideline. Newly hired or promoted executives have five years to reach their guideline. The tableTable below shows our current guidelines.
NCR CORPORATION | 2021 Proxy Statement | 65
As of February 28, 2021, all currently employed named executives either2023, Mr. Hayford, Mr. Sullivan, Mr. Oliver, and Mr. Layden met or are on track to meet our stock ownership guidelines based on unreduced 2020 base salary. As of the date he became our Senior Advisor on July 13, 2020, Mr. Fernandez was no longer subject to our stock ownership guidelines.2022 salary levels.
Stock Ownership Guideline as a Multiple of | |||||
Named Executive
| Guideline
| ||||
Michael Hayford | 6 | ||||
Owen Sullivan | 5 | ||||
Timothy Oliver | 4 | ||||
| 3 | ||||
NCR CORPORATION | 2023 Proxy Statement | 54
|
Compensation Clawback Policy
We have a policy generally providing that short-term and long-term incentive awards provided to our executive officers, including our named executives, are subject to clawback (forfeiture or repayment), as directed by the Committee, if:
| ● |
|
| ● |
|
If it is determined that the above conditions are met, then to the full extent permitted by law and as directed by the Committee, the executive officer must also forfeit any outstanding equity awards and repay amounts received from time-based equity award vesting and gains from stock option exercises.
Hedging and Pledging Policy
Hedging and Pledging Policy |
Our Insider Trading Policy incorporates the Company’s prohibitions against hedging, pledging and related transactions. The Policy applies to all officers, directors, employees (including temporary employees) and contractors of the Company and its subsidiaries who have access, including temporary access, to material nonpublic information, as well as certain family members of, and individuals who live in the same household as, are financially dependent on, or whose transactions (including transactions by an entity) in NCR’s securities are directed by or subject to the influence or control of, any such person.
In order to restrict covered persons from engaging in transactions that hedge or offset, or are designed to hedge or offset, fluctuation in the market value of NCR equity securities, our Insider Trading Policy prohibits covered persons from directly or indirectly engaging in hedging activities or transactions of derivative securities of the Company at any time. In addition, because a margin or foreclosure sale may occur at a time when individuals are in possession of material nonpublic information or otherwise are not permitted to trade in NCR securities, our directors, executive officers and designated key employees are prohibited from taking margin loans where NCR securities are used, directly or indirectly, as collateral for the loan, andloan. Such individuals are also prohibited from pledging NCR securities as collateral for a loan. An exception to the foregoing pledging prohibition may be granted upon advance approval of our General Counsel, subject to a clear demonstration of financial capacity to repay the loan without resorting to the pledged securities, and satisfaction of the remaining requirements of our Insider Trading Policy.
NCR CORPORATION | 2021 Proxy Statement | 66
Tax Considerations in Setting Executive Compensation |
Under Federal tax rules in effect for tax years beginning on and after January 1, 2018 (which tax rules eliminated a performance-based compensation exception that was previously available), compensation over $1 million paid annually for certain covered employees, including the named executives, generally is not deductible for federal tax purposes. As has been the case historically, the Committee continues to have the ability to pay compensation to our named executives in appropriate circumstances, even if such compensation is not fully deductible.
|
| ● | “Adjusted EBITDA” is defined as the Company’s GAAP net income (loss) from continuing operations attributable to NCR plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization; plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition-related intangibles and transformation and restructuring charges (which includes integration, severance and other exit and |
NCR CORPORATION | 2023 Proxy Statement | 55
disposal costs), among others. The special items are considered non-operational so are excluded from the Adjusted EBITDA metric utilized by our management in evaluating segment performance and are separately delineated to reconcile back to total reported income (loss) from continuing operations attributable to NCR. This format is useful to investors because it allows analysis and comparability of operating trends. It also includes the same information that is used by NCR management to make decisions regarding the segments and to assess our financial performance. Refer to the table below in the Supplementary Non-GAAP Information section of this proxy statement for the reconciliations of net income (loss) from continuing operations attributable to NCR (GAAP) to Adjusted EBITDA (non-GAAP). |
| ● | “AIP” means the NCR Annual Incentive Plan established pursuant to the Second Amended and Restated NCR Management Incentive Plan. |
| ● | “AIP EBITDA” for purposes of our 2022 Annual Incentive Plans equals Adjusted EBITDA for the Company, adjusted to eliminate the impact of foreign currency fluctuations during the performance period, based on the same foreign exchange rates used to establish the Company’s applicable financial plan, and excludes the impact of mergers and acquisitions completed during the performance period. Further adjusted as determined in the sole discretion of the Committee. |
| ● | “AIP Revenue”for purposes of our 2022 Annual Incentive Plan equals NCR’s GAAP revenue, adjusted to exclude any material unplanned mergers and acquisitions activity during 2022 and the revenue impact of the shift to recurring versus the 2022 budgeted value of $207M. Shift to recurring is defined as eliminating the net impact of the shift to recurring revenue by treating all new contracts as if they would have been accounted for as revenue upfront during the year of signing in accordance with prior practice versus the amount to be recognized during the year of signing on a recurring revenue basis. Further adjusted as determined in the sole discretion of the Committee. |
| ● | “CD&A” means the Executive Compensation – Compensation Discussion and Analysis section included herein. |
| ● | “Change in Control Severance Plan” means the Amended and Restated NCR Change in Control Severance Plan. |
| ● | “Committee” means the Compensation and Human Resource Committee |
The Compensation and Human Resource Committee, comprised of independent directors, reviewed and discussed the above Compensation Discussion & Analysis with management. Based on that review and those discussions, the Committee recommended to our Board of Directors that the Compensation Discussion & Analysis be included in these proxy materials.
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| ● | “ESG” means environmental, social and governance. |
| ● | “Executive Severance Plan” means the NCR Executive Severance Plan. |
| ● | “LTI” means long-term incentive. |
| ● | “LTI EBITDA” for purposes of our Long-Term Incentive Plans equals Adjusted EBITDA for the Company (as defined herein), further adjusted to eliminate the impact of foreign currency fluctuations during the performance period, incorporate (for 2020, eliminate) the impact of mergers and acquisitions and eliminate the net impact of the shift to recurring revenue by treating all new contracts as if they would have been accounted for as revenue upfront during the year of signing in accordance with prior practice versus the amount to be recognized during the year of signing on a recurring revenue basis. Further adjusted as determined in the sole discretion of the Committee. |
| ● | “LTI Plan” means the NCR Long-Term Incentive Plan. |
| ● | “LTI Recurring Revenue” for purposes of our Long-Term Incentive Plans equals recurring revenue for the Company (as defined herein), adjusted to eliminate the impact of foreign currency fluctuations during |
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the performance period, and incorporate (for 2020, eliminate) the impact of mergers and acquisitions completed during such period. Further adjusted as determined in the sole discretion of the Committee. |
| ● | “Named executives” or “NEOs” means our Named Executive Officers. |
| ● | “NPS” means our Net Promoter Score. |
| ● | “PEO” means principal executive officer, who is Michael Hayford, our CEO. |
| ● | “recurring revenue” includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue, interchange and network revenue, cryptocurrency-related revenue and certain professional services arrangements, as well as term-based software license arrangements that include customer termination rights. |
| ● | “rTSR” means relativetotal shareholder return. |
| ● | “Stock Plan” or “2017 Stock Incentive Plan” means the NCR Corporation 2017 Stock Incentive Plan, as amended. |
| ● | “TSR” means total shareholder return. |
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These Executive Compensation Tables use capitalized terms, certain of which are defined in the Glossary of Key Terms Used In Our CD&A and Executive Compensation Tables section, including certain terms used with respect to the metrics established for the Company’s incentive plans.
Summary Compensation Table
Our Summary Compensation Table below shows the total compensation paid to or earned by each of our named executives with respect to the fiscal year ending December 31, 2020,2022, and for those individuals who were then named executives, with respect to the fiscal years ending December 31, 20192021 and December 31, 2018.2020.
Summary Compensation Table ($)
| Name and Principal Position | Year | Salary | Bonus | Stock Awards | Option | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | ||||||||||||||||||||||
| (a) | (b) | (c)(2) | (d)(3) | (e)(4) | (f)(5) | (g)(1)(6) | (h)(7) | (i) | ||||||||||||||||||||||
Michael Hayford(1) | 2020 | 317,102 | — | 10,895,960 | 7,150,000 | 9,843,750 | 118,454 | 28,325,266 | ||||||||||||||||||||||
| President & Chief Executive Officer | 2019 | 1,000,000 | — | 6,500,007 | 3,499,999 | 1,539,962 | 240,604 | 12,780,572 | ||||||||||||||||||||||
| 2018 | 634,615 | 1,010,959 | 5,000,011 | 7,499,881 | — | 94,423 | 14,239,889 | |||||||||||||||||||||||
Owen Sullivan(1) | 2020 | 474,039 | — | 6,537,585 | 4,290,001 | 5,700,000 | 66,892 | 17,068,517 | ||||||||||||||||||||||
| Chief Operating Officer | 2019 | 725,000 | — | 3,899,988 | 2,100,001 | 1,116,472 | 237,968 | 8,079,429 | ||||||||||||||||||||||
| 2018 | 292,789 | 482,671 | 2,250,000 | 3,749,994 | — | 74,071 | 6,849,525 | |||||||||||||||||||||||
Timothy Oliver(1) | ||||||||||||||||||||||||||||||
| Executive Vice President & Chief Financial Officer | 2020 | 288,462 | — | 2,000,005 | 1,999,999 | 2,812,500 | 105,462 | 7,206,428 | ||||||||||||||||||||||
Adrian Button(1) | ||||||||||||||||||||||||||||||
| Executive Vice President, Product and Service Operations | 2020 | 468,462 | — | 2,476,348 | 1,624,997 | 2,250,000 | 27,292 | 6,847,099 | ||||||||||||||||||||||
Daniel Campbell(1) | 2020 | 513,077 | — | 2,476,348 | 1,624,997 | 1,125,000 | 15,343 | 5,754,765 | ||||||||||||||||||||||
| Executive Vice President, NCR Global Sales | 2019 | 575,000 | — | 1,299,996 | 700,003 | 649,370 | 19,005 | 3,243,374 | ||||||||||||||||||||||
| 2018 | 479,596 | 500,000 | 5,000,011 | 499,996 | — | 9,970 | 6,507,573 | |||||||||||||||||||||||
Andre Fernandez(1) | 2020 | 347,356 | — | 1,400,002 | 2,599,999 | — | 2,547,209 | 6,894,566 | ||||||||||||||||||||||
Former Senior Advisor; | 2019 | 625,000 | — | 2,599,992 | 1,399,998 | 802,064 | 162,873 | 5,589,927 | ||||||||||||||||||||||
| Former Executive Vice President & Chief Financial Officer | 2018 | 187,500 | 267,551 | 3,000,011 | 999,998 | — | 57,867 | 4,512,927 | ||||||||||||||||||||||
| Name and Principal Position | Year | Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | All Other Compensation | Total | |||||||||||||||||||||
| (a) | (b) | (c)(1) | (d)(2) | (e)(3) | (f)(4) | (g)(5) | (h) | |||||||||||||||||||||
Michael Hayford | 2022 | 1,000,000 | 11,597,692 | — | — | 145,903 | 12,743,595 | |||||||||||||||||||||
Chief Executive Officer | 2021 | 984,813 | 11,331,818 | — | 2,325,000 | 198,870 | 14,840,501 | |||||||||||||||||||||
| 2020 | 317,102 | 10,895,960 | 7,150,000 | 9,843,750 | 118,454 | 28,325,266 | ||||||||||||||||||||||
Owen Sullivan | 2022 | 825,000 | 6,958,608 | — | — | 204,547 | 7,988,155 | |||||||||||||||||||||
President & Chief Operating Officer | 2021 | 755,962 | 7,032,801 | — | 1,773,529 | 79,953 | 9,642,245 | |||||||||||||||||||||
| 2020 | 474,039 | 6,537,585 | 4,290,001 | 5,700,000 | 66,892 | 17,068,517 | ||||||||||||||||||||||
Timothy Oliver | 2022 | 625,000 | 4,639,083 | — | — | 124,384 | 5,388,467 | |||||||||||||||||||||
Senior Executive Vice President & Chief Financial Officer | 2021 | 625,000 | 4,532,716 | — | 1,453,125 | 212,534 | 6,823,375 | |||||||||||||||||||||
| 2020 | 288,462 | 2,000,005 | 1,999,999 | 2,812,500 | 105,462 | 7,206,428 | ||||||||||||||||||||||
| Adrian Button | 2022 | 600,000 | 2,899,423 | — | — | 27,869 | 3,527,292 | |||||||||||||||||||||
Executive Vice President, Product and Service Operations | 2021 | 578,193 | 2,832,978 | — | 1,162,500 | 27,369 | 4,601,040 | |||||||||||||||||||||
| 2020 | 468,462 | 2,476,348 | 1,624,997 | 2,250,000 | 27,292 | 6,847,099 | ||||||||||||||||||||||
| Don Layden | 2022 | 600,000 | 4,639,083 | — | — | 39,559 | 5,278,642 | |||||||||||||||||||||
Executive Vice President, President, Payments & Network, Head of Strategy and M&A | 2021 | 140,769 | 2,832,978 | — | 351,616 | 1,320,490 | (6) | 4,645,853 | ||||||||||||||||||||
(1)Cash compensation for Mr. Hayford in 2020 was $317,102 due to the voluntary temporary reduction in his base salary as approved by the Committee starting April 4, 2020 and the Company’s failure to achieve the 2020 Annual Incentive Plan AdjustedAIP EBITDA threshold, which was not changed due to the COVID-19 global pandemic. The 2020 cash compensation of each of Mr. Sullivan Mr. Button, and Mr. CampbellButton was also reduced for the same reasons to the following amounts: Mr. Sullivan: $474,039; Mr. Button: $468,462; Mr. Campbell: $513,077.$474,039 and $468,462, respectively. For Mr. Oliver, who joined the Company in July 2020 without a base salary reduction, his 2020 cash compensation of $288,462 also reflects the Company’s underperformance under our 2020 Annual Incentive Plan noted above. The 2020 cash compensationImpacted base salaries were restored to pre-reduction levels effective January 1, 2021. For Mr. Layden, this column represents salary from October 1, 2021 (when he commenced employment) through December 31, 2021. For further details, see the Agreements with Our Named Executives section below.
(2) This column shows the aggregate accounting grant date fair value, as determined in accordance with FASB ASC Topic 718, of Mr. Fernandezstock awards granted to each named executive in the applicable year. See Note 8 of $347,356 reflects his base salary reduction and his October 2020 separation (which made him ineligiblethe Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the foregoing plan). The amounts shownyear ended December 31, 2022 for an explanation of the assumptions we make in the Non-Equityvaluation of our equity awards. For 2022, PBRSUs are valued by applying the applicable NCR common stock price on the date of grant. rTSR RSUs are valued using a Monte Carlo valuation, which simulates a distribution of stock prices for equity awards throughout the remaining performance period of the awards, based on certain assumptions of NCR common stock price behavior. The Monte Carlo value for rTSR RSUs differ from target value approved by the Committee, as the latter were converted to a number of RSUs based on the closing price of NCR common stock on the date of grant. Assuming achievement of the highest level of performance, the aggregate grant date fair values of the PBRSUs and the rTSR RSUs granted in 2022 are: Mr. Hayford: $23,195,384; Mr. Sullivan: $13,917,217; Mr. Oliver: $9,278,167; Mr. Button: $5,798,846; Mr. Layden: $9,278,167.
(3) Represents the grant date fair value of the option awards granted in the applicable year. See Note 8 of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 for an explanation of the assumptions we make in valuing our option awards.
(4) For 2022, although several metrics were achieved and exceeded under the 2022 Annual Incentive Plan, Compensation forthere is no earned payout since the 2022 Annual Incentive Plan EBITDA threshold was not met. For 2021, this column represents amounts earned under our
NCR CORPORATION | 2023 Proxy Statement | 58
2021 Annual Incentive Plan. For 2020, this column consistdoes not include any cash payments and consists entirely of RSUs granted under our Stock Planawarded in February 2021 to eligible named executives in full settlement of earned awards under ourthe NCR Strategic Transformation Fitness Plan adopted by the Committee in 2019, a one-time long-term strategic transformation compensation plan that targeted and achieved in excess of $150 million in recurring annual EBITDA improvements and in excess of $250 million in cash savings.savings, which RSUs remained subject to a one-year restriction period following vesting, during which period the underlying shares may not be sold or otherwise alienated. For more details on this plan, see the NCR Strategic Transformation Fitness Plan section in our the Executive Compensation – Compensation Discussion & Analysis section above.
(2) On April 4, 2020, as a swift response to the COVID-19 pandemic’s impact on the global economy, in order to preserve cash, improve short-term liquidity and retain human capital, the Committee, at the request of Mr. Hayford, reduced the base salaries of each of our named executive officers (excluding Mr. Oliver, who joined the Company in July 2020) and all senior managers. Mr. Hayford’s and Mr. Martire’s (Executive Chairman) base salaries were reduced to zero (except for amounts to cover their healthcare insurance premiums under broad-based employee benefit plans) for the remainder of 2020; Mr. Sullivan’s and Mr. Fernandez’s were reduced by 50%; and Mr. Button’s and Mr. Campbell’s were reduced by 20%. These base salary reductions were put in place for the remainder of 2020 for the foregoing named executives and certain senior managers.
(3) This column represents 2018 bonus commitments paid in early 2019 under negotiated new hire employment agreements, except that Mr. Campbell’s amount for 2018 includes: (i) a negotiated new hire sign-on bonus of $150,000 subject to repayment in the event of his resignation during the year after his start date; and (ii) a discretionary bonus recommended by the CEO and approved by the Committee in the amount of $350,000 for his leadership on certain Company-wide strategic directives and the achievement of various individual management objectives.
(4) This column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of stock awards granted to each named executive in the applicable year. See Note 7 of the Notes to Consolidated Financial Statements contained in the
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Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for an explanation of the assumptions we make in the valuation of our equity awards. Assuming achievement of the highest level of performance, the aggregate grant date fair values of the performance-based RSUs and the performance share RSUs granted in 2020 are: Mr. Hayford: $21,791,920; Mr. Sullivan: $13,075,169; Mr. Button: $4,952,695; Mr. Campbell: $4,952,695; Mr. Fernandez: $2,800,003. Mr. Oliver joined NCR in July 2020, and did not receive performance-based RSUs or performance share RSUs. For more about our 2020 awards, see the Grants of Plan-Based Awards – 2020 Table.
(5) Represents the grant date fair value of the option awards granted in the applicable year. See Note 7 of the Notes to the Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for an explanation of the assumptions we make in valuing our option awards. For more about our 2020 Premium-priced option awards, see the Grants of Plan-Based Awards – 2020 Table.
(6) For 2020, this column does not include any cash payments and shows RSUs awarded on February 23, 2021 to eligible named executives under our Stock Plan in full settlement of amounts earned under our long-term Fitness Plan. See the NCR Strategic Transformation Fitness Plan section in our Executive Compensation - Compensation Discussion & Analysis above. The Committee determined to make these equity awards in lieu of paying such earned amounts in cash in order to preserve cash/improve liquidity, incentivize NCR stock appreciation and enhance retention. These RSU awards vest 100% on December 31, 2021 and remain subject to a one-year restriction period following vesting during which the underlying shares generally may not be sold or otherwise alienated. Mr. Fernandez did not receive such an RSU award because he forfeited his Fitness Plan award upon his October 2020 separation from service. For 2019, this column represents amounts earned by our named executives under our 2019 Annual Incentive Plan.
(7) The amounts in this column consist of the aggregate incremental cost to the Company of the perquisites provided to theour named executives, any insurance premiums paid by the Company with respect to life insurance for the benefit of theour named executives, contributions made by the Company to the NCR Savings Plan (our 401(k) plan) on behalf of theour named executives and certain other payments. For Mr. Fernandez, the 2020 amount includes a cash severance payment of $2,449,375, executive outplacement services valued at $10,000 and certain welfare benefits continuation valued at $38,259, each of the foregoing pursuant to his separation agreement with the Company. Additional details regarding these amounts are included in the All Other Compensation – 20202022 Table, and the Perquisites – 2020 2022 Table and the Agreements with Our Named Executives section below.
(6) For 2021, this amount for Mr. Layden includes (i) perquisites provided to him after his commencement of employment on October 1, 2021, and (ii) amounts earned in 2021 before commencing employment consisting of consulting fees together with a transaction incentive fee for his leadership with respect to the Separation AgreementCardtronics Acquisition and certain other 2021 merger and acquisition activity, in the aggregate of $1,235,000. For further details, see the Agreements with Our Former Chief Financial Officer sectionsNamed Executives section below.
All Other Compensation Table |
This Table shows the value of Company-paid perquisites and other personal benefits, insurance premiums and Company matching contributions to the NCR Savings Plan, our broad-based 401(k) plan, on behalf of our named executives in 2020:2022:
All Other Compensation – 2020 ($)
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All Other Compensation – 2022 ($)
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| Named Executive | Perquisites and Other Personal Benefits(1) | Insurance Premiums(2) | Company Contributions to Retirement / 401(K) Plans(3) | Total | Perquisites and Other Personal Benefits(1) | Insurance Premiums(2) | Company Contributions to Retirement / 401(k) Plans(3) | Total | ||||||||||
| Michael Hayford | 108,652 | 52 | 9,750 | 118,454 | 135,601 | 52 | 10,250 | 145,903 | ||||||||||
| Owen Sullivan | 56,394 | 748 | 9,750 | 66,892 | 193,446 | 851 | 10,250 | 204,547 | ||||||||||
| Timothy Oliver | 103,697 | 323 | 1,442 | 105,462 | 113,489 | 645 | 10,250 | 124,384 | ||||||||||
| Adrian Button | 17,000 | 542 | 9,750 | 27,292 | 17,000 | 619 | 10,250 | 27,869 | ||||||||||
| Daniel Campbell | 5,000 | 593 | 9,750 | 15,343 | ||||||||||||||
| Andre Fernandez | 39,395 | 430 | 9,750 | 49,575 | ||||||||||||||
| Don Layden | 28,690 | 619 | 10,250 | 39,559 | ||||||||||||||
(1) This column shows the Company’s aggregate incremental cost for the perquisites and other personal benefits described in the Perquisites - 2020 Table below.2022 Table.
(2) This column shows the value of Company-paid premiums for life insurance for the benefit of our named executives.
(3) This column shows Company matching contributions to our broad-based 401(k) plan, which the Company also makes for our non-executive participants in that plan.
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Perquisites Table |
Perquisites Table
This Table shows the aggregate incremental cost to the Company for perquisites for our named executives in 2020.2022.
Perquisites – 2020 ($)
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Perquisites – 2022 ($)
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| Named Executive | Corporate Aircraft Usage(1) | Executive Medical Program(2) | Financial Planning Allowance(3) | Relocation(4) | Total | Corporate Aircraft Usage(1) | Executive Medical Program(2) | Financial Planning Allowance(3) | Relocation(4) | Total | ||||||||||
| Michael Hayford | 91,652 | 5,000 | 12,000 | — | 108,652 | 118,601 | 5,000 | 12,000 | — | 135,601 | ||||||||||
| Owen Sullivan | 39,394 | 5,000 | 12,000 | — | 56,394 | 176,446 | 5,000 | 12,000 | — | 193,446 | ||||||||||
| Timothy Oliver | 3,640 | 5,000 | 12,000 | 83,057 | 103,697 | 56,168 | 5,000 | 12,000 | 40,321 | 113,489 | ||||||||||
| Adrian Button | — | 5,000 | 12,000 | — | 17,000 | — | 5,000 | 12,000 | — | 17,000 | ||||||||||
| Daniel Campbell | — | 5,000 | — | — | 5,000 | |||||||||||||||
| Andre Fernandez | — | 5,000 | 12,000 | 22,395 | 39,395 | |||||||||||||||
| Don Layden | 11,690 | 5,000 | 12,000 | — | 28,690 | |||||||||||||||
(1) This column shows the Company’s incremental cost for personal usage of the corporate aircraft. Personal use of aircraft includes commutingtravel between executives’an executive’s principal place of residence and the Company’s headquarters in Atlanta which theand other locations. The Company believes this is an important incentive to attract top-tier talent in the highly competitive technology industry to the Company.industry. The Company provides the use of corporate aircraft both for executives’ business-related and personal travel in order to support the efficiency and productivity of our executives, protect their personal safety and security, and to ensure the confidentiality of our business. Protecting the health and safety of our executives during the COVID-19 pandemic resulted in additional usage. We will continue to monitor this as the pandemic evolves. We calculated this incremental cost by determining the variable operating cost to the Company, including items such as fuel, landing and terminal fees, crew travel expenses and operational maintenance. Expenses determined to be less variable in nature, such as general administration, depreciation and pilot compensation, were not included in this incremental cost. On occasion, family members and close associates traveled with or at the authorization of our CEO on corporate aircraft; the Company incurred de minimis incremental costs as a result of such travel, which costs are included in the Table.
(2) This column shows the Company-paid maximum amount available to named executives for medical diagnostic services under our Executive Medical Exam Program. Though some executives may not use the maximum, for privacy reasons we choose to disclose the maximum benefit (rather than amount actually used) available under the Program ($5,000 for those under age 65 and $10,000 for those age 65 or older)., rather than the amount actually used.
(3) This column shows the Company-paid amounts for financial planning assistance under our Executive Financial Planning Program.
(4) This column shows relocation expenses related to our named executives. Included in these relocation figures areFor Mr. Oliver, the followingamount shown includes a tax gross-up amounts: Mr. Oliver: $31,702; Mr. Fernandez: $10,378. of $20,321.
Agreements with Our Named Executives |
Our named executives have agreements with the Company that generally describe, among other things, their initial base salaries, bonus opportunities and equity awards, as well as benefit plan participation and applicable restrictive covenants. These agreements generally are not updated to reflect laterordinary-course compensation changes.
Employment AgreementAgreements with Our President & Chief Executive Officer
Mr. Hayford: Mr. Hayford’s April 27, 2018 employment agreement describes his initial base salary, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. For each of 2019 and 2020, NCR agreed that his annual LTI award would have an aggregate grant value of at least $10 million. The agreement also provides for Mr. Hayford’s Executive Severance Plan participation with a separation benefit of one and one-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If his employment is terminated (otherother than for cause)cause or if he resigns for good reason, under the agreement Mr. Hayford’s unvested 2018 equity awards vestoption award vests immediately and his 2018 options remainremains exercisable for 1 year (or until earlier expiration). “Cause” generally means grounds for cause under our Change in Control Severance Plan, felony conviction or material Code of Conduct violation. “Good reason” generally means assignment of duties inconsistent with position, authority,
NCR CORPORATION | 2021 Proxy Statement | 70
duties or responsibilities or diminution in such items, relocation over 40 miles or material breach of employment agreement or 2018 option award agreements.
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On February 16, 2023, the Company entered into an employment agreement amendment with Mr. Hayford (the “Hayford Amendment”), which provides that: (i) for purposes of the Change in Control Severance Plan, if his employment is terminated without cause or he resigns for good reason (as defined in the Change in Control Severance Plan) within the two-year period following, or the ninety-day period preceding, a “qualified transaction” (as defined in the Hayford Amendment, which includes, among other things, a spin-off, split-off or sale of the Commerce or Banking segment or a sale of more than 50% of the Company’s assets), he will receive the separation benefits that he is currently eligible to receive under the Change in Control Severance Plan upon a termination without cause or resignation for good reason following a change in control; (ii) for purposes of any then-outstanding equity agreements.awards, if his employment is terminated without cause or he resigns for good reason within the two-year period following, or the ninety-day period preceding, a qualified transaction, he will receive the accelerated vesting treatment (and for any stock options, the post-termination exercise period) as set forth in the applicable award agreements upon a “Change in Control Termination” or “Good Reason Termination,” as the case may be, that occurs in connection with a change in control in which the equity awards are assumed, converted or replaced; (iii) for purposes of any pre-2023 equity awards, if his employment is terminated for any reason other than for cause on or after August 13, 2024, he will receive the vesting treatment that he would have received upon a “mutually agreed retirement” approved by the CHRC, and any vested options will remain outstanding and exercisable through their original expiration dates; and (iv) the completion of a qualified transaction will constitute good reason for purposes of the Change in Control Severance Plan and any equity awards.
Employment Agreements with Other Currently Employed Named Executives
Mr. Sullivan: Mr. Sullivan’s July 18, 2018 employment agreement describes his initial base salary as Chief Operating Officer, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. For 2019, NCR agreed that his annual LTI award would have an aggregate grant value of at least $4.5 million. The agreement also provides for Mr. Sullivan’s Executive Severance Plan participation with a separation benefit of one and one-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If his employment is terminated (other than for cause) or if he resigns for good reason, under the agreement Mr. Sullivan’s unvested 2018 equity awards vest immediately, and his 2018 option awards remain exercisable for 1 year (or until earlier expiration). “Cause” and “good reason” generally have the same meanings noted for Mr. Hayford above.
On February 13, 2023, the Company entered into an employment agreement amendment with Mr. Sullivan (the “Sullivan Amendment”), which provides that: (i) for purposes of the Executive Severance Plan, if Mr. Sullivan resigns for good reason, he will receive the separation benefits that he is currently eligible to receive under the Executive Severance Plan upon a termination without cause; (ii) for purposes of the Change in Control Severance Plan, if his employment is terminated without cause or he resigns for good reason within the two-year period following a qualified transaction, he will receive the separation benefits that he is currently eligible to receive under the Change in Control Severance Plan upon a termination without cause or resignation for good reason following a change in control; (iii) the completion of a qualified transaction will constitute good reason for purposes of the Change in Control Severance Plan and any 2023 equity awards;(iv) for purposes of any pre-2023 equity awards, if Mr. Sullivan’s employment is terminated for any reason other than for cause, he will receive the vesting treatment that he would have received upon a “mutually agreed retirement” approved by either the Chief Executive Officer or the CHRC, and any vested options will remain outstanding and exercisable through their original expiration dates, provided that if his employment is terminated for cause or he resigns without good reason prior to the earlier to occur of either December 1, 2023, or the occurrence of a qualified transaction, he will not be entitled to receive such vesting and post-termination exercisability treatment; and (v) for purposes of any 2023 equity awards, if his employment is terminated for any reason other than for cause, he will receive the vesting treatment that he would have received upon a qualified retirement occurring on or after the first anniversary of the grant date, provided that if his employment is terminated for cause or he resigns without good reason prior to the earlier to occur of either the first anniversary of the grant date or the occurrence of a qualified transaction, he will not be entitled to receive such vesting treatment.
NCR CORPORATION | 2023 Proxy Statement | 61
Mr.Oliver: Mr. Oliver’s June 17, 2020 employment agreement describes his initial base salary as Chief Financial Officer, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. Under the agreement, Mr. Oliver’s sign-on annual LTI award granted on August 1, 2020 consisted of Premium-priced options valued at $2 million with an exercise price equal to 110% of the grant date NCR stock closing market price, and time-based restricted stock units valued at $2 million that vest 1/3 on each anniversary of the grant date generally subject to his continued Company service through the vesting dates. The agreement also provides for Mr. Oliver’s Executive Severance Plan participation with a separation benefit of one and one-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. If his employment is terminated (otherother than for cause)cause or if he resigns for good reason, under the agreement Mr. Oliver’s unvested 2020 sign-on equity awards vest immediately, and his 2020 sign-on options remain exercisable for one year (or until earlier expiration). “Cause” and “good reason” generally have the same meanings noted for Mr. Hayford above.
On February 13, 2023, the Company entered into an employment agreement amendment with Mr. Button:Oliver (the “Oliver Amendment”), which provides that: (i) for purposes of the Executive Severance Plan, if he resigns for good reason, he will receive the separation benefits that he is currently eligible to receive under the Executive Severance Plan upon a termination without cause; (ii) for purposes of the Change in Control Severance Plan, if his employment is terminated without cause or he resigns for good reason within the two-year period following a qualified transaction, he will receive the separation benefits that he is currently eligible to receive under the Change in Control Severance Plan upon a termination without cause or resignation for good reason following a change in control; (iii) unless he is offered and accepts a chief executive officer role at the Company or a successor entity resulting from a qualified transaction (e.g., the Company’s planned spin-off), the completion of a qualified transaction will constitute good reason for purposes of the Change in Control Severance Plan and any 2023 equity awards, provided that if he is offered, but does not accept, such chief executive officer role, such resignation shall be treated only as a termination for good reason for purposes of the Executive Severance Plan, and not the Change in Control Severance Plan; (iv) for purposes of any pre-2023 equity awards, if Mr. Oliver’s employment is terminated without cause in the ninety-day period preceding a qualified transaction, then, subject to his continued compliance with the applicable restrictive covenants, such awards will continue to vest as if he had remained actively employed, and any vested options will remain outstanding and exercisable through their original expiration dates, provided that, from and after the date of a qualified transaction, upon a termination of his employment for any reason other than for cause, then, subject to his continued compliance with the applicable restrictive covenants, such awards will continue to vest as if he had remained actively employed, and any vested options will remain outstanding and exercisable through their original expiration dates;(v) for purposes of any 2023 equity awards, if his employment is terminated without cause in the ninety-day period preceding a qualified transaction, then, subject to his continued compliance with the applicable restrictive covenants, such awards will continue to vest as if he had remained actively employed; and (vi) for purposes of his 2023 bonus, if Mr. Oliver’s employment is terminated without cause in the ninety-day period preceding a qualified transaction, he will receive a pro-rated bonus for 2023 based on actual performance, provided that, from and after the date of a qualified transaction, upon a termination of his employment for any reason other than for cause, he will receive a full bonus (without pro-ration) for 2023 based on actual performance.
Mr. Button: We entered into an agreement with Mr. Button on January 8, 2018 when he was promoted to his prior position of Senior Vice President, NCR Global Hardware Product Operations. The agreement describes (among other things) his promotional base salary, incentive opportunities, benefit plan participation and related items. Under the agreement, Mr. Button’s 2018 minimum promotional equity award commitment, subject to Committee approval, was valued at $2 million. The agreement also provides for Mr. Button’s Change in Control Severance Plan participation with a Tier 2 separation benefit of two times (2x) base salary plus target bonus, as well as benefit plan participation. Mr Button’s last day of employment with the Company was December 31, 2022.
Mr. Layden:Mr. Campbell: Mr. Campbell’sLayden’s employment agreement dated December 28, 2017October 1, 2021 describes his initial base salary as EVP, NCR Global Sales,Executive Vice President, President, Payments & Network, Head of Strategy and M&A, as well as his incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. He receivedcovenants, following transition from a sign-on award of performance-vesting RSUs and a cash sign-on bonus of $150,000 (subject to repayment ifconsulting role he resigned during his first year of employment). For 2018,held with the Company agreed thatbefore accepting his annual LTI award would have an aggregate grant value of at least $1.5 million.current position. The agreement also provides for Mr. Campbell’s Executive Severance Plan participation with a separation benefit of one times (1x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier II separation benefit of two times (2x) base salary plus target bonus. If his employment was terminated (other than for cause) or if he resigned for good reason during the first two years of employment, under the agreement Mr. Campbell’s unvested 2018 new hire and 2018 annual equity awards would have vested immediately (with RSUs subject to performance conditions vesting at “target”). “Cause” and “good reason” have meanings similar to those noted for Mr. Hayford above.
NCR CORPORATION | 2021 Proxy Statement | 71
Employment Agreement with Our Former Chief Financial Officer
Mr. Fernandez: Mr. Fernandez’s August 27, 2018 employment agreement described his initial base salary as EVP and Chief Financial Officer, incentive opportunities and awards, benefit plan participation and related items including noncompete and other restrictive covenants. The agreement also provided for Mr. Fernandez’sLayden’s Executive Severance Plan participation with a separation benefit of one and one-half times (1.5x) base salary plus target bonus, and Change in Control Severance Plan participation with a Tier I separation benefit of three times (3x) base salary plus target bonus. Further,The agreement also provides for $60,000 in relocation expenses subject to repayment if Mr. Fernandez’sLayden resigns without good reason or is terminated by the Company for Cause during his first year of employment.
NCR CORPORATION | 2023 Proxy Statement | 62
If Mr. Layden’s employment is terminated (otherother than for cause) or if he resignscause, his agreements for good reason, under the agreementequity awards made during his pre-employment consulting period provide that (i) his unvested 2018 equity2021 restricted stock unit awards would vest immediately, and (ii) his 2018unvested 2020 options would remain exercisable for 1 year (or until earlier expiration), (iii) if termination occurs during the period that begins six months after a grant or vesting datecontinue to vest for a particular equity grantperiod of one year following termination, and that ends 364 days after that same grant or vesting date for a particular equity grant Mr. Fernandez would be entitled to full vesting of the equity tranche for that particular grant that would otherwise vest on the scheduled vesting date next following the date of termination, with any option tranche so vesting remaining unvested options are forfeited and cancelled (with vested options exercisable until the earlier of the first2-year anniversary of the employmenthis termination date, or the option expiration date, (iv) if termination occurred after the end of a fiscal year, he would receive any unpaid bonus for that year based on Company performance, and (v) if termination occurred in the last half of the year, he would receive a prorated bonus for that year, based on his service and Company performance.until earlier expiration). “Cause” and “good reason” generally have the same meanings similar to those noted for Mr. Hayford above.
As noted above, Mr. Fernandez ceased his position as Executive Vice President and Chief Financial Officer on JulyOn February 13, 2020. He continued to assist with transition and advisory services, until he separated from service with2023, the Company entered into an employment agreement amendment with Mr. Layden (the “Layden Amendment”), which provides that: (i) for purposes of the Executive Severance Plan, if Mr. Layden resigns for good reason, he will receive the separation benefits that he is currently eligible to receive under the Executive Severance Plan upon a termination without cause; (ii) for purposes of the Change in Control Severance Plan, if his employment is terminated without cause or he resigns for good reason within the two-year period following a qualified transaction, he will receive the separation benefits that he is currently eligible to receive under the Change in Control Severance Plan upon a termination without cause or resignation for good reason following a change in control; (iii) the completion of a qualified transaction will constitute good reason for purposes of the Change in Control Severance Plan and any 2023 equity awards;(iv) for purposes of any pre-2023 equity awards, if Mr. Layden’s employment is terminated for any reason other than for cause, he will receive the vesting treatment that he would have received upon a “mutually agreed retirement” approved by either the Chief Executive Officer or the CHRC, and any vested options will remain outstanding and exercisable through their original expiration dates, provided that if his employment is terminated for cause or he resigns without good reason prior to the earlier to occur of either December 1, 2023, or the occurrence of a qualified transaction, he will not be entitled to receive such vesting and post-termination exercisability treatment; and (v) for purposes of any 2023 equity awards, if his employment is terminated for any reason other than for cause, he will receive the vesting treatment that he would have received upon a qualified retirement occurring on October 1, 2020. Mr. Fernandez’s separation agreement terms are described inor after the Separation Agreement with Our Former Chief Financial Officer section below.first anniversary of the grant date, provided that if his employment is terminated for cause or he resigns without good reason prior to the earlier to occur of either the first anniversary of the grant date or the occurrence of a qualified transaction, he will not be entitled to receive such vesting treatment.
NCR CORPORATION | 2023 Proxy Statement | 63
Grants of Plan-Based Awards Table |
TheThis Table below shows the equity and non-equity incentive plan awards approved by the Committee for our named executives.executives during 2022. Equity awards were made under our Stock Plan. Non-equity incentive plan awards were made under our 20202022 Annual Incentive Plan and the NCR Strategic Transformation Fitness Plan. These plans and related awards are described in the Executive Compensation – Compensation Discussion & Analysis section above. section.
Grants of Plan-Based Awards – 2020 ($) | ||||||||||||||||||||||||||||||||||||||||||
Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan | Equity Incentive Plan Awards: | Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | Equity Incentive Plan Awards: | |||||||||||||||||||||||||||||||||||||
| Named Executive | Award Type | Grant Date | Threshold | Target | Max | Threshold | Target | Max | All Other Stock Awards: Number of Shares of Stock or Units(3) | All Other Option Awards: Number of Securities Underlying | Exercise Option Awards | Grant Fair Value of Stock | Award Type | Grant Date | Threshold ($) | Target ($) | Max ($) | Threshold (#) | Target (#) | Max (#) | Grant ($) | |||||||||||||||||||||
Michael Hayford | Annual Incentive Plan | 750,000 | 1,500,000 | 3,000,000 | — | — | — | — | — | — | — | Annual Incentive Plan | 750,000 | 1,500,000 | 3,000,000 | — | — | — | — | |||||||||||||||||||||||
| Strategic Transformation Fitness Plan | 6,650,000 | 9,843,750 | 9,843,750 | — | — | — | — | — | — | — | Performance-Based RSU | 02/25/2022 | — | — | — | 72,798 | 145,596 | 291,192 | 6,000,011 | |||||||||||||||||||||||
| Premium-Priced Stock Options | 02/12/2020 | — | — | — | — | — | — | — | 910,828 | 38.26 | 7,150,000 | rTSR RSU | 02/25/2022 | — | — | — | 48,532 | 97,064 | 194,128 | 5,597,681 | ||||||||||||||||||||||
| Performance-Based RSU | 02/12/2020 | — | — | — | 57,860 | 115,720 | 231,440 | — | — | 3,850,004 | ||||||||||||||||||||||||||||||||
| Performance Share RSU | 07/01/2020 | — | — | — | 0 | 324,101 | 648,202 | — | — | — | 7,045,956 | |||||||||||||||||||||||||||||||
Owen Sullivan | Annual Incentive Plan | 618,750 | 1,237,500 | 2,475,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Performance-Based RSU | 02/25/2022 | — | — | — | 43,679 | 87,358 | 174,716 | 3,600,023 | ||||||||||||||||||||||||||||||||||
| rTSR RSU | 02/25/2022 | — | — | — | 29,119 | 58,238 | 116,476 | 3,358,585 | ||||||||||||||||||||||||||||||||||
Timothy Oliver | Annual Incentive Plan | 468,750 | 937,500 | 1,875,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Performance-Based RSU | 02/25/2022 | — | — | — | 29,119 | 58,238 | 116,476 | 2,399,988 | ||||||||||||||||||||||||||||||||||
| rTSR RSU | 02/25/2022 | — | — | — | 19,413 | 38,826 | 77,652 | 2,239,095 | ||||||||||||||||||||||||||||||||||
Adrian Button | Annual Incentive Plan | 375,000 | 750,000 | 1,500,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Performance-Based RSU | 02/25/2022 | — | — | — | 18,200 | 36,399 | 72,798 | 1,500,003 | ||||||||||||||||||||||||||||||||||
| rTSR RSU | 02/25/2022 | — | — | — | 12,133 | 24,266 | 48,532 | 1,399,420 | ||||||||||||||||||||||||||||||||||
Don Layden | Annual Incentive Plan | 450,000 | 900,000 | 1,800,000 | — | — | — | — | ||||||||||||||||||||||||||||||||||
| Performance-Based RSU | 02/25/2022 | — | — | — | 29,119 | 58,238 | 116,476 | 2,399,988 | ||||||||||||||||||||||||||||||||||
| rTSR RSU | 02/25/2022 | — | — | — | 19,413 | 38,826 | 77,652 | 2,239,095 | ||||||||||||||||||||||||||||||||||
NCR CORPORATION | 2021 Proxy Statement | 72
Grants of Plan-Based Awards – 2020 ($) | ||||||||||||||||||||||||
Estimated Future Payouts Under Non- Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan | Equity Incentive Plan Awards: | ||||||||||||||||||||||
| Named Executive | Award Type | Grant Date | Threshold | Target | Max | Threshold | Target | Max | All Other Stock Awards: Number of Shares of Stock or Units(3) | All Other Option Awards: Number of Securities Underlying | Exercise Option Awards | Grant Fair Value of Stock | ||||||||||||
Owen Sullivan | Annual Incentive Plan | 543,750 | 1,087,500 | 2,175,000 | — | — | — | — | — | — | — | |||||||||||||
| Strategic Transformation Fitness Plan | 3,876,000 | 5,737,500 | 5,737,500 | — | — | — | — | — | — | — | ||||||||||||||
| Premium-Priced Stock Options | 02/12/2020 | — | — | — | — | — | — | — | 546,497 | 38.26 | 4,290,001 | |||||||||||||
| Performance-Based RSU | 02/12/2020 | — | — | — | 34,716 | 69,432 | 138,864 | — | — | — | 2,310,003 | |||||||||||||
| Performance Share RSU | 07/01/2020 | — | — | — | 0 | 194,461 | 388,922 | — | — | — | 4,227,582 | |||||||||||||
Timothy Oliver | Annual Incentive Plan | 216,347 | 432,693 | 865,386 | — | — | — | — | — | — | — | |||||||||||||
| Strategic Transformation Fitness Plan | 1,900,000 | 2,812,500 | 2,812,500 | — | — | — | — | — | — | — | ||||||||||||||
| Premium-Priced Stock Options | 08/01/2020 | — | — | — | — | — | — | — | 345,423 | 20.27 | 1,999,999 | |||||||||||||
| Time-Based RSU | 08/01/2020 | — | — | — | — | — | — | 108,519 | — | — | 2,000,005 | |||||||||||||
Adrian Button | Annual Incentive Plan | 308,438 | 616,875 | 1,233,750 | — | — | — | — | — | — | — | |||||||||||||
| Strategic Transformation Fitness Plan | 1,520,000 | 2,250,000 | 2,250,000 | — | — | — | — | — | — | — | ||||||||||||||
| Premium-Priced Stock Options | 02/12/2020 | — | — | — | — | — | — | — | 207,006 | 38.26 | 1,624,997 | |||||||||||||
| Performance-Based RSU | 02/12/2020 | — | — | — | 13,150 | 26,300 | 52,600 | — | — | — | 875,001 | |||||||||||||
| Performance Share RSU | 07/01/2020 | — | — | — | 0 | 73,659 | 147,318 | — | — | — | 1,601,347 | |||||||||||||
Daniel Campbell | Annual Incentive Plan | 316,250 | 632,500 | 1,265,000 | — | — | — | — | — | — | — | |||||||||||||
| Strategic Transformation Fitness Plan | 760,000 | 1,125,000 | 1,125,000 | — | — | — | — | — | — | — | ||||||||||||||
| Premium-Priced Stock Options | 02/12/2020 | — | — | — | — | — | — | — | 207,006 | 38.26 | 1,624,997 | |||||||||||||
| Performance-Based RSU | 02/12/2020 | — | — | — | 13,150 | 26,300 | 52,600 | — | — | — | 875,001 | |||||||||||||
| Performance Share RSU | 07/01/2020 | — | — | — | 0 | 73,659 | 147,318 | — | — | — | 1,601,347 | |||||||||||||
Andre Fernandez | Annual Incentive Plan | 217,098 | 434,195 | 868,390 | — | — | — | — | — | — | — | |||||||||||||
| Strategic Transformation Fitness Plan(5) | 886,667 | 1,312,500 | 1,312,500 | — | — | — | — | — | — | — | ||||||||||||||
| Premium-Priced Stock Options | 02/12/2020 | — | — | — | — | — | — | — | 331,210 | 38.26 | 2,599,999 | |||||||||||||
| Performance-Based RSU | 02/12/2020 | — | — | — | 21,040 | 42,080 | 84,160 | — | — | — | 1,400,002 | |||||||||||||
(1) This column showsThese columns show potential award levels based on performance under our 20202022 Annual Incentive Plan and our Fitness Plan. No cash was paid under the Fitness Plan to our named executives. All awardsActual payouts earned by eligible named executives under the Fitness Plan (excluding Mr. Fernandez who did not receive an award under this plan) were settled in full on February 23, 2021 solelyplan are shown in the form“Non-Equity Incentive Plan Compensation” column of the Summary Compensation Table above.
NCR CORPORATION | 2021 Proxy Statement | 73
RSU awards under our Stock Plan that vest 100% on December 31, 2021 and remain subject to a one-year restriction period following vesting during which the underlying shares generally may not be sold or otherwise alienated.
(2) This column shows the threshold, target and maximum shares that could be received under performance-based RSUsPBRSUs and performance sharerTSR RSUs awarded in 2020.2022.
(3)Sign-on award of time-based RSUs granted pursuant to Mr. Oliver’s negotiated new hire agreement. Vests ratably, with 1/3 vesting on each anniversary of the grant date, generally subject to Mr. Oliver’s continued Company service through the vesting dates.
(4) This column shows the accounting grant date fair value of equity awards, as determined in accordance with FASB ASC Topic 718. For 2022, rTSR RSUs values, which are based on a Monte Carlo valuation for accounting purposes, differ from the target values approved by the Committee, which were converted to a number of RSUs based on the closing price of NCR common stock on the date of grant. A Monte Carlo valuation simulates a distribution of stock prices for equity awards throughout the remaining performance period of the awards, based on certain assumptions of NCR common stock price behavior. The accounting grant date fair values of performance-based RSU awards and performance share RSUPBRSU awards are based on the probable outcomeclosing price of applicable performance conditions asNCR common stock on the date of the grant date.grant. The performance-based RSUsPBRSUs for all named executives have a 3-year performance period and, cliff vestto the extent earned, will cliff-vest on the 3-year anniversary of the grant date. The rTSR RSUs awarded to all named executives in 2022 are subject to our TSR performance share RSUs haveafter a1.5-year performance period and vest 50% in 18 months onfrom February 25, 2022 through December 31, 20212024 relative to the TSR after the same period for the companies in the S&P MidCap 400 Value Index, and 50% in 30 monthsto the extent earned, will cliff-vest on the 3-year anniversary of the grant date. Vesting of both types of RSUs is generally subject to continued Company service through the applicable vesting dates.
NCR CORPORATION | 2023 Proxy Statement | 64
Outstanding Equity Awards at Fiscal Year-End 2022 Table |
This Table provides details about the outstanding LTI awards held by our named executives as of December 31, 2022, in2022.
| Option Awards | ||||||||||||||||||||||||||||||||||
| Named Executive | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(1) (#) | Option Exercise Price ($) | Option Expiration Date | Number of Stock Units That Have Not Vested (#) | Market Value of Stock Units That Have Not Vested ($)(2) | Equity Incentive Plan Awards: Number of Unearned Stock Units That Have Not Vested (#) | Equity Incentive Plan Awards: Market Value of Stock Units That Have Not Vested ($)(2) | |||||||||||||||||||||||||
Michael Hayford | 02/25/2022(3) | 145,596 | 3,408,402 | |||||||||||||||||||||||||||||||
| 02/25/2022(4) | 97,064 | 2,272,268 | ||||||||||||||||||||||||||||||||
| 02/23/2021(5) | 36,859 | 862,869 | ||||||||||||||||||||||||||||||||
| 02/23/2021(6) | 338,888 | 7,933,368 | ||||||||||||||||||||||||||||||||
| 02/12/2020(7) | 607,218 | 303,610 | 38.26 | 02/11/2027 | ||||||||||||||||||||||||||||||
| 02/12/2020(8) | 125,788 | 2,944,697 | ||||||||||||||||||||||||||||||||
| 2/8/2019 | 325,682 | 108,561 | 26.42 | 02/07/2026 | ||||||||||||||||||||||||||||||
| 5/1/2018 | 266,634 | 31.15 | 04/30/2025 | |||||||||||||||||||||||||||||||
| 5/1/2018 | 533,268 | 31.15 | 04/30/2025 | |||||||||||||||||||||||||||||||
Owen Sullivan | 02/25/2022(3) | 87,358 | 2,045,051 | |||||||||||||||||||||||||||||||
| 02/25/2022(4) | 58,238 | 1,363,352 | ||||||||||||||||||||||||||||||||
| 02/23/2021(5) | 22,876 | 535,527 | ||||||||||||||||||||||||||||||||
| 02/23/2021(6) | 210,322 | 4,923,638 | ||||||||||||||||||||||||||||||||
| 02/12/2020(7) | 364,331 | 182,166 | 38.26 | 02/11/2027 | ||||||||||||||||||||||||||||||
| 02/12/2020(8) | 75,473 | 1,766,823 | ||||||||||||||||||||||||||||||||
| 2/8/2019 | 195,409 | 65,137 | 26.42 | 02/07/2026 | ||||||||||||||||||||||||||||||
| 8/1/2018 | 178,784 | 27.19 | 07/31/2025 | |||||||||||||||||||||||||||||||
| 8/1/2018 | 268,176 | 27.19 | 07/31/2025 | |||||||||||||||||||||||||||||||
Timothy Oliver | 02/25/2022(3) | 58,238 | 1,363,352 | |||||||||||||||||||||||||||||||
| 02/25/2022(4) | 38,826 | 908,917 | ||||||||||||||||||||||||||||||||
| 02/23/2021(5) | 14,744 | 345,157 | ||||||||||||||||||||||||||||||||
| 02/23/2021(6) | 135,554 | 3,173,319 | ||||||||||||||||||||||||||||||||
| 08/01/2020(7) | 230,282 | 115,141 | 20.27 | 07/31/2027 | ||||||||||||||||||||||||||||||
| 08/01/2020(9) | 36,173 | 846,810 | ||||||||||||||||||||||||||||||||
Adrian Button | 02/25/2022(3) | 36,399 | 852,101 | |||||||||||||||||||||||||||||||
| 02/25/2022(4) | 24,266 | 568,067 | ||||||||||||||||||||||||||||||||
| 02/23/2021(5) | 9,215 | 215,723 | ||||||||||||||||||||||||||||||||
| 02/23/2021(6) | 84,722 | 1,983,342 | ||||||||||||||||||||||||||||||||
| 02/12/2020(7) | 138,004 | 69,002 | 38.26 | 02/11/2027 | ||||||||||||||||||||||||||||||
| 02/12/2020(8) | 28,588 | 669,245 | ||||||||||||||||||||||||||||||||
| 2/8/2019 | — | 21,713 | 26.42 | 02/07/2026 | ||||||||||||||||||||||||||||||
| 2/23/2018 | 68,027 | — | 32.57 | 02/22/2025 | ||||||||||||||||||||||||||||||
Don Layden | 02/25/2022(3) | 58,238 | 1,363,352 | |||||||||||||||||||||||||||||||
| 02/25/2022(4) | 38,826 | 908,917 | ||||||||||||||||||||||||||||||||
| 02/23/2021(5) | 9,215 | 215,723 | ||||||||||||||||||||||||||||||||
| 02/23/2021(6) | 28,240 | 661,098 | ||||||||||||||||||||||||||||||||
| 07/01/2020(10) | 123,647 | 61,824 | 16.97 | 06/30/2027 | ||||||||||||||||||||||||||||||
(1) The 2020 unvested options and the 2019 unvested options fully vest on the remaining one-year anniversary of the grant date, with vesting for each caseof the foregoing awards generally subject to continued Company service through the vesting dates. Mr. Oliver’s time-based RSU award vests ratably with 1/3 vesting on each anniversary of the grant date, generally subject to continued Company service through the vesting dates.
(5) Mr. Fernandez forfeited his Fitness Plan award upon separation from Company service in October 2020.
|
The following Table sets forth information concerning all of the outstanding LTI awards held by each named executive as of December 31, 2020.2018 options are fully vested.
| Option Awards | ||||||||||||||||||||||||||||||||||
| Named Executive | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(1) (#) | Option ($) | Option Expiration Date | Number of Stock Units That Have Not Vested (#) | Market Value of Stock Units That Have Not Vested ($)(2) | Equity (#) | Equity Incentive Plan Awards: Market Value of Stock Units That Have Not Vested ($)(2) | |||||||||||||||||||||||||
Michael Hayford | 07/01/2020(3) | 648,202 | 24,352,950 | |||||||||||||||||||||||||||||||
| 02/12/2020(4) | 910,828 | 38.26 | 02/11/2027 | |||||||||||||||||||||||||||||||
| 02/12/2020(5) | 115,720 | 4,347,600 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 325,683 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 02/08/2019(6) | 305,401 | 11,473,916 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 108,560 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 05/01/2018 | 133,317 | 31.15 | 04/30/2025 | |||||||||||||||||||||||||||||||
| 05/01/2018 | 266,634 | 31.15 | 04/30/2025 | |||||||||||||||||||||||||||||||
| 05/01/2018(7) | 53,505 | 2,010,183 | ||||||||||||||||||||||||||||||||
| 05/01/2018 | 133,317 | 31.15 | 04/30/2025 | 194,461 | 7,035,900 | |||||||||||||||||||||||||||||
| 05/01/2018 | 266,634 | 31.15 | 04/30/2025 | |||||||||||||||||||||||||||||||
Owen Sullivan | 07/01/2020(3) | 02/11/2027 | 388,922 | 14,611,800 | ||||||||||||||||||||||||||||||
| 02/12/2020(4) | 546,497 | 38.26 | ||||||||||||||||||||||||||||||||
| 02/12/2020(5) | 02/07/2026 | 69,432 | 2,608,560 | |||||||||||||||||||||||||||||||
| 02/08/2019 | 195,410 | 26.42 | ||||||||||||||||||||||||||||||||
| 02/08/2019(6) | 02/07/2026 | 183,239 | 6,884,289 | |||||||||||||||||||||||||||||||
| 02/08/2019 | 65,136 | 26.42 | 07/31/2025 | |||||||||||||||||||||||||||||||
| 08/01/2018 | 89,392 | 27.19 | 07/31/2025 | |||||||||||||||||||||||||||||||
| 08/01/2018 | 134,088 | 27.19 | ||||||||||||||||||||||||||||||||
| 08/01/2018(7) | 07/31/2025 | 27,584 | 1,036,331 | |||||||||||||||||||||||||||||||
| 08/01/2018 | 89,392 | 27.19 | 07/31/2025 | |||||||||||||||||||||||||||||||
| 08/01/2018 | 134,088 | 27.19 | 02/11/2027 | |||||||||||||||||||||||||||||||
Timothy Oliver | 08/01/2020(4) | 345,423 | 20.27 | 07/31/2027 | ||||||||||||||||||||||||||||||
| 08/01/2020(7) | 108,519 | 4,077,059 | ||||||||||||||||||||||||||||||||
NCR CORPORATION | 20212023 Proxy Statement | 7465
| Option Awards | ||||||||||||||||||||||||||||||||||
| Named Executive | Grant Date | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable(1) (#) | Option ($) | Option Expiration Date | Number of Stock Units That Have Not Vested (#) | Market Value of Stock Units That Have Not Vested ($)(2) | Equity (#) | Equity Incentive Plan Awards: Market Value of Stock Units That Have Not Vested ($)(2) | |||||||||||||||||||||||||
Adrian Button | 07/01/2020(3) | 147,318 | 5,534,738 | |||||||||||||||||||||||||||||||
| 02/12/2020(4) | 207,006 | 38.26 | 02/11/2027 | |||||||||||||||||||||||||||||||
| 02/12/2020(5) | 26,300 | 988,091 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 65,137 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 02/08/2019(6) | 61,081 | 2,294,813 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 21,712 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 05/01/2018(8) | 16,052 | 603,074 | ||||||||||||||||||||||||||||||||
| 02/23/2018 | 34,014 | 32.57 | 02/22/2025 | |||||||||||||||||||||||||||||||
| 02/23/2018(8) | 6,823 | 256,340 | ||||||||||||||||||||||||||||||||
| 02/23/2018 | 34,013 | 32.57 | 02/22/2025 | |||||||||||||||||||||||||||||||
Daniel Campbell | 07/01/2020(3) | 147,318 | 5,534,738 | |||||||||||||||||||||||||||||||
| 02/12/2020(4) | 207,006 | 38.26 | 02/11/2027 | |||||||||||||||||||||||||||||||
| 02/12/2020(5) | 26,300 | 988,091 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 65,137 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 02/08/2019(6) | 61,081 | 2,294,813 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 21,712 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 05/01/2018(8) | 10,701 | 402,037 | ||||||||||||||||||||||||||||||||
| 03/01/2018(8) | 30,331 | 1,139,536 | ||||||||||||||||||||||||||||||||
| 02/23/2018 | 25,510 | 32.57 | 02/22/2025 | |||||||||||||||||||||||||||||||
| 02/23/2018(8) | 5,117 | 192,246 | ||||||||||||||||||||||||||||||||
| 02/23/2018 | 25,510 | 32.57 | 02/22/2025 | |||||||||||||||||||||||||||||||
Andre Fernandez | 02/12/2020(4) | 110,403 | 38.26 | 02/11/2027 | ||||||||||||||||||||||||||||||
| 02/12/2020(5) | 8,945 | 336,064 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 43,424 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 02/08/2019(6) | 61,079 | 2,294,738 | ||||||||||||||||||||||||||||||||
| 02/08/2019 | 43,424 | 26.42 | 02/07/2026 | |||||||||||||||||||||||||||||||
| 09/01/2018 | 114,155 | 28.41 | 08/31/2025 | |||||||||||||||||||||||||||||||
(1) The 2020 unvested options vest 1/3 on each anniversary of the grant date, the 2019 unvested options vest 1/3 on each of the three remaining anniversaries of the grant date, and the 2018 unvested options vest 1/2 on each of the two remaining anniversaries of the grant date, generally subject to continued Company service through the vesting dates.
(2) The market value of outstanding RSU awards was calculated by multiplying the number of shares shown in the tableTable by $37.57,$23.41, which was the closing market price of NCR common stock on December 31, 2020,2022, the last trading day of our fiscal year.
(3) As described in the One-Time Performance Share RSU Grant section above, in lieu of making changes to the performance criteria established in early 2020 for our Annual Incentive Plan and the equity awards made in early 2020 under our annual LTI program, the Committee determined to grant performance share RSU awards on July 1, 2020. These awards have a performance goal tied to the Company’s stock price appreciation. The performance share RSUs were trending above target as of December 31, 2020, and in accordance with SEC rules are reflected herein at the maximum level of achievement.
(4) Premium-priced options were granted toFor all named executives, in 2020. Premium-priced options granted to all named executives on 2/12/2020 have an exercise price that includes a 15% premium over the grant date closing NCR stock price, except for Mr. Oliver whose sign-on award of Premium-priced options granted on 8/1/2020 has an exercise price that includes a 10% premium over the grant date closing NCR stock price.
(5) Performance-based RSUPBRSU award where performance achieved will be determined at the end of the 3-year performance period, and will cliff-vest on the third anniversary of the grant date, generally subject to continued Company service through the vesting date. These PBRSUs were trending below target as of December 31, 2022, and in accordance with SEC rules are reflected herein at the target level of achievement.
(4) For all named executives, rTSR RSU award where performance achieved will be determined based on the performance of the TSR of our common stock relative to the S&P MidCap 400 Value Index over the performance period between February 25, 2022 and December 31, 2024, and will cliff vest on the third anniversary of the grant date, generally subject to continued Company service through the vesting date. The performance-basedThese rTSR RSUs were trending above threshold but below target as of December 31, 2020,2022, and in accordance with SEC rules are reflected herein at the target level of achievement.
(6)(5) Performance-based RSUFor all named executives, PBRSU award where the performance conditions have been satisfiedachieved was determined at 186.2%65.26% of target based on the Company’s stock price appreciation through December 30, 2022. The PBRSU award vested at 50% on December 31, 2022 and the remainder will vest 1/3 on each of the three remaining anniversaries of the grant date,December 31, 2023, generally subject to continued Company service through the vesting dates.date.
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(7)(6) For all named executives other than Mr. Hayford’sLayden, performance-based RSU award where performance achieved will be determined at the end of the 3-year performance period, and Mr. Sullivan’s final one-third of their time-based RSU awards will vestcliff-vest on the next anniversary of the grant date, and Mr. Oliver’s time-based RSU award will vest 1/3 on each anniversary of the grant date, in each case generally subject to continued Company service through the vesting dates.
(8) Performance-vesting RSU where the performance condition has been achieved, and the final one-third will vest on the nextthird anniversary of the grant date, generally subject to continued Company service through the vesting date. These PBRSUs were trending above target as of December 31, 2022, and in accordance with SEC rules are reflected herein at the maximum level of achievement. For Mr. Layden, PBRSU award subject to the performance goal of successfully closing the Cardtronics Acquisition (which goal has been certified as achieved by the Committee), which award will vest 1/3 on each anniversary of the grant date, generally subject to his continued Company service through the vesting dates.
(7) Premium-priced options granted on February 12, 2020 with an exercise price that includes a 15% premium over the grant date closing NCR stock price. Sign-on premium-priced options granted on August 1, 2020 have an exercise price that includes a 10% premium over the grant date closing NCR stock price.
(8) PBRSU award where the performance conditions have been satisfied at 108.7% of target and will vest on the grant date anniversary in 2023 generally subject to continued Company service through such date.
(9)Sign-on time-based RSU award that will fully vest on the grant date anniversary in 2023, generally subject to continued Company service through the vesting dates.
(10) Option award granted in connection with Mr. Layden’s execution of his negotiated consulting services agreement with the Company, that will fully vest on the grant date anniversary in 2023 generally subject to continued Company service through the vesting dates.
|
This Table shows the exercise of stock options and the vesting of RSUs held by theour named executives during 2020. None2022.
| Option Exercises and Stock Vested – 2022 | ||||||||||
| Options | RSUs | |||||||||
| Named Executive | Number of Shares Acquired on Exercise | Value Realized on Exercise(1) | Number of Shares Acquired on Vesting | Value Realized on Vesting(2) | ||||||
Michael Hayford | — | — | 631,504 | $16,937,887 | ||||||
Owen Sullivan | — | — | 379,662 | $10,180,499 | ||||||
Timothy Oliver | — | — | 50,917 | $ 1,541,760 | ||||||
Adrian Button | 21,712 | $351,517 | 140,196 | $ 3,709,610 | ||||||
Don Layden | — | — | 23,336 | $ 781,693 | ||||||
(1) The value realized is the fair market value on the exercise date, net of the named executives exercised any stock options during 2020.exercise price.
| Option Exercises and Stock Vested - 2020 | ||||||||||
| Options | RSUs | |||||||||
| Named Executive | Number of Shared Acquired on Exercise | Value Realized on Exercise | Number of Shares Acquired on Vesting | Value Realized on Vesting(1) | ||||||
Michael Hayford | — | — | 206,204 | $6,033,767 | ||||||
Owen Sullivan | — | — | 119,204 | $3,550,157 | ||||||
Timothy Oliver | — | — | 0 | $ 0 | ||||||
Adrian Button | — | — | 64,349 | $1,718,108 | ||||||
Daniel Campbell | — | — | 76,688 | $2,131,128 | ||||||
Andre Fernandez | — | — | 131,477 | $3,512,165 | ||||||
(1)(2) The value realized is the fair market value on the vesting date.
The compensation and benefits that would have been provided to our named executives (other than Mr. Fernandez) in the event of various types of employment terminations on December 31, 20202022 are described below and shown in the Tables below. The amounts payable to Mr. Fernandez in connection with his separation from service are also described below. For more on these items, see the Severance Benefits – Standard Severance and Change in Control (CIC) Severance Benefits and Severance Benefits sections section in our Executive Compensation – Compensation Discussion & Analysis section and the Agreements with Our Named Executives section above.
The information provided below reflects the payments that would have been required in the event of various types of employment terminations on December 31, 2022 and do not reflect the employment agreement
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amendments entered into with each of Messrs. Hayford, Sullivan, Oliver and Layden in February 2023. Such amendments are described in the Agreements with Our Named Executives section of this proxy statement and on the current report on Form 8-K filed on February 17, 2023 (see https://www.sec.gov/ix?doc=/Archives/edgar/data/70866/000119312523042007/d455681d8k.htm).
Termination Connected with Change in Control |
Change in Control Severance Plan
Our Change in Control Severance Plan provides separation benefits to our named executives only if both a Change in Control occurs, and employment ends in a qualifying termination, except for Mr. Fernandez who did not participate in this plan after his separation from Company service in October 2020.termination. Amounts payable are based on executive “Tier” level, and payment is conditioned on the executive signing a restrictive covenant and release agreement with confidentiality and eighteen-month non-competition and non-solicitation provisions. Under this plan, if the Company terminates the employment of an eligible named executive for reasons other than “cause,” death or disability, or if the executive resigns for “good reason” within two years after a Change in Control (or within six months before a Change in
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Control, if the executive can show that the termination occurred in connection with a Change in Control), then the Company or its successor must provide these benefits:
| ● | A lump sum equal to 300 percent of annual |
| ● | A lump sum equal to a pro rata portion of the current year target bonus under the Annual Incentive Plan (prorated based on |
| ● | Three years of medical, dental and life insurance benefits for the executive and dependents at the level in effect at termination for Tier 1 (Mr. Hayford, Mr. Sullivan, Mr. Oliver, and Mr. |
| ● | One year of outplacement assistance. |
“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.
“Good reason” generally means: (i) reduction in duties or reporting requirements; (ii) reduction in base salary; (iii) failure to pay incentive compensation when due; (iv) reduction in target or maximum incentive opportunities; (v) failure to continue the equity award or other employee benefit programs; (vi) relocation of an executive’s office over forty miles; or (vii) successor’s failure to assume the Change in Control Severance Plan.
“Change in Control” generally means any of the following: (i) third party acquisition of 30% or more of our stock; (ii) a change in our Board members such that the current incumbents and approved successors no longer make up a majority; (iii) a reorganization, merger, consolidation or sale or other disposition of substantially all of our assets in which any of the following is true – the stockholders of NCR immediately before the change in control do not hold at least 50% of the combined enterprise, there is a 30%-or-more stockholder of the combined enterprise (other than as a result of conversion of the stockholder’s pre-combination interest in the Company), or our Board members (immediately before the combination) do not make up a majority of the board of the combined enterprise; or (iv) stockholder approval of a complete liquidation.
Treatment of Equity – In the Event of a Change In Control |
The general rules for treatment for outstanding equity awards granted through 20202022 in the event of a Change in Control are described below. Under new hire employment agreements, or under a
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pre-employment consulting agreement (for Mr. Layden only), certain named executives have varied negotiated terms for sign-on or other equity awards, as described in the Agreements with Our Named Executives section.
Stock Options and Time-Based RSUs. Under our Stock Plan and award agreements, the timing of any accelerated vesting for unvested stock options (including Premium-priced options) and time-based RSUs awarded to our named executives depends upon whether the acquirer assumes the awards in the change in control. If the acquirer does not assume the awards, they immediately vest and options become exercisable. If the acquirer does assume the awards, they vest and become exercisable if the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that 24 months.such 24-month period. Such options generally remain exercisable until the earlier of the first anniversary of employment termination or the option expiration date.
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Performance-Based RSUs.RSUs (PBRSUs). Under our Stock Plan and award agreements, the timing for vesting of unvested performance-based RSUsPBRSUs depends upon whether the acquirer assumes the awards in the change in control.
If the acquirer does not assumeis a public company, the awards they vest immediately, based on:
|
|
If the acquirer is a private company and does assume these awards, they vest at the end of the original vesting period based on:
| ● | target performance, if less than one year of the performance period is complete; or |
| ● | actual results, if at least one year of the performance period is complete. |
For 2022 PBRSUs, if the acquirer is not a public company and does not assume the awards, they vest immediately, based on:
| ● | target performance, if less than one year of the performance period is complete; or |
| ● | actual results, if at least one year of the performance period is complete. |
If the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that 24-month period, performance-based RSUPBRSU awards will vest immediately based on:
| ● | target performance, if less than one year of the performance period is complete; or |
| ● | actual results, if at least one year of the performance period is complete. |
Performance-VestingPerformance Share RSUs. Under our Stock Plan and award agreements, the timing for vesting of unvested performance-vestingPBRSUs depends upon whether the acquirer assumes the awards in the change in control. If the acquirer does not assume the awards, they vest immediately, based on:
| ● | the target award number multiplied by the Change in Control Multiplier if the performance period is not complete; or |
| ● | actual results, if the performance period is complete. |
If the acquirer does assume these awards, they vest at the end of the original vesting period based on:
| ● | the target award number multiplied by the Change in Control Multiplier if the performance period is not complete; and |
| ● | actual results, if the performance period is complete. |
If the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control
NCR CORPORATION | 2023 Proxy Statement | 68
Severance Plan or other applicable severance plan and resigns for good reason within that 24-month period, performance share RSU awards will vest immediately based on:
| ● | the target award number multiplied by the Change in Control Multiplier if the performance period is not complete; or |
| ● | actual results, if the performance period is complete. |
rTSR RSUs. Under our Stock Plan and award agreements, the timing for vesting of unvested rTSR RSUs depends upon whether the acquirer assumes the awards in the change in control. If the acquirer does not assume the awards, they vest immediately, based on target performance. on:
| ● | the target award adjusted for rTSR performance as compared to the comparator group as if the performance period ended on the date of the Change in Control, or |
| ● | actual results, if the performance period is complete. |
If the acquirer does assume these awards, they vest at the end of the original vesting period based on actual performance. on:
| ● | the target award adjusted for rTSR performance as compared to the comparator group as if the performance period ended on the date of the Change in Control, or |
| ● | actual results, if the performance period is complete. |
If the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that 24-month period, performance-basedrTSR RSU awards will vest immediately based on target performance.
Performance Share RSUs. Under our Stock Plan and award agreements, the timing for vesting of unvested performance share RSUs depends upon whether the acquirer assumes the awards in the change in control. If the acquirer does not assume the awards, they vest immediately, based on:
| ● | the target award |
| ● | actual results, if the performance period is complete. |
If the acquirer does assume these awards, they vest at the end of the original vesting period based on:
|
|
If the Company terminates the named executive’s employment within 24 months of the transaction for reasons other than cause or disability, or if the named executive is subject to our Change in Control Severance Plan or other applicable severance plan and resigns for good reason within that 24-month period, performance share RSU awards will vest immediately based on:
|
|
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Termination Not Connected with Change in Control |
Severance Plan
Our named executives are eligible forparticipate in our Executive Severance Plan. Under this plan, if a named executive’s employment is terminated by the Company without cause (other than death or disability as defined in the plan), we provide the executive a lump sum equal to one and a half times (1.5x) base salary plus target bonus (as defined in the plan) for Mr. Hayford, Mr. Sullivan, Mr. Oliver and Mr. Fernandez,Layden, or one times (1x) base salary plus target bonus for Mr. Button and Mr. Campbell.Button. Also, the named executives will receive up to eighteen months of “COBRA” medical, dental and vision coverage, and outplacement services under the Company’s outplacement program in effect on the termination date. Under their negotiated new hire employment agreements, in the event of a qualifying termination, certain named executives receive additional payments or benefits described in the Agreements with Our Named Executives section.
Treatment of Equity – Termination Not Connected with a Change In Control |
Under our Stock Plan, the treatment of outstanding equity awards when employment ends in a termination not connected with a Change In Control of the Company differs based on the form of equity award, the grant agreement in use at a given time and the reason for the termination, as summarized below. Under negotiated new hire employment agreements, or under a pre-employment consulting agreement (for Mr. Layden only), certain named executives have varied terms for sign-on or other specific equity awards, as described in the Agreements with Our Named Executives section.
NCR CORPORATION | 2023 Proxy Statement | 69
Performance-Based RSUs and Performance-Vesting RSUs.(PBRSUs). Unless determined otherwise by the Committee, unvested performance-based RSUs and unvested performance-vesting RSUsPBRSUs vest pro rata at a specified date (depending upon year of grant) if employment ends because of death, disability, retirement or Company termination without cause. For this purpose, “retirement” means termination of Company service after reaching age 62 with 10 years of continuous service. The pro rata portion is determined based on the length of service during the applicable vesting period and in certain cases on our achievement of performance objectives. An exception applies for (i) performance-based RSU awards granted in 2019, 2020, and 20202021 which will become 100% vested upon death or disability, and (ii) performance-based RSUPBRSU awards granted in 2020 and 2021 which, upon approval by the Committee in its sole discretion (or by the CEO, for awards to named executives other than Mr. Hayford), will continue to vest on their original vesting dates following a termination due to “Mutually Agreed Retirement” (defined to mean at least age 62 with two years of continuous Company service) subject to continued compliance with the restrictive covenants and other terms of the applicable award agreement. All unvested performance-basedPBRSUs are forfeited if a named executive resigns or is terminated for cause.
Performance Share RSUs and performance-vestingrTSR RSUs. Unless determined otherwise by the Committee, unvested performance share RSUs and rTSR RSUs generally vest pro rata and become exercisable if employment ends because of retirement or Company termination without cause. For this purpose, “retirement” has the meaning noted above for PBRSUs. The pro rata portion is determined based on the length of service during the applicable vesting period. In the event of death or disability, unvested performance share RSUs and rTSR RSUs become 100% vested. Further, upon approval by the Committee in its sole discretion (or by the CEO, for awards to named executives other than Mr. Hayford), unvested performance share RSUs and rTSR RSUs will continue to vest on their original vesting dates following a termination due to Mutually Agreed Retirement (as defined above for PBRSUs) subject to continued compliance with the restrictive covenants and other terms of the applicable award agreement. All unvested performance share RSUs and rTSR RSUs are forfeited if a named executive resigns or is terminated for cause.
Time-Based RSUs. Unvested time-based RSUs held by our named executives generally vest pro rata if employment ends because of death, disability, retirement or Company termination without cause. For this purpose, “retirement” has the meaning noted above for performance-based RSUs.PBRSUs. An exception applies for the time-based RSUs granted to Mr. Oliver in 2020, which (i) will become 100% vested upon death or disability, and (ii) upon approval by the Committee in its sole discretion or by the CEO, will continue to vest on their original vesting dates following a termination due to “Mutually Agreed Retirement” (as defined above for performance-based RSUs)PBRSUs) subject to continued compliance with the restrictive covenants and other terms of the applicable award agreement. The pro rata portion is determined based on the length of service during the applicable vesting period. All unvested time-based RSUs are immediately forfeited if a named executive resigns or is terminated for cause.
Stock Options. Unvested options generally vest pro rata and become exercisable if employment ends because of death, disability, retirement or Company termination without cause. For this purpose, “retirement” has the meaning noted above for performance-based RSUs.PBRSUs. The pro rata portion is determined based on the length of service during the applicable vesting period. An exception applies for (i) options granted in 2019 and 2020, which will become 100% vested upon death or disability, and (ii) and Premium-Priced Options granted in 2020 which, upon approval by the Committee in its sole discretion (or by the CEO, for
NCR CORPORATION | 2021 Proxy Statement | 79
awards to named executives other than Mr. Hayford), will continue to vest on their original vesting dates following a termination due to “Mutually Agreed Retirement” (as defined above for performance-based RSUs)PBRSUs) subject to continued compliance with the restrictive covenants and other terms of the applicable award agreement. Vested options may be exercised until the earlier of the first anniversary of the termination event, or the expiration date. All unvested options are forfeited if a named executive resigns or is terminated for cause.
Performance Share RSUs. Unless determined otherwise by the Committee, unvested performance share RSUs generally vest pro rata and become exercisable if employment ends because of retirement or Company termination without cause. For this purpose, “retirement” has the meaning noted above for performance-based RSUs. The pro rata portion is determined based on the length of service during the applicable vesting period. In the event of death or disability, unvested performance share RSUs become 100% vested. Further, upon approval by the Committee in its sole discretion (or by the CEO, for awards to named executives other than Mr. Hayford), unvested performance share RSUs will continue to vest on their original vesting dates following a termination due to Mutually Agreed Retirement (as defined above for performance-based RSUs) subject to continued compliance with the restrictive covenants and other terms of the applicable award agreement. All unvested performance share RSUs are forfeited if a named executive resigns or is terminated for cause.
All Equity Awards. In addition, all unvested equity awards are generally forfeited and deemed canceled, and the fair market value of previously vested awards is subject to a repayment obligation, if during employment or the year after employment a named executive competes with the Company, induces or attempts to induce any of our employees to resign or solicits business from customers all as set forth more specifically in applicable equity award agreements. Equity awards are also generally forfeited if a named executive fails to keep the terms of the award agreement confidential, or engages, as determined by the Committee, in misconduct in connection with employment.
Separation Agreement with Our Former Chief Financial Officer
Mr. Fernandez: Mr. Fernandez separated from service with the Company effective October 1, 2020. Mr. Fernandez and the Company agreed that the separation qualified for severance under our Executive Severance Plan and for prorated and other vesting of certain equity awards in accordance with the terms of his equity award agreements and his employment agreement with the Company. His separation agreement includes restrictive covenants and a general release, and provides for lump sum cash severance in the gross amount of $2,449,375 substantially in accordance with our Executive Severance Plan. Mr. Fernandez’s separation agreement further provides, among other things, that his unvested equity awards as of his separation date generally vest pro rata and become payable in accordance with his equity agreements, except that in accordance with his employment agreement with the Company described in the Employment Agreements with Former Executives section above: (i) the entire amount of his 70,398 unvested 2018 sign-on time-based RSUs and 85,617 unvested sign-on options would fully vest on his separation date, with such options remaining exercisable for one year following separation; (ii) 43,424 of his unvested 2019 option shares, 110,403 of his unvested 2020 option shares and 61,079 of his 2019 unvested performance-based RSUs (the performance goals for which had already been achieved) scheduled to vest in 2021 would each vest on their original 2021 vesting dates subject to certain limited exceptions, with such options remaining exercisable for one year following vesting, and the remaining portions of such unvested awards (86,849 of his 2019 option shares, 220,807 of his 2020 option shares and 61,081 of his 2019 performance-based RSUs, respectively) were forfeited; and (iii) with respect to his 2020 performance-based RSUs, subject to such actual performance results as may be certified by the Committee following completion of the three-year performance period, a pro rata portion of such award calculated based on the number of days actively worked during the performance period, amounting to 8,945 shares, would vest on the original 2023 vesting date (subject to adjustment for performance as applicable), and the remaining 33,135 RSUs were forfeited. Mr. Fernandez also received certain welfare benefit plan continuation (valued at approximately $38,259) and executive outplacement services (valued at $10,000) as provided under the terms of our Executive Severance Plan. His separation agreement further provided for reimbursement for a maximum of $35,000 in relocation and related expenses together with a gross-up for taxes on such amount, with actual amounts shown in our Perquisites - 2020 Table. For more about the treatment of Mr. Fernandez’s unvested equity awards upon his separation, see the Employment Agreement with Our Former Chief Financial Officer section above.
NCR CORPORATION | 20212023 Proxy Statement | 8070
Potential Payments Upon Termination or Change in Control Table |
This Table shows the estimated amounts each named executive would have received upon the occurrence of the events listed in the tableTable as of December 31, 2020 based on unreduced base salaries, except that the actual amounts for Mr. Fernandez, who separated from Company service in October 2020, are described in the Employment Agreement with Our Former Chief Financial Officer section and the Separation Agreement with Our Former Chief Financial Officer section above.2022.
| Potential Payments Upon Termination or Change in Control ($) | Potential Payments Upon Termination or Change in Control ($) | Potential Payments Upon Termination or Change in Control ($) | ||||||||||||||||||||||||||||||||||||||
| Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Michael Hayford | ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 7,500,000 | 3,750,000 | — | — | — | 7,500,000 | 3,750,000 | — | — | — | ||||||||||||||||||||||||||||||
Pro rata Bonus(3) | 1,500,000 | — | — | — | — | 1,500,000 | — | 1,500,000 | — | — | ||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6) | 36,207,224 | 14,546,056 | 33,842,192 | — | — | 13,454,921 | 7,150,507 | 13,454,921 | — | — | ||||||||||||||||||||||||||||||
Welfare Benefits | 48,536 | 24,191 | — | — | — | 57,165 | 28,505 | — | — | — | ||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — | 10,000 | 10,000 | — | — | — | ||||||||||||||||||||||||||||||
Total Benefits Payable upon Termination | 45,265,760 | 18,330,247 | 33,842,192 | — | — | 22,522,086 | 10,939,012 | 14,954,921 | — | — | ||||||||||||||||||||||||||||||
| Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Owen Sullivan | ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 5,437,500 | 2,718,750 | — | — | — | 6,187,500 | 3,093,750 | — | — | — | ||||||||||||||||||||||||||||||
Pro rata Bonus(3) | 1,087,500 | — | — | — | — | 1,237,500 | — | 1,237,500 | — | — | ||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6) | 22,333,624 | 9,336,924 | 19,899,977 | — | — | 8,172,571 | 4,346,248 | 8,172,571 | — | — | ||||||||||||||||||||||||||||||
Welfare Benefits | 55,253 | 26,504 | — | — | — | 60,960 | 29,203 | — | — | — | ||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — | 10,000 | 10,000 | — | — | — | ||||||||||||||||||||||||||||||
Total Benefits Payable upon Termination | 28,923,877 | 12,092,178 | 19,899,977 | — | — | 15,668,531 | 7,479,201 | 9,410,071 | — | — | ||||||||||||||||||||||||||||||
| Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Timothy Oliver | ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 4,687,500 | 2,343,750 | — | — | — | 4,687,500 | 2,343,750 | — | — | — | ||||||||||||||||||||||||||||||
Pro rata Bonus(3) | 937,500 | — | — | — | — | 937,500 | — | 937,500 | — | — | ||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6) | 10,052,877 | 10,052,877 | 10,052,877 | — | — | 5,412,438 | 2,233,975 | 5,412,438 | — | — | ||||||||||||||||||||||||||||||
Welfare Benefits | 46,688 | 34,532 | — | — | — | 81,060 | 39,563 | — | — | — | ||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — | 10,000 | 10,000 | — | — | — | ||||||||||||||||||||||||||||||
Total Benefits Payable upon Termination | 15,734,565 | 12,441,159 | 10,052,877 | — | — | 11,128,498 | 4,627,288 | 6,349,938 | — | — | ||||||||||||||||||||||||||||||
NCR CORPORATION | 20212023 Proxy Statement | 8171
| Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Adrian Button | ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 2,362,500 | 1,181,250 | — | — | — | 2,700,000 | 1,350,000 | — | — | — | ||||||||||||||||||||||||||||||
Pro rata Bonus(3) | 656,250 | — | — | — | — | 750,000 | — | 750,000 | — | — | ||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6) | 7,806,034 | 2,792,473 | 7,473,452 | — | — | 3,296,807 | 1,723,266 | 3,296,807 | — | — | ||||||||||||||||||||||||||||||
Welfare Benefits | 52,096 | 38,259 | — | — | — | 56,679 | 41,581 | — | — | — | ||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — | 10,000 | 10,000 | — | — | — | ||||||||||||||||||||||||||||||
Total Benefits Payable upon Termination | 10,886,880 | 4,021,982 | 7,473,452 | — | — | 6,813,486 | 3,124,847 | 4,046,807 | — | — | ||||||||||||||||||||||||||||||
| Named Executive | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | Termination Upon Change in Control(1) | Involuntary Termination Without Cause(2) | Death or Disability | Retirement | Voluntary Resignation or Termination for Cause | ||||||||||||||||||||||||||||||
Daniel Campbell | ||||||||||||||||||||||||||||||||||||||||
Don Layden | ||||||||||||||||||||||||||||||||||||||||
Cash Severance | 2,415,000 | 1,207,500 | — | — | — | 4,500,000 | 2,250,000 | — | — | — | ||||||||||||||||||||||||||||||
Pro rata Bonus(3) | 632,500 | — | — | — | — | 900,000 | — | 900,000 | — | — | ||||||||||||||||||||||||||||||
Equity Awards(4),(5),(6) | 8,637,919 | 3,539,980 | 8,220,959 | — | — | 3,547,236 | 1,388,256 | 3,547,236 | — | — | ||||||||||||||||||||||||||||||
Welfare Benefits | 47,230 | 34,532 | — | — | — | 60,264 | 29,203 | — | — | — | ||||||||||||||||||||||||||||||
Outplacement | 10,000 | 10,000 | — | — | — | 10,000 | 10,000 | — | — | — | ||||||||||||||||||||||||||||||
Total Benefits Payable upon Termination | 11,742,649 | 4,792,012 | 8,220,959 | — | — | 9,017,500 | 3,677,459 | 4,447,236 | — | — | ||||||||||||||||||||||||||||||
(1)This column shows payments based on occurrence of a “double trigger” event (a qualifying change in control and a qualifying termination), together with assumption of applicable equity awards in the change in control and vesting based on actual performance. For performance-based RSUPBRSU awards, this column reflects that performance was achieved at 0%108.7% for the 20182020 awards, 186.2%and at 100% for the 2019 awards,Mr. Layden’s 2021 PBRSU award, and assuming 100% for the 20202021 and 2022 awards for all other named executives, for which the performance periods will not be completed until December 31, 2023 and December 31, 2024, respectively. For the 2021 PBRSUs, performance is reflected at 65.26%. For the 2022 rTSR RSUs, performance is reflected at 100%, as the performance period will not be completed until 12/31/2022. For the 2018 performance-vesting RSU awards, performance is reflected at 100%. For the 2020 performance share RSUs, performance is reflected at 200%.December 31, 2024.
(2)This column shows the amount the executive would receive upon a termination without cause or for good reason under the terms of our Executive Severance Plan and an applicable agreement with the Company.
(3)This row shows payments based on the 20202022 Annual Incentive Plan target bonus in the event of a Termination Upon Change in Control, and actual 2020 Annual Incentive Plan bonus ($0 for each executive) for termination as a result of death, disability or retirement.upon Death and Disability.
(4)Equity valuations reflect a closing price of NCR common stock on December 31, 20202022 of $37.57.$23.41.
(5)The payments in this row include only unvested awards for which payment would accelerate in connection with the applicable termination scenario. For Mr. Hayford and Mr. Sullivan, whoeach of whom had reached age 62 with at least two years of service by December 31, 2020,2022, presumes that termination is not a mutually agreed retirement approved by the Committee with respect to Mr. Hayford, or by the Committee or the CEO.CEO with respect to Mr. Sullivan.For Mr. Layden, pursuant to his option award agreement, includes the value associated with continued vesting in his 2020 option award for one year following his involuntary termination without cause (which would result in vesting of the third tranche of such award on July 1, 2023).
(6)The payments in this row reflect accelerated vesting of any applicable performance-based RSUPBRSU awards, based on actual performance. Performance was achieved at 0%108.7% for the 2018 performance-based RSU awards and 186.2% for the 2019 performance-based RSU2020 PBRSU awards. For the 2020 performance-based RSU2021 and 2022 PBRSU awards, performance is reflected at 100%. Performance was achieved at 100% for the 2018 performance-vesting RSU awards. For the 20202021 performance share RSUs, performance is reflected at 65.26%. For the 2022 rTSR RSUs, performance is reflected at 100%., as the performance period will not be completed until December 31, 2024.
NCR CORPORATION | 2023 Proxy Statement | 72
Equity Compensation Plan Information Table |
This Table shows information, as of December 31, 2020,2022, regarding shares of NCR Common Stockcommon stock authorized for issuance under NCR equity compensation plans, including our Management Stock Plan (in effect through April 25, 2006), our NCR Corporation 2011 Amended and Restated Stock Incentive Plan (in effect through April 24, 2013, the “2011 Stock Incentive Plan”), our NCR Corporation 2013 Stock Incentive Plan (in effect through April 30, 2017, the “2013 Stock Plan”), and our NCR Corporation 2017 Stock Incentive Plan, as amended, which is our most recently adopted equity compensation plan (the “2017 Stock Plan”). As of December 31, 2020, no, and the equity securities were authorized for issuance under equity compensation plans not approved by stockholders.incentive plan that we assumed in the Cardtronics Acquisition as noted below.
| Equity Compensation Plan Information - 2022 | ||||||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities shown in column a) | |||||||||
Equity compensation plans | (a) | (b) | (c) | |||||||||
- Management Stock Plan(2) | 2,178 | (3) | — | — | ||||||||
- 2011 Stock Plan(4) | 4,282 | (5) | — | — | ||||||||
- 2013 Stock Plan(6) | 7,438 | (7) | — | — | ||||||||
- 2017 Stock Plan(8) | 16,741,747 | (9) | $33.01 | 7,783,081 | ||||||||
Equity compensation plans not | — | — | — | |||||||||
- Cardtronics Stock Plan(10) | 1,231,811(11) | $27.97 | 1,155,618(12) | |||||||||
- Moon, Inc. 2014 Stock Incentive Plan(13) | 47,474 | (13) | $1.90 | — | ||||||||
Total | 18,034,930 | $ 32.81 | 8,938,699 | (14) | ||||||||
NCR CORPORATION | 2021 Proxy Statement | 82
| Equity Compensation Plan Information - 2020 | |||||||||||||||
| Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants and rights | Weighted average exercise price of outstanding options, warrants and rights(1) | Number of securities remaining available for future issuance under equity compensation plans (excluding securities shown in column a) | ||||||||||||
Equity compensation plans approved by stockholders | (a) | (b) | (c) | ||||||||||||
Management Stock Plan(2) | 3,628 | (3) | — | — | |||||||||||
2011 Stock Plan(4) | 79,731 | (5) | $ | 21.10 | — | ||||||||||
2013 Stock Plan(6) | 19,255 | (7) | — | — | |||||||||||
2017 Stock Plan(8) | 16,251,515 | (9) | $ | 32.91 | 13,890,849 | ||||||||||
Equity compensation plans not approved by stockholders | — | — | — | ||||||||||||
Total | 16,354,129 | $ | 32.82 | 13,890,849 | |||||||||||
(1) The weighted average exercise price does not take into account outstanding restricted stock unit (RSU) awards, which have no exercise price.
(2) We adopted the NCR Management Stock Plan with stockholder approval effective January 1, 1997. We terminated the NCR Management Stock Plan as of April 26, 2006, upon stockholder approval of the 2006 Stock Incentive Plan, which we subsequently amended and restated as the 2011 Stock Incentive Plan. However, termination of the NCR Management Stock Plan did not affect awards previously granted and outstanding under its terms.
(3) Outstanding awards consist of 3,6282,178 restricted stock unit awards.
(4) We adopted the 2006 Stock Incentive Plan with stockholder approval effective April 26, 2006. On April 27, 2011, we amended and restated the 2006 Stock Plan as the 2011 Stock Plan. We froze the 2011 Stock Plan effective April 24, 2013, when stockholders approved our 2013 Stock Plan. Previously granted 2011 Stock Plan Awards remain outstanding under their terms.
(5) Outstanding awards consist of 73,192 nonqualified stock options and 6,5394,282 RSU awards payable at 100%.
(6) Stockholders approved our 2013 Stock Plan on April 24, 2013. We froze the 2013 Stock Plan on May 1, 2017, when our 2017 Stock Plan became effective. Previously granted 2013 Stock Plan awards remain outstanding under their terms.
(7) Outstanding awards consist of 19,2557,438 RSU awards payable at 100%.
(8) Stockholders approved our 2017 Stock Plan on April 26, 2017, and it became effective on May 1, 2017.
(9) Outstanding awards consist of 9,724,6018,616,450 nonqualified stock options and 6,526,914 RSU8,125,297 RSUs. Earned performance-based awards (with earned performance-based awardsare shown at the actual level of performance attained and unearned performance awards are shown at target).target.
(10) In connection with the Cardtronics Acquisition effective June 21, 2021, we assumed the Cardtronics 2007 Stock Plan (the “Cardtronics Stock Plan”) which had been approved by the stockholders of Cardtronics plc but has not been approved by NCR stockholders.
(11) Outstanding awards consist of (i) nonqualified stock options and time-based RSUs awarded under the Cardtronics Stock Plan before the Cardtronics Acquisition, which were converted to NCR equity awards of the same type effective June 21, 2021 in connection with such acquisition, and (ii) time-based and PBRSUs awarded under the NCR Corporation 2021 Equity Retention Program to certain selected former Cardtronics employees who became employed by NCR in the Cardtronics Acquisition. Earned performance-based awards are shown at the actual level of performance attained and unearned performance awards are shown at target.
(12) Shares available for issuance under the Cardtronics Stock Plan, which we assumed in connection with the Cardtronics Acquisition and transferred from the Cardtronics Plan to our 2017 Stock Plan for future issuance thereunder to employees newly hired by NCR or an affiliate on and after June 21, 2021.
(13) Outstanding awards consist of nonqualified stock options and incentive stock options awarded under the Moon Inc., 2014 Stock Incentive Plan before the Moon Inc. Acquisition, which were converted to NCR equity awards of the same type effective January 5, 2022 in connection with such acquisition.
(14) As of December 31, 2022, the outstanding shares of 8.9 million available under the 2017 Stock Plan is not reduced by the number of shares for our outstanding PBRSUs calculated at the maximum performance payout. As of February 28, 2023, the outstanding shares available under the 2017 Plan are 3.5 million shares after accounting for the shares awarded in 2023 and reducing the number of shares for our outstanding PBRSUs calculated at the maximum performance payout.
NCR CORPORATION | 2023 Proxy Statement | 73
Pay vs. Performance |
Year | Summary Compensation Table Total for PEO (1&2) | Compensation Actually Paid to PEO (1&3) | Average Summary Compensation Table Total for Non- PEO NEOs (1&2) | Average Compensation Actually Paid to Non-PEO NEOs (1&3) | Value of Initial Fixed $100 | Net Income (millions) (5) | Adjusted EBITDA (6) | |||||||||
Total Shareholder Return (4) | Peer Group Total Shareholder Return (4) | |||||||||||||||
(a) | (b) | (c) | (d) | (e) | (f) | (g) | (h) | (i) | ||||||||
2022 | $12,743,595 | ($23,626,321) | $5,545,639 | ($5,623,383) | $66.58 | $98.98 | $59.00 | $1,370 | ||||||||
2021 | $14,840,501 | $25,600,030 | $6,428,128 | $9,513,796 | $114.33 | $143.24 | $98.00 | $1,244 | ||||||||
2020 | $28,325,266 | $48,362,013 | $8,754,275 | $13,908,923 | $106.85 | $122.10 | ($78) | $896 | ||||||||
Year | PEO | Non-PEO NEOs | ||
2022 | Michael Hayford | Owen Sullivan, Tim Oliver, Adrian Button and Don Layden | ||
2021 | Michael Hayford | Owen Sullivan, Tim Oliver, Adrian Button and Don Layden | ||
2020 | Michael Hayford | Owen Sullivan, Tim Oliver, Adrian Button, Daniel Campbell and Andre Fernandez | ||
PEO | NEO Average | |||||||||||
| 2022 | 2021 | 2020 | 2022 | 2021 | 2020 | |||||||
Summary Compensation Table Total | $12,743,595 | $14,840,501 | $28,325,266 | $5,545,639 | $6,428,128 | $8,754,275 | ||||||
Less: Reported Fair Value of Equity Awards (a) | $11,597,692 | $11,331,818 | $18,045,960 | $4,784,049 | $4,307,868 | $5,406,057 | ||||||
Add: Year-End Fair Value of Equity Awards Granted in the Year(b) | $4,622,248 | $13,720,895 | $36,557,846 | $1,906,677 | $5,200,338 | $10,661,027 | ||||||
Add: Change in Fair Value of Equity Awards Granted in Prior Years that Vested in the Year (b) | ($16,707,235) | $1,494,274 | ($2,887,754) | ($3,980,644) | $530,113 | ($902,923) | ||||||
Add: Change in Fair Value of Outstanding and Unvested Equity Awards (b) | ($12,687,237) | $6,876,178 | $4,412,615 | ($4,311,006) | $1,663,085 | $802,601 | ||||||
Compensation Actually Paid | ($23,626,321) | $25,600,030 | $48,362,013 | ($5,623,383) | $9,513,796 | $13,908,923 | ||||||
| (a) | The amounts reflect the aggregate grant-date fair value reported in the “Stock Awards” and “Option Awards” columns in the Summary Compensation Table fo r the applicable year. |
| (b) | Fair values of unvested and outstanding equity awards to our named executives were remeasured as of the end of each fiscal year, and as of each vesting date, during the years displayed in the table above. Fair values as of each measurement date were determined using valuation assumptions and methodologies that are generally consistent with those used to estimate fair value at grant under US GAAP, including the Black-Scholes formula for options granted at the money, and Monte Carlo simulation for premium-priced options and performance share RSUs. See “Stock Compensation Plans” in the Notes to Consolidated Financial Statements contained in the Company’s Annual Report on Form 10-K for the corresponding fiscal year, where we explain assumptions made in valuing equity awards at grant. |
● | PEO and other named executives pay is strongly aligned with TSR performance. PEO and other named executives CAP has moved with our TSR performance over time |
● | The 2021 increase in TSR combined with the decrease in PEO and other named executives pay is due to the special one-off andoff-cycle incentive grants in 2020, which the Company has committed to discontinuing |
● | We do not necessarily expect net income and Adjusted EBITDA to move with TSR every year. This is because ending TSR reflects investors’ assessment of our valuation taking forward-looking factors into account, while income metrics measure performance over a 1-year, backward-looking time frame as business conditions may be changing |
● | Adjusted EBITDA |
● | Recurring Revenue |
● | rTSR |
Rules adopted under the Dodd-Frank Wall Street Reform and Consumer Protection Act require us to disclose the ratio of our CEO’s annual total compensation to the annual total compensation of the “median compensated” employee of all our employees other than the CEO (the “Median Compensated Employee”). The 20202022 annual total compensation of the Median Compensated Employee was $50,196.$42,961. Mr. Hayford’s 20202022 annual total compensation was $28,325,266.$12,743,595. The ratio of these amounts was 1:564.297.
This pay ratio is a reasonable estimate calculated in a manner consistent with SEC rules based on our payroll records and the methodology described below. Because SEC rules for identifying the Median Compensated Employee and calculating the pay ratio based on his or her annual total compensation allow companies to adopt a variety of methodologies, to apply certain exclusions and to make reasonable estimates and assumptions that reflect their compensation practices, the pay ratio reported by other companies may not be comparable to the pay ratio reported above, as other companies may have different employment and compensation practices and may utilize different methodologies, exclusions, estimates and assumptions in calculating their own pay ratios.
As permitted under SEC rules, given that there have been no changes in our employee population or employee compensation arrangements that we reasonably believe would result in a significant change to our pay ratio disclosure for 2020,2021, we have used the same Median Compensated Employee that we identified last year in calculatingcalculation our 20192021 CEO pay ratio. To identify this Median CompensatedCompensation Employee last year, we used Target Total Cash, which includes base salary or base wages, target cash bonus incentives and
NCR CORPORATION | 2021 Proxy Statement | 83
other cash-based incentive allowances, such as housing, automobile, meal and other types of allowances, as reported in our payroll data, to determine our Median Compensated Employee as of October 1, 2019.December 31, 2021 (which date was selected in order to include continuing employees from all acquisitions). For hourly employees, we calculated base wages based on a reasonable estimate of hours worked during 20192021 and the relevant employee’s hourly wage rate as in effect on October 1, 2019.December 31, 2021. For salaried employees, we calculated base salary using the relevant employee’s annual salary level as in effect on October 1, 2019.December 31, 2021. We annualized Target Total Cash for all permanent employees who did not work for all of 2019.2021.
As of October 1, 2019,December 31, 2021, NCR employed approximately 9,75411,491 US employees and 22,313 26,585 non-US employees. In determining the Median Compensated Employee, we prepared a listing of approximately 9,75311,490 of our US-based employees and approximately 20,72424,899 of our non-US based employees who were employed as of October 1, 2019.December 31, 2021. This listing excluded our CEO and approximately 1,128877 employees from Philippines, 211389 employees from Bosnia & Herzegovina, 131Turkey, 203 employees from Pakistan, and 119155 employees from Nigeria.Nigeria, 47 employees from Ghana, and 15 employees from the Dominican Republic. The excluded non-US employees, in the aggregate, represent less than 5% of our total employee population. In determining that there had been no changes to our employee population that were reasonably likely to result in a significant change to our pay ratio disclosure for 2020, we considered that this October 1, 2019 employee population also excludes approximately 1,280 employees that we acquired in connection with 2020 acquisitions. We identified the Median Compensated Employee from the list, who was an employee from the United States. Because the median employee we initially identified separated from service during 2020, we substituted the identified Median Compensated Employee with a US employee with substantially similar compensation, based on the compensation measure used to select the Median Compensated EmployeeStates, and determined this individual’s compensation in accordance with the requirements of SEC Regulation S-K, Item 402(c)(2)(x).
Under its charter, the CODG is responsible for the review of all related person transactions. In January 2007, the Board formalized in writing a Related Person TransactionsTransaction Policy that provides that each related person transaction must be considered for approval or ratification (i) by the CODG, or (ii) by all of the disinterested members of the Board, if the CODG so determines. In 2021, the Board amended the Related Person Transaction Policy as a result of two amendments made in 2021 to the related party transaction approval rule under Section 314.00 of the NYSE Listed Company Manual.
The policy, as amended, requires each director and executive officer of the Company to use reasonable efforts to report to the Company’s General Counsel any transaction that could constitute a related person transaction prior to undertaking the transaction. The General Counsel must advise the Chair of the CODG of any related person transaction of which the General Counsel becomes aware, whether as a result of reporting or otherwise. The CODG then considers each such related person transaction, unless the CODG determines that the approval or ratification
NCR CORPORATION | 2023 Proxy Statement | 78
of such transaction should be considered by all of the disinterested members of the Board, in which case such disinterested members of the Board will consider the transaction. Except as set forth below, the Company will not enter into a related person transaction that is not approved in advance unless the effectiveness of the transaction is expressly subject to ratification by the CODG or the disinterested members of the Board, as applicable.
If the Company enters into a transaction that it subsequently determines is a related person transaction or a transaction that was not a related person transaction at the time it was entered into but thereafter became a related person transaction, then, in either case, the related person transaction shall be promptly presented to the CODG or the disinterested members of the Board, as applicable, for ratification.approval. If such related person transaction is not ratified,approved, then the Company shall take all reasonable actions to attempt to terminate the Company’s participation in that transaction.
Under the policy, a related person transaction generally means any transaction involving or potentially involving an amount in excess of $120,000 in which the Company or any of its subsidiaries is a participant and in which any of its directors or director nominees, executive officers or 5% stockholders, or any immediate family members of any of the foregoing, or any entity controlled by any of the foregoing or in which any of the foregoing has a 10% or greater ownership interest, has or will have a direct or indirect material interest.
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In considering whether to approve or ratify a related person transaction or relationship, the CODG or the disinterested members of the Board, as applicable, considers all relevant factors, including:
| ● | the size of the transaction and the amount payable to a related person or any other benefit received by a related person; |
| ● | the nature of the interest of the related person in the transaction; |
| ● | whether the transaction may involve a conflict of interest; and |
| ● | whether the transaction involves the provision of goods or services to the Company that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to the Company as would be available in comparable transactions with or involving unaffiliated third parties. |
Transactions and relationships that are required to be disclosed under applicable securities laws and regulations are disclosed in the Company’s proxy statement. Since the beginning of the Company’s 20202021 fiscal year, the CODG has not identified any related person transactions requiring disclosure.
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The following tableTable presents the approximate fees for professional audit services rendered by the Company’s independent registered public accounting firm, PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”)(PricewaterhouseCoopers), for the audit of the Company’s financial statements and internal controls over financial reporting for the fiscal years ended December 31, 20202022 and December 31, 2019,2021, as well as the approximate worldwide fees billed for other services rendered by PricewaterhouseCoopers in such years:
Service
|
| 2020
|
|
| 2019
|
| 2022 | 2021 | ||||||||||
Audit Fees(1) | $ | 5,906,000 | $ | 5,298,000 | $ | 7,628,000 | $ | 7,255,000 | ||||||||||
Audit-Related Fees(2) | $ | 380,000 | $ | 1,173,000 | $ | 83,000 | $ | 83,000 | ||||||||||
Subtotal | $ | 6,286,000 | $ | 6,471,000 | $ | 7,711,000 | $ | 7,338,000 | ||||||||||
Tax Fees(3) | $ | 230,000 | $ | 110,000 | $ | 268,000 | $ | 1,543,000 | ||||||||||
All Other Fees(4) | $ | 27,000 | $ | 2,416,000 | $ | 1,000 | $ | 5,000 | ||||||||||
Subtotal | $ | 257,000 | $ | 2,526,000 | $ | 269,000 | $ | 1,548,000 | ||||||||||
Total Fees | $ | 6,543,000 | $ | 8,997,000 | $ | 7,980,000 | $ | 8,886,000 | ||||||||||
(1) Includes fees required for the review and examinationintegrated audit of NCR’s consolidated financial statements, the audit of internal controls over financial reporting, quarterly reviews of interim financial statements, Comfort Letters and Consents associated with Registration Statements, statutory audit and consultations by management as to the accounting or disclosure treatment of transactions or eventsaudits and the actual or potential impact of final or proposed rules, standards or interpretations by regulatory and standard-setting bodies. This also includes attestation services and review servicesincremental audit effort associated with the Company’s filings with the SEC.acquisition of Cardtronics in 2021 and new enterprise resource planning system implementation in 2022.
(2) Includes fees related to financial audits of employee benefit plans and services related to due diligence and technical accounting assistance.plans.
(3) Generally includes tax compliance, tax advice, taxconsulting and planning and expatriate services. In 20202022 and 2019,2021, respectively, fees for tax services include:
(a) $140,000$214,000 and $40,000$1,372,000 for tax audit consultation and assistance; and
(b) $54,000 and $171,000 for tax compliance including the preparation, review and filing of tax returns; andreturns.
(b) $90,000 and $70,000 for tax audit consultation and assistance.
(4) Includes fees for all other work performed by PricewaterhouseCoopers that does not meet the above category descriptions. In 2020, 84% of these fees related to benchmarking consulting services and 16% related to licenses to research and benchmarking applications. In 2019, 83% of these fees related to global restructuring consultation, 16% related to due diligence services, and 1% related to R&D credit preparation services. These items were evaluated by the Audit Committee to be permissible services and determined not to impact the independence and objectivity of the independent registered public accounting firm.
(4) Includes fees for all other work performed by PricewaterhouseCoopers that does not meet the above category descriptions. In 2022 and 2021, this amount related to licenses to research applications. These items were evaluated by the Audit Committee to be permissible services and determined not to impact the independence and objectivity of the independent registered public accounting firm.
The charter of the Audit Committee requires that all auditing and non-auditing services to be provided to the Company by its independent accountants be pre-approved by the Audit Committee. The Audit Committee has adopted policies and procedures regarding its pre-approval of these services (the “Pre-Approval Policy”) Policy). The Pre-Approval Policy is designed to assure that the provision of such services does not impair the independence of the Company’s independent registered public accounting firm and includes the following principles and restrictions, among others:
| ● | In no case should NCR or its consolidated subsidiaries retain the Company’s independent registered public accounting firm or its affiliates to provide management consulting services or any non-audit services that are not permitted under applicable laws and regulations, including, without limitation, the Sarbanes-Oxley Act of 2002 and the SEC’s related rules and regulations. |
| ● | Unless a type of service to be provided by the independent registered public accounting firm has received general pre-approval, it will require specific pre-approval by the Audit Committee. Any other non-audit services and tax consulting services will require specific pre-approval by the |
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Audit Committee and a determination that such services would not impair the independence of the Company’s independent registered public accounting firm. Specific pre-approval by the Audit Committee will also be required for any material changes or additions to the pre-approved services. |
| ● | The Audit Committee recommends that the ratio of total fees for tax and all other non-audit services to total fees for audit and audit-related services procured by the Company in a fiscal year be less than 1 to 1. |
| ● | The Audit Committee will not permit the exclusive retention of NCR’s independent registered public accounting firm in connection with a transaction initially recommended by the independent auditors if the purpose may be tax avoidance and the proposed tax treatment 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 separate pre-approval by the Audit Committee. |
| ● | The Corporate Controller will report to the Audit Committee on a quarterly basis regarding the status of all pre-approved audit, audit-related, tax and all other non-audit services provided by the Company’s independent registered public accounting firm or its affiliates to NCR or its consolidated subsidiaries. |
| ● | Back-up documentation will be provided to the Audit Committee by management and/or the independent registered public accounting firm when requesting pre-approval of services by the Company’s independent registered public accounting firm. At the request of the 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 the Chief Financial Officer or Corporate Controller, 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. |
At the beginning of each fiscal year, management and the Company’s independent registered public accounting firm propose to the Audit Committee the audit and non-audit services to be provided by the firm during that year. The Audit Committee reviews and pre-approves the proposed services taking into account, among other things, the principles and restrictions set forth in the Pre-Approval Policy. Under the Pre-Approval Policy, the Audit Committee has delegated to its Chair limited authority to grant pre-approvals for audit, audit-related, tax and other non-audit services in the event that immediate approval of a service is needed, and the Chair can further delegate such authority to another Audit Committee member. The Chair (or his or her delegate) must report any pre-approval decisions to the Audit Committee at its next scheduled meeting for its review and approval. The Audit Committee may not delegate to management its responsibilities to pre-approve services performed by the independent registered public accounting firm.
The audit, non-audit, tax and all other non-audit services provided by PricewaterhouseCoopers to the Company, and the fees charged for such services, are actively monitored by the Audit Committee as set forth in the Pre-Approval Policy on a quarterly basis to maintain the appropriate level of objectivity and independence in the firm’s audit work for NCR. Part of the Audit Committee’s ongoing monitoring includes a review of any de minimis exceptions as provided in the applicable SEC rules for non-audit services that were not pre-approved by the Audit Committee. In 20202022 and 2019,2021, of those total amounts reported above, all activities were pre-approved by the Audit Committee prior to commencement, and therefore no de minimis activity was reported.
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The Audit Committee consists of fourfive directors, each of whom is independent as determined by the Board of Directors based on independence standards set forth in the NCR Corporation Board of Directors Corporate Governance Guidelines, which meet, and in some cases exceed, the listing standards of the New York Stock Exchange (“NYSE”)(NYSE) and the applicable rules of the U.S. Securities and Exchange Commission (“SEC”)(SEC). In accordance with NYSE rules, all members are “financially literate.” In addition, as of the date of this report, threeall five of its members are “audit committee financial experts” as defined under applicable SEC rules. A brief description of the responsibilities of the Audit Committee is set forth above under the caption Committees of the Board. The Audit Committee acts under a charter adopted by the Board of Directors, which is periodically reviewed and revised as appropriate. The Audit Committee charter is available on the Company’s website at https://www.ncr.com/company/corporate-governance/board-of-directors-committee-membership-and-chartersboard-of-directors-committee
-membership-and-charters.
In general, NCR’s management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”)(PricewaterhouseCoopers), NCR’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles, as well as an independent audit of the Company’s internal controls over financial reporting.
In the course of fulfilling its oversight responsibilities, the Audit Committee has reviewed and discussed with NCR’s management the Company’s audited financial statements for fiscal year 2020,2022, as well as its quarterly public earnings releases and its quarterly reports on Form 10-Q, and, together with the Board, has reviewed and discussed the Company’s Annual Report on Form 10-K and this proxy statement. In addition, the Audit Committee discussed with PricewaterhouseCoopers, the Company’s independent registered public accounting firm, the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board (“PCAOB”)(PCAOB) and the SEC. The Audit Committee also has received the written disclosures and the letter from PricewaterhouseCoopers required by applicable requirements of the PCAOB’s Rule 3526 and has discussed with PricewaterhouseCoopers its independence, and the Audit Committee concurred, based on those disclosures and discussions as well as its own review and consideration, that PricewaterhouseCoopers is independent. In connection with its discussions concerning the independence of its independent registered public accounting firm, the Audit Committee adopted its annual policy requiring that the Audit Committee pre-approve all audit and non-audit services provided by the Company’s independent registered public accounting firm or its affiliates to NCR or its consolidated subsidiaries. The Audit Committee also reviewed its procedures for processing and addressing complaints regarding accounting, internal controls, or auditing matters, and the confidential, anonymous submission by Company employees of concerns regarding questionable accounting or auditing matters. Finally, the Audit Committee has reviewed NCR’s critical accounting policies and alternative policies with NCR’s management and the Company’s independent registered public accounting firm to determine that both are in agreement that the policies currently being used are appropriate.
The Audit Committee met in executive session at its regular meetings periodically throughout the year with both PricewaterhouseCoopers and the Company’s internal audit management.Chief Audit Executive. It also met privately on occasion with the Chief Financial Officer, who has unrestricted access to the Audit Committee.
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Based on the reviews and the discussions referred to above, the Audit Committee recommended to the Board that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 20202022, for filing with the SEC.
Date: | The Audit Committee
Kirk T. Larsen, Chair Gregory Blank
Glenn W. Welling |
NCR CORPORATION | 20212023 Proxy Statement | 8883
The Board of Directors recommends that you vote 1 YEAR on the frequency of future advisory votes on the compensation of the named executives.
Proposal Details
Pursuant to Section 14A of the Securities Exchange Act of 1934, as amended, we are required to ask our stockholders, at least once every six years, to cast an advisory vote on the frequency of future advisory “Say on Pay” votes on NCR executive compensation. Our most recent Say on Frequency vote occurred in 2017, when our stockholders voted consistent with the Board’s recommendation to hold advisory Say on Pay votes on NCR executive compensation on an annual basis. Since 2017, in accordance with this recommendation, we have held annual Say on Pay votes.
We are now asking our stockholders to cast an advisory vote to continue holding future advisory Say on Pay votes on NCR executive compensation on an annual basis (instead of every two years, or every three years).
The Board of Directors recommends that future advisory Say on Pay votes on NCR executive compensation be held on an annual basis. The Board believes that an annual Say on Pay vote remains the most appropriate option for NCR and its stockholders, as it will allow the most frequent opportunity for our stockholders to evaluate and assess our executive compensation program.In addition, an annual Say on Pay vote provides the Board, and the Compensation and Human Resource Committee (the “Committee”), with the most frequent feedback on our executive compensation program. Annual feedback allows the Board and Committee to have discussions with our stockholders to the extent necessary, to implement appropriate adjustments to our compensation programs on a yearly basis, as opposed to every two or every three years.
For these reasons, the Board recommends that you vote “1 Year” on the proposal regarding the frequency of future advisory Say on Pay votes on NCR executive compensation. Stockholders are not voting to approve or disapprove of the Board’s recommendation. Instead, the proxy card provides stockholders with four choices for holding future advisory Say on Pay votes on executive compensation under this proposal:
| ● | Every 1 year (recommended by our Board) |
| ● | Every 2 years; |
| ● | Every 3 years; or |
| ● | Abstain |
How Does the Board Recommend that I Vote on this Proposal?
The Board recommends that, on a non-binding and advisory basis, you vote “1 Year” for the frequency of future advisory Say on Pay votes on the compensation of the named executives. Properly authorized proxies received by the Board will be voted for conducting future advisory votes on NCR executive compensation on an annual basis unless they specify otherwise.
Vote Required for Approval
The option of one year, two years or three years that receives the highest number of votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy), with the Series A Convertible Preferred Stock voting on an as-converted basis, will be considered our stockholders’ recommendation as to the frequency of future Say on Pay votes. Under Maryland law, abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the votes for this proposal.
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Proposal 4 – Ratification of the Appointment of Independent Registered Public Accounting Firm for 20212023
The Board of Directors recommends that you vote FOR the proposal to ratify the appointment of PricewaterhouseCoopers as our Independent Registered Public Accountingindependent accounting firm for the fiscal year ending December 31, 2021.2023.
Proposal Details
The Audit Committee has appointed PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”)(PricewaterhouseCoopers) as the Company’s independent registered public accounting firm for the fiscal year ending December 31, 2021.2023. Although stockholder ratification of the appointment of the Company’s independent registered public accounting firm is not required, the Board is asking that you ratify this appointment as a matter of good corporate governance.
PricewaterhouseCoopers has been the Company’s independent registered public accounting firm since 1993 and is a leader in providing audit services to companies in the high-technology industry. The Audit Committee believes that PricewaterhouseCoopers is well qualified to serve as NCR’s independent registered public accounting firm due to its experience, global presence with offices or affiliates in or near most locations where NCR does business and quality audit work in serving the Company. PricewaterhouseCoopers rotates its audit partners assigned to audit NCR at least once every five years and the Audit Committee has placed restrictions on the Company’s ability to hire any employees or former employees of PricewaterhouseCoopers or its affiliates. Based on its “Pre-Approval Policy” Policy as defined in the Fees Paid to Independent Registered Public Accounting Firm section of this proxy statement and applicable SEC rules and guidance, the Audit Committee considered whether the provision during 20202022 of the tax and other non-audit services described above under the caption “Fees Paid to Independent Registered Public Accounting Firm” was compatible with maintaining the independence of PricewaterhouseCoopers and concluded that it was.
PricewaterhouseCoopers representatives are expected to be present at the virtual Annual Meeting where they will have the opportunity to make a statement if they desire to do so, and will be available to respond to appropriate questions.
How Does the Board Recommend that I Vote on this Proposal?
The Board of Directors and the Audit Committee recommend that you vote FOR this proposal. Proxies Properly authorized proxies received by the Board will be voted FOR this proposal unless they specify otherwise. If the stockholders do not ratify the appointment of PricewaterhouseCoopers, the Audit Committee will reconsider the appointment, but may elect to maintain it.
Vote Required for Approval
TheUnder Maryland law and the Company’s Charter and Bylaws, a majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual meeting or by proxy), with the Series A Convertible Preferred Stock voting on an as-converted basis, is required to approve the ratification of the appointment of our independent registered accounting firm will be approved if it receives the affirmative vote of a majority of the votes cast on the proposal.firm. Abstentions and broker “non-votes”, if any, will not be counted as votes cast and will have no effect on the approval of the resolution.this proposal. As brokers generally have discretionary authority to vote on this proposal if they do not receive voting instructions, we do not expect any broker non-votes. The vote is not binding on the Board and Audit Committee but the Board and Audit Committee will review and consider the voting results when evaluating selection of the Company’s independent registered public accounting firm in the future.
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Proposal 5 – Approval of Proposed Second Amendment to 2017 Stock Incentive Plan
The Proposed Second Amendment to the 2017 Stock Plan is essential to NCR’s continued strategic business transformation, because it:
| ● | allows NCR to continue granting employee long-term equity incentives that are critical to the success of our strategic business transformation, acceleration of future profitable growth and achievement of stronger returns; |
| ● | directly aligns stockholder and employee/director interests and drives exceptional employee performance to achieve our new strategic business priorities; and |
| ● | is critical for NCR to compete in the market for and attract top talent to fuel our business transformation. |
In February 2023, upon recommendation by the Compensation and Human Resource Committee (the “Committee”) and its independent compensation consultant, the Board approved a second amendment to the NCR Corporation 2017 Stock Incentive Plan (as amended, the “2017 Stock Plan”), approving an additional 12 million shares for issuance under the 2017 Stock Plan (the “Proposed Second Amendment”), subject to stockholder approval. The 2017 Stock Plan was originally approved by stockholders at the 2017 annual meeting of stockholders and was subsequently amended to increase the number of shares approved for issuance, as approved by stockholders at the 2020 annual meeting of stockholders, and incorporates shares transferred from the Cardtronics plc Fourth Amended and Restated 2007 Stock Incentive Plan (the “Cardtronics Stock Plan”) to the 2017 Stock Plan in connection with the Cardtronics acquisition completed on June 21, 2021, as permitted by the NYSE rules. A summary of the material provisions of the 2017 Stock Plan is set forth below.
How Does the Board Recommend that I Vote on this Proposal?
The Board of Directors unanimously recommends that you vote FOR this proposal. Proxies received by the Board will be voted FOR this proposal unless they specify otherwise.
Vote Required for Approval
Under applicable New York Stock Exchange listing standards, Maryland law and the Company’s charter and bylaws, a majority of all the votes cast by holders of our common stock and Series A Convertible Preferred Stock voting together as a single class (in person via attendance at the virtual meeting or by proxy), with the holders of Series A Convertible Preferred Stock Voting on an as-converted basis, is required to approve the Proposed Second Amendment to the 2017 Stock Plan. Under Maryland law, broker “non-votes” will not be counted as votes cast and will have no effect on the approval of this proposal.
Proposal Details
As noted above, our continued ability to grant stock-based incentives to our employees and our non-employee directors is critical to the strategic business transformation of NCR and directly serves the interests of our stockholders. As a result of the limited number of shares remaining available for issuance under the 2017 Stock Plan, our projections show that that the current share reserve will not likely be sufficient to cover anticipated new equity grants needed beyond 2023.
In order to have an appropriate supply of shares available for future equity awards to attract, retain and motivate the team responsible for achieving our new strategic business priorities, the Board unanimously recommends that our stockholders approve the Proposed Second Amendment to the 2017 Stock Plan providing for a reserve of an additional 12 million new shares for future stock-based incentives. We expect that this reserve will be sufficient for approximately 3 years, covering grants currently anticipated over the
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period from 2023 through 2025. As described in the Key Data section below and the Compensation Discussion & Analysis, NCR equity grant practices have been appropriate and emphasize variable compensation and equity-based compensation in alignment with the interests of our stockholders.
The 2017 Stock Plan’s material terms and certain additional features, as amended by the Proposed Amendment, are summarized below. This summary is qualified in its entirety by reference to the full text of the 2017 Stock Plan contained in Appendix B to the proxy materials for our 2017 Annual Meeting of Stockholders (see https://www.sec.gov/Archives/edgar/data/70866/000119312517087387/d294010ddef14a.htm#toc294010_126), and the full text of the First Amendment to the 2017 Stock Plan contained in Appendix A to the proxy materials for our 2020 Annual Meeting of Stockholders (see https:www.sec.gov/Archives/edgar/data/70866/000119312520071042/ d825867ddef14a.htm#oc825867_87). The full text of the Proposed Second Amendment to the 2017 Stock Plan is included as Appendix A to these proxy materials. The additional share reserve included in the Proposed Amendment will not become effective until approved by NCR stockholders.
The Company’s continued ability to grant stock-based incentives is critical to:
| • | align employee and stockholder interests in the creation of stockholder value, |
| • | attract, incentivize and retain highly qualified and experienced employee and director talent in the highly competitive software/services industry, |
| • | motivate exceptional employee behavior that leads to the achievement of our strategic priorities and increased stockholder return, and |
| • | drive employees to achieve long-term financial and operational goals to realize our strategic business transformation. |
Stockholder interests and the future of NCR would be seriously jeopardized if the Company were unable to use equity grants to achieve these outcomes. Stock-based incentives are fundamental components of the Committee’s pay for performance philosophy, as reflected in our Compensation Discussion & Analysis section.
The 2017 Stock Plan will continue to retain key governance features protecting stockholders:
The 2017 Stock Plan will continue to retain the enhanced governance rules protecting stockholders that were added to the Plan in 2017 and 2020, plus prior governance protections, as set forth in the chart below:
Key Governance Features Retained in 2017 Stock Plan | ||||||||
✓ | Director Pay Cap: Plan retains rules capping director pay annually including cash and NCR equity | ✓ | No Tax Gross-Ups: Plan does not provide for any tax gross-ups | |||||
✓ | Strengthened Repricing Prohibition: Plan retains strengthened 2017 language more explicitly prohibiting option/SAR repricing | ✓ | No “Single Trigger” Vesting: No automatic vesting of equity awards upon a change in control | |||||
✓ | Strengthened Cash Buyout Prohibition: Plan retains strengthened 2017 rules more explicitly prohibiting cash buyout of underwater options/SARs without stockholder approval | ✓ | No Liberal Change in Control Provisions: Plan and Change in Control Severance Plan do not provide for a change in control upon announcement or stockholder approval of a transaction (rather than completion) | |||||
✓ | Strengthened Award Clawback Provisions: Plan retains strengthened 2017 language authorizing forfeiture or clawback of awards in certain circumstances involving misconduct | ✓ | Minimum Vesting Period: All award types are subject to a minimum vesting period of 12 months (with limited exceptions) | |||||
✓ | Individual Award Limits: Plan retains certain provisions establishing Award maximums as described in this proposal | ✓ | Discounted Options/SARs Prohibited: Options and SARs must be granted at no less than Fair Market Value | |||||
✓ | Dividend Treatment: Plan retains rules barring payment of dividends or dividend equivalents before the underlying award vests | ✓ | No “Evergreen” Provision: No automatic increase in shares available for grant under the Plan | |||||
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When approving the Proposed Second Amendment to the 2017 Stock Plan, the Board considered the potential dilutive impact on our stockholders of our share usage measured by our “run rate” and “overhang”:
| ● | Run Rate: A measure of the annual shares granted expressed as a percent of our weighted average common shares outstanding. Our run rate in 2022 and 2021 was 4.3% and 3.4%, respectively. |
| ● | Overhang: Dilution analysis quantifying the cumulative impact of equity grant practices, by calculating shares subject to outstanding grants plus the shares remaining in the share reserve for new grants, divided by the diluted common stock outstanding as of February 28, 2023, plus the shares subject to outstanding grants plus the shares remaining in the share reserve. NCR’s overhang as of February 28, 2023 is approximately 12.26%. We anticipate the overhang would be approximately 18.04% upon stockholder approval of the additional 12 million shares under the Proposed Second Amendment. |
Our Board determined that our share usage levels measured by run rate and overhang were appropriate. The Board was cognizant of these matters when approving the Proposed Second Amendment, which will enable NCR to continue to reward our employees and its directors with equity compensation that aligns directly with stockholder interests and fuel the continued business transformation of NCR.
NCR Historic Equity Grant Run Rate and Overhang.This chart shows our run rate under the 2017 Stock Plan for the past three fiscal years:
NCR Historic Run Rate | ||||||
| 2022 | 2021 | 2020 | ||||||||||
Total Number of Restricted Stock Units Granted (in millions)
| 6.3 | 4.8 | 5.4 | |||||||||
Total Number of Stock Options Granted (in millions)**
| 0.0 | 0.0 | 2.6 | |||||||||
Weighted Average Common Shares Outstanding (in millions)*
| 145.9 | 140.4 | 137.4 | |||||||||
Run Rate
| 4.3 | % | 3.4 | % | 5.8 | % | ||||||
| * | Includes our Series A Convertible Preferred Stock on an as-converted basis. |
| ** | The number of options for purposes of calculating the burn rate is the granted number of options reduced in proportion to the value of the options as a percent of the stock value using the Black-Scholes model. |
NCR Historic Overhang. This chart shows our overhang under the 2017 Stock Plan, as well as predecessor plans under which awards are still outstanding (including our NCR Corporation 2013 Stock Incentive Plan (“2013 Stock Plan”), our NCR Corporation 2011 Amended and Restated Stock Incentive Plan (“2011 Stock Plan”) and our Management Stock Plan, each of which were in effect on the dates shown above in our Equity Compensation Plan Information Table in our Compensation Discussion & Analysis section):
NCR Overhang (As of February 28, 2023) | ||||||
Outstanding Grants (shares)* | 17.4 million | |||||
Shares Currently Available for Grant under 2017 Stock Plan (before Proposed Second Amendment)** | 3.5 million | |||||
Additional Shares Available for Grant if Proposed Second Amendment is approved by stockholders | 12.0 million | |||||
Common Shares Outstanding*** | 149.3 million | |||||
Total Fully Diluted Overhang**/*** (prior to 12 million share authorization) | 12.26% | |||||
Total Fully Diluted Overhang**/*** (including 12 million share authorization) | 18.04% | |||||
* This is the total of all outstanding restricted stock units and options. Unearned performance-based restricted stock units are shown assuming target performance is achieved. The maximum potential payout on such units is 200%. Earned performance-based restricted stock units (which remain subject to a holding period) are shown based on actual performance achieved.
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** Includes shares that were transferred from the Cardtronics Stock Plan to the 2017 Stock Plan in connection with the Cardtronics acquisition completed on June 21, 2021, as permitted by the NYSE rules. Such assumed shares were originally approved by Cardtronics shareholders pursuant to the Cardtronics Stock Plan prior to (but not in contemplation of) the date of the Cardtronics acquisition. Such assumed shares are available for future issuance under the 2017 Stock Plan to either former Cardtronics employees or employees newly hired by NCR or an affiliate on and after June 21, 2021 (but not to legacy NCR employees prior to June 21, 2021), provided that such assumed shares will expire on their original expiration date under the Cardtronics Stock Plan of July 1, 2026. Such limitations shall continue to apply to the assumed shares following any approval of this proposal.
*** Includes our Series A Convertible Preferred Stock on an as-converted basis. Our common shares outstanding excluding the Series A Convertible Preferred Stock would be 140.1 million.
If stockholders do not approve the Proposed Second Amendment, NCR will continue to make awards under the 2017 Stock Plan. In the event sufficient shares are not available under the 2017 Stock Plan to settle awards granted thereunder, NCR will be required to grant some awards, or portions of awards, to be settled in cash. Settling awards in cash instead of NCR common stock could have an adverse impact on NCR’s cash flow from operations, financial position and results of operations. Approval of the Proposed Second Amendment should reduce NCR’s magnitude of exposure to this cash settlement risk.
In addition, under applicable accounting rules, if NCR determines at any time that sufficient shares do not remain available under the 2017 Stock Plan to settle one or more awards granted thereunder with issuance of shares, NCR will be required to classify and account for as a liability any equity-based awards, or portions of awards, to be settled in cash under the 2017 Stock Plan. Such “liability accounting” could have an adverse impact on NCR’s financial position and results of operations. Approval of the Proposed Second Amendment should reduce NCR’s magnitude of exposure to such “liability accounting” risk in the event that it is triggered.
Key Data Supporting the Proposal |
The Table below shows certain key data supporting our Proposed Second Amendment to the 2017 Stock Plan, including certain awards outstanding under the 2017 Stock Plan, the NCR Corporation 2013 Stock Plan, the 2011 Stock Plan and the Management Stock Plan (collectively, the “Prior Plans”).
Key Data
Prior Plan Share Details: | | As of February 28, 2023 | ||
• Number of outstanding Options | 8.7 million | |||
• Weighted average exercise price | $ 32.87 | |||
• Weighted average remaining contractual term (in years) | 3.1 | |||
• Number of outstanding Time-based Restricted Stock Units | 5.8 million | |||
• Number of outstanding Performance-Based Restricted Stock Units* | 2.9 million | |||
Total shares remaining available for grant under the 2017 Stock Plan (before Proposed Second Amendment)** | 3.5 million | |||
Additional shares requested under the Proposed Second Amendment | 12.0 million | |||
Total number of shares to be available for issuance under the 2017 Stock Plan | 15.5 million | |||
The closing price of our common stock on the New York Stock Exchange as of February 28, 2023 | $25.53 | |||
Total shares of NCR common stock outstanding as of February 28, 2023** | 149.3 million | |||
* Represents the number of unearned performance-based restricted stock units assuming target performance is achieved. The maximum potential payout on such units is 200%. Earned performance-based restricted stock units (which remain subject to a holding period) are shown based on actual performance.
** Includes shares that were transferred from the Cardtronics Stock Plan to the 2017 Stock Plan in connection with the Cardtronics acquisition completed on June 21, 2021, as permitted by the NYSE rules. Such assumed shares were originally approved by Cardtronics shareholders pursuant to the Cardtronics Stock Plan prior to (but not in contemplation of) the date of the Cardtronics acquisition. Such assumed shares are available for future issuance under the 2017 Stock Plan to either former Cardtronics employees
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or employees newly hired by NCR or an affiliate on and after June 21, 2021 (but not to legacy NCR employees prior to June 21, 2021), provided that such assumed shares will expire on their original expiration date under the Cardtronics Stock Plan of July 1, 2026. Such limitations shall continue to apply to the assumed shares following any approval of this proposal.
Principal Features of the Proposed Second Amendment |
The chart below summarizes the principal features of the 2017 Stock Plan as amended by the Proposed Second Amendment. Certain additional terms of the 2017 Stock Plan as amended by the Proposed Second Amendment are also described below. This summary is qualified in its entirety by reference to the full text of the 2017 Stock Plan contained in Appendix B to the proxy materials for our 2017 Annual Meeting of Stockholders (see https://www.sec.gov/Archives/edgar/data/70866/000119312517087387/d294010ddef14a.htm#toc294010_126), and the full text of the First Amendment to the 2017 Stock Plan contained in Appendix A to the proxy materials for our 2020 Annual Meeting of Stockholders (see https:www.sec.gov/Archives/edgar/data/70866/000119312520071042/ d825867ddef14a.htm#oc825867_87). The full text of the Proposed Second Amendment to the 2017 Stock Plan is included as Appendix A to these proxy materials.
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Principal Features of 2017 Stock Plan
as Amended by the Proposed Second Amendment
Purpose | To allow the Company to award equity incentives to eligible participants that link directly to stockholder value, drive participant exceptional performance and give the Company a competitive advantage in attracting, retaining and motivating participants | |
Effective Date | The effective date of the Proposed Second Amendment will be the first day of the month following the date of stockholder approval (the “Effective Date”) | |
Securities Underlying Awards | NCR Common Stock, $0.01 par value per share* | |
Award Types | Restricted Stock Units (“RSUs”), Restricted Stock, Performance Units, Incentive Stock Options (“ISOs”), Nonqualified Stock Options (“NQSOs”), Stock Appreciation Rights (“SARs”), and Other Stock-Based Awards (each an “Award”) | |
Eligible Participants | Current and prospective Company employees, officers, non-employee directors and consultants. As of February 28, 2023, there were 10 non-employee directors and approximately 7,735 employees (including 7 executive officers and 24 other officers) who would be eligible to participate in the 2017 Stock Plan, as amended by the Proposed Second Amendment | |
Share Reserve** | •15.5 million shares of common stock under the 2017 Stock Plan, plus •any shares with respect to Awards granted under the 2017 Stock Plan that are forfeited (or again become available for grant) following the Effective Date •Shares subject to any type of Award will be counted against this plan limit as one share for every one share granted | |
Share Recycling | Shares not issued because an Award expires, cancels, terminates, forfeits, lapses or settles without issuance of common stock (including, but not limited to, shares tendered or withheld upon Option/SAR exercise and shares withheld for taxes on Awards) will be added back to the share reserve | |
Minimum Vesting | All award types will generally have a minimum vesting period of at least one year from the grant date*** | |
Director Compensation Limit | The amount of cash and equity-based compensation to non-employee directors, whether under the 2017 Stock Plan or otherwise, is limited to an aggregate of $1 million in any calendar year, as measured by the grant date value (for equity-based compensation) | |
Plan Expiration | The earlier of: (i) May 1, 2027, or (ii) the date that the Board terminates the Plan |
* The closing price of our common stock on the New York Stock Exchange as of February 28, 2023 was $25.53.
** Subject to adjustment as permitted by the 2017 Stock Plan. Includes shares that were transferred from the Cardtronics Stock Plan to the 2017 Stock Plan in connection with the Cardtronics acquisition completed on June 21, 2021, as permitted by the NYSE rules. Such assumed shares were originally approved by Cardtronics shareholders pursuant to the Cardtronics Stock Plan prior to (but not in contemplation of) the date of the Cardtronics acquisition. Such assumed shares are available for future issuance under the 2017 Stock Plan to either former Cardtronics employees or employees newly hired by NCR or an affiliate on and after June 21, 2021 (but not to legacy NCR employees prior to June 21, 2021), provided that such assumed shares will expire on their original expiration date under the Cardtronics Stock Plan of July 1, 2026. Such limitations shall continue to apply to the assumed shares following any approval of this proposal.
*** Subject to certain limited exceptions in the 2017 Stock Plan.
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Plan Administration. The Committee will administer the Plan. The Committee will determine eligible recipients and establish Award terms and conditions for inclusion in an Award agreement (“Award Agreement”). The Committee is authorized to, among other things, interpret the 2017 Stock Plan and Award Agreements, and amend Awards and Award Agreements as permitted by the Plan.
Eligible Employees. Current and prospective Company employees and consultants, as well as officers and non-employee directors, are eligible to receive awards under the 2017 Stock Plan. However, ISOs may only be granted to employees. As of February 28, 2023, there were 10 non-employee directors, approximately 7,735 employees (including 7 executive officers and 24 other officers) and no non-employee consultants who would be eligible to participate in the 2017 Stock Plan.
Award Limits and Maximums. The 2017 Stock Plan contains the below limits that apply to individual and aggregate Awards. In addition, the maximum number of shares of NCR common stock that may be granted pursuant to Options intended to be ISOs is 12,000,000.
| ● | Options and SARS. No participant may be granted Options and SARs covering more than 3,000,000 common shares during any consecutive 12-month period. |
| ● | Restricted Stock, RSUs, Performance Units or Other Stock-Based Awards. No participant may be granted either Restricted Stock, RSUs, Performance Units or other Stock-Based Awards covering over 2,500,000 common shares during any consecutive 12-month period. |
| ● | Non-Employee Director Awards: The maximum aggregate value at grant of equity-based and cash compensation that may be granted to any non-employee director under the 2017 Stock Plan and the NCR Director Compensation Program and otherwise during any calendar year is $1,000,000. |
Permissible Performance Goals. “Performance Goals” means any performance goals established by the Committee in connection with the grant of Restricted Stock, RSUs, Performance Units or Other Stock-Based Awards. Under the 2017 Stock Plan: such Performance Goals may be based on attaining (i) specified levels of one or more of the following measures: revenues; revenue growth; earnings or losses or net earnings or losses (including earnings or losses before taxes, before interest and taxes or before interest, taxes, depreciation and amortization); earnings or loss per share; operating income and adjusted operating income (before or after taxes) (including non-pension operating income and non-pension operating income less capital charge); net income or loss (before or after taxes); net operating profit (before or after taxes); pre- or after-tax income or loss (before or after allocation of corporate overhead and bonus); cash flow (before or after dividends) (including operating cash flow and free cash flow); cash flow return on capital; cash flow per share (before or after dividends); gross or net margin; operating margin; bookings; net sales; 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 net 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; enterprise value; net annual contract value; cash generation; unit volume; appreciation in and/or maintenance of stock price; market share; sales; asset quality; cost saving levels; marketing-spending efficiency; core noninterest income; cash margin; debt reduction; stockholders equity; operating efficiencies; customer satisfaction; customer growth; employee satisfaction; productivity or productivity ratios; financial ratios, including those measuring liquidity, activity, profitability or leverage; financing and other capital raising transactions (including sales of the Company’s equity or debt securities); debt level year-end cash position; book value; competitive market metrics; implementation, completion or attainment of measurable objectives with respect to research, development, manufacturing, products or projects, acquisitions and divestitures, succession and hiring projects, reorganization and other corporate transactions, expansions of specific business operations and meeting divisional or project budgets; improvement in or attainment of expense levels; or change in working capital
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with respect to the Company or any one or more affiliates, subsidiaries, divisions, business units or business segments of the Company either in absolute terms or relative to the performance of one or more other companies or an index covering multiple companies, or (ii) such other Performance Goals as may be approved by the Committee.
Fair Market Value of Awards. Unless otherwise determined by the Committee, the closing price of a share of NCR common stock on the Applicable Exchange (as defined in the 2017 Stock Plan) on the trading date, or if shares were not traded on the Applicable Exchange on the trading date, then on the immediately preceding date on which shares were traded, all as reported by such source as the Committee may select. If NCR common stock is not listed on a national securities exchange, Fair Market Value shall be determined by the Committee in its good faith discretion.
Types of Awards.
| ● | Options. Options entitle the participant to buy NCR common stock at a specified exercise price. Options are granted in the form of either ISOs that are intended to qualify for special tax treatment under Internal Revenue Code Section 422, or NQSOs that are not tax-qualified. Options must be granted with an exercise price at least equal to the Fair Market Value of one share of common stock on the grant date, and generally may not be exercisable for more than 10 years after granted. |
Options generally become exercisable in specified increments on the anniversaries of the grant date as determined by the Committee, except that vesting may not occur earlier than the first such anniversary except in limited cases involving participant death or disability. Except for certain limited permissible adjustments (described below), the Company may not, without stockholder approval, reprice any Option or buyout any underwater Option by: (i) lowering its exercise price after the grant date; (ii) cancelling it (at a time when the applicable exercise price per share exceeds the Fair Market Value of the underlying shares) in exchange for cash, property or another Award; (iii) taking any action that would be treated as a repricing under generally accepted accounting principles; or (iv) taking any other action that has the same effect as clause (i), (ii) or (iii).
| ● | SARs. A SAR is a contractual right granted to the participant to receive, either in cash, common stock or both, an amount equal to the appreciation of one share of common stock from the grant date to the exercise date. SARs may be granted free-standing or in tandem with other types of Awards. A free-standing SAR generally will be subject to the same terms and conditions that apply to options under the 2017 Stock Plan. A Tandem SAR will have the same terms and conditions as the Award to which it relates. The Committee will set the exercise price for SARs, which will not be less than the fair market value of one share of our common stock on the grant date. |
Except for certain limited permissible adjustments (described below), the Company may not, without stockholder approval, reprice any SAR by: (i) lowering its exercise price after the grant date; (ii) cancelling it (at a time when the applicable exercise price per share exceeds the Fair Market Value of the underlying shares) in exchange for cash, property or another Award; (iii) taking any action that would be treated as a repricing under generally accepted accounting principles; or (iv) taking any other action that has the same effect as clause (i), (ii) or (iii).
| ● | Restricted Stock, Restricted Stock Units and Other Stock-Based Awards. Shares of Restricted Stock are actual shares of NCR common stock issued to a participant subject to certain transfer and forfeiture restrictions for a specified period of time. RSUs are unfunded, unsecured rights to receive cash, common stock or both (as determined by the Committee) at the end of a specified period of time, which are also subject to certain transfer and forfeiture restrictions. Other Stock-Based Awards may be granted under the Plan, provided that any Other Stock-Based Awards that are unrestricted Awards of common stock will only be granted in lieu of other compensation due and payable to a participant. |
The Committee may generally condition the grant or vesting of Restricted Stock Awards or RSUs upon satisfying Performance Goals and/or upon continued service with the Company, which need not be the same for each recipient. Subject to the 2017 Stock Plan and applicable Award Agreement
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terms, during the period that an Award is subject to continued service and/or Performance Goal requirements, participants may not sell, assign, transfer, pledge or otherwise encumber Restricted Stock or RSUs subject to the Award.
Generally, Restricted Stock, RSUs and Other Stock-Based Awards (excluding Options, SARs and dividend equivalent rights), collectively “Full-Value Awards,” will have vesting periods of at least one year after the grant date. A 2017 Stock Plan exception permits the grant of five percent (5%) of shares available for grant as any type of Award with a vesting period of at least one year following the grant date. Full-Value Awards may also vest pro rata before their applicable vesting dates in circumstances permitted by the Committee.
A participant granted Restricted Stock generally will have all of the rights of a holder of Company common stock, including the right to vote and receive dividends subject to the restrictions noted below. A participant with RSUs or Other Stock-Based Awards will not have rights as a stockholder.
Unless otherwise determined by the Committee in the applicable Award Agreement, and subject to the provisions of the Plan: (i) cash dividends on common shares subject to an Award of Restricted Stock will be automatically deferred and reinvested in additional Restricted Stock, held subject to the vesting of the underlying Restricted Stock, (ii) subject to any adjustment, dividends payable in common stock will be paid in the form of Restricted Stock, held subject to the vesting of the underlying Restricted Stock and (iii) in the case of an Award of Restricted Stock subject to Performance Goals, the participant will not be entitled to receive payment for dividends with respect to such Restricted Stock unless, until and except to the extent that the applicable Performance Goals are achieved or are otherwise deemed satisfied.
| ● | Performance Units. Performance Units may be issued for no cash consideration or for such minimum consideration as may be required by applicable law, either alone or in addition to other Awards granted under the Plan. The Performance Goals to be achieved during any period established by the Committee at the time any Performance Unit is granted (or at any time thereafter) (each, a “Performance Period”) and the length of the Performance Period will be determined by the Committee upon the grant of each Performance Unit, provided that the Performance Period will be no less than one year following the date of grant (subject to the 5% exception noted above). The conditions for grant or vesting and the other provisions of Performance Units (including any applicable Performance Goals) need not be the same with respect to each recipient. |
Performance Units may be paid in cash, common stock, other property or any combination thereof, in the sole discretion of the Committee at the time of payment. The performance levels to be achieved for each Performance Period, the amount of the Award to be distributed and whether or not the Award will be designated as a Qualified Performance-Based Award will be determined by the Committee. Performance Units may be paid in a lump sum or in installments following the close of the Performance Period.
Awards to Non-U.S. Participants.The Committee may grant Awards to eligible participants who are foreign nationals and/or persons who are otherwise subject to foreign legal or regulatory provisions on such terms and conditions different from those specified in the Plan as may be necessary or desirable. The Committee is authorized to make such modifications, amendments, procedures or sub-plans as may be necessary or advisable to comply with such legal or regulatory provisions.
No Rights as Stockholder; Non-Transferability of Awards.Except as provided under the Plan, no Award holder has any rights as a stockholder with respect to common stock subject to an Award (including rights to vote common stock and receive dividends thereon) until such common stock is distributed to such holder.
Options and SARs will not be transferable by a participant other than: (i) by will or by the laws of descent and distribution; or (ii) in the case of an NQSO or a SAR if expressly permitted by the Committee, pursuant to a transfer to the participant’s family members.
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Adjustments for Certain Corporate Events.If certain corporate events occur, such as a change in capitalization, merger, liquidation, spin-off, stock split, extraordinary dividend or similar event affecting the Company or the common stock (each a “Corporate Transaction”), the Committee is authorized to make appropriate and equitable adjustments to: (a) the number and kind of common shares or other securities reserved for issuance and delivery under the 2017 Stock Plan, (b) the Plan’s maximum share limits, (c) the number and kind of common shares or other securities subject to outstanding Awards, and (d) outstanding Option and SAR exercise prices.
Awards may, in the discretion of the Committee, be granted under the 2017 Stock Plan in assumption of, or in substitution for, outstanding Awards previously granted by the Company or any of its subsidiaries or affiliates or an entity acquired by the Company or any of its subsidiaries or affiliates or with which the Company or any of its subsidiaries or affiliates combines (“Substitute Awards”); provided, however, that in no event may any Substitute Award be granted in a manner that would violate the prohibitions on repricing of Options and SARs (as described above). The number of common shares underlying any Substitute Awards will generally be counted against the maximum share limits of the Plan; provided, however, that Substitute Awards issued in connection with the assumption of, or in substitution for, outstanding awards previously granted by an entity that is acquired by or combined with the Company or any of its subsidiaries or affiliates, will not be counted against the maximum share limits of the Plan (with the exception that Substitute Awards that are ISOs will count against the maximum ISO limit of the Plan).
Impact of Change in Control.Unless otherwise provided in the applicable Award Agreement, in the event of a Change in Control (as defined below) unless Awards are assumed, converted or replaced, Awards will vest immediately prior to such Change in Control. Further, unless otherwise provided in the applicable Award Agreement, upon a participant’s Termination of Employment (as defined below), during the 24 month period following a Change in Control, (x) by the Company other than for Cause (as defined below) or disability, or (y) to the extent applicable, by the participant for Good Reason (as defined below):
| ● | any Options and SARs outstanding as of such Termination of Employment that were outstanding as of the date of such Change in Control will become fully exercisable and vested; |
| ● | the restrictions and deferral limitations applicable to any Restricted Stock will lapse, and such Restricted Stock outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control will become free of all restrictions and become fully vested and transferable; and |
| ● | all RSUs outstanding as of such Termination of Employment which were outstanding as of the date of such Change in Control will be considered to be earned and payable in full, and any deferral or other restriction will lapse. |
“Cause”means, unless otherwise provided in an Award Agreement, Cause as defined in any employment, consulting or similar agreement between the Plan participant and the Company or one of its subsidiaries or affiliates, or, if no such agreement exists or if it does not define Cause, Cause will generally mean, with regard to the applicable participant: (A) a felony conviction under Federal, state or foreign law; (B) dishonesty in the course of his or her duties; (C) his or her failure to perform substantially his or her employment duties in any material respect; (D) a material violation of the Company’s ethics and compliance program; or (E) before a Change in Control, such other events as will be determined by the Committee and set forth in the applicable participant’s Award Agreement.
Unless otherwise provided pursuant to an Award Agreement, “Change in Control” is defined to mean any of the following events, generally:
| ● | the acquisition by any individual, entity or group of beneficial ownership of 30% or more of either the then outstanding common shares or the combined voting power of the then outstanding voting securities of the Company entitled to vote generally in the election of directors; except any acquisition directly from or by the Company or any acquisition by any Company employee benefit plan (or related trust), or any Non-Qualifying Transaction (as defined below) will generally not be deemed a Change in Control; |
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| ● | a change in the composition of a majority of the Board of Directors which is not supported by the incumbent board of directors; |
| ● | the consummation of a merger, reorganization or consolidation or sale or other disposition of all or substantially all of the Company’s assets or the acquisition of assets of another entity, unless, immediately following such transaction (i) more than 50% of the total voting power of the surviving entity or the ultimate parent entity is represented by voting shares that were outstanding immediately before the transaction and are held substantially in the same proportion, (ii) no individual, entity or group (excluding any Company employee benefit plan or related trust) is or becomes the beneficial owner of 30% or more of the outstanding voting shares (except as provided above) and (iii) there has not been a change in the composition of a majority of the Board of Directors, as provided above (each, a “Non-Qualifying Transaction”); or |
| ● | the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. |
“Good Reason” generally means, if the applicable Plan participant is also a participant in the Company’s Change in Control Severance Plan or is subject to a Company severance plan, policy or guideline that provides the applicable participant with the opportunity to resign for good reason, the definition of Good Reason as set forth in such Company arrangement, as applicable. If the participant is not a participant in any such Company arrangement, the definition of Good Reason as set forth in any Award Agreement to which the applicable participant is a party or any employment, consulting or similar agreement between the applicable participant and the Company or one of its subsidiaries or affiliates.
“Termination of Employment”generally means, unless otherwise provided in the applicable Award Agreement, the complete termination of the applicable Plan participant’s employment with, and performance of services for, the Company and any of its subsidiaries or affiliates (including in connection with a complete disaffiliation of a subsidiary or an affiliate or a division of the Company).
Plan Amendment and Termination. The Board or its delegate may amend or terminate the 2017 Stock Plan, so long as such amendment or termination will not materially impair rights under outstanding Awards without participant consent (except if required to comply with applicable law or stock exchange accounting rules). No amendment will be made without the approval of the Company’s stockholders to the extent such approval is required by applicable law or by New York Stock Exchange listing standards.
Award Clawback, Cancellation and Suspension. Subject to the above restrictions, the Committee has full authority to cancel or suspend Awards, and the participant may be required to repay any or all amounts previously paid pursuant to any Award, such as in the case of Awards to participants who render services to, or own any material interest in, any business that competes with the Company as determined by the Committee or its delegate.
Unless otherwise provided in the applicable Award Agreement, any Award will be cancelled, and the Participant may be required to repay any or all amounts previously paid pursuant to any Award, if the participant, without the consent of the Company, violates any policy adopted by the Company or applicable affiliate relating to the recovery of compensation granted, paid, delivered, awarded or otherwise provided to such participant by the Company or applicable affiliate, as such policy is in effect on the Award’s grant date, or, to the extent necessary to address applicable legal requirements, as may be amended from time to time. The Company may, to the extent permitted or required by law or regulation (including the Dodd-Frank Act), enforce any repayment obligation pursuant to any such policy by reducing any amounts that may be owing from time to time to a participant, whether as wages, severance, vacation pay or in the form of any other benefit or for any other reason, or enforce any other recoupment as prescribed by applicable law or regulation.
Stock Plan Limits. Subject to the adjustment provisions of the 2017 Stock Plan in the event of Corporate Transactions, the maximum number of shares that may be granted under the 2017 Stock Plan without approval of the Proposed Second Amendment is limited to: (i) the number of shares remaining available for
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grant under the Company’s 2017 Stock Plan on the Effective Date as described in this proposal; plus (ii) any shares with respect to awards granted under the 2017 Stock Plan that are forfeited, cancelled or expire following the Effective Date. As of February 28, 2023, we had 3.5 million shares remaining available for future issuance under the under the 2017 Plan. No shares remained available for future issuance under either the 2013 Plan, the 2011 Plan, the 2006 Plan or the Management Stock Plan as of February 28, 2023. Shares subject to any type of Award will be counted against this plan limit as one share for every one share granted.
New Plan Benefits |
Because benefits under the 2017 Stock Plan, as amended by the Proposed Second Amendment, will depend on the Committee’s actions and the fair market value of our common stock at various future dates, it is not possible to determine with precision at this time the benefits that might be received by officers, employees and non-employee directors if the Proposed Second Amendment to the 2017 Stock Plan is approved by stockholders. For grants to directors and our named executives for fiscal year 2022, see our Director Compensation Tables section and the Grants of Plan-Based Awards Table — 2022 in our Compensation Discussion & Analysis section above.
Existing Plan Benefits |
As of February 28, 2023, the following number of equity awards relating to shares of our common stock were held under the 2017 Stock Plan by the following individuals and groups (assuming target performance with respect to each PBRSU): (i) each of our named executive officers held the following amounts: Michael Hayford held 2,144,973 stock options and 820,296 RSUs; Owen Sullivan held 1,254,003 stock options and 496,433 RSUs; Tim Oliver held 345,423 stock options and 431,131 RSUs; Adrian Button held 286,554 stock options and 46,118 RSUs; and Don Layden held 185,471 stock options and 306,066 RSUs; (ii) our executive officers as a group (i.e., our named executive officers) held an aggregate of 4,216,424 stock options and 2,100,044 RSUs; (iii) our current nonemployee directors as a group held an aggregate of 0 stock options and 105,743 RSUs; (iv) the director nominees for this year who are not current non-employee directors (if any) held 0 stock options and 0 RSUs; (v) associates of our executive officers, non-employee directors and director nominees for this year held 0 stock options and 0 RSUs; (vi) all employees, including all current officers who are not executive officers, as a group held an aggregate of 4,453,041 stock options and 6,479,135 RSUs; and (vii) all non-employee consultants as a group held an aggregate of 0 stock options and 0 RSUs. As of February 28, 2023, the following individuals held 5% or more of the total number of outstanding equity awards under the 2017 Stock Plan: Michael Hayford (CEO) and Owen Sulllivan (President and COO). No other person held 5% or more of the total number of outstanding equity awards under the 2017 Stock Plan. The foregoing equity awards were granted in consideration for services provided to the Company as an employee or as a non-employee director. The stock options were granted with an exercise price that was not be less than the fair market value of our common stock at the time of grant, and the maximum term of each option does not exceed ten years. As of February 28, 2023, the closing price of a share of our common stock on the NYSE was $25.53. For a summary of certain federal income tax consequences of the issuance and exercise of such stock options to the Company and the participants, see the section below entitled “US Federal Income Tax Consequences.”
Registration with SEC |
We intend to file with the SEC a registration statement on Form S-8 covering the additional 12,000,000 shares of our common stock issuable under the NCR Corporation 2017 Stock Incentive Plan, as amended (if approved by our stockholders).
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U.S. Federal Income Tax Implications of Awards |
The following is a brief summary of the U.S. Federal income tax consequences applicable to Awards granted by NCR under the 2017 Stock Plan, based upon current law as of the date of these proxy materials. This summary is provided only as general information and not as tax advice. It is not intended or written to be used, and cannot be used: (i) by any taxpayer for the purpose of avoiding tax penalties under the Federal Internal Revenue Code; or (ii) for promoting, marketing or recommending to another party any transaction or matter addressed herein. It does not address all of the tax considerations that may be relevant to a particular participant and does not discuss state, local and foreign tax consequences. Tax consequences may vary depending on each participant’s particular circumstances, and each participant should consult his or her tax advisor regarding his or her personal circumstances.
No later than the date as of which an amount first becomes includible in the gross income of a participant for Federal, state, local or foreign income or employment or other tax purposes with respect to any Award under the 2017 Stock Plan, such participant will be required to pay to the Company, or make arrangements satisfactory to the Company regarding the payment of, any Federal, state, local or foreign taxes of any kind required by law to be withheld with respect to such amount, at the statutory withholding rate determined applicable by the Company (up to the participant’s maximum required tax withholding rate) that will not trigger a negative accounting impact. Withholding obligations generally may be settled with NCR common stock, including common stock that is part of the Award that gives rise to the withholding requirement. The obligations of the Company will be conditional on such payment or arrangements, and the Company and its subsidiaries and affiliates will, to the extent permitted by law, have the right to deduct any such taxes from any payment otherwise due to such participant. The Committee may establish such procedures as it deems appropriate, including making irrevocable elections, for the settlement of withholding obligations with common stock. For purposes of calculating compensation income and withholding for transactions that settle in common shares, the Company will use the closing price of a share of Company common stock on the New York Stock Exchange (or such other exchange as maybe the principal market for the Company’s common stock) on the trading date immediately preceding the distribution date of the common stock.
RSUs. No income generally will be recognized by a participant in connection with the grant of a restricted stock unit (“RSU”). A participant is generally subject to withholding of Social Security and Medicare taxes on the value of an RSU at the time that the participant’s rights with respect to the RSU become vested. Although not free from doubt, under the Internal Revenue Code, if the participant’s employer determines the time at which a vested RSU will be settled, a participant generally should not be subject to income taxes with respect to such RSU until the participant has received shares and/or cash in settlement of the RSU. The fair market value of those shares at the time of settlement and/or any cash received generally should be taxable to the participant as ordinary income at the time of settlement (and, with respect to an employee, will be subject to income tax withholding on the amount of such ordinary income). The amount of ordinary income recognized by the participant generally will be deductible to the Company, except to the extent that the limitations on deductibility under Code Section 162(m) apply. The participant’s aggregate tax basis for resale purposes in any common stock received is the amount taxed as ordinary income upon receipt of the common stock. Any gain or loss on a sale of common stock will be treated as capital gain or loss and will be long-term capital gain or loss if such common stock is held for more than one year after the date of issuance.
Restricted Stock. No income generally will be recognized by a participant in connection with the grant of Restricted Stock. The participant generally will be subject to tax at ordinary income rates on the fair market value of the common stock held at the time the Restricted Stock is no longer subject to a substantial risk of forfeiture or restrictions on transfer for purposes of Section 83 of the Code (the “Vesting Date”), reduced by the amount, if any, paid by the participant for the Restricted Stock (and, with respect to an employee, will be subject to income tax withholding on the amount of such ordinary income). When a participant sells the common stock held upon vesting of the Restricted Stock, he or she generally will recognize capital gain or loss in an amount equal to the difference between the amount realized upon the sale of the shares and his or her tax basis in the shares (generally equal to the amount, if any, paid for the Restricted Stock and any
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ordinary income recognized on the Vesting Date). If the participant’s holding period for the shares, which begins on the Vesting Date, exceeds one year, such gain or loss will constitute long-term capital gain or loss.
A participant who so elects, pursuant to the express terms of the applicable Award Agreement or by action of the Committee in writing, under Section 83(b) of the Code within thirty days of the date of transfer of the Restricted Stock to the participant will have taxable ordinary income on the date of transfer of the Restricted Stock (the “Transfer Date”) equal to the excess of the fair market value of the Restricted Stock on the Transfer Date (determined without regard to the risk of forfeiture or restrictions on transfer) over the amount, if any, paid for the Restricted Stock (and, with respect to an employee, will be subject to income tax withholding on the amount of such ordinary income). If the Vesting Date occurs, the participant will not recognize any additional income on such date, and the gain or loss to the participant on a subsequent sale of the common stock (calculated as the difference between the fair market value of the shares on the date of sale and the participant’s tax basis in the shares, generally equal to the amount, if any, paid for the Restricted Stock and any ordinary income recognized on the Transfer Date) generally will be treated as capital gain or loss to the participant. If the participant’s holding period for the common stock, which begins on the Transfer Date, exceeds one year, such gain or loss will constitute long-term capital gain or loss.
Incentive Stock Options. Neither the grant nor the exercise of an ISO results in taxable income to the optionee for regular U.S. Federal income tax purposes. However, an amount equal to: (i) the fair market value on the exercise date minus the exercise price at the time of grant; multiplied by (ii) the number of shares with respect to which the ISO is being exercised, will count as “alternative minimum taxable income” which, depending on the particular facts, could result in liability for the “alternative minimum tax” or AMT. If the optionee does not dispose of the common stock issued pursuant to the exercise of an ISO until the later of the two-year anniversary of the date of grant of the ISO and the one-year anniversary of the date of the acquisition thereof, then: (a) upon a later sale or taxable exchange of the shares, any recognized gain or loss would be treated for tax purposes as a long-term capital gain or loss; and (b) the Company would not be permitted to take a deduction with respect to that ISO for Federal income tax purposes.
If common stock acquired upon the exercise of an ISO were disposed of prior to the expiration of the two-year and one-year holding periods described above (a “disqualifying disposition”), generally the optionee would realize ordinary income in the year of disposition in an amount equal to the lesser of: (i) any excess of the fair market value of the shares at the time of exercise of the ISO over the amount paid for the shares; or (ii) the excess of the amount realized on the disposition of the shares over the participant’s aggregate tax basis in the shares (generally, the exercise price). A deduction would be available to the Company equal to the amount of ordinary income recognized by the optionee. Any further gain realized by the optionee would be taxed as short-term or long-term capital gain and would not result in any deduction by the Company. A disqualifying disposition occurring in the same calendar year as the year of exercise would eliminate the alternative minimum tax effect of the ISO exercise.
Special rules may apply where all or a portion of the exercise price of an ISO is paid by tendering common stock, or if the shares acquired upon exercise of an ISO are subject to substantial forfeiture restrictions. The foregoing summary of tax consequences associated with the exercise of an ISO and the disposition of shares acquired upon exercise of an ISO assumes that the ISO is exercised during employment or within three months following termination of employment. The exercise of an ISO more than three months following termination of employment will result in the tax consequences described below for NQSOs, except that special rules apply in the case of disability or death.
An individual’s Options otherwise qualifying as ISOs will be treated for tax purposes as NQSOs (and not as ISOs) to the extent that, in the aggregate, they first become exercisable in any calendar year for stock having a fair market value in excess of $100,000.
Nonqualified Stock Options. An NQSO (that is, an Option that does not qualify as an ISO) would result in no taxable income to the optionee or deduction to the Company at the time that such NQSO is granted. An optionee exercising an NQSO would, at the time of exercise, realize taxable compensation equal to: (i) the
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fair market value on the exercise date minus the exercise price at the time of grant, multiplied by (ii) the number of shares with respect to which the Option is being exercised. If the NQSO were granted in connection with employment, this taxable income would also constitute “wages” subject to withholding and employment taxes. A corresponding deduction would be available to the Company. The foregoing summary assumes that the shares acquired upon exercise of an NQSO are not subject to a substantial risk of forfeiture.
SARs. No income generally will be recognized by a participant in connection with the grant of a SAR. When the SAR is exercised, the participant generally will be required to include as ordinary income in the year of exercise an amount equal to the excess of the fair market value of the common stock subject to the SAR on the date of exercise over the aggregate exercise price of the SAR. A participant who is an employee will be subject to income tax withholding on ordinary income recognized upon exercise of a SAR. The Company generally will be entitled to a deduction equal to the amount of ordinary income recognized by the participant at the time the SAR is exercised. A Plan participant’s aggregate tax basis for resale purposes in any common stock received upon exercise of a SAR is the amount taxed as ordinary income upon receipt of such common stock (generally equal to the fair market value of such common stock on the date of receipt). Any gain or loss on a sale of such common stock will be treated as capital gain or loss and will be long-term capital gain or loss if such common stock is held for more than one year after the date of issuance.
Performance Units and Other Performance-Based Awards. No income generally will be recognized by a participant in connection with the grant of a performance unit or an Award otherwise subject to Performance Goals. Upon settlement of any such Award, the participant generally will be required to include as ordinary income in the year of payment an amount equal to the amount of any cash, and the fair market value of any non-restricted shares, actually or constructively received (and, with respect to an employee, will be subject to income tax withholding on the amount of such ordinary income). The amount of ordinary income recognized by the participant generally will be deductible to the Company, except to the extent that the limitations on deductibility under Section 162(m) apply.
Shares. In the event that fully vested common stock is issued to a participant for no cash consideration, an amount equal to the fair market value of the common stock on the date of issuance is taxable to the participant as ordinary income at the time of issuance. The amount of ordinary income recognized by the participant generally will be deductible to the Company, except to the extent that the limitations on deductibility under Section 162(m) apply. The participant’s aggregate tax basis in the common stock so received will be equal to the amount taxed as ordinary income upon receipt of the common stock. Any gain or loss on a sale of the common stock will be treated as capital gain or loss and will be long-term capital gain or loss if such common stock is held for more than one year after the date of issuance.
Other Matters |
The Board of Directors does not know of any matters that will be brought before the Annual Meeting or any postponement or adjournment thereof other than those listed in the notice of meeting. If any other matters are properly introduced at the Annual Meeting, or any postponement or adjournment thereof, for consideration, including consideration of a motion to adjourn the Annual Meeting to another time or place, the individuals named on the enclosed form of proxy will have authority to vote on such matters in their discretion.
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Security Ownership of Certain Beneficial Owners and Management
Officers and Directors
The following table shows information as of February 15, 202128, 2023 (the “Table Date”), unless otherwise indicated, regarding the beneficial ownership of NCR common stock by: (i) each named executive officer listed in our Summary Compensation Table (the “named executives”); (ii) each non-employee director and nominee; director; and (iii) all current directors and executive officers as a group. Unless otherwise indicated, to NCR’s knowledge each person named in the table below has sole voting and investment power over the shares reported. As of the Table Date, 130,068,495140,055,915 shares of the Company’s common stock were issued and outstanding, and none of the persons named in the table below owned, beneficially or of record, any shares of NCR’s Series A Convertible Preferred Stock. Unless otherwise noted below, the address of each beneficial owner listed in the table is: c/o NCR Corporation, 864 Spring Street NW, Atlanta, Georgia 30308-1007.
| Name of Beneficial Owner |
Shares of Common Stock | Percent of Common Stock Outstanding | ||
Joseph Reece, Independent Lead Director | 18,462 | * | ||
Mark W. Begor, Director | 38,236 | * | ||
Gregory Blank, Director | 27,253 | * | ||
Catherine L. Burke, Director | 27,618 | * | ||
Deborah A. Farrington, Director | 41,109 | * | ||
Georgette D. Kiser, Director | 25,152 | * | ||
Kirk T. Larsen, Director | 27,618 | * | ||
Martin Mucci, Director | 10,458 | * | ||
Laura J. Sen, Director | 4,859 | * | ||
Glenn W. Welling, Director | 5,260,742(2) | 3.8% | ||
Michael D. Hayford, Director and Officer | 2,993,930(3) | 2.1% | ||
Frank R. Martire, Director and Officer | 1,042,956(4) | * | ||
Owen J. Sullivan, Officer | 1,689,143(5) | 1.2% | ||
Timothy C. Oliver, Officer | 326,194(6) | * | ||
Donald Layden, Officer | 148,662(7) | * | ||
Current Directors, Director Nominees and | 12,102,566 | 8.6% | ||
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Name of Beneficial Owner
|
Shares of Common Stock
| Percent of Common Stock
| ||
Mark W. Begor, Director | 14,421(2) | * | ||
Gregory Blank, Director | 13,580(3) | * | ||
Catherine L. Burke, Director | 13,945(4) | * | ||
Chinh E. Chu, independent Lead Director | 49,754(5) | * | ||
Deborah A. Farrington, Director | �� 27,436(6) | * | ||
Georgette D. Kiser, Director | 11,429(7) | * | ||
Kirk T. Larsen, Director | 13,945(8) | * | ||
Matthew A. Thompson, Director | 28,072(9) | * | ||
Martin Mucci, Director Nominee | - | * | ||
Michael D. Hayford, Director and Officer | 1,238,630(10) | * | ||
Frank R. Martire, Director and Officer | 548,251(11) | * | ||
Owen J. Sullivan, Officer | 709,246(12) | * | ||
Timothy C. Oliver, Officer | - (13) | * | ||
Adrian Button, Officer | 170,269(14) | * | ||
Daniel W. Campbell, Officer | 230,083(15) | * | ||
Andre J. Fernandez, Former Officer | 391,406(16) | * | ||
Current Directors, Director Nominees and Executive Officers as a Group (19 persons) | 3,761,783 | 3% | ||
* Less than 1%.
(1) Represents shares of NCR common stock held, and options and RSUs held that will become exercisable or vest, respectively, within 60 days after the Table Date. Fractional shares are rounded to the nearest whole number. Includes the following shares deferred under our Director Compensation Program: 13,90037,715 shares granted to Mr. Begor, and 9,64310,458 granted to Ms. Kiser, 23,316 shares granted to Mr. Larsen.Larsen, and 7,559 share granted to Mr.Reece.
(2) Excludes 3,215 RSUsRepresents securities beneficially owned directly by Engaged Capital Flagship Master Fund, LP (“Engaged Capital Flagship Master”), Engaged Capital Co-Invest XIV, LP (“Engaged Capital Co-Invest XIV”) and held in an account (the “Engaged Capital Account”) separately managed by Engaged Capital, LLC (“Engaged Capital”). Engaged Capital serves as the general partner and investment adviser of each of Engaged Capital Flagship Master and Engaged Capital Co-Invest XIV and as the investment adviser of the Engaged Capital Account. Mr. Welling, as the founder and Chief Investment Officer of Engaged Capital, and as the sole member of Engaged Capital Holdings, LLC, which serves as the managing member of Engaged Capital, may be deemed to beneficially own the securities held by Mr. Begor that are not scheduled to vest within 60 days afterEngaged Capital Flagship Master, Engaged Capital Co-Invest XIV and the Table Date.Engaged Capital Account.
(3) Excludes 3,215820,296 RSUs held by Mr. Blank that are not scheduled to vest within 60 days after the Table Date.
(4) Excludes 3,215 RSUs held by Ms. Burke that are not scheduled to vest within 60 days after the Table Date.
(5) Excludes 3,215 RSUs held by Mr. Chu that are not scheduled to vest within 60 days after the Table Date.
(6) Excludes 3,215 RSUs held by Ms. Farrington that are not scheduled to vest within 60 days after the Table Date.
(7) Excludes 3,215 RSUs held by Ms. Kiser that are not scheduled to vest within 60 days after the Table Date.
(8) Excludes 3,215 RSUs held by Mr. Larsen that are not scheduled to vest within 60 days after the Table Date.
(9) Excludes 3,215 RSUs held by Mr. Thompson that are not scheduled to vest within 60 days after the Table Date.
(10) Excludes 646,026 RSUs and 1,224,292 options held by Mr. Hayford that are not scheduled to vest or become exercisable within 60 days after the Table Date.
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(11)(4) Excludes 114,64815,713 RSUs and 414,854 options held by Mr. Martire that are not scheduled to vest or become exercisable within 60 days after the Table Date.
(12)(5) Excludes 383,096496,433 RSUs and 718,085 options held by Mr. Sullivan that are not scheduled to vest or become exercisable within 60 days after the Table Date.
(13)(6) Excludes 108,519431,131 RSUs and 345,423115,141 options held by Mr. Oliver that are not scheduled to vest or become exercisable within 60 days after the Table Date.
(14)(7) Includes 6,823Excludes 306,066 RSUs and 61,824 options held by Mr. Button that vested on February 23, 2021, and excludes 146,551 RSUs and 198,436 optionsLayden that are not scheduled to vest or become exercisable within 60 days after the Table Date.
(15) Includes 5,117 RSUs held by Mr. Campbell that vested on February 23, 2021 and 30,331 RSUs held by Mr. Campbell that vested on March 1, 2021, and excludes 141,200 RSUs and 194,184 options that are not scheduled to vest or become exercisable within 60 days after the Table Date.
(16) Excludes 42,080 RSUs and 364,734 options held by Mr. Fernandez that are not scheduled to vest or become exercisable within 60 days after the Table Date.
Other Beneficial Owners of Common Stock
To the company’s knowledge, and as reported as of the close of business on February 16, 202114, 2023 (except as otherwise specified), the following stockholders beneficially own more than 5% of the Company’s outstanding stock.
| Name and Address of Beneficial Owner | Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | Shares of Common Stock Beneficially Owned | Percent of Common Stock Outstanding | ||||||||||||
The Vanguard Group(1) 100 Vanguard Boulevard Malvern, PA 19355 | 11,824,500 | 9.17 | % | 13,918,318 | 10.13 | % | ||||||||||
BlackRock, Inc.(2) 55 East 52nd Street New York, NY 10055 | 10,436,398 | 8.10 | % | 12,370,519 | 9.0 | % | ||||||||||
Wells Fargo & Company(3) 420 Montgomery Street San Francisco, CA 94163 | 6,440,257 | 5.00 | % | |||||||||||||
(1) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on February 10, 20219, 2023 by The Vanguard Group (“Vanguard”), reporting beneficial ownership of 11,824,50013,918,318 shares of the Company’s stock as of December 31, 2020, on behalf of itself and its subsidiaries, Vanguard Asset Management, Limited, Vanguard Fiduciary Trust Company, Vanguard Global Advisors, LLC; Vanguard Group (Ireland) Limited; Vanguard Investments Australia Ltd, Vanguard Investments Canada Inc., Vanguard Investments Hong Kong Limited, and Vanguard Investments UK, Limited.2022. In this filing, Vanguard reported sole dispositive power with respect to 11,625,624 of such shares, sole voting power with respect to 013,667,721 of such shares, shared dispositive power with respect to 198,876250,597 of such shares and shared voting power with respect to 91,292114,649 of such shares.
(2) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on January 29, 202125, 2023 by BlackRock, Inc. (“BlackRock”), reporting beneficial ownership of 10,436,39812,370,519 shares of the Company’s stock as of December 31, 2020, as a parent holding company or control person for its subsidiaries, BlackRock Life Limited, BlackRock Advisors, LLC, BlackRock (Netherlands) B.V., BlackRock Institutional Trust Company, National Association, BlackRock Asset Management Ireland, Limited, BlackRock Financial Management, Inc., BlackRock Asset Management Schweiz AG, BlackRock Investment Management, LLC, BlackRock Investment Management (UK) Limited, BlackRock Asset Management Canada Limited, BlackRock Investment Management (Australia) Limited, BlackRock Advisors (UK) Limited, BlackRock Fund Advisors and BlackRock Fund Managers Ltd.2022. In this filing, BlackRock reported sole voting power to vote or direct the vote with respect to 9,990,71011,970,706 of such shares, and sole dispositive power to dispose of or to direct the disposition with respect to all 10,436,39812,370,519 of such shares.
(3) Information, including ownership percentage, is based on a Schedule 13G/A filed with the SEC on February 11, 2021 by Wells Fargo & Company (“Wells Fargo”), reporting beneficial ownership of 6,440,257 shares of the Company’s stock as of December 31, 2020, on behalf of itself and its subsidiaries, Wells Fargo Funds Management, LLC, Wells Fargo Bank, National Association, Wells Capital Management Incorporated, Wells Fargo Clearing Services, LLC, and Wells Fargo Advisors Financial Network, LLC. In this filing, Wells Fargo reported sole dispositive power with respect to 108,470 of such shares, sole voting power with respect to 108,470 of such shares, shared dispositive power with respect to 6,331,787 of such shares and shared voting power with respect to 748,752 of such shares.
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Delinquent Section 16(a) Reports
Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and related SEC regulations require us to identify in this proxy statement each person who, at any time during the fiscal year, was a director, officer, or beneficial owner of more than ten percent of any class of equity securities of NCR registered pursuant to Section 12 of the Exchange Act, or any other person subject to Section 16 of the Exchange Act with respect to NCR because of the requirements of Section 30 of the Investment Company Act that failed to file on a timely basis reports required by Section 16(a) of the Exchange Act during the most recent fiscal year or prior fiscal years if not previously reported. Based on our review of filings and written representations from reporting persons stating that they were not required to file such forms as permitted under SEC regulations, we believe that during the most recent fiscal year and prior fiscal years (subject to any previously reported delinquencies), all Section 16(a) filing requirements were satisfied on a timely basis except that one report on Form 4 filed on behalf of Mr. Martire (a director and officer) on February 12, 2020 was filed one day late as a result of the SEC filing codes for Mr. Martire being updated by another registrant without notice to NCR. Further, due to a technical error, this filing inadvertently showed details of a prior timely reported 2019 option award, instead of the February 8, 2020 restricted stock unit vesting transaction and associated tax withholding transaction subject to reporting. A Form 4/A showing corrected information about these vesting and tax withholding transactions was filed on behalf of Mr. Martire on March 20, 2020 following discovery of the technical error.
|
What is the purpose of these proxy materials? |
We are making this proxy statement, the notice of 2023 annual meeting and our 2022 annual report available to stockholders beginning on or about March 21, 2023 in connection with the solicitation by the Board of Directors (the “Board”) of NCR Corporation, a Maryland corporation (“NCR,” the “Company,” “we” or “us”), of proxies for the 2023 Annual Meeting of Stockholders, and any postponement or adjournment thereof (the “Annual Meeting”), to be held via a live webcast, for the purposes set forth in these proxy materials.
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How do I attend and ask questions at the Annual Meeting? |
The Annual Meeting will be a virtual meeting of stockholders, which allows stockholders the ability to more easily attend the Annual Meeting without incurring travel costs or other inconveniences. If you are a stockholder as of the close of business on February 27, 2023, the record date for the Annual Meeting (the “Record Date”), a proxy for a record stockholder or a beneficial owner of either (i) NCR’s common stock, par value $0.01 per share (the “common stock”), or (ii) NCR’s Series A Convertible Preferred Stock, par value $0.01 per share, with a liquidation preference $1,000 per share (the “Series A Convertible Preferred Stock”), in either case with evidence of ownership, you will be able to attend the Annual Meeting and vote and submit questions during the Annual Meeting via a live webcast by registering at www.proxydocs.com/NCR prior to the deadline of 5:00 p.m. Eastern Time on April 30, 2023, which provides our stockholders with rights and opportunities to vote and ask questions equivalent to in-person meetings of stockholders. The Annual Meeting will convene at 12:00 p.m. Eastern Time, on May 2, 2023.
We recommend that you authorize a proxy to vote your shares as described below so that your vote will be counted if you later decide not to virtually attend the Annual Meeting.
How do I access the proxy materials? |
We are providing access to our proxy materials (including this proxy statement, the notice of 2023 annual meeting and our 2022 annual report) over the Internet pursuant to rules adopted by the Securities and Exchange Commission (“SEC”). Beginning on or about March 21, 2023, we will send Notices of Internet Availability of Proxy Materials (each, a “Notice”) by mail to stockholders entitled to notice of or a vote at the Annual Meeting. The Notice includes instructions on how to view the electronic proxy materials on the Internet, which will be available to all stockholders beginning on or about March 21, 2023. The Notice also includes instructions on how to elect to receive future proxy materials by email. If you choose to receive future proxy materials by email, next year you will receive an email with a link to the proxy materials and proxy voting site, and you will continue to receive proxy materials in this manner until you terminate your election. We encourage you to take advantage of the availability of our proxy materials on the Internet.
Will I receive a printed copy of the proxy materials? |
You will not receive a printed copy of the proxy materials unless you specifically request one. Each Notice includes instructions on how to request a printed copy of the proxy materials, including the proxy card for the Annual Meeting if you are a record holder or the applicable voting instruction form (or forms) if you are a beneficial owner, at no cost to you. In addition, by following the instructions on the Notice, you can elect to receive future proxy materials in printed form by mail. If you choose to receive future proxy materials in printed form by mail, we will continue to send you printed materials pursuant to that election until you notify us otherwise.
Can I access the proxy materials on the Internet? |
Yes. The Company’s proxy statement and our Annual Report are available free of charge at SEC Filings | NCR Corporation and www.proxydocs.com/NCR. You may also obtain these materials at the SEC website at www.sec.gov or by contacting the Company’s Corporate Secretary at NCR Corporation 864 Spring Street NW, Atlanta, Georgia 30308-1007. The Annual Report is not proxy soliciting material. Except to the extent specifically referenced herein, information contained or referenced on our website is not incorporated by reference into and does not form a part of the proxy statement.
What does it mean if I receive more than one Notice? |
We are taking advantage of the householding rules adopted by the SEC that permit us to deliver only one Notice to stockholders who share an address, unless otherwise requested. This allows us to reduce the expense of delivering duplicate Notices to our stockholders who may have more than one stock account or who share an address with another NCR stockholder.
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If you have multiple common stock record accounts or multiple Series A Convertible Preferred Stock record accounts and you have received only one Notice with respect to your common stock or Series A Convertible Preferred Stock, and/or if you share an address with another NCR stockholder and you have received only one Notice:
| ● | you may write us at 864 Spring Street NW, Atlanta, Georgia 30308-1007, Attn: Investor Relations, or call us at 1-800-225-5627, to request separate copies of the proxy materials at no cost to you; or |
| ● | if you no longer wish to participate in the householding program, please call 1-866-540-7095 to “opt-out” or revoke your consent. |
If you have multiple NCR common stock record accounts or multiple Series A Convertible Preferred Stock record accounts and you have received multiple copies of the Notice with respect to either your common stock or Series A Convertible Preferred Stock, and/or if you share an address with another NCR stockholder and you have received multiple copies of the Notice, and you wish to participate in the householding program, please call 1-866-540-7095 to “opt-in.”
Please note that if you hold both common stock and Series A Convertible Preferred Stock, you can expect to receive a separate Notice for each class of stock. These notices are separate and will not be combined even if you have opted in or consented to householding. See “What if I hold both common stock and Series A Convertible Preferred Stock” below.
Who is soliciting my vote and who pays the cost of this proxy solicitation? |
Your vote is being solicited by our Board. Certain of our officers, directors and employees, none of whom will receive additional compensation therefor, may solicit proxies by telephone or other personal communication. We have hired Innisfree M&A Incorporated to assist in the solicitation of proxies at an estimated cost of $25,000 plus reimbursement of reasonable out-of-pocket expenses. In accordance with SEC and New York Stock Exchange (“NYSE”) rules, NCR also will reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses of sending proxies and proxy materials to the beneficial owners of NCR common stock and Series A Convertible Preferred Stock.
Who will count the vote? |
Mediant Communications Inc., an independent third party, will count the votes and act as the inspector of the elections.
Who is entitled to vote at the Annual Meeting? |
Record holders of our common stock and/or Series A Convertible Preferred Stock on the Record Date are entitled to notice of and to vote at the Annual Meeting.
How many votes do I have? |
Each record holder of common stock will have one vote for each share of common stock held at the close of business on the Record Date on each matter that is properly brought before the Annual Meeting and on which holders of common stock are entitled to vote. There were 140,049,384 shares of common stock outstanding on the Record Date.
Each record holder of Series A Convertible Preferred Stock will have a number of votes equal to the largest number of whole shares of common stock into which such shares are convertible on the Record Date on each matter that is properly brought before the Annual Meeting and on which holders of Series A Convertible Preferred Stock are entitled to vote together with common stock as a single class. As of the Record Date, there were 275,685 shares of Series A Convertible Preferred Stock outstanding, which as of such date were convertible into 9,188,581 shares of common stock.
Are there any requirements on how the holders of Series A Convertible Preferred Stock must vote? |
Each record holder of Series A Convertible Preferred Stock is entitled to vote in his, her or its discretion on all matters described in this proxy statement.
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How do I vote my shares? |
Your vote is important. Your shares can be voted at the Annual Meeting only if you are present (via attendance at the Annual Meeting by webcast) or if your shares are represented by proxy. Even if you plan to attend the Annual Meeting webcast, we urge you to authorize a proxy to vote your shares in advance.
If you hold both common stock and Series A Convertible Preferred Stock, you will need to vote, or authorize a proxy to vote, each class of stock separately. Please be sure to vote or authorize a proxy to vote for each class of stock separately so that all your votes can be counted. For more information, see “What if I hold both common stock and Series A Convertible Preferred Stock” below.
You can authorize a proxy to vote your shares of common stock or Series A Convertible Preferred Stock electronically by going to www.proxypush.com/NCR, or by calling the toll-free number (for residents of the United States and Canada) listed on the proxy card. Please have your proxy card in hand when going online or calling. If you authorize a proxy to vote your shares electronically, you do not need to return the proxy card. If you received proxy materials by mail and want to authorize your proxy by mail, simply mark the proxy card, and then date, sign and return it in the applicable postage-paid envelope provided so it is received no later than April 21, 2023.
Your shares of common stock or Series A Convertible Preferred Stock will be voted at the Annual Meeting as directed by your electronic proxy or the instructions on your proxy card if: (i) you are entitled to vote those shares; (ii) your proxy for those shares was properly executed or properly authorized electronically; (iii) we received your proxy for those shares prior to the Annual Meeting; and (iv) you did not revoke your proxy for those shares prior to or at the Annual Meeting or provide a later dated proxy. The method by which you vote or authorize a proxy to vote your shares will in no way limit your right to attend and vote at the Annual Meeting webcast if you later decide to do so. However, attendance at the Annual Meeting, by itself, will not cause your previously granted proxy to be revoked unless you specifically make that request or vote in person at the Annual Meeting.
If you properly submit your proxy card, your shares will be voted as you direct or will be voted as specified in the above Board recommendations if you do not direct a particular vote. With respect to director elections, should any nominee be unable to serve, the Board may reduce the size of the Board or designate a substitute nominee. If the Board designates a substitute nominee, shares represented by properly authorized proxies that were voted in favor of the nominee that became unable to serve will be voted FOR the substitute nominee. With respect to any other matter that may be properly brought before the Annual Meeting or any adjournment or postponement thereof, the persons designated as proxies reserve full discretion to vote in accordance with their judgment.
Please note that if you hold any of your shares through a bank, broker or other nominee (i.e., in street name), you may be able to authorize your proxy for those shares by telephone, the Internet or mail. You should follow the instructions you receive from your bank, broker or other nominee to vote these shares. Also, if you hold any of your shares in street name, you must obtain a “legal proxy” executed in your favor from your bank, broker or nominee to be able to vote those shares in person via attendance at the virtual Annual Meeting. Obtaining a legal proxy may take several days.
What if I hold both common stock and Series A Convertible Preferred Stock? |
Some of our stockholders may hold both common stock and Series A Convertible Preferred Stock. If you are a holder of both common stock and Series A Convertible Preferred Stock, you can expect to receive a separate Notice for each class of stock (or a separate set of printed proxy materials if you previously elected to receive proxy materials in printed form).
You will need to vote, or authorize a proxy to vote, each class of stock separately in accordance with the instructions set forth herein and on the proxy card or voting instruction forms. Voting, or authorizing a proxy to vote, only your common stock will not also cause your shares of Series A Convertible Preferred Stock to be voted, and, similarly, voting, or authorizing a proxy to vote, only your Series A Convertible Preferred Stock will not also cause your shares of common stock to be voted.
NCR CORPORATION | 2023 Proxy Statement | 105
If you hold both common stock and Series A Convertible Preferred Stock, please be sure to vote or authorize a proxy to vote for each class of stock separately so that all of your votes can be counted.
How do I vote shares held under the NCR Direct Stock Purchase and Sale Plan? |
If you are a participant in the Direct Stock Purchase and Sale Plan (the “DSPP”) administered by our transfer agent, Equiniti Trust Company, any proxy you authorize will also have the authority to vote the shares of common stock held in your DSPP account. Equiniti Trust Company, as the DSPP administrator, is the stockholder of record of the plan and will not vote those shares unless you provide it with instructions, which you may do by telephone, the Internet or mail.
If I authorized a proxy, can I revoke it and change my vote? |
Yes, you may revoke a proxy at any time before it is exercised at the Annual Meeting by:
| ● | authorizing a new proxy on the Internet or by telephone; |
| ● | properly executing and delivering another proxy card (dated as of a date later than the date of the original proxy card), which is received no later than 5:00 p.m. Eastern Time on the business day immediately prior to the Annual General Meeting; |
| ● | voting by ballot at the Annual Meeting (attendance at the Annual Meeting without voting will not revoke a previously authorized proxy); or |
| ● | sending a written notice of revocation to the inspector of election in care of the Corporate Secretary of the Company at 864 Spring Street NW, Atlanta, Georgia 30308-1007 that is received no later than April 26, 2023. |
Only the most recent, properly authorized proxy will be exercised and all others will be disregarded regardless of the method by which the proxies were authorized.
If shares of NCR’s voting securities are held on your behalf by a broker, bank or other nominee, you must contact it to receive instructions as to how you may revoke your proxy instructions for those shares.
Attendance at the Annual Meeting will not cause your previously granted proxy to be revoked unless you specifically make that request or vote in person at the Annual Meeting.
What constitutes a quorum at the Annual Meeting? |
The presence at the Annual Meeting (in person via attendance at the virtual Annual Meeting by proxy) of stockholders entitled to cast a majority of all the votes entitled to be cast at the Annual Meeting constitutes a quorum.
NCR CORPORATION | 2023 Proxy Statement | 106
What vote is required to approve each proposal? |
| Proposal | Vote required for approval(1) | Effect of Abstentions | Effect of Broker Non-Votes(2) (3) | |||
1. Election of director nominees | Majority of votes cast for and against each nominee | No effect | No effect | |||
2. Say on Pay: Advisory Vote on the Compensation of the Named Executive Officers as described in these proxy materials | Majority of votes cast | No effect | No effect | |||
3. Say on Frequency: Advisory Vote on Frequency of Future Advisory Votes on the Compensation of the Named Executive Officers as described in these proxy materials | Majority of votes cast among 1 year, 2 years or 3 years | No effect | No effect | |||
4. Ratification of the Appointment of Independent Registered Public Accounting Firm for the year ending December 31, 2023 | Majority of votes cast | No effect | No effect | |||
5. Second Amendment to the 2017 Stock Incentive Plan as described in these proxy materials | Majority of votes cast | No effect | No effect | |||
(1) “Majority of votes cast” means the affirmative vote of a majority of all votes cast by holders of our common stock and Series A Convertible Preferred Stock, voting together as a single class (in person via attendance at the virtual Annual Meeting or by proxy), with the holders of Series A Convertible Preferred Stock voting on an as-converted basis.
(2) Under Maryland law, abstentions and broker “non-votes” will not be counted as votes cast and will have no effect on the results of the votes in the election of directors, the Say on Pay proposal, the Say on Frequency proposal, the proposal to ratify the appointment of our independent registered accounting firm or the proposal to amend the 2017 Stock Incentive Plan.
(3) A broker “non-vote” occurs when a broker returns a properly executed proxy containing at least one routine matter but does not vote on a particular proposal because the broker does not have the discretionary authority to vote on the proposal and has not received voting instructions from the beneficial owner regarding the proposal. Under the rules of the NYSE, brokers have the discretionary authority to vote on the ratification of our independent registered public accounting firm, but not on the election of our directors, on the Say on Pay proposal, on the Say on Frequency proposal, or on the proposal to amend the 2017 Stock Incentive Plan.
What if I have technical difficulties or trouble accessing the Annual Meeting? |
We will have technicians ready to assist you with any technical difficulties you may have accessing the virtual meeting. An email address for support is provided during the registration process and a toll-free support number is provided in the email that registrants receive one hour prior to the meeting.
Do I have any dissenters’ or appraisal rights with respect to any of the matters to be voted on at the Annual Meeting? |
No. None of our stockholders of the Company have any dissenters’ or appraisal rights with respect to the matters to be voted on at the Annual Meeting.
NCR CORPORATION | 2023 Proxy Statement | 107
When will you publish the results of the Annual Meeting? |
We will include the results of the votes taken at the Annual Meeting in a Current Report on Form 8-K filed with the SEC following the Annual Meeting.
General Information |
Cost of Proxy Solicitation
We will pay the expenses of soliciting proxies in connection with the Annual Meeting. Proxies may be solicited on our behalf through the mail, in person or by telephone, electronic or facsimile transmission. We have hired Innisfree M&A Incorporated to assist in the solicitation of proxies at an estimated cost of $35,000$25,000 plus reimbursement of reasonable out-of-pocket expenses. In accordance with SEC and NYSE rules, NCR also will reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses of sending proxies and proxy materials to the beneficial owners of NCR common stock and Series A Convertible Preferred Stock.
Procedures for Nominations Using Proxy Access
Stockholders interested in submitting nominations to the Board of Directors to be included in the Company’s 20222024 proxy materials pursuant to the proxy access provisions in Article I, Section 9 of the Company’s current bylaws must follow the procedures found in the Company’s bylaws. Nominations (containing the information specified in the bylaws regarding the stockholders and the proposed nominee) must be received by NCR’s Corporate Secretary no earlier than October 11, 2021,23, 2023, nor later than 5:00 p.m. Eastern Time on November 10, 2021.22, 2023.
Procedures for Stockholder Proposals and Nominations for 20222024 Annual Meeting Pursuant to SEC Rule 14a-8
Stockholders interested in presenting a proposal pursuant to SEC Rule 14a-8 for possible inclusion in the proxy materials for NCR’s 20222024 Annual Meeting of Stockholders must follow the procedures found in SEC Rule 14a-8 and the Company’s bylaws. To be eligible for possible inclusion in the Company’s 20222024 proxy materials, all qualified proposals must be received by NCR’s Corporate Secretary no later than 5:00 p.m. Eastern Time on November 10, 2021.22, 2023.
Procedures for Stockholder Proposals and Nominations for 20222024 Annual Meeting Outside of SEC Rule 14a-8 and Pursuant to SEC Rule 14a-19
Under the Company’s current bylaws, nominations for election of directors and proposals for other business to be considered by the stockholders at an annual meeting outside of SEC Rule 14a-8 may be made only:
NCR CORPORATION | 2021 Proxy Statement | 93
(i) pursuant to the Company’s notice of meeting; (ii) by or at the direction of the Board; or (iii) by any stockholder of the Company that was a stockholder of record both at the time of giving of notice as provided for in our bylaws and at the time of the annual meeting, that is entitled to vote at the meeting in the election of each individual so nominated or on any such other business and that has provided the information required by our bylaws and delivered notice to the Company no earlier than 150 days, which is October 11, 2021,23, 2023, nor later than 5:00 p.m. Eastern Time 120 days, which is November 10, 2021,22, 2023, before the first anniversary of the date of the proxy statement for the preceding year’s annual meeting. In addition to satisfying the requirements under our bylaws, to comply with the universal proxy rules, stockholders who intend to solicit proxies in support of director nominees other than the Company’s nominees must also provide notice that sets forth the information required by Rule 14a-19 under the Securities Exchange Act of 1934, which notice must be received by NCR’s Corporate Secretary no later than March 2, 2024, which is 60 calendar days prior to the anniversary of this year’s meeting date.
NCR CORPORATION | 2023 Proxy Statement | 108
A copy of the full text of the Company’s current bylaws may be obtained upon written request to the Corporate Secretary at the address provided on Communications with Directors section of this proxy statement and online at https://www.ncr.com/about/corporate-governance.
Supplementary Non-GAAP Information
While NCR reports its results in accordance with Generally Accepted Accounting Principles in the United States, or GAAP, in this proxy statement NCR also uses certain non-GAAP measures which are described below.
Non-GAAP Diluted Earnings Per Share(EPS) is determined by excluding, as applicable, pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits, as well as other special items, including amortization of acquisition related intangibles and transformation and restructuring activities, from NCR’s GAAP earnings per share. Due to the non-operational nature of these pension and other special items, NCR’s management uses this non-GAAP measure to evaluate year-over-year operating performance. NCR believes this measure is useful for investors because it provides a more complete understanding of NCR’s underlying operational performance, as well as consistency and comparability with NCR’s past reports of financial results.
|
| FY 2022 | FY 2021 | ||||||
Diluted Earnings Per Share (GAAP)(1) |
$ |
0.34 |
|
$ |
0.58 |
| ||
Transformation and restructuring costs
|
|
0.71
|
|
|
0.38
|
| ||
Acquisition-related amortization of intangibles
|
| 0.82
|
|
| 0.70
|
| ||
Acquisition-related costs
|
| 0.06
|
|
| 0.71
|
| ||
Pension mark-to-market adjustments
|
| (0.01
| )
|
| (0.62
| )
| ||
Debt refinancing
|
| -
|
|
| 0.28
|
| ||
Valuation allowance, internal entity restructuring & other tax adjustments
|
| 0.48
|
|
| 0.46
|
| ||
Separation costs
|
| 0.01
|
|
| -
|
| ||
Russia
|
| 0.13
|
|
| -
|
| ||
Diluted Earnings Per Share (Non-GAAP)(1) | $
| 2.62
|
| $ | 2.56 | |||
(1) Non-GAAP diluted EPS is determined using the conversion of the Series A Convertible Preferred Stock into common stock in the calculation of weighted average diluted shares outstanding. GAAP EPS is determined using the most dilutive measure, either including the impact of dividends or deemed dividends on the Company’s Series A Convertible Preferred Stock in the calculation of net income or loss available to common stockholders or including the impact of the conversion of the Series A Convertible Preferred Stock into common stock in the calculation of the weighted average diluted shares outstanding. Therefore, GAAP diluted EPS and non-GAAP diluted EPS may not mathematically reconcile.
Constant Currency. NCR presents certain financial measures, such as period-over-period revenue growth, on a constant currency basis, which excludes the effects of foreign currency translation by translating prior period results at current period monthly average exchange rates. Due to the overall variability of foreign exchange rates from period to period, NCR’s management uses constant currency measures to evaluate period-over-period operating performance on a more consistent and comparable basis. NCR’s management believes that presentation of financial measures without this result may contribute to an understanding of the Company’s period-over-period operating performance and provides additional insight into historical and/or future performance, which may be helpful for investors.
NCR CORPORATION | 2023 Proxy Statement | 109
Twelve months ended December 31, 2022 | As Reported Growth % | Favorable (Unfavorable) FX Impact | Growth % Constant Currency (non-GAAP) | ||||||||||||
Total revenue
|
|
10 |
% |
|
(3 |
%) |
|
13 |
% | ||||||
Recurring Revenue
|
|
16 |
% |
|
(4 |
%) |
|
20 |
% | ||||||
Adjusted EBITDA |
|
10 |
% |
|
(6 |
%) |
|
16 |
% | ||||||
Free Cash Flow. NCR’s management uses a non-GAAP measure called “free cash flow” to assess the financial performance of the Company. NCR definesWe define free cash flow as net cash provided by (used in) operating activities and cash provided by (used in) discontinued operations, less capital expenditures for property, plant and equipment, less additions to capitalized software, plus/minus restricted cash settlement activity, plus discretionaryacquisition-related items, less the impact from the initial sale of trade accounts receivables under the agreement entered into during the 3rd quarter of 2021, and plus pension contributions and settlements (if any). Free cash flow does not have a uniform definition under GAAP, and therefore NCR’s definition of this measure may differ from that of other companies. NCR believessettlements. We believe free cash flow information is useful for investors because it relates the operating cash flows fromof the Company’s continuing and discontinued operationsCompany to the capital that is spent to continue and to improve business operations. In particular, free cash flow indicates the amount of cash available after capital expenditures, which can be used for, among other things, investments in the Company’s existing businesses, strategic acquisitions, and investments,strengthening the Company’s balance sheet, repurchase of NCR stock and repayment of debt obligations. Free cash flow does not represent the residual cash flow available for discretionary expenditures, since there may be other non-discretionary expenditures that are not deducted from the measure. Free cash flow does not have a uniform definition under GAAP, and therefore NCR’s definition of this measure may differ from that of other companies. This non-GAAP measure should not be considered a substitute for, or superior to, cash flows from operating activities under GAAP. The table below reconciles net cash provided by (used in) operating activities, the most directly comparable GAAP measure, to NCR’s non-GAAP measure of free cash flow for the year ended December 31, 2020:
|
|
| ||
|
|
| ||
|
|
| ||
|
| |||
|
| |||
|
|
| ||
| $ in millions | FY 2022 | FY 2021 | ||||||
Net cash provided by (used in) operating activities |
$ |
447 |
|
$ |
1,077 |
| ||
Total capital expenditures |
|
(377 |
) |
|
(348 |
) | ||
Restricted cash settlement activity |
|
27 |
|
|
(41 |
) | ||
Acquisition Related Items |
|
- |
|
|
55 |
| ||
Initial sale of Trade Accounts Receivable |
|
- |
|
|
(300 |
) | ||
Pension contributions |
|
67 |
|
|
17 |
| ||
Free cash flow |
$ |
164 |
|
$ |
460 |
| ||
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (Adjusted EBITDA). NCR’s management uses the non-GAAP measure Adjusted EBITDA because it provides useful information to investors is defined as an indicator of strength and performance of the Company’s ongoing business operations, including funding discretionary spending such as capital expenditures, strategic acquisitions, and other investments. NCR determines Adjusted EBITDA based on GAAP net income (loss) from continuing operations attributable to NCR plus interest expense, net; plus income tax expense (benefit); plus depreciation and amortization; plus stock-based compensation expense; plus other income (expense); plus pension mark-to-market adjustments, pension settlements, pension curtailments and pension special termination benefits and other special items, including amortization of acquisition-related intangibles and transformation and restructuring charges (which include integration, severance and other exit and disposal costs), among others. LTI EBITDA equalsThe special items are considered non-operational so are excluded from the Adjusted EBITDA formetric utilized by our chief operating decision maker in evaluating segment performance and are separately delineated to reconcile back to total reported income from operations. Management believes this format is useful to investors because it allows analysis and comparability of operating trends. It also includes the Company, further adjustedsame information that is used by NCR management to eliminatemake decisions regarding the impact of foreign currency during the performance period, exclude the impact of mergerssegments and acquisitions, and eliminate the net impactto assess our financial performance.
NCR CORPORATION | 20212023 Proxy Statement | 94110
$ In millions
| FY 2022
| FY 2021
| ||||||
Net Income (Loss) from Continuing Operations Attributable to NCR (GAAP)
| $ | 64 | $ | 97 | ||||
Transformation and restructuring costs
| 123 | 66 | ||||||
Acquisition-related amortization of intangibles
| 172 | 132 | ||||||
Acquisition-related costs
| 10 | 98 | ||||||
Pension mark-to-market adjustments
| 8 | (118 | ) | |||||
Depreciation and amortization
| 423 | 357 | ||||||
Loss on Debt Extinguishment
| - | 42 | ||||||
Interest expense
| 285 | 238 | ||||||
Interest income
| (13 | ) | (8 | ) | ||||
Income tax expense (benefit)
| 148 | 186 | ||||||
Stock-based compensation expense
| 125 | 154 | ||||||
Separation costs
| 3 | - | ||||||
Russia
| 22 | - | ||||||
Adjusted EBITDA (Non-GAAP)
| $ | 1,370 | $ | 1,244 | ||||
Special Item Related to Russia. For more information regarding the item related to Russia in the tables in this Section, see Special Item Related to Russia in Non-GAAP Financial Measures and Use of Certain Terms contained in the shift to recurring revenue by treating all new contracts as if they would have been accountedCompany’s Annual Report on Form 10-K for as revenue upfront during the year of signing in accordance with prior practice versus the amount to be recognized during the year of signing on a recurring revenue basis.ended December 31, 2022.
NCR’s definitions and calculations of these non-GAAP measures may differ from similarly-titled measures reported by other companies and cannot, therefore, be compared with similarly-titled measures of other companies. These non-GAAP measures should not be considered as substitutes for, or superior to, results determined in accordance with GAAP.
NCR also uses certain other terms in this proxy statement. “Recurring revenue” includes all revenue streams from contracts where there is a predictable revenue pattern that will occur at regular intervals with a relatively high degree of certainty. This includes hardware and software maintenance revenue, cloud revenue, payment processing revenue, and certain professional services arrangements,statement, such as well as term-based software license arrangements that include customer termination rights.AIP EBITDA, AIP Revenue, constant currency, LTI EBITDA, LTI Recurring Revenue equals recurring revenue forand Recurring Revenue as defined in the Company, adjusted to eliminate the impactGlossary of foreign currency during the performance periodKey Terms used in Our CD&A and exclude the impact of mergers and acquisitions.Executive Compensation Table section.
The above notice and proxy statement are sent by order of the Board of Directors.
James M. Bedore
Executive Vice President, General Counsel and Secretary
Dated: March 10, 202121, 2023
NCR CORPORATION | 20212023 Proxy Statement | 95111
Appendix A Proposed Second Amendment to the NCR Corporation 2017 Stock Incentive Plan |
Effective June 1, 2023
SECOND AMENDMENT TO THE
NCR CORPORATION 2017 STOCK INCENTIVE PLAN
WHEREAS, NCR Corporation, a Maryland corporation (the “Company”) maintains the NCR Corporation 2017 Stock Incentive Plan, which was effective as of April 26, 2017 and amended May 1, 2020 (the “Plan”);
WHEREAS, Section 12.03 of the Plan provides that the Board may amend the Plan, provided that no such amendment shall be made without the approval of the Company’s stockholders to the extent such approval is otherwise required by applicable law or the listing standards of the Applicable Exchange (as defined in the Plan);
WHEREAS, the Board has determined that it is advisable and appropriate to amend the Plan to provide for an increase in the number of Shares (as defined in the Plan) that may be granted pursuant to Awards (as defined in the Plan) under the Plan; and
WHEREAS, an amendment to increase the number of Shares that may be granted pursuant to Awards under the Plan must be subject to the approval of the Company’s stockholders under the listing standards of the New York Stock Exchange.
NOW, THEREFORE, the Plan is amended, effective as of the first day of the month following the date it is approved by the holders of at least a majority of the votes cast at a duly constituted meeting of the stockholders of the Company, as follows:
Section 3.01 of the Plan is hereby amended and restated in its entirety to read as follows:
“SECTION 3.01. Plan Maximums. The maximum number of Shares that may be granted pursuant to Awards under the Plan shall be a total of (i) 12,000,000 Shares, plus (ii) any Shares (other than the Assumed Shares) remaining available for grant under the Plan on May 2, 2023 (the “Second Amendment Date”), plus (iii) any Shares (other than the Assumed Shares) with respect to Awards granted under the Plan that are forfeited, cancelled, terminated, or expire or lapse, or are settled for cash (or otherwise again become available for grant, including, but not limited to, Shares tendered or withheld upon the exercise of an Option or SAR or Shares withheld in respect of the tax withholding obligations relating to any Award) following the Second Amendment Date, (iv) plus any Shares transferred from the Cardtronics plc Fourth Amended and Restated 2007 Stock Incentive Plan to the Plan pursuant to the M&A exemption under the rules of the Applicable Exchange (the “M&A Exemption”) on June 21, 2021 (the “Assumed Shares”) remaining available for grant under the Plan on the Second Amendment Date, which Assumed Shares shall remain subject to the limitations on Eligible Individuals who may receive grants in respect of such Assumed Shares and the original expiration date of such Assumed Shares pursuant to the M&A Exemption, plus (v) any Assumed Shares with respect to Awards granted under the Plan that are forfeited, cancelled, terminated, or expire or lapse, or are settled for cash (or otherwise again become available for grant subject to the limitations on Eligible Individuals who may receive grants in respect of such Assumed Shares pursuant to the M&A Exemption, including, but not limited to, Assumed Shares tendered or withheld upon the exercise of an Option or SAR or Assumed Shares withheld in respect to the tax withholding obligations relating to any Award) following the Second Amendment Date, which Assumed Shares shall remain subject to the limitations on Eligible Individuals who may receive grants in respect of such Assumed Shares and the original expiration date of such Assumed Shares pursuant to the M&A Exemption; in each case subject to any future adjustments as may be made pursuant to Section 3.04. The maximum number of Shares
NCR CORPORATION | 2023 Proxy Statement | A-1
that may be granted pursuant to Options intended to be Incentive Stock Options shall be 12,000,000 Shares, subject to any future adjustment as may be made pursuant to Section 3.04, and shall not be affected by the provisions of Section 3.03(b). Shares subject to an Award under the Plan may be authorized and unissued Shares.”
* * *
NCR CORPORATION | 2023 Proxy Statement | A-2
Note to Investors. This proxy statement and Annual Report contain “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 (the “Act”). Forward-looking statements use words such as “expect,” “anticipate,” “outlook,” “intend,” “plan,” “confident,” “believe,” “will,” “should,” “would,” “potential,” “positioning,” “proposed,” “planned,” “objective,” “likely,” “could,” “may,” and words of similar meaning, as well as other words or expressions referencing future events, conditions or circumstances. We intend these forward-looking statements to be covered by the safe harbor provisions for forward-looking statements contained in the Act. Statements that describe or relate to NCR’s plans, goals, intentions, strategies, or financial outlook, and statements that do not relate to historical or current fact, are examples of forward-looking statements. TheExamples of forward-looking statements in this proxy statement and Annual Report include, without limitation, statements regarding: the Company’s business and financial strategy; the Company’s future plans relating to its workforce talent and diversity, equity and inclusion initiatives; public disclosure of the Company’s greenhouse gas emissions (GHG) and implementing an inventory management plan for Scope 1 and 2 emissions; the Company’s commitment to be net-zero by 2050 and transitioning to an Electric Vehicle fleet by 2030; publishing our global and U.S. diversity data, which will be reported in alignment with the SASB; our expectations of demand for our solutions and execution and the impact thereof on our financial results in 2023; NCR’s focus on advancing our strategic growth initiatives and transforming NCR into a software-ledas-a-service company with a higher mix of recurring revenue streams; our expectations of NCR’s ability to deliver increased value to customers and stockholders; and statements regarding NCR’s plans to manage its business through the coronavirus (“COVID-19”) pandemic and the health and safetyplanned separation of our customers and employees; the expected impact of the COVID-19 pandemic on NCR’s Banking, Retail and Hospitality segments including the impact on our customers’ businesses and their ability to pay; expectations regarding our operating goals and actions to manage these goals; expectations regarding cost and non-price revenue synergies; expectations regarding our cash flow generation, cash reserve, liquidity, financial flexibility and impact of the COVID-19 pandemic on our employee base; expectations regarding our ability to capitalize on market opportunities; expectations regarding leveraging the debit network to monetize payment transactions; expectations regarding accretion; NCR’s revenue and financial growth expectations; expectations regarding our continued focus on our long-term fundamentals,NCR into two separate companies, including, but not limited to, executionstatements regarding the anticipated timing and structure of NCR’s recurring revenue strategy and accelerated growth including its transformation to an as-a-Service company and its 80/60/20 strategy;such planned transaction, the potential benefitsfuture commercial or financial performance of the proposed Cardtronics plcdigital commerce company or the ATM company following such planned transaction, including ourvalue creation and ability to successfully integrate Cardtronics plcinnovate and realize any anticipated efficiencies and synergies from the transaction; and NCR’s expected areas of focus to drive growth generally as a result of such transaction, and create long-term stockholder value. Forward-looking statements are based on our current beliefs, expectationsthe expected capital structure of the companies at the time of and assumptions, which may not prove to be accurate, and involve a number of known and unknown risks and uncertainties, many of which are out of our control.following the transaction. Forward-looking statements are not guarantees of future performance, and there are a number of important factors that could cause actual outcomes and results to differ materially from the results contemplated by such forward-looking statements, including those factors relating to: (i) operational
| ● | Strategy and Technology: transforming our business model; development and introduction of new solutions; competition in the technology industry; integration of acquisitions and management of alliance activities; and our multinational operations; |
| ● | Business Operations: domestic and global economic and credit conditions; risks and uncertainties from the payments-related business and industry; disruptions in our data center hosting and public cloud facilities; retention and attraction of key employees; defects, errors, installation difficulties or development delays; failure of third-party suppliers; a major natural disaster or catastrophic event, including the impact of the coronavirus (COVID-19) pandemic and geopolitical and macroeconomic challenges; environmental exposures from historical and ongoing manufacturing activities; and climate change; |
| ● | Data Privacy & Security: impact of data protection, cybersecurity and data privacy including any related issues; |
| ● | Finance and Accounting: our level of indebtedness; the terms governing our indebtedness; incurrence of additional debt or similar liabilities or obligations; access or renewal of financing sources; our cash flow sufficiency to service our indebtedness; interest rate risks; the terms governing our trade receivables facility; the impact of certain changes in control relating to acceleration of our indebtedness, our obligations under other financing arrangements, or required repurchase of our senior unsecured notes; any lowering or withdrawal of the ratings assigned to our debt securities by rating agencies; our pension liabilities; and write down of the value of certain significant assets; |
| ● | Law and Compliance: our inability to protect of our intellectual property and third-party intellectual property infringement claims; changes to our tax rates and additional income tax liabilities; uncertainties regarding regulations, lawsuits and other related matters; and changes to cryptocurrency regulations; |
| ● | Governance: impact of the terms of our Series A Convertible Preferred (“Series A”) Stock relating to voting power, share dilution and market price of our common stock; rights, preferences and privileges of Series A stockholders compared to the rights of our common stockholders; and actions or proposals from stockholders that do not align with our business strategies or the interests of our other stockholders; |
| ● | Planned Separation: an unexpected failure to complete, or unexpected delays in completing, the necessary actions for the planned separation, or to obtain the necessary approvals to complete these actions; that the potential strategic benefits, synergies or opportunities expected from the separation may not be realized or may take longer to realize than expected; costs of implementation of the separation and any changes to the configuration of businesses included in the separation if implemented; the potential inability to access or reduced access to the capital markets or increased cost of borrowings, including as a result of a credit rating downgrade; the potential adverse reactions to the planned separation by customers, suppliers, strategic partners or key personnel and potential difficulties in maintaining relationships with such persons and risks associated with third party contracts containing consent and/or other provisions that may be triggered by the planned separation; the risk that any newly formed entity to house the digital commerce or ATM business would have no credit rating and may not have access to the capital markets on acceptable terms; unforeseen tax liabilities or changes in tax law; requests or requirements of governmental authorities related to certain existing liabilities; and the ability to obtain or consummate financing or refinancing related to the transaction upon acceptable terms or at all. |
Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those set forth in the forward-looking statements. There can be no guarantee that the planned separation will be completed in the expected form or within the expected time frame or at all. Nor can there be any guarantee that the digital commerce business and ATM business risks including the impact of COVID-19 pandemic on our business, financial condition and results of operations; domestic and global economic and credit conditions including, in particular, political, consumer, and unemployment conditions, the imposition or threat of protectionist trade policies or import or export tariffs, global and regional market conditions and spending trends, new tax legislation across multiple jurisdictions, modified or new global or regional trade agreements, executionafter a separation will be able to realize any of the United Kingdom’s exit frompotential strategic benefits, synergies or opportunities as a result of these actions. Neither can there be any guarantee that stockholders will achieve any particular level of stockholder returns. Nor can there be any guarantee that the European Union, uncertainty over further potential changes in Eurozone participation, fluctuations in oilplanned separation will enhance value for stockholders, or that NCR or any of its divisions, or separate digital commerce and commodity prices, and our customer responses to the same; the transformation of ourATM business, model to an as-a-Service company with focus on, among other items, increased software and services revenue, and recurring revenue; our ability grow software and services and expanding our customer base; our ability to successfully develop and introduce new solutionswill be commercially successful in the competitive, rapidly changing environment in which we do business; defects, errors, installation difficultiesfuture, or development delays in our products; disruptions in our data center hosting facilities; our ability to compete effectively within the technology industry; reliance on third party suppliers; our multinational operations, including in new and emerging markets; our ability to successfully integrate acquisitionsachieve any particular credit rating or effectively manage alliance activities, including but not limited to, the proposed transaction with Cardtronics plc; continuous improvement, customer experience, restructuring and cost reduction initiatives; and our ability to retain key employees, or attract quality new and replacement employees; (ii) financing and liquidity risks including: our level of indebtedness; the terms of the documents governing our indebtedness including financial and other covenants; the incurrence of substantially more debt, including secured debt, and similar liabilities, which would increase the risks described in our risk factors relating to indebtedness and repurchase obligations; sufficiency of our cash flows including to service our indebtedness; interest rate risk, which could cause our debt service obligations to increase significantly; our ability to raise the funds necessary to finance a required repurchase of our senior unsecured notes or our Series A Convertible Preferred Stock; a lowering or withdrawal of the ratings assigned to our debt securities by rating agencies; and our pension liabilities; (iii) data protection, cybersecurity and privacy risks; (iv) intellectual property risks including protection, development and our ability to manage third party claims regarding patents and other intellectual property rights; (v) legal and regulatory risks including unanticipated changes to our tax rates and additional income tax liabilities; environmental exposures from our historical and ongoing manufacturing activities; and uncertainties with regard to regulations, lawsuits, claims, and other matters across various jurisdictions; and (vi) other risks including the impact of the terms of our Series A Convertible Preferred Stock relating to voting power, share dilution and market price of our common stock, as well as rights, preferences and privileges that are not held by, and are preferential to, the rights of our common stockholders; actions or proposals from stockholders that do not align with our business strategies or the interests of our other stockholders; and potential write-down of the value of certain significant assets.results. Additional information concerning these and other factors can be found in the Company’s filings with the U.S. Securities and Exchange Commission, including the Company’s most recentour annual report on Form 10-K, contained in this proxy statement quarterly reports on Form 10-Q and Annual Report.current reports on Form 8-K. Any forward-looking statement speaks only as of the date on which it is made. We doThe Company 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.otherwise, except as required by law.
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YOUR VOTE IS IMPORTANT! PLEASE VOTE BY: | |||||
P.O. BOX 8016, CARY, NC 27512-9903 |
| INTERNET | |||
Go To: www.proxypush.com/NCR | |||||
 · Cast your vote online | |||||
· Have your Proxy Card ready | |||||
· Follow the simple instructions to record your vote | |||||
 Please fold here — Do not separate | |||||
| PHONE Call1-866-250-6196 | ||||
· Use any touch-tone telephone | |||||
· Have your Proxy Card ready | |||||
· Follow the simple recorded instructions | |||||
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· Mark, sign and date your Proxy Card | |||||
· Fold and return your Proxy Card in the postage-paid envelope provided | |||||
| You must register to attend the meeting online and/or participate at www.proxydocs.com/NCR | ||||
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| 2023 Annual Meeting of Stockholders | ||
| TIME: | Tuesday, May 2, 2023 12:00 PM, Eastern Time |
| PLACE: | Annual Meeting to be held live via the Internet - please visit
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www.proxydocs.com/NCR for more details
This proxy is being solicited on behalf of the Board of Directors
The undersigned hereby appoints Michael D. Hayford, James M. Bedore and Timothy C. Oliver, and each of them, as the true and lawful proxies for the undersigned, with full power of substitution in each item, and authorizes each of them, to vote all the shares of capital stock of NCR Corporation which the undersigned is entitled to vote at said meeting and any postponement or adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any postponement or adjournment thereof, conferring authority upon such true and lawful proxies to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given and otherwise authorizing such true and lawful proxies to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORSDIRECTORS’ RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxiesnamed proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxiesnamed proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
card or otherwise authorize a proxy to vote your shares at the meeting.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Copyright © 2021 Mediant Communications Inc. All Rights Reserved
NCR Corporation
2023 Annual Meeting of Stockholders
Please make your marks like this: Use dark black pencil or pen only |  | |
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THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED BELOW, “FOR” PROPOSAL 2, FOR “1 YEAR” ON PROPOSAL 3, AND “FOR” EACH OF PROPOSALS 4 AND 5.
| PROPOSAL | YOUR VOTE | BOARD OF DIRECTORS RECOMMENDS | ||||||||||
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| 1. |  | |||||||||||
| Election of Director Nominees |  | |||||||||||
| FOR | AGAINST | ABSTAIN | ||||||||||
| 1.01 Mark W. Begor | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.02 Gregory Blank | FOR | |||||||||||
| 1.03 Catherine L. Burke | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.04 Deborah A. Farrington | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.05 Michael D. Hayford | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.06 Georgette D. Kiser | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.07 Kirk T. Larsen | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.08 Martin Mucci | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.09 Joseph E. Reece | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.10 Laura J. Sen | ☐ | ☐ | ☐ | FOR | ||||||||
| 1.11 Glenn W. Welling | ☐ | ☐ | ☐ | FOR | ||||||||
2. | To approve, on a non-binding and advisory basis, the compensation of the named executive officers as more particularly described in the proxy | FOR ☐ | AGAINST ☐ | ABSTAIN ☐ | FOR | |||||||
3. | To approve, on a non-binding advisory basis, the frequency of future advisory votes on the compensation of our named executive officers | 1YR ☐ | 2YR ☐ | 3YR ☐ | ABSTAIN ☐ | 1 YEAR | ||||||
4. | To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, | FOR ☐ | AGAINST ☐ | ABSTAIN ☐ | FOR | |||||||
5. | To approve the proposal to amend the NCR Corporation 2017 Stock Incentive Plan as more particularly described in the proxy materials. | FOR ☐ | AGAINST ☐ | ABSTAIN ☐ | FOR | |||||||
You must pre-registerregister to attend the meeting online and/or participate at the email address indicated.www.proxydocs.com/NCR
Authorized Signatures - Must be completed for your instructions to be executed.
Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.
| Signature (and Title if applicable) | Date | Signature (if held jointly) | Date | |||||
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This proxy is being solicited on behalf of the Board of Directors
The undersigned hereby appoints Michael D. Hayford, James M. Bedore and Timothy C. Oliver, and each of them, as the true and lawful proxies for the undersigned, with full power of substitution, and authorizes each of them, to vote all the shares of capital stock of NCR Corporation which the undersigned is entitled to vote at said meeting and any postponement or adjournment thereof upon the matters specified and upon such other matters as may be properly brought before the meeting or any postponement or adjournment thereof, conferring authority upon such true and lawful proxies to vote in their discretion on such other matters as may properly come before the meeting and revoking any proxy heretofore given and otherwise authorizing such true and lawful proxies to represent the undersigned at the meeting with all powers possessed by the undersigned if personally present at the meeting.
THE SHARES REPRESENTED BY THIS PROXY WILL BE VOTED AS DIRECTED OR, IF NO DIRECTION IS GIVEN, SHARES WILL BE VOTED IDENTICAL TO THE BOARD OF DIRECTORS RECOMMENDATION. This proxy, when properly executed, will be voted in the manner directed herein. In their discretion, the Named Proxies are authorized to vote upon such other matters that may properly come before the meeting or any adjournment or postponement thereof.
You are encouraged to specify your choice by marking the appropriate box (SEE REVERSE SIDE) but you need not mark any box if you wish to vote in accordance with the Board of Directors’ recommendation. The Named Proxies cannot vote your shares unless you sign (on the reverse side) and return this card.
PLEASE BE SURE TO SIGN AND DATE THIS PROXY CARD AND MARK ON THE REVERSE SIDE
Copyright © 2021 Mediant Communications Inc. All Rights Reserved
NCR Corporation
Annual Meeting of Stockholders
| Use dark black pencil or pen only |
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You must pre-register to attend the meeting online and/or participate at the email address indicated.
Authorized Signatures - Must be completed for your instructions to be executed.
Please sign exactly as your name(s) appears on your account. If held in joint tenancy, all persons should sign. Trustees, administrators, etc., should include title and authority. Corporations should provide full name of corporation and title of authorized officer signing the Proxy/Vote Form.
P.O. BOX 8016, CARY, NC 27512-9903 | NCR Corporation Important Notice Regarding the Availability of Proxy Materials
Stockholders Meeting to be held on
For Stockholders as of February
This communication presents only an overview of the more complete proxy materials that are available to you on the Internet. This is not a ballot. You cannot use this notice to vote your shares. We encourage you to access and review all of the important information contained in the proxy materials before voting.
To view the proxy materials, and to obtain directions to attend the meeting, go to: www.proxydocs.com/NCR
To vote your proxy while visiting this site, you will need the 12 digit control number in the box below.
Under United States Securities and Exchange Commission rules, proxy materials do not have to be delivered in paper. Proxy materials can be distributed by making them available on the internet. |
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| For a convenient way to view proxy materials and VOTE go to www.proxydocs.com/NCR | | ||
Have the 12 digit control number located in the shaded box above available when you access the website and follow the instructions. | ||||
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| 21, 2023. | ||||
To order paper materials, use one of the following methods. | ||||
INTERNET |
TELEPHONE |
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| www.investorelections.com/NCR |
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When requesting via the | * If requesting material by e-mail, please send a blank e-mail with the 12 digit control number (located above) in the subject line. No other requests, instructions | |||||||
NCR Corporation | ||
Meeting Materials: Notice of Meeting and Proxy Statement & Annual Report or Form 10-K | ||
Meeting Type: Annual Meeting of Stockholders | ||
| Tuesday, | |
| 12:00 PM, Eastern Time | |
| Annual Meeting to be held live via the Internet - please visit | |
| www.proxydocs.com/NCR for more | ||
You must | ||
SEE REVERSE FOR FULL AGENDA
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Copyright © 2021 Mediant Communications Inc. All Rights Reserved
NCR Corporation
2023 Annual Meeting of Stockholders
THE BOARD OF DIRECTORS RECOMMENDS A VOTE “FOR” EACH OF THE NOMINEES LISTED BELOW, “FOR” PROPOSAL 2, FOR PROPOSAL(S) 1, 2, 3.“1 YEAR” ON PROPOSAL 3, AND “FOR” EACH OF PROPOSALS 4 AND 5.
| PROPOSAL | ||
| 1. | ||
| 1.01 Mark W. Begor | ||
| 1.02 Gregory Blank | ||
| 1.03 Catherine L. Burke | ||
| 1.04 Deborah A. Farrington | ||
| 1.05 Michael D. Hayford | ||
| 1.06 Georgette D. Kiser | ||
| 1.07 Kirk T. Larsen | ||
| 1.08 | ||
| 1.09 Joseph E. Reece | ||
| 1.10 | ||
| 1.11 Glenn W. Welling | ||
| 2. | To approve, on a non-binding and advisory basis, the compensation of the named executive officers as more particularly described in the proxy | |
| 3. | To approve, on a non-binding advisory basis, the frequency of future advisory votes on the compensation of our named executive officers | |
| 4. | To ratify the appointment of PricewaterhouseCoopers LLP as the Company’s independent registered public accounting firm for the fiscal year ending December 31, | |
| 5. | To approve the proposal to amend the NCR Corporation 2017 Stock Incentive Plan as more particularly described in the proxy materials. | |