UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A INFORMATION
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| WEX INC. |
| (Name of Registrant as Specified In Its Charter) |
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WEX INC.
April 18, 201424, 2017
Dear Fellow Stockholders,
You are invited to attend the WEX Inc. 20142017 annual meeting of stockholders.stockholders of WEX Inc., or the Company. The meeting will be held on Friday, May 16, 2014,12, 2017, at 8:00 a.m., Eastern Time, at the WEX Inc. Long Creek Campus located at 225 Gorham Road, South Portland, Maine, 04106.
At the meeting we will:
elect fourtwo directors for three-year terms,
conduct an advisory vote on executive compensation,
conduct an advisory vote on the frequency of future advisory votes on executive compensation,
vote to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 20142017, and
consider any other business properly coming before the meetingmeeting.
Whether or not you attend the annual meeting, it is important that your shares be represented and voted at the meeting. As a stockholder of record, you can vote your shares by signing and dating the enclosed proxy card and returning it by mail in the enclosed envelope. If you decide to attend the annual meeting and vote in person, you may then revoke your proxy. If you hold your stock in "street name," that is, held for your account by a bank, broker or other nominee, you should follow the instructions provided by your bank, broker or other nominee.
On behalf of the Board of Directors and the employees of WEX Inc., we would like to express our appreciation for your continued interest in the Company.
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| Sincerely, |
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| Melissa D. Smith |
| PRESIDENT AND CHIEF EXECUTIVE OFFICER |
WEX INC.
NOTICE OF 20142017 ANNUAL MEETING OF STOCKHOLDERS
April 18, 201424, 2017
The 20142017 annual meeting of stockholders of WEX Inc. will be held on Friday, May 16, 2014,12, 2017, at 8:00 a.m., Eastern Time, at the WEX Inc. Long Creek Campus located at 225 Gorham Road, South Portland, Maine, 04106. At the meeting we will:
elect fourtwo directors for three-year terms,
conduct an advisory vote on executive compensation,
conduct an advisory vote on the frequency of future advisory votes on executive compensation,
vote to ratify the selection of Deloitte & Touche LLP as the Company’s independent registered public accounting firm for the year ending December 31, 2014,2017, and
consider any other business properly coming before the meeting.
Important Notice Regarding the Availability of Proxy Materials for the ShareholderStockholder Meeting to be Held on May 16, 2014:12, 2017:
The proxy statement and annual report to stockholders are available on our investor relations webpage at: http://ir.wexinc.com/phoenix.zhtml?c=186699&p=irol-proxy
Stockholders who owned shares of our common stock at the close of business on March 18, 201414, 2017 are entitled to attend and vote at the meeting and any adjournment or postponement of the meeting. Stockholders that owned stock in “street name” as of such date must present proof of beneficial ownership to attend the meeting and must obtain a legal proxy from their bank, broker or other nominee to vote at the meeting. A complete list of registered stockholders will be available at least 10 days prior to the meeting at our offices located at 225 Gorham Road, South Portland, Maine, 04106.
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| By Order of the Board of Directors, |
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| Hilary A. Rapkin |
| SENIOR VICE PRESIDENT, |
| GENERAL COUNSEL AND |
| CORPORATE SECRETARY |
TABLE OF CONTENTS
This proxy statement describes the proposals on which you may vote as a stockholder of WEX Inc. It contains important information to consider when voting.
The Company’s boardBoard of directors,Directors, or the Board, is sending these proxy materials to you in connection with the Board’s solicitation of proxies. Our annual report to stockholders and our proxy materials were first mailed on or about April 23, 2014.24, 2017.
Your vote is important. Please complete, execute and promptly mail your proxy card as soon as possible even if you plan to attend the annual meeting.
VOTING YOUR SHARES
Stockholders who owned the Company’s common stock at the close of business on March 18, 2014,14, 2017, the record date, may attend and vote at the annual meeting.meeting of stockholders, or the Annual Meeting. Each share is entitled to one vote. There were 38,850,25142,742,467 shares of common stock outstanding on the record date.
How do I vote?
You may vote by mail if you hold your shares in your own name
You do this by completing, signing and dating your proxy card and mailing it in the enclosed prepaid and addressed envelopeenvelope.
You may vote in person at the meeting
We will pass out ballots to any record holder who wants to vote at the meeting. However, if you hold your shares in “street name,” you must request a proxy from your bank, broker or other nominee in order to vote at the meeting. Holding shares in street name means you hold them through a bank, broker or other nominee, and as a result, the shares are not held in your individual name but through someone else.
If you hold your shares in "street name," you should follow the instructions provided by your bank, broker or other nominee, which may include instructions regarding your ability to vote by telephone or through the Internet.
How do I vote my shares held in the WEX Inc. Employee Savings Plan?
If you participate in our WEX Inc. Employee Savings Plan, commonly referred to as the "401(k) Plan," shares of our common stock equivalent to the value of the common stock interest credited to your account under the plan will be voted by the trustee in accordance with your instruction,instructions, if it isthey are received bybefore 8:00 AM Eastern Time on May 13, 2014.10, 2017. Otherwise, if you do not provide instruction by such date, the share equivalents credited to your account will not be voted by the trustee.
Please refer to the "Information about Voting Procedures" section.
PROPOSALS TO VOTE ON
GOVERNANCE
The Corporate Governance Committee of the Board of Directors of WEX Inc. is responsible for identifying individuals qualified to become Board members, consistent with criteria approved by the Board and recommending to the Board the persons to be nominated for election as directors at the annual meeting of stockholders in accordance with the Corporate Governance Guidelines, the policies and principles in the Corporate Governance Committee charter and the applicable criteria adopted by the Board. In 2017, there are two Class III directors up for election at the Annual Meeting. Eric Duprat and Ronald T. Maheu currently serve as Class III directors. However, Messrs. Duprat and Maheu will retire at the end of their term and are not standing for reelection at the Annual Meeting. Following the Annual Meeting, the size of the Board will be reduced to ten members.
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| ITEM 1. | ELECTION OF DIRECTORS |
At each annual meeting of stockholders, directors are elected for a term of three years to succeed those directors whose terms are expiring.
Our nominees for director this year are:
Michael E. Dubyak
Eric Duprat
Ronald T. Maheu
Rowland T. Moriarty
Each nominee is presently a director of the Company and has consented to serve a new three-year term.
We recommend a vote FOR these nominees.
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ITEM 2. | ADVISORY VOTE ON EXECUTIVE COMPENSATION |
We are providing you with the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of the executive officers named in the Summary Compensation Table under "Executive Compensation," whom we refer to as our "named executive officers" or "NEOs," as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as "say-on-pay," is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Securities Exchange Act of 1934, or Exchange Act.
Our executive compensation programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. The "Executive Compensation" section of this proxy statement including "Compensation Discussion and Analysis," describes in detail our executive compensation programs and the decisions made by the Compensation Committee with respect to the fiscal year ended December 31, 2013.
In 2013, we delivered solid top- and bottom-line growth, added approximately 700,000 new fleet cards globally, grew our virtual business spend volume by over 20% and broadened our international reach through customer signings. Total revenue grew 15% while adjusted net income, a key non-GAAP metric used as a performance goal in our compensation program1, increased 10% to $4.45 per diluted share in 2013 from $4.06 in 2012. The combined achievement under the short-term incentive program, or "STIP," resulted in the NEOs receiving STIP payments averaging 123% of target. As a result of the STIP payments, our NEOs total cash compensation, on average, approximated the 60th percentile of the market data provided by our consultants. This compensation is generally consistent with our overall business performance for 2013, which was in the top quartile for revenue and net income growth and approximated the 27th percentile for total shareholder return compared to our peer group.
WEX’s philosophy regarding executive compensation is straightforward: reward our executives for their contributions to the Company’s annual and long-term performance by tying a significant portion of their total compensation to key drivers of increased stockholder value. Reflecting our pay-for-performance philosophy, a significant portion of executive compensation is performance-based, subject to increase when results exceed corporate targets, reduction when results fall below target and elimination if results do not achieve threshold levels of performance. Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which more thoroughly discusses how our compensation policies and procedures implement our compensation philosophy and objectives. Features of our executive compensation program include:
Executives are subject to robust stock ownership guidelines
Our equity plans prohibit repricing and backdating
Cash severance payments are payable under executive change in control severance agreements only on a "double trigger" basis (in other words, it is payable only upon both a change in control and a qualifying termination of employment)
We do not provide tax gross-ups on new or materially modified change in control severance agreements. Among our Named Executive Officers, only Mr. Dubyak is currently eligible for a tax gross up in the event of a change in control
The Compensation Committee hires its own independent compensation consultant
1Please refer to Compensation Discussion and Analysis for an explanation of adjusted net income and refer to note 21 to our consolidated financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2013 (pages 89-91) for a reconciliation to net income.
Financial metrics are set for the incentive plans early in the year with a view towards aligning the interest of our executives with the interests of our shareholders and ensuring that such goals are sufficiently challenging but maintain our focus on key corporate initiatives which are intended to drive stockholder value
We maintain an insider trading policy which prohibits hedging the economic risk of ownership of our stock
A risk assessment of compensation plans is reviewed by the Compensation Committee annually
The Compensation Committee and the Board believe that these policies and procedures are effective in implementing our compensation philosophy and in achieving its objectives.
Our Board is asking stockholders to approve a non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid to WEX Inc.’s named executive officers, as disclosed in accordance with the Securities and Exchange Commission’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote will not overrule any decision by the Company or the Board (or any committee of the Board), create or imply any change to the fiduciary duties of the Company or the Board (or any committee of the Board), or create or imply any additional fiduciary duties for the Company or the Board (or any committee of the Board). However, our Compensation Committee and Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
The Board has decided that the Company will hold an annual advisory vote on the compensation of our named executive officers.
We recommend a voteFORapproval of the compensation of our named executive officers.
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ITEM 3. | RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2014 |
The Audit Committee of the Board has selected Deloitte & Touche LLP, or "D&T," as the independent registered public accounting firm for the Company’s fiscal year 2014. Stockholder ratification of the appointment is not required under the laws of the State of Delaware, but the Audit Committee has decided to request that the stockholders ratify the appointment. A representative of D&T will be present at the meeting to answer appropriate questions from stockholders and will have the opportunity to make a statement on behalf of the firm, if he or she so desires.
If this proposal is not approved by our stockholders at the 2014 annual meeting, the Audit Committee will reconsider its selection of D&T. Even if the selection is ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm at any point during the year if it determines that making a change would be in the best interests of the Company and our stockholders.
We recommend a vote FOR the ratification of Deloitte & Touche LLP as our independent registered public accounting firm.
OTHER BUSINESS
We know of no other business to be considered at the meeting, and the deadline for stockholders to submit proposals or nominations has passed. However, if:
other matters are properly presented at the meeting, or at any adjournment or postponement of the meeting, and
you have properly submitted your proxy, then, Melissa D. Smith or Steven A. Elder will vote your shares on those matters according to her or his best judgment.
THE BOARD OF DIRECTORS
BOARD LEADERSHIP
Our Board is led by our Executive Chairman, Mr. Dubyak. On May 1, 2013, the Company announced a management transition plan in accordance with the Board’s succession planning process. As part of that plan, effective January 1, 2014, Mr. Dubyak resigned as Chief Executive Officer and continues to serve as a director of the Company and as Chairman of the Board in the newly created, non-officer role of "Executive Chairman." The Executive Chairmanhe leads all meetings of the Board at which he is present, sets meeting schedules and agendas and manages information flow to the Board to ensure appropriate understanding and discussion regarding matters of interest or concern to the Board. The Executive Chairman also has such additional powers and performs such additional duties consistent with organizing and leading the actions of the Board as may be prescribed by the Board.
In addition to our Chairman, the Board has appointed Dr. Moriarty as our Vice Chairman and Lead Director. Dr. Moriarty chairs meetings of the independent directors in executive session and chairs any meetings at which the Chairman is not present. In addition, he facilitates communications between other members of the Board and the Chairman as needed. The Lead Director is authorized to call meetings of the independent directors and is available to consult with any of the Company’s senior executives regarding any concerns an executive may have. Dr. Moriarty aids in the preparation of meeting agendas and is authorized to meet with stockholders as a representative of the independent directors. Our Board decided to separate the roles of the Chairman and Chief Executive Officer because it believes that leadership structure presently offers the following benefits:
•Enhances our Board's objective evaluation of our Chief Executive Officer
•Frees the Chief Executive Officer to focus on the Company's operations instead of Board administration
•Provides a liaison on our Board with a depth of knowledge about the Chief Executive Officer with an experienced sounding BoardCompany
•Provides greater opportunities for communication between shareholdersstockholders and our Board
In addition to our Executive Chairman, the Board has appointed Dr. Moriarty as our Vice Chairman and Lead Director. Dr. Moriarty chairs meetings of the independent directors in executive session and chairs any meetings at which the Executive Chairman is not present. In addition, he facilitates communications between other members of the Board and the Executive Chairman. The Lead Director is authorized to call meetings of the independent directors and is available to consult with any of the Company’s senior executives regarding any concerns an executive may have. Dr. Moriarty aids in the preparation of meeting agendas and is authorized to meet with stockholders as a representative of the independent directors.
THE BOARD’S ROLE IN RISK OVERSIGHT
Our Board oversees our risk management processes directly, and through a risk management program overseen by both: (i) the Company’s Senior Vice President, General Counsel and Corporate Secretary, who reports directly to the Chief Executive Officer.Officer; and, (ii) our director of compliance who reports to the Company’s Senior Vice President, General Counsel and Corporate Secretary. Risks are identified and prioritized by our management, and a report of those risks is presented to the full Board on a quarterly basis.Board. In general, our Board oversees risk management activities relating to business strategy, operations and financial and legal hazard risks; our Audit Committee oversees the process by which risksvarious issues, such as enterprise risk and cybersecurity, are managed and reported to the Board, as well as activities related to financial controls and legal and corporate compliance; and, our Compensation Committee oversees risks related to our compensation programs. RisksOversight of particular risks may also be delegated to other committees of the Board, such as the Technology Committee and the Finance Committee, as appropriate, based upon the nature of any particular risk. Our appointment of both: (i) a Chairman and (ii) Vice Chairman and Lead Director allows for an efficient delegation of responsibilities for risk oversight amongst those two individuals as well as the use of an independent Vice Chairman and Lead Director to manage risks as needed.
SUCCESSION PLANNING
The Board, with support from its committees as needed, regularly reviews short and long-term succession plans for the Chief Executive Officer and for other senior management positions. In assessing possible CEO candidates, the independent Directors identify the skills, experience and attributes they believe are required to be an effective CEO in light of the Company’s global business strategies, opportunities and challenges. The Board also ensures that Directors have substantial opportunities over the course of the year to engage with possible succession candidates.
MEMBERS OF THE BOARD OF DIRECTORS
The Corporate Governance Committee seeks directors with the following types of experience:
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 Finance, accounting, or reporting experience.Directors with an understanding of finance and financial reporting processes are valued on our Board because of the importance we place on accurate financial reporting and robust financial controls and compliance. We also seek to have a number of directors who qualify as audit committee financial experts. |  Global or international business experience.Because our company is a global organization, directors with broad international exposure provide useful business and cultural perspectives. We seek directors who have had relevant experience with multinational companies or in international markets. |
 Legal or regulatory experience.Directors who have had legal or regulatory experience provide insights into addressing significant legal and public policy issues, particularly in areas related to our company’s business and operations. Because our company’s business requires compliance with a variety of regulatory requirements across a number of countries, our Board values directors with relevant legal or regulatory experience. |  Leadership experience.We believe that directors who have held significant leadership positions over an extended period, especially CEO positions, provide the company with unique insights. These people generally possess extraordinary leadership qualities, and the ability to identify and develop those qualities in others. They demonstrate a practical understanding of organizations, processes, strategy and risk management, and know how to drive change and growth. |
 Business development and M&A experience. Directors with a background in business development and in M&A provide insight into developing and implementing strategies for growing our business. Useful experience in this area includes skills in analyzing the “fit” of a proposed acquisition with a company’s strategy, the valuation of transactions, and assessing management’s plans for integration with existing operations. |  Technology experience.As a technology company and leading innovator, we seek directors with backgrounds in technology and cybersecurity because our success depends on developing, investing in and protecting new technologies and ideas. |
 Marketing or public relations experience.Directors, who have had relevant experience in marketing, brand management, and public relations, especially on a global basis, provide important insights to our Board. |  Industry experience.We seek to have directors with experience in the payments, travel and healthcare industries in which we participate. |
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George L. McTavish
| Age 72
75 Class I
Director Since 2005
2007 Term Expires 20152018 | |
Mr. McTavish currently sits on the Advisory Board of Clayton Associates, which makes early stage investments in healthcare and technology companies, where he has served since March 2014. From October 2004 until his retirement in October 2012, Mr. McTavish served as the Chairman and Chief Executive Officer of Source Medical Corporation, an outpatient information solutions and service provider for ambulatory surgery centers and rehabilitation clinics. Before joining Source Medical, Mr. McTavish served as Chairman and Chief Executive Officer of BenView Capital, a private investment company, from December 2001 to October 2004. Prior to BenView, Mr. McTavish was a full-time consultant for Welsh Carson Anderson & Stowe, an investment buy-out firm in New York City. From 1987 to 1997, Mr. McTavish was Chairman and Chief Executive Officer of Comdata, a provider of information services, financial services and software to the transportation industry. Following the acquisition of Comdata Corporation by Ceridian Corporation in 1995, he was also named as an Executive Vice President of Ceridian. He had joined Comdata after serving as Chairman and Chief Executive Officer of Hogan Systems, a provider of enterprise software systems to the banking and financial services industries. Mr. McTavish is also a member of the boards of directors of several private businesses. |
| The Board concluded that Mr. McTavish is well suited to serve as a director of the Company because of his leadership experience as the Chairman and CEO of an information services company and experience as the CEO of several large organizations. In addition the Board benefits from his deep knowledge of the payments, fleet and healthcare industries and experience in business development and financial and technology industries. |
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Regina O. Sommer
| Age 56
59 Class I
Director Since 2005
Term Expires 20152018 | |
Since March 2005, Ms. Sommer has been a financial and business consultant. From January 2002 until March 2005, Ms. Sommer served as Vice President and Chief Financial Officer of Netegrity, Inc., a leading provider of security software solutions, which was acquired by Computer Associates International, Inc. in November 2004. From October 1999 to April 2001, Ms. Sommer was Vice President and Chief Financial Officer of Revenio, Inc., a privately-held customer relationship management software company. Ms. Sommer was Senior Vice President and Chief Financial Officer of Open Market, Inc., an Internet commerce and information publishing software firm, from 1997 to 1999 and Vice President and Chief Financial Officer from 1995 to 1997. From 1989 to 1994, Ms. Sommer was Vice President at The Olsten Corporation and Lifetime Corporation, providers of staffing and healthcare services. From 1980 to 1989, Ms. Sommer served in various positions from staff accountant to senior manager at PricewaterhouseCoopers. Ms. Sommer served on the Board of SoundBite Communications, Inc., from 2006 until May 2012, where she was the chair of the Audit Committee and a member of the Compensation Committee. In addition, she has sat on the board of Insulet Corporation since 2008, a publicly held provider of an insulin infusion system for people with insulin-dependent diabetes. She also serves on Insulet’s Audit Committee and is the chair of the Nominating and Governance Committee. Ms. Sommer also sat on the Board of ING Direct from January 2008 until February 2012, and served as a member of the Audit, Risk Oversight &and Investment and the Governance &and Conduct Review Committees. |
| The Board concluded that Ms. Sommer is well suited to serve as a director of the Company because of her past leadership experience as the Chief Financial Officer of two publicly-traded companies. In addition, she brings significant financial expertise across a broad range of industries relevant to the Company’s business, including banking, software development and auditing. She also adds value from her experience in business development. |
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Jack VanWoerkom
| Age 6063
Class I
Director Since 2005
Term Expires 20152018 | |
Mr. VanWoerkom has served as an Operating Partner at Highland Consumer Fund, which invests in growth-oriented consumer-facing businesses, including specialty retail, e-commerce, consumer products and consumer service companies, since June 2015. From June 2011 until June 2015, he was retired. From June 2007 until his retirement in June 2011 Mr. VanWoerkom was employed by The Home Depot, Inc., a home improvement retailer, as Executive Vice President, General Counsel and Corporate Secretary from June 2007 until his retirement in June 2011.Secretary. Previously, Mr. VanWoerkom served as Executive Vice President, General Counsel and Secretary of Staples, Inc., an office supply retailer, from March 2004 to June 2007. Before that, Mr. VanWoerkom was Senior Vice President, General Counsel and Secretary of Staples from March 1999 to March 2004. The Board concluded that, due to his experience as a general counsel and an executive officer of several companies, Mr. VanWoerkom is well suited to serve as a director of the Company. Specifically, his experience with legal, regulatory, corporate governance and corporate transactions, including mergers and acquisitions, provides a valuable point of view on the board. Mr. VanWoerkom brings an international perspective to the Board owing to his experience with managing global suppliers and international operations. |
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| John E. Bachman | Age 61
Class I
Director Since 2016
Term Expires 2018 | |
Mr. Bachman was a partner at the accounting firm of PricewaterhouseCoopers LLP (“PwC”), a firm that focuses on audit and assurance and tax and consulting services, from 1989 to 2015. At PwC, in addition to audit partner work, Mr. Bachman served from July 2007 to November 2013 as the operations leader of the firm’s U.S. Assurance Practice with full operational and financial responsibility for this $4 billion line of business, which included the firm’s audit and risk management practices. Mr. Bachman earlier served for three years as the firm’s strategy leader, where he was responsible for strategic planning across business units, geographies and industries. As an audit partner, Mr. Bachman focused on companies in the industrial manufacturing, financial services, publishing, healthcare and other industries. Mr. Bachman sits on the Board of The Children’s Place, Inc., a children’s specialty apparel retailer. Mr. Bachman received an MBA from the Harvard University Graduate Business School and a bachelor’s degree from Bucknell University.
The Board concluded that Mr. VanWoerkomBachman is well suited to serve as a director of the Company because of his extensive background in auditing, as well as his strategy and operations experience with international operations, corporate governanceC-level executives, which will benefit WEX’s vision of global expansion now and corporate transactions.in the future.
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Shikhar Ghosh
| Age 56
59 Class II
Director Since 2005
Term Expires 20162019 | Since August 2008, |
Mr. Ghosh has beenis a Professor inof Management Practice at the Entrepreneurial Management Unit of Harvard Business School. He has been on the faculty since August 2008. Mr. Ghosh is also currently on the Chairmanboard of two venture-backed companies, Rave Mobile SafetyDecision Resources Group, a leading provider of information services to the healthcare industry and Skyhook Wireless. Rave Mobile Safety builds mobile applications for universities, Skyhook is developingEvidence Action, a national positioning system based on WiFi technology.non-profit organization that provides health services to over 200 million children across multiple countries. From June 2006 until December 2007, Mr. Ghosh was the Chief Executive Officer of Risk Syndication for the Kessler Group, where he enabled bank clients and their endorsing partners to market credit cards. From June 1999 to June 2004, Mr. Ghosh was Chairman and Chief Executive Officer of Verilytics Technologies, LLC, an analytical software company focused on the financial services industry. In 1993, Mr. Ghosh founded Open Market, Inc., an Internet commerce and information publishing software firm. From 1988 to 1993, Mr. Ghosh was the Chief Executive Officer of Appex Corp., a technology company that was sold to Electronic Data Systems Corporation in 1990. From 1980 until 1988, Mr. Ghosh served in various positions with The Boston Consulting Group, and was elected as a worldwide partner and a director of the firm in 1988. |
| The Board concluded that Mr. Ghosh is well suited to serve as a director of the Company because of his experience with various technology related ventures and record of founding companies that have operated in emerging technology markets. Mr. Ghosh's qualifications to serve on the Board include his academic experience and executive management, business development and leadership experience, as the Chairman and CEO of various companies.
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| James Neary | Age 52 Class II Director Since 2016 Term Expires 2019 | |
Mr. Neary is a managing director of Warburg Pincus, a stockholder of our Company, which he joined in 2000. Mr. Neary has served as co-head of the Industrial & Business Services team since June 2013 and is also a member of the firm’s executive management group. From 2010 to June 2013, Mr. Neary led the firm’s late-stage efforts in the technology and business services sectors in the U.S. Prior to that, from 2004 to 2010, he was co-head of the technology, media and telecommunications investment efforts in the U.S. From 2000 to 2004, Mr. Neary led the firm’s Capital Markets activities. Before joining Warburg Pincus, he was a managing director at Chase Securities, an investment advisory firm. Mr. Neary has been the Chairman of Endurance International Group, a web presence solutions company, since December 2011 and Hygiena, a manufacturer of food safety devices, since August 2016. He is also a director of several private companies and a trustee of The Mount Sinai Health Systems. Mr. Neary has previously served on the boards of Fidelity National Information Services, Inc., a bank technology processing company, from October 2009 to October 2013, Coyote Logistics, a truck brokerage business now owned by UPS, from November 2007 to September 2015 and Interactive Data Corporation, a firm providing financial market data and analytics and now owned by Intercontinental Exchange, from July 2010 to December 2015.
The Board concluded that Mr. Neary is qualified to serve as a director of the Company due to his extensive knowledge of the payments industry, strategy and business development and his wide-ranging experience as a director and as chairman of other companies and his perspective as the representative of a substantial shareholder. |
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| Kirk P. Pond | Age 6972 Class II Director Since 2005 Term Expires 20162019 | |
From June 1996 until May 2005, Mr. Pond was the President and Chief Executive Officer of Fairchild Semiconductor International, Inc., one of the largest independent, international semiconductor companies. He was the Chairman of the Board of Directors of that company from March 1997 until June 2006 and retired from its board in May 2007. Prior to Fairchild Semiconductor’s separation from National Semiconductor, Mr. Pond held several executive positions with National Semiconductor, including Executive Vice President and Chief Operating Officer and was in the office of the President. Mr. Pond had also held executive management positions with Texas Instruments, a global semiconductor design & manufacturing company, and Timex Corporation, a watch and jewelry manufacturing company, and is also a former director of the Federal Reserve Bank of Boston. Mr. Pond has been a director of Brooks Automation, Inc., a leading worldwide provider of automation solutions and integrated subsystems to the global semiconductor and related industries, since 2007, where he serves on the human resources and compensation committee and nominating and governance committees.the finance committee. Mr. Pond has also been a director of Sensata Technologies Holding N.V., a sensor and electrical protection device manufacturer, since March 2011 and serves on the auditnominating and governance committee and is the chair of the compensation committees. |
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The Board concluded that Mr. Pond is well suited to serve as a director of the Company because of his experience directing a large, publicly traded company with international operations and experience with the technology industry. The Board benefits from Mr. Pond’s number of years of leadership and global experience and expertise in corporate strategy and restructuring and from his organizational acumen. In addition, Mr. Pond provides considerable operational, strategic planning and leadership experience to the Board. |
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| Melissa D. Smith | Age 45 48 Class II Director since 2014 Term expires 20162019 | Melissa D. |
Ms. Smith assumed the role of President and Chief Executive Officer and a seat on the Board in January 2014. She has served as the Company’s President since May 2013. Previously, Ms. Smith served as President, The Americas, from April 2011 to April 2013 and as the Company’s Chief Financial Officer and Executive Vice President, Finance and Operations from November 2007 to April 2011. From September 2001 through November 2007, Ms. Smith served as Senior Vice President, Finance and Chief Financial Officer. From May 1997 to August 2001, Ms. Smith held various positions of increasing responsibility with the Company. Ms. Smith began her career at Ernst & Young. |
|
The Board concluded that Ms. Smith is well suited to serve as a director of the Company because of her experience with the Company in various positions with increasing responsibilities across all facets of the Company. The Board benefits from the leadership skills, financial expertise and business development expertise of Ms. Smith. Ms. Smith has almost 20 years of experience with the Company. |
| | |
|
| | |
Michael E. Dubyak
| Age 6366
Class III
Director Since 2005
Term Expires 20142017
| |
Mr. Dubyak has served as ourthe Chairman of the Board since May 2008. Mr. Dubyak also served as the Executive Chairman sincefrom January 2014. Prior2014 to that, Mr. Dubyak served asDecember 2014 and our Chief Executive Officer from August 1998 until January 2014. He also served as the President from August 1998 until May 2013. From November 1997 to August 1998, Mr. Dubyak served as our Executive Vice President of U.S. Sales and Marketing. FromBefore that, from January 1994 to November 1997, Mr. Dubyak served us in various senior positions in marketing, marketing services, sales, business development and customer service. From January 1986 to January 1994, he served as our Vice President of Marketing. Mr. Dubyak has more than 30 years of experience in the business-to-business payments, payment processing, information management services and vehicle fleet and fuel industries. |
|
The Board concluded that Mr. Dubyak is well suited to serve as a director of the Company because of his long experience with the Company and knowledge of the fleet card and payment processing industries. |
Eric Duprat Age 54 Class III Director Since 2014 Term expires 2014 | Eric Duprat assumed a seat on Mr. Dubyak has served in various leadership roles with the BoardCompany and held senior positions in March 2014. Mr. Duprat is currently the Presidentmarketing, marketing services, sales and Chief Executive Officer of Verayo, a mobile security services turnaround firm in San Jose, California.business development. He has served as Verayo’s CEO since April 2011. Prior to joining Verayo, Mr. Duprat wasbeen associated with the General Manager of Mobile Payments at PayPal, an eBay company, from March 2008 to March 2011. Prior to PayPal, he was the Vice President of Marketing and Business Development at Inside Contactless from April 2006 to February 2008. Before that, Mr. Duprat was a Vice President, and later, Senior Vice President of Global Marketing at Hypercom, an industry leader in payment and networking systems. He has also served as a Director in Hewlett Packard’s VeriFone Division, first in European, Middle East and Africa (EMEA) Marketing and then in the United States.Company for over 30 years.
|
| | The Board concluded that Mr. Duprat is well suited to serve as a director of the Company because he brings with him expertise in the areas of global management, wireless, security and payment systems which would benefit the Company. |
|
| |
Ronald T. Maheu
Age 71
Class III
Director Since 2005
Term Expires 2014
| Mr. Maheu retired in July 2002 from PricewaterhouseCoopers, where he was a senior partner since 1998. Since 2002, Mr. Maheu has been a financial and business consultant. Mr. Maheu was a founding member of Coopers & Lybrand’s board of partners. Following the merger of Price Waterhouse and Coopers & Lybrand in 1998, Mr. Maheu served on both the U.S. and global boards of partners and principals of PricewaterhouseCoopers until June 2001. Since January 2003, Mr. Maheu serves on the Board of Directors and the Audit, Executive and Governance Committees of CRA International, Inc., an international consulting firm headquartered in Boston, Massachusetts. Mr. Maheu also serves on the Board of Directors and the Audit Committee of Virtusa Corporation, a global information technology services company. |
| The Board concluded that Mr. Maheu is well suited to serve as a director of the Company because of his experience with public accounting and subsequent experience as a member of the board of directors of several publicly-traded companies. |
Rowland T. Moriarty
| Age 67 70
Class III
Director Since 2005
Term Expires 20142017 | |
Dr. Moriarty served as the non-executive Chairman of the Board of Directors of WEX Inc. from 2005 until May 2008 and has served as the Vice Chairman and Lead Director since May 2008. He has been the President and Chief Executive Officer of Cubex Corporation, a privately-held consulting company, since 1992. From 1981 to 1992, Dr. Moriarty was a professor of business administration at Harvard Business School. Dr. Moriarty hasSchool and served on the boardsboard of Staples, Inc., an office products company, from 1986 until June 2016. Dr. Moriarty currently serves on the boards of CRA International, Inc., an economic, financial and management consulting services firm, where he serves as Chairman, and Virtusa Corporation, a global information technology services company, since 1986 2002 and 2006, respectively. |
|
The Board concluded that Mr.Dr. Moriarty is well suited to serve as a director of the Company because of his experience across a broad spectrum of industries gained as the Chairman of CRA International, Inc., as well as his experience as a member of the boardBoard of directorsDirectors of other publicly-traded companies. He also adds value to the Board from his in-depth industry experience, diversification, merger and acquisition experience and financial expertise. |
Eric Duprat and Ronald T. Maheu also currently serve as Class III directors. However, Messrs. Duprat and Maheu will retire at the end of their term and are not standing for reelection at the Annual Meeting.
NUMBER OF DIRECTORS AND TERMS
Our certificate of incorporation provides that our Board shall consist of such number of directors as is fixed by our By-Laws. Our By-Laws provide that our Board shall consist of such number of directors as from time to time is fixed exclusively by resolution of the Board. Currently, the Board has fixed the size of the Board at tentwelve directors, who serve staggered terms as follows:
each director who is elected at an annual meeting of stockholders serves a three-year term and until such director’s successor is duly elected and qualified, subject to such director’s earlier death, resignation or removal,
the directors are divided into three classes,
the classes are as nearly equal in number as possible, and
the term of each class begins on a staggered schedule.
Following the Annual Meeting, the size of the Board will be reduced to ten members.
BOARD AND COMMITTEE MEETINGS
The Board held 912 meetings in 2013.2016. Each of our directors attended at least 75 percent of the aggregate number of meetings of the Board and meetings of the Board committees, onheld during the period for which he or she was a director or served on a committee in 2013.2016. Our independent directors meet in executive session in at least one regularly scheduled in-person Board meeting each year. As provided in our Corporate Governance Guidelines, we expect directors to attend the annual meeting of stockholders. All of our directors attended the 20132016 annual meeting of stockholders.
Our Board has created the following committees. The charters for each of the committees can be obtained at: http://ir.wexinc.com/phoenix.zhtml?c=186699&p=irol-govhighlights
Our Board has created the following committees:
|
| | | | |
NAME OF COMMITTEE AND MEMBERS | | COMMITTEES OF THE BOARD OF DIRECTORS | | NUMBER OF MEETINGS IN 20132016 |
| Audit | | | | |
Regina O. Sommer (Chair)Eric Duprat John E. Bachman Ronald T. Maheu George L. McTavish
| | The Audit Committee must be comprised of at least three independent directors appointed by a majority of the Board. The Audit Committee oversees our accounting and financial reporting processes, as well as the audits of our financial statements and internal control over financial reporting.reporting and monitors the Company's enterprise risk management and cybersecurity program. All members of the Audit Committee are independent under the applicable rules of the New York Stock Exchange, or the NYSE, and the applicable rules of the Securities and Exchange Commission, or the SEC. In addition, each member of the Audit Committee is required to have the ability to read and understand fundamental financial statements. Unless determined otherwise by the Board, the Audit Committee shall have at least one member who qualifies as an "audit committee financial expert" as defined by the rules of the SEC. Our Board has determined that Mr.Messrs. Bachman and Maheu and Ms. Sommer qualify as "audit committee financial experts." | | 911 |
| Compensation | | | | |
Jack VanWoerkom (Chair) Shikhar Ghosh (Chair) Kirk P. Pond James Neary Regina O. Sommer Jack VanWoerkom
| | The Compensation Committee must be comprised of at least two independent directors appointed by a majority of the Board. The Compensation Committee oversees the administration of our equity incentive plans and certain of our benefit plans, reviews and administers all compensation arrangements for executive officers and our Board and establishes and reviews general policies relating to the compensation and benefits of our officers and employees. All members of the Compensation Committee are independent under the applicable rules of the NYSE. | | 8 |
| Corporate Governance | | | | |
Rowland T. Moriarty (Chair) Eric Duprat Shikhar GhoshRonald T. Maheu Jack VanWoerkom | | The Corporate Governance Committee is comprised of thatsuch number of independent directors as our Board shall determine. The Corporate Governance Committee’s responsibilities include identifying and recommending to the Board appropriate director nominee candidates, overseeing succession planning for the CEO and other executive officers and providing oversight with respect to corporate governance matters. All members of the Corporate Governance Committee are independent under the applicable rules of the NYSE. | | 54 |
| | | |
| Finance Committee | | | | |
George L. McTavish (Chair) Michael E. Dubyak Rowland T. Moriarty Ronald T. Maheu Kirk P. Pond
| | The Finance Committee is comprised of thatsuch number of directors as our Board shall determine. The Finance Committee’s responsibilities include advising the Board and the Company’s management regarding potential corporate transactions, including strategic investments, mergers, acquisitions and divestitures. The Finance Committee also oversees the Company’s debt or equity financings, credit arrangements, investments, and capital structure and capital policies. | | 511 |
|
| Technology Committee | | | | |
Shikhar Ghosh (Chair) Eric Duprat James Neary Kirk Pond | | The Technology Committee is comprised of such number of directors as our Board shall s determine. The Technology Committee's responsibilities include assisting the Board and Audit Committee in their oversight of the Company’s management of risks regarding technology, data security, disaster recovery, and business continuity. In addition, the Technology Committee focuses on strategy relating to hardware, software, personnel, architecture, organizational structure, management, resource allocation, innovation, and research and development.
| | 2 |
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
No member of our Compensation Committee (the members of which are listed in the table in the "Board and Committee Meetings" section) is or was one of our or our subsidiaries’ former officers or employees. During 2013,2016, there were no Compensation Committee interlocks as required to be disclosed under SEC rules.
DIRECTOR COMPENSATION
In 2012, at the request of the
The Company's Non-Employee Directors Compensation Committee, Pearl Meyer and Partner, or PM&P, conducted an analysis of our director compensation programs, including peer group and general market comparisons, and provided the committee with recommendations on changesPlan is designed to meetachieve the following objectives of the compensation plan:objectives:
Attract and retainengage directors
Compensate our directors for the investment of time they make to support the Company
Align director compensation with stockholder interests
The Compensation Committee reviewed PM&P's analysisHave a compensation structure that is simple, transparent and agreed that no significant changeseasy for stockholders to the WEX Inc. Non-Employee Director Compensation Plan were necessary to meet the above objectives for 2013.understand
Annual Cash Retainers
The Company pays each non-employee board member the following annual cash retainer(s) based upon his or her service. Such payments are made in four equal quarterly amounts.
| | | Annual Chair Cash Retainer | | $ | 87,500 |
|
| Annual Lead Director Cash Retainer | $ | 75,000 |
| $ | 65,000 |
|
| Annual Director Cash Retainer (other than Lead Director) | $ | 50,000 |
| |
| Annual Director Cash Retainer (other than Chairman and Lead Director) | | $ | 50,000 |
|
| Audit Committee Chair Cash Retainer | $ | 30,000 |
| $ | 30,000 |
|
| Compensation Committee Chair Cash Retainer | $ | 20,000 |
| $ | 20,000 |
|
| Finance Committee Chair Cash Retainer | $ | 20,000 |
| $ | 20,000 |
|
| Governance Committee Chair Cash Retainer | $ | 15,000 |
| |
| Corporate Governance Committee Chair Cash Retainer | | $ | 15,000 |
|
| Technology Committee Chair Cash Retainer | | $ | 20,000 |
|
| Audit Committee Member Cash Retainer (other than Committee Chair) | $ | 15,000 |
| $ | 15,000 |
|
| Compensation Committee Member Cash Retainer (other than Committee Chair) | $ | 10,000 |
| $ | 10,000 |
|
| Finance Committee Member Cash Retainer (other than Committee Chair) | $ | 10,000 |
| $ | 10,000 |
|
| Governance Committee Member Cash Retainer (other than Committee Chair) | $ | 7,500 |
| |
| Corporate Governance Committee Member Cash Retainer (other than Committee Chair) | | $ | 7,500 |
|
| Technology Committee Member Cash Retained (other than Committee Chair) | | $ | 10,000 |
|
To the extent a director is appointed at a time other than the annual stockholders' meeting, any annual cash retainer is prorated. Employees who serve as directors are not separately compensated for their service on our Board.
Equity Retainers
In 20132016 all non-employee directors other than the Lead Director were granted a number of restricted stock units, or RSUs, worth the equivalent of approximately $90,000$110,000 at the time of the annual stockholders’ meeting at the then current stock price. The Lead Director was granted a number ofadditional RSUs worth the equivalent of approximately $115,000$25,000 and the Chairman was granted additional RSUs worth the equivalent of approximately $37,500 at the time of the annual stockholders’ meeting at the then current stock price. These RSUs vest on the first anniversary of the date of grant.
In 2013, at the request of the compensation committee, PM&P conducted a new analysis of our director compensation program, including consideration of the company’s growing size and complexity. As a result of this analysis, on December 12, 2013, the compensation committee adopted amendments effective January 1, 2014 to increase the size of the equity retainer provided to all directors other than the Lead Director at the time of the annual stockholders’ meeting from $90,000 to $110,000, and to increase the size of the equity retainer provided to the Lead Director at the time of the annual stockholders’ meeting from $115,000 to $135,000. No other changes were made.
New Director Equity Grants
All new directors are granted a number of RSUs, worth the equivalent of $50,000 at the then current stock price. Such RSUs vest annually and are granted at the next annual stockholders meetings after the appointment.
20132016 Director Compensation
| | | Name | Fees Earned or Paid in Cash ($) | | Stock
Awards (1) ($) | | Total ($) | Fees Earned or Paid in Cash ($) | | Stock
Awards (1) ($) | | Total ($) |
John E. Bachman(2) | | $2,528 | | — | | $2,528 |
| Michael E. Dubyak | | $97,500 | | $147,426 | | $244,926 |
| Eric Duprat | | $74,417 | | $109,982 | | $184,399 |
| Shikhar Ghosh | $ | 67,500 |
| | $ | 89,951 |
| | $ | 157,451 |
| $75,938 | | $109,982 | | $185,920 |
| Ronald T. Maheu | $ | 90,000 |
| | $ | 89,951 |
| | $ | 179,951 |
| $67,813 | | $109,982 | | $177,795 |
| George L. McTavish | $ | 75,000 |
| | $ | 89,951 |
| | $ | 164,951 |
| $85,000 | | $109,982 | | $194,982 |
| Rowland T. Moriarty | $ | 102,500 |
| | $ | 114,998 |
| | $ | 217,498 |
| $82,500 | | $134,974 | | $217,474 |
James Neary(2) | | $17,500 | | — | | $17,500 |
| Kirk P. Pond | $ | 85,000 |
| | $ | 89,951 |
| | $ | 174,951 |
| $68,750 | | $109,982 | | $178,732 |
| Regina O. Sommer | $ | 75,000 |
| | $ | 89,951 |
| | $ | 164,951 |
| $90,000 | | $109,982 | | $199,982 |
| Jack VanWoerkom | $ | 75,000 |
| | $ | 89,951 |
| | $ | 164,951 |
| $71,250 | | $109,982 | | $181,232 |
|
| |
| (1) | This column is the fair value of stock awards granted on May 17, 2013.13, 2016. The fair value of these awards wasis determined in accordance with accounting standardsFASB ASC Topic 718 based on the closing price of our common stock as reported by the New York Stock Exchange on the day that the award is granted. The aggregate number of RSUs outstanding for each director as of December 31, 20132016 is as follows: Mr. Dubyak — 1,693; Mr. Duprat — 1,263; Mr. Ghosh — 1,677;1,263; Mr. Maheu — 1,677;1,263; Mr. McTavish — 1,677;1,263; Dr. Moriarty — 2,224;1,550; Mr. Pond — 1,677;1,263; Ms. Sommer —1,677;— 1,263; and Mr. VanWoerkom — 1,677.1,263. |
| (2) | Messrs. Neary and Bachman were appointed in July and September 2016, respectively, and the amounts represent fees earned by them for the part of the year they served on the Board. |
Fee Deferral
Directors may defer all or part of their cash fees and equity retainers into deferred stock units which will be payable in Company shares to the director 200 days following cessation of Board service.
Expense Reimbursement
Directors are reimbursed by the Company for their out-of-pocket travel and related expenses incurred in attending all Board and committee meetings.
NON-EMPLOYEE DIRECTOR OWNERSHIP GUIDELINES
The Compensation Committee has established equity ownership guidelines for all non-employee directors. "Equity" for the purpose of these guidelines is defined to include shares of the Company’s common stock, vested restricted stock units and deferred stock units. Under the guidelines of the equity ownership program, all directors are expected to own equity equal in value to at least three times each director’s annual director cash retainer or lead director cash retainer. The director's compliance with these guidelines is assessed by the Compensation Committee annually on July 31, which is the "Determination Date" for purposes of these guidelines. New directors have three years following their appointment to the Boardinitial Determination Date, to achieve this level of ownership. The Compensation Committee assesses progress against the guidelines each year on July 31. As of July 31, 2013,2016, all of our non-executivenon-employee directors then serving, other than Messrs. Duprat and Neary, who joined the Board on March 12, 2014 and July 5, 2016 respectively, exceeded the holdingsholding levels in the guidelines. Because Mr. Bachman joined the Board on September 22, 2016, his equity ownership was not measured on July 31, 2016. Under our guidelines, Messrs. Bachman, Duprat and Neary have three years from their initial Determination Date to accumulate sufficient equity to gain compliance with the equity ownership guidelines.
PRINCIPAL STOCKHOLDERS
This table shows common stock that is beneficially owned by our directors, our named executive officers, our current directors and officers as a group and all persons known to us to own 5 percent or more of the Company's outstanding Company common stock, as of March 18, 2014.30, 2017. The percent of outstanding shares reported below is based on 38,850,25142,742,467 shares outstanding on March 18, 2014.30, 2017.
AMOUNT AND NATURE OF SHARES BENEFICIALLY OWNED
| | Name and Address(1) | Common Stock Owned (2) | | Right To Acquire (3) | | Total Securities Owned (4) | | Percent of Outstanding Shares | Common Stock Owned (2) | | Right To Acquire(3) | | Total Securities Beneficially Owned (3) | | Percent of Outstanding Shares |
| Principal Stockholders: | | | | | | | | | | | | | | |
Wellington Management Company, LLP(6) | 3,813,102 | | — |
| | 3,813,102 | | 9.8 | % | |
Warburg Pincus LLC(4) | | 3,850,810 |
| | | | 3,850,810 |
| | 9 | % |
| 450 Lexington Avenue | | | | | | | | |
| New York, NY 10017 | | | | | | | | |
Wellington Management Company, LLP(5) | | 3,806,565 |
| | — |
| | 3,806,565 |
| | 8.9 | % |
| 280 Congress Street | | | | | | | | | | | | | | |
| Boston, MA 02210 | | | | | | | | | | | | | | |
BlackRock Inc.(5) | 3,251,087 | | — |
| | 3,251,087 | | 8.4 | % | |
| 40 East 52nd Street | | | | | | | | |
| New York NY 10022 | | | | | | | | |
The Vanguard Group, Inc.(7)(6) | 2,336,076 |
| | — |
| | 2,336,076 |
| | 6.0 | % | 2,937,967 |
| | — |
| | 2,937,967 |
| | 6.9 | % |
| 100 Vanguard Blvd | | | | | | | | | | | | | | |
| Malvern, PA 19355 | | | | | | | | | | | | | | |
BlackRock Inc.(7) | | 2,842,055 |
| | — |
| | 2,842,055 |
| | 6.7 | % |
| 55 East 52nd Street | | | | | | | | |
| New York NY 10022 | | | | | | | | |
Janus Capital Management LLC(8) | | 2,754,125 |
| | — |
| | 2,754,125 |
| | 6.4 | % |
| 151 Detroit Street | | | | | | | | |
| Denver, Colorado 80206 | | | | | | | | |
| Executive Officers and Directors: | | | | | | | | | | | | | | |
| Michael E. Dubyak | 70,908 |
| | 5,961 |
| | 76,869 |
| | * |
| |
| Melissa D. Smith | 35,272 |
| | 8,340 |
| | 43,612 |
| | * |
| 70,380 |
| | — |
| | 70,380 |
| | * |
|
| Steven A. Elder | 12,251 |
| | 5,930 |
| | 18,181 |
| | * |
| |
| David D. Maxsimic | 17,852 |
| | 1,536 |
| | 19,388 |
| | * |
| |
| George W. Hogan | 11,541 |
| | 5,762 |
| | 17,303 |
| | * |
| |
| Roberto Simon | | 4,137 |
| | — |
| | 4,137 |
| | * |
|
| Jeffrey Young | | 4,599 |
| | — |
| | 4,599 |
| | * |
|
George W. Hogan(9) | | 20,304 |
| | — |
| | 20,304 |
| | * |
|
| Kenneth Janosick | | 13,817 |
| | — |
| | 13,817 |
| | * |
|
| John E. Bachman | | — |
| | — |
| | — |
| | * |
|
Michael E. Dubyak(10) | | 64,416 |
| | 1,693 |
| | 66,109 |
| | * |
|
| Eric Duprat | | 1,593 |
| | 1,263 |
| | 2,856 |
| | * |
|
| Shikhar Ghosh | 3,274 |
| | — |
| | 3,274 |
| | * |
| 3,712 |
| | 1,263 |
| | 4,975 |
| | * |
|
| Ronald T. Maheu | 6,593 |
| | 1,239 |
| | 7,832 |
| | * |
| 9,413 |
| | 1,263 |
| | 10,676 |
| | * |
|
| George L. McTavish | 6,552 |
| | 1,239 |
| | 7,791 |
| | * |
| 10,021 |
| | 1,263 |
| | 11,284 |
| | * |
|
Rowland T. Moriarty(8) | 59,354 |
| | 1,584 |
| | 60,938 |
| | * |
| |
Kirk P. Pond(9) | 26,393 |
| | 1,239 |
| | 27,632 |
| | * |
| |
Rowland T. Moriarty(11) | | 59,208 |
| | 1,550 |
| | 60,758 |
| | * |
|
James Neary(12) | | 3,850,810 |
| | — |
| | 3,850,810 |
| | 9 | % |
Kirk P. Pond(13) | | 28,070 |
| | 1,263 |
| | 29,333 |
| | * |
|
| Regina O. Sommer | 5,322 |
| | 1,239 |
| | 6,561 |
| | * |
| 5,083 |
| | 1,263 |
| | 6,346 |
| | * |
|
| Jack VanWoerkom | 13,193 |
| | 1,239 |
| | 14,432 |
| | * |
| 3,113 |
| | 1,263 |
| | 4,376 |
| | * |
|
| Eric Duprat | — |
| | — |
| | — |
| | * |
| |
Directors and Executive Officers as a Group (18 Persons) (10) | 287,566 |
| | 36,912 |
| | 324,478 |
| | 0.8 | % | |
Directors and Executive Officers as a Group
(21 Persons) (14) | | 3,851,205 |
| | 12,084 |
| | 3,851,217 |
| | * |
|
|
| |
| (1) | Unless otherwise noted, the business address for the individual is care of WEX Inc., 97 Darling Avenue, South Portland, ME 04106. |
| (2) | Unless otherwise noted, includes shares for which the named person has sole voting and investment power or has shared voting and investment power with his or her spouse. Excludes shares that may be acquired through stock option exercises or that are restricted stock unit holdings. This table does not include the following number of shares which will be acquired by our non-employee directors 200 days after their retirementseparation from our Board: 29,71635,239 shares by Mr. Ghosh; 9,248 shares by Mr. Maheu; 22,839 shares by Mr. McTavish; 11,999 shares by Dr. Moriarty; 6,4988,641 shares by Mr. Pond; 6,564 shares by Ms. Sommer, and 6,606 shares by Mr. VanWoerkom. Certain shares identified in this column are held through brokerage accounts and may be pledged as security. |
| (3) | Includes shares that can be acquired through stock option exercises or the vesting of restricted stock units through May 17, 2014.29, 2017. Excludes shares that may not be acquired until on or after May 18, 2014.30, 2017. |
| (4) | IncludesThe stockholder is Mustang HoldCo II LLC, Delaware limited liability company ("Mustang Holdco"). The unitholders of Mustang HoldCo are (i) Warburg Pincus Private Equity (Lexington) XI- A, L.P., Delaware limited partnership ("WP XI Lexington-A"), (ii) Warburg Pincus XI (Lexington) Partners- A, L.P., a Delaware limited partnership (''WP Lexington Partners-A"), (iii) WP Mustang Co-Invest LLC, a Delaware limited liability company ("WP Co-Invest"), (iv) WP (Lexington) Holdings II, L.P., a Delaware limited partnership ("WP Lexington IT"), (v) Warburg Pincus XI (E&P) Partners- B, L.P., a Delaware limited partnership ("WP E&P Partners-B"), (vi) WP Mustang Co-Invest-B L.P., a Delaware limited partnership ("WP Co-Invest-B") and (vii) WP Mustang Co-Invest-C L.P., a Delaware limited partnership ("WP Co-Invest-C"). Warburg Pincus (E&P) XI, L.P., a Delaware limited partnership ("WP E&P XI GP"), is (a) the general partner of WP XI Lexington-A, WP XI Lexington Pa1tners-A, WP Lexington II, WP E&P Partners-B and (b) the managing member of WP Co-Invest LLC. Warburg Pincus (E&P) XI LLC, a Delaware limited liability company ("WP E&P XI LLC"), is the general partner of WP E&P XI GP. Warburg Pincus Partners (E&P) XI LLC, a Delaware Limited liability company ("WPP E&P XI"), is the sole member of WP E&P XI LLC. Warburg Pincus Partners II (US), L.P., a Delaware limited pa1tnership (''WPP II US"), is the managing member of WPP E&P XI. Warburg Pincus & Company US, LLC, a New York limited liability company ("WP & Company US"), is the general partner of WPP IT US. Warburg Pincus (Bermuda) XI, Ltd., a Bermuda company ("WP Bermuda XI") is the general partner of WP Co Invest-B and WP Co-Invest-C. Warburg Pincus Partners II (Cayman), L.P., a Cayman Islands limited partnership ("WPP II Cayman") is the sole shareholder of WP Bermuda XI. Warburg Pincus (Bermuda) Private Equity GP Ltd., a Bermuda company ("WP Bermuda GP") is the general partner of WPP II Cayman. Charles R. Kaye and Joseph P. Landy are each (i) Managing Members of WP & Company US, (ii) the Co-Chairmen and sole Directors of WP Bermuda GP and (iii) the Managing Members and Co-Chief Executive Officers of Warburg Pincus LLC, a New York limited liability company ("WP LLC"), and may be deemed to control the Warburg Pincus entities. Messrs. Kaye and Landy disclaim beneficial ownership of all shares held by the Warburg Pincus entities. The address of the Warburg Pincus entities is 450 Lexington Avenue, New York, New York 10017. |
| (5) | This information was reported on a Schedule 13G/A filed by Wellington Management Company, LLP ("Wellington") with the SEC on February 9, 2017. The Schedule 13G/A indicates that Wellington has shared voting power over 3,084,876 shares and shared dispositive power over 3,806,565 shares. The percentage reported is based on the assumption that Wellington has beneficial ownership of 3,806,565 shares of common stock and shares that can be acquired through stock option exercises or the vesting of restricted stock units through May 17, 2014.on March 30, 2017. |
(5)(6) | This information was reported on a Schedule 13G/A filed by The Vanguard Group, Inc. ("Vanguard") with the SEC on February 10, 2017. The Schedule 13G/A reported that Vanguard has sole voting power over 22,710 shares, shared voting power over 4,490 shares, sole dispositive power over 2,912,906 shares and shared dispositive power over 25,061 shares. The percentage reported is based on the assumption that Vanguard has beneficial ownership of 2,937,967 shares of common stock on March 30, 2017. |
| (7) | This information was reported on a Schedule 13G/A filed by BlackRock Inc. ("BlackRock") with the SEC on January 31, 2014.26, 2017. The Schedule 13G/A reported that BlackRock has sole voting power over 3,138,9402,709,849 shares and has sole power to dispose 3,251,0872,842,055 shares. The percentage reported is based on the assumption that BlackRock had beneficial ownership of 3,251,0872,842,055 shares of common stock on March 18, 2014.30, 2017. |
(6)(8) | This information was reported on a Schedule 13G/A13G filed by WellingtonJanus Capital Management Company, LLPLLC ("Janus Capital") with the SEC on February 14, 2014.13, 2017. The Schedule 13G/A indicates13G reported that itJanus Capital has sole voting power over 2,753,025 shares, shared voting power over 2,986,1941,100 shares, sole dispositive power over 2,753,025 shares and shared dispositive power over 3,813,1021,100 shares. The percentage reported is based on the assumption that Wellington Management Company, LLPJanus Capital has beneficial ownership of 3,813,1022,754,125 shares of common stock on March 18, 2014.30, 2017. |
(7)(9) | This information was reported on a Schedule 13G/A filed by The Vanguard Group, Inc. withIncludes 189 shares held indirectly under the SEC on February 12, 2014. The Schedule 13G/A reported that each has sole voting power over 54,649 shares, sole dispositive power over 2,284,027 shares and shared dispositive power over 52,049 shares. The percentage reported is based on the assumption that The Vanguard Group, Inc. has401(k) Plan. Mr. Hogan disclaims beneficial ownership of 2,336,076those shares except to the extent of common stock on March 18, 2014.his pecuniary interest in them. |
(8)(10) | Includes 20,000 shares held indirectly under a Grantor Retained Annuity Trust ("GRAT"). Mr. Dubyak disclaims beneficial ownership of those shares except to the extent of his pecuniary interest in them. |
| (11) | Includes 19,000 shares held indirectly through Rubex, LLC, and 15,600 shares held indirectly through the Moriarty Family Charitable Trust.Trust and 21,978 held indirectly by Rowgra, LLC. Dr. Moriarty is the Chief Investment Officer and Managing Member of Rubex, LLC and disclaims beneficial ownership of those shares except to the extent of his pecuniary interest in them. Dr. Moriarty disclaims beneficial ownership of the Moriarty Family Charitable Trust shares except to the extent of his pecuniary interest in them. Dr. Moriarty is the Managing Manager and Distribution Manager of Rowgra LLC and disclaims beneficial ownership of those shares except to the extent of his pecuniary interest in them. |
|
(9) | |
| (12) | Mr. Neary became a director of the Company on July 5, 2016, and is a Member of WP & Company US and a Managing Director and Member of WP LLC. As such, Mr. Neary may be deemed to have an indirect pecuniary interest in an indeterminate portion of the securities reported as beneficially owned by Mustang Holdco. Mr. Neary disclaims beneficial ownership of such securities, except to the extent of any direct pecuniary interest therein. Mr. Neary does not directly own any shares of Common Stock in the Company. |
| (13) | Includes 2,500 shares held indirectly through the Pond Family Foundation; 700 shares held indirectly through the Loretta A. Pond Trust; and 3,000 shares held by Mr. Pond’s spouse. Mr. Pond disclaims beneficial ownership of those shares except to the extent of his pecuniary interest in them. |
(10)(14) | In addition to the officers and directors named in this table, five other executive officers were members of this group as of March 18, 2014.30, 2017. |
DIRECTOR INDEPENDENCE
We have considered the independence of each member of the Board. To assist us in our determination, we reviewed the NYSE independence requirements and our general guidelines for independence, which are part of our corporate governance guidelines.
To be considered independent: (1) a director must be independent as determined under Section 303A.02(b) of the NYSE Listed Company Manual and (2) in the Board’s judgment, the director must not have a material relationship with the Company (either directly or as a partner, shareholderstockholder or officer of an organization that has a relationship with the Company).
The Board has established guidelines to assist it in determining whether a director has a material relationship with the Company. Under these guidelines, a director will not be considered to have a material relationship with the Company if (1) he or she is independent as determined under Section 303A.02(b) of the NYSE Listed Company Manual and (2) he or she: (i) serves as an executive officer of another company which is indebted to the Company, or to which the Company is indebted, provided that the total amount of either company's indebtedness to the other is less than one percent of the total consolidated assets of the company he or she serves as an executive officer; (ii) serves as an officer, director or trustee of a tax exempt organization, that receives contributions from the Company, provided that the Company's discretionary contributions to such organization are less than the greater of "$1000"$1 million or 2 percent of that organization’s consolidated gross revenues; or (iii) serves as a director of another company with which the Company engages in a business transaction or transactions, provided that the director owns less than 5 percent of the equity interests of such other company and recuses himself or herself from deliberations of the Board with respect to such transactions. In addition, ownership of a significant amount of the Company's stock, by itself, does not constitute a material relationship. For relationships not covered by the guidelines set forth above, the determination of whether a material relationship exists shall be made by the other members of the Board of Directors who are independent as defined above.
Based on our guidelines and NYSE corporate governance standards, we have determined that the following directors are independent: John E. Bachman, Eric Duprat, Shikhar Ghosh, Ronald T. Maheu, George L. McTavish, Rowland T. Moriarty, James Neary, Kirk P. Pond, Regina O. Sommer and Jack VanWoerkom. In assessing the independence of Mr. VanWoerkom, the Board considered the employment relationship of an immediate family member of Mr. VanWoerkom who is not an executive officer and receives annual compensation of less than $120,000. In assessing the independence of Mr. Neary, the Board considered Warburg Pincus’ stock ownership in the Company and Mr. Neary’s relationship with Warburg Pincus.
In addition, each of the members of the Corporate Governance Committee, Audit Committee and the Compensation Committee are independent, as determined by the Board in accordance with its guidelines and the listing standards of the NYSE. We have also determined that the members of the Audit Committee satisfy the independence requirements contemplated by Rule 10A-3 under the Exchange Act, and that the members of the Compensation Committee satisfy the independence requirements contemplated by Rule 10C-1 under the Exchange Act.
DIRECTOR NOMINATIONS AND RECOMMENDATIONS
The Corporate Governance Committee is composed entirely of independent directors as determined by the Board in accordance with its independence guidelines and the listing standards of the NYSE. Among the Corporate Governance Committee's responsibilities isinclude recommending candidates for nomination to the Board. In that capacity, theThe Corporate Governance Committee unanimouslyhas recommended Messrs.Mr. Dubyak Duprat, Maheu and Dr. Moriarty (with Mr. Dubyak and Dr. Moriarty abstaining from the vote regarding their own nominations) for election. Messrs.re-election at the 2017 Annual Meeting. Mr. Dubyak Maheu and Dr. Moriarty have served as members of our Board since February 2005. Mr. Duprat was appointed as a director on March 12, 2014. Mr. Duprat was initially recommended for consideration as a director toIn identifying potential directors, the Corporate Governance Committee by an executivemay: retain a search firm, SpencerStuart, which was retained by the Corporate Governance Committeefirm; canvass their networks; evaluate highly-regarded leaders in order to identify aindustry and academia; or, entertain suggestions from stockholders or other business organizations, among other ways suitable candidate for election as a director.identifying potential directors.
The Corporate Governance Committee will consider candidates nominated or recommended by stockholders as potential director nominees in the same manner as candidates identified by the Corporate Governance Committee. If the Board determines to nominate a stockholder-recommended candidate and recommends his or her election, then that nominee’s name will be included in the proxy card for the next annual meeting. Our stockholders also have the right under our By-Laws to directly nominate director candidates and should follow the procedures outlined in the “Information About Voting Procedures” section of this proxy statement in the answer to the question section entitled "How do I submit a stockholder proposal or director nominee for next year's annual meeting or suggest a candidate for nomination as a director to the Corporate Governance Committee?"
To be timely, a stockholder's notice to the Secretary of a director nominee for next year's annual meeting must be delivered to or mailed and received notno earlier than January 16, 201512, 2018 nor later than February 15, 2015.11, 2018. However, in the event that the annual meeting is called for a date that is not within 25 days before or after May 16, 2015,12, 2018, notice by the stockholder must be received no earlier than 120 days prior to the annual meeting and no later than the later of the 90th day prior to the
annual meeting or the tenth day following the day on which notice of the date of the annual meeting is mailed or publicly disclosed.
Stockholder nominations must be addressed to:
WEX Inc.
Attention: Corporate Secretary
97 Darling Avenue
South Portland, ME 04106
Under the terms of our Investor Rights Agreement, investment funds and entities affiliated with Warburg Pincus are entitled to designate one representative, subject to certain qualifications, to Class II of the Board (currently Mr. Neary) until the shares of the Company’s common stock beneficially owned by such entities have had a market value of less than $200 million for 20 consecutive trading days. During this period, at each meeting of the stockholders of the Company at which directors of the Company are to be elected and at which such representative’s term expires, the Board will nominate and recommend for election one representative designated by such investment funds and entities affiliated with Warburg Pincus and will use its reasonable best efforts to cause such representative to be elected as a director.
Director Qualifications
The qualifications for directors are described in our Corporate Governance Guidelines and the guidelines for evaluating director nominees are in the Corporate Governance Committee's charter, each of which is available on our website. In addition, theThe Corporate Governance Committee believes that a nominee for the position of director must meet the following specific, minimum qualifications:
Nominees should have a reputation for integrity, honesty and adherence to high ethical standardsstandards;
Nominees should have demonstrated business acumen, experience and ability to exercise sound judgments in matters that relate to the current and long-term objectives of the Company and should be willing and able to contribute positively to the decision-making process of the CompanyCompany;
Nominees should have a commitment to understand the Company and its industry and to regularly attend and participate in meetings of the Board and its committeescommittees;
Nominees should have the interest and ability to understand the sometimes conflicting interests of the various constituencies of the Company, which include stockholders, employees, customers, governmental units, creditors and the general public, and to act in the interests of all stockholdersstockholders; and
Nominees should not have, nor appear to have, a conflict of interest that would impair the nominee's ability to represent the interests of all the Company's stockholders and to fulfill the responsibilities of a directordirector.
Our Corporate Governance Committee does not have a policy with respect to diversity, but believes that our Board, taken as a whole, should embody a diverse set of skills, experiences and backgrounds. Our Board currently is comprised of tentwelve directors, two of whom are women and another of whom is South Asian. The Corporate Governance Committee intends to be mindful of the diversity, with respect to gender, race and national origin, of our current Board members in connection with future nominations of directors not presently serving on the Board. In addition, our Corporate Governance Committee’s charter provides that nominees shall not be discriminated against on the basis of race, religion, national origin, sex, sexual orientation, disability or any other basis proscribed by law.
Application of Criteria to Existing Directors
The re-nomination of existing directors is not viewed as automatic, but is based on continuing qualification under the criteria listed above. The Corporate Governance Committee uses its best judgment and discretion in applying the criteria to the existing directors keeping in mind the interest of the Company.
In addition, the Corporate Governance Committee considers the existing directors' performance on the Board and any committee, which shall includeincluding consideration of the extent to which the directors undertook continuing director education.
The backgrounds and qualifications of the directors considered as a group provide a significant breadth of experience, knowledge and abilities in order to assist the Board in fulfilling its responsibilities. The rationale for the Company's determination that each director is well suited to serve on the Board is specified with his or her respective biographical entry under the "Members of the Board of Directors" section of this proxy statement.
COMMUNICATIONS WITH THE BOARD OF DIRECTORS
The Board believes that the Chief Executive Officer and her designees, as well as the Chairman of the Board and Vice Chairman and Lead Director, speak for the Company. Individual Board members may, from time to time, meet or otherwise communicate with various constituencies who are involved with the Company. It is, however, expected that Board members would do so with the knowledge of and, absent unusual circumstances or as contemplated by the committee charters, only at the request of the Company’s senior executives.executives or the Board.
The Board will give appropriate attention to written communications that are submitted by stockholders and other interested parties, and will respond if and as appropriate. Absent unusual circumstances or as contemplated by the committee charters, the Vice Chairman and Lead Director shall, subject to advice and assistance from the General Counsel, (1) be primarily responsible for monitoring communications from stockholders and other interested parties, and (2) provide copies or summaries of such communications to the other directors as he considers appropriate.
If you wish to communicate with the Board or the independent members of the Board, you may send your communication in writing to:
Independent Director Communication
WEX Inc.
Attention: Corporate Secretary
97 Darling Avenue
South Portland, ME 04106
You should include your name and address in the written communication and indicate whether you are a stockholder.
Governance Disclosures on Our Website
Complete copies of our corporate governance guidelines, committee charters and code of conduct are available on the Corporate Governance section of our website, at www.wexinc.com. In accordance with NYSE rules, we may also make disclosure of the following on our website:
the identity of the lead directorLead Director at meetings of independent directors;
the method for interested parties to communicate directly with the Lead Director or with the independent directors as a group;
the identity of any member of our Audit Committee who also serves on the audit committees of more than three public companies and a determination by our Board that such simultaneous service will not impair the ability of such member to effectively serve on our Audit Committee; and
contributions by us to a tax exempt organization in which any independent director serves as an executive officer if, within the preceding three years, contributions in any single fiscal year exceeded the greater of $1 million or 2% of such tax exempt organization’s consolidated gross revenues.
INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
AUDIT COMMITTEE REPORT
The board of directors appointed us as an audit committee to monitor the integrity of WEX's consolidated financial statements, its system of internal controls and the independence and performance of its internal audit department and independent registered public accounting firm. As an audit committee, we select the independent registered public accounting firm.
We are governed by a written charter adopted by the Board, which is available through the investors page of the Company’s website at www.wexinc.com.
Our committee consisted of three non-employee directors at the time that the actions of the committee described in this report were undertaken. Each member of the audit committee is "independent" within the meaning of the New York Stock Exchange rules and Rule 10A-3 under the Securities Exchange Act of 1934. WEX's management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. WEX's independent registered public accounting firm is responsible for auditing those financial statements. Our responsibility is to monitor and review these processes. However, we are not professionally engaged in the practice of accounting or auditing. We have relied, without independent verification, on the
information provided to us and on the representations made by WEX's management and independent registered public accounting firm.
In fulfilling our oversight responsibilities, we discussed with representatives of D&T, the Company's independent registered public accounting firm for fiscal year 2013, the overall scope and plans for their audit of the consolidated financial statements for fiscal year 2013. We met with them, with and without WEX management present, to discuss the results of their examinations, their evaluations of the Company’s internal control over financial reporting and the overall quality of WEX's financial reporting. We reviewed and discussed the audited consolidated financial statements for fiscal year 2013 with management and the independent registered public accounting firm.
We also reviewed the report of management contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC, as well as the Report of Independent Registered Public Accounting Firm included in the annual report on Form 10-K related to their audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. We continue to oversee the Company’s efforts related to its internal control over financial reporting and management’s preparations for the evaluation in fiscal year 2014.
We discussed with the independent registered public accounting firm the matters required to be discussed by Auditing Standard No. 16, Communication with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board, including a discussion of WEX’s accounting principles, the application of those principles, and the other matters required to be discussed with audit committees under generally accepted auditing standards.
In addition, we received from the independent registered public accounting firm the letter and the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board, and discussed the disclosures with them, as well as other matters relevant to their independence from management and WEX. In evaluating the independence of our independent registered public accountant, we considered whether the services they provided beyond their audit and review of the consolidated financial statements were compatible with maintaining their independence. We also considered the amount of fees they received for audit and non-audit services.
Based on our review and these meetings, discussions and reports, we recommended to the board of directors that the audited consolidated financial statements for fiscal year 2013 be included in the Annual Report on Form 10-K.
THE AUDIT COMMITTEE
Regina O. Sommer, Chair
George L. McTavish
Ronald T. Maheu
AUDITOR SELECTION AND FEES
Auditor Selection
The Audit Committee has selected D&T as the Company’s independent registered public accountant for the 2014 fiscal year. D&T has served as the Company’s independent registered public accountant since our initial public offering.
Audit Fees
The following is a description of the fees billed to the Company by D&T for the years ended December 31, 2012 and 2013:
|
| | | | | | | |
| | December 31, |
| | 2012 | | 2013 |
Audit Fees(1) | $ | 2,562,758 |
| | $ | 2,253,092 |
|
Audit-Related Fees(2) | 431,444 |
| | 260,358 |
|
Tax Fees(3) | — |
| | 100,000 |
|
| All Other Fees | — |
| | — |
|
| Total | $ | 2,994,202 |
| | $ | 2,613,450 |
|
|
| |
(1) | These are the aggregate fees for professional services by D&T in connection with their audits of the annual financial statements, included in the annual report on Form 10-K, reviews of the financial statements included in quarterly reports on Forms 10-Q and audits of our internal control over financial reporting, as well as fees associated with the statutory audits of certain of our foreign entities.
|
(2) | These are the aggregate fees for professional services by D&T in connection with the audit of the WEX Inc. Employee Savings Plan and SSAE 16 Report and debt offerings. |
(3) | These are the aggregate fees for professional services by D&T in connection with a global tax study. |
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy regarding pre-approval of audit and non-audit services performed by D&T. According to the policy, the Audit Committee shall pre-approve all audit services to be provided to the Company, whether provided by the principal independent registered public accountant or other firms, and all other permitted services (review, attest and non-audit) to be provided to the Company by the independent registered public accountant; provided, however, that de minimis permitted non-audit services may instead be approved in accordance with applicable SEC rules. The independent registered public accountant is not authorized to provide any prohibited non-audit services (as defined in Rule 2-01(c)(4) of Regulation S-X). The Chairman of the Audit Committee has the authority to pre-approve any permitted services on behalf of the Audit Committee and shall notify the full committee of such approval at its next meeting.
Since our initial public offering on February 16, 2005, the Audit Committee has pre-approved all of the services performed by D&T.COMPENSATION
EXECUTIVE OFFICERS
Non-Director Members of the Executive Management Team
|
| |
David D. MaxsimicCooper Age 5450 President,
InternationalChief Technology Officer
| David D. Maxsimic has served as our President, International since September 2012. Prior to that, he served as our Executive Vice President, Sales and Marketing from November 2007 until September 2012. Before that, he was our Senior Vice President, Sales and Marketing from January 2003 until November 2007. From November 1997 to January 2003, Mr. Maxsimic held various positions of increasing responsibility with the Company. |
Steven Elder
Age 45
Senior Vice President
and Chief Financial
Officer
| Steven Elder has servedCooper joined WEX in December 2016 as our Senior Vice President and Chief Financial Officer since April 2011. Before that, he was our Vice President, Corporate Finance and Treasurer since December 2007.Technology Officer. Prior to that,joining WEX, he was our Vice President, Investor Relationsheld several senior technology positions, including head of global operations at GlobeOne, a financial services company, from June to December 2016, CTO at Advisor Software from November 2015 until June 2016, SVP of technology at Green Dot, a retail banking company, from March 2015 to November 2015, CTO and Treasurer sinceSVP of product development at both Fiserv, an information technology and services company, from September 2005. Mr. Elder has worked for the Company for over 14 years, during which time he served in2011 to February 2014 and CashEdge, a varietyleading provider of financial roles of increasing responsibility. Mr. Elder began his career at Ernst & Young.Intelligent Money Movement from June 2005 to September 2011. |
George W. Hogan Age 5356 Senior Vice President, and General Manager Fleet Over-the-Road and Partner Channels International | George Hogan has been our Senior Vice President, International since May 2014. Prior to that he was Senior Vice President and General Manager, Fleet Over-the-Road and Partner Channels sincefrom January 2014 to April 2014. Prior to that, he was ourHe also served as the Senior Vice President and General Manager of of WEX Fleet One from May 2013 to December 2013. He also served as WEX’s2013 and Senior Vice President and Chief Information Officer from November 2007 through July 2013. Mr. Hogan joined WEX in January 2007 as Vice President of Enterprise Architecture. |
Hilary A. RapkinKenneth W. Janosick
Age 55 Senior Vice President and General Manager, Global Fleet Direct | Kenneth Janosick has been our Senior Vice President and General Manager, Global Fleet Direct since January 2014. He also served as the Senior Vice President, Small Business Solutions from December 2010 to December 2013. He joined WEX as Vice President, Product and Marketing in January 2009 and served in that role until December 2010. Before that, Mr. Janosick was a First Vice President at JP Morgan Chase bank from November 2006 until November 2009 with responsibility for Relationship Banking and Investments and the Small Business Division. |
Nicola S. Morris Age 51 Senior Vice President, Corporate Development | Nicola Morris has been our Senior Vice President, Corporate Development since February 2014. She is responsible for managing corporate development and strategic planning, directing corporate marketing, and overseeing early stage product development. Prior to joining WEX, she worked for Verizon Communications, a global communications and technology company, from January 2006 through January 2014, where she served as the Vice President, Global Corporate Strategy from November 2011 to January 2014. Prior to that role, she held the positions of Vice President and Chief Marketing Officer from October 2010 to November 2011 and also that of Vice President, Strategy and Business Development, both with the Verizon Business unit from January 2006 to October 2010. Before Verizon, she held positions with MCI, Incorporated and Digex, Incorporated. |
Scott Phillips Age 47 Senior Vice President and General Manager, EFS | Scott Phillips joined the Company as Senior Vice President and General Manager, EFS on July 1, 2016, when the company acquired EFS to expand its large and mid-sized over-the-road (OTR) and corporate payments business. Prior to the acquisition, Mr. Phillips had been the President and CEO of EFS since September 2011 and now leads the new EFS line of business, responsible for over-the-road, or OTR, fleet activities along with the EFS Corporate Payments business. Prior to joining EFS, he was Executive Vice President and General Manager of the Corporate Payments Divisions at Comdata Corporation, a payment processor and issuer of fleet fuel cards. |
James Pratt Age 60 Senior Vice President and General Manager, Virtual Products | James (Jim) Pratt has been the Senior Vice President and General Manager Virtual Payments since April 2015. Before that, he served as our Vice President, Mastercard from November 2010 until April 2015. He joined the Company in 1998 and served as Vice President, Corporate Payment Solutions from December 2007 until November 2010, Vice President MasterCard Sales from March 2006 until December 2007 and in various management positions with us prior to that. Before joining WEX, Mr. Pratt spent 10 years with Digital Equipment Corporation, a computer systems, including computers, software, and peripherals company, in various sales and management positions and spent several years consulting in the technology sector. Mr. Pratt serves on the MasterCard Advisory Board and the Commercial Payments International Global Advisory Board. He also serves on the board of Big Brothers Big Sisters of Southern Maine. |
Hilary A. Rapkin Age 50 Senior Vice President, General Counsel and Corporate Secretary | Hilary A. Rapkin has served as our Senior Vice President, General Counsel and Corporate Secretary since February 2005. She also served, as the interim, head of human resources beginning February 2013 and assumed that role permanently on May 1, 2013. From January 1996 to February 2005, Ms. Rapkin held various positions of increasing responsibilityresponsibilities with the Company. Ms. Rapkin is a member of the American Bar Association, the Maine State Bar Association, the Association of Corporate Counsel, the Society of Corporate Secretaries and Governance Professionals, the Society for Human Resources and Management and the New England Legal Foundation. |
Kenneth Janosick
Age 52
Senior Vice
President and General Manager, Global Fleet Direct
| Kenneth Janosick has been our Senior Vice President, Small Business Solutions since December 2010. He joined WEX as Vice President, Product and Marketing in January 2009 and served in that role until December 2010. Before that, Mr. Janosick was a First Vice President at JPMorgan Chase bank from November 2006 until November 2009 with responsibility for Relationship Banking and Investments and the Small Business Division. |
Stephen R. Crowley Age 53 Senior Vice President Shared Services and Chief Information Officer | Stephen R. Crowley joined WEX as Senior Vice President, Shared Services and Chief Information Officer in July 2013. Most recently, Mr. Crowley was with Bank of America serving as Senior Vice President, Mortgage and Affiliate Services Strategy and Execution from February 2013 to July 2013 and as Senior Vice President, ePayments Delivery from August 2010 to February 2013. From July 2009 to August 2010, he was Vice President, Continuous Improvement and Global Customer Advocacy at NCR Corporation, and from February 2007 to July 2009, he was Senior Vice President, ATM Technology and Operations at Bank of America. Prior to these roles, Mr. Crowley held various high-level leadership positions at Bank of America and General Electric from 1994 to 2007. |
Nicola Morris Age 48 Senior Vice President, Corporate Development | Nicola Morris joined WEX inFebruary 2014 as Senior Vice President, Corporate Development. She is responsible for managing corporate development and strategic planning, directing corporate marketing, and overseeing early stage product development. Prior to joining WEX, she worked for Verizon Communications from January 2006 through January 2014, where most recently she served as the Vice President, Global Corporate Strategy. Prior to that role, she held the positions of Vice President, Chief Marketing Officers of Strategy and Marketing and also that of the Executive Director, Strategy and Business Development, both with the Verizon Business unit. Before Verizon, she held positions with MCI, Incorporated and Digex, Incorporated.
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Alison Vanderhoof Age 40 Senior Vice President, General Manager for Emerging Industries | Alison Vanderhoof joined WEX in December 2013 as Senior Vice President, General Manager for Emerging Industries. She is responsible for overseeing the strategic business performance of WEX's emerging industries including travel, healthcare, and employee benefits globally. Prior to WEX, Ms. Vanderhoof worked at Vistaprint for six years. She was Managing Vice President of Vistaprint's B2B unit, Strategic Partnerships, from August 2009 to August 2013. During that period, she was also Managing Vice President of North America Customer Service from January 2012 to October 2012. Before that, she was Vice President of Corporate Strategy and Corporate Development from January 2007 to August 2009. |
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Roberto Simon Age 42 Chief Financial Officer | Roberto Simon joined WEX as the Chief Financial Officer in February 2016. Previously, Mr. Simon served as the Executive Vice President and Chief Financial Officer of Revlon, Inc., a global color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant / deodorants and beauty care products company, from October 2014 until February 2016. Prior to that, he was the Revlon Senior Vice President, Global Finance from October 2013 to September 2014 and served as Revlon’s Global Business Process Owner, SAP, since February 2014. Prior to joining Revlon as a result of Revlon’s acquisition of The Colomer Group Participations, S.L. (“The Colomer Group”), a Spain-based salon and professional beauty business, Mr. Simon served in various senior finance positions of increasing responsibility at The Colomer Group since 2002, including most recently serving as The Colomer Group’s Chief Financial Officer from October 2011 to October 2014. Prior to that, he served as The Colomer Group’s Vice President of Finance for America and Africa from January 2008 until September 2011. |
Jeffrey Young Age 51 Senior Vice President and General Manager, WEX Health | Jeffrey (Jeff) Young joined WEX in July 2014, when the Company acquired WEX Health (formerly, Evolution1) to expand its healthcare payments business. He served as the CEO of WEX Health, then known as Evolution1, from November 2008 to July 2014. Prior to WEX Health, Mr. Young was the vice president of business applications at Microsoft Corporation in the United States from May 2001 to October 2008. Previously, he helped to lead Great Plains Software through its successful IPO and eventual sale to Microsoft for more than $1 billion, as an Executive Vice President of Sales and Marketing from 1989 to 2001. |
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| ITEM 2. | ADVISORY VOTE ON EXECUTIVE COMPENSATION |
We are providing you with the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of the executive officers named in the Summary Compensation Table under "Executive Compensation," whom we refer to as our "named executive officers" or "NEOs," as disclosed in this proxy statement in accordance with the SEC’s rules. This proposal, which is commonly referred to as "say-on-pay," is required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 14A to the Securities Exchange Act of 1934, or Exchange Act.
Our executive compensation programs are designed to attract, motivate, and retain our executive officers, who are critical to our success. The "Executive Compensation" section of this proxy statement, including the "Compensation Discussion and Analysis," describes in detail our executive compensation programs and the decisions made by the Compensation Committee with respect to the fiscal year ended December 31, 2016.
WEX’s philosophy regarding executive compensation is straightforward: reward our executives for their contributions to the Company’s annual and long-term performance by tying a significant portion of their total compensation to key drivers of increased stockholder value. Reflecting our pay-for-performance philosophy, a significant portion of executive compensation is performance-based, subject to increase when results exceed corporate targets, reduction when results fall below target and elimination if results do not achieve threshold levels of performance. Stockholders are urged to read the Compensation Discussion and Analysis section of this Proxy Statement, which more thoroughly discusses how our compensation policies and procedures implement our compensation philosophy and objectives.
Our Board is asking stockholders to approve a non-binding advisory vote on the following resolution:
RESOLVED, that the compensation paid to WEX Inc.’s named executive officers, as disclosed in accordance with the Securities and Exchange Commission’s compensation disclosure rules, including the Compensation Discussion and Analysis, the compensation tables and any related material disclosed in this proxy statement, is hereby approved.
As an advisory vote, this proposal is not binding. The outcome of this advisory vote will not overrule any decision by the Company or the Board (or any committee of the Board), or create or imply any change or addition to the fiduciary duties of the Company or the Board (or any committee of the Board). However, our Compensation Committee and Board value the opinions expressed by our stockholders in their vote on this proposal and will consider the outcome of the vote when making future compensation decisions for named executive officers.
The Board has decided that the Company will hold an annual advisory vote on the compensation of our named executive officers.
We recommend a voteFORapproval of the compensation of our named executive officers.
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| ITEM 3. | ADVISORY VOTE ON THE FREQUENCY OF FUTURE ADVISORY VOTES ON EXECUTIVE COMPENSATION |
In Item 2, we are providing you with the opportunity to vote to approve, on an advisory, non-binding basis, the compensation of our named executive officers. In this Item 3, we are asking our stockholders to cast a non-binding advisory vote regarding the frequency of future advisory votes on executive compensation . You may vote for a frequency of every one, two, or three years, or you may abstain on the proposal.
The Board will take into consideration the outcome of this vote in making a determination about the frequency of future advisory votes on executive compensation. However, because this vote is advisory and non-binding, the Board may decide that it is in the best interests of our stockholders and the Company to hold the advisory vote to approve executive compensation more or less frequently. In the future, we will propose an advisory vote on the frequency of the advisory vote on executive compensation at least once every six calendar years.
Since 2011, we have held an annual advisory vote on the compensation of our named executive officers. The Board has determined that continuing to hold an advisory vote on executive compensation every year remains the most appropriate approach for the Company at this time, and therefore our Board recommends that you vote for a frequency of every ONE YEAR for future executive compensation advisory votes.
The Board believes that an annual executive compensation advisory vote will facilitate more direct stockholder input about executive compensation. An annual executive compensation advisory vote is consistent with our policy of reviewing our compensation program annually, as well as being accountable to our stockholders on corporate governance and executive compensation matters. We believe an annual vote would be the best governance practice for our Company at this time and in the best interests of the Company and its stockholders.
We recommend a vote for a frequency of every “ONE YEAR” for future executive compensation advisory votes.
EXECUTIVE COMPENSATION
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis, or CD&A, describes our compensation objectives and programs for our "named executive officers" or "NEOs." TheThis CD&A also describes the specific decisions, and the processprocesses supporting those decisions, which were made with respect to 20132016 for the NEOs.
For 2013,2016, our NEOs were:
Michael E. Dubyak, our Executive Chairman
Steven A. Elder, our Senior Vice President and Chief Financial Officer
Melissa D. Smith, our Chief Executive Officer (“CEO”) and President
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| • | Roberto Simon, Chief Financial Officer ("CFO")(1) |
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| • | Steven A. Elder, Former Senior Vice President and Chief Financial Officer (“CFO”)(2) |
David D. Maxsimic, our President, International
George W. Hogan, ourJeffrey Young, Senior Vice President and General Manager, Fleet Over-the-Road and Partner ChannelsWEX Health
The following discussion includes statements regarding performance targets in the limited context of our compensation programs. These targets should not be understood to be statements of management's expectations of our future results or other guidance. Investors should not apply these targets in any other context.George W. Hogan, Senior Vice President, International
Executive Summary
WEX's philosophy regarding executive compensation is straightforward: reward our executives for their contribution to the Company's annual and long-term performance by tying a significant portion of their total compensation to key drivers of increased stockholder value. The elements of our executives' total compensation are base salary, cash incentive awards, stock incentive awards, and retirement and other employee benefits. A significant portion of executive compensation is performance-based, subject to increase when results exceed corporate targets, reduction when results fall below target and elimination if results do not achieve threshold levels of performance. The performance measures used in our compensation programs include revenue adjusted for changes in fuel prices, the impact of acquisitions, adjusted net income and other operational and strategic goals. Please refer to the notes to the table of performance objectives for an explanation of how our performances measures that are non-GAAP financial measures are calculated.
Business Environment. 2013 was a strong year for WEX. Total revenue grew 15% and adjusted net income grew 10% over 2012. This performance was driven by continued execution against our multi-pronged strategy to accelerate growth organically and through mergers and acquisitions, further globalize our business by making targeted investments, and drive scale across the organization. Over the past year, we:
Increased total fleet transactions 10% from 2012 to 371 million. Payment processing transactions increased 12% to 292 million, and transaction processing transactions increased 2% to 79 million
Grew our corporate purchase card product to $13.1 billion in purchase volume for the year, a 22% increase from 2012
Diversified our revenues and developed our international business through the acquisition of FastCred by our Brazilian subsidiary UNIK, which we own a 51 percent controlling interest in
Announced plans to acquire the assets of ExxonMobil's European commercial fuel card ("Esso Card") program through a majority owned subsidiary, WEX Europe Services Limited
WEX stockholders experienced an increase of 31% in their investment based on total shareholder return as measured from December 31, 2012 to December 31, 2013.
2013 Compensation Actions. The compensation paid to our NEOs reflects their contribution to WEX's success in 2013. In order to tie NEO total compensation to the performance of the Company, the 2013 STIP considered financial results relative to a number of goals, including Adjusted Net Income and revenue adjusted for changes in fuel prices and the impact of acquisitions which we refer to as "PPG Adjusted Revenue." Additional goals measured success against factors such as strategic and operational objectives, Americas and International EBIT, and International Revenue. The relative weighting of various goals was specific to each NEOs role and responsibilities. Combined achievement against STIP targets resulted in STIP payments of 121% of target for Messrs. Dubyak and Elder, 111% of target for Ms. Smith, 147% of target for Mr. Maxsimic, and 117% of target for Mr. Hogan.
As a result of the STIP payments, our NEOs total cash compensation, on average, approximated the 60th percentile of the market data provided by our consultant in September of 2012. This compensation is generally consistent with our overall
performance for 2013, which was in the top quartile as compared to our peer group (defined below) for both revenue growth and net income growth and approximated the 27th percentile for total shareholder return.
In 2013, in addition to the cash compensation earned by the NEOs, we made a grant of equity in March 2013 as part of our long-term incentive program, or LTIP. Grants were comprised of 60% performance based restricted stock units, or PSUs, and 40% time vested RSUs. To reflect the Company’s focus on profitable growth, the PSUs only vest upon achievement of performance criteria that included either a combination of PPG Adjusted Revenue and Adjusted Net Income objectives for 2013 (for NEOs other than Mr. Maxsimic) or a combination of International Revenue and International EBIT Objectives for 2013 (for Mr. Maxsimic). Based on achievement relative to the 2013 performance criteria, 94% of the 2013 LTIP PSUs granted to NEOs have been earned. RSUs and earned PSUs will vest equally in annual installments over three years on the anniversary of the grant date.
In 2013, we also made a grant of equity to Mr. Hogan (referred to below as the "2013 FleetOne Integration Long-Term Incentive Program") designed to support our objective of maximizing the synergies available to the Company through the Fleet One acquisition. PSUs are earned under this award based on achievement relative to business unit EBITDA, business unit PPG Adjusted Revenue and Synergies hurdles, with 50% of the award subject to 2013 performance and 50% subject to 2014 performance. Based on 2013 performance, 145% of the PSUs subject to 2013 performance have been earned and vested on March 28, 2014.
On average, over 48% of the NEOs' 2013 cash compensation was variable and related to Company performance and 79% of their total compensation (including equity) is aligned with the performance of the Company.
Management Transition: On May 1, 2013, the Company announced a management transition plan in accordance with the Board's succession planning process. As part of that plan, effective January 1, 2014, Mr. Dubyak resigned as Chief Executive Officer and the Board appointed Ms. Smith as Chief Executive Officer of the Company. Ms. Smith was also elected to the Board of Directors effective January 1, 2014. Mr. Dubyak continues to serve as a director of the Company and as Chairman of the Board in the newly created, non-officer role of "Executive Chairman."
As a part of the succession plan, Mr. Dubyak entered into a transition agreement with the Company, dated as of April 29, 2013. Pursuant to the terms of the agreement, during the transition period beginning on January 1, 2014 and ending on December 30, 2014, Mr. Dubyak will assist with the management transition process and will be paid an annual salary of $592,111 and be eligible to receive a bonus of up to $296,056 at the discretion of the Board. In addition, on the date of the Company's 2013 annual meeting, the Company granted Mr. Dubyak restricted stock units covering a number of shares of common stock of the Company having a value of $1.7 million on the grant date. The RSU Award will vest on December 30, 2014, subject to conditions specified in the agreement. Under the agreement, at the end of the transition period, Mr. Dubyak is also entitled to receive (i) full vesting of all unvested restricted stock unit awards and performance stock unit awards for which the performance goals have then been achieved and (ii) certain continued health and dental plan benefits for himself and his spouse, each subject to conditions specified in the agreement. The agreement also provided that, at the end of the transition period, Mr. Dubyak would have ceased to be an employee of the Company and resigned from the Board (unless the Board and he mutually agree otherwise). On March 26, 2014, the Company and Mr. Dubyak entered into an amendment (the "Amendment") of the previously entered transition agreement, which provides that upon ceasing to be an employee of the Company on December 30, 2014, Mr. Dubyak will continue to serve as Executive Chairman of the Company's Board of Directors with the non-officer title of "Executive Chairman" until March 31, 2015. During such three-month period, he will continue to assist in the Company’s management transition and will be paid approximately $49,000 per month. The amendment further provides that on March 31, 2015, Mr. Dubyak will resign from the Board of Directors (unless the Board and he mutually agree otherwise).
Key Features of Our Executive Compensation Program.
The Compensation Committee of the Board, or the "Committee", believes that the compensation programs outlined in this CD&A are market competitive and provide the appropriate incentive for the NEOs to achieve above market financial performance for the stockholders.
Other notable aspects of our executive compensation practices include the following:
We have stock ownership guidelines for our executives and directors
An independent executive compensation consultant is retained by the Committee each year to provide objective advice to it
We conduct a compensation risk assessment when implementing compensation programs and believe that there is a reasonable basis to believe that our compensation programs do not present significant risk to the Company
The Committee remains committed to providing our NEOs with competitive compensation opportunities that allow for significant upside when the Company is performing well above target and the stockholders are receiving returns commensurate with that level of performance. We remain focused on our pay-for-performance alignment and vigilant to avoid compensation arrangements that would incent excessive risk taking.
Consideration of 2013 Advisory Vote on Executive Compensation
We have adopted a policy of conducting an annual advisory vote on executive compensation. While this vote is not binding on us, our board of directors and the Committee value the opinions of our stockholders. In addition to our advisory vote on executive compensation, we are committed to ongoing engagement with our stockholders. These engagement efforts take place throughout the year through meetings, telephone calls and correspondence involving our senior management and representatives of our stockholders.
At our 2012 and 2013 annual meetings of stockholders, 94% and 98% of the votes cast, respectively, on the advisory vote on executive compensation proposal were in favor of approval of our named executive officer compensation as disclosed in our proxy statement. The 2012 favorable shareholder advisory vote was considered by the Committee in structuring compensation awards for 2013. The Committee also considered the results of both advisory votes, along with many other business-related strategic factors, in its review of compensation policies and programs prior to structuring compensation awards for 2014. As part of our ongoing efforts to drive outstanding operational and financial performance, we have made minor modifications to our STIP goals and weightings for 2014 to closely align compensation with our strategic plan and corporate goals. The Committee considers the favorable stockholder advisory votes on executive compensation for our NEOs to be indicative of stockholder support for its overall compensation strategy and structure.
Compensation Philosophy
Our business model enables us to provide exceptional payment security and control across a spectrum of payment sectors. The experience and performance of our associates, including the members of our executive team, are critical to sustaining this level of differentiation. Our Executive Chairman has been with the Company since 1986 and has been instrumental in guiding this approach and in our resulting growth. OurKenneth Janosick, Senior Vice President and Chief Executive Officer joined the company in 1997, and has held various positions of increasing responsibility across all facets of the Company. The other members of our executive team bring significant industry and/or Company experience which is critical to our continued success. Accordingly, in addition to being designed to support our goals of achieving strong year-over-year and long-term growth and stockholder value, our compensation programs reflect the competitive environment in which we operate and our focus on differentiation in the marketplace through continuity of leadership and culture.General Manager, Global Fleet Direct
Our compensation programs are designed and administered to balance the achievement of near-term operational results and long-term growth goals with the ultimate objective of increasing long-term stockholder value. We achieve this by structuring our compensation programs to:
Attract and retain high-performing talent
Drive outstanding operational and financial performance
Align executive and stockholder interests for profitable long-term growth
Compensation Objectives
We recognize the role total compensation plays in achieving our objectives of attracting, retaining and motivating our high-performing employees, including our executives, to achieve results. The chart below identifies the compensation elements and method of delivery used to support each of our compensation objectives.
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| (1) | Mr. Simon was appointed Chief Financial Officer effective February 29, 2016. |
| (2) | Mr. Elder served as the Chief Financial Officer until Mr. Simon’s appointment in February 2016, after which Mr. Elder assumed the newly created position of SVP, Investor relations. As of February 29, 2016, he ceased to be an Executive Officer, and the discussion of his compensation is limited to material elements of Mr. Elder's compensation. |
CD&A Table of Contents
To assist in finding important information, we call your attention to the following sections of our CD&A:
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| Primary Objective | | |
Element of | Reward
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Attract | | Retain | | Drive
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Growth with
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Method of Delivery | | |
Base Salary | Ongoing | |
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ý | | | ¨ | | ¨ | | - Cash |
Cash Incentive | Annual | (1) | ý | | ý | | ý | | ý | | - Cash |
Equity Incentive | Annual | (1) | ý | | ý | | ý | | ý | | - Restricted Stock Units
- Performance Based Restricted Stock Units
- Non Qualified Stock Options |
Benefits | Ongoing | | ý | | ý | | ¨ | | ¨ | | - Health and Welfare Benefits
- Deferred Compensation Program
- 401(k)
- Employment Agreements for certain officers |
Executive Summary
Summary of WEX’s Business. WEX Inc. is a leading multi-channel provider of corporate payment solutions that operates in three business segments: Fleet Solutions, Travel and Corporate Solutions and Health and Employee Benefit Solutions. During 2016, Fleet Solutions revenue represented approximately 63 percent of our total revenue, Travel and Corporate Solutions revenue represented approximately 21 percent of our total revenue, and Health and Employee Benefit Solutions revenue represented approximately 16 percent of our total revenue. The Fleet Solutions segment provides customers with fleet vehicle payment processing services specifically designed for the needs of commercial and government fleets, through a closed-loop network that offers complete control of the transaction life cycle. Our Travel and Corporate Solutions segment is comprised of our virtual and prepaid products that we use to provide innovative corporate purchasing and payment capabilities that can be integrated with our customers’ internal systems to streamline their corporate payments, accounts payable and reconciliation processes. Our Health and Employee Benefit Solutions segment is comprised of our healthcare payment products and SaaS platforms that we use to provide simplified payment capabilities in a complex healthcare market. The Health and Employee Benefit Solutions segment also includes payroll related benefits to customers in Brazil.
Our opportunities for growth extend well beyond the fleet fuel market, in particular to the online travel and healthcare payments markets. Building on a leading market position in our core fleet business, we continue to expand our company. Our strategic approach to entering new markets is focused on three steps:
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(1)• | CashIdentify complicated markets facing complex payment challenges and Equity Incentives are generally provided on an annual basis. From time to time, the Committee approves grants of cash or equity to executives in addition to the grants provided underinefficiencies, |
| • | Develop products and services that address these annual programs in order to reward achievement of critical near-term milestones in the pursuit of long-term growth or to incent the achievement of long-term strategic goals.unmet market needs, and, |
| • | Operate with systemic efficiency through scale and cost management. |
We believehave a proven model in the compensationfleet space where we have developed a leading market position and a strong margin profile. We have done the same in the online travel industry where we have become a leader in global virtual payments and continue to grow the business and create scale on a global basis. Through the acquisitions of our executives should,Evolution1 and does, reflectBenaissance, WEX Health has continued to expand into the performanceconsumer directed healthcare payments market.
2016 Company Performance Highlights. The Company's 2016 revenue grew 19% to $1.018 billion from $854.6 million in 2015. Adjusted net income, a non-GAAP measure, decreased 1% to $198.2 million from 191 million in 2015. The impact of lower fuel prices and ultimate success of our Company. In setting compensation levels for each executive, we evaluate total direct compensation (base salary plus short-term incentive at target plus long-term equity incentive at target) against multiple factors including:
Company successsmaller relative fuel price hedging gains in achieving pre-determined revenue,2016 created a swing in adjusted net income and other operational and strategic goals
Market and peer group comparison data
The value of the unique skills and experience each executive brings to our Company and the importance of his or her continued leadership$49.3 million. Total Stockholder Return (TSR) was up 26% on a one-year basis, as shown in the Company
Annually, we reevaluate each compensation element with a focus on total direct compensation.charts below. We also evaluate equity ownership levels for each executive. The purpose of this review is to appropriately reward and motivatehave designed our executive team to increase stockholder value with a focus on providing compensation at above target levels when Company performance is above target and compensation below target levels when we do not achieve our performance goals.
In evaluating the components of compensation and the metrics used to determine individual and Company performance, the Committee considers whether these factors drive an appropriate level of risk taking. The Committee believes that the mix and design of the elements of compensation incent management to assume appropriate levels of risk to achieve both near-term operational goals and long-term growth. The Committee reviews the strategic, financial, and execution risks and exposures associated with the initiatives that drive our performance based incentive compensation. In addition, the Committee believes the following help ensure an appropriate level of risk in our compensation programs:
A competitive base salary, which provides executives with ongoing income
Minimum thresholds and maximum performance caps in incentive plans
Incentive plan funding based on actual results measured against pre-approved financial and operational goals and metrics that are clearly defined in all plans
The use of both time-based and performance-based incentives
Multi-year vesting of stock compensation to provide value through long-term appreciation of stockholder value
Stock ownership guidelines that align executives’ interests with those of our stockholders
Annual Process of the Compensation Committee
The Committee is responsible for review and oversight of executive compensation. This includes approval of corporate goals and objectives used in the compensation programs for executives as well as setting executive compensation and approving annual incentive plan payouts and long-term incentive stock grants.awards for executives to, among other things, align compensation with performance against the metrics discussed above and shown below. The Committee meets at least once each quarter. In additionreconciliation of the non-GAAP financial measures discussed above to the four independent directors who serve on the Committee, typical attendance at these meetings includes Senior Vice President, General Counsel and Corporate Secretary; Senior Vice President, Human Resources; the Director of Global Total Rewards; and the Legal Director and the Assistant Corporate Secretary. Our CEO, generally joins several meetings each yearrespective GAAP measure is located in Appendix A to discuss the corporate performance, compensation program design and corporate strategy, with the Committee. Thethis proxy statement.
2016 was a strong year operationally for WEX. We continued to execute against our strategy to grow organically and through strategic investments, further globalize our business, and drive scale across the organization. Selected highlights of our achievements during 2016 in furtherance of our strategy included:
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| w | On July 1, 2016, we acquired EFS, a provider of customized payment solutions for fleet and corporate customers with a focus on the large and mid-sized over-the-road fleets, in order to expand our customer footprint and utilize EFS's technology to better serve the needs of all fleet customers. |
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| The Company benefited from customer acquisitions and expanded relationships across all three of the Company's segments on our way to surpassing $1 billion in annual revenues. |
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| Average number of vehicles serviced increased 4 percent from 2015 to approximately 10.0 million for 2016, primarily related to the acquisition of EFS. |
| w | Total fleet transactions processed increased 12 percent from 2015 to 454.5 million in 2016. Payment processing transactions increased 13 percent from 2015 to 385.9 million in 2016, and transaction processing transactions increased 9 percent from 2015 to 68.6 million in 2016. |
Summary of WEX’s 2016 Executive Compensation Program. A summary of our executive compensation program during 2016 is provided below.
- Generally, we target total direct compensation (salary/ annual bonus/ long-term incentives) within a competitive range of the market median.
- Pay will vary above or below target based primarily on corporate and business unit and, to a lesser degree individual, quantitative performance outcomes.
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| Compensation Element | 2016 Element |
Base Salary
Fixed rate of pay
| Among NEOs, excluding the CEO, increases averaged 5%, reflecting market-based adjustments. |
Short-term Incentive Plan ("STIP")
Payout can range from 0-200% of target based on, corporate financial goals 2. PPG Adjusted Revenue (50%)
The funded payout may be adjusted for each NEO (excluding the CEO) through an individual performance modifier, down to 75% or up to 125%, with no payout greater than 200% of target. The adjustment is made based on an assessment of performance versus pre-defined, often quantitative individual goals. The modifier, across our executive leadership team, is intended to generally function within the “pool” of STIP-funded dollars (0-200% of target) that is determined based on the two financial metrics listed above. The Committee has further discretion to eliminate any funded bonus payout at its discretion, should circumstance warrant. | STIP funding was 123% of target, on an overall corporate basis, based on objective performance against pre-defined enterprise-wide quantitative goals.
Payments for our NEOs averaged 124% of target, after two non-CEO NEOs received a positive individual modifier and one non-CEO NEO received a downward individual modifier.
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Long-Term Incentive Plan ("LTIP") Our target mix for our NEOs (excluding our CEO) during 2016 was: 60% Performance Stock Units (PSUs). • Payout can range from 0-200% of target• 2-year performance goals; if earned, additional 1-year time-based vesting requirement• Goals weighted 60% ANI Earnings Per Share (EPS), and 40% Non-Fuel Price Sensitive Revenue20% Stock Options (options). • 3-year ratable vesting requirement• Reward long-term stockholder value creation20% Restricted Stock Units (RSUs). • 3-year ratable vesting requirement• Reward long-term stockholder value creation and encourage retention
The target mix for our CEO was: 60% PSUs, 25% stock options, and 15% RSUs, to further emphasize the importance of long-term stockholder value creation. | Payout of 2016 PSUs is not yet determined, given their 2-year performance goals. Previously, PSUs had 1-year performance goals.
The Non-Fuel Price Sensitive Revenue metric recognizes the importance of revenue diversification for our business, given the impact volatile fuel prices can currently have on our business results.
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Pay Mix. The majority of CEO compensation is variable (“at risk”). For 2016, 83% of target total direct compensation was variable for our CEO. This directly ties pay to company performance outcomes, including financial results, strategic initiatives, and stock price performance.
2016 CEO Pay Mix
The majority of the compensation for the remaining NEOs is also variable and tied directly to Company performance outcomes, as described above.
Key Compensation Practices. Key executive compensation practices are summarized below. We believe these practices promote alignment with the interests of our stockholders.
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What We Do |
| ü | Directly link pay to performance outcomes, operational results and stockholder returns |
| ü | Target total direct compensation (base / cash bonus / long-term incentives) within a competitive range of the market median |
| ü | Maintain a cap on CEO incentive compensation payouts (200 percent of target) |
| ü | Have stock ownership guidelines for NEOs, including a retention requirement until stock ownership guideline is achieved |
| ü | Double-trigger change-in-control severance benefits |
| ü | Anti-hedging policy for all executive officers |
| ü | Review share utilization annually |
| ü | Offer executives the same health and welfare benefits as other salaried employees |
| ü | Devote time to management succession and leadership development efforts |
| ü | Design incentive compensation plans to optimize tax deductibility |
| ü | Utilize an independent compensation consultant |
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What We Don’t Do |
| X | No payment of dividends or dividend equivalents on unearned RSUs or PSUs |
| X | No excise tax gross-ups upon a change-in-control |
| X | No re-pricing of underwater stock options without stockholder approval |
| X | No excessive severance or change-in-control benefits |
| X | No perks are presently offered |
Process for Determining Executive Compensation
Compensation Committee. The Compensation Committee, also meetscomposed solely of independent directors and referred to in this CD&A as the Committee, is responsible for our executive officer compensation decisions. The Committee works closely with its independent consultant and management to examine pay and performance matters throughout the year. The Committee held 8 meetings over the course of 2016, all of which included an executive session as needed with no members ofwithout management present. OnlyThe
Committee charter may be accessed through the independent directors are entitled to vote“Governance” link found on proposals that come before the Committee.our website at: http://ir.wexinc.com/phoenix.zhtml?c=186699&p=irol-govhighlights.
In the first quarter of each fiscal year, the Committee reviews the Board’s assessment of the CEO's performance with the CEO and reviews the Company's results for the prior year. In addition, the Committee approves the following, as explained in the Annual Review of Executive Compensation section:below:
Changes•changes to executive base salaries and incentive targets, if any, for the current yearyear;
•STIP payout, if any, for the previous fiscal yearyear;
•STIP design and targets for the current fiscal yearyear;
Vesting•vesting of performance-based restricted stock units granted under the LTIP, if any, for previous yearsyears; and
•LTIP metrics, targets and grants for the current fiscal yearyear.
Agenda items for the second quarter vary each year but always include a review of Company performance and progress toward the achievement of incentive plan targets. Typically, this also includes a retrospective assessment of the senior executive pay versus performance relationship.
The Committee generally conducts its annual review of executive compensation in the third or fourth quarter of each year. The Committee is provided a report from theits independent compensation consultant who compares the compensation of the Company'sCompany executives to a peer group of companies details appropriateand survey data and provides recommendations for compensation actions to be taken for the upcoming fiscal year.actions.
In the final quarter of each fiscal year, management generally presents the Committee with recommended executive compensation changes for each element of compensation. Included in this presentation is a total direct compensation and wealth accumulation review for each member of the executive team. The review shows proposed total direct compensation in the context of historical compensation and current and projected wealth accumulated through the compensation provided by the Company.
The design of the STIP and LTIP is typically discussed over multiple meetings prior to the actual approval of the plans in the first quarter of each year. The discussions generally focus on the metrics to be utilized, the difficulty of the metric levelsperformance goals and the weightings for each category of metric.
Other items that are addressed on an annual basis include a review of the committee'sCommittee's charter, compliance with executive and director stock ownership guidelines, market trends, and a compensation-related risk assessment.
RoleThe Compensation Committee has delegated to a subcommittee (i) its responsibility under the Company's 2010 Equity Incentive Plan with respect to the approval of acquisitions and dispositions of Company securities by officers and directors of the Compensation ConsultantCompany for purposes of Section 16(b) of the Exchange Act and (ii) its authority to approve performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code of 1986, as amended, or the Code. The members of the subcommittee are Jack VanWoerkom, Shikhar Ghosh and Reggie Sommer each of whom satisfies the requirements of a “non-employee director” for purposes of Section 16 of the Exchange Act and an "outside director" for purposes of Section 162(m) of the Code.
In 2013,
Executive Management. Our SVP and General Counsel, acting under the supervision of the CEO and working with members of our Human Resources, Legal and Finance departments, is responsible for coordinating and overseeing the implementation of executive compensation with the SVP, Human Resources, and discussing significant proposals or topics impacting executive compensation at WEX with the Committee. This includes development of compensation recommendations, in accordance with the compensation philosophy and policies more fully described elsewhere in this CD&A. The following members of management are generally invited to and attend Committee meetings: the CEO; CFO; SVP and General Counsel; SVP, Human Resources; and, VP, Corporate Securities Counsel.
The Committee has exclusive authority for approving the compensation of the CEO and the other NEOs. The CEO meets with the Committee engaged PM&Pand the compensation consultant to provide advice regardingdiscuss company and individual performance objectives and outcomes, and review compensation recommendations for executive officers directly reporting to her, including the Company's executive compensation practices. PM&P reported directly toother NEOs. Thereafter, the Committee meets privately with its independent compensation consultant to review and determine compensation of our CEO. In addition, the Committee sets the targets each year for compensation plan performance for our officers; management provides input and recommendations with respect to such targets, as well as information and analyses, as requested by the Committee.
Independent Compensation Committee, the primary services they provided were evaluations of executive officers' base salaries, annual incentive targets and long-term incentive targets relative to identified peers and the broader market and a recommendation of compensation ranges for each executive officer. PM&P also provided advice on the design of the Company's incentive plans, a review of Director compensation, assistance in drafting the CD&A and updates regarding legislative and regulatory changes that affect executive compensation. PM&P provided no other services to the Company.
Pursuant to its charter, theConsultant. The Committee has the sole authority to retain and terminate obtain advice from, overseea compensation consultant, and compensateto approve the consultant’s fees and all other terms of such engagement. During 2016, the Committee continued to directly retain Compensation Advisory Partners LLC ("CAP") as its outside advisors.independent compensation consultant. The Company has provided appropriate fundingscope of the Committee to do so. The Committee regularly reviews its relationship with PM&P, and has determined that PM&P’s work done by CAP for the Committee did not raise any conflicts of interest, consistent with guidance provided under the Dodd-Frank Act, the SEC and the NYSE. In making this determination, the Committee noted that during 2013:at its direction included:
PM&P did not provide any services to the Company or its management other than service to the Committee
Fees from the Company were less than 1% of PM&P's total revenue
None of the PM&P consultants providing services to the Committee had any business or personal relationship with Committee members
None of the PM&P consultants providing services to the Committee had any business or personal relationship with executive officers of the Company
None of the PM&P consultants providing services to the Committee directly own Company stock
RolePreparing analyses and recommendations to inform the Committee’s decisions related to executive and director compensation;
Providing updates on market trends and the regulatory environment, as they relate to executive and director compensation;
Reviewing and commenting on management proposals presented to the Committee; and
Working with the Committee to validate the pay-for-performance relationship, and support alignment with stockholders.
The Committee assessed the independence of CAP pursuant to SEC and NYSE rules, and concluded that no conflict of interest exists that would prevent CAP from providing independent advice to the Committee. CAP will not perform other services for WEX without the consent of the Executive OfficersChair of the Committee. CAP meets with the Committee Chair and the Committee outside the presence of management. In addition, CAP participates in all of the Committee’s meetings and, when requested by the Committee Chair, in preparatory meetings and executive sessions.
Total Compensation - Objectives and Philosophy
Objectives. Our compensation programs are designed and administered to balance the achievement of near-term operational results and long-term growth goals with the ultimate objective of increasing long-term stockholder value. The principal elements of an executive’s total compensation consist of: base salary, annual cash bonus, and long-term incentives.
Compensation Philosophy. Generally, we target total direct compensation (salary, annual bonus and long-term incentives) within a competitive range of the market median. Sustained performance may be recognized in individual pay components. Pay may vary above or below target based on actual performance outcomes. Variations in total direct compensation among the NEOs reflect differences in competitive pay for their respective positions as well as the size and complexity of the business units or functions they oversee, the performance of those business units or functions, and individual performance.
2016 Total Direct Compensation
We structure NEO total direct compensation so that the majority is delivered in the form of equity awards, in order to provide incentives to work towards long-term top and bottom line growth that will enhance stockholder returns and to align our NEOs' compensation directly with our stockholders' interests. We also structure NEOs’ cash compensation so that a significant portion is at risk under the company’s short-term incentive plan, payable primarily based on enterprise and business unit results, and to a lesser degree based on individual performance. We further detail each component of total direct compensation below.
Base Salary. We review base salaries annually, but we do not necessarily award salary increases each year. In approving compensationdetermining base salary levels for executive officers, the Committee considers the CEO's recommendations regardingfollowing qualitative and quantitative factors: job level and responsibilities, relevant experience, individual performance, recent corporate and business unit performance, internal equity, and our objective of paying competitive total direct compensation for the executive officers. Ms. Smith provides the Committee withif performance is met. From time to time base salaries may be adjusted other than as a result of an assessment of each executive officer's performance to support her recommendations. These assessments include the results of specific operational and strategic goals as well as progress in the area of succession planning and concerns, if any, in the area of retention of the executive officer. Ms. Smith does not provide recommendations for her own compensation. Mr. Elder attended meetings as needed to respond to requests for information from the Committee.
Peer Group
The peer group used by the Company in 2012 for the establishment of fiscal year 2013 compensation was developed by PM&P, based on input from management and aannual review, by the Committee. The peer group is generally reviewed each year and modified as needed to reflect our growth and to account for changes due to market consolidation among peers.
The following companies were utilized in PM&P's executive compensation assessment in the summer of 2012, which was used for establishing 2013 compensation.
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Company | 2013 Fiscal Year End Market Cap ($M) | | 2013 Revenue Fiscal Year End ($M) | | 1-Year Revenue Growth | | 2013 Fiscal Year End Basic EPS | | 2013 Fiscal Year End Net Income ($M) | | 1-Y Net Income Growth | | 2013 Fiscal Year End Total Assets ($M) | | 2013 TSR | | Fiscal Year End |
| Cardtronics Inc | $ | 1,928 |
| | $ | 876 |
| | 12 | % | | $ | 0.52 |
| | $ | 24 |
| | (45 | )% | | $ | 1,056 |
| | 83 | % | | Dec 13 |
| CSG Systems International Inc. | $ | 931 |
| | $ | 747 |
| | (1 | )% | | $ | 1.60 |
| | $ | 51 |
| | 5 | % | | $ | 869 |
| | 65 | % | | Dec 13 |
| Dealertrack Technologies Inc. | $ | 2,115 |
| | $ | 482 |
| | 24 | % | | $ | 0.14 |
| | $ | 6 |
| | (71 | )% | | $ | 956 |
| | 67 | % | | Dec 13 |
| FleetCor Technologies Inc. | $ | 9,663 |
| | $ | 895 |
| | 27 | % | | $ | 3.48 |
| | $ | 285 |
| | 32 | % | | $ | 3,932 |
| | 118 | % | | Dec 13 |
| Global Payments Inc. | $ | 3,614 |
| | $ | 2,376 |
| | 8 | % | | $ | 2.78 |
| | $ | 216 |
| | 15 | % | | $ | 3,125 |
| | 13 | % | | May 13 |
| Green Dot Corp | $ | 949 |
| | $ | 582 |
| | 5 | % | | $ | 0.78 |
| | $ | 34 |
| | (28 | )% | | $ | 875 |
| | 106 | % | | Dec 13 |
| Heartland Payment Systems Inc. | $ | 1,838 |
| | $ | 2,135 |
| | 6 | % | | $ | 2.03 |
| | $ | 79 |
| | 19 | % | | $ | 900 |
| | 70 | % | | Dec 13 |
| Higher One Holdings Inc. | $ | 459 |
| | $ | 210 |
| | 8 | % | | $ | 0.30 |
| | $ | 14 |
| | (62 | )% | | $ | 232 |
| | (7 | )% | | Dec 13 |
| Total System Services Inc. | $ | 6,227 |
| | $ | 2,132 |
| | 14 | % | | $ | 1.30 |
| | $ | 245 |
| | — | % | | $ | 3,687 |
| | 58 | % | | Dec 13 |
| Verifone Systems Inc | $ | 2,517 |
| | $ | 1,702 |
| | (9 | )% | | $ | (2.73 | ) | | $ | (296 | ) | | (555 | )% | | $ | 2,994 |
| | (24 | )% | | Oct 13 |
| WEX Inc. | $ | 3,861 |
| | $ | 717 |
| | 15 | % | | $ | 3.83 |
| | $ | 149 |
| | 54 | % | | $ | 3,433 |
| | 31 | % | | Dec 13 |
| WEX Inc. Percentile Rank | 79 |
| | 31 |
| | 79 |
| | 100 |
| | 72 |
| | 100 |
| | 84 |
| | 27 |
| | |
While the peer group listed above and the other survey data referred to below was used to compare our executives' compensation to the market, the Committee believes that understanding compensation practices for these companies similar to us in size and industry is only one important element in determining the appropriate compensation level for each of our executives. As outlined more fully below, the compensation of any individual executive may vary from the specific market data based on factors such as the individual's performance, the scope of the duties performed by that individual, the importance of the position to the Company and internal equity.
Annual Review of Executive Compensation
Based on the above peer group and the other data discussed below, PM&P provided recommended ranges of compensation for base salary, total cash, long-term incentives and total direct compensation for each executive for 2013. PM&P collected comparable position data on each executive from two sources:
Proxy data for the companies in our peer group (where a peer position matched)
Market survey data for companies of comparable revenue and industry sector
This data was blended equally where comparable peer data was available to produce a target compensation range competitive with the market 50th percentile (plus or minus 15%) for each executive. We believe market data at the 50th percentile for companies of comparable size and industry is the appropriate target in order to meet our objectives ofaddress competitive pressures or in connection with a promotion. Year-end NEO salaries were as follows:
|
| | | | | | |
Name | NEOs Base Salary | Rationale for Increase |
| 2015 | 2016 | % Increase (2015-2016) |
Smith, Melissa D. CEO & President | $565,000 | $700,000 | 24% | Market-based adjustment; below median |
Simon, Roberto R. SVP & CFO | $— | $500,000 | —% | New Hire in 2016 |
Young, Jeff A.
SVP and GM, WEX Health | $— | $450,000 | —% | Not a NEO in 2015 |
Hogan, George W. SVP, International | $308,000 | $325,000 | 6% | Market-based adjustment; below median |
Janosick, Kenneth W. SVP and GM, Global Fleet Direct | $310,000 | $325,000 | 5% | Market-based adjustment; below median |
Short-Term Incentive Plan ("STIP"). Our Annual Incentive Plan, structured under the 2015 Section 162(m) Performance Incentive Plan ("PIP"), is designed to motivate our NEOs to drive profitable company growth, while diversifying Company revenues, by measuring the NEOs performance against our plans at the corporate and retaining talent. PM&P relied on the Towers Watson Survey Report on top Management Compensation and the Pearl Meyer & Partners Executive and Senior Management Total Compensation surveys in establishing the 50th percentile market survey data for companies of our size for 2013 compensation.
Data from companies in our revenue category who participated in these surveys was aggregated and incorporated into the target compensation ranges provided to the Committee by PM&P. The Committee did not receive data identified for any individual Company in these surveys. PM&P provided the Committee and the Company's human resources departmentbusiness unit level, with the current placementpotential for individual adjustment for NEOs as described below. The PIP was approved by our stockholders in 2015 and is designed to give us flexibility to potentially maximize the tax deductibility of each executive within the target range. Management used the PM&P data to provide the Committee with recommended base salary changes, annual cash incentive targets and long-term equity targets for eachcertain incentives as performance-based awards under Section 162(m) of the executive officers.Internal Revenue Code of 1986, as amended (“Section 162(m)"), as further described below under the “Tax and Accounting Considerations” section.
In determining 2013 compensation, the Committee also examined the following in addition to the competitive data:
Summary of performance for each of the executive officers
A comparison of Mr. Dubyak's realizable compensation from equity awards received from 2009 to 2011 (realizable compensation includes the in-the-money value of options and value of RSUs granted between 2009 and 2011 and long-term performance plan payouts for plans that began and ended between 2009 and 2011) relative to cumulative total shareholder return between December 31, 2008 and December 31, 2011. This analysis indicated that Mr. Dubyak's realizable compensation from equity awards approximated the 69th percentile relative to peer group CEOs, while cumulative total shareholder return approximated the 86th percentile
A tally sheet of each executive's actual compensation for the years 2010-2012, includingWe establish a cash equity and all other compensatory benefits and perquisites
Company performance against strategic and operational goals for the previous fiscal year
Proposed performance goals for the annual and long-term incentive programs for the upcoming fiscal year
Summary of Board feedback on Mr. Dubyak's leadership of the Company in achieving results against goals for the fiscal year
Total compensation summaries showing historic, current and proposed total direct compensationbonus target for each executive officer are reviewed bybased upon their position within the Committee each year. These summaries providecompany, responsibility and competitive cash bonus opportunities for similar positions at other companies. Final actual payouts may range from 0% to 200% of the target value of all componentsbonus opportunity based on actual performance outcomes. The following tables describe 2016 NEO performance goals, results for each component of the executive officers' proposed compensation as well as the deferred compensation, benefits, perquisites and exit pay in the event of various termination scenarios, including a change of control. The purpose of this review is to assess whether the overall compensation package is consistent with the individual executive's contribution toward Company performance. Annual review of the total compensation summaries also provides the Committee with a view of the impact of historical changes to compensation over time and an opportunity to assess effectiveness in attracting and retaining our executives and driving high performance.
The Committee looks at the total impact of all year-over-year changes in executive compensation to decide whether changes are appropriate. In reviewing total cash and equity compensation, the Committee considers the retention value of the long-term equity currently held by the executivebonus, and the impact that retirement or voluntary termination would have on the executive. Based on this review, the Committee can decide to adjust one or more elements of an executive's total compensation. The Committee aims to provide competitive total direct compensation and assesses an executive's total compensation package when looking at the executive’s competitive standing relative to the market.actual cash bonus award for each NEO.
|
| | | | | | | | | |
| Weighting by NEO |
| Corporate Goals | M. Smith | | R. Simon | | J. Young | | G. Hogan | | K. Janosick |
| Corporate Financial Goals |
| Corporate PPG Adjusted Revenue | 50% | | 50% | | 20% | | 20% | | 20% |
| Corporate Operating Income | 50% | | 50% | | 20% | | 20% | | 20% |
| Business Unit Financial Goals | | | | | | | | | |
| Fleet PPG Adjusted Revenue | — | | — | | — | | — | | 25% |
| Fleet Operating Income | — | | — | | — | | — | | 35% |
| Healthcare Revenue | — | | — | | 35% | | — | | — |
| Healthcare Operating Income | — | | — | | 25% | | — | | — |
| International PPG Adjusted Revenue | — | | — | | — | | 35% | | — |
| International Operating Income | — | | — | | — | | 25% | | — |
| STIP payout as a percentage of target based on 2016 performance | 122.7% | | 122.7% | | 120.8% | | 104.7% | | 150.9% |
|
| | | | | | | | | | | | | | | | | | | | | | | |
| | Weighting by NEO | |
| Company Goals | Dubyak | | Elder | | Smith | | Maxsimic | | Hogan | | Threshold | | Target Performance Goal | | Maximum | | Actual Result (1) | | 2013 Earned Payout Factor(2) |
Adjusted Net Income(3) | 50% | | 50% | | 20% | | 20% |
| | 20% |
| | $138,742,000 | | $173,427,000 | | $197,707,000 | | $178,987,000 |
| | 123% |
PPG Adjusted Revenue(4) | 20% | | 20% | | | | | | | | $630,500,000 | | $741,765,000 | | $78,853,000 | | $709,970,000 |
| | 71% |
Americas EBIT(5) | | | | | 30% | | | | 30 | % | | $280,537,000 | | $350,672,000 | | $399,766,000 | | $358,184,000 |
| | 115% |
Americas PPG Adjusted Revenue(4) | | | | | 20% | | | | 20 | % | | $554,182,000 | | $651,979,000 | | $684,578,000 | | $632,437,000 |
| | 80% |
International EBIT(5) | | | | | | | 30% |
| | | | $15,368,000 | | $19,210,000 | | $20,555,000 | | $20,589,000 |
| | 200% |
International PPG Adjusted Revenue(4) | | | | | | | 20% |
| | | | $76,318,000 | | $89,786,000 | | $92,929,000 | | $82,743,000 |
| | 49% |
Strategic Ratio Targets(6) | 10% | | 10% | | 10% | | | | | | N/A | | Pass/Fail | | N/A | | Pass |
| | 100% |
Global Virtual Card Expansion & OTA Spend(7) | 10% | | 10% | | 10% | | 15% |
| | | | $7,796,637,000 | | $9,172,516,000 | | $10,548,393,000 | | $ | 9,857,000,000 |
| | 150% |
Follow the Majors(8) | 10% | | 10% | | | | 15 | % | | | | Establish non-binding head of terms for joint venture | | Sign joint venture agreement, win bid for key oil company relationship | | Sign joint venture agreement, win two bids for key oil company relationships | | Maximum |
| | 200% |
FleetOne Integration / Optimization (9) | | | | | 10% | | | | 20% |
| | $20,700,000 | | $25,800,000 | | $31,000,000 | | $26,300,000 |
| | 110% |
Cross Selling(10) | | | | | | | | | 10% |
| | 150 closed cross-sell leads | | 175 closed cross-sell leads | | 200 closed cross-sell leads | | Maximum |
| | 200% |
| STIP payout as a percentage of target based on 2013 performance | 120.7% | | 120.7% | | 111.1% | | 146.8% |
| | 117.0% |
| | | | | | | | | | |
|
| |
(1) | Result as determined under the 2013 WEX Inc. Short-Term Incentive Program. |
(2) | Payout factor represents payout level based on 25 percent payout for threshold performance, 100 percent payout for target performance and 200 percent payout for maximum performance, including interpolation on a straight-line basis between these levels of performance based on the actual result. |
(3) | Adjusted Net Income means Adjusted Net Income as reported in the Company's Form 8-K reporting the Company's results for the performance period and may be adjusted to exclude the following items (if any): losses from discontinued operations, the cumulative effects of changes in Generally Accepted Accounting Principles, any one-time charge or dilution resulting from any acquisition or divestiture, the effect of changes to our effective federal or state tax rates, extraordinary items of loss or expense, and any other unusual or nonrecurring items of loss or expense, including restructuring charges. |
(4) | PPG Adjusted Revenue is revenue adjusted for changes in fuel prices and the impact of acquisitions. We use this adjustment in our incentive programs to ensure that payouts are not artificially increased or decreased by changes in the price of fuel. The 2013 revenue goals and revenue results were adjusted to a PPG of $3.50 US and A$1.43 (per liter) Australian for the purposes of calculating STIP payout. |
(5) | EBIT is Earnings before Interest and Taxes and any allocations of corporate expenses to the business unit and is calculated consistently with Adjusted Net Income. |
(6) | This pass/fail performance goal is specific to establishment of a model along with financial targets, goals and actions, which is effective in the identification and tracking of operating margin improvement. |
(7) | This performance goal is specific to expanding WEX's ability to offer, process, support and service Virtual Cards, and is measured by Online Travel Agency (OTA) spending via these cards. |
(8) | This performance goal is specific to WEX's efforts to expand its global fuel footprint by partnering with key oil company relationships in strategic regions. |
(9) | This performance goal is specific to optimizing the integration of Fleet One and is measured by achievement relative to adjusted EBITDA financial goals. |
(10) | Cross-sell leads are defined as selling a new product offering into our existing customer base. |
|
| | | | | | |
| | Performance Goals | | | |
| Company Goals | Threshold (50% payout) | Target Performance Goal (100% payout) | Maximum (200% payout) | Strategic Objective Weight | Actual Performance | Payout based on Actual 2016 Performance |
PPG Adjusted Revenue(1)
| $858,200,000 | $905,700,000 | $951,000,000 | 50% | $911,059,000 | 111.8% |
Operating Income(2) | $223,600,000 | $298,100,000 | $357,700,000 | 50% | $318,177,000 | 133.6% |
| Weighted Average Payout | 122.7% |
We have generally used
(1) PPG Adjusted Revenue means 2016 revenue as reported in the Form 10-K filing reporting the Company's results for the performance period adjusted net income and revenue adjusted for the difference between 2016 reported fuel prices and Board-approved, budgeted 2016 fuel price assumptions. The results were further adjusted for: acquisition and divestiture related items; unbudgeted pricing changes; and, unbudgeted accounting reclassifications.
(2) Operating Income means 2016 operating income as reported in the impact of acquisitions asForm 10-K filing reporting the Company's results for the performance measures in our STIP. They represent key areas of focus for continued growthperiod adjusted for: acquisition and stockholder return. The inclusion of Americasdivestiture-related items; stock-based compensation; restructuring and International EBITother costs; a vendor settlement; and, Americasacquisition and International Revenue goals reflects our 2013 focus on diversifying our revenue streams and building out our international presence. The Strategic Ratio Targets, Global Virtual Card Expansion & OTA Spend, Follow the Majors, FleetOne Integration / Optimization and Cross Selling goals reinforced key performance deliverables for 2013.divestiture related items.
The funded STIP payout, based on the financial metrics and pre-set goals described above, may be adjusted for each NEO (excluding the CEO) through an individual performance modifier, down to 75% or up to 125%, with no payout greater than 200% of target. The adjustment is made based on an assessment of performance versus pre-defined, often quantitative individual goals. The modifier, across our executive leadership team, is intended to generally function within the “pool” of STIP-funded dollars (0-200% of target) that is determined based on the financial metrics listed above. The pre-definited goals, which are generally quantitative, used to determine individual modifiers for the NEOs were based on the following criteria:
26Roberto Simon: Investor outreach, exposure to and management of foreign exchange rates, as well as general leadership competencies
Jeff Young: Benaissance integration plan and performance, WEX Health strategy and integration execution, as well as general leadership competencies
George Hogan: New business development, system development, European strategy advancement, as well as general leadership competencies
Kenneth Janosick: Revenue per transaction growth, global fleet roadmap, mobile strategy, EFS synergies, as well as general leadership competencies
Our CEO makes individual modifier recommendations to our Committee for all of the other NEOs, for consideration and approval by the Committee. With respect to the 2016 individual performance modifiers outlined below, our CEO considered the following generally quantitative accomplishments during 2016:
Roberto Simon: As a result of Ms. Smith’s overall assessment of Mr. Simon’s success against his pre-defined individual goals, which included strategic planning, profitability and infrastructure initiatives, a positive individual modifier (of +5%) was recommended by Ms. Smith for Mr. Simon, as shown in the chart below.
Jeff Young: No modifier was applied in the case of Mr. Young.
George Hogan: As a result of Ms. Smith’s overall assessment of Mr. Hogan’s successes against his pre-defined individual goals, especially with regard to new business and profitability initiatives, a downward individual modifier (of -10%) was recommended by Ms. Smith for Mr. Hogan, as shown in the chart below.
Kenneth Janosick: As a result of Ms. Smith’s overall assessment of Mr. Janosick’s successes against his pre-defined individual goals, especially with regard to his leadership of pricing modernization initiatives, a positive individual modifier (of +5%) was recommended by Ms. Smith for Mr. Janosick, as shown in the chart below.
2013 Executive Compensation Overview
Base Salary. Base salary
As stated above, the individual modifier, across our executive leadership team, is provided at a competitive level in orderintended to attract and retain key talent andgenerally function within the “pool” of STIP funded dollars (0-200% of target) that is reviewed annually. Annual adjustments to base salary are madedetermined based on the financial metrics listed above. Therefore, while no individual modifier, a review of bothpositive individual modifier, or a downward individual modifier was applied across the individual performance assessed by the CEO and reported to the Committee by management and the locationNEO group, other members of the executive officer's current base salary in the target range provided by PM&P. In additionleadership team also received individual modifiers to other annual adjustments, the following occurred in 2013:generally balance total incentive spend against STIP funded dollars.
Mr. Elder received an increase of $30,000 (or 10.7%) as a market adjustment to reflect his continued growth in the role of Senior Vice President and Chief Financial Officer
Ms. Smith received an increase of $21,302 (or 5.4%) upon her promotion to President in April of 2013
Following these increases, the NEOs were, on average, positioned near the market 50th percentile of the market data provided by our consultants.
Annual Incentive Compensation. The short-term annual incentive compensation program (STIP) is an annual bonus opportunity for employees at all levels of the organization who generally share the same key goals, other than those on commission and departmental incentive plans. The actual payouts of the STIP are contingent upon Committee-approved financial performance goals. For the executive officers, a performance-based bonus focuses management on our fiscal year financial results and strategic initiatives approved by the Committee at the beginning of each year.
At the target level of performance, named executive officer STIP payouts would be, on average, positioned within 15% of the median total cash compensation of the market composite identified by PM&P. At the maximum level of performance, which would represent performance that significantly exceeded target goals, STIP payouts would be at or above the 75th percentile of this market composite. If we fail to meet the threshold level goals as defined by the Committee, the executive officers receive no payout under the STIP. In 2013, the Company was required to achieve threshold results for Adjusted Net Income in order for any portion of the STIP to be paid to any employees, including the executive officers.
Each year, management proposes performance level goals based on estimated achievability and current factors supporting or inhibiting achievement. The goals for 2013 were approved by the Committee in March 2013 and progress toward these goals was reported by the CEO to the Board of Directors throughout the year.
Named executives received 2013 STIP bonus targets and payment based on performance achievement outlined in the chart below:
|
| | | | | | | | | | | | | | | | | | | |
| Named Executive Officer | Eligible Earnings(1) | | Percentage of Eligible Earnings at Threshold | | Percentage of Eligible Earnings at Target | | Percentage of Eligible Earnings at Maximum | | Actual Percentage of Eligible Earnings Paid | | Actual Award |
| Michael E. Dubyak | $ | 592,111 |
| | 25.0 | % | | 100.0 | % | | 200.0 | % | | 121 | % | | $ | 714,678 |
|
| Steven A. Elder | $ | 305,385 |
| | 13.75 | % | | 55.0 | % | | 110.0 | % | | 66 | % | | $ | 202,730 |
|
Melissa D. Smith(2) | $ | 441,807 |
| | 19.1 | % | | 76.3 | % | | 152.5 | % | | 85 | % | | $ | 374,297 |
|
| David D. Maxsimic | $ | 370,000 |
| | 18.75 | % | | 75.0 | % | | 150.0 | % | | 110 | % | | $ | 407,370 |
|
| George W. Hogan | $ | 288,725 |
| | 11.25 | % | | 45.0 | % | | 90.0 | % | | 53 | % | | $ | 152,014 |
|
|
| |
(1) | STIP Eligible Earnings include total gross pay for the applicable plan year excluding salary or wages classified by the Company as disability pay, commission/incentive pay and bonuses. |
(2) | Ms. Smith's STIP bonus target was increased from 75% of eligible earnings to 80% upon her promotion to President; the percentage of eligible earnings statistics above reflect a pro-ration based on this mid-year increase. |
|
| | | | | | | | | | | | | | | |
| Name | 2016 FYE Salary | | Bonus Eligible Compen-sation | | Threshold | | Target | | Maximum | | Payout based on 2016 Corporate Performance | | Individual Performance Modifier | | Actual 2016 STIP Award Earned |
| M. Smith | $700,000 | | $674,039 | | $393,558 | | $787,115 | | $1,574,231 | | 122.7% | | n/a | | $965,791 |
| R. Simon | $500,000 | | $423,077 | | $158,654 | | $317,308 | | $634,615 | | 122.7% | | 5% | | $408,803 |
| J. Young | $450,000 | | $450,000 | | $150,750 | | $301,500 | | $603,000 | | 120.8% | | —% | | $364,212 |
| G. Hogan | $325,000 | | $321,731 | | $106,683 | | $213,365 | | $426,731 | | 104.7% | | (10)% | | $201,055 |
| K. Janosick | $325,000 | | $322,115 | | $105,288 | | $210,577 | | $421,154 | | 150.9% | | 5% | | $333,649 |
Long-Term Incentive Compensation. The Company provides long-term equity-based incentives through the LTIP.long-term incentive plan (“LTIP”). Grants under the LTIP have generally beenwere provided asthrough a mix of PSUs, which vest from 0% to 200% based on the achievement of multi-year performance goals, subject to further service-based vesting described below, stock options which have no value absent stock price appreciation and encourage stockholder value creation over a long-term (10 year) time horizon, and RSUs, which vest based on the passage of time. The metric used to determine the vesting oftime and fluctuate in value based on changes in our stock price. PSUs, has generally been the achievement of adjusted net income targets and/or revenue targets set by the Committee. PSUsstock options and RSUs generally vest over a three or four year period of employment. Executive overall
We aim to provide long-term awards such that together with cash compensation, target total direct compensation is weighted more heavily towardwithin a competitive range of the market median. Compensation is intended to vary based on company and individual performance outcomes. The Committee bases individual award levels on comparative market data for the executive’s position, award levels of comparably-situated executives, and an assessment of individual potential and performance. In making awards to any individual, the Committee does not consider his or her gains made, or failure to achieve gains, on prior restricted stock, stock option or performance stock unit awards.
NEO equity than cash as compared to non-executive employees.grants were 60% PSUs, 20% stock options and 20% RSUs for our non-CEO NEOs; the mix for our CEO was: 60% PSUs, 25% stock options and 15% RSUs. Our program balances mid-term (PSUs) and long-term (stock options) goals and stockholder valuation creation, with key employee motivation and retention.
2016 LTIP. The 20132016 LTIP was implemented pursuantdesigned to support our 2011 Equitymulti-year strategic plan and Incentive Plan which allows usreward each of the NEOs for their contribution to grant employees and directors stock options, stock awards (including restricted stock units), stock appreciation rights, performance-contingent
awards and other awards. Eligible participants include executive officers and other selected employeesplan goals during the two-year period from January 1, 2016 to December 31, 2017. The change to a two year period more closely aligns the performance measures used in the Company. Each ofLTIP with the executive officers received a grant in 2013 throughCompany's overall strategic vision. As the LTIP.
The Committee grants stock awards at the fair market value of the stock at the time of grant. In determining the size of equity grants to executive officers, the Committee considers the peer groupperformance period is incomplete, payout is not yet known. Payout and survey data described above. The Committee also reviews potential equity ownership as a percentage of shares outstanding for each executive versus comparable positions within the peer group. Management does not grant awards without Committee approval. With the exception of limited grants to newly hired associates, grants are generally awardedtargets will be disclosed in the first quarter of each year.2018 proxy statement, retrospectively, once the performance period is complete.
2013 LTIP.2014 Growth Grant. In March 2013, executive LTIP award targets for the annual grant were set after consideration of the data provided by PM&P. The 2013 LTIP2014 Growth Grant was designed to support our long-term strategic plan and reward each of the NEOs for his or her contribution to the achievement of plan goals from 2014 through 2016; i.e., over a three-year performance period. The 2014 Growth Grant included only PSUs. The PSUs vested in 2013. NEO equity grants were 60% PSUs and 40% RSUs. The RSUs inMarch 2017 based on performance against the 2013 LTIP vest equally over three years on the anniversary2016 performance targets.
Final overall payout was 120% of the grant date. The PSUs also vest, assuming performance criteria are met, in equal annual installments over three years ontargeted number of PSUs; the anniversary of the grant date.
Mr. Dubyak’s 2013 equity grant value was larger than the other NEOs' equity grant value due to the scope of his role as Chairman and CEO. In determining the appropriate level for each of the named executive officer grants, the Committee reviewed a range of values provided by PM&P with the midpoint of the range being a blend of peer data and market data.
In 2013, the Company was required to achieve threshold results for adjusted net income in order for any portion of the LTIP to be paid to any employees, including the executive officers. This threshold was $138,742,000.
The following table illustrates performance objectives and finalactual results that led to this payout rate, which are also sometimes referred to as the "conversion levels" of 2013 LTIP PSUs to shares of Company common stock for NEOs other than Mr. Maxsimic:
factor:
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| | | | | | | | | | | | | | | | | | | | | |
| Company Goals | Weight | | Threshold | | Target Performance Goal | | Maximum | | Actual Result(1) | | 2013 Earned Payout Factor(2) |
Adjusted Net Income(3) | 40 | % | | $ | 138,742,000 |
| | $ | 173,427,000 |
| | $ | 197,707,000 |
| | $ | 178,987,000 |
| | 123 | % |
PPG Adjusted Revenue(4) | 60 | % | | $ | 630,500,000 |
| | $ | 741,765,000 |
| | $ | 778,853,000 |
| | $ | 709,970,000 |
| | 71 | % |
| PSU Conversion based on 2013 performance | | 92 | % |
|
| | | | | |
| | | |
| Target | | |
| Performance | | Actual |
| Company Goals | Weight | Threshold | Goal | Maximum | Result |
2016 Reported Adjusted Net Income(1) | 40% | $230M | $290M | $350M | $189.2M |
2016 PPG Adjusted Revenue(2) | 60% | $900M | $1,025M | $1,150M | $1,178.6M |
(1) Adjusted Net Income means: Adjusted Net Income as reported in the Corporation’s Form 10-K filing reporting the Corporation’s results for the performance period (the “10-K ANI”). Notwithstanding the foregoing, in order to determine the level of performance for purposes of this Program, the Compensation Committee may exercise discretion to adjust the 10-K ANI by any or all of the following items (if any): losses from discontinued operations; the cumulative effects of changes in Generally Accepted Accounting Principles; any one-time charge or dilution resulting from any acquisition or divestiture; the effect of changes to our effective federal or state tax rates, extraordinary items of loss or expense; and, any other unusual or nonrecurring items of loss or expense, including restructuring charges.
(2) PPG Adjusted Revenue means 2016 revenue as reported in the Form 10-K filing reporting the Company's results for the performance period adjusted for the difference between 2016 reported fuel prices and Board-approved, budgeted 2014 fuel price assumptions.
International Assignment Bonus. In 2016, the Company requested that Mr. Hogan oversee the Company's operations in New Zealand for a six month period during a key phase of IT system development, while continuing to manage his responsibilities for general, international business operations. In recognition of Mr. Hogan's extended overseas' assignment to the Company's New Zealand office for a prolonged period of time and in consideration of the related time and extensive travel requirements, the Compensation Committee authorized a one-time payment of $200,000 to Mr. Hogan.
Peer Group
We have created a compensation structure that focuses on the median of our selected peer companies, but also allows total target compensation to vary to reflect considerations, such as company performance, individual experience, job responsibilities and other individual performance factors.
A key element of this process is selecting a relevant peer group against which we compare our elements of pay. The Committee reviews and determines the composition of our peer group, considering input from its independent compensation consultant. For 2016, our peer group consisted of the 11 companies shown below, whose aggregate profile was comparable to WEX in terms of size, industry and competition for executive talent.
|
| |
(1) | Result as determined under the 2013 WEX Inc. Long-Term Incentive Program.2016 Peer Group |
(2)Cardtronics Inc. | Payout factor represents payout level based on 25 percent payout for threshold performance, 100 percent payout for target performance and 200 percent payout for maximum performance including interpolation on a straight-line basis between these levels of performance based on the actual result.Heartland Payment Systems, Inc.(1) |
(3)CSG Systems International Inc. | Adjusted Net Income means Adjusted Net Income as reported in the Corporation's Form 10-K reporting the Corporation's results for the performance period and may be adjusted to exclude the following items (if any): losses from discontinued operations, the cumulative effects of changes in Generally Accepted Accounting Principles, any one-time charge or dilution resulting from any acquisition or divestiture, the effect of changes to our effective federal or state tax rates, extraordinary items of loss or expense, and any other unusual or nonrecurring items of loss or expense, including restructuring charges. The Compensation Committee may exercise discretion to include all or part of an item of loss or expense.Jack Henry & Associates Inc. |
(4)Euronet Worldwide Inc | PPG Adjusted Revenue is revenue adjusted for changes in fuel prices and the impact of acquisitions. We use this adjustment in our incentive programs to ensure that payouts are not artificially increased or decreased by changes in the price of fuel. The 2013 revenue goals and revenue results were adjusted to a PPG of $3.50 US for the purposes of calculating 2013 LTIP PSU conversion levels.Total System Services, Inc. |
| EVERTEC, Inc | Vantiv, Inc. |
| FleetCor technologies, Inc. | VeriFone Systems, Inc. |
| Global Payments Inc. | |
Mr. Maxsimic's 2013 LTIP PSUs used performance objectives specific to our international performance. The following table illustrates performance objectives and final payout rate, which are also sometimes referred to as the "conversion levels" of 2013 LTIP PSUs to shares of Company common stock for Mr. Maxsimic:
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| | | | | | | | | | | | | | | | | | | | | |
| Company Goals | Weight | | Threshold | | Target Performance Goal | | Maximum | | Actual Result(1) | | 2013 Earned Payout Factor(2) |
International EBIT(3) | 40 | % | | $ | 15,368,000 |
| | $ | 19,210,000 |
| | $ | 20,555,000 |
| | $ | 20,589,000 |
| | 200 | % |
International PPG Adjusted Revenue(4) | 60 | % | | $ | 76,318,000 |
| | $ | 89,786,000 |
| | $ | 92,929,000 |
| | $ | 82,743,000 |
| | 49 | % |
| PSU Conversion based on 2013 performance | | | | 109 | % |
|
| |
(1) | Result as determined under the 2013 WEX Inc. Long-Term Incentive Program. | |
(2)(1) | Payout factor represents payout level based on 25 percent payout for threshold performance, 100 percent payout for target performance and 200 percent payout for maximum performance including interpolation on a straight-line basis between these levels of performance based on the actual result.In April 2016 Global Payments Inc. acquired Heartland Payment Systems, Inc. |
|
| | |
| | WEX ($millions) | Peer Median ($millions) |
| Market Capitalization (at 12/31/2016) | $4,769 | $5,358 |
| 2016 EBITDA Margin | 29% | 24% |
| 2016 Revenue | $1,018 | $1,895 |
| 3-Year Revenue Growth | 42% | 41% |
For certain NEOs, data relating to the peer group is supplemented with functional data from two general executive compensation surveys conducted by national compensation consulting firms: Mercer Executive Survey and Radford Global Technology Survey - US. With respect to these surveys, the identity of the individual companies comprising the survey data is not considered by the Committee in its evaluation process. Peer group data and other information provided to the Committee were considered in setting target compensation levels for our NEOs. For purposes of defining the market for each individual role, the Committee used the peer group data for the CEO and CFO; for the other NEOs, the Committee supplemented peer group data with the survey data described above.
During 2016, on average, target total direct compensation of our NEOs was positioned within a competitive range of the market median. Adjustments are typically made when we believe that there is a market-based gap and/or as warranted by individual performance.
Strong Say on Pay Support and Stockholder Engagement
We have adopted a policy of conducting an annual advisory vote on executive compensation. While this vote is not binding on us, our Board of Directors and the Committee value the opinions of our stockholders. At our 2016 Annual Stockholders Meeting, approximately 98.6% of votes cast supported WEX’s executive compensation program. We received a similar level of stockholder support in 2015, 2014 and in 2013. Management and the Compensation Committee reviewed our stockholders’ affirmative 2016 Say on Pay vote and believe it to be a strong indication of support for WEX’s executive compensation program and practices.
In addition to our annual advisory vote on executive compensation, we are committed to ongoing engagement with our stockholders. These engagement efforts take place throughout the year through meetings, telephone calls and correspondence involving our senior management and representatives of our stockholders.
Changes for 2017
Though encouraged by strong stockholder support for our compensation program, exhibited through our Say on Pay vote results (98.6% support in 2016), we refined our executive compensation program for 2017. The changes - outlined below - are intended to support our business strategy, as well as to enhance alignment with longer-term value creation for stockholders, taking into account views of various internal and external stakeholders.
|
(3) | EBIT is Earnings before Interest and Taxes and any allocations of corporate expenses to the business unit and is calculated consistently with Adjusted Net Income. | |
(4) | | |
| Changes We've Made For 2017 | Rationale |
| Short Term Incentive Plan ("STIP") |
| w Changed corporate financial performance metrics and weightings to 40% Company Net Revenue Adjusted for PPG and FX and 60% Operating Income Adjusted Revenue is revenue adjusted for changes in fuel pricesPPG and FX
| w In determining corporate financial goals, the Committee considered the board-approved strategic plan, management input, investor voting policies and stockholder feedback w Operating Income goals evaluate annual performance excluding the impact of acquisitions. We use this adjustment in our incentive programs to ensure that payouts are not artificially increased or decreased by changestax (among other items), which is taken into account - on a multi-year basis - in the price of fuel. The 2013 revenuePSU program |
|
| Long Term Incentive Plan ("LTIP") |
| w For 2017 long-term incentive awards, extended PSU performance period from two to three years | w Changes support a longer-term focus on company goals and revenue resultsplanning
|
| w Modified PSU vesting from 50% after year two and 50% after year three, assuming performance thresholds were adjustedattained, to a PPG of A$1.43 (per liter) Australian for the purposes of calculating Mr. Maxsimic's 2013 LTIP PSU conversion levels.100% after year three, assuming performance thresholds are attained |
Given
Other Compensation Program and Governance Features.
Compensation Risk Analysis. In 2016, the goalsCommittee was presented and reviewed the conclusions of a risk assessment of our compensation policies and practices covering employee groups, which is conducted annually by representatives from Human Resources working with the Committee’s independent consultant. The Committee evaluated the levels of risk-taking that potentially could be encouraged by our compensation arrangements, taking into account the arrangements’ risk-mitigation features, to determine whether they are appropriate in the context of our strategic plan and annual budget, our overall compensation arrangements, our compensation objectives and the Company’s overall risk profile. We have concluded that WEX has an executive compensation program that balances competitive compensation with performance incentives and does not use compensation policies or practices - across employee groups - that could create risks that are reasonably likely to have a material adverse effect on the Company. Select identified risk-mitigation features with respect to our NEOs include the following:
A competitive base salary, which provides executives with ongoing income;
Rigorous budget and goal setting processes that involve multiple levels of review;
Independent oversight of incentive program design and payouts;
Use of common performance metrics;
Different performance-measurement and time-based vesting requirements between our short-term and long-term incentive programs;
Robust stock ownership guidelines and anti-hedging policy; and
Committee approval for all Section 16 Executive Officer compensation.
Tax Deductibility of Compensation. Section 162(m) generally limits the deductibility of compensation paid to our NEOs (excluding the CFO) to $1 million during any fiscal year unless such compensation is "performance-based." In general, we seek to structure incentive compensation arrangements in a manner that complies with these tax rules. The Committee reserves the right to pay compensation that may exceed the limits on tax deductibility or not satisfy the performance-based award exception, such as time-based restricted stock units, if it determines doing so is in our and our stockholders’ best interests.
Under the 2015 Section 162(m) Performance Incentive Plan ("PIP"), our NEOs’ 2016 annual incentive awards were initially funded under a performance formula of 6% of WEX’s Adjusted Net Income, with a maximum defined for each participant. These amounts were subject to the Committee’s exercise of negative discretion, as described in the short-term incentive plan section above.
Accounting Implications. In designing our compensation and benefit programs, the Committee reviews and considers the accounting implications of its decisions, including the accounting treatment of amounts awarded or paid to our executives.
Executive Stock Ownership Guidelines. In order to further align the interests of management and stockholders, we maintain stock ownership guidelines for our executives. The guidelines require that executives attain a specified level of ownership of shares of the 2013 LTIP, ifcompany’s common stock equal in value to a multiple of base salary within the maximum levellater of PSUs had become vested as a resultfive years of the performanceexecutive’s appointment to their role or the applicability of the Company, the Committee believes the total compensation provided to the NEOs would reflect an appropriate pay-for-performance alignment.
2013 FleetOne Integration Long-Term Incentive Program.these guidelines: In March 2013, the Committee approved a special one-time incentive of 6,369 PSUs for Mr. Hogan designed to support our objective of maximizing the synergies available to the Company through the Fleet One acquisition. PSUs are earned under this award based on achievement relative to specific business unit hurdles, with 50% of the award subject to 2013 performance and 50% subject to 2014 performance.
The following table illustrates the performance objectives and final payout rate of the 2013 FleetOne Integration Long-Term Incentive Program PSUs to shares of Company common stock for NEOs for Mr. Hogan:
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| | | | | | | | | | | | | | | | | | | | | |
| Company Goals | Weight | | Threshold | | Target Performance Goal | | Maximum | | Actual Result(1) | | 2013 Earned Payout Factor(2) |
FleetOne PPG Adjusted Revenue(3) | 30 | % | | $ | 54,700,000 |
| | $ | 64,400,000 |
| | $ | 77,300,000 |
| | $ | 64,790,000 |
| | 103 | % |
FleetOne Adjusted EBITDA(4) | 40 | % | | $ | 19,030,000 |
| | $ | 24,000,000 |
| | $ | 30,230,000 |
| | $ | 27,463,000 |
| | 156 | % |
FleetOne Run-Rate Synergy Savings(5) | 30 | % | | $ | 2,400,000 |
| | $ | 3,000,000 |
| | $ | 6,000,000 |
| | $ | 5,219,000 |
| | 174 | % |
| PSU Conversion based on 2013 performance | | | | | | | | | | | 145 | % |
|
| |
(1) | Result as determined under the 2013 FleetOne Integration Long-Term Incentive Program.2016 Guidelines |
(2)Role | Payout factor represents payout level based on 25 percent payout for threshold performance, 100 percent payout for target performance and 200 percent payout for maximum performance including interpolation on a straight-line basis between these levelsMultiple of performance based on the actual result.Base Salary |
(3)Chief Executive Officer | PPG Adjusted Revenue is revenue adjusted for changes in fuel prices and the impact of acquisitions. We use this adjustment in our incentive programs to ensure that payouts are not artificially increased or decreased by changes in the price of fuel. The 2013 revenue goals and revenue results were adjusted to a PPG of $3.50 US for the purposes of calculating 2013 FleetOne Integration Long-Term Incentive Program PSU conversion levels.5.0x |
(4)Executive Vice Presidents and Senior Vice Presidents | Adjusted EBITDA is defined as 2013 deal model EBITDA of $27.8M adjusted by synergy savings, synergy costs, and integration costs, totaling $3.8M for 2013.3.0x |
(5)Vice Presidents | Synergy target for 2014 based on deal model and represents net synergy savings that are $3.0M incremental to 2013.1.0x |
Based on 2013 performance, 145%
Until the minimum level of ownership is achieved, executives must retain, net after tax, 50% of any earned PSUs upon vesting, any RSUs upon vesting, and/or any stock options upon exercise.
The Compensation Committee reviews the ownership level for covered executives each year. As of the PSUs subject to 2013 performance have been earned and vested on March 28, 2014.
The remaining 50%2016 measurement of PSUs are subject to 2014 goals for FleetOne EBITDA, revenue and synergy savings.
Other 2013 RSU Awards. In recognition of the promotion and the growing scope of responsibility of Ms. Smith, as well asownership, all NEOs were in accordancecompliance with the Board’s succession planning process, the Committee approved certain other awards of RSUs to NEOs in 2013.
In May of 2013, the Company granted Mr. Dubyak 23,415 RSUs, having a value of $1.7 million on the grant date, which will vest on December 30, 2014, subject to conditions specified in his Transition Agreement.
In May of 2013 the Company also granted Ms. Smith 2,754 RSUs, having a value of $200,000 on the grant date in recognition of her promotion to President. These awards will vest in November of 2014.
2014 Growth Grant. From time to time, the Committee has supplemented annual grants with additional awards of equity in order to incent the achievement of long-term strategic goals. In March of 2014, the Committee approved awards of PSUs to key employees, including Ms. Smith and Messrs. Elder, Maxsmic and Hogan. This 2014 Growth Grant is intended to reward and retain key employees driving long term strategic plan and operational deliverables in support of our next phase of growth.
The PSUs will vest in March of 2017, if at all, based on performance against 2016 PPG Adjusted Revenue (weighted 60%) and 2016 Adjusted Net Income (weighted 40%) performance hurdles. The actual PSU award payout with respect to the 2014 Growth Grant will be made in shares of our common stock and can range from 0% to 200% of the target number of performance share units awarded.
Awards are subject to a share price cap, such that the number of shares paid will be reduced if the price of the shares when paid exceeds 200% of the price of the shares on the first day of the date of grant. The price on the date of grant was $92.07.
The Committee considered input from its consultant in developing the design and size of these awards, including dynamic pay modeling that considered possible pay outcomes relative to our peer group companies across a variety of performance scenarios. Given the degree of rigor embedded in the 2014 Growth Grant performance hurdles, the Committee believes the total compensation provided to NEOs from this award in conjunction with our other compensation vehicles will support an appropriate pay-for-performance alignment over time.
Tax Deductibility of Compensation. Section 162(m) of the Internal Revenue Code generally places a limit of $1 million on the amount of compensation that WEX may deduct in any one year with respect to its CEO and the other three officers (other than the Chief Financial Officer) whose compensation is required to be reported to our stockholders pursuant to the Exchange Act. WEX receives no federal income tax deduction for any compensation that is (a) over $1 million and (b) is not performance-based as defined under Section 162(m). The STIP as well as the PSU component of our LTIP are generally intended to provide tax-deductible compensation. The time-based RSU component of our LTIP and discretionary cash bonuses, if any, are not considered performance-based under Section 162(m). The Committee may approve compensation that is not considered performance-based under Section 162(m) when it believes that such compensation is appropriate and consistent with our goal of building long-term stockholder value.
Executive Officer Equity Ownership Guidelines. We believe executive ownership of Company securities demonstrates a commitment to continued success and aligns the efforts of our executives with stockholders. The Committee established equity ownership guidelines for all executive officers in October 2005 and subsequently increased the holding requirements in December 2010.guidelines. "Equity," for the purposes of executive officer ownership guidelines, includes shares of our common stock owned directly or indirectly and ownership interests in the WEX Common Stock Fund held in the Company’sCompany's 401(k) Plan. It doesPlan, as well as 50% percent of unvested time-based RSU awards. Stock options and unearned, unvested PSUs are not include any RSUs or PSUs prior to their vesting and conversion to shares of stock.
These equity ownership guidelines require the CEO to hold securities equal in value to at least 4 times her annual base salary, Executive Vice Presidents to hold 2.5 times their annual base salaries and all other executive officers to hold 1.5 times their annual base salaries. Beyond these ownership guidelines, the Company does not have a policy specifying a minimum period of time an executive must hold some or all of the Company shares obtained upon exercise of options or vesting of stock units. The policy requires newly appointed officers to achieve their required ownership within three years of appointment.
The annual measurement date under the guidelines is July 31 of each year. For 2013, all NEOs held securities with value equal to the guidelines.counted.
Employment Agreements. The Company provides employment agreements, which include severance and change of control benefits, to attract and retain key executive officers. In the event, or threat, of a change of control transaction, these agreements reduce uncertainty and provide compensation for the significant levels of executive engagement and support required during an ownership transition that results in the termination of their employment. In addition, our employment agreements contain non-compete, non-solicitation, non-disparagement and non-disclosure provisions which protect the Company in the event that an executive terminates his or her employment. These employment agreements represent competitive severance and change of control benefits based on an analysis conducted and reviewed by the Committee annually to assess whether the total value to an executive provided by the agreement remains at the level needed to attract and retain executives without being considered excessive in the opinion of the Committee. The specific material provisions of these contracts are discussed in the "Employment Agreements, Severance and Change of Control Benefits" section of this proxy.
HedgingAnti-Hedging Policy. As part of our insider trading policy, our directors and executive officers are prohibited from engaging in any hedging or monetization transactions of our common stock, including through the use of financial instruments such as short sales "against the box" and purchases or sales of puts, calls, or other "derivative securities" involving the Company’s stock.
Compensation Recovery. Under the Sarbanes-Oxley Act, in the event of misconduct that results in a financial restatement that would have reduced previously paid incentive compensation, we can recoup the amount of any improper payments from our Chief Executive Officer and Chief Financial Officer. In addition, we intend to implement a clawback policy in accordance with the requirements of the Dodd-Frank Act and the regulations that will be issued under that Act. We have elected to defer
adoption of a clawback policy until the SEC issues guidance as to the required elements of such a policy to ensure that we are able to implement a single fully compliant policy at one time, rather than implementing a policy that may require significant modifications after the SEC regulations are issued.
Benefits and Perquisites. We provide competitive benefits to attract and retain high performing associates at all levels. This includes a health and welfare benefits package and a 401(k) plan. In 2013, the Company also paid for airfare and travel-related costs for Mr. Maxsimic's spouse to accompany him while he traveled internationally on company-related business.
Nonqualified Deferred Compensation. The Company administers an Executive Deferred Compensation Plan, or EDCP, that provides each of the executive officers with the opportunity to defer up to 80 percent of base salary and/or up to 98 percent of annualshort-term incentive compensation. The Company provides a match of up to 6 percent of the participant’s annualshort-term incentive compensation deferred into the EDCP. Investment income on contributions and Company match is accrued for participants to reflect performance of investment funds identified by each participant during their annual election period. The investment funds and their performance used to calculate earnings in the EDCP generally mirror those used in the 401(k) Plan.
Each of the named executivesNEOs serving in his or her role at the time of election, with the exception of Messrs. Janosick and Young, who was eligible to participate chose to defer a portion of his or her 2013 bonus2016 short term incentive compensation into the EDCP in 2014.2017.
Prior to our initial public offering, we offered the WEX Inc. Supplemental Investment and Savings Plan, or SERP, which allowed participants to defer compensation. The SERP was frozen to new contributions on December 31, 2004. Mr. Dubyak and Ms. Smith have balanceshas a balance in this plan, which continuecontinues to earn investment returns based on the funds they selected. Theseshe selects from an available menu. We believe these investment returns are market competitive for the type of funds offered; there is no preferential interest earned in either the EDCP or SERP accounts. No other executive officers participated in the SERP when it was an active plan.
Travel. Directors and executive officers, when traveling on WEX business, are reimbursed for their travel costs. No personal travel for directors or executive officers was reimbursed in 2013.
The aggregate value of all perquisites received by each of the executive officers in 2013 is detailed in the footnotes to the Summary Compensation Table.
COMPENSATION COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The compensation committee is comprised entirely of independent directors as determined by the Board of Directors in accordance with its independence guidelines, the applicable listing standards of the New York Stock Exchange and Rule 10C-1 under the Exchange Act.
The compensation committee is responsible for review and oversight of executive and board compensation. This includes approval of corporate goals and objectives used in the compensation programs for executives as well as setting executive compensation and approving annual incentive plan payouts and long-term incentive stock grants. In connection with that responsibility, the compensation committee reports to the Board on the Company's activities at each meeting of the Board. The compensation committee charter, which describes in detail the purpose, structure, membership, authority, responsibilities, procedures and administration of the compensation committee is available on the Company's website.
The compensation committeeCommittee has reviewed and discussed the foregoing Compensation Discussion and Analysis ("CD&A") with members of senior management and, basedmanagement. Based on thisour review and discussion, the committeediscussions with management, we recommended to the Board of Directors that the Compensation Discussion and AnalysisCD&A be included in the Company’s annual reportthis proxy statement and incorporated by reference into our Annual Report on Form 10-K and proxy statement on Schedule 14A.for the year ended December 31, 2016.
THE COMPENSATION COMMITTEE
Jack VanWoerkom (Chair)
Shikhar Ghosh Chair
Kirk P. PondJames Neary
Regina O. Sommer
Jack VanWoerkom
20132016 SUMMARY COMPENSATION TABLE
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| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | | Salary ($)(1) | | Bonus ($) | | Stock Awards ($)(2) | | Option Awards ($) | | Non-Equity Incentive Plan Compensation ($)(3) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(4) | | All Other Compensation ($)(5) | | Total ($) |
Michael E. Dubyak(6) | 2013 | | $ | 592,111 |
| | — |
| | $ | 3,399,928 |
| | — |
| | $ | 714,678 |
| | $ | 1,368 |
| | $ | 46,143 |
| | $ | 4,754,228 |
|
| Chairman, President and Chief Executive Officer | 2012 | | $ | 589,458 |
| | — |
| | $ | 1,299,990 |
| | — |
| | $ | 518,546 |
| | $ | 21,839 |
| | $ | 56,097 |
| | $ | 2,485,930 |
|
| 2011 | | $ | 560,529 |
| | — |
| | $ | 1,336,660 |
| | — |
| | $ | 689,132 |
| | $ | 13,462 |
| | $ | 68,672 |
| | $ | 2,668,455 |
|
| | | | | | | | | | | | | | | | |
|
| Steven A. Elder | 2013 | | $ | 305,385 |
| | — |
| | $ | 399,963 |
| | — |
| | $ | 202,730 |
| | — |
| | $ | 25,405 |
| | $ | 933,483 |
|
| Senior Vice President and Chief Financial Officer | 2012 | | $ | 272,308 |
| | — |
| | $ | 224,997 |
| | — |
| | $ | 131,752 |
| | — |
| | $ | 22,091 |
| | $ | 651,148 |
|
| 2011 | | $ | 214,294 |
| | — |
| | $ | 164,512 |
| | — |
| | $ | 118,180 |
| | — |
| | $ | 11,126 |
| | $ | 508,112 |
|
| | | | | | | | | | | | | | | | |
|
Melissa D. Smith(7) | 2013 | | $ | 441,807 |
| | — |
| | $ | 749,889 |
| | — |
| | $ | 374,297 |
| | $ | 17,257 |
| | $ | 31,676 |
| | $ | 1,614,926 |
|
| President, The Americas | 2012 | | $ | 426,777 |
| | — |
| | $ | 529,968 |
| | — |
| | $ | 276,518 |
| | $ | 9,578 |
| | $ | 34,830 |
| | $ | 1,277,671 |
|
| 2011 | | $ | 390,901 |
| | — |
| | $ | 585,558 |
| | — |
| | $ | 335,325 |
| | $ | 603 |
| | $ | 44,691 |
| | $ | 1,357,078 |
|
| | | | | | | | | | | | | | | | |
|
| David D. Maxsimic | 2013 | | $ | 370,000 |
| | — |
| | $ | 434,936 |
| | — |
| | $ | 407,370 |
| | — |
| | $ | 40,435 |
| | $ | 1,252,741 |
|
| President, International | 2012 | | $ | 359,451 |
| | — |
| | $ | 334,954 |
| | — |
| | $ | 240,622 |
| | — |
| | $ | 33,034 |
| | $ | 968,061 |
|
| 2011 | | $ | 332,877 |
| | — |
| | $ | 439,270 |
| | — |
| | $ | 305,958 |
| | — |
| | $ | 45,428 |
| | $ | 1,123,533 |
|
| | | | | | | | | | | | | | | | |
|
George W. Hogan(8) | 2013 | | $ | 288,725 |
| | — |
| | $ | 749,943 |
| | — |
| | $ | 152,014 |
| | — |
| | $ | 19,119 |
| | $ | 1,209,801 |
|
| Senior Vice President, IT and Chief Information Officer | 2012 | | $ | 287,432 |
| | — |
| | $ | 249,961 |
| | — |
| | $ | 117,781 |
| | — |
| | $ | 13,559 |
| | $ | 668,733 |
|
| 2011 | | $ | 265,659 |
| | — |
| | $ | 257,050 |
| | — |
| | $ | 147,059 |
| | — |
| | $ | 21,284 |
| | $ | 691,052 |
|
| | | | | | | | | | | | | | | | | |
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Name and Principal Position | Year | | Salary ($)(1) | | Bonus ($) | | Stock Awards ($)(2) | | Option Awards ($)(3) | | Non-Equity Incentive Plan Compensation ($)(4) | | Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)(5) | | All Other Compensation ($)(6) | | Total ($) |
| Melissa D. Smith | 2016 | | $ | 674,039 |
| | $ | — |
| | $ | 1,895,106 |
| | $ | 631,727 |
| | $ | 965,791 |
| | $ | 4,383 |
| | $ | 39,961 |
| | $ | 4,211,007 |
|
| President and Chief Executive Officer | 2015 | | $ | 578,317 |
| | $ | — |
| | $ | 1,331,217 |
| | $ | 443,742 |
| | $ | 451,745 |
| | $ | 653 |
| | $ | 48,315 |
| | $ | 2,853,989 |
|
| 2014 | | $ | 515,048 |
| | $ | — |
| | $ | 3,392,039 |
| | $ | — |
| | $ | 545,318 |
| | $ | 7,441 |
| | $ | 39,957 |
| | $ | 4,499,803 |
|
| | | | | | | | | | | | | | | | |
|
|
| Steven A. Elder | 2016 | | $ | 286,538 |
| | $ | — |
| | $ | 159,958 |
| | $ | 39,993 |
| | $ | 138,863 |
| | $ | — |
| | $ | 24,992 |
| | $ | 650,344 |
|
| Senior Vice President and Chief Financial Officer | 2015 | | $ | 347,885 |
| | $ | — |
| | $ | 159,983 |
| | $ | 39,971 |
| | $ | 151,539 |
| | $ | — |
| | $ | 26,343 |
| | $ | 725,721 |
|
| 2014 | | $ | 330,192 |
| | $ | — |
| | $ | 1,180,145 |
| | $ | — |
| | $ | 174,051 |
| | $ | — |
| | $ | 27,764 |
| | $ | 1,712,152 |
|
| | | | | | | | | | | | | | | | |
|
|
| Roberto Simon | 2016 | | $ | 423,077 |
| | $ | — |
| | $ | 2,049,892 |
| | $ | 199,989 |
| | $ | 408,803 |
| | $ | — |
| | $ | 69,112 |
| | $ | 3,150,873 |
|
| Chief Financial Officer | 2015 | | $ | — |
|
| $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| 2014 | | $ | — |
|
| $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| | | | | | | | | | | | | | | | |
|
|
| Jeffrey Young | 2016 | | $ | 432,693 |
|
| $ | — |
| | $ | 1,199,920 |
| | $ | 49,978 |
| | $ | 364,212 |
| | $ | — |
| | $ | 13,500 |
| | $ | 2,060,303 |
|
| Senior Vice President & General Manager, WEX Health | 2015 | | $ | — |
|
| $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| 2014 | | $ | — |
|
| $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| | | | | | | | | | | | | | | | |
|
|
| George W. Hogan | 2016 | | $ | 321,731 |
| | $ | 200,000 |
| | $ | 499,947 |
| | $ | 124,997 |
| | $ | 201,055 |
| | $ | — |
| | $ | 22,036 |
| | $ | 1,369,766 |
|
| Senior Vice President, International | 2015 | | $ | 318,308 |
| | $ | 50,000 |
| | $ | 280,021 |
| | $ | 69,975 |
| | $ | 141,176 |
| | $ | — |
| | $ | 21,344 |
| | $ | 880,824 |
|
| 2014 | | $ | 297,832 |
| | $ | — |
| | $ | 1,006,434 |
| | $ | — |
| | $ | 180,242 |
| | $ | — |
| | $ | 21,186 |
| | $ | 1,505,694 |
|
| | | | | | | | | | | | | | | | | |
| Kenneth Janosick | 2016 | | $ | 322,115 |
| | $ | — |
| | $ | 499,947 |
| | $ | 124,997 |
| | $ | 333,649 |
| | $ | — |
| | $ | 14,058 |
| | $ | 1,294,766 |
|
| Senior Vice President and General Manager Global Fleet Direct | 2015 | | $ | 320,000 |
| | $ | — |
| | $ | 280,021 |
| | $ | 69,975 |
| | $ | 123,172 |
| | $ | — |
| | $ | 13,984 |
| | $ | 807,152 |
|
| 2014 | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
|
| |
| (1) | Includes amounts that may be contributed by each named executive officer on a pre-tax basis to the company's 401(k) plan and Executive Deferred Compensation Plan.EDCP. |
| (2) | The amounts shown in this column represent the aggregate grant date fair value of stock awards made during 2013, 2012,2016, 2015, and 2011,2014, respectively, calculated in accordance with FASB ASC Topic 718, assuming performance at target. Assumptions used in the calculation of these amounts are included in the Company's audited financial statements for the fiscal years ended December 31, 2016, 2015, and 2014, included in the Company's Annual Reports on Form 10-K filed with the Securities and Exchange Commission on March 6, 2017, February 26, 2016, and February 26, 2015, respectively. For PSUs, these amounts reflect the grant date fair value of such awards based upon the probable outcome at the time of grant. The value of the 2016 PSU awards at the grant date assuming that the highest level of performance conditions were achieved would be $3,032,262, $239,938, $1,199,997, $2,299,942, $749,921, and $124,997 for Ms. Smith, Mr. Elder, Mr. Simon, Mr. Young, Mr. Hogan, and Mr. Janosick respectively. The value of the 2015 PSU awards at the grant date assuming that the highest level of performance conditions were achieved would be $2,129,988, $239,870, $419,980, and $419,980 for Ms. Smith, Mr. Elder, Mr. Hogan, and Mr. Janosick respectively. The value of the 2014 PSU awards at the grant date assuming that the highest level of performance conditions were achieved would be $5,784,015, $2,000,297, and $1,752,863 for Ms. Smith, Mr. Elder, and Mr. Hogan respectively. |
| (3) | The amounts shown in this column represent the aggregate grant date fair value of option awards made during 2016 and 2015, respectively, calculated in accordance with FASB ASC Topic 718. Assumptions used in the calculation of these amounts are included in the Company's audited financial statements for the fiscal years ended December 31, 2013, 2012,2016 and 2011,2015, included in the Company's Annual reportsReports on Form 10-K filed with the Securities and Exchange Commission on February 27, 2014, March 1, 2013,6, 2017 and February 28, 2012, respectively. For PSUs granted in March 2013, these amounts reflect the grant date fair value of such awards based upon the probable outcome at the time of grant. The value of the 2013 awards at the grant date assuming that the highest level of performance conditions was achieved was $2,039,873, $479,924, $659,876, $521,861 and $1,299,905 for Mr. Dubyak, Mr. Elder, Ms. Smith, Mr. Maxsimic and Mr. Hogan, respectively. The value of the 2012 awards at the grant date assuming that the highest level of performance conditions was achieved was $1,559,988, $269,971, $635,937, $401,868, and $299,953 for Mr. Dubyak, Mr. Elder, Ms. Smith and, Mr. Maxsimic and Mr. Hogan, respectively. The value of the 2011 awards at the grant date assuming that the highest level of performance conditions was achieved was $1,603,992, $197,414, $462,690, $407,167 and $308,460 for Mr. Dubyak, Mr. Elder, Ms. Smith, Mr. Maxsimic and Mr. Hogan26, 2016, respectively. |
(3)(4) | The amounts shown reflect the cash incentive awarded in March 20142017 for 2013 Short-Term Incentive Program2016 STIP results, March 20132016 for 2012 Short-Term Incentive program2015 STIP results, and March 20122015 for 2011 Short-Term Incentive Program2014 STIP results, respectively and include amounts contributed by each Named Executive Officernamed executive officer on a pre-tax basis to the Company's Executive Deferred Compensation Plan.EDCP. |
(4)(5) | The amounts shown reflect Supplemental Executive Retirement AccountInvestment & Savings Plan earnings. |
(5)(6) | The following table describes the elements that are represented in the "All Other Compensation" column for 2013 :2016: |
ALL OTHER COMPENSATION
| | | Name | 401(k) or Other Retirement Plan Employer Match ($) | | EDCP Employer Match ($) | | Other ($) | | Total ($) | 401(k) or Other Retirement Plan Employer Match ($) | | EDCP Employer Match ($) | | Other ($) | | Total ($) |
| Michael E. Dubyak | $ | 15,030 |
| | $ | 31,113 |
| | — |
| | $ | 46,143 |
| |
| Melissa D. Smith | | $ | 15,567 |
| | $ | 24,394 |
| | $ | — |
| | $ | 39,961 |
|
| Steven A. Elder | $ | 17,500 |
| | $ | 7,905 |
| | — |
| | $ | 25,405 |
| $ | 15,900 |
| | $ | 9,092 |
| | $ | — |
| | $ | 24,992 |
|
| Melissa D. Smith | $ | 15,085 |
| | $ | 16,591 |
| | — |
| | $ | 31,676 |
| |
| David D. Maxsimic | $ | 15,081 |
| | $ | 14,437 |
| | $ | 10,917 |
| (9) | $ | 40,435 |
| |
Roberto Simon(1) | | $ | — |
| | $ | — |
| | $ | 69,112 |
| | $ | 69,112 |
|
| Jeffrey Young | | $ | 13,500 |
| | $ | — |
| | $ | — |
| | $ | 13,500 |
|
| George W. Hogan | $ | 12,052 |
| | $ | 7,067 |
| | — |
| | $ | 19,119 |
| $ | 13,565 |
| | $ | 8,471 |
| | $ | — |
| | $ | 22,036 |
|
| Kenneth Janosick | | $ | 14,058 |
| | $ | — |
| | $ | — |
| | $ | 14,058 |
|
|
| |
(6) | As part of the Company's management transition plan, Mr. Dubyak resigned as Chief Executive Officer effective January 1, 2014. Mr. Dubyak continues to serve as a director of the Company and as Executive Chairman of the Board. | |
(7)(1) | Ms. Smith served asRepresents Mr. Simon's relocation expenses paid at the Company's President from April 2013 to December 2013. Previously, Ms. Smith served as President, The Americas, from April 2011 to April 2013. Effective January 1, 2014, Ms. Smith assumedtime he joined the role of Chief Executive Officer and was elected to the Board. |
(8) | Mr. Hogan assumed the role of Senior Vice President and General Manager, Fleet Over-the-Road and Partner Channels effective January 1, 4012. Previously, he managed WEX's Fleet One operations effective July 31, 2013 through January 2014. Earlier still, Mr. Hogan served as the Senior Vice President and Chief Information Officer from November 2007 through May 2013. |
(9) | In 2013, the Company paid for airfare and travel-related costs for Mr. Maxsimic's spouse to accompany him while he traveled internationally on company-related business.Company. |
20132016 GRANTS OF PLAN-BASED AWARDS
The following table represents all plan-based awards granted to the named executive officers in 2013:2016:
| | | Name | Type of Award(1) | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards(2) | | All Other Stock Awards: Number of Shares of Stock or Units (#)(3) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards ($) | Type of Award(1) | | Grant Date | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards | | Estimated Future Payouts Under Equity Incentive Plan Awards | | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | | All Other Option Awards: Number of Securities Underlying Options (#) | | Exercise or Base Price of Option Awards ($/Sh) | | Grant Date Fair Value of Stock and Option Awards ($) |
Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | | Threshold ($) | | Target ($) | | Maximum ($) | | Threshold (#) | | Target (#) | | Maximum (#) | |
| Michael E. Dubyak | STIP | | — |
| | $ | 148,028 |
| | $ | 592,111 |
| | $ | 1,184,222 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
| Melissa D. Smith | | STIP | | — |
| | $ | 393,558 |
| | $ | 787,115 |
| | $ | 1,574,231 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| | RSU | | 3/15/2013 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 8,692 |
| | — |
| | — |
| | $ | 680,062 |
| RSU | | 3/15/2016 |
| | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | 4,909 |
| | — |
| | $ | — |
| | $ | 378,975 |
|
| | PSU | | 3/15/2013 |
| | — |
| | — |
| | | | 3,259 |
| | 13,036 |
| | 26,072 |
| | — |
| | — |
| | — |
| | $ | 1,019,937 |
| PSU | | 3/15/2016 |
| (3) | $ | — |
| | $ | — |
| | $ | — |
| | 9,819 |
| | 19,639 |
| | 39,278 |
| | — |
| | — |
| | $ | — |
| | $ | 1,516,131 |
|
| | RSU | | 5/17/2013 |
| (4) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 23,415 |
| | — |
| | — |
| | $ | 1,699,929 |
| NQ | | 3/15/2016 |
| (5) | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | — |
| | 24,168 |
| | $ | 77.20 |
| | $ | 631,727 |
|
| Steven A. Elder | STIP | | — |
| | $ | 41,990 |
| | $ | 167,962 |
| | $ | 335,923 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| STIP | | — |
| | $ | 69,432 |
| | $ | 138,863 |
| | $ | 277,726 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| Steven A. Elder | | RSU | | 3/15/2016 |
| | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | 518 |
| | — |
| | $ | — |
| | $ | 39,990 |
|
| RSU | | 3/15/2013 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,045 |
| | — |
| | — |
| | $ | 160,001 |
| PSU | | 3/15/2016 |
| (3) | $ | — |
| | $ | — |
| | $ | — |
| | 777 |
| | 1,554 |
| | 3,108 |
| | — |
| | — |
| | $ | — |
| | $ | 119,969 |
|
| | PSU | | 3/15/2013 |
| | — |
| | — |
| | | | 766 |
| | 3,067 |
| | 6,134 |
| | — |
| | — |
| | — |
| | $ | 239,962 |
| NQ | | 3/15/2016 |
| (5) | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | — |
| | 1,530 |
| | $ | 77.20 |
| | $ | 39,993 |
|
| Melissa D. Smith | STIP | | — |
| | $ | 88,361 |
| | $ | 353,446 |
| | $ | 706,892 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
| Roberto Simon | | STIP | | — |
| | $ | 158,654 |
| | $ | 317,308 |
| | $ | 634,615 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| RSU | | 3/15/2016 |
| | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | 18,781 |
| | — |
| | $ | — |
| | $ | 1,449,893 |
|
| | | PSU | | 3/15/2016 |
| (3) | $ | — |
| | $ | — |
| | $ | — |
| | 3,886 |
| | 7,772 |
| | 15,544 |
| | — |
| | — |
| | $ | — |
| | $ | 599,998 |
|
| | | NQ | | 3/15/2016 |
| (5) | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | — |
| | 7,651 |
| | $ | 77.20 |
| | $ | 199,989 |
|
| Jeffrey Young | | STIP | | — |
| | $ | 150,750 |
| | $ | 301,500 |
| | $ | 603,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| | RSU | | 3/15/2013 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,812 |
| | — |
| | — |
| | $ | 220,011 |
| RSU | | 3/15/2016 |
| | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | 647 |
| | — |
| | $ | — |
| | $ | 49,948 |
|
| | PSU | | 3/15/2013 |
| | — |
| | — |
| | — |
| | 1,054 |
| | 4,217 |
| | 8,434 |
| | — |
| | — |
| | — |
| | $ | 329,938 |
| PSU | | 3/15/2016 |
| (3) | $ | — |
| | $ | — |
| | $ | — |
| | 971 |
| | 1,943 |
| | 3,886 |
| | — |
| | — |
| | $ | — |
| | $ | 150,000 |
|
| | RSU | | 5/17/2013 |
| (5) | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,754 |
| | — |
| | — |
| | $ | 199,940 |
| PSU | | 3/15/2016 |
| (4) | $ | — |
| — |
| $ | — |
| — |
| $ | — |
| 6,476 |
| 6,476 |
| | 12,953 |
| | 25,906 |
| | — |
| | — |
| | $ | — |
| | $ | 999,972 |
|
| David D. Maxsimic | STIP | | — |
| | $ | 69,375 |
| | $ | 277,500 |
| | $ | 555,000 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
| | RSU | | 3/15/2013 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 2,224 |
| | — |
| | — |
| | $ | 174,006 |
| NQ | | 3/15/2016 |
| (5) | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | — |
| | 1,912 |
| | $ | 77.20 |
| | $ | 49,978 |
|
| | PSU | | 3/15/2013 |
| | — |
| | — |
| | | | 833 |
| | 3,335 |
| | 6,670 |
| | — |
| | — |
| | — |
| | $ | 260,930 |
| |
| George W. Hogan | STIP | | — |
| | $ | 32,482 |
| | $ | 129,926 |
| | $ | 259,853 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| |
| George Hogan | | STIP | | — |
| | $ | 106,683 |
| | $ | 213,365 |
| | $ | 426,731 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| | RSU | | 3/15/2013 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | — |
| | 1,278 |
| | — |
| | — |
| | $ | 99,991 |
| RSU | | 3/15/2016 |
| | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | 1,619 |
| | — |
| | $ | — |
| | $ | 124,987 |
|
| | PSU | | 3/15/2013 |
| | — |
| | — |
| | | | 479 |
| | 1,917 |
| | 3,834 |
| | — |
| | — |
| | — |
| | $ | 149,986 |
| PSU | | 3/15/2016 |
| (3) | $ | — |
| | $ | — |
| | $ | — |
| | 2,428 |
| | 4,857 |
| | 9,714 |
| | — |
| | — |
| | $ | — |
| | $ | 374,960 |
|
| | PSU | | 3/28/2013 |
| (6) | — |
| | — |
| | — |
| | 1,592 |
| | 6,369 |
| | 12,738 |
| | — |
| | — |
| | — |
| | $ | 499,967 |
| NQ | | 3/15/2016 |
| (5) | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | — |
| | 4,782 |
| | $ | 77.20 |
| | $ | 124,997 |
|
| Kenneth Janosick | | STIP | | — |
| | $ | 105,288 |
| | $ | 210,577 |
| | $ | 421,154 |
| | — |
| | — |
| | — |
| | — |
| | — |
| | $ | — |
| | $ | — |
|
| RSU | | 3/15/2016 |
| | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | 1,619 |
| | — |
| | $ | — |
| | $ | 124,987 |
|
| | | PSU | | 3/15/2016 |
| (3) | $ | — |
| | $ | — |
| | $ | — |
| | 2,428 |
| | 4,857 |
| | 9,714 |
| | — |
| | — |
| | $ | — |
| | $ | 374,960 |
|
| | | NQ | | 3/15/2016 |
| (5) | $ | — |
| | $ | — |
| | $ | — |
| | — |
| | — |
| | — |
| | — |
| | 4,782 |
| | $ | 77.20 |
| | $ | 124,997 |
|
|
| |
| (1) | All awards are granted under our 2010 Equity and Incentive Plan. |
| (2) | PSUs granted on March 15, 2013 may convert to RSUs based on the achievement of predetermined performance goals for the Company's Adjusted Net Income and PPG Adjusted Revenue for 2013. Once converted to RSUs, these vest over 3 years at a rate of one third of the total award per year beginning on the first anniversary of the grant date. |
(3) | RSUs granted on March 15, 20132016 vest over 3 years at a rate of one third of the total award per year beginning on the first anniversary of the grant date. The number of RSUs received by each named executive officer was determined by dividing the total award amount granted by the fair market value of our common stock on the date of grant. |
(4) | Pursuant to Mr. Dubyak's Transition Agreement, or RSUs granted on May 17, 2013 vest on December 30, 2014, subject to conditions specified in the agreement. |
(5) | RSUs granted to Ms. Smith on May 17, 2013 vest on November 14, 2014 pursuant to the award agreement. |
(6)(3) | PSUs granted to Mr. Hogan on March 28, 201315, 2016 under the 2016 LTIP may convert to RSUs based on the achievement of predetermined performance goals. 50%goals for the Company's Adjusted Net Income per share and Non-Fuel Sensitive Revenue over 2016 and 2017. Once converted to RSUs, these vest at fifty percent of the total award vestson the second anniversary of the grant date and fifty percent of the total award on the third anniversary of the grant date. |
| (4) | PSUs granted to Mr. Young on March 28, 2014 based on achievement15, 2016 as part of the 2013 performance metrics and 50% of the award vests on March 28, 2015a special incentive grant may convert to RSUs based on the achievement of predetermined performance goals for 2018 of the 2014 performance metrics.revenue and operating income of its WEX Health business. Once converted to RSUs, these vest in full on the third anniversary of the grant date. |
| (5) | Non-qualified stock options granted on March 15, 2016 vest over 3 years at a rate of one third of the total award per year beginning on the first anniversary of the grant date. The number of non-qualified stock options received by each named executive officer was determined by dividing the total award amount granted by the Black-Scholes calculated value on the date of grant. |
OUTSTANDING EQUITY AWARDS AT 20132016 FISCAL YEAR END
The following table represents stock options and unvested stock units held by each of the named executive officers as of December 31, 2013.2016.
| | | | Option Awards | | Stock Awards | Option Awards | | Stock Awards |
| Name | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(1) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(2) | | Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) | | Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(2) | Number of Securities Underlying Unexercised Options (#) Exercisable | | Number of Securities Underlying Unexercised Options (#) Unexercisable(1) | | Equity Incentive Plan Awards: Number of Securities Underlying Unexercised Unearned Options (#) | | Option Exercise Price ($) | | Option Expiration Date | | Number of Shares or Units of Stock That Have Not Vested (#)(2) | | Market Value of Shares or Units of Stock That Have Not Vested ($)(3) | | Equity Incentive Plan Awards Number of Unearned Shares, Units or Other Rights That Have Not Vested (#)(4) | | Equity Incentive Plan Awards Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested ($)(3) |
| | | | | | | | | | | | | | | | | | | |
| Michael E. Dubyak | — |
| | — |
| | — |
| | — |
| | — |
| | 54,140 |
| | $ | 5,361,484 |
| | 13,036 |
| | $ | 1,290,955 |
| |
| Melissa D. Smith | | 4,329 |
| | 8,671 |
| | — |
| | $ | 103.75 |
| | 3/15/2025 |
| | 16,532 |
| | $ | 1,844,971 |
| | 43,533 |
| | $ | 4,858,283 |
|
| | | | | | | | | | | | | | | | | | | — |
| | 24,168 |
| | — |
| | $ | 77.20 |
| | 3/15/2026 |
| | — |
| | $ | — |
| | — |
| | $ | — |
|
| Steven A. Elder | 4,898 |
| | — |
| | — |
| | $ | 13.60 |
| | 3/5/2017 |
| | 5,356 |
| | $ | 530,405 |
| | 3,067 |
| | $ | 303,725 |
| 389 |
| | 782 |
| | — |
| | $ | 103.75 |
| | 3/15/2025 |
| | 3,108 |
| | $ | 346,853 |
| | 9,699 |
| | $ | 1,082,408 |
|
| | | | | | | | | | | | | | | | | | | — |
| | 1,530 |
| | — |
| | $ | 77.20 |
| | 3/15/2026 |
| | — |
| | $ | — |
| | — |
| | $ | — |
|
| Melissa D. Smith | 5,910 |
| | — |
| | — |
| | $ | 13.60 |
| | 3/5/2017 |
| | 14,578 |
| | $ | 1,443,659 |
| | 4,217 |
| | $ | 417,610 |
| |
| Roberto Simon | | — |
| | — |
| | — |
| | $ | — |
| | — |
| | 18,781 |
| | $ | 2,095,960 |
| | 7,772 |
| | $ | 867,355 |
|
| | | | | | | | | | | | | | | | | | | — |
| | 7,651 |
| | — |
| | $ | 77.20 |
| | 3/15/2026 | | — |
| | $ | — |
| | — |
| | $ | — |
|
| David D. Maxsimic | — |
| | — |
| | — |
| | — |
| | — |
| | 7,863 |
| | $ | 778,673 |
| | 3,335 |
| | $ | 330,265 |
| |
| Jeffrey Young | | — |
| | — |
| | — |
| | $ | — |
| | — |
| | 647 |
| | $ | 72,205 |
| | 17,305 |
| | $ | 1,931,238 |
|
| | | | | | | | | | | | | | | | | | | — |
| | 1,912 |
| | — |
| | $ | 77.20 |
| | 3/15/2026 |
| | — |
| | $ | — |
| | — |
| | $ | — |
|
| George W. Hogan | — |
| | — |
| | — |
| | — |
| | — |
| | 5,516 |
| | $ | 546,249 |
| | 8,286 |
| | $ | 820,563 |
| 682 |
| | 1,368 |
| | — |
| | $ | 103.75 |
| | 3/15/2025 |
| | 4,334 |
| | $ | 483,674 |
| | 12,459 |
| | $ | 1,390,424 |
|
| | | — |
| | 4,782 |
| | — |
| | $ | 77.20 |
| | 3/15/2026 |
| | — |
| | $ | — |
| | — |
| | $ | — |
|
| Kenneth Janosick | | 682 |
| | 1,368 |
| | — |
| | $ | 103.75 |
| | 3/15/2025 |
| | 4,334 |
| | $ | 483,674 |
| | 12,459 |
| | $ | 1,390,424 |
|
| | | — |
| | 4,782 |
| | — |
| | $ | 77.20 |
| | 3/15/2026 |
| | — |
| | $ | — |
| | — |
| | $ | — |
|
|
| |
| (1) | The following Table shows the number of RSUs, by grant date, which have not yet vested as of December 31, 2013: |
|
| | | | | | | | | | | | | | | | | |
| Name | March 10,
2011 (#) | | May 19,
2011 (#) | | March 28,
2012 (#) | | March 15,
2013 (#) | | May 17,
2013 (#) | | Total
(#) |
| Michael E. Dubyak | 10,092 |
| | — |
| | 11,941 |
| | 8,692 |
| | 23,415 |
| | 54,140 |
|
| Steven A. Elder | 1,243 |
| | — |
| | 2,068 |
| | 2,045 |
| | — |
| | 5,356 |
|
| Melissa D. Smith | 2,911 |
| | 1,232 |
| | 4,869 |
| | 2,812 |
| | 2,754 |
| | 14,578 |
|
| David D. Maxsimic | 2,562 |
| | — |
| | 3,077 |
| | 2,224 |
| | — |
| | 7,863 |
|
| George W. Hogan | 1,941 |
| | — |
| | 2,297 |
| | 1,278 |
| | — |
| | 5,516 |
|
|
| |
Event Date | Stock Award Vesting Schedule |
March 10, 2011 | Vests at a rate of one third of the total award per year beginning on the first anniversary of the grant datedate. |
May 19, 2011(2) | Vests at a rateThe following table shows the number of one third of the total award per year beginning on the first anniversary of theRSUs, by grant date, which have not yet vested as of December 31, 2016: |
|
| | | | | | | | | | | |
| Name | March 15,
2014 (#) | | March 15,
2015 (#) | | March 15,
2016 (#) | | Total
(#) |
| Melissa D. Smith | 4,915 |
| | 6,708 |
| | 4,909 |
| | 16,532 |
|
| Steven A. Elder | 1,770 |
| | 820 |
| | 518 |
| | 3,108 |
|
| Roberto Simon | — |
| | — |
| | 18,781 |
| | 18,781 |
|
| Jeffrey Young | — |
| | — |
| | 647 |
| | 647 |
|
| George W. Hogan | 1,279 |
| | 1,436 |
| | 1,619 |
| | 4,334 |
|
| Kenneth Janosick | 1,279 |
| | 1,436 |
| | 1,619 |
| | 4,334 |
|
|
| |
| Grant Date | Stock Award Vesting Schedule |
March 28, 201215, 2014 | Vests at a rate of one third of the total award per year beginning on the first anniversary of the grant date |
March 15, 20132015 | Vests at a rate of one third of the total award per year beginning on the first anniversary of the grant date |
March 17, 201315, 2016 | Vests in fullat a rate of one third of the total award per year beginning on 12/30/2014 for Mr. Dubyak and 11/17/2014 for Ms. Smiththe first anniversary of the grant date |
|
| |
(2)(3) | Reflects the value as calculated based on the closing price of the Company's common stock ($99.03)111.60) on December 31, 2013. |
| 30, 2016. |
| |
(3)(4) | These amounts represent the number of PSUsPSU's granted assuming target performance conditions are met. The following table shows the PSUs,PSU's, by grant date, where achievement of the target performance conditions have not yet been determined as of December 31, 2013:2016: |
| | | Name | March 15,
2013 (#) | | March 28,
2013 (#) | | Total (#) | Growth Grant
March 15,
2014 (#) | | Growth Grant
March 15,
2015 (#) | | Annual Grant
March 15,
2016 (#) | | Special Incentive Grant March 15,
2016 (#) | | Total (#) |
| Michael E. Dubyak | 13,036 |
| | — |
| | 13,036 |
| |
| Melissa D. Smith | | 23,894 |
| | — |
| | 19,639 |
| | — |
| | 43,533 |
|
| Steven A. Elder | 3,067 |
| | — |
| | 3,067 |
| 8,145 |
| | — |
| | 1,554 |
| | — |
| | 9,699 |
|
| Melissa D. Smith | 4,217 |
| | — |
| | 4,217 |
| |
| David D. Maxsimic | 3,335 |
| | — |
| | 3,335 |
| |
| Roberto Simon | | — |
| | — |
| | 7,772 |
| | — |
| | 7,772 |
|
| Jeffrey Young | | — |
| | 2,409 |
| | 1,943 |
| | 12,953 |
| (a) | 17,305 |
|
| George W. Hogan | 1,917 |
| | 6,369 |
| | 8,286 |
| 7,602 |
| | �� |
| | 4,857 |
| | — |
| | 12,459 |
|
| Kenneth Janosick | | 7,602 |
| | — |
| | 4,857 |
| | — |
| | 12,459 |
|
The Growth Grant PSUs, granted on March 15, 2013 (to all NEOs excluding Mr. Maxsimic)2014, converted to RSUs during the company's first quarter of 2017, at 92%120% of target, based on the achievement of predetermined performance goals for the Company's PPG Adjusted Revenue and Adjusted Net Income and PPG Adjusted Revenue for 2013. The PSUs granted on March 15, 2013 to Mr. Maxsimic converted to RSUs at 109% of target based on the achievement of predetermined performance goals for International EBIT and PPG Adjusted Revenue for 2013. Half of the PSUs granted on March 28, 2013 converted to Company common stock at 145% of target based on the achievement of FleetOne Revenue, Adjusted EBITDA and Synergy Run-Rate for 2013. The remaining half may convert to Company common stock based on the achievement of predetermined performance goals for FleetOne Revenue, Adjusted EBITDA and Synergy Run-Rate for 2014.2016.
|
| | |
| Grant Date | | Stock Award Vesting Schedule |
| March 15, 2014 | | Vests in full on the third anniversary of the grant date. |
| March 15, 2015 | | Vests in full on the second anniversary of the grant date. |
| March 15, 2016 | | Vests at fifty percent of the total award on each of the second and third anniversaries of the grant date. |
| March 15, 2016 | (a) | Vests in full on the third anniversary of the grant date. |
2016 OPTION EXERCISES AND STOCK VESTED
The following table represents stock options exercised and stock vested in 20132016 by each of the named executive officers.
| | | | Option Awards | | Stock Awards | Option Awards | | Stock Awards |
| Name | Number of Shares Acquired on Exercise (#) | | Value Realized Upon Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) | Number of Shares Acquired on Exercise (#) | | Value Realized Upon Exercise ($) | | Number of Shares Acquired on Vesting (#) | | Value Realized on Vesting ($) |
| Michael E. Dubyak | 43,838 |
| | $ | 1,843,559 |
| | 129,145 |
| | $ | 9,799,847 |
| |
| Melissa D. Smith | | 5,910 |
| | $ | 469,451 |
| | 10,487 |
| | $ | 821,342 |
|
| Steven A. Elder | — |
| | — |
| | 6,998 |
| | $ | 533,379 |
| 4,898 |
| | $ | 423,187 |
| | 3,799 |
| | $ | 297,538 |
|
| Melissa D. Smith | 5,370 |
| | $ | 403,556 |
| | 34,762 |
| | $ | 2,635,519 |
| |
| David D. Maxsimic | — |
| | — |
| | 23,145 |
| | $ | 1,758,474 |
| |
| Roberto Simon | | — |
| | $ | — |
| | — |
| | $ | — |
|
| Jeffrey Young | | — |
| | $ | — |
| | 3,605 |
| | $ | 282,344 |
|
| George W. Hogan | — |
| | — |
| | 14,361 |
| | $ | 1,092,079 |
| — |
| | $ | — |
| | 3,005 |
| | $ | 235,352 |
|
| Kenneth Janosick | | — |
| | $ | — |
| | 2,762 |
| | $ | 216,320 |
|
20132016 NONQUALIFIED DEFERRED COMPENSATION
The following table represents the amounts deferred by each of the named executive officers in the WEX Corporation Executive Deferred Compensation Plan, or EDCP, and the WEX Corporation Supplemental Investment & Savings Plan, or SERP. The EDCP and SERP, which was frozen to new contributions on December 31, 2004, and EDCP are described in the Nonqualified Deferred Compensation section of the Compensation Discussion and Analysis.
| | | Name | Plan | | Executive Contributions in Last FY ($) | | Registrant Contributions in Last FY ($)(1) | | Aggregate Earnings in Last FY ($)(2) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($)(3) | | Plan | | Executive Contributions in Last FY ($) | | Registrant Contributions in Last FY ($)(1) | | Aggregate Earnings in Last FY ($)(2) | | Aggregate Withdrawals/ Distributions ($) | | Aggregate Balance at Last FYE ($)(3) | |
| Michael E. Dubyak | SERP | | — |
| | — |
| | $ | 1,368 |
| | — |
| | $ | 367,567 |
| (4) | |
| | EDCP | | $ | 392,036 |
| | $ | 42,881 |
| | $ | 216,175 |
| | $ | 31,561 |
| | $ | 1,904,420 |
| | |
| Melissa D. Smith | | SERP | | $ | — |
| | $ | — |
| | $ | 4,383 |
| | $ | — |
| | $ | 98,396 |
| (4) |
| EDCP | | $ | 96,579 |
| | $ | 57,947 |
| | $ | 6,893 |
| | $ | 52,944 |
| | $ | 503,350 |
| |
| Steven A. Elder | EDCP | | $ | 20,273 |
| | $ | 12,163 |
| | $ | 10,681 |
| | — |
| | $ | 83,950 |
| | EDCP | | $ | 13,886 |
| | $ | 8,332 |
| | $ | 10,636 |
| | $ | 26,927 |
| | $ | 155,713 |
| |
| Melissa D. Smith | SERP | | — |
| | — |
| | $ | 17,257 |
| | — |
| | $ | 85,919 |
| (4) | |
| | EDCP | | $ | 22,458 |
| | $ | 22,458 |
| | $ | 44,706 |
| | — |
| | $ | 330,487 |
| | |
| David D. Maxsimic | EDCP | | $ | 124,043 |
| | $ | 24,442 |
| | $ | 99,430 |
| | — |
| | $ | 815,374 |
| | |
| Roberto Simon | | EDCP | | $ | 204,402 |
| | $ | 24,528 |
| | $ | — |
| | $ | — |
| | $ | 228,930 |
| |
| Jeffrey Young | | EDCP | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| |
| George W. Hogan | EDCP | | $ | 142,822 |
| | $ | 9,121 |
| | $ | 15,562 |
| | — |
| | $ | 281,651 |
| | EDCP | | $ | 100,527 |
| | $ | 12,063 |
| | $ | 6,225 |
| | $ | — |
| | $ | 783,088 |
| |
| Kenneth Janosick | | EDCP | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| |
|
| |
| (1) | Participant contributions to the WEX Corporation EDCP are matched on annual incentive compensation payments only. WEX matches the executives’ incentive compensation deferral up to a maximum of 6% of their total incentive compensation award. |
| (2) | Earnings on the SERP are not included in the Summary Compensation Table. The company does not pay above-market interest rates on non-qualified deferred compensation.the EDCP, and thus earnings on the EDCP are not included in the Summary Compensation Table. |
| (3) | Portions of the amounts shown in this column have been previously reported in the Salary, Non-Equity Incentive Plan Compensation and All Other Compensation columns of the Summary Compensation Table in previous years, as follows: |
| | | Name | Salary | | Non-Equity Incentive Plan Compensation | | All Other Compensation | | Total | Salary | | Non-Equity Incentive Plan Compensation | | All Other Compensation | | Total |
| Michael E. Dubyak | $ | 177,633 |
| | $ | 1,070,724 |
| | $ | 278,856 |
| | $ | 1,527,213 |
| |
| Steven Elder | — |
| | $ | 45,266 |
| | $ | 27,159 |
| | $ | 72,425 |
| |
| Melissa D. Smith | — |
| | $ | 118,757 |
| | $ | 118,757 |
| | $ | 237,514 |
| $ | — |
| | $ | 263,150 |
| | $ | 224,518 |
| | $ | 487,668 |
|
| David D. Maxsimic | $ | 77,536 |
| | $ | 389,057 |
| | $ | 115,260 |
| | $ | 581,853 |
| |
| Steven A. Elder | | $ | — |
| | $ | 91,711 |
| | $ | 55,027 |
| | $ | 146,738 |
|
| Roberto Simon | | $ | — |
| | $ | 204,402 |
| | $ | 24,528 |
| | $ | 228,930 |
|
| Jeff Young | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| George W. Hogan | — |
| | $ | 216,215 |
| | $ | 42,476 |
| | $ | 258,691 |
| $ | 59,566 |
| | $ | 576,860 |
| | $ | 70,824 |
| | $ | 707,250 |
|
| Kenneth W. Janosick | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
|
| |
| (4) | Includes the earnings and balance on December 31, 2013,2016 of the SERP, which is explained in the Nonqualified Deferred Compensation section of the Compensation Discussion and Analysis. |
During the year ended December 31, 2013,2016, participants were given the opportunity to select among various funds in the SERP and EDCP. The table below shows the funds available to participants and their annual rate of return for the year ended December 31, 2013.2016. The investment alternatives in the EDCP are the same as those available under our 401(k) plan with the exception of the BlackRock S&P 500 Index Fund. The comparable fund used in the 401(k), Merrill Lynch Equity Index
Trust Tier 13, is a collective trust and cannot be used in a non-qualified plan such as the EDCP.
|
| | |
| | Rate of Return |
| SERP | |
Principal Global Investors Bond & Mortgage Securities | (1.27 | )%
|
Principal Global Investors Government & High QualityCore Plus Bond | (1.443.65 | )% |
| Principal Global Investors Balanced | 18.985.24 | % |
Principal GlobalColumbus Circle Investors LargeCap Growth | 33.35(5.53 | )% |
| Principal Global Investors LargeCap Value | 30.287.72 | % |
Principal Global Investors MidCap Blend | 33.379.91 | % |
| Principal Global Investors Diversified International | 17.90(0.06 | )% |
| EDCP | |
|
| The Oakmark Equity & Income Fund | 24.2510.97 | % |
Davis New York Venture Fund Incorporated (Y) | 34.88 | % |
DWS RREEFDeutsche Real Estate Securities Fund (A) | (0.446.75 | )% |
| American EuroPacific Growth Fund (R-4) | 20.170.69 | % |
| Goldman Sachs Large Cap Value Fund | 33.2011.69 | % |
Perkins MidCap ValueWells Fargo Stable Return Fund | 25.67 | % |
Prudential Jennison Small Comp | 34.24 | % |
ML Retirement Reserves | —1.53 | % |
| Oppenheimer Developing Markets Fund (A) | 8.656.89 | % |
Victory Small Business OpportunityPRIMECAP Odyssey Stock Fund (A) | 32.9112.80 | % |
PIMCO Total Return Fund (A) | (2.17 | )% |
| Principal High Yield Fund | 7.00 | % |
Goldman Sachs Growth Opportunities Fund | 32.3814.65 | % |
| MainStay Large Cap Growth Fund | 36.94(2.28 | )% |
BlackRockNorthern Trust S&P 500 Index Fund | 32.2111.81 | % |
| AllianceBerstein Discovery Value Fund | 24.73 | % |
| Northern Trust Extended Equity Market Index Fund | 15.86 | % |
| Wells Fargo Discovery Fund | 7.53 | % |
| Metropolitan West Total Return Bond Fund | 2.46 | % |
| T. Rowe Price Retirement Balance Inv | 6.49 | % |
| T. Rowe Price 2005 Retirement | 6.72 | % |
| T. Rowe Price 2010 Retirement | 7.11 | % |
| T. Rowe Price 2015 Retirement | 7.31 | % |
| T. Rowe Price 2020 Retirement | 7.41 | % |
| T. Rowe Price 2025 Retirement | 7.55 | % |
| T. Rowe Price 2030 Retirement | 7.69 | % |
| T. Rowe Price 2035 Retirement | 7.64 | % |
| T. Rowe Price 2040 Retirement | 7.63 | % |
| T. Rowe Price 2045 Retirement | 7.69 | % |
| T. Rowe Price 2050 Retirement | 7.71 | % |
| T. Rowe Price 2055 Retirement | 7.73 | % |
| T. Rowe Price 2060 Retirement | 7.63 | % |
| WEX Inc. Common Stock Fund | 31.3926.24 | % |
EMPLOYMENT AGREEMENTS, SEVERANCE AND CHANGE OFIN CONTROL BENEFITS
The Company provides employment agreements, which include severance benefits and change of control benefits to attract and retain key executive officers. In the event, or threat, of a change of control transaction, these agreements reduce uncertainty and provide compensation for the significant levels of executive engagement and support required during an ownership transition that results in the termination of their employment. These employment agreements represent competitive severance and change of control benefits based on analysis conducted by PM&P and reviewedupon the review by the Compensation Committee.
The Compensation Committee reviews these agreements annually to assess whether the total value to an executive provided by the agreement remains at the level needed to attract and retain executives without being considered excessive in the opinion of the Compensation Committee.
The agreements contained the following provisions are in effect as of December 31, 2013:2016:
|
| | | | | | | |
| | Mr. Dubyak(1)
| Ms. Smith | Mr. Maxsimic(2) Simon | Mr. Hogan | Mr. Elder | Mr. Janosick | Mr. Young |
| Basic Severance Benefit (requires termination without cause or constructive discharge or resignation for good cause for Mr. Simon) |
| Severance Payment | 2x (base salary plus target bonus) | 1x (base salary plus target bonus)bonus payable in lump sum or payable over a 12 month period or a combination of both at Company's election) | 1x (base salary plus prorata portion of bonus payable over a 12 month period) | 1x (base salary) | 0.5x (base salary) | 1x (base salary payable throughout the year) |
| Accelerated Vesting of Equity | 2 years | 1 year | 1 year(1) | None |
| Health Benefit Continuation | 1 year | None | 1 year |
| Change ofin Control (CoC)(CiC)(3)(2) Severance Benefit |
Double Trigger: requires CoC(requires CiC and loss of comparable position) |
| Severance Payment | 3x (base salary plus target bonus) | 2x (base salary plus target bonus)bonus payable in lump sum or payable over a 12 month period or a combination of both at Company's election) | 2x (base salary plus target bonus payable in lump sum ) | 2x (base salary plus target bonus payable in lump sum or payable over a 12 month period or a combination of both at Company's election) | 2x (base salary plus target bonus payable in lump sum or payable over a 12 month period or a combination of both at Company's election) | 0.5x (base salary payable in lump sum) | 1x (base salary payable throughout the year) |
| Accelerated Vesting of Equity | 100 percent100% | 100%(3) |
| Health Benefit Continuation | 32 years | 2 yearsNone | 1 year |
| Other Agreement Provisions |
280G Gross Up | Yes | NoneAgreements |
Non-Compete(4) | 2 years for without cause
termination and constructive discharge with or with CoC; 1 year otherwise
| 2 years for without cause termination and constructive discharge with CoC;CiC; 1 year otherwise | 1 year | 2 years for without cause termination and constructive discharge with CiC; 1 year otherwise | 2 years for CoC; not specifiedCiC; 1 year for other scenarios | 1 year |
Non-Solicitation(5) |
Non-Disparagement(6) |
Non-Disclosure(7) | Indefinitely |
|
| | | | | | | |
| (1) | InThe accelerated vesting of equity is in connection with "the New Hire RSU Award" only. No other equity awards shall accelerate in connection with either a 'Without Cause Termination' or a resignation for a 'Good Reason' of Mr. Simon, as described in the event any payment or distribution to Mr. Dubyak under his employment agreement is determined to be subject to additional taxes under Section 280GSeverance and Restrictive Covenant Agreement, in the absence of the Internal Revenue Code, he is entitled to receive a payment on an after-tax basis equalChange in Control, except to the excise taxes imposed, and any penalties and interest. The decision to provide Mr. Dubyak with a 280G gross up was made atextent specifically provided otherwise in the time his agreement was executed in October 2005, after reviewing the standard provisions of agreements for executives at his level. The terms of these agreements continue from their original execution dates; no affirmative action was taken to renew the terms of the agreements.applicable award agreement. |
| (2) | On April 6, 2011, Mr. Maxsimic signed an Executive Retention Agreement with the Company pursuant to which Mr. Maxsimic agreed to enhanced non-competition and non-solicitation obligations for up to two years following the termination of his employment for any reason (the "Restricted Period"). As of December 31, 2013, the restricted period"Change in the agreement reverted back to the restricted period in the employment agreement. |
(3) | "Change of control"Control" means, in summary: (i) an acquisition of 50 percent or more of either the then-outstanding shares of common stock or the combined voting power of the then-outstanding voting securities excluding certain specified acquisitions; (ii) a change in the composition of the Board such that the individuals who constitute the Board at that point in time cease to constitute a majority of the Board; (iii) consummation of a reorganization, merger or consolidation or sale or other disposition of all or substantially all of the assets of the Company or the acquisition of shares or assets of another Company excluding certain specified transactions; or (iv) the approval by the stockholders of the Company of a complete liquidation or dissolution of the Company. |
| (3) | Upon a “Change in Control” of the Company, if the surviving entity does not agree to assume the obligations set forth in the Agreement, then the Award shall become immediately and fully vested, subject to any terms and conditions set forth in the Plan or imposed by the Committee. |
| (4) | Each of the employment agreements signed by the executive officers contains a provisionhas agreed to provisions which restrictsrestrict the executive from performing any acts which advance the interests of any existing or prospective competitors of WEX during the period specified in the agreement.above. |
| (5) | Each of the employment agreements signed by the executive officers contains a provisionhas agreed to provisions which restrictsrestrict the executive from soliciting customers or employees to terminate their relationship with the Company. |
| (6) | Each of the employment agreements signed by the executive officers contains a provisionhas agreed to provisions which restrictsrestrict them from making any statements or performing any acts intended or reasonably calculated to advance the interest of any existing or prospective competitor or in any way to injure the interests of or disparage the Company. |
| (7) | Each of the employment agreements signed by the executive officers contains a provisionhas agreed to provisions which restrictsrestrict the executive from disclosing confidential information as defined in the agreement. |
POTENTIAL PAYMENTS UPON TERMINATION OF EMPLOYMENT
The following chart shows the payments to each named executive officer which would be made as a result of possible termination scenarios assuming each had occurred on December 30, 2013.31, 2016.
| | | Named Executive Officer | Voluntary Termination or Involuntary Termination For Cause ($) | | Involuntary Termination Without Cause ($) | | Change in Control With Termination ($) | | Disability ($) | | Death ($) | Voluntary Termination or Involuntary Termination For Cause ($) | | Involuntary Termination Without Cause ($) | | Change in Control With Termination ($) | | Disability ($) | | Death ($) |
| Michael E. Dubyak | | | | | | | | | | |
| Melissa D. Smith | | | | | | | | | | |
Acceleration of Equity Awards (1) | — |
| | $ | 5,933,581 |
| | $ | 6,652,439 |
| | — |
| | $ | 6,652,439 |
| $ | — |
| | $ | 4,082,210 |
| | $ | 7,636,683 |
| | $ | — |
| | $ | 7,636,683 |
|
| Salary and Benefits Continuation | — |
| | $ | 1,195,323 |
| | $ | 1,810,715 |
| | — |
| | — |
| $ | — |
| | $ | 722,895 |
| | $ | 1,445,790 |
| | $ | — |
| | $ | — |
|
| Short Term Incentive Program | — |
| | $ | 1,184,222 |
| | $ | 1,776,333 |
| | $ | 592,111 |
| | $ | 592,111 |
| $ | — |
| | $ | 840,000 |
| | $ | 1,680,000 |
| | $ | 840,000 |
| | $ | 840,000 |
|
Non-Qualified Plan(2) | $ | 2,014,703 |
| | $ | 2,014,703 |
| | $ | 2,014,703 |
| | $ | 2,014,703 |
| | $ | 2,014,703 |
| $ | 601,746 |
| | $ | 601,746 |
| | $ | 601,746 |
| | $ | 601,746 |
| | $ | 601,746 |
|
| 280G Gross-up | — |
| | — |
| | — |
| | — |
| | — |
| |
| Total | $ | 2,014,703 |
|
| $ | 10,327,829 |
|
| $ | 12,254,190 |
|
| $ | 2,606,814 |
|
| $ | 9,259,253 |
| $ | 601,746 |
| | $ | 6,246,851 |
| | $ | 11,364,219 |
| | $ | 1,441,746 |
| | $ | 9,078,429 |
|
Steven A. Elder(3) | | | | | | | | | | | | | | | | | | |
Acceleration of Equity Awards (1) | — |
| | — |
| | $ | 834,130 |
| | — |
| | $ | 834,130 |
| $ | — |
| | $ | — |
| | $ | 1,491,086 |
| | $ | — |
| | $ | 1,491,086 |
|
| Salary and Benefits Continuation | — |
| | $ | 155,000 |
| | $ | 653,870 |
| | — |
| | — |
| $ | — |
| | $ | 137,500 |
| | $ | 590,381 |
| | $ | — |
| | $ | — |
|
| Short Term Incentive Program | | | — |
| | $ | 341,000 |
| | — |
| | — |
| $ | — |
| | $ | — |
| | $ | 192,500 |
| | $ | 192,500 |
| | $ | 192,500 |
|
Non-Qualified Plan(2) | $ | 51,514 |
| | $ | 51,514 |
| | $ | 51,514 |
| | $ | 51,514 |
| | $ | 51,514 |
| $ | 155,713 |
| | $ | 155,713 |
| | $ | 155,713 |
| | $ | 155,713 |
| | $ | 155,713 |
|
| Total | $ | 51,514 |
|
| $ | 206,514 |
|
| $ | 1,880,514 |
|
| $ | 51,514 |
|
| $ | 885,644 |
| $ | 155,713 |
| | $ | 293,213 |
| | $ | 2,429,680 |
| | $ | 348,213 |
| | $ | 1,839,299 |
|
| Melissa D. Smith | | | | | | | | | | |
| Roberto Simon | | | | | | | | | | |
Acceleration of Equity Awards (1) | — |
| | $ | 1,155,383 |
| | $ | 1,861,269 |
| | — |
| | $ | 1,861,269 |
| $ | — |
| | $ | 601,636 |
| | $ | 3,226,509 |
| | $ | — |
| | $ | 3,226,509 |
|
| Salary and Benefits Continuation | — |
| | $ | 463,460 |
| | $ | 926,920 |
| | — |
| | — |
| $ | — |
| | $ | 522,746 |
| | $ | 1,045,493 |
| | $ | — |
| | $ | — |
|
| Short Term Incentive Program | — |
| | $ | 360,000 |
| | $ | 720,000 |
| | $ | 360,000 |
| | $ | 360,000 |
| $ | — |
| | $ | 375,000 |
| | $ | 750,000 |
| | $ | 375,000 |
| | $ | 375,000 |
|
Non-Qualified Plan(2) | $ | 371,490 |
| | $ | 371,490 |
| | $ | 371,490 |
| | $ | 371,490 |
| | $ | 371,490 |
| $ | 228,930 |
| | $ | 228,930 |
| | $ | 228,930 |
| | $ | 228,930 |
| | $ | 228,930 |
|
| Total | $ | 371,490 |
|
| $ | 2,350,333 |
|
| $ | 3,879,679 |
|
| $ | 731,490 |
|
| $ | 2,592,759 |
| $ | 228,930 |
| | $ | 1,728,312 |
| | $ | 5,250,932 |
| | $ | 603,930 |
| | $ | 3,830,439 |
|
| David D. Maxsimic | | | | | | | | | | |
| Jeff Young | | | | | | | | | | |
Acceleration of Equity Awards (1) | — |
| | $ | 589,030 |
| | $ | 1,108,938 |
| | — |
| | $ | 1,108,938 |
| $ | — |
| | $ | — |
| | $ | 2,069,216 |
| | $ | — |
| | $ | 2,069,216 |
|
| Salary and Benefits Continuation | — |
| | $ | 387,189 |
| | $ | 774,378 |
| | — |
| | — |
| $ | — |
| | $ | 457,222 |
| | $ | 457,222 |
| | $ | 225,000 |
| | $ | — |
|
| Short Term Incentive Program | — |
| | $ | 277,500 |
| | $ | 555,000 |
| | $ | 277,500 |
| | $ | 277,500 |
| $ | — |
| | $ | — |
| | $ | — |
| | $ | 301,500 |
| | $ | 301,500 |
|
Non-Qualified Plan(2) | $ | 689,089 |
| | $ | 689,089 |
| | $ | 689,089 |
| | $ | 689,089 |
| | $ | 689,089 |
| $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Total | $ | 689,089 |
|
| $ | 1,942,808 |
|
| $ | 3,127,405 |
|
| $ | 966,589 |
|
| $ | 2,075,527 |
| $ | — |
| | $ | 457,222 |
| | $ | 2,526,438 |
| | $ | 526,500 |
| | $ | 2,370,716 |
|
| George W. Hogan | | | | | | | | | | | | | | | | | | |
Acceleration of Equity Awards (1) | — |
| | — |
| | $ | 1,366,812 |
| | — |
| | $ | 1,366,812 |
| $ | — |
| | $ | — |
| | $ | 2,054,692 |
| | $ | — |
| | $ | 2,054,692 |
|
| Salary and Benefits Continuation | — |
| | $ | 288,725 |
| | $ | 611,829 |
| | — |
| | — |
| $ | — |
| | $ | 325,000 |
| | $ | 690,915 |
| | $ | — |
| | $ | — |
|
| Short Term Incentive Program | — |
| | — |
| | $ | 259,853 |
| | — |
| | — |
| $ | — |
| | $ | — |
| | $ | 455,000 |
| | $ | 227,500 |
| | $ | 227,500 |
|
Non-Qualified Plan(2) | $ | 129,708 |
| | $ | 129,708 |
| | $ | 129,708 |
| | $ | 129,708 |
| | $ | 129,708 |
| $ | 783,088 |
| | $ | 783,088 |
| | $ | 783,088 |
| | $ | 783,088 |
| | $ | 783,088 |
|
| Total | $ | 129,708 |
|
| $ | 418,433 |
|
| $ | 2,368,202 |
|
| $ | 129,708 |
|
| $ | 1,496,520 |
| $ | 783,088 |
| | $ | 1,108,088 |
| | $ | 3,983,695 |
| | $ | 1,010,588 |
| | $ | 3,065,280 |
|
Kenneth W. Janosick(4) | | | | | | | | | | |
Acceleration of Equity Awards(1) | | $ | — |
| | $ | — |
| | $ | 2,054,692 |
| | $ | — |
| | $ | 2,054,692 |
|
| Salary and Benefits Continuation | | $ | — |
| | $ | 162,500 |
| | $ | 162,500 |
| | $ | — |
| | $ | — |
|
| Short Term Incentive Program | | $ | — |
| | $ | — |
| | $ | — |
| | $ | 227,500 |
| | $ | 227,500 |
|
Non-Qualified Plan(2) | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| Total | | $ | — |
| | $ | 162,500 |
| | $ | 2,217,192 |
| | $ | 227,500 |
| | $ | 2,282,192 |
|
|
| |
| (1) | For purposes of these calculations, the stock price used to calculate potential payments was the closing price on December 31, 2013,30, 2016, being $99.03.$111.60. The officers identified above hold employee stock options that feature an exercise price of $103.75 and $77.20. |
| (2) | As used in this table, Non-Qualified Plan Payout includes the participants' balances in their EDCP and SERP accounts. |
| (3) | Mr. Elder is covered by the WEX Severance Plan for Officers which provides for 26 weeks of base pay for Executive Vice Presidents and Senior Vice Presidents who have been employed with the Company for a minimum of six months upon any termination without cause. On April 13, 2012, Mr. Elder executed a Change in Control Agreement pursuant to which, following a without cause termination or a constructive discharge (both as defined in the agreement), within 90 days before a change in control (as defined in the agreement) and ending 365 days after a change in control (as defined in the agreement), he will receive (i) a cash payment equal to the sum of his then current base salary plus his then current target incentive compensation award, multiplied by 200%, payable, at the company's option, in either one lump sum, equal installments not less frequently than once per month over a twelve month period, or a combination of lump sum and equal installments not less frequently than once per month over a twelve month period, and (ii) any and all base salary and incentive compensation awards earned but unpaid through the date of such termination and any unreimbursed business expenses. In addition, upon such termination, those outstanding and unvested stock options and unvested RSUs held by Mr. Elder as of the date of termination will immediately become vested. In addition, the Company shall pay to Mr. Elder in a lump sum an amount equal to the present value of the Company's share of the cost of medical and dental insurance premiums for a 24 month period. |
| (4) | Mr. Janosick is covered by the WEX Severance Plan for Officers which provides for 26 weeks of base pay for Executive Vice Presidents and Senior Vice Presidents who have been employed with the Company for a minimum of six months upon any termination without cause. |
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table provides information about shares of common stock that may be issued under the Company's equity compensation plans as of December 31, 2013.2016. The Company's only equity plan, the 2010 Equity and Incentive plan,Plan, has been approved by our stockholders.
| | | Plan Category | Number of Securities to be Issued Upon Exercise of Outstanding Options and Restricted Stock Units (#) | | Weighted-Average Exercise Price of Outstanding Options (Excludes Restricted Stock Units) ($) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) (#) | Number of Securities to be Issued Upon Exercise of Outstanding Options and Restricted Stock Units (#) | | Weighted-Average Exercise Price of Outstanding Options (Excludes Restricted Stock Units) ($) | | Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (Excluding Securities Reflected in First Column) (#) |
| Equity compensation plans approved by Company security holders | 552,170 |
| | 13.59 | | 3,756,000 |
| 1,087,374 | | 81.90 | | 2,645,897 |
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Based solely on a review of the reports and written representations submitted to us, we believe that during 20132016 all filings with the SEC by our officers, directors and 10 percent stockholders timely complied with requirements for reporting ownership and changes in ownership of our common stock under Section 16(a) of the Securities Exchange Act of 1934.1934, except that, due to an administrative oversight, Messrs. Elder, Pratt, Hogan, Janosick, and Crowley and Mses. Smith, Rapkin and Morris each made one late filing on Form 4 reporting the certification of performance criteria established in connection with performance stock units granted to each of them.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Policies and Procedures for Related Person Transactions
Our Board has adopted written policies and procedures for the review of any transaction, arrangement or relationship in which WEX is a participant, the amount involved exceeds $120,000, and one of our executive officers, directors, director nominees or 5 percent stockholders (or their immediate family members), each of whom we refer to as a "related person," has a direct or indirect material interest.
If a related person proposes to enter into such a transaction, arrangement or relationship, which we refer to as a "related person transaction," the related person must report the proposed related person transaction to our General Counsel. The policy calls for the proposed related person transaction to be reviewed and, if deemed appropriate, approved by our Board's AuditCorporate Governance Committee. Whenever practicable, the reporting, review and approval will occur prior to entry into the transaction. If advance review and approval is not practicable, the committeeCommittee will review, and, in its discretion, may ratify the related person transaction. The policy also permits the chair of the AuditCorporate Governance Committee to review and, if deemed appropriate, approve proposed related person transactions that arise between meetings, subject to ratification by the AuditCorporate Governance Committee at its next meeting. Any related person transactions that are ongoing in nature are reviewed annually.
A related person transaction reviewed under the policy will be considered approved or ratified if it is authorized by the AuditCorporate Governance Committee after full disclosure of the related person's interest in the transaction. The AuditCorporate Governance Committee will review and consider such information regarding the related person transaction as it deems appropriate under the circumstances.
The AuditCorporate Governance Committee may approve or ratify the transaction only if the committeeCommittee determines that, under all of the circumstances, the transaction is not inconsistent with the Company's best interests. The committeeCommittee may impose any conditions on the related person transaction that it deems appropriate.
In addition to the transactions that are excluded by the instructions to the SEC's related person transaction disclosure rule, the Board has determined that the following transactions do not create a material direct or indirect interest on behalf of related persons and, therefore, are not related person transactions for purposes of this policy:
interests arising solely from the related person's position as an executive officer of another entity (whether or not the person is also a director of such entity), that is a participant in the transaction, where (a) the related person and all other related persons own in the aggregate less than a 10 percent equity interest in such entity, (b) the related person and his or her immediate family members are not involved in the negotiation of the terms of the transaction
and do not receive any special benefits as a result of the transaction, (c) the amount involved in the transaction equals less than the greater of $750,000 or 1 percent of the annual consolidated gross revenues of the other entity that is a party to the transaction, and (d) the amount involved in the transaction equals less than 2 percent of the Company's annual consolidated gross revenues; and
a transaction that is specifically contemplated by provisions of the Company's charter or By-Laws.
There were no relationships or related person transactions in 20132016 which required review under the policy.
The policy provides that transactions involving compensation of executive officers shall be reviewed and approved by the Compensation Committee in the manner specified in its charter.
Investor Rights Agreement
As a condition to the closing of the acquisition of EFS, on July 1, 2016, the Company entered into an investor rights agreement (the “Investor Rights Agreement”) with (i) Mustang HoldCo 1 LLC, Warburg Pincus Private Equity (E&P) XI‑ B, L.P., Warburg Pincus Private Equity XI - C, L.P., WP XI Partners, L.P., Warburg Pincus Private Equity XI - B, L.P., WP Mustang Co-Invest - B L.P., WP Mustang Co-Invest - C L.P., Warburg Pincus XI (E&P) Partners - B, L.P., and Warburg Pincus (E&P) XI, L.P., (collectively, “the Sellers”), (ii) WP (Lexington) Holdings II, L.P., Warburg Pincus Private Equity (Lexington) XI - A, L.P., Warburg Pincus XI (Lexington) Partners - A , L.P., and WP Mustang Co-Invest LLC and (iii) certain other investors party thereto. On February 14, 2017, Mustang HoldCo II LLC executed a joinder to the Investor Rights Agreement. The Investor Rights Agreement sets forth certain agreements, including with respect to governance matters, the exercise of registration rights, transfer restrictions, standstill restrictions and certain other matters.
The following is a description of the material terms of the Investor Rights Agreement:
Board Representation. Under the terms of the Investor Rights Agreement, the Company is obligated to cause one representative designated by the Sellers and certain affiliates of Warburg Pincus LLC to whom the Sellers have transferred their shares in accordance with the terms of the Investor Rights Agreement (“WP”), subject to certain qualifications, to be appointed to Class II of the Board (any such director designated by WP, a “WP Representative”) and as a member of the Compensation Committee or the Corporate Governance Committee, as agreed by the Company and WP in good faith. At each meeting of the stockholders of the Company at which directors of the Company are to be elected and at which the WP Representative’s term expires, the Board will nominate and recommend for election one WP Representative and will use its reasonable best efforts to cause such WP Representative to be elected as a director. Upon the vacancy of a WP Representative, the Board will appoint another WP Representative to fill such vacancy. The WP Representative will have the right to the same compensation, indemnification, advancement of expenses, insurance coverage, reimbursement and other perquisites as other directors and will have customary rights to information and notice as other directors. The WP Representative will resign and the Company’s obligations with respect to the appointment and nomination such WP Representative will terminate when the Board, by majority vote, requests the resignation of such WP Representative and the shares of the Company’s common stock beneficially owned by WP have had a market value of less than $200 million for 20 consecutive trading days (the “Standstill Termination Date”).
Registration Rights. The Investor Rights Agreement provides WP with certain demand registration rights, including shelf registration rights, in respect of the Company’s common stock held by them, subject to certain conditions. In addition, WP has piggyback rights with respect to certain registrations of the Company’s common stock. The Company is required to pay the expenses, other than underwriting discounts and commissions and transfer taxes, associated with any registration of shares of the Company’s common stock pursuant to the Investor Rights Agreement.
Transfer Restrictions. The Investor Rights Agreement prohibits any transfers of (x) any shares of the Company’s common stock acquired pursuant to the purchase agreement for the EFS acquisition and held by WP until December 28, 2016 and (y) more than one-third of such shares of the Company’s common stock until July 1, 2017, except, in both cases, transfers (i) to certain permitted transferees, (ii) to another party pursuant to a tender offer, exchange offer, merger, consolidation or other similar transaction recommended by the Board to the stockholders of the Company or (iii) in connection with any merger, business combination or mandatory share exchange approved by the stockholders of the Company, subject to certain conditions and exceptions. Parties to the Investor Rights Agreement also agreed not to transfer any shares of the Company’s common stock for a certain period of time in connection with certain offerings of equity securities of the Company.
Standstill Restrictions. The Investor Rights Agreement provides that, subject to certain exceptions, from July 1, 2016 until the Standstill Termination Date or earlier material breach by the Company of any of its obligations under the Investor Rights Agreement, WP and Warburg Pincus LLC may not (without the Company’s prior written consent) (1) acquire beneficial
ownership of any shares of the Company’s common stock if, after such acquisition, Warburg Pincus LLC, WP and certain of their respective affiliates would beneficially own, in the aggregate, a number of shares of the Company’s common stock equal to ten percent (10%) or more of the number of outstanding shares of the Company’s common stock; (2) make or participate, directly or indirectly, in any solicitation of proxies or otherwise seek to advise or influence any person or entity (other than a permitted transferee of WP) with respect to the voting of any voting securities of the Company; (3) form, join or in any way participate in a “group” as defined in Section 13(d)(3) of the Exchange Act (other than with other permitted transferees of WP) with respect to any voting securities of the Company; and (4) publicly disclose any intention, plan or arrangement that is prohibited by or inconsistent with the foregoing.
|
| |
| ITEM 4. | RATIFICATION OF DELOITTE & TOUCHE LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL YEAR 2017 |
In accordance with its Board-approved charter, the Audit Committee of the Board is directly responsible for the appointment, compensation, retention and oversight of the independent external audit firm retained to audit the Company’s consolidated financial statements. The Audit Committee has selected Deloitte & Touche LLP, or “D&T,” as the independent registered public accounting firm for the Company’s fiscal year 2017. D&T has audited the Company’s consolidated financial statements since its initial public offering in 2005. The Audit Committee oversees and is ultimately responsible for the audit fee negotiations associated with our retention of D&T. Further, in conjunction with the mandated rotation of the external audit firm’s lead engagement partner, the Audit Committee, through the Audit Committee Chair as its representative, is directly involved in the selection of D&T’s new lead engagement partner.
Stockholder ratification of the appointment is not required under the laws of the State of Delaware, but the Audit Committee has decided to request that the stockholders ratify the appointment. A representative of D&T will be present at the meeting to answer appropriate questions from stockholders and will have the opportunity to make a statement on behalf of the firm, if he or she so desires.
The Audit Committee and the Board believe that the continued retention of D&T to serve as our independent external audit firm is in our best interests and those of our stockholders. If this proposal is not approved by our stockholders at the 2017 annual meeting, the Audit Committee will reconsider its selection of D&T. Even if the selection is ratified, the Audit Committee may, in its discretion, select a different independent registered public accounting firm at any point during the year if it determines that making a change would be in the best interests of the Company and our stockholders.
We recommend a vote FOR the ratification of Deloitte & Touche LLP as our independent registered public accounting firm.
AUDIT COMMITTEE REPORT
The Board of Directors appointed us as an audit committee to monitor the integrity of WEX’s consolidated financial statements, its system of internal controls and the independence and performance of its internal audit department and independent registered public accounting firm. As an audit committee, we select the independent registered public accounting firm.
We are governed by a written charter adopted by the Board, which is available through the investor’s page of the Company’s website at www.wexinc.com.
Our committee consisted of four non-employee directors at the time that the actions of the committee described in this report were undertaken. Each member of the audit committee is “independent” within the meaning of the New York Stock Exchange rules and Rule 10A-3 under the Securities Exchange Act of 1934. WEX’s management is responsible for the financial reporting process, including the system of internal controls, and for the preparation of consolidated financial statements in accordance with generally accepted accounting principles. WEX’s independent registered public accounting firm is responsible for auditing those financial statements. Our responsibility is to monitor and review these processes. However, we are not professionally engaged in the practice of accounting or auditing. We have relied, without independent verification, on the information provided to us and on the representations made by WEX’s management and independent registered public accounting firm.
In fulfilling our oversight responsibilities, we discussed with representatives of D&T, the Company’s independent registered public accounting firm for fiscal year 2016, the overall scope and plans for their audit of the consolidated financial statements for fiscal year 2016. We met with them, with and without WEX management present, to discuss the results of their examinations, their evaluations of the Company’s internal control over financial reporting and the overall quality of WEX’s financial reporting. We reviewed and discussed the audited consolidated financial statements for fiscal year 2016 with management and the independent registered public accounting firm.
We also reviewed the report of management contained in the Annual Report on Form 10-K for the fiscal year ended December 31, 2016, filed with the SEC, as well as the Report of Independent Registered Public Accounting Firm included in the annual report on Form 10-K related to their audit of (i) the consolidated financial statements and (ii) the effectiveness of internal control over financial reporting. We continue to oversee the Company’s efforts related to its internal control over financial reporting and management’s preparations for the evaluation in fiscal year 2017.
We discussed with the independent registered public accounting firm the matters required to be discussed by AS 1301, Communications with Audit Committees, as amended, as adopted by the Public Company Accounting Oversight Board, including a discussion of WEX’s accounting principles, the application of those principles, and the other matters required to be discussed with audit committees under generally accepted auditing standards.
In addition, we received from the independent registered public accounting firm the letter and the written disclosures required by the applicable requirements of the Public Company Accounting Oversight Board, and discussed the disclosures with our independent registered accounting firm, as well as other matters relevant to their independence from management and WEX. In evaluating the independence of our independent registered public accountant, we considered whether the services they provided beyond their audit and review of the consolidated financial statements were compatible with maintaining their independence. We also considered the amount of fees they received for audit and non-audit services.
Based on our review and these meetings, discussions and reports, we recommended to the Board of Directors that the audited consolidated financial statements for fiscal year 2016 be included in the Annual Report on Form 10-K.
THE AUDIT COMMITTEE
Regina O. Sommer, Chair
John E. Bachman
George L. McTavish
Ronald T. Maheu
INDEPENDENT REGISTERED PUBLIC ACCOUNTANT
AUDITOR SELECTION AND FEES
Auditor Selection
The Audit Committee has selected D&T as the Company’s independent registered public accountant for the 2017 fiscal year. D&T has served as the Company’s independent registered public accountant since our initial public offering.
Audit Fees
The following is a description of the fees billed to the Company by D&T for the years ended December 31, 2016 and 2015:
|
| | | | | | | |
| | December 31, |
| | 2016 | | 2015 |
Audit Fees(1) | $ | 4,998,958 |
| | $ | 3,388,017 |
|
Audit-Related Fees(2) | 248,747 |
| | 295,518 |
|
Tax Fees(3) | 40,000 |
| | 55,000 |
|
All Other Fees (4) | — |
| | 25,000 |
|
| Total | $ | 5,287,705 |
| | $ | 3,763,535 |
|
|
| |
| (1) | These are the aggregate fees for professional services by D&T in connection with their audits of the annual financial statements, included in the annual report on Form 10-K, reviews of the financial statements included in quarterly reports on Forms 10-Q and audits of our internal control over financial reporting, as well as fees associated with the statutory audits of certain of our foreign entities. |
| (2) | These are the aggregate fees for professional services by D&T in connection with the audit of the WEX Inc. Employee Savings Plan and SSAE 16 Report. |
| (3) | These are the aggregate fees for professional services by D&T in connection with domestic tax audit support provided during 2016 and domestic tax consulting services provided during 2015. |
| (4) | These are fees for corporate strategic consulting services for certain lines of business. |
Pre-Approval Policies and Procedures
The Audit Committee has adopted a policy regarding pre-approval of audit and non-audit services performed by D&T. According to the policy, the Audit Committee shall pre-approve all audit services to be provided to the Company, whether provided by the principal independent registered public accountant or other firms, and all other permitted services (review, attest and non-audit) to be provided to the Company by the independent registered public accountant; provided, however, that de minimis permitted non-audit services may instead be approved in accordance with applicable SEC rules. The independent registered public accountant is not authorized to provide any prohibited non-audit services (as defined in Rule 2-01(c)(4) of Regulation S-X). The Chair of the Audit Committee has the authority to pre-approve any permitted services on behalf of the Audit Committee and shall notify the full committee of such approval at its next meeting.
Since our initial public offering on February 16, 2005, the Audit Committee has pre-approved all of the services performed by D&T.
OTHER BUSINESS
We know of no other business to be considered at the meeting, and the deadline for stockholders to submit proposals or nominations has passed. However, if:
other matters are properly presented at the meeting, or at any adjournment or postponement of the meeting, and
you have properly submitted your proxy,
then, Melissa D. Smith or Roberto R. Simon will vote your shares on those matters according to her or his best judgment.
INFORMATION ABOUT VOTING PROCEDURES
How is my vote counted?
You may vote "for"“for” or "against"“against” or "abstain"“abstain” from voting for each director nominee. If you abstain from voting on the nomination of any director nominee, it will not count as a vote “for” or “against” the nominee.
You may vote “for” or “against” or “abstain” from voting on the proposals regarding the election of nominees for directors, the advisory vote on executive compensation and ratification of the independent registered public accounting firm. If you abstain from voting on the proposal regarding the nominationeither of directors, it will not count as a vote "for" or "against" the proposal. If you abstain from voting on the otherthese proposals, it will have the same effect as a vote "against"“against” the proposal.
You may vote for “One Year,” “Two Years,” “Three Years” or “abstain” on the proposal regarding the advisory vote on frequency of future executive compensation advisory votes. Abstentions will be included in the denominator in calculating whether any of the three frequency choices has received majority support.
If you provide your voting instructions on your proxy, your shares will be voted:
as you instruct, and
according to the best judgment of the persons named in the proxy if a proposal comes up for a vote at the meeting that is not on the proxy.
If you do not indicate a specific choice on the proxy you sign and submit, your shares will be voted:
for the fourtwo named nominees for director,
for the approval of the company’s executive compensation,
forONE YEAR, as the frequency of future votes on executive compensation,
for the ratification of Deloitte & Touche LLP as the auditors, and
according to the best judgment of the persons named in the proxy if a proposal comes up for a vote at the meeting that is not on the proxy.
How many votes are required for the election of directors?
Under our By-Laws, a nominee will be elected to the Board of Directors if the votes cast "for" the nominee's election exceed the votes cast "against" the nominee's election, with abstentions and "broker non-votes" not counting as votes "for" or "against." If an uncontested incumbent director nominee receives a majority of votes "against" his election, the director must tender a resignation from the Board of Directors. The Board of Directors will then decide whether to accept the resignation within 90 days following certification of the stockholder vote (based on the recommendation of a committee of independent directors). We will publicly disclose the Board of Directors' decision and its reasoning with regard to the offered resignation.
How many votes are needed to approve the advisory vote on executive compensation, to approve the frequency of future advisory votes on executive compensation and to ratify the selection of the independent registered public accounting firm?
The affirmative vote of the holders of a majority of the shares present at the meeting in person, or by proxy, and entitled to vote on the proposal is required for the approval of the advisory vote on executive compensation, the approval of the frequency of future advisory votes on executive compensation and the approval of the ratification of the selection of the independent registered public accounting firm. An abstention will be included in the denominator for purposes of determining the number of affirmative votes required for approval. A broker non-vote will be treated as not being entitled to vote on the proposal and will not be counted for purposes of determining whether the proposal has been approved.
Who can attend the meeting?
All stockholders as of the record date, or their duly appointed proxies, may attend the meeting. A government-issued photo identification such as a driver's license, state-issued ID card or passport, will be required. Please note that if you are a beneficial owner, you will also need to bring a copy of a brokerage statement reflecting your stock ownership in the Company as of the record date to be allowed into the meeting. You may obtain directions to the location of our Annual Meeting by writing, emailing or calling our Investor Relations department at, email: investors@wexinc.com, or telephone: (866) 230-1633.
What is the difference between a "stockholder of record" and a "beneficial owner"?
These terms describe the manner in which your shares are held. If your shares are registered directly in your name through American Stock Transfer & Trust Company, LLC, our transfer agent, you are a "stockholder of record" or registered stockholder. If your shares are held in an account at a brokerage firm, bank, broker-dealer, or other similar organization, then you are the beneficial owner of shares held in "street name."
What is a Broker Non-Vote?
A broker is entitled to vote shares held for a stockholder on "discretionary" matters without instructions from the beneficial owner of those shares. However, if a beneficial owner does not provide timely instructions, the broker does not have the authority to vote on any "non-discretionary" proposals at the Annual Meeting and a "broker non-vote" would occur. The only matter at the 2017 Annual Meeting that is "discretionary" is the ratification of our independent registered public accounting firm. The other matters are "non-discretionary." Please instruct your broker how to vote your shares using the voting instruction form provided by your broker or following any instructions provided by your broker regarding your ability to vote by telephone or through the Internet.
What if I do not vote?
The effect of not voting will depend on how your share ownership is registered. If you own shares as a registered holder and you do not vote, then your unvoted shares will not be represented at the meeting and will not count toward the quorum requirement. If a quorum is obtained, then your unvoted shares will not affect whether a proposal is approved or rejected.
If you are a shareholderstockholder whose shares are not registered in your name and you do not vote, then your bank, broker or other nominee, who is the holder of record, may still represent your shares at the meeting for purposes of obtaining a quorum. In the absence of your voting instructions, under stock exchange rules, if applicable, your bank, broker or other nominee will be able to vote your shares in its discretion regarding the ratification of the Company's independent auditors. However, under stock exchange rules, if applicable, your bank, broker or other nominee will not be able to vote your shares in its discretion in the election of directors, the advisory vote on executive compensation or the advisory vote on the frequency of future advisory votes on executive compensation. Therefore, you must vote your shares if you want them to be counted for purposes of these votes.
What if I change my mind after I submit my proxy?
If your stock is registered in your name, you may revoke your proxy and change your vote by:
signing a proxy card with a later date and returning it before the polls close at the meeting, or
voting at the meeting
If you hold your stock in "street name," you should follow the instructions provided by your bank, broker or other nominee.
Your attendance at the meeting alone will not automatically revoke your proxy.
What happens if a director nominee is unable to stand for election?
The Board may reduce the number of directors or select a substitute nominee. In the latter case, if you have submitted your proxy, the persons named in the proxy can vote your shares for a substitute nominee. The person you authorize to vote on your behalf cannot vote for more than fourtwo nominees.
What constitutes a quorum?
In order for business to be conducted at the meeting, a quorum must be present. A quorum consists of the holders of one-third of the shares of common stock issued and outstanding on the record date and entitled to vote.
Shares of common stock represented in person or by proxy (including shares that abstain or do not vote with respect to one or more of the matters to be voted upon) will be counted for purposes of determining whether a quorum exists. If a quorum is not present, the meeting will be adjourned until a quorum is obtained.
How many votes are needed to approve advisory vote on executive compensation and to ratify the selection of the independent registered public accounting firm?
The affirmative vote of the holders of a majority of the shares present at the meeting in person, or by proxy, and entitled to vote is required for the approval of the advisory vote on executive compensation and approval of the ratification of the selection of the independent registered public accounting firm. An abstention will be included in the denominator for purposes of determining the number of affirmative votes required for approval. A broker non-vote will be treated as not being entitled to vote on the proposal and will not be counted for purposes of determining whether the proposal has been approved.
How many votes are required for the election of directors?
Under our By-Laws, a nominee will be elected to the Board of Directors if the votes cast "for" the nominee's election exceed the votes cast "against" the nominee's election, with absententions and "broker non-votes" not counting as votes "for" or "against". If an uncontested incumbent director nominee receives a majority of votes "against" his election, the director must tender a resignation from the Board of Directors. The Board of Directors will then decide whether to accept the resignation within 90 days following certification of the shareholder vote(based on the recommendation of a committee of independent directors). We will publicly disclose the Board of directors' decision and its reasoning with regard to the offered resignation.
What is the effect of not submitting my proxy if my shares are held in the WEX Inc. Employee Savings Plan?
The trustee for the WEX Inc. Employee Savings Plan, which is often referred to as the 401(k) plan, will not vote the shares of participants who do not give specific instructions as to how those shares should be voted. As a result, your unvoted
shares will not be represented at the meeting and will not count toward the quorum requirement. If a quorum is obtained, then your unvoted shares will not affect whether a proposal is approved or rejected.
What does it mean if I receive more than one proxy card?
It means that you hold your shares in multiple accounts. Please be sure to complete and submit all proxies that you received to ensure that all your shares are voted.
Where do I find voting results of the meeting?
We will announce preliminary voting results at the annual meeting. We will also publish the preliminary or, if available, the final results in a current report on Form 8-K within four business days of the end of the meeting. You may access a copy of the current report on Form 8-K electronically on our website or through the SEC's "EDGAR" website at www.sec.gov. Voting results will be tabulated and certified by our transfer agent, American Stock Transfer & Trust Company.
Who pays the cost for proxy solicitation?
The Company pays for distributing and soliciting proxies. As a part of this process, the Company reimburses brokers, nominees, fiduciaries and other custodians for reasonable fees and expenses in forwarding proxy materials to stockholders. The Company has hired AST Phoenix Advisors, a division of American Stock Transfer & Trust Company, LLC ("Phoenix"),Laurel Hill Advisory Group, to assist it in preparing for its annual meeting. The Company will bear the entire cost of Phoenix,Laurel Hill, including the payment of fees of approximately $6,000, plus reasonable expenses and other incremental charges, for its services. Although the Company does not presently intend to use PhoenixLaurel Hill to solicit votes, employees of the Company or its subsidiaries may solicit proxies through mail, telephone, the Internet or other means. To the extent the Company deems it advisable, it will ask PhoenixLaurel Hill to also solicit votes. Employees do not receive additional compensation for soliciting proxies. The Company will use PhoenixLaurel Hill to advise it in connection with assessing the impact of the votes cast during the solicitation period.
How do I submit a stockholder proposal or director nominee for next year’s annual meeting or suggest a candidate for nomination as a director to the Corporate Governance Committee?
Any proposal that a stockholder wishes to be considered for inclusion in our proxy statement and proxy card for the 20152018 annual meeting of stockholders must comply with the requirements of Rule 14a-8 under the Exchange Act and must be submitted to the Corporate Secretary, 97 Darling Avenue, South Portland, ME 04106, no later than December 20, 2014.25, 2017. However, in the event that the annual meeting is called for a date that is not within thirty days before or after May 16, 2015,12, 2018, notice by the stockholder must be received a reasonable time before we begin to print and mail our proxy materials for the 20152018 annual meeting of stockholders.
If a stockholder wishes to present a proposal before the 20152018 annual meeting but does not wish to have a proposal considered for inclusion in our proxy statement and proxy in accordance with Rule 14a-8 or to nominate someone for election as a director, the stockholder must give written notice to our Corporate Secretary at the address noted above. To be timely, a stockholder's notice to the Secretary must be delivered to or mailed and received notno earlier than January 16, 2015,12, 2018, nor later than February 15, 2015.11, 2018. However, in the event that the annual meeting is called for a date that is not within twenty-five days before or after May 16, 2015,12, 2018, notice by the stockholder must be received no earlier than 120 days prior to the annual meeting and no later than the later of the 90th day prior to the annual meeting or the tenth day following the day on which notice of the date of the annual meeting is first mailed or publicly disclosed. The Company's By-Laws contain specific procedural requirements regarding a stockholder's ability to nominate a director or submit a proposal to be considered at a meeting of stockholders. The By-Laws are available on our website at www.wexinc.com, under the Corporate Governance tab.
For next year's annual meeting of stockholders, the persons appointed by proxy to vote stockholders' shares will vote those shares according to their best judgment on any stockholder proposal the Company receives after February 15, 2015.
What is "householding"?
"Householding" means that we deliver a single set of proxy materials to households with multiple stockholders, provided such stockholders give their consent and certain other conditions are met.
Some households with multiple stockholders already may have provided the Company with their consent to householding. We will provide only one set of proxy materials to each such household, unless we receive contrary instructions.
We will promptly deliver separate copies of our proxy statement and annual report, or deliver multiple copies in the future, at the request of any stockholder who is in a household that participates in the householding of the Company’s proxy materials. You may call our Investor Relations department at (866) 230-1633 or send your request to:
WEX Inc.
Attention: Investor Relations — Annual Meeting
97 Darling Avenue
South Portland, ME 04106
Email: investors@wexinc.com
If you currently receive multiple copies of the Company’s proxy materials and would like to participate in householding, please contact the Investor Relations department at the above address.
What is meant by "incorporation by reference"?
"Incorporation by reference" means that we refer to information that previously has been filed with the SEC, so the information should be considered as part of the filing you are reading. Information on the corporate websites referred to in this proxy statement is not incorporated into this proxy statement. Based on SEC rules, the sections entitled "Audit Committee Report" and the "Compensation Committee Report," of this proxy statement and the information regarding the
Audit Committee Charter and the independence of the Audit Committee members specifically are not incorporated by reference into any other filings with the SEC.
You receive this proxy statement as part of the proxy materials for the annual meeting of stockholders. You may not consider this proxy statement as material for soliciting the purchase or sale of our Company's common stock.
How do I obtain directions to the annual meeting, notify you that I will attend the annual meeting or request future copies of your proxy materials?
Seating is limited and, therefore, we request that you please notify us if you intend to attend the annual meeting in person. In order to do so, you may either:
write or email the Investor Relations office at this address:
WEX Inc.
Attention: Investor Relations — Annual Meeting
97 Darling Avenue
South Portland, ME 04106
Email: investors@wexinc.com
- or -
call the Investor Relations department at (866) 230-1633
If you need directions on how to get to our Long Creek Campus offices in order to attend our annual meeting, please contact our Investor Relations office.
If you require copies of these or any future proxy materials, please refer to the Investor Relations page of our website at www.wexinc.com or contact our Investor Relations office.
How do I request a copy of your annual report on Form 10-K?
We will provide you with a copy, without charge, of our Form 10-K, including the financial statements, for our most recently ended fiscal year, upon request to our Investor Relations Department.
|
|
| By Order of the Board of Directors, |
|
| Hilary A. Rapkin |
| SENIOR VICE PRESIDENT, |
| GENERAL COUNSEL AND |
| CORPORATE SECRETARY |
April 18, 201424, 2017
SOUTH PORTLAND, MAINE
Reconciliation of performance measures to reported results for 2016 STIP Operating Income, 2016 STIP PPG Adjusted Revenue, 2014 Growth Grant PPG Adjusted Revenue and 2016 Adjusted Net Income.
|
| | | | | | | | | | | | | | | | |
| (in thousands) | | 2016 STIP Operating Income | | 2016 STIP PPG Adjusted Revenue | | 2014 Growth Grant PPG Adjusted Revenue | | 2016 ANI |
| 2016 Results as reported on a US GAAP Basis | | $ | 195,128 |
| | $ | 1,018,460 |
| | $ | 1,018,460 |
| | $ | 60,637 |
|
| Acquisition and divestiture related items | | $ | 118,709 |
| | $ | — |
| | $ | — |
| | $ | 148,753 |
|
| Stock-based compensation | | $ | 19,742 |
| | $ | — |
| | $ | — |
| | $ | 19,742 |
|
| Restructuring and other costs | | $ | 13,995 |
| | $ | — |
| | $ | — |
| | $ | 13,995 |
|
| Vendor settlement | | $ | 15,500 |
| | $ | — |
| | $ | — |
| | $ | 15,500 |
|
| Unrealized gains (losses) on derivative instruments | | $ | — |
| | $ | — |
| | $ | — |
| | $ | (7,901 | ) |
| Net foreign currency remeasurement | | $ | — |
| | $ | — |
| | $ | — |
| | $ | 7,665 |
|
| Debt restructuring and debt issuance cost amortization | | $ | — |
| | $ | — |
| | $ | — |
| | $ | 12,673 |
|
| Non-cash adjustments related to tax receivable agreement | | $ | — |
| | $ | — |
| | $ | — |
| | $ | 563 |
|
| Regulatory reserve | | $ | — |
| | $ | — |
| | $ | — |
| | $ | — |
|
| ANI adjustments attributable to non-controlling interests | | $ | — |
| | $ | — |
| | $ | — |
| | $ | (2,583 | ) |
| Tax related items | | $ | — |
| | $ | — |
| | $ | — |
| | $ | (79,834 | ) |
| 2016 results per adjusted reporting basis | | $ | 363,074 |
| | $ | 1,018,460 |
| | $ | 1,018,460 |
| | $ | 189,210 |
|
| Adjustment to 2016 actual for 2016 budget fuel prices | | $ | — |
| | $ | (24,203 | ) | | $ | — |
| | $ | — |
|
| Adjustment to 2016 actual for 2014 budget fuel prices | | $ | — |
| | $ | — |
| | $ | 160,163 |
| | $ | — |
|
| Adjustments for unbudgeted accounting reclassifications and results | | $ | (44,897 | ) | | $ | (83,199 | ) | | $ | — |
| | $ | — |
|
| Adjusted for compensation attainment purposes | | $ | 318,177 |
| | $ | 911,059 |
| | $ | 1,178,623 |
| | $ | 189,210 |
|
