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| Preliminary Proxy Statement |
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.DC 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section
PROXY STATEMENT PURSUANT TO SECTION 14(a) of
OF THE SECURITIES EXCHANGE ACT OF 1934
the Securities Exchange Act of 1934 (Amendment(Amendment No. )
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Filed by a Party other than the Registrant o
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| Preliminary Proxy Statement |
| Confidential, for Use of the Commission Only (as permitted by Rule |
| Definitive Proxy Statement |
| Definitive Additional Materials |
| Soliciting Material under §240.14a-12 |
CSG SYSTEMS INTERNATIONAL, INC.
(Name of Registrant as Specified Inin Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than the Registrant)
Payment of Filing Fee (Check the appropriate box):
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MESSAGE FROM THE CEO AND PRESIDENT
April 4, 2022
DEAR FELLOW SHAREHOLDERS,
2021 was a remarkable year for CSG as we delivered on our commitment to win bigger in the market. We surpassed $1 billion in annual revenue for the first time. We delivered the fastest organic revenue growth in over a decade. We signed the biggest deal in our 40-year history. We achieved the highest level of revenue diversification with almost a quarter of revenues coming from big, faster growth industry verticals. We introduced an industry-defining end-to-end, unified customer engagement platform, CSG Xponent. And we achieved all this and more the CSG way - with integrity, inspiration, and impact that obsesses over the value we bring our customers.
The foundation of our competitive advantage has and will continue to be the best culture, the best people, and the most energized, globally diverse team. This is not a slogan at CSG. Our culture and our people are why we win. They are also why CSG will envision, invent, and shape a better, more future-ready world. We are dreaming bigger, innovating more, and pushing the boundaries on the value we create for customers and shareholders. Our success in 2021 can be measured by both big new customer logo wins and by customer retention in the high 90% range with many of our biggest customers relying on our business-critical software for multiple decades.
Our mission is simple and clear: By channeling the power of all, we help large, global brands make ordinary customer and employee experiences extraordinary. With exceptional customer engagement separating winners from losers in every industry around the world, CSG can be the difference between success and failure. Our innovative SaaS platforms (consistently recognized by leading analyst firms and industry associations like Gartner, Forrester, TM Forum, The Strawhecker Group and more) and our deep domain expertise help iconic brands, industry giants, large merchants, and digital start-ups all wow their customers across B2C, B2B, and B2B2X segments.
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| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 1 |
To highlight a few examples from last year, in the global telecom, broadband and PayTV markets, we supported the monetization offering of a global media and technology company’s entry into the smart TV market. We helped TalkTalk lead the way in their UK market by bundling Netflix with their internet fiber offering to provide customers with a more cost-effective and accessible alternative to traditional TV bundling. We helped MTN, the largest telecom company in Africa, modernize their consumer, B2B enterprise, and digital wholesale technology platforms. And we helped Australian-based Telstra launch and monetize new 5G IOT solutions by powering the onboarding, rating, and billing for their connected car initiative.
In faster growth verticals like financial services, healthcare, retail, government and more, CSG helped big brands deliver a differentiated digital customer experience. Last year, CSG technology helped process and improve over 10 billion journey interactions with real-time, predictive, cross-channel insights. A great example is how we helped three of the largest US pharmacy retailers save lives by improving their vaccination appointment scheduling, prescription refills, and contactless pickup during the pandemic. We also helped a Fortune 50 financial services company redesign its mortgage processing, auto lending, and collections management which improved cost savings, customer satisfaction, and brand loyalty. And we helped over 81,000 merchants manage and process tens of billions of dollars with our full end-to-end, integrated payments SaaS platform.
At CSG, we are passionate about more than just financial success. We also care deeply about doing well by doing good. Our purpose and our metrics of success are linked to our customer obsession, our globally diverse and inclusive culture, our commitments to drive social impact, and our determined pursuit of growth across all aspects of our company. We empower and encourage our talented colleagues to make a bigger difference outside our walls on issues that matter most to them including environmental stewardship, community impact, and digital inclusion. Corporate responsibility is the social responsibility of every CSGer around the world, and it is one of the many reasons CSG is consistently recognized as an employer of choice in our communities.
As we set our sights on 2022 and beyond, passion and positive energy power CSG’s $2 Billion and Beyond growth mindset. We are honored to humbly serve many of the most dynamic and innovative companies in the world. They rely on us not just to help them implement the next big thing, but to be future-ready for digital everything - confident in CSG’s game-changing commerce and engagement SaaS platforms built by the most committed and customer-obsessed people in the industry.
As a result, our future has never been brighter. Our energy has never been more contagious. Our growth potential has never been more real. Say hello to the new CSG. Thank you to our 5,200 team members around the world who make all this possible and to our shareholders for believing that Team CSG will deliver for you.
Best Regards,
Brian A. Shepherd
President and Chief Executive Officer
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| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 2 |
NOTICE
OF ANNUAL MEETING
OF SHAREHOLDERS
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MAY 18, 2022
9:00 A.M. CENTRAL DAYLIGHT TIME
Notice of Annual Meeting
of Stockholders and
2016 Proxy Statement
May 26, 2016
CSG Systems International, Inc.
9555 Maroon Circle, Englewood, Colorado 80112
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
OF CSG SYSTEMS INTERNATIONAL, INC.We will hold a virtual shareholders meeting at www.virtualshareholdermeeting.com/CSGS2022
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1. To elect three Class I Directors; 2. To approve, on an advisory basis, the compensation of our named executive officers; 3. To approve the Third Amended and Restated 1996 Employee Stock Purchase Plan; 4. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2022; and 5. To transact any other business that properly comes before the meeting or any adjournment or postponement of | ||||
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All stockholders are cordially invited to attend the meeting.
By Order of the Board of Directors of CSG Systems International, Inc.
Joseph T. Ruble
Secretary
April 12, 2016
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR
THE STOCKHOLDERSHAREHOLDER MEETING TO BE HELD ON MAY 26, 2016: 18, 2022:
The proxy statement and
the Company’s our Annual Report on Form 10-K are available at www.proxyvote.comwww.proxyvote.com.
The Board of Directors has fixed the close of business on March 23, 2022, as the record date for determining the shareholders who are entitled to notice of, and to vote at, the meeting and any adjournment or postponement thereof. All shareholders are cordially invited to attend the virtual meeting. There will be no physical location for shareholders to attend.
During the virtual meeting, you may vote your shares electronically. You may also submit questions in advance. Any previously submitted questions pertinent to meeting matters that cannot be answered during the meeting due to time constraints will be posted online and answered at the “Investor Relations” section of our website at https://ir.csgi.com/investors/default.aspx.
The Securities and Exchange Commission (“SEC”) has adopted a “Notice and Access” rule that allows companiesIf you plan to deliver aattend the meeting online, you will need the 16-digit control number included in your Notice of Internet Availability of proxy materials (“NoticeProxy Materials (the “Notice of Internet Availability”) to stockholders in lieu of a paper copy of, on your proxy card, or on the voting instructions that accompany your proxy statement, related materialsmaterials. The meeting will begin promptly at 9:00 a.m. (Central Daylight Time). Online check-in will begin at 8:45 a.m. (Central Daylight Time), and you should allow ample time for the company’s annual report to stockholders.online check-in procedures.
The Notice of Internet Availability provides instructions as to how stockholders can access the proxy materials online, contains a listing of matters to be considered atFor information about attending the meeting, submitting questions in advance, voting, or getting technical support, see Questions and sets forth instructions as to how shares can be voted. Shares must be voted either by telephone, online, or by completingAnswers About the 2022 Annual Meeting and returning a proxy card. Shares cannot be voted by marking, writing on and/or returning the Notice of Internet Availability. Any Notices of Internet Availability that are returned will not be counted as votes. Instructions for requesting a paper copy of the proxy materials are set forth on the Notice of Internet Availability.Voting.
All stockholders are welcome to attend the annual meeting. If you attend the meeting and are a stockholder of record, you may vote in person. If you wish to attend and vote at the meeting and your shares are held in “street name,” you will need to obtain a proxy from the institution that holds your shares and should advise such institution not to vote your shares. A proxy which you give will not be used if you attend the meeting in person and so request.
| HOW TO CAST YOUR VOTE | |||||
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INTERNET | BY TELEPHONE |
| ONLINE AT THE MEETING | |||
(www.proxyvote.com) until | (1-800-690-6903) until | Complete, sign and return your proxy | Shareholders of record may vote during the meeting by visiting our annual meeting website. | |||
We encourage you to submit your proxy well in advance of the annual meeting, even if you plan to attend. | ||||||
By Order of the Board of Directors of CSG Systems International, Inc.  Rasmani Bhattacharya |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 3 |
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| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 4 |
This summary highlights information contained in this proxy statement. It is intended to assist you in your review of the proposals to be acted upon at the meeting, and to provide key information about CSG Systems International, Inc. (“we”, “us”, “our”, “CSG”, or the “Company”). To find more complete information on any specific topic, please refer to the Table of Contents on the previous page.
 DATE AND TIME |  VIRTUAL MEETING |  RECORD DATE |
9:00 a.m. Central Daylight Time | www.virtualshareholdermeeting.com/CSGS2022 | March 23, 2022 |
These proxy materials are first being made available to shareholders starting on or about April 4, 2022.
PROPOSAL | Board Recommendation | Page Number For More Information | |
1. TO ELECT THREE CLASS I DIRECTORS |  | FOR Each Nominee | 27 |
2. TO APPROVE, ON AN ADVISORY BASIS, THE COMPENSATION OF OUR NAMED EXECUTIVE OFFICERS | | FOR | 51 |
3. TO APPROVE THE THIRD AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN | | FOR | 63 |
4. TO RATIFY THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2022 | | FOR | 66 |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 5 |
Assuming the three nominees are elected, our Board of Directors (the “Board”) will have the following ten members at the conclusion of the 2022 Annual Meeting of Shareholders (“Annual Meeting”).
Name | Age | Director since | Occupation | Independent | Committees | Term Expires |
Class I Nominees | ||||||
GREGORY A. CONLEY | 66 | 2021 | Director on the board of TTEC holdings and Travelport | | Compensation | 2025 |
RONALD H. COOPER | 65 | 2006 | Retired, former President and CEO of Clear Channel Outdoor Americas, Inc. | | Audit Compensation (C) | 2025 |
MARWAN H. FAWAZ | 59 | 2016 | Executive Advisor to Google and Alphabet, Inc. | | Nominating and Corporate Governance (C) | 2025 |
Continuing Directors | ||||||
DAVID G. BARNES | 60 | 2014 | Chief Financial Officer of Trimble Inc. | | Audit (C) | 2023 |
RAJAN NAIK | 50 | 2018 | Chief Strategy Officer for Motorola Solutions, Inc. | | Nominating and Corporate Governance | 2023 |
BRIAN A. SHEPHERD | 54 | 2021 | President and CEO of CSG |  |
| 2024 |
FRANK V. SICA | 71 | 1994 | Partner of Tailwind Capital and director on the boards of Kohl’s Corporation and Safe Bulkers, Inc. | | Compensation | 2024 |
HAIYAN SONG | 56 | 2020 | Executive Vice President and General Manager at F5 Networks | | Compensation Nominating and Corporate Governance | 2023 |
SILVIO TAVARES | 50 | 2020 | President and CEO of Vantage Score and Chairman of the board of Digital Commerce Alliance | | Audit Compensation | 2024 |
TSE LI “LILY” YANG | 49 | 2021 | Chief Financial Officer of Strava, Inc. | | Audit | 2024 |
OVERVIEW OF DIRECTOR SKILLS AND EXPERIENCE
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 6 |
DIRECTOR INDEPENDENCE AND DIVERSITY
The Board currently consists of twelve directors. To further our Board refreshment goals, Ms. Obuchowski and Mr. Reed were not nominated for re-election to the Board and their respective terms will end at the Annual Meeting. Following the Annual Meeting, the Board will consist of ten directors.
The Board has determined that each director except Mr. Shepherd, our President and CEO, is an “independent director” as defined in the applicable rules of The Nasdaq Stock Market, Inc. (“Nasdaq”) and applicable rules and regulations of the Securities and Exchange Commission (“SEC”). We believe that having a Board consisting of predominantly independent, experienced directors with independent oversight by a non-executive Chair (as described below) is in the best interests of our Company and our shareholders.
It is critical that we recruit and nominate independent directors who help achieve the goal of a well-rounded, diverse Board that functions respectfully as a unit. Our Board includes directors who have historical institutional knowledge of our Company and the markets we serve, complemented by newer directors who bring diversity of experience, perspectives, qualifications, and leadership to address the issues facing our Company. Over the past few years, our Board has made a concerted effort to recruit new directors to achieve the right blend between experience and continuity and new perspectives, including with respect to gender and racial and ethnic diversity. For our directors whose terms of office will continue after the Annual Meeting, the following charts represent director independence, tenure, and diversity.
| Female | Male | Non-Binary | Did Not Disclose |
Part I - Gender Identity | ||||
Directors | 2 | 8 | - | - |
Part II - Demographic Background | ||||
African American or Black | - | 1 | - | - |
Alaskan Native or Native American | - | - | - | - |
Asian | 2 | 1 | - | - |
Hispanic or Latinx | - | - | - | - |
Middle Eastern | - | 1 | - | - |
Native Hawaiian or Pacific Islander | - | - | - | - |
White | - | 5 | - |
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Two or More Races or Ethnicities | - | - | - | - |
LBGTQ+ | - | - | - | - |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 7 |
COMPANY OVERVIEW AND BUSINESS STRATEGY
CSG is a leader in innovative customer engagement, revenue management and payments solutions that make ordinary customer experiences extraordinary. Our cloud-first architecture and customer-obsessed mindset help companies around the world launch new digital services, expand into new markets, and create dynamic experiences that capture new customers and build brand loyalty. For nearly 40 years, CSG’s technologies and people have helped some of the world’s most recognizable brands solve their toughest business challenges and evolve to meet the demands of today’s digital economy with future-ready solutions that drive exceptional customer experiences. With over 5,200 employees in over 20 countries, CSG is the trusted technology provider for leading global brands in telecommunications, retail, financial services, and healthcare. Our solutions deliver real world outcomes to more than 900 customers in over 120 countries.
Our award-winning solutions are built on proven public and private cloud platforms, available out-of-the-box, custom, or through end-to-end managed services. Specifically, our software-as-a-service (“SaaS”) solutions help our customers:
Improve customer engagement and reduce churn;
Reduce operating expenses and run their businesses more efficiently;
Quickly launch new digital services; and
Enter new markets and compete and win in an ever-changing global marketplace.
2021 was a banner year for CSG and proves the health and resilience of our business. We reported profitable operating results with strong cash flows and a very healthy balance sheet as we continued to execute upon our strategic initiatives. Key highlights of our 2021 performance include the following:
Surpassed $1 billion in revenue for the first time in company history and grew revenue by 6% in the year, with the majority driven by organic growth, our best annual result in over 10 years;
Expanded our leadership position in the North American PayTV and broadband business with landmark contract renewals with Charter Communications and DISH Network, by continuing to deepen our relationships with these customers and by deploying new solutions that help differentiate the customer and employee experience;
Strengthened our position as the top challenger brand in the wireless and telecommunications revenue management market with several large, new customer wins including Mobily, CBTS and TalkTalk;
Continued our industry diversification efforts by increasing revenue from verticals outside the Communications Service Provider (CSP) industry to $255 million, or approximately 24% of our revenue;
Grew our sales pipeline to an all-time high, as our global sales team continues to compete and win in the market; and
Continued high visibility into our revenue over the next twelve months.
Additionally, we believe our holistic approach to capital allocation, which balances internal investments with shareholder remuneration, will maximize long-term shareholder value. During the year, we:
Drove innovation and technology leadership with $135 million of research and development investments in our revenue management, customer engagement, and payment solutions, enabling a growing list of companies around the world to provide a more personalized customer experience while monetizing new digital products and services; and
Returned $69 million to shareholders through a combination of $33 million in quarterly dividend payments and $36 million in common stock repurchases under a stock repurchase program. Our 2021 dividend increased 6% from the prior year.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 8 |
Our corporate governance practices, summarized below, are reviewed regularly. We believe they reflect best practices.
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| Meaningful director and executive share ownership guidelines |
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DIRECTOR NOMINEES | ||||||||||
Name |
| Age |
| Director Since |
| Occupation |
| Independent |
| Committee Membership |
Ronald H. Cooper |
| 59 |
| 2006 |
| Retired, former President and Chief Executive Officer of Clear Channel Outdoor Americas, Inc. |
| Yes |
| Compensation
Nominating and Corporate Governance (Chairman) |
Janice I. Obuchowski |
| 64 |
| 1997 |
| Founder and President of Freedom Technologies, Inc. |
| Yes |
| Audit
Nominating and Corporate Governance |
Donald B. Reed |
| 71 |
| 2005 |
| Retired, former Chief Executive Officer of Cable & Wireless Global |
| Yes |
| Audit
Board Chairman |
Proxy Summary i
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Our corporate governance practices are reviewed regularly. We believe they reflect best practices, as highlighted below:
| Majority voting for uncontested director elections | | Anti-hedging and anti-pledging policy for all directors and executive officers |
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| | Annual independent director evaluation of the CEO | |
| All directors are independent (other than our Chief Executive Officer) |
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| | Code of Ethics and Business Conduct applicable to directors, officers, and employees |
| Regular executive sessions of independent | | Regular shareholder engagement to understand shareholders’ views and insights |
| Independent Audit, Compensation, and Nominating |
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| | Annual shareholder advisory vote on named executive officer compensation | |
| Audit Committee is updated quarterly on accounting, audit, legal, compliance, privacy and cybersecurity matters | | Limitations on compensation given to our named executive officers (to include no excise tax gross-ups) upon the occurrence of a change of control | |
| Independent compensation consultant | | Compensation recovery and clawback policy | |
| Structured annual evaluation of the Board, its committees, and the individual directors, conducted by an independent third-party governance expert | | Limited perquisites or other benefits | |
| Board engagement in long-term succession planning and talent management |
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Our compensation program is designed to attract and retain highly qualified executives and create incentive compensation opportunities aligned with our strategic goals, long-term shareholder value, and evolving competitive and governance practices. Highlights
Executive compensation highlights for 20152021 include:
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The portion of total target compensation based on the achievement of key financial and operational measures was 57% for our CEO and, on average, approximately 55% for our other named executive officers (“NEOs”);
ii Proxy Summary
QUESTIONS AND ANSWERS ABOUT THE 2016 ANNUAL MEETING AND VOTING
Why am I receiving these materials?
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What information is contained in this proxy statement?
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How do I get electronic access to the proxy materials?
You may view our proxy materials at www.proxyvote.com.
What items of business will be voted on We had strong financial performance, finishing at the Annual Meeting?high-end of our predetermined revenue target, and as a result our NEOs earned an annual performance bonus payout for the 2021 fiscal year at 130% of target;
There are five proposals scheduled to be voted on at the Annual Meeting:
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What shares can I vote?
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CSG Systems International, Inc. 2016 Proxy Statement1
May I attend the Annual Meeting?
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May I vote my shares in person at the Annual Meeting?
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May I vote my shares without attending the Annual Meeting?
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May I change my vote?
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How many shares must be present or represented to conduct business at the Annual Meeting?
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2 CSG Systems International, Inc. 2016 Proxy Statement
What is the voting requirement to approve each of the proposals?
Each of Proposals 1, 2, 3, 4, and 5 will be approved if the proposal receives the affirmative FOR vote of a majority of Of the votes cast on our 2021 say-on-pay proposal, over 79.1% were in favor of our executive compensation program and policies; and
Even with the proposal. For purposesCOVID-19 pandemic continuing in 2021, we delivered on all of our 2021 performance-based long-term incentive (“LTI”) award’s objectives (revenue, non-GAAP EPS and “impact minutes”), resulting in our NEOs earning an overall weighted achievement of 104.9% of the election of directors, a majority of votes cast means that the number of votes cast “for” a director’s election exceeds the number of votes cast “against” that director’s election.
Abstentions are considered votes cast on Proposals 2, 3, 4, and 5, and thus have the same effect as AGAINST votes. Abstentions are not considered votes cast on Proposal 1, the election of directors. Broker non-votes are not considered votes cast with respect to Proposals 1 and 4, and will not affect the outcome on those matters. With
respect to the election of directors, in the event a director does not receive a majority of the votes cast that director will be required to submit his or her resignation to the full Board, with a presumption that the resignation will be accepted unless the Board determines that there is a compelling reason for the director to remain on the Board.
Although the advisory vote to approve executive compensation is non-binding, as provided by law, our Board and the Compensation Committee will review the results of the vote and will consider the results in making future decisions on executive compensation.
Votes cast in person or by proxy will be tabulated by the inspector appointed for the Annual Meeting. If you provide specific instructions on your proxy card, your shares will be voted as you instruct. If you do not give instructions, your shares will be voted as recommended by the Board as follows:
target shares.
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| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT |
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Back to ContentsWhat happens if additional matters are presented at the Annual Meeting?
We are not aware of any business to be acted upon at the Annual Meeting other than the five proposalsAs described in this proxy statement. If you grant a proxy, the individuals named as proxy holders, Bret C. Griess and Joseph T. Ruble, and each or either of them, will have the discretion
to vote your shares on any additional matters properly presented for a vote at the meeting. If for any reason a nominee is not available as a candidate for director, the proxy holders will vote your proxy for such other candidate or candidates assection, the Board may nominate.
Who will bear the costhas formalized several policies, procedures, and standards of soliciting votes for the Annual Meeting?
sound corporate governance.We will pay the entire cost of preparing, assembling, printing, mailing,continue to monitor best practices and distributing these proxy materialslegal and soliciting votes. If you chooseregulatory developments with a view to access the proxy materials or vote over the Internet, you are responsible for Internet access charges you may incur. If you choose to vote by telephone, you are responsible for telephone charges you may incur. Our directors, executives,refining our governance policies and regular employees, without additional remuneration, and
their appointed agents, may solicit proxies or votes in person, by telephone, or by electronic communication. We will request banks, brokers, and other fiduciaries to forward proxy materials to the owners of stock held in their names and will reimburse the reasonable out-of-pocket expenses incurred in connection with that distribution.
CSG Systems International, Inc. 2016 Proxy Statement3
Where can I find the voting results of the Annual Meeting?
4 CSG Systems International, Inc. 2016 Proxy Statement
CORPORATE GOVERNANCE AND BOARD OF DIRECTORS
Our current directors include: David G. Barnes, Ronald H. Cooper, Marwan H. Fawaz, Bret C. Griess, John L. M.
Hughes, Janice I. Obuchowski, Donald B. Reed, Frank V. Sica, Donald V. Smith, and James A. Unruh.
The Board has determined that every Board member except Mr. Griess, our President and Chief Executive Officer (“CEO”), is an “independent director”procedures, as defined in the applicable rule of The NASDAQ Stock Market, Inc., or NASDAQ. We believe that having a Board made up
predominantly of independent, experienced directors with independent oversight by a non-executive Chairman (as further described below) benefits our Company and our stockholders.
Corporate Governance Practices and Documents
appropriate. The Board encourages you to visit our corporatethe governance page on our website at http://ir.csgi.com/documents.cfm, which provides information about our corporate governance practices and includes the following documents:
| Board Committee Charters; |
| Code of Ethics and Business Conduct; |
| Corporate Governance Guidelines; and |
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InformationShare Ownership Policy.
We will disclose on our website any amendments to our Code of Ethics and Business Conduct, or any waiver of a provision of our Code of Ethics and Business Conduct that is required to be disclosed under applicable SEC rules.
Information contained on, or accessible through, our website is not part of, or incorporated by reference in, this proxy statement.
In 2014,The Board does not have a policy regarding separation of the roles of CEO and Chair of the Board. The Board approved a majority voting standardbelieves it is in the election of directors. Thus, in any “uncontested election” of directors (i.e., an election where the number of nominees does not exceed the number of directors to be elected), each nominee to the Board will be elected by the vote of a “majority of the votes cast,” meaning that the number of votes cast “for” a director’s election must exceed the number of votes cast “against” that director’s election. Abstentions and broker non-votes will not count as votes
cast for purposes of this provision. If any incumbent director does not receive a majority of votes cast in favor of his or her re-election to the Board, that director will be required to submit his or her resignation to the full Board, with a presumption that the resignation will be accepted unless the Board determines that there is a compelling reason for the director to remain on the Board. In the case of a contested election, directors will continue to be elected by a plurality vote.
We invite stockholders to send written communications to the Board or to individual Board members. Please send your letter in care of the Secretarybest interests of the Company atto determine the address shownappropriate leadership structure based on the first page of this proxy statement. If a letter relates to publicly available information about the Company or our stock, the Secretary will respond to the writer directly. If a letter is primarily commercial in nature or relates to an improper or irrelevant topic, the Secretary
will make a record of it, but will not transmit the communication to the Board. Any letter that relates to accounting, internal accounting controls, or auditing matters will be forwarded to the Chairman of the Audit Committee. All other letters will be forwarded to the entire Board or to the individual Board member(s) to whom they are addressed.
CSG Systems International, Inc. 2016 Proxy Statement5
Historically, very few stockholders have attended our annual meetings; almost all stockholders who vote do so by proxy. Accordingly, directors are not required to attend our annual meetings. We expect employee directors to attend if their schedules permit, and non-employee directors are welcome to attend if they wish. All of our
Director Attendance at Board Meetings
During 2015, the Board held six meetings. All directors attended at least 75% of the total number of meetings of the Board and of the committees on which they served. In
addition, during 2015 the Board held four executive sessions during which only independent directors were present.
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“C” Chairman
“M” Member
The Audit Committee is presently composed of Mr. Barnes (Chairman), Ms. Obuchowski, and Mr. Reed. The Audit Committee’s primary purposes are to oversee our accounting and financial reporting processes, the audits of our financial statements, and our risk and compliance management programs.
As required by the Audit Committee Charter (located at http://ir.csgi.com/documents.cfm), all members of the Audit Committee satisfy all NASDAQ requirements applicable to audit committee members and are “independent” as defined by the rules promulgated by the SEC under the Exchange Act, and by NASDAQ.current circumstances. The Board has determined that Messrs. Barnesan independent director serving as Chair is in our best interests at this time. Since 2010, Mr. Reed has served as Chair of the Board and Reed are “audit committee financial experts”since February 2021, Mr. Cooper has served as definedVice-Chair of the Board. In light of Mr. Reed’s term as a director ceasing at the Annual Meeting, in February 2022 the Board appointed Mr. Cooper as Chair of the Board effective following the Annual Meeting. Mr. Cooper will continue CSG’s long history of having an independent director as Chair of the Board. Our Board believes that an independent director serving as Chair ensures that the independent directors have a significant role in the active oversight of our business, including overseeing risk management, setting agendas, and establishing Board priorities and procedures. In the future, if the Board believes it would be in the best interests of the Company and our shareholders, the Board may decide that one person should serve as both CEO and Chair of the Board.
The Board is responsible for oversight of our risks, including establishing our risk appetite and overseeing our risk management framework. The Board recognizes that effective risk oversight is important to the success of our strategy and is an integral part of its fiduciary duties to the Company and our shareholders. The Board believes taking well-considered risk is a critical component of innovation and effective leadership, but also recognizes that imprudently accepting risk or failing to appropriately identify and mitigate risk could negatively impact our business and shareholder value. The Board therefore seeks to foster a risk-aware culture that conforms to an established risk appetite framework while encouraging thoughtful risk taking in pursuit of the Company’s strategic initiatives.
The Board exercises its risk oversight primarily through management, an Executive Business Risk Committee, and the Audit Committee, as described below. The Board believes our current leadership structure facilitates its oversight of risk by applicable rules. combining independent leadership through the Board and the Audit Committee, with an experienced Executive Business Risk Committee whose members have intimate knowledge of our business, industry, and challenges.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 10 |
EXECUTIVE BUSINESS RISK COMMITTEE
The Executive Business Risk Committee—which is made up of our executive officers and our General Counsel, is chaired and coordinated by our Chief Risk Officer.
The Audit Committee heldreceives quarterly reports on risk-related matters from four meetings during 2015.sources:
The Head of Internal Audit reports directly to the Chair of the Audit Committee and prepares reports for the Audit Committee summarizing the results of internal audits and the related risks, issues and activities.
Our Head of Compliance reports directly to the Chair of the Audit Committee and prepares reports for the Audit Committee summarizing compliance risks, issues, and activities.
Our Chief Information Security Officer reports on our information security governance program and related risks, issues and activities.
Our Chief Risk and Compliance Oversight. To administerOfficer reports on our overall risk and compliance management program we established a Business Risk Committee comprised ofand related top risks, issues and activities.
In addition, our named executive officers (“NEOs”) (see the Compensation Discussion and Analysis beginning on page 21), chaired by our Chief Financial Officer (“CFO”), and coordinated by our internal audit department. The internal audit department reports directly to the Audit Committee and prepares a quarterly report forNominating and Corporate Governance Committee monitor risks in their respective areas of responsibility, and keep the Audit Committee summarizing material existing and emerging business risks.Board informed of any specific risks through regular reports.
RISK ASSESSMENT AND MITIGATION PROGRAM
We also maintain a formal risk assessment and risk mitigation program that is administered by our CFO. NEOs,Chief Risk Officer. Our executive officers, in conjunction with members of our internal audit department,Risk and Security organizations, review this program periodically throughout the year. This program is intended to: (1)has three goals: identify those risks that are most likely to affect our business; (2) assign an executiveindividual executives to be responsible for monitoring and mitigating each of those risks; and (3) provide a formal mechanism
6 CSG Systems International, Inc. 2016 Proxy Statement
for the assigned executiveexecutives to report back periodically on the adequacy and effect of mitigation efforts. The Audit Committee and the Board review the results of this program at each regularly scheduled meeting.
INFORMATION SECURITY GOVERNANCE PROGRAM
The following chart outlines our information security governance program structure and controls:
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 11 |
The following chart outlines our risk management structure and responsibilities:
BOARD OF DIRECTORS | |||||||
Oversees Major Risks | |||||||
Strategic and Competitive Financial | Legal and Regulatory Operational | Cybersecurity Brand and Reputational | |||||
Audit Committee Primary Risk Oversight  Financial statement integrity and reporting Major financial and other business risk exposures Information security, technology, and privacy and data protection Risk management framework Legal, regulatory and compliance Internal controls | Compensation Committee Primary Risk Oversight Compensation and performance evaluation of executive officers Incentive compensation programs | Nominating and Corporate Governance Committee Primary Risk Oversight Governance structure and processes Board performance Shareholder concerns (including sustainability) Independent director compensation policies and practices Succession planning for executive officers Environmental, Social and Governance (ESG) | |||||
MANAGEMENT | |||||||
Key Risk Responsibilities | |||||||
Operating units identify and manage business risks | Central functions design risk framework, including setting boundaries and monitoring risk appetite | Internal audit provides independent assurance on design and effectiveness of internal controls and governance processes | |||||
The Board is committed to a rigorous annual self-evaluation. The Chair of the Nominating and Corporate Governance Committee coordinates an annual evaluation process that is conducted by an independent, third-party consultant. Spencer Stuart, our consultant for 2021, surveyed the full Board and select management team members to evaluate the Board’s and the Board committees’ performance and procedures to determine whether they were functioning effectively. The consultant also collected and provided personalized feedback on the performance and contributions of each individual Board member. The results of the annual evaluation were reviewed by the Nominating and Corporate Governance Committee and provided to the full Board for their consideration. Regular annual Board evaluations will continue to include a Board survey process.
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The Board does not have a mandatory retirement age or term limits because we believe such fixed rules do not recognize the continuing contributions of directors who have developed experience with, and insight into, the Company. However, the Board understands there is value in regularly refreshing its composition. To further our Board refreshment goals, Ms. Obuchowski and Mr. Reed have not been nominated for re-election to the Board and their respective terms will end at the Annual Meeting.
In addition,recommending nominees for election as directors, the Nominating and Corporate Governance Committee (“NCG Committee”) reviews the present composition of the Board to determine if additional qualities, skills, and expertise would help the Board and its committees properly discharge their responsibilities. When there is a need, the NCG Committee utilizes the services of executive search firms with well-established board practices to help identify and recruit qualified director nominees. When identifying and assessing a candidate’s qualifications, the NCG Committee considers, among other things:
the candidate’s background, reputation, independence, experience, skills, and judgment;
the candidate’s ability and willingness to devote the required amount of time to serve as a Board member and as a member of one or more Board committees;
the candidate’s other business and professional commitments and potential conflicts of interest; and
the number and type of other boards on which the candidate serves.
Although we do not currently have a written policy on diversity, the NCG Committee values and seeks diversity when recruiting and nominating directors. We define “diversity” in its broadest sense and believe it encompasses many attributes, including background, experience, skills, substantive expertise, age, gender, ethnicity, geography, and education. Our Board is particularly interested in assembling a group of directors who represent our Chief Compliance Officer hascustomers and also have experience in operations, finance, accounting, marketing, human resources, sales, and domestic and international business—particularly in the technology and communication service provider and related industries. We also consider whether nominees are active or retired executive officers of public or private companies and whether they have ever served on the board of a public company.
We expect Board members to display the personal attributes necessary to be effective directors: integrity, sound judgment, independence, ability to operate collaboratively, and a fiduciary commitment to the Company and our shareholders. We believe the current members of our Board have a diverse set of business and personal experience, backgrounds, and expertise, and that they all share the personal attributes described above.
The following chart outlines the areas of expertise that each continuing director on the Board possesses. For more information, please see the directors’ biographies, which begin on page 27.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 13 |
| Name | Accounting/ Financial Management | Corporate Governance | Cyber- security | Executive Leadership | Global Business | Human Capital Management | Marketing / Sales | Mergers / Acquisitions | Strategy | Technology/ Innovation |
| David G. Barnes | | | | | | | | |||
| Gregory A. Conley | | | | | | | | | | |
| Ronald H. Cooper | | | | | | | | | ||
| Marwan H. Fawaz | | | | | | | | | ||
| Dr. Rajan Naik | | | | | | | ||||
| Brian A. Shepherd | | | | | | | | |||
| Frank V. Sica | | | | | | | | | ||
| Haiyan Song | | | | | | | | | | |
| Silvio Tavares | | | | | | | | | | |
| Tse Li “Lily” Yang | | | | | | | | | |
NEW DIRECTOR SINCE THE LAST ANNUAL MEETING
The Board engages a third-party search firm, Heidrick & Struggles, in its search for new director candidates. As part of its engagement, Heidrick & Struggles identified Mr. Gregory A. Conley as a nominee for director, and in October 2021 the Board appointed Mr. Conley as a new director. Mr. Conley is the sixth new independent director to join our Board in the past five years. We believe the appointment of these new directors demonstrates our ongoing emphasis on good corporate governance, as we continue to refresh the talent, skills, diversity and experience that are represented by the members of our Board.
Mr. Conley brings over 30 years of experience in the technology and software industries having served as CEO of Aha! Software, a privately held predictive analytics and cloud computing company, as CEO of Odyssey Group, a Switzerland-based technology services and software company, and as CEO of Verio, a leading global provider of hosting and network services. Prior to these roles, Mr. Conley was the Global General Manager of e-markets and Global General Manager of Travel and Transportation Industries at IBM.
SHAREHOLDER RECOMMENDED DIRECTOR CANDIDATES
The Nominating and Corporate Governance Committee will consider qualified nominees recommended by our shareholders for election as directors in the same manner that the committee considers other director candidates. A shareholder who wishes to recommend a nominee for the Board should submit the recommendation in writing to the Secretary of the Company indicating the proposed nominee’s qualifications and other relevant biographical information and providing written confirmation that the proposed nominee consents to serve as a director if nominated and elected. See Shareholder Proposals for additional requirements and information. Our Secretary will forward qualifying recommendations from shareholders to the Chair of the Nominating and Corporate Governance Committee for further review and consideration. Our bylaws provide that shareholder nominations for election to the Board are subject to certain advance notice and informational requirements. Shareholders may obtain a copy of the relevant bylaw provisions from our Secretary at CSG Systems International, Inc., 6175 S. Willow Drive, Greenwood Village, Colorado, 80111.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 14 |
The charters for all three of the Board’s standing committees are available on our website at http://ir.csgi.com/documents.cfm. All of the members of the Board’s committees are independent.
Director | Audit Committee | Compensation Committee | Nominating and Corporate Governance Committee | |
David G. Barnes |  |  | ||
Gregory A. Conley |  | |||
Ronald H. Cooper | | | | |
Marwan H. Fawaz | | |||
Dr. Rajan Naik | | |||
Janice I. Obuchowski1 | | | ||
Donald B. Reed 1 | | | ||
Brian A. Shepherd | ||||
Frank V. Sica | | |||
Haiyan Song | | | ||
Silvio Tavares | | | | |
Tse Li “Lily” Yang | | | ||
| Chair | | Member |  | Financial Expert |
Due to continued Board refreshment activity, Mr. Reed and Ms. Obuchowski were not nominated for re-election to the Board. They will remain on their respective committees through the Annual Meeting.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 15 |
Number of Meetings in 2021: 4
The Audit Committee’s primary purposes are to oversee our accounting and financial reporting relationship toprocesses, the audits of our financial statements, and our risk and compliance management programs, including cybersecurity.
All members of the Audit Committee satisfy all Nasdaq and provides a quarterly reportSEC requirements applicable to audit committee members, and all members of the Audit Committee on compliance risks, issues,are “independent” as defined by the SEC and activities.
Nasdaq rules and regulations. The Board has determined that Mr. Barnes, Mr. Cooper, Mr. Reed, Mr. Tavares, and Ms. Yang are “audit committee financial experts” as defined by applicable SEC rules.
COMPENSATION COMMITTEECompensation Committee
The Compensation Committee presently is composedNumber of Messrs. Cooper, Hughes, Sica (Chairman), Smith, and Unruh. Meetings in 2021: 5
The Compensation Committee’s primary purposes are to review and recommend senior management compensation and benefit policies, evaluate the performance of our executive officers, and review and recommend the compensation of our executive officers. In addition, the Compensation Committee has independent authority to administer and grant equity awards under our equity plans and our Performance Bonus Programannual performance bonuses for executive officers. The Compensation Committee also is responsible for ongoing oversight and evaluation of our compensation policies and practices for employees generally as they relate to risk management.
As required by The Compensation Committee may delegate any of its responsibilities to a subcommittee or the Chair of the Compensation Committee. The Compensation Committee may also delegate to one or more of our officers the authority to grant awards to non-executive officers and employees under our equity compensation plans. In 2021, the Compensation Committee Charter (located at http://ir.csgi.com/documents.cfm),delegated to the CEO the authority to grant equity awards to non-executive officers and other employees.
All members of the Compensation Committee satisfy all Nasdaq and SEC requirements applicable to compensation committee members, and all members of the Compensation Committee are “outside directors” for purposes of Section 162(m) of the Internal Revenue Code of 1986 and are “independent” as defined by the SEC and Nasdaq rules promulgated by the SEC under the Exchange Act, and by NASDAQ. The Compensation Committee meets at least quarterly, and held five meetings during 2015.regulations.
Determining Executive Officer Compensation and Use of Independent Compensation Consultant.Consultant
To assist the Compensation Committee with its responsibilities, the Compensation Committee retains an independent compensation consultant, consults with our CEO (other than with respect to compensation decisions for the CEO) and our head of Human Resources,Chief People and Places Officer, and draws upon the extensive business experience of its members. The Compensation Committee directs the independent compensation consulting firmconsultant to prepare a comprehensive formal assessment of the competitiveness of our executive officer compensation program, including a comparison of the principal components of our program (base salaries, performance bonuses, and equity awards) and other compensation program elements with those of a peer group of other public companies.companies as well as industry practices. The Compensation Committee considers this assessment and other data provided by the independent compensation consultant in arriving at its decisions or recommendations to the Board with respect to base salaries, performance bonuses, and long-term incentives, and other compensation program elements for our executive officers. For additional information about our executive compensation program, processes, and procedures, see the Compensation Discussion and Analysis beginning on page 21..
The Compensation Committee periodically evaluates the qualifications of its independent compensation consultant. The Compensation Committee utilizes Pearl Meyer & Partners (“PM&P”)has engaged Exequity as its independent compensation consultant. During 2015, PM&P2021, Exequity provided only executive compensation guidance to the Compensation Committee and did not provide any other services to the Company. During 2015,2021, the Compensation Committee requested information from PM&P,Exequity, our executives, and our Board members in order to assess the independence of PM&PExequity as the Compensation Committee’s compensation consultant and to determine whether PM&P’sExequity’s work raised any conflict of interest. Based on the information provided, the Compensation Committee determined that PM&PExequity was independent and that the work of PM&PExequity did not raise a conflict of interest.
Determining Non-Employee Director Equity Awards. In making equity awards to our non-employee directors, theAwards
The Compensation Committee considers relevant information provided by the independent compensation consultant and the recommendations of our Nominating and Corporate Governance Committee and the Board.Board as it relates to awarding of equity to our non-employee directors.
Risks Related to Compensation Policies and Practices for All Employees.Employees
The Compensation Committee does not believe that risks arising from our compensation policies and practices are reasonably likely to have a material adverse effect on the Company. A number of the factors considered by the Compensation Committee when it develops executive compensation recommendations have the effect of mitigating risk. Additionally, executive officers and certain members of senior management regularly review our employee compensation policies and practices, including the elements of our compensation programs, to determine whether any element or program design encourages excessive risk taking. TheFor additional information about the factors the Board and senior management consider the following factors that reducereduces the likelihood of excessive risk taking:taking, see Risk and Compliance Oversight and Compensation Discussion and Analysis.
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CSG Systems International, Inc. 2016 Proxy Statement7
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Back to ContentsCompensation Committee Interlocks and Insider Participation. No member of the Compensation Committee has ever been an officer or employee of the Company. In 2015, no member of the Compensation Committee had any relationship or transaction with the Company that would require disclosure as a “related person transaction” under SEC rules. During 2015, none of our executive officers served on the board of directors or compensation committee of any other entity whose executive officer(s) served as a member of our Board or Compensation Committee.
NOMINATING AND CORPORATE GOVERNANCE COMMITTEENominating and Corporate Governance Committee
The Nominating and Corporate Governance Committee presently is composedNumber of Messrs. Cooper (Chairman), Fawaz, Hughes, Smith, and Ms. Obuchowski. Meetings in 2021: 4
The Nominating and Corporate Governance Committee’s primary purposes are to: (1)to identify individuals qualified to become Board members; (2) recommend to the Board nominees for election as directors and directors for appointment to Board committees; (3) evaluate the Board’s performance; (4)performance, in conjunction with the formal and structured annual Board evaluation process conducted by an independent third-party governance expert; review and recommend the compensation of our directors; oversee and (5)support company commitments to ESG and other public policy initiatives as they pertain to business objectives and long-term strategy; and develop and recommend for Board approval our Corporate Governance Guidelines and Code of Ethics and Business Conduct.
The Nominating and Corporate Governance Committee Charter (located at http://ir.csgi.com/documents.cfm) requires that a majority of theAll members be independent directors. The Nominating and Corporate Governance Committee held four meetings during 2015.
What We Look for in Director Nominees. In recommending nominees for election as directors, the Nominating and Corporate Governance Committee reviews the present composition of the Board to determine the qualities, skills, and areas of expertise needed to enable the Board and its committees to properly discharge their responsibilities. When there is a need, the Nominating and Corporate Governance Committee utilizes the services of executive search firms with well-established board practices to assist in the identification and recruitment of qualified director nominees. This process supports our objective of recruiting highly qualified candidates that meet our specific criteria for skills, professional and governance experience, diversity, and the personal attributes we're seeking as discussed in more detail below. The Nominating and Corporate Governance Committee considers it necessary for the Board to have at least one independent member who qualifies as an “audit committee financial expert” and takes that requirement into account when recommending nominees. When identifying and assessing a candidate’s qualifications, the Nominating and Corporate Governance Committee considers, among other things: (1) the number and type of other boards on which the candidate serves; (2) the candidate’s other business and professional commitments and potential conflicts of interest; (3) the candidate’s ability and willingness to devote the required amount of time to service as a Board member and as a member of one or more Board committees; and (4) the candidate’s age, background, reputation, independence, experience, skills, and judgment.
Our Nominating and Corporate Governance Committee considers the diversity of the Board’s membership when nominating directors. We interpret the term “diversity” in its broadest sense and believe it encompasses many attributes, including age, background, experience, skills, substantive expertise, gender, ethnicity, geography, and education. Our Board is particularly interested in maintaining a collective group of individuals with experience in operations, finance, accounting, marketing, human resources, sales, and international business, particularly in the technology and communication service provider and related industries. We also consider whether nominees are active or retired executive officers of public or private companies and whether they have ever served on the board of a public company.
Our Board members also should display the personal attributes necessary to be effective directors: integrity, sound judgment, independence, ability to operate collaboratively, and a fiduciary commitment to the Company and our stockholders. We believe the current members of our Board have a diverse set of business and
8 CSG Systems International, Inc. 2016 Proxy Statement
personal experiences, backgrounds and expertise, and that they all share the personal attributes described above.
Stockholder Recommended Director Candidates. The Nominating and Corporate Governance Committee will consider qualified nominees recommended by our stockholders for election as directors. A stockholder who wishes to recommend a nominee for the Board should submit the recommendation in writing to the Secretary of the Company indicating the proposed nominee’s qualifications and other relevant biographical information and providing written confirmation that the proposed nominee consents to serve as a director if nominated and
elected. See Stockholder Proposals on page 58 of this proxy statement for additional requirements and information. Our Secretary will forward qualifying recommendations from stockholders to the Chairman of the Nominating and Corporate Governance Committee are “independent” as defined by the SEC and Nasdaq rules and regulations.
CSG recognizes it has a responsibility to operate responsibly and sustainably to support the company’s goal to envision, invent, and shape a better, future-ready world by doing what’s right for shareholders, customers, team members and the communities where they operate. The company is committed to strong corporate governance policies and the management of environmental, social and governance practices that focus on team members and culture, social responsibility and environmental stewardship.
CSG recognizes that it has a responsibility to the environment beyond legal and regulatory requirements. We believe in protecting the environment and are working towards announcing our carbon commitment. We are committed to reducing our environmental impact by establishing a baseline to drive improvement in our environmental performance as part of our ongoing business strategy and operating methods. To further reviewour commitment, in 2022 we will leverage science-based research to establish a baseline and consideration.target goals that align with Greenhouse Gas (GHG) Protocol and are consistent with the SASB and TCFD frameworks. We encourage customers, suppliers, and other stakeholders to do the same.
We also continue to seek opportunities to reduce consumption of water, electricity, and gas through improved processes and upgrades. We strive to reduce the quantity of non-hazardous materials sent to landfill by increasing reuse and recycling opportunities. We are committed to comply with and achieve all relevant domestic and international regulatory requirements, continually improve, and monitor environmental performance as well as reduce environmental impacts, incorporate environmental factors into business decisions and increase employee awareness and training.
Diversity, Equity & Inclusion (DEI)
CSG is committed to building and fostering a diverse, supportive, and inclusive work environment where individuality is valued, and our people can flourish and grow. We believe our workforce should not only reflect the world in which we live, but also our customers, and that we are stronger because of our differences. By embracing various backgrounds, attributes, experiences, and perspectives, we will help our team members, customers and communities thrive, while together, we work toward making social equality a reality.
To channel the power of all and make ordinary customer and employee experiences extraordinary, we are full steam ahead on a journey to have the best, most globally diverse workforce where each person can thrive. Our bylawsjourney has the full commitment from our Board, and our executive leadership team, including the company’s Chief Diversity & Social Responsibility Officer.
In 2021, we continued to evolve our DEI journey by conducting our first DEI Assessment to better understand the experiences of team members of all different backgrounds, identify biases in our human capital practices, and use data to identify bias.
The Board of Directors and our executive leadership team have been consistent in their engagement, support, and ownership of advancing DEI across our company. Reporting on DEI progress and metrics is shared with the Board quarterly, in addition to ESG oversight in the Nominating and Governance Committee.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 17 |
The leadership team has demonstrated an unwavering commitment to making sustainable change and progress to create a globally diverse, equitable and inclusive CSG. This commitment starts with the Board and their investment in ESG, to our CEO who has been a champion for all CSGers (current and future) to experience a culture where everyone belongs. Our leaders are committed to learning, creating action plans to improve metrics and using data to measure progress. In 2021, leaders at the Executive Director and above levels attended Inclusive Leadership training, and those participants are invited to attend a quarterly forum that will continue through 2023.
In 2021, we invested time and resources in building a robust data and reporting infrastructure to ensure we could measure progress, identify areas to improve and create more transparency into our employee journey experience, including diversity and inclusion metrics. The senior leadership team received regular insights with data on a variety of metrics including representation, inclusion survey scores, progress and employee feedback.
To further enhance our commitment to creating a globally diverse, equitable and inclusive company, a 10% modifier, based on the Company’s progress on its diversity, equity, and inclusion program, has been added to the 2022 short-term incentive bonus plan for our NEOs and all Senior Vice Presidents and above.
We are committed to ensuring all the people whom we attract, recruit, develop, and retain feel safe, valued, and heard. Our belief is that true inclusion means everyone is accepted and supported so they can thrive at CSG. The global DEI team partners closely with the talent acquisition team and hiring managers on this front.
In 2021, we partnered with Women in Cable Telecommunications Network, which provides leadership development, mentoring, and recruitment opportunities for women in media, entertainment, and technology.
In 2022, we are setting goals to diversify our talent pipeline and remove bias. This includes launching a new tool that will scan and remove gender biased language in job descriptions and the launch of an internal talent marketplace. We seek to leverage our flexible first model to recruit from more geographic locations attracting new talent to our organization.
Inclusion Programming & Employee Education
In 2021, we launched our DEI Meet Up series which featured internal and external speakers who delivered thought leadership and engaging discussion around a range of topics including Black History Month, International Women’s Day, Asian American Pacific Islander Heritage, and Hispanic Heritage Month.
Our newly formed Employee Belonging Groups began in 2021 and were formalized in early 2022. These employee led groups with executive sponsorship offer community, courageous conversation, and awareness activities. They include WE LEaD (supporting women), Pride@CSG (supporting LGBTQ+), and Aspiring Allies (allies supporting underrepresented groups).
We are focused on global inclusion with local relevance for over 5,200 employees representing over 20 countries. In 2022 we are launching new mandatory DEI training for all employees, a quarterly Inclusion Lab in each of our regions, and dynamic virtual and micro-learning opportunities. In 2021, we hosted our first Inclusive Leadership training for leaders and have expanded that program through 2022 as a DEI Forum that meets quarterly.
CSG strives to align most of our social responsibility and impact activity with the United Nations Sustainable Development Goals.
Social Impact & Responsibility
We are committed to making a bigger community impact by creating new opportunities and access for underrepresented communities, protecting the environment, and developing technology solutions that foster digital inclusivity. Our commitment starts with our team members being active in our local communities. We aspire to envision, invent, and create a better, more future ready world by channeling the power of all. To accomplish that, we are focusing on these key areas:
Expanding Our Community Impact
We support Community Based Organizations (“CBOs”) that enable women and people of color the opportunity to participate, thrive, and make a lasting impact on the technology industry across the globe. We expanded our partnerships with CBOs like Cape Innovation and Technology in South Africa, and established new ones with Girls Who Code and WeMakeChange. In addition, we implemented our first Global Day of Action, where we gave every team member an opportunity to spend a day of service in the community, for an impact activity of their choosing.
We are proud of being a people first organization. Our leaders and colleagues mobilized our Company to accelerate our community impact work and pledged thousands of dollars to India during the height of the COVID-19 pandemic. With more than 1,000 employees in the country, our focus was to ensure team members were safe and supported. Our commitment to those affected by COVID-19 aligns not only with our Guiding Principles but our role as a purpose driven company.
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Enhancing Our Environmental Stewardship
With offices in 20 countries and serving customers in 120 countries, this is a vital and important focus area. We are working with our partners who are committed to reducing and recycling waste, investing in green energy, and responsible sourcing to create a more sustainable future. CSG has made a commitment to join the UN Global Compact.
We strive to develop solutions that make the world more future-ready with technology solutions that promote social progress and make navigating the digital world easier.
Our ESG Workgroup, established in 2021 with oversight by our Chief Diversity & Social Responsibility Officer, is comprised of leaders from key areas across the Company with responsibility for business operations aligned to our ESG focus areas. In 2022, we will incorporate guidance from the Sustainability Accounting Standards Board (SASB), Task Force on Climate-related Financial Disclosures (TCFD) and the United Nations Global Compact. As we continue to evolve our ESG practice, we’re committed to sharing progress through our Global Impact Report in 2022 and beyond.
OUR CULTURE AND PEOPLE PHILOSOPHY
We believe that our culture and our people are a competitive differentiator in the marketplace. As a result, our success is dependent upon our ability to attract, develop, and retain this talented, energized and diverse stakeholder group. With that in mind, we have introduced a framework that outlines our ethos for how we serve not only our customers and each other, but the communities in which we operate.
Delivering on our greater purpose and mission at speed and scale while delighting our customers and supporting our team members’ growth, wellbeing, and happiness requires a people and culture philosophy that accelerates sustainable growth and innovation across three pillars:
Leading the Future of Work | Winning with Talent | Grow@CSG | ||
 |  |  | ||
through our Flexible First approach, optimizing physical space to engage and inspire; providing programs and events focusing on wellbeing and mental health of all team members; and inspiring collaborative and connected teams. Today, approximately 90% of our team members have the option to work from home when it makes sense for them, their team, and the business. | by attracting and retaining the best, most diverse global talent; accelerating time to productivity, togetherness, and engagement; embedding diversity, equity, and inclusion considerations into our strategy, and ensuring our global team members thrive in an inclusive environment. In 2021, in addition to our already competitive pay and benefits, we introduced many new benefits that focused on the “whole person” designed to promote mental and physical wellness. | by developing bold, agile, inventive team members and leaders; innovating on talent development and succession planning; and expanding cross-company and cross-unit rotations and promotions. In 2021, we expanded our curated and personalized learning platform and launched an internal talent marketplace, which allows our team members to browse open roles, see their skills match for roles they might be interested in, and receive curated learning pathways designed to provide them the skills they need to take on more responsibility or move to an entirely different role or department. |
We believe that our culture and our team members are a key reason our customers trust us with their mission-critical technology platforms and to help them achieve their business goals and objectives. Each and every day, we recognize that our success depends on the joyful determination of our greatest asset—our people. That’s why we are committed to being the global employer of choice for the best, most diverse, global talent, and we measure our progress based on our team members’ connection to our mission and culture.
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We’re committed to honoring our team members’ power to choose—to choose their future, to choose when and where to work, to choose their growth path and opportunities, and to choose to connect with others in the way that works best for them. Whether through our internal talent marketplace, our CSG University on-demand learning, our onboarding communities, our team member belonging groups, our global networking lunch clubs, our two days of paid volunteer time off for every team member around the globe, or our wellness, togetherness, and fitness challenges—we support our team members as they cultivate their whole selves in order to power a better experience for our customers, a better CSG, and a better, more future-ready world.
U.S. RACE AND ETHNICITY BREAKDOWN
People of color comprise 31% of our U.S.-based employees.
Our Commitment Starts at the Top
Leadership with authenticity, transparency and integrity is the key to our success and shaping a better, future-ready world. Our CEO, Brian Shepherd, and our entire executive leadership team are passionate about being the employer of choice for the best, most diverse global talent. We show our commitment by providing an exceptional team member experience for our teammates from application to alumni.
Our Board of Directors also views our team members as our most critical asset, and regularly receives briefings on initiatives and innovations designed to advance the team member experience and further the personal and professional growth of all our teammates. Our Board and our executive leadership team work together to create an authentic, collaborative, and inclusive environment. We honor our commitment to diversity by having a designated Chief Diversity and Social Responsibility Officer. In addition, beginning in 2022, our executive leadership team demonstrates their commitment to diversity, equity, and inclusion by tying a portion of their short-term incentive bonus to progress on diversity, equity, and inclusion metrics.
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At CSG, how we do things is just as important as what we do. Every coaching conversation, talent assessment, and succession planning session includes an evaluation of strengths and opportunities of each team member’s modeling of our Guiding Principles. Our performance management process has been upgraded to include both goal achievement and demonstration of the Guiding Principles in our day-to-day behavior as equally important components of performance.
CSG has an open and transparent communications approach that connects team members to one another and to our business purpose. As we advance our Flexible First philosophy we meet team members where they are so that they have access to news, information, and resources that help them do their job, foster belonging, and understand how their contributions make an impact to our culture and success. Centered on opportunities to provide forums for leaders and team members to interact, such as global town halls, all-hands meetings, round tables and small group meet ups, CSG shares company news and information across a variety of digital platforms focusing on timeliness, relevancy, personalization, and ease of access. We also take every opportunity to take questions live from our team members with frequent “ask me anything” sessions with executive leadership.
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OUR CSG EMPLOYEE JOURNEY EXPERIENCE
At CSG, we strive to ensure our employee journey experience, from attraction to alumni, enables personal and professional growth at all stages while ensuring wellbeing, safety, and inclusion.
Our objective is to be the employer of choice for the best, most globally diverse talent. With an average tenure of 8 years and a low attrition rate, our Talent Acquisition team focuses on finding candidates with the right skills who also live our Guiding Principles in action and exhibit the power of joyful determination. Working around the globe, our recruiters use technology—including our internal talent marketplace—combined with the power of personal connection to find exceptional individuals, including through sourcing strategies for underrepresented groups, our internship program, and internal referrals.
In light of our Flexible First workplace philosophy, our welcome program has evolved to accommodate a globally distributed team, with varying schedules and work locations. We greet new team members with welcome kits, and assign them to an onboarding cohort and a CSG Connect ambassador. Providing access to resources provides a safe space for learning and growth and sets the tone for the authentic team member experience that stockholder nominationseach team member will contribute to and shape in the years to come. Our investment in setting our people up for electionsuccess has led to a 92% team member satisfaction rating of our onboarding experience.
“So far the whole onboarding has been a great experience - from the 1st interaction with the recruiter to HR doing my induction! Superb.”
-New CSGer
At CSG, we are agile, bold, and inventive. We apply a learning and system thinking mindset to strive for continuous improvement and efficiency gains as part of what we do every day.
We believe in creating an environment where our team members are constantly learning, developing, and growing—whether in their current roles, through community involvement, or by developing skills to take them to the next level or a totally different career. All CSG team members have access to our internal talent marketplace, which allows them to browse open roles, see their skills match for roles they might be interested in, and receive curated learning pathways designed to help them develop the skills they need to take on more responsibility or move to an entirely different role or department.
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As part of our whole person philosophy, we encourage CSG team members to pursue higher education, whether or not related to their current roles. Our global Tuition Assistance Program provides CSG team members the opportunity to receive help funding their higher education goals at a wide range of global accredited schools.
CSG’s Agile CAFÉ (CSG’s Agility Framework and Enablement) program provides learning and development opportunities to empower CSG teams with the knowledge and tools they need to work well together and provide value as we implement our enterprise-level DevOps Best Practices. Our Agile CAFÉ learning program leverages industry-leading methodologies while focusing specifically on how those methodologies can be used at CSG. The Agile CAFÉ creates consistency, alignment, and a common understanding within the adoption to CSG’s industry-leading DevOps culture and helps us execute to deliver value.
At CSG, we believe we are at our best when we bring our authentic selves to work. When our leaders are trained to coach and develop team members and to be visionaries for the future of CSG, our customers, and our communities, we all win by employing a servant leadership model.
In 2022, we are launching a refreshed Ignite Leadership course for all front line managers. Ignite Leadership provides a foundation for our philosophy of coaching the whole person, leading inclusively, and improving communications between leaders and their teams. When combined with our Level Up series for more senior leaders, and our Skill-Up series for all people leaders, we believe that our agile and inclusive approach to leadership development will enable us to drive a coaching culture throughout the organization and is designed to ensure our teams are set up for success both personally and professionally.
Leadership at CSG is multi-dimensional and focused on the concepts of “Leading Self, Leading the Team and Leading the Business.” We believe strong leaders are first and foremost self-aware and purposeful in continuous improvement and development - both personally and professionally. Our leaders are expected to demonstrate the core values represented by our Guiding Principles coupled with a servant leadership framework. We understand the significant responsibility we have to lead our teams to both deliver on goals and objectives and to demonstrate respect for one another. Leaders at CSG focus on strategic objectives that advance the goals of the organization and provide vision that inspires everyone on the team.
Investing in the Development of Diverse Leaders
We believe that being the employer of choice for the best, most globally diverse talent is a competitive advantage and the right thing to do. We are champions of increasing the presence of women and people of color in leadership positions and across the technology and telecommunications, cable, and satellite industry. We provide support systems to help all team members advance in their careers. This includes development opportunities that provide a clear path for growth, including curated learning paths, while strengthening the representation of women and people of color in our leadership ranks.
Designed for students enrolled in undergraduate programs, our internship program focuses on developing technical skills, and business skills and providing mentorship through real work experience. We recruit interns from all fields of study, including computer science, engineering, marketing, sales, human resources, communications, and business. From day one, students are immersed in real projects, collaborating with some of the best and brightest in the industry and gaining experience to power their careers and personal growth.
Since the internship program began in 2016, 65% of our interns have converted to full or part-time employment following their internship.
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In 2021, we centered our approach to cultivating the best culture by starting with Inclusion; where the thoughts, perspectives and ideas of all individuals are respected and valued. Our approach emphasizes meeting the needs of all team members beyond psychological and physical safety, where all groups have the same access to power and opportunity.
This started with our continuous celebration of culture and heritage across the globe. We celebrate days, months, and people of significance in every region throughout the year to build community and bring awareness to employee experience and identity.
Our annual Inclusion Survey, which launched in 2021, gave us an opportunity to learn more about the rich diversity of our global workforce, their experiences, and perception of our culture. We have set goals to continue improving the results of our Inclusion Survey each year. The feedback from the survey informs how we address each stage of the employee life-cycle starting with attracting talent and our welcoming program.
Our total rewards package combines competitive pay and world-class benefits for all of our team members. This includes our Flexible First workplace philosophy, base pay, short- and long-term incentives, and exceptional health and welfare benefits, including paid parental leave, two paid days of volunteer time off, unlimited paid time off for our exempt U.S. based team members, and retirement benefits.
We make significant yearly grants of discretionary equity awards in the form of restricted stock or restricted stock units to individuals other than our executive leadership to create an opportunity for CSGers to share in our Company’s success and the value we create together.
Our goal is to ensure equitable pay by role and level while supporting pay for performance. We are constantly evaluating our pay to ensure equity and consistent treatment across our entire team through pay equity audits and random checks to confirm our compensation programs are based on performance and free from bias. Throughout our compensation cycle, we are committed to:
Education for all managers and team members about fair pay practices and reducing unconscious bias in pay decisions;
Transparency in our compensation philosophy and awards; and
Designing our hiring, promotion, and compensation decisions to promote pay equity.
We do not request current or past salary information on our employment applications. In addition, we believe that transparency in compensation decisions and pay ranges is critical to promoting fair pay, and as such we post salary ranges on all U.S. job postings.
Over the years, CSG has created an environment that encourages moments of thanks through formal and informal programs. Employee recognition is a foundational aspect of everyday life at CSG, helping us bring our teams together to celebrate big wins and everyday moments. Our goals are to:
Foster a culture of appreciation and gratitude;
Celebrate moments that matter, both personally and professionally; and
Applaud those living our Guiding Principles.
Our approach to team member recognition is fluid and agile. Rather than creating a one-size-fits-all program for the entire Company, we provide flexibility and options to allow for a more meaningful experience for our team members. We provide standard, formal recognition opportunities through a corporate managed program, while at the same time encouraging our regional/functional partners to create programs that are meaningful to them.
An important part of our “whole person” philosophy is being mindful of the wellbeing of our team members and their families. To that end, we provide health benefits and services and sponsor other initiatives designed to promote mental and physical wellness.
CSG’s competitive benefits provide choices to meet the diverse needs of our team members. In the U.S., we offer a choice of medical coverage plans as well as prescription drug, dental, vision, life insurance, disability coverage and a variety of voluntary benefits. CSG covers most of the cost of medical coverage, including 100% of the cost for in-network preventive care, annual physicals, or wellness exams.
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In our effort to provide a simple and user-friendly experience to our team members, we implemented a healthcare concierge service that provides a single point of contact and personalized benefit support in one single place.
We also provide easy access to Telehealth to ensure team members have safe and convenient access to healthcare. We opted to support our team members by waiving the employee cost-share under our medical plans for team members who receive treatment under a COVID-19 admission or diagnosis code, including for emergency department visits and observation stays resulting in an admission to a network hospital. Internationally, we offer comprehensive and market competitive health and welfare benefits in each country where we have employees.
In the U.S., CSG provides generous paid parental leave to all parents welcoming new children, including adoptive parents and gestational and surrogate carriers. We also offer a competitive adoption assistance program to reimburse team members for relevant costs of adopting a child.
Our global paid parental leave benefits vary according to local laws and regulations. Overall, we are committed to supporting new parents in their journey to define a new normal of work-life integration following the arrival of their bundles of joy through mentorship, coaching, and our Flexible First policy.
The mental health of our team members is of the utmost importance. In addition to being transparent about the importance of being mindful of mental health and sharing personal stories when possible to contribute to destigmatizing mental health issues, we provide our team members with global support to address mental health issues. We provide an employee assistance program (EAP) globally that is available 24 hours a day, 365 days a year for free professional mental health resources, substance abuse support, and assistance for financial challenges and stress management. In the U.S., our team members have robust access and coverage for mental and behavioral healthcare through our medical plans, and we regularly communicate with our team members to maintain awareness of our programs and support systems.
The financial wellbeing of our team members is a priority for us. We offer training and frequent communications that provide access to a variety of resources, from basic to advanced concepts and topics, to meet the wide range of financial needs our team members have. In particular, team members have access to one-on-one support through our Retirement Plan record keeper to help them meet their individual financial goals.
We are always mindful about the safety of our team members, whether in our output services centers (“OSCs”), at their home offices, or traveling around the world. Our global Employee, Health and Safety (“EHS”) programs strive to provide all teammates with not only a safe and healthy work environment but also with guidance and training. CSG complies with all applicable regulatory and legal requirements.
Throughout the COVID-19 pandemic, we have emphasized employee safety and wellbeing. At the start of the pandemic, we closed our collaboration centers and mobilized most of our teammates to a home office setting. Our OSCs remained operational throughout the pandemic, with required mask wearing and social distancing. Our global collaboration centers closed or operated at limited capacity through all of 2021, depending on local COVID-19 case counts and local regulations relating to capacity restrictions. Currently all our global collaboration centers are open at full capacity, welcoming CSGers as our Flexible First model allows each individual to choose what way of working enables them to succeed in work and in life.
We believe in openness and transparency about the importance of wellness and are constantly evaluating how best to support our CSG team members. In 2021, we introduced the first CSGMeDay, a global, company-wide day off to rest and recharge. We encouraged our team members to take this time off to reset and do something they love to do, and to share their adventures and stories with the rest of CSG and the world by using #CSGMeDay on social platforms.
Our wellness, togetherness, and fitness challenge, also launched in 2021, engages CSGers in a friendly competition to drive mental and physical wellbeing, connection, and community amongst our global team members. Our team members logged almost 3,200 hours of mental or physical fitness activities over a four-week period. The challenge also provided an opportunity to connect with other competitors – over 5,500 ‘togetherness’ conversations took place, strengthening our teams and building a stronger community. The success and overwhelming positive feedback of this initiative created strong demand for a second challenge in 2022.
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To achieve our goals as a business, we must retain and grow our most important asset: our people. We leverage Glint™ to solicit feedback from our team members on a recurring basis so we can understand and take action to improve employee experience, engagement, and satisfaction. Glint’s™ bi-annual survey provides a platform for the entire organization to have a voice and be heard on matters such as what it’s like to work at CSG, what we do well, and what areas we can improve. The adaptable framework and technology allow us to easily understand statistical and predictive links between employee engagement, various drivers, and business outcomes.
Employee feedback is important, but equally critical are the actions taken and how we respond to that feedback. All managers act on survey feedback by enabling teams to transparently share results, have conversations about priorities, and plan how they will address issues raised by creating focus areas using Glint’s™ technology. Action plans are tracked throughout the year and correlated with survey results in the next survey cycle. Those actions that effectively move the needle in the right direction are shared globally so all team members benefit.
During 2021, the Board held seven meetings. All directors attended at least 75% of the aggregate of the total number of meetings of the Board (during the period for which he or she was a director) and of the committees on which they served (during the period that he or she served). In addition, during 2021 the Board held six executive sessions during which only independent directors were present. The Board expects to continue to conduct executive sessions limited to non-employee directors at least twice a year. Our non-employee directors may schedule additional executive sessions at their discretion.
Historically, most shareholders vote by proxy. Accordingly, directors are not required to attend our annual meetings. We expect, but do not require, employee director(s) to attend if their schedules permit, and non-employee directors are welcome to attend if they wish. All of our nominated directors and continuing directors attended our 2021 Annual Meeting, except for Mr. Barnes. The Board scheduled the Annual Meeting to coincide with a regular quarterly meeting of the Board so that all members attending such Board meeting could more easily attend the Annual Meeting as well.
We invite shareholders or any other interested party to send written communications to the Board are subjector to certain advance notice and informational requirements. Stockholders may obtain a copyindividual Board members. Please send your letter in care of the relevant bylaw provisions from our Secretary at CSG Systems International, Inc., 9555 Maroon Circle, Englewood, Colorado 80112.
Since 2005, an independent director has served as non-executive Chairman of the Board. Currently, Mr. Reed serves in that position. We believe it is beneficial to separate the roles of Board Chairman and CEO for two reasons: the responsibilities of each position can be clearly delineated, and each individual can devote more time to a single position.
Our Corporate Governance Guidelines permit the Board to modify this leadership structure. In the future, if the Board believes it would be in the best interest of the Company andat the address of our stockholders,principal offices as shown on the Board may decidefirst page of this proxy statement or via email to our Investor Relations Department at john.rea@csgi.com. Any letter that one person should serve as both CEO and Board Chairman.
Code of Ethics and Business Conduct
Our Board has adopted a Code of Ethics and Business Conduct applicablerelates to all directors, officers, and employeesaccounting, internal accounting controls, or auditing matters will be forwarded to the Chair of the Audit Committee. All other appropriate letters will be forwarded to the entire Board or to the individual Board member(s) to whom they are addressed. If a letter relates to publicly available information about the Company andor our subsidiaries. Our Codestock, the Secretary will respond to the writer directly. If a letter is primarily commercial in nature or, in the Secretary’s opinion, relates to an improper or irrelevant topic, the Secretary will make a record of Ethics and Business Conduct and Corporate Governance Guidelines are available on our website under Investor Relations, Corporate Governance, located at http://ir.csgi.com/documents.cfm. Information on our website isit, but will not incorporated by reference in this proxy
statement. We will disclose on our website any amendmentstransmit the communication to our Code of Ethics and Business Conduct, or any waiver of a provision of our Code of Ethics and Business Conduct that is required to be disclosed under applicable rules of the SEC. Historically, we have had minimal substantive changes to our Code of Ethics and Business Conduct, and there have not been any waivers that are required to be disclosed.Board.
There are no family relationships between any of our directors or executive officers. There are no arrangements between any director, nominee, or executive officer of the Company and any other person pursuant to which such director, nominee, or executive officer was selected for such position. NoneThere are no material legal proceedings pending where any of our directors, have been involved inofficers, affiliates, or shareholders of more than 5% of our stock (or any legal proceedings duringassociates of any of the past 10 years requiredforegoing) is a party adverse to the Company.
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The Board is divided into three classes with staggered terms. The terms of our Class I Directors will expire at the Annual Meeting.
The Board, upon recommendation of the Nominating and Corporate Governance Committee, has nominated Mr. Conley, Mr. Cooper, and Mr. Fawaz to be disclosedelected as Class I Directors at the Annual Meeting. Mr. Fawaz currently is a Class II director, but in thiscompliance with our bylaws (which requires each class of directors to consist, as nearly as possible, of one-third of the total number of directors), Mr. Fawaz consented to, and the Board at its February 2022 meeting approved, a move of Mr. Fawaz from Class II to Class I. In the interests of Board refreshment, Ms. Obuchowski and Mr. Reed, who currently are Class I Directors, were not nominated for re-election to the Board and their terms will end at the Annual Meeting.
Unless a proxy statement.is marked otherwise, the person acting under the accompanying proxy will vote to elect Mr. Conley, Mr. Cooper, and Mr. Fawaz as the Class I Directors to serve until the 2025 annual meeting of shareholders. If a nominee declines or is unable to serve, then the person acting under the proxy may vote for the election of a substitute nominee selected by the Board, if any. We expect that all three nominees will be able to serve, and each of the nominees has consented to serve as a director.
 | THE BOARD RECOMMENDS A VOTE FOR THE ELECTION OF EACH OF THE THREE NOMINEES FOR CLASS I DIRECTOR. |
CSG Systems International, Inc. 2016 Proxy Statement9
COMPENSATION OF DIRECTORSThe following information relates to the Board’s nominees for election at the Annual Meeting and to the other directors whose terms of office will continue after the Annual Meeting.
During 2015, each non-employee director of the Company received an annual fee of $75,000, payable in quarterly installments. Additionally, each non-employee director receives an annual equity grant of restricted stock as determined by the Compensation Committee, which vests on the first anniversary of the grant. The annual Chairman retainers in 2015, also paid in quarterly installments, were as follows:
GREGORY A. CONLEY | ||
 Age 67 Director Since: Member of Other public boards | Mr. Conley has served as a board member of TTEC holdings (Nasdaq: TTEC) since 2012, where he is the Chair of the Audit Committee and a member of the Compensation Committee, and is a board member of Travelport, a travel technology company, on which he has served since May 2019. Mr. Conley brings over 30 years of experience in the technology and software industries having served as CEO of Aha! Software, a privately held predictive analytics and cloud computing company, as CEO of Odyssey Group, a Switzerland-based technology services and software company, and as CEO of Verio, a leading global provider of hosting and network services. Prior to these roles, Mr. Conley was the CEO and a board member of Tanning Technology (Nasdaq: TANN), Global General Manager of e-markets and Global General Manager of Travel and Transportation Industries at IBM (NYSE: IBM), General Counsel and CEO of Galileo International (a predecessor company of Travelport) from 1989-1995, and an attorney at the law firm of Covington & Burling from 1983-1989. Mr. Conley holds a J.D. from Georgetown University and a B.S. in Electrical Engineering from Purdue University. SKILLS & QUALIFICATIONS: Industry & Innovation: Over 30-years of experience in the technology and software industries. Experience: Has held the CEO position at numerous technology and software companies including Aha! Software, Odyssey Group, and Verio. Experience serving as director and Audit committee chair of public company in the customer engagement sector. | |
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| ||
 Age 65 Director since: Vice Chair of the Chair of Member of Audit |
SKILLS & QUALIFICATIONS: Industry & Innovation: Nearly 25 years of experience in the communications industry at multiple enterprises. Experience: Significant experience in operational finance. Held executive management positions at several multi-billion-dollar corporations in telecommunications and other related industries, with a focus on risk assessment and mitigation, capital planning, M&A, and the linkage between finance and strategy. Director and committee positions with various industry associations and non-profit boards of directors. | |
MARWAN H. FAWAZ | ||
 Age 59 Director since: Chair of Other public boards | Mr. Fawaz is currently an Executive Advisor to Google and Alphabet Inc. (since January 2019), after joining Alphabet as the CEO of Nest Labs, Inc in May 2016. He offers a wealth of knowledge and expertise developed from his time as Executive Vice President and CEO of Google/Motorola Mobility from 2012 to 2013 and Executive Vice President of Strategy and Operations and Chief Technology Officer of Charter Communications from 2006 to 2011. Earlier in his career, he served as Senior Vice President and Chief Technology Officer of Adelphia Communications from 2003 to 2006 and held leadership positions for other cable industry companies, including MediaOne. He was the founder and principal of Sarepta Advisors, a strategic advisory and consulting group supporting the technology, media, and telecommunications industries. Mr. Fawaz holds an M.S. degree in Electrical and Communication Engineering and a B.S. degree in Electrical Engineering, both from California State University at Long Beach. SKILLS & QUALIFICATIONS: Industry & Innovation: More than 30 years of experience in the media, cable, telecommunications, and broadband industries, serving in a variety of executive positions with multiple large enterprises. Comprehensive understanding of the Experience: Served in multiple senior executive roles, with an emphasis in strategy, operations, and technology. Significant experience serving as a director of another public company and as an advisory board member to several large, global companies. | |
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DAVID G. BARNES | ||
 Age 60 Director since: Chair of | Mr. Barnes is Chief Financial Officer of Trimble Inc., a position he assumed in January 2020. Previously, he served as Executive Vice President, Global Operations of Stantec Inc., a publicly traded global provider of engineering, consulting, and construction services from 2016 through 2018. From 2009 through 2016, he served as Executive Vice President and CFO of MWH Global Inc., an employee-owned engineering and construction firm that was acquired by Stantec Inc. in 2016. From 2006 to 2008, he was Executive Vice President of Western Union Financial Services. From 2004 to 2006, Mr. Barnes served as CFO of Radio Shack Corporation, and from 1999 to 2004, he was Vice President, Treasurer, and U.S. CFO for Coors Brewing Company. Mr. Barnes holds an M.B.A. degree from the University of Chicago and a B.A. degree from Yale University. SKILLS & QUALIFICATIONS: Industry & Innovation: Hands-on strategic, financial, and business development experience in emerging and mature markets at both domestic and global companies. Extensive experience in driving shareholder value in a variety of complex international businesses. Experience: Has served as a member of senior leadership teams of large businesses in diverse industries, with a strong emphasis on finance and strategy development. Significant knowledge of public company governance functions, such as approval of annual budgets, compensation, and financial performance accountability mechanisms for key stakeholders. | |
DR. RAJAN NAIK | ||
 Age 50 Director since: Member of Other public boards | Dr Naik has been Chief Strategy Officer for Motorola Solutions, Inc. since 2016, where he is responsible for the corporate strategy organization, M&A, venture capital portfolio, and competitive and market intelligence. Prior to joining Motorola Solutions, Dr. Naik held the role of Senior Vice President, Chief Strategy Officer at Advanced Micro Devices (AMD), a provider of high-performance computing, graphics, and visualization technologies, for 3 years. From 2000 to 2012, Dr. Naik was a Partner at McKinsey & Company in the technology/media/telecom practice. Dr. Naik holds a BSc. degree in Engineering from Cornell University and a Ph.D. degree in Engineering from the Massachusetts Institute of Technology. SKILLS & QUALIFICATIONS: Industry & Innovation: As a former partner at McKinsey & Company, led multiple large-scale margin improvement programs for technology and telecommunications companies across sales operations, software and services delivery and procurement. Experience: Deep experience driving growth and increasing shareholder value, having led corporate strategy, M&A, CTO, and corporate venture capital teams at Fortune 500 enterprises. | |
HAIYAN SONG | ||
 Age 56 Director since: Member of | Ms. Song has been Executive Vice President and General Manager, Security & Distributed Cloud at F5 Networks since 2021. Prior to that, she served as Senior Vice President and General Manager of Security Markets for Splunk, Inc. from 2014 to 2020. From 2010 to 2014 she held engineering and general manager roles within Hewlett Packard’s ArcSight Business Unit. Ms. Song was Vice President of Engineering & Product with ArcSight for five years, and joined Hewlett Packard when it acquired ArcSight in 2010. Ms. Song holds both M.S. and B.S. degrees in Computer Science from Florida Atlantic University. She also studied at Tsinghua University in China and completed the Stanford University Graduate School of Business Executive Program in General Management in 2012. SKILLS & QUALIFICATIONS: Industry & Innovation: Nearly 30 years of experience in enterprise software, SaaS, and cybersecurity. Familiarity with serving customers globally, particularly in Asian markets, among key industry verticals, and in both the private and public sectors. Strong track record of building disruptive and industry-leading products. Named one of the 50 Most Powerful Women in Tech by the National Diversity Council in 2016. Experience: Served as a member of senior leadership teams across a wide spectrum of companies from startup to large businesses in software and cybersecurity industries. Incubated and grew new businesses and secured market share leadership, including building the security business at Splunk, Inc. from inception and scaling annual revenue to more than $1 billion. | |
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| BRIAN A.SHEPHERD | |
 Age 54 Director since: | Mr. Shepherd was appointed President and CEO of CSG and a member of our Board in January 2021. He joined the Company in 2016 and, before becoming CEO, he was Executive Vice President and Group President of CSG, where he led the profit and loss function for the entire global organization. He also served as Executive Vice President and President of Global Broadband, Cable and Satellite Business from 2016 to 2017, where he focused on accelerating the growth and strategic direction of CSG’s global broadband, cable and direct broadcast satellite business. Mr. Shepherd received an M.B.A. degree from Harvard Business School and graduated magna cum laude from Wabash College with a B.A. degree in Economics. SKILLS & QUALIFICATIONS: Industry & Innovation: With 20 years of experience in the cable and communications industries, Mr. Shepherd has built wide and deep relationships with C-suite leaders, decision-makers, and policy influencers who have shaped these industries globally. Known for his ability to lead and grow profitable businesses engaged in enterprise SaaS and cloud-based solutions. Experience: Held executive roles at companies such as TeleTech, Amdocs, DST Innovis, and McKinsey & Company. Successfully led the acquisition and integration of over two dozen software, payments, analytic, and consulting companies. Brings extensive global sales, services and delivery, strategy, corporate development, and marketing expertise. |
| FRANK V.SICA | |
 Age 71 Director since: Member of Other public boards Safe Bulkers, Inc. JetBlue Airways | Mr. Sica has been a Partner of Tailwind Capital (a private equity firm) since 2006. He currently serves as a director on the boards of Kohl’s Corporation (since 1988) and Safe Bulkers, Inc. (since 2008), and formerly served as a director on the board for JetBlue Airways (December 1998 to May 2020). Mr. Sica holds an M.B.A. degree from the Tuck School of Business at Dartmouth College and a B.A. degree from Wesleyan University. SKILLS & QUALIFICATIONS: Industry & Innovation: Comprehensive understanding of CSG’s business and markets, having served as a Company director for more than 25 years. Experience: Wide-ranging experience in venture capital, private equity, M&A, capital markets, management recruitment, executive compensation, and strategic planning across a broad range of industries. Broad experience serving as a director of multiple large public companies. |
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| ||
 Age 50 Director since: Member of Other public boards | Mr. Tavares is the President and CEO of VantageScore, a leading national credit score and analytics company. He is also Chairman of the board of directors (and former President and CEO) of Digital Commerce Alliance, a leading global trade association for the digital commerce, payments, and fin-tech industries, since 2013. Previously Mr. Tavares was Senior Vice President and the Global Head of the Information Products Business Unit at Visa, Inc. from May 2012 to August 2013. Earlier, Mr. Tavares was with First Data Corp. (now part of Fiserv) from 2006 to 2012 as Senior Vice President and the Head of the Global Information and Analytics Business Unit, and also held other senior finance roles. Mr. Tavares holds a J.D. degree from the Boston University School of Law; an M.B.A. degree from the Boston College Carroll School of Management; and a B.S. degree in Electrical and Computer Engineering from Tufts University. SKILLS & QUALIFICATIONS: Industry & Innovation: Senior Executive in the payments industry for over 15 years including positions with Visa, First Data, and Digital Commerce Alliance. Authored over 15 issued or pending patents in payments, digital commerce, and analytics. Experience: Held executive management positions at several multi-billion-dollar public companies in the payments and analytics industries with a focus on digital commerce and scaling global business. Independent board director on public company boards. Audit | |
TSE LI “LILY” YANG | ||
 Age 49 Director since: Member of | Ms. Yang is currently Chief Financial Officer of Strava, Inc., where she is responsible for the finance and legal functions. From 2017-2021, Ms. Yang was the Chief Accounting Officer for Pinterest, Inc. where she was instrumental in taking the company from late stage private to public in 2019 and enabling the scale of growth by 5X. From 2015 to 2017, she spent two years with Medivation as the Vice President of Finance and Accounting where she was tasked with driving strategic growth and expansion before the company was acquired by Pfizer. Ms. Yang worked at Gilead Sciences from 2003 to 2015, finishing her tenure as Vice President and Corporate Controller. Ms. Yang holds a B.S. degree in Accounting and Managerial Information Systems from Boston University and is a certified public accountant. SKILLS & QUALIFICATIONS: Industry & Innovation: Nearly 30 years of experience in diverse organizations across the technology, healthcare, and other high growth industries. Experience: Strong financial and accounting background with leadership experience in regulatory compliance, investment management, M&A, credit and business risk. | |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 31 |
The table below sets forth each shareholder known by us to own beneficially more than 5% of our outstanding common stock as of February 28, 2022.
Percentage ownership calculations for beneficial ownership are based on 32,272,599 shares outstanding at the close of business on February 28, 2022.
Name and Address of Beneficial Owner | Shares of Common Stock Beneficially Owned |
| Percentage of Common Stock Outstanding |
BlackRock, Inc. 55 East 52nd Street New York, New York 10055 | 5,934,493 | (1) | 18.39% |
The Vanguard Group 100 Vanguard Boulevard Malvern, Pennsylvania 19355 | 4,191,685 | (2) | 12.99% |
(1) Based solely on Schedule 13G/A filed with the SEC on January 25, 2022, by BlackRock, Inc. (2) Based solely on Schedule 13G/A filed with the SEC on February 9, 2022, by The Vanguard Group. | |||
The table below sets forth, to our knowledge, the beneficial ownership of common stock held by each director and each NEO of the Company included in the 2021 Summary Compensation Table, individually, and by all directors and executive officers of the Company as a group, in each case, as of February 28, 2022.
Beneficial ownership is determined in accordance with SEC rules, which generally attribute beneficial ownership of securities to persons who possess sole or shared voting power or investment power with respect to those securities and includes shares of common stock issuable upon vesting or exercise of equity awards within 60 days of February 28, 2022. The information is not necessarily indicative of beneficial ownership for any other purpose. Percentage ownership calculations for beneficial ownership are based on 32,272,599 shares outstanding at the close of business on February 28, 2022.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 32 |
Name | Total Shares of Common Stock Beneficially Owned(1)(2) | Percentage of Common Stock Outstanding |
| |
David G. Barnes | 25,886 |
| * |
|
Elizabeth A. Bauer | 29,730 |
| * |
|
Gregory A. Conley | - |
| * |
|
Ronald H. Cooper | 38,854 |
| * |
|
Marwan H. Fawaz | 20,086 |
| * |
|
Rolland B. Johns | 76,150 |
| * |
|
Kenneth M. Kennedy | 141,628 |
| * |
|
Dr. Rajan Naik | 14,086 |
| * |
|
Janice I. Obuchowski(1) | 53,747 |
| * |
|
Donald B. Reed | 45,954 |
| * |
|
Brian A. Shepherd | 259,571 |
| * |
|
Frank V. Sica | 32,136 |
| * |
|
Haiyan Song | 7,768 |
| * |
|
Silvio Tavares | 7,768 |
| * |
|
Hai Tran | - |
| * |
|
Tse Li “Lily” Yang | 3,672 |
| * |
|
All directors and executive officers as a group | 757,036 |
| 2.35% |
|
* Less than 1% of the outstanding common stock. | ||||
(1) Except as otherwise indicated, all of the shares reflected are shares of common stock and all persons listed have sole voting and investment power with respect to the shares beneficially owned by them, subject to applicable community property laws. Ms. Obuchowski has shared voting and investment power with respect to 3,000 shares owned jointly with her spouse. | ||||
(2) Includes restricted shares of common stock administered under the Amended and Restated 2005 Stock Incentive Plan of the Company, which have not vested and are itemized in the table below. Each holder of restricted shares may vote such shares but may not sell, transfer, or encumber such shares until they vest in accordance with the applicable restricted stock award agreement. | ||||
Name | Number of Restricted Shares That Have Not Vested as of February 28, 2022 | |||
David G. Barnes | 3,672 | |||
Elizabeth A. Bauer | 20,872 | |||
Gregory A. Conley | - | |||
Ronald H. Cooper | 3,672 | |||
Marwan H. Fawaz | 3,672 | |||
Rolland B. Johns | 45,416 | |||
Kenneth M. Kennedy | 93,500 | |||
Dr. Rajan Naik | 3,672 | |||
Janice I. Obuchowski | 3,672 | |||
Donald B. Reed | 3,672 | |||
Brian A. Shepherd | 175,811 | |||
Frank V. Sica | 3,672 | |||
Haiyan Song | 3,672 | |||
Silvio Tavares | 3,672 | |||
Hai Tran | - | |||
Tse Li “Lily” Yang | 3,672 | |||
TOTAL | 372,319 | |||
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 33 |
After consultation with the Compensation Committee's independent compensation consultant, including an analysis of peer and market practices, the Board sets the director compensation program to be in line with similar companies in our industry. Periodically, our Board of Directors reviews the competitiveness of our compensation program for non-employee directors. Based on such analysis, supported by the Compensation Committee’s independent compensation consultant, the Nominating and Corporate Governance Committee decided not to change the director compensation program in 2021. Our non-employee director compensation program consists of the following:
| |||
Annual retainer for non-employee director service(2) | 75,000 | ||
Additional annual retainer for Chair of the Board | $ | 50,000 | |
Additional annual retainer for committee member service(3) | $ | 7,500 | |
Additional annual retainer for committee chair service | |||
Audit Committee | $ | 16,000 | |
Compensation Committee | $ | 16,000 | |
Nominating and Corporate Governance | $ | 10,000 | |
Equity Compensation(4) | |||
Annual equity | $ | 175,000 | |
(1) Cash retainers are paid in advance in quarterly installments, subject to such non-employee director's continued service on the Board. (2) A director who is an officer or employee of the Company does not receive additional compensation for serving as a director or committee member. Mr. Shepherd is the only current officer or employee of the Company who serves as a director, and he does not currently serve on any Board committee. (3) Each non-employee director who serves as a committee member is entitled to only one Member retainer irrespective of the number of Committees on which such non-employee director serves. (4) Each non-employee director receives an annual equity grant in the form of restricted stock awards as determined by the Compensation Committee, which vests one year from the grant date. Numbers of shares awarded are calculated by dividing the annual equity grant amount by the twenty-day trailing average of our common stock closing share price on Nasdaq (“CSGS 20-day Trailing Average”), calculated through the date of the grant. | |||
|
| |
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 34 |
The following table contains information about the compensation of our non-employee directors for 2021. A director who is an officer or employee of the Company does not receive additional compensation for serving as a director or committee member. Mr. GriessShepherd is the only current officer or employee of the Company who serves as a director, and he does not currently serve on any Board committee.
The following table contains information about the compensation of our non-employee directors for 2015.director. All amounts have been rounded to the nearest dollar.
dollar and pro-rated for actual time of service on the Board or committees.
Name |
| Total Fees Earned |
|
| Stock Awards (1) |
|
| Total |
| Fees Earned |
| Stock Awards(1)(2) | Total |
| |||||||
David G. Barnes |
| $ | 91,000 |
|
| $ | 95,520 |
|
| $ | 186,520 |
| $ | 98,500 |
| $ | 173,282 | $ | 271,782 |
| |
Ronald H. Cooper |
|
| 85,000 |
|
|
| 95,520 |
|
|
| 180,520 |
| $ | 98,500 |
| $ | 173,282 |
| $ | 271,782 |
|
John L. M. Hughes (2) |
|
| 75,000 |
|
|
| 95,520 |
|
|
| 170,520 |
| |||||||||
Gregory A. Conley(3) | $ | 20,625 |
| $ | - |
| $ | 20,625 |
| ||||||||||||
Marwan H. Fawaz |
|
| - |
|
|
| - |
|
|
| - |
| $ | 92,500 |
| $ | 173,282 |
| $ | 265,782 |
|
Dr. Rajan Naik | $ | 82,500 |
| $ | 173,282 |
| $ | 255,782 |
| ||||||||||||
Janice I. Obuchowski |
|
| 75,000 |
|
|
| 95,520 |
|
|
| 170,520 |
| $ | 82,500 |
| $ | 173,282 |
| $ | 255,782 |
|
Donald B. Reed |
|
| 125,000 |
|
|
| 95,520 |
|
|
| 220,520 |
| $ | 132,500 |
| $ | 173,282 |
| $ | 305,782 |
|
Frank V. Sica |
|
| 91,000 |
|
|
| 95,520 |
|
|
| 186,520 |
| $ | 82,500 |
| $ | 173,282 |
| $ | 255,782 |
|
Donald V. Smith |
|
| 75,000 |
|
|
| 95,520 |
|
|
| 170,520 |
| |||||||||
James A. Unruh |
|
| 75,000 |
|
|
| 95,520 |
|
|
| 170,520 |
| |||||||||
Totals |
| $ | 692,000 |
|
| $ | 764,160 |
|
| $ | 1,456,160 |
| |||||||||
|
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| |||||||||
(1) This column reflects the aggregate grant date fair value of restricted stock awards granted during the year computed in accordance with the accounting rules, Financial Accounting Standards Board ("FASB") has issued Accounting Standards Codification ("ASC") Topic 718. The aggregate grant date fair value is calculated using the closing price of our common stock on the date of grant, August 19, 2015. Each Board member was granted 3,000 shares of restricted stock in 2015, which will vest one year from the date of grant. |
| ||||||||||||||||||||
(2) As a foreign (U.K.) citizen, Mr. Hughes is subject to mandatory U.S. tax withholding on his director fees and stock awards which is deducted from his compensation. |
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(3) Mr. Fawaz joined the Board effective March 1, 2016. |
|
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|
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|
|
|
|
|
|
| |||||||||
Haiyan Song | $ | 82,500 |
| $ | 173,282 |
| $ | 255,782 |
| ||||||||||||
Silvio Tavares | $ | 82,500 |
| $ | 173,282 |
| $ | 255,782 |
| ||||||||||||
James A. Unruh(4) | $ | 41,250 |
|
| - |
| $ | 41,250 |
| ||||||||||||
Tse Li “Lily” Yang | $ | 82,500 |
| $ | 173,282 |
| $ | 255,782 |
| ||||||||||||
(1) This column reflects the aggregate grant date fair value of restricted stock awards granted during the year computed in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. The value reported excludes the impact of estimated forfeitures, if any. Assumptions used to determine these amounts are set forth in Note 13 of our 2021 Form 10-K. (2) The aggregate number of restricted stock awards that had not vested as of December 31, 2021, was 3,672 shares for each non-employee director, except for Mr. Conley and Mr. Unruh. (3) Mr. Conley was appointed to the Board and the Compensation Committee on October 29, 2021. (4) Mr. Unruh's term ceased on May 20, 2021. | (1) This column reflects the aggregate grant date fair value of restricted stock awards granted during the year computed in accordance with the Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC") Topic 718. The value reported excludes the impact of estimated forfeitures, if any. Assumptions used to determine these amounts are set forth in Note 13 of our 2021 Form 10-K. (2) The aggregate number of restricted stock awards that had not vested as of December 31, 2021, was 3,672 shares for each non-employee director, except for Mr. Conley and Mr. Unruh. (3) Mr. Conley was appointed to the Board and the Compensation Committee on October 29, 2021. (4) Mr. Unruh's term ceased on May 20, 2021. | ||||||||||||||||||||
10 CSG Systems International, Inc. 2016 Proxy Statement
The Board is divided into three classes presently consisting of three Class I Directors, four Class II Directors, and three Class III Directors whose present terms continue until the annual meetings of stockholders of the Company to be held in 2016, 2017, and 2018, respectively, and until their respective successors are elected and qualified.
Unless the proxy is marked otherwise, the person acting under the accompanying proxy will vote to elect Messrs. Cooper and Reed, and Ms. Obuchowski, as the Class I Directors to serve until 2019. The proxy may not be voted for more than three directors. If a nominee is unable to serve, then the person acting under the proxy may vote the proxy for the election of a substitute nominee. The Company presently expects that all three nominees will be able to serve.
The Board Recommends a vote FOR the Election of Each of the Three Nominees for Class I Director.
The following information relates to the Board’s nominees for election at the Annual Meeting and to the other directors of the Company whose terms of office will continue after the Annual Meeting:
Nominees for Class I Directors – Term to Expire in 2019:
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Mr. Cooper is retired. He most recently served as the President and Chief Executive Officer of Clear Channel Outdoor Americas, Inc. from 2009 through 2012. Prior to this position, he was a Principal at Tufts Consulting LLC from 2006 through 2009. Previously, he spent nearly 25 years in the cable and telecommunications industry, most recently at Adelphia Communications where he served as President and Chief Operating Officer from 2003 to 2006. Prior to Adelphia, Mr. Cooper held a series of executive positions at AT&T Broadband, RELERA Data Centers & Solutions, MediaOne and its predecessor Continental Cablevision, Inc. He has served on various boards of directors and committees with the National Cable Television Association, California Cable & Telecommunications Association, Cable Television Association for Marketing, New England Cable Television Association, and Outdoor Advertising Association of America. Mr. Cooper holds a B.A. degree from Wesleyan University.
Skills and Qualifications
Corporate Governance: Director and committee positions with various industry associations and non-profit boards of directors.
Industry Experience: Nearly 25 years of experience in the communications industry serving in executive positions at Adelphia, AT&T Broadband, RELERA Data Centers & Solutions, MediaOne and its predecessor Continental Cablevision.
Leadership Experience: Served in multiple senior executive roles, including as President and Chief Executive Officer of Clear Channel Outdoor Americas, Inc. and as President and Chief Operating Officer at Adelphia Communications. Experience in the acquisition and development of executive talent.
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CSG Systems International, Inc. 2016 Proxy Statement11
Ms. Obuchowskiis the founder and President of Freedom Technologies, Inc., a research and consulting firm providing public policy, strategic, and engineering advice to companies in the communications sector, government agencies, and international clients, a position she has held since 1992. She was previously Chairman and the founder of Frontline Wireless, Inc., a public safety network start-up from 2007 through 2008. In 2003, Ms. Obuchowski was appointed by President George W. Bush to serve as Ambassador and Head of the U.S. Delegation to the World Radiocommunication Conference. She has served as Assistant Secretary for Communications and Information at the Department of Commerce and Administrator for the National Telecommunications and Information Administration (“NTIA”), and as the head of international government relations at NYNEX Corporation (now part of Verizon). She also has served on several non-profit and other publicly traded company boards. She holds a J.D. degree from Georgetown University and a B.A. degree from Wellesley College, and also attended the University of Paris.
Skills and Qualifications
Corporate Governance: Broad governance experience from her service as a director of multiple public companies and non-profit organizations.
Industry Experience: Extensive knowledge and expertise on various facets of the competitive landscape and government regulations impacting the communications and information technology sectors. Experience in international business affairs through her current and prior board positions, government appointments supporting international communications policies, and as head of international government relations at NYNEX.
Leadership Experience: Current President of Freedom Technologies, Inc. and former Chairman of Frontline Wireless. Led the NTIA, the government agency with internet and telecommunications policy, federal spectrum management, and government research facility responsibilities. Responsible for major U. S. delegations and support personnel at international conferences.
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Mr. Reed is retired. He served as Chief Executive Officer of Cable & Wireless Global from 2000 to 2003. Cable & Wireless Global, a subsidiary of Cable & Wireless plc, is a provider of internet protocol (“IP”) and data services to business customers in the U. S., United Kingdom, Europe, and Japan. From June 1998 until May 2000, Mr. Reed served Cable & Wireless in various other executive positions. Mr. Reed’s career includes 30 years at NYNEX Corporation (now part of Verizon), a regional telephone operating company. From 1995 to 1997, Mr. Reed served NYNEX Corporation as President and Group Executive with responsibility for directing the company’s regional, national, and international government affairs, public policy initiatives, legislative and regulatory matters, and public relations. Mr. Reed holds a B.A. degree in History from Virginia Military Institute.
Skills and Qualifications
Corporate Governance: Significant experience serving as a director of multiple public companies, including large multinationals, and his current position as Chairman of privately-held Oceus Networks Inc.
Financial Experience: Held executive management positions at several multi-billion dollar corporations where he developed expertise in financial management, risk assessment, investment knowledge, and strategic business development.
Leadership Experience: Over 30 years of experience in the domestic and international telecommunications industry including executive leadership positions as Chief Executive Officer for Cable & Wireless Global and as President and Group Executive for NYNEX Corporation. Extensive experience in developing and implementing strategies and policies for the acquisition and development of executive talent.
12 CSG Systems International, Inc. 2016 Proxy Statement
Class II Directors – Term Expires in 2017:
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Mr. Barnes currently serves as the Chief Financial Officer and a director for MWH Global, a private, employee-owned global provider of environmental engineering, construction, and strategic consulting services, a position he has held since 2008. MWH Global has entered into a definitive merger agreement with Stantec Inc., a publicly-traded professional design and consulting firm located in Edmonton, Canada, with an anticipated close date in the second quarter of 2016. From 2006 to 2008, he was Executive Vice President of Western Union Financial Services. From 2004 to 2006, Mr. Barnes served as Chief Financial Officer of Radio Shack Corporation. From 1999 to 2004, he was Vice President, Treasurer and U.S. Chief Financial Officer for Coors Brewing Company. Mr. Barnes holds an M.B.A. degree from the University of Chicago and a B.A. degree from Yale University.
Skills and Qualifications
Corporate Governance: Significant knowledge of public company governance functions such as approval of annual budgets and compensation, and experience being accountable to stakeholders for the organization’s financial performance, gained through executive financial positions at public companies. Also serves as a director of MWH Global.
Financial Experience: Almost 30 years’ experience in finance and strategic development gained from a wide spectrum of well-known and respected companies, including Western Union Financial Services, Radio Shack Corporation, and Coors Brewing Company. Hands-on strategic, financial, and business development experience in emerging and mature markets at both domestic and global companies.
Leadership Experience: Oversaw all financial activities for the United States business and performed the global investor relations function at Coors. Extensive experience in driving shareholder value in a variety of complex international businesses.
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Mr. Fawaz was appointed to the Board in March 2016. With more than 28 years of experience in the media, cable, telecommunications, and broadband industries, Mr. Fawaz offers a wealth of knowledge and expertise, developed from his current role as a principal of Sarepta Advisors, a strategic advisory and consulting group supporting the technology, media, and telecommunications industries, from 2013-present, and past positions as Executive Vice President and Chief Executive Officer of Google/Motorola Mobility from 2012-2013 and Executive Vice President of Strategy and Operations and Chief Technology Officer of Charter Communications from 2006-2011. In addition, he served as Senior Vice President and Chief Technology Officer of Adelphia Communications from 2003-2006, and held leadership positions for other cable industry companies such as MediaOne, among others. Mr. Fawaz is currently an advisory board member of ADT, CenturyLink, Liberty Global plc, and Guavus Inc. He holds an M.S. degree in Electrical and Communication Engineering and a B.S. degree in Electrical Engineering, both from California State University at Long Beach.
Skills and Qualifications
Corporate Governance: Significant experience serving as a director of another public company and as an advisory board member to a number of large corporations with global operations.
Industry Experience: Over 28 years of experience in the cable, broadband, and telecommunications industry serving in executive positions at Google/Motorola Mobility, Charter Communications, Adelphia Communications, and MediaOne. Comprehensive understanding of the business practices and technology used by our largest customers.
CSG Systems International, Inc. 2016 Proxy Statement13
Leadership Experience: Served in multiple senior executive roles, including Chief Executive Officer of Google/Motorola Mobility and Executive Vice President of Strategy and Operations and Chief Technology Officer of Charter Communications.
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Mr. Hughes previously served as Chairman of the board of directors for Intec Telecom Systems plc for nearly six years until it was acquired by us in 2010. Mr. Hughes currently serves as Chairman for several public corporations and for privately-held Zenos Cars. He is also a director for privately-held Scorpion Ventures Limited. Mr. Hughes has been an advisor to Oakley Corporate Finance since 2012 and previously served as an advisor to Advent International, a private equity fund, from 2008 to 2011. Prior to his board positions, from 2000 to 2004, Mr. Hughes served as Executive Vice President and Chief Operating Officer for Thales Group, a European provider of complex systems for the defense, aerospace, and commercial markets. Prior to 2000, he served as President of GSM/UMTS Wireless Networks of Lucent Technologies, and as a director of Convex Global Field Operations and Vice President and Managing Director of Convex Europe, a division of Hewlett Packard Company. Mr. Hughes holds a B.S. degree in Electrical and Electronic Engineering from the Hatfield Polytechnic (now the University of Hertfordshire).
Skills and Qualifications
Corporate Governance: Extensive knowledge of public company governance functions including monitoring the performance of chief executive officers, approving annual budgets and compensation, and being accountable for the organization’s performance, gained through roles as chairman and director for several companies.
Financial Experience: Extensive experience in leading global companies, making and integrating acquisitions, implementing restructuring programs, and enhancing shareholder value through effective management selection and development, sales growth strategies and operational excellence.
Leadership Experience: Several chairman and director positions for large, global communications and technology companies, as well as senior executive positions at various international communications and technology companies including lengthy periods living and working in the United States and France. Direct responsibility for major joint ventures in Japan and Australia and large development centers in India, China, and the United States.
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Mr. Smith is presently retired. Previously, he served as Senior Managing Director of Houlihan Lokey Howard & Zukin, Inc., an international investment banking firm with whom he had been associated from 1988 through 2009, and where he served on the board of directors. From 1978 to 1988, he served as a Principal with Morgan Stanley & Co. Inc., where he headed the company’s valuation and reorganization services. He also serves on the board of directors of several non-profit organizations. Mr. Smith holds an M.B.A. degree from the Wharton Graduate School of the University of Pennsylvania and a B.S. degree from the United States Naval Academy.
14 CSG Systems International, Inc. 2016 Proxy Statement
Corporate Governance: Significant experience serving as a director of several public and non-profit companies.
Financial Experience: Over 40 years of expertise in financial, investment, and valuation analysis as an executive with international investment firms, notably as Senior Managing Director of Houlihan Lokey Howard & Zukin, Inc. and as Principal with Morgan Stanley & Co. Inc., dealing with corporate finance, mergers, acquisitions, financial restructurings, and other financial activities. Provided international investment banking advice and service to clients in various industries around the world.
Industry Experience: Significant advisory experience in markets directly related to our core competency, namely business services, data processing, software, and IT.
CSG Systems International, Inc. 2016 Proxy Statement15
Class III Directors – Term Expires in 2018:
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Mr. Griess currently serves as our President and Chief Executive Officer. He joined CSG in 1996 and held a variety of positions in Operations and Information Technology, until being appointed Executive Vice President of Operations in February 2009, Chief Operating Officer in March 2011, and President in June 2015. In January 2016, Mr. Griess was appointed President and Chief Executive Officer and a member of our Board. Prior to joining CSG, Mr. Griess was Genesis Product Manager with Chief Automotive Systems from 1995 to 1996, and an information systems analyst with the Air Force from 1990 to 1995. Mr. Griess holds an M.A. degree in Management and a B.S. degree in Management from Bellevue University in Nebraska, an A.A.S. degree from the Community College of the Air Force, and an A.S. degree in Business Administration from Eastern Florida State College, formerly Brevard Community College.
Skills and Qualifications
Industry Experience: Extensive knowledge of the businesses and markets we serve, which provides our Board with an acute understanding of business practices and special industry concerns.
Leadership Experience: Our current Chief Executive Officer and President. Brings executive level leadership, strategic thinking, business development, and strong financial oversight skills to the Board.
Financial Experience: Significant executive experience in operational finance, financial management, risk assessment, capital planning, and strategic business development.
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Mr. Sica is currently a Managing Partner of Tailwind Capital. From 2004 to 2005, Mr. Sica was a Senior Advisor to Soros Private Funds Management. From 2000 until 2003, he was President of Soros Private Funds Management, where he oversaw the direct real estate and private equity investment activities of Soros. In 1998, he joined Soros Fund Management where he was a Managing Director responsible for Soros’ private equity investments. From 1988 to 1998, Mr. Sica was Managing Director for Morgan Stanley Merchant Banking Division. In 1996, Mr. Sica was elevated to Co-CEO of Morgan Stanley’s Merchant Banking Division. Mr. Sica holds an M.B.A. degree from the Tuck School of Business at Dartmouth College and a B.A. degree from Wesleyan University.
Skills and Qualifications
Corporate Governance: Broad experience serving as a director of multiple large public companies.
Financial Experience: Wide-ranging experience in venture capital, private equity, mergers and acquisitions, capital markets, management recruitment, executive compensation, and strategic planning across a broad range of commercial industries from his work at Morgan Stanley, Soros, and now at Tailwind Capital. Experience in investment banking serving global clients and in structuring international mergers and acquisitions.
Industry Experience: Comprehensive understanding of our business and markets, having served as a director of our Company for nearly 20 years.
16 CSG Systems International, Inc. 2016 Proxy Statement
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Mr. Unruh became a founding Principal of Alerion Capital Group, LLC (a private equity investment company) in 1998 and currently holds such position. Mr. Unruh was an executive with Unisys Corporation from 1987 to 1997, including serving as its Chairman and Chief Executive Officer from 1990 to 1997. From 1982 to 1986, Mr. Unruh held various executive positions, including Senior Vice President—Finance and Chief Financial Officer with Burroughs Corporation, a predecessor of Unisys Corporation. Prior to 1982, Mr. Unruh was Chief Financial Officer with Memorex Corporation and also held various executive positions with Fairchild Camera and Instrument Corporation, including Chief Financial Officer. He holds an M.B.A. degree from the University of Denver and a B.S. degree from the University of Jamestown.
Skills and Qualifications
Corporate Governance: Significant experience serving as a director of several public and private companies with global operations.
Financial Experience: Broad-based understanding of investments and corporate development in pursuing long-term strategic business objectives as a principal of Alerion Capital Group and as Senior Vice President—Finance and Chief Financial Officer with Burroughs Corporation.
Leadership Experience: Unique combination of expertise in information technology together with business and financial management experience gained through executive positions held at multinational technology firms. Chairman and Chief Executive Officer with Unisys Corporation and Senior Vice President—Finance and Chief Financial Officer with Burroughs Corporation.
CSG Systems International, Inc. 2016 Proxy Statement17
BENEFICIALSHARE OWNERSHIP OF COMMON STOCK
The table below sets forth each stockholder known by us to own beneficially more than 5% of our outstanding common stock as of February 29, 2016.
Name and Address of Beneficial Owner |
| Shares of Common Stock Beneficially Owned |
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| Percentage of Common Stock Outstanding |
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BlackRock, Inc. |
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| 3,311,798 |
| (1) |
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| 10.17% |
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55 East 52nd Street |
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New York, New York 10055 |
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The Vanguard Group, Inc. |
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| 2,966,549 |
| (2) |
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| 9.11% |
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100 Vanguard Boulevard |
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Malvern, Pennsylvania 19355 |
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FMR LLC |
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| 1,965,933 |
| (3) |
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| 6.04% |
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245 Summer Street |
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Boston, Massachusetts 02210 |
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Renaissance Technologies LLC |
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| 1,934,322 |
| (4) |
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| 5.94% |
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800 Third Avenue |
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New York, New York 10022 |
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LSV Asset Management |
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| 1,645,047 |
| (5) |
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| 5.05% |
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155 N. Wacker Drive, Suite 4600 |
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Chicago, Illinois 60606 |
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(1) On January 8, 2016, BlackRock, Inc. filed an amendment to Schedule 13G with the SEC stating that, as of December 31, 2015, BlackRock, Inc. held an ownership position of 10.1% of the common stock outstanding and had sole voting power over 3,233,511 shares and sole dispositive power over 3,311,798 shares. |
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(2) On February 10, 2016, The Vanguard Group, Inc. filed an amendment to Schedule 13G with the SEC stating that, as of December 31, 2015, The Vanguard Group held an ownership position of 9.07% of the common stock outstanding and, of these total shares, had sole voting power over 72,084 shares, shared voting power over 3,400 shares, sole dispositive power over 2,893,065 shares, and shared dispositive power over 73,484 shares. |
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(3) On February 12, 2016, FMR LLC filed a Schedule 13G with the SEC stating that, as of December 31, 2015, FMR LLC held an ownership position of 6.012% of the common stock outstanding and, of these total shares, had sole voting power over 1,525,863 shares and sole dispositive power over 1,965,933 shares. |
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(4) On February 11, 2016, Renaissance Technologies LLC filed an amendment to Schedule 13G with the SEC stating that, as of December 31, 2015, Renaissance Technologies LLC held an ownership position of 5.94% of the common stock outstanding and, of these total shares, had sole voting power over 1,839,389 shares, sole dispositive power over 1,934,270 shares, and shared dispositive power over 52 shares. |
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(5) On February 12, 2016, LSV Asset Management filed a Schedule 13G with the SEC stating that, as of December 31, 2015, LSV Asset Management held an ownership position of 5.05% of the common stock outstanding and, of these total shares, had sole voting power over 675,566 shares and sole dispositive power over 1,645,047 shares. |
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18 CSG Systems International, Inc. 2016 Proxy Statement
Directors and Executive Officers
The table below sets forth to our knowledge the beneficial ownership of common stock held by each director and each executive officer of the Company named in the 2015 Summary Compensation Table on page 33, individually, and by all directors and executive officers of the Company as a group as of February 29, 2016.
| Total Shares of Common Stock Beneficially Owned (1) (2) |
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David G. Barnes |
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| 5,800 |
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Ronald H. Cooper |
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| 34,068 |
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Marwan H. Fawaz (3) |
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| - |
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Bret C. Griess |
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| 205,281 |
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John L. M. Hughes |
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| 15,598 |
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Peter E. Kalan (4) |
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| 310,738 |
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| * |
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Janice I. Obuchowski |
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| 43,786 |
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| * |
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Donald B. Reed |
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| 42,868 |
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| * |
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Joseph T. Ruble |
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| 121,256 |
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| * |
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Frank V. Sica |
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| 24,550 |
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| * |
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Donald V. Smith |
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| 42,868 |
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| * |
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James A. Unruh |
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| 39,868 |
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| * |
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Randy R. Wiese |
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| 171,911 |
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All directors and executive officers as a group (13 persons) |
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| 1,058,592 |
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| 3.25% |
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* Less than 1% of the outstanding common stock. |
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(1) Each person named has sole voting and investment power over the shares owned by him or her, except that Ms. Obuchowski has shared voting and investment power with respect to 3,000 shares owned jointly with her husband. |
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(2) Includes restricted shares of common stock awarded under the 2005 Stock Incentive Plan of the Company, which have not vested. Each holder of restricted shares may vote such shares but may not sell, transfer, or encumber such shares until they vest in accordance with the applicable restricted stock award agreement. The persons named in this table held the numbers of unvested restricted shares shown opposite their respective names as of February 29, 2016. |
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(3) Mr. Fawaz joined the Board effective March 1, 2016. |
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(4) Mr. Kalan's beneficial ownership is as of December 31, 2015 at which time he was no longer a director or executive officer of CSG. |
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| Number of Unvested Restricted Shares |
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David G. Barnes |
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| 3,000 |
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Ronald H. Cooper |
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| 3,000 |
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Marwan H. Fawaz (3) |
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| - |
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Bret C. Griess |
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| 143,172 |
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John L. M. Hughes |
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| 3,000 |
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Peter E. Kalan (5) |
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| 138,843 |
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Janice I. Obuchowski |
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| 3,000 |
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Donald B. Reed |
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| 3,000 |
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Joseph T. Ruble |
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| 93,438 |
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Frank V. Sica |
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| 3,000 |
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Donald V. Smith |
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| 3,000 |
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James A. Unruh |
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| 3,000 |
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Randy R. Wiese |
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| 111,480 |
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Total |
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| 510,933 |
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(5) Mr. Kalan's number of unvested restricted shares is as of February 29, 2016, consistent with the other directors and executive officers. As previously mentioned, he was no longer a director or executive officer of CSG as of December 31, 2015. |
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CSG Systems International, Inc. 2016 Proxy Statement19
The Board has established robust share ownership guidelines for our executive officers and non-employee directors, which were most recently amended effective April 1, 2022. Executive officers and executive officers. Below is a summary of the current required minimum share ownership levels:
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Each executive officer is expected tonon-employee directors must attain the minimum ownership level within fourfive years of his or herApril 1, 2022 (or their date of appointment. Directors do notappointment, whichever is later). Individuals who, because of a promotion or an increase in base salary (or, for non-employee directors, an increase in annual retainer) are subject to an increased ownership requirement will have a specific timeframethree years to attain their share ownership requirements, but theythe required level of stock ownership. Individuals may not sell any granted/retainednet shares received upon the exercise of options or vesting of restricted stock in the corporationor restricted stock units until the requirements are met.
The Board and management believe that share ownership aligns the interests of the Company’s executive officers and non-employee directors with the interests of shareholders, promotes sound corporate governance, and demonstrates a commitment by leadership to the long-term future of the Company. All non-employee directors and executive officers are in compliance subject to applicable grace periods and other transfer limitations.
Ownership levels for NEOs and Executive Vice Presidents are determined based on the common stock owned by each individual, excluding any unvested shares of restricted stock. AsSenior Vice President minimum ownership requirements include unvested shares of February 29, 2016, eachrestricted stock or unvested restricted stock units.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 35 |
Below is a summary of our executive officers and directors were inthe required minimum share ownership levels:
Role | Minimum Ownership Level(1) | Compliance Status as of December 31, 2021 | |
Non-employee Board Directors | 5x annual cash retainer | 100% | |
CEO | 6x base salary | 100% | |
NEOs and Executive Vice Presidents | 3x base salary | 100% | |
Senior Vice Presidents | 1.5x to 2x base salary | 100% | |
(1) Stock value is determined by using a twenty-day trailing average ending on the applicable measurement date. Stock ownership for the purpose of compliance with these guidelines includes: shares purchased on the open market, shares obtained through the employee stock purchase plan, shares obtained through stock option exercise (and not thereafter sold), vested but unexercised stock options, and vested shares of restricted stock or restricted stock units. For Senior Vice Presidents, stock ownership for the purpose of compliance with these guidelines also includes unvested restricted stock and restricted stock units subject to time-based vesting requirements. Stock ownership does not include unvested stock options or unvested restricted stock units that remain subject to the achievement of performance goals. | |||
Management conducts an annual assessment to determine whether an individual has met the applicable requirements. The failure to comply with the share ownership guidelines will result in consequences to be determined by the Nominating and Corporate Governance Committee which may include the individual receiving up to half of any net annual cash bonus or retainer, as applicable, ownership guidelines.
Hedging and Pledging Policyin Company stock, or declaring the individual ineligible to receive equity grants under the Company’s equity incentive plans.
Section 16(a) Beneficial Ownership Reporting
Section 16(a) of the Securities Exchange Act of 1934 requires our Section 16 officers (as defined in the applicable regulations) and, directors, and persons who beneficially own more than 10% of a class of the Company’s equity securities registered under such Act,our common stock, to file certain reports of ownership and changes of ownership of the Company’sour equity securities with the SEC. Officers, directors, and stockholdersthe shareholders who beneficially own more than 10% of such shares are
required by SEC regulation to furnish to the Company copies of all Section 16(a) forms which they file.
Based solely on our review of the copies of such forms submitted to usfiled with the SEC and written representations from certain reporting persons, we believe that all filing requirements applicable tofilings required by our officers, directors and directorspersons who beneficially own more than 10% of our common stock were complied withtimely filed for the year ended December 31, 2015.2021, except for the following:
One Form 3 for Elizabeth A. Bauer filed on June 4, 2021, in conjunction with her appointment as an executive officer on May 20, 2021.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 36 |
The Compensation Discussion and Analysis is organized as follows:
20 CSG Systems International, Inc. 2016 Proxy Statement
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 37 |
This section explains our 20152021 executive compensation program as it relates to the following NEOs. Compensation information for the NEOs is presented in the tables following this discussion.named executive officers (“NEOs”).
|  HAI TRAN(1) | 
|  ELIZABETH A. BAUER(2) |  ROLLAND B. JOHNS(3) | ||
| President and Chief | Executive Vice President | ||||
| Chief Operating Officer | Executive Vice President, | Former Executive Vice | |||
(1)
| Mr. Tran was named our Executive Vice President and Chief (2) Ms. Bauer was named Executive Vice President, Chief Marketing Officer and Chief Customer Officer effective May 20, 2021. (3) Mr. Johns held the CFO position until November 28, 2021, and then served in a Transition Consultant role through April 1, 2022. | |||||
COMPANY OVERVIEW AND BUSINESS STRATEGY
CSG is a leader in innovative customer engagement, revenue management and payments solutions that make ordinary customer experiences extraordinary. Our cloud-first architecture and customer-obsessed mindset help companies around the world launch new digital services, expand into new markets, and create dynamic experiences that capture new customers and build brand loyalty. For nearly 40 years, CSG’s technologies and people have helped some of the world’s most recognizable brands solve their toughest business challenges and evolve to meet the demands of today’s digital economy with future-ready solutions that drive exceptional customer experiences. With over 5,200 employees in over 20 countries, CSG is the trusted technology provider for leading global brands in telecommunications, retail, financial services and healthcare. Our solutions deliver real world outcomes to more than 900 customers in over 120 countries.
Our award-winning solutions are built on proven public and private cloud platforms, available out-of-the-box, custom, or through end-to-end managed services. Specifically, our software-as-a-service (“SaaS”) solutions help our customers:
Improve customer engagement and reduce churn; Reduce operating expenses and run their businesses more efficiently; Quickly launch new digital services; and Enter new markets and compete and win in an ever-changing global marketplace. |
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OUR OVERALL 2021 PERFORMANCECEO Transition, Leadership Team Expanded
2021 was a banner year for CSG and proves the health and resilience of our business. We reported profitable operating results with strong cash flows and a solid balance sheet as we continued to execute upon our strategic initiatives. Key highlights of our 2021 performance include the following:
AtSurpassed $1 billion in revenue for the end of 2015, Mr. Kalan announced his plans to retire from his role as CEOfirst time in company history and fromgrew revenues by 6% in the Board following 19 years of serviceyear, with us. Under Mr. Kalan’sthe majority driven by organic growth, our best annual result in over 10 years;
Expanded our leadership we have become a leading business support solutions providerposition in the North American cablePayTV and satellite markets, expandedbroadband business with the landmark contract renewals with Charter Communications and DISH Network, by continuing to deepen our presence internationally, investedrelationships with these customers and by deploying new solutions that help differentiate the customer and employee experience;
Strengthened our position as the top challenger brand in next generation solutions aimed at the changing video landscape,wireless and groomedtelecommunications revenue management market with several new, large customer wins including Mobily, CBTS, and TalkTalk;
Continued our industry diversification efforts by increasing revenues from verticals outside of the Communications Service Provider (CSP) industry to $255 million, or approximately 24% of our revenue;
Grew our sales pipeline to an all-time high, as our global sales team continues to compete and win in the markets; and
Continued high visibility into our revenue over the next generation oftwelve months.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 38 |
Additionally, we believe our leadersholistic approach to build upon this legacy.
Effective January 1, 2016, CSG veteran Bret Griess was named to succeed Mr. Kalan as CEO and was appointed to the Board. Mr. Griess’ CEO appointment is the result of the Board’s succession planning process and the confidence in our management team to continue to drivecapital allocation, which balances internal investments with shareholder remuneration, will maximize long-term shareholder value. Mr. Griess has establishedDuring the year, we:
Drove innovation and technology leadership with $135 million of research and development investments in our revenue management, customer engagement, and payment solutions, enabling a clear strategygrowing list of companies around the world to prioritizeprovide a more personalized customer experience while monetizing new digital products and focus our go-to-market approach, expand our footprint within our clients’ businessesservices; and within the video, carriers, and over-the-top industries, and pursue targeted opportunities for profitable growth. To meet these objectives, Mr. Griess
Returned $69 million to shareholders through a combination of $33 million in quarterly dividend payments and $36 million in common stock repurchases under a stock repurchase program. Our 2021 dividend increased 6% from the Board expanded our leadership team, redefined roles, and organized around our strategy.prior year.
Effective March 1, 2016, Brian Shepherd was named as President of our Global Broadband, Cable and Satellite Business. Mr. Shepherd is a leader and industry veteran who will help leverage our domain expertise and our proven and established teams to expand our existing customer relationships and drive new business both in the U.S. as well as in international markets. Additionally, we promoted Ken Kennedy, Chief Technology Officer and Senior Vice President of Product Management, Development and Operations, to our Executive Vice President of Product Development. He is tasked with supporting and helping lead our clients in their evolution to digital services with the continual innovation of our solutions. In addition, we appointed Marwan H. Fawaz to our Board. He has more than 25 years of experience as a leader within the North American cable industry and senior management experience with Google/Motorola Mobility and Charter Communications.
2021 EXECUTIVE COMPENSATION HIGHLIGHTSExecutive Summary
Company OverviewOur executive compensation program consists of a balance of multiple elements, including base salary, annual cash incentive programs, and Business Strategy
Welong-term equity incentive awards that are oneearned over a number of years. The structure of our annual cash incentives for NEOs includes two predetermined performance measures that are objective and quantifiable, with a corresponding minimum and maximum payout range. A significant portion of our NEOs’ pay is tied to long-term equity awards based on the world's largest and most established providersachievement of business support solutions. We primarily serve the communications industry, whose businesses have evolved from a single product offering to highly complex, highly competitive, multi-product service offerings. Our solutions help service providers streamline and scale operations, introduce and adapt products and services to meet changing consumer demands, and address the challenges and opportunities brought about by changes
to their businesses. Our approach has centered on using the best technology for the various functions required to provide world-class solutions.
Our goal is to be the most trusted provider of world-class software and services to service providers around the world who depend upon the timely and accurate processing of complex, high-volume transactions to operate their business and deliver a superior customer experience. We believe that by successfully executing on this goal we can grow our revenues and earnings, and
CSG Systems International, Inc. 2016 Proxy Statement21
therefore, create long-term value, not only for our clients and our employees, but for our stockholders as well. Our strategic focus to accomplish this goal is as follows:
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We had a solid performance in 2015, delivering positivepredetermined financial and operational results, executing on manyperformance measures that we believe align the long-term interests of our key strategic initiatives, and continuing to expand and extend our relationshipsexecutives with manythose of our clients.shareholders.
Key highlights of our 2015 performance include the following:
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Enhanced Capital Allocation Strategy
Our strong operating model and financial position allow us to return capital to stockholders, and also allow us to continue to invest in the long-term growth of our business.
In 2015, we announced an increase in our capital allocation to stockholders and an improvement in our capital structure, including the following key items:
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Under this enhanced capital allocation structure, we paid a total of $22 million in dividends and repurchased $57 million of our outstanding shares.
In early 2016, we reinforced our commitment to returning cash to shareholders with an additional 6% increase in the dividend and the announcement of our intent to repurchase a minimum of up to $50 million of shares in 2016.
In summary, we continue to execute in a challenging business environment by delivering on our business objectives and enhancing our capital allocation strategy.
2015 Executive Compensation Highlights
In June 2015, Mr. Griess was named as President and COO by the Board. At that time, the Board approved a salary increase and revised performance-based incentive for Mr. Griess to be commensurate with competitive market practice for the duties and responsibilities of the position. Mr. Griess later became our President and CEO on January 1, 2016.
We made some important changes to our executive compensation program in 2015, consistent with evolving governance practices for executive compensation. These changes included the following:
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Additionally, afterAfter considering compensation within our peer group and consulting with PM&P,our independent compensation consultant retained by the Compensation Committee, (“Committee”)the Compensation Committee independently assessed the value and competitiveness of each NEO’s compensation, including various pay components.
Based upon their assessment, the Board and the Compensation Committee made the following decisions regarding the framework for the 20152021 executive compensation program:
Annual Base salary. The Board increased our CEO’sSalary. In addition to the base salary by 10%adjustment for Mr. Shepherd’s promotion to his new role as CEO and Ms. Bauer’s promotion to her new role as EVP, CMO and Chief Customer Officer, modest market alignments were approved for the base salaries of each of our other three NEOs by 3% to align their salaries with the corresponding median levels within our peer group.
22 CSG Systems International, Inc. 2016 Proxy Statement
Annual incentive program. The Committee approved an increasewhich resulted in Mr. Griess’ target bonus percentage from 100% to 150% of base salary as part of his promotionincreases ranging from 2.6% to President and COO in June 2015. The target and maximum bonus percentages for Mr. Kalan, Mr. Wiese, and Mr. Ruble did not change from 2014.8.7%. For more information, see 20152021 Compensation on page 27.– Annual Base Salaries.
Annual Incentive Program. Along with Ms. Bauer’s promotion to her new role as EVP, CMO and Chief Customer Officer, her target bonus as a percentage of base salary increased from 60% to 75%. Target bonus as a percentage of base salary was maintained for NEOs with 100% for both Mr. Shepherd and Mr. Kennedy and 75% for Mr. Johns. For more information, see 2021 Compensation – Annual Performance Bonuses.
Long-term incentiveAnnual Long-Term Incentive (“LTI”) program. For the February 2015 annual grant, the CommitteeProgram. The Annual LTI structure was maintained the LTI award program with 60% of each NEO’s award granted in the form of performance-based restricted stock. Performance-based restricted stock vests ratably over three years if we achieve predetermined financial targets, or in full if a predetermined stock price target is achieved atand the end of the third year. The otherremaining 40% of each NEO’s award isgranted in the form of time-based restricted stock that vests ratably over four years.a four-year period.
In addition, in November 2015,The Compensation Committee continued to align LTI compensation for our NEOs with our pay-for-performance philosophy and strategic goals. Similar to prior year’s awards, the 2021 performance-based awards have an opportunity to vest at the end of a two-year performance period based upon the achievement of predetermined, objective, and quantifiable performance measures. For 2021, the Committee granted special one-time awardsestablished the following performance measures: (1) Non-GAAP EPS; (2) Revenue; and (3) “Impact Minutes” as an operational measure. These performance measures were selected to Mr. Wieseincentivize and Mr. Ruble inreward long-term strategic progress towards the formsuccess of restricted stock that vests ratably over two years. These awards were retention awardsthe business and to ensure leadership continuity following Mr. Kalan’s retirement. The Committee granted Mr. Griess a special one-time award in recognitioncontinue to drive the creation of his forthcoming promotion to CEO that vests ratably over four years.long-term shareholder value through profitability, growth, and operational excellence.
For more information on our executive compensation program, see2015 2021 Compensation beginning on page 27. – 2021 Long-Term Incentive Awards.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 39 |
Back to ContentsPay-for-Performance Compensation Program
At least 55%COMPENSATION MIX AND PAY-FOR-PERFORMANCE COMPENSATION PROGRAM
As shown below, over half of each NEO’sthe total target compensation for 2015our NEOs was based on ourthe achievement of key financial
and operational measures under our annual incentive and long-term incentive plans.LTI programs.
We delivered upon manyhad strong financial performance in 2021, finishing at the high end of our key initiatives during 2015predetermined revenue range and achieved a number of our financial targets.delivering on both 2021 short-term incentive plan objectives and the 2020 performance-based LTI award objectives. As a result, our NEOs achieved payouts and performance-based stock vesting under our executive compensation program as follows:
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■ 130% of target under the annual incentive program for 2021; and ■ 104.9% of target shares vest under the 2020 LTI program. The direct compensation for our NEOs includes the components described below.
For more information, see
Summary of Say on
In evaluating potential changes to the
Committee has addressed these matters.
GOVERNANCE AND COMPENSATION PRACTICES
KEY COMPENSATION GOVERNANCE FACTORS We believe that the following governance and compensation practices reinforce our business strategy, culture, and values.
HOW THE COMPENSATION COMMITTEE DETERMINES EXECUTIVE COMPENSATION | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 42 |
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As required by the Compensation Committee’s charter, the CEO may not be present at meetings when either the CommitteeCEO compensation is discussed or the Board discuss or vote on CEO compensation.fixed.
The Compensation Committee undertakes considerable analysis when determining metricsmeasures to be used in both its annual performance bonus programfor the Annual Performance Bonus Program and performance-based equity.
LTI awards.
24 CSG Systems International, Inc. 2016 Proxy Statement
The Committee’s goal is to selectCompensation Committee selects a combination of metricsmeasures that, if achieved, in the long-term, will most likely result in positive long-term shareholder return. One of the more challenging aspects of this endeavor isGoals are established to set goals that effectively incent managementthe NEOs to achieve long-term results while maintainingcontinuing to deliver and further enhance the consistent operational excellence that our customers have come to expect. expect and rely upon. Target performance levels under the performance-based LTI award are typically established based upon our financial budgets and projections, which are adjusted for a pre-established growth as well as an improvement factor for our operational measure.
All of our currentOur performance-based equityLTI awards to our executives employ a three-yearmultiple-year time horizon, with a third of the shares in eachthe award eligible for vesting annuallybased upon achievement of the specified predetermined, objective and measurable performance metrics. Up tolevels. A minimum threshold of achievement is required before any shares for a measure may vest. At the threshold performance level, 50% of the target shares will vest. If targets are achieved, 100% of the eligibletarget shares will vest. Up to 200% of the target shares may vest each yearat the end of the performance period if targets are significantly exceeded.
Effective for any performance-based equity awards granted starting in 2022, the minimum metric threshold is achieved. IfCompensation Committee approved the executives earn less than 100% vesting basedinclusion of a relative TSR performance measure with a 3-year performance period that allocates 25% of the underlying shares to this measure.
The Compensation Committee believes basing executive compensation on the levelachievement of achievement againstperformance-based measures that are tied to the performance targets for a particular year within the three-year incentive-performance period, the executives have the opportunity to earn the remaining vesting percentage if certain performance criteria are met in the second or third year.
We areshort- and long-term strategy of the view that this performance-based design strikes an appropriate balance between ensuring theour business is operating at its optimal level in the short-term, while incentingincentivizes management to invest in the success of the business, for long-term results.while also linking executive compensation to increasing shareholder value.
ROLE OF THE INDEPENDENT COMPENSATION CONSULTANT AND MANAGEMENTRole of the Independent Compensation Consultant and Management
The Compensation Committee has sole authority and discretion to retain and terminate compensation consultants, independent legal counsel, and other advisers to help the Committeecommittee perform its responsibilities. It also has the sole authority to approve the
fees, scope, and other terms of engagement with its compensation consultant and other advisers, with full funding provided by the Company. The Compensation Committee is responsible for determining the independence of its compensation consultant and other advisers. Management is available at the Committee’son request to assist the consultant by providing historical pay data and perspective on our competitive environment for recruiting managerial talent.
For 2015, theThe Compensation Committee again engaged PM&PExequity as its independent compensation consultant to advise it on executive compensation matters. The Committeematters for 2021. Exequity was instructed PM&P to take a broad view of the competitive compensation landscape to assist the Committee in structuringhelp us structure a compensation program for our NEOs. We believe this broader perspective has enabled us to attract and retain a highly talented executive team. PM&PExequity reviewed compensation data publicly available from peer company proxy statements and published survey sourcescompanies, using position matches and data analyses to identify the most appropriate comparisons among executives of similar titles and responsibilities. For additional information regarding the companies in the peer group component companies and the pay of our NEOs compared to the peer group, see Role of Benchmarking in Determining Compensation and Peer Groupon page 26..
ROLE OF BENCHMARKING IN DETERMINING COMPENSATION AND PEER GROUPCompensation Mix
The compensation program for each of our NEOs includes the following components, which together comprise Total Direct Compensation: base salary, an annual performance bonus, and two types of long-term incentive awards. The objective of each component and the form in which each is delivered if earned is outlined as follows:
Overview of NEO Total Direct Compensation
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CSG Systems International, Inc. 2016 Proxy Statement25
Total Direct Compensation. The Committee targets Total Direct Compensation (the sum of all three core compensation components) for our NEOs to be between 65% and 75% of our peer group’s total direct compensation. The following table shows how our NEOs’ compensation levels compare (on a percentile basis) to our peer group company information for Total Direct Compensation.
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The charts below illustrate the percentage of compensation the CEO and other NEOs would generally receive, if paid at target level, for each core compensation component, based on 2015 compensation:
Role of Benchmarking in Determining Compensation andHow We Use Peer Group
InformationRole of Benchmarking in Determining Compensation
To assist the Compensation Committee in establishing 20152021 compensation for the NEOs, PM&PExequity provided a competitive assessment using peer group compensation information and industry survey data for the primary elements of our NEO compensation packages. PM&P developed benchmarking market data by blending theExequity analyzed and assessed peer group data for roles corresponding to and industry survey data equally. closely aligned to the roles of our NEOs.
The peer group composition is described in the next section. The industry survey data was comprised of technology companies, represented in the Culpepper and Radford compensation surveys, with revenues ranging from $500 million to $1 billion.
TheCompensation Committee recognizes that peer group comparisons and industry survey data may not be perfectly aligned because the executive titles and responsibilities at peer
group companies may not be directly comparable to those of our NEOs with similar or equivalent titles.
Our compensation philosophy is intended to ensure leadership continuity as part of our succession planning and to leverage variable incentive pay tied to Company performance. The Compensation Committee generally considers Total Direct Compensation (including target bonus)total direct compensation for a NEO to be competitive if it is betweennear the 65th and 75th percentilemedian of the blended peer group and industry survey data.
To achieve the desired pay positioning, base salaries are generally targeted at the 50th percentile and target annual performance bonus (assuming targeted performance levels are achieved) and total long-term incentive value are generally targeted between the 50th and 75th percentiles.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 43 |
26 CSG Systems International, Inc. 2016 Proxy Statement
Peer Group Used for Benchmarking
The peer group used to determine 2015 compensation, as listed in the table below, was comprised of companies with revenues ranging in size from $249 million to $2.6 billion at year-end 2014.
2015 Company Peer Group
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The peer group used for compensation benchmarking is created based on analysis and recommendations by our independent compensation consultant. The peer group is reviewed annually to ensure that its composition and characteristics remain consistent with our objectives. In advanceAs a result of the 2016 benchmarkingmost recent review, PM&P noted that four peer companies had been acquired or would be acquired. As such, a revision to the peer group for 2016 to increase the number of peer companies was initiated. PM&P reviewed companies with a comparable range of annual revenue in the data processing, outsourced services, and application software industries. In addition to
providing written materials to the Committee, PM&P discussed with the Committee its experiences and observations regarding the compensation practices and philosophies of other Companies.
Based on the considerations detailed above, the Compensation Committee approved a new 21-companythe removal of both CTS Corporation and National Instruments Corporation - both part of the 2020 compensation peer group at their November 2015 meeting for 2016 benchmarking purposes. Companies included are in- when establishing the software and data processing industries and were selected for their comparable size, product, service offerings, customers, and markets.2021 peer group. The 2021 peer group, that will be used to determine 2016 compensation is listed in the following table:
2016 Company Peer Group
shown below, includes 22 companies:
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2015Base salaries reflect the scope of responsibility, level of authority, and overall duties of the position. For 2021, the Compensation
For 2015, the Committee recommended to the Board, and the Board approved, the following base salaries:
NEO |
| 2015 Base Salary |
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| 2014 Base Salary |
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| % Increase in Base Salary from 2014 |
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Peter E. Kalan |
| $ | 660,000 |
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| $ | 600,000 |
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| 10.0% |
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Randy R. Wiese |
| $ | 403,142 |
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| $ | 391,400 |
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| 3.0% |
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Joseph T. Ruble |
| $ | 371,315 |
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| $ | 360,500 |
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| 3.0% |
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Bret C. Griess (1) |
| $ | 450,000 |
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| $ | 414,750 |
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| 8.5% |
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(1) Mr. Griess received a 3% salary increase in February 2015; he was later named President and COO in June 2015 and received a promotional increase resulting in a total annual salary increase of 8.5%. |
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The Board approved these increases to make the salaries for our NEOs more consistent withNEOs:
NEO | 2021 Base Salary(1) | 2020 Base Salary | % Increase in Base Salary from 2020 | ||||
Brian A. Shepherd | $ | 700,000 |
| $ | 473,200 |
| 47.9% |
Hai Tran | $ | 475,000 |
| $ | - |
| - |
Kenneth M. Kennedy | $ | 475,000 |
| $ | 436,800 |
| 8.7% |
Elizabeth A. Bauer | $ | 372,000 |
| $ | 312,000 |
| 19.2% |
Rolland B. Johns | $ | 435,000 |
| $ | 424,000 |
| 2.6% |
(1) Base salary amounts were effective as of January 1, 2021, except for Mr. Tran, who was appointed EVP and CFO, effective November 29, 2021. | |||||||
Based on their review and assessment of the corresponding median levels within our peer group to be commensurate
withdata and competitive market practicepractices for the duties and responsibilities of these positions.each position, the Compensation Committee approved an increase for Mr. Shepherd’s base salary upon his promotion to CEO; an increase for Ms. Bauer’s base upon her promotion to EVP, CMO and Chief Customer Officer; and modest base salary increases for 2021 for each of the other NEOs except Mr. Tran whose base salary was established in connection with his November 29, 2021, appointment as our new EVP and CFO.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 44 |
ANNUAL PERFORMANCE BONUSES2015 Annual Performance Bonuses
Annual performance bonuses are awarded under the terms of our Annual Performance Bonus Plan.
The annual performance bonus for each NEO isProgram and are determined based on the following formula:
Base Salary. The starting point for each NEO’s bonus calculation is the NEO’s base salary.
CSG Systems International, Inc. 2016 Proxy Statement27
NEO Target Bonus Percentage.Percentage
The Compensation Committee provides competitive target bonus opportunities for the NEOs and setsbased on the achievement of annual performance goals. After considering the competitive compensation information provided by PM&P,Exequity, the Committee decided to keep the CEO2021 and other NEO target bonus percentages the same from 2014 to 2015. At the time of Mr. Griess’ promotion to COO and President in June 2015, his target bonus percentage was increased from 100% to 150%.
The 2015 and 20142020 target bonus percentages of base salary for each NEO arewere as follows:
NEO | 2021 Target Bonus % | 2020 Target Bonus % |
Brian A. Shepherd | 100% | 100% |
Hai Tran | 75% | - |
Kenneth M. Kennedy | 100% | 100% |
Elizabeth A. Bauer | 75% | 60% |
Rolland B. Johns | 75% | 75% |
Mr. Tran’s employment letter established his target bonus opportunity of 75% for the 2021 Annual Performance Bonus Program, with the actual payout prorated based on the time in his role. The Compensation Committee maintained Mr. Kennedy’s target bonus at 100% for his role as COO; however, the Compensation Committee based his annual bonus achievement on 50% Company performance and 50% achievement based on Revenue Management and Digital Monetization (RMDM) performance. The Compensation Committee calibrated Ms. Bauer’s compensation package for her promotion to EVP, CMO and Chief Customer Officer, by adjusting her target bonus from 60% to 75% for the 2021 Annual Performance Bonus Program.
NEO |
| 2015 Bonus - % of Base Salary |
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| 2014 Bonus - % of Base Salary |
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Peter E. Kalan |
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| 200% |
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| 200% |
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Randy R. Wiese |
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| 100% |
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| 100% |
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Joseph T. Ruble |
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| 100% |
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| 100% |
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Bret C. Griess |
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| 150% |
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| 100% |
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Company Performance Percentage.Percentage
The Company performance percentage which is based on our performance against two pre-establishedpredetermined financial performance measures, is the same for all of the NEOs.measures: Non-GAAP adjusted revenues and Non-GAAP adjusted operating margin percentage. If we achieve the target levels of performance for both measures, the Company performance percentage achieved will be 100%. If CSG missesWe must achieve the minimum threshold performance for either measure,both measures in order for the Company performance percentage will be zero (0%)to exceed zero. If we exceed target levels, the Company performance percentage may reach a maximum of 200%. The following table shows CSG’s performanceour financial results with respect to the 2015 targets for revenue and Adjusted Operating Income:2021 targets:
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| 2021 Minimum Threshold |
| 2021 Target (100% Payout) |
| 2021 Results | |||
Non-GAAP adjusted revenues (in millions)(1) | $ | 930.2 |
| $ | 949.7 |
| $ | 980.5 | ||
Non-GAAP adjusted operating margin percentage(2) |
| 16.0% |
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| 16.5% |
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| 16.3% | ||
(1) Non-GAAP adjusted revenues is defined as GAAP revenues less transaction fees at a budgeted constant currency rate. (2) Non-GAAP adjusted operating margin percentage is calculated by dividing Non-GAAP operating income (at a budgeted constant currency rate) by our Non-GAAP adjusted revenues. Non-GAAP operating income is defined as our GAAP operating income with the following items added back, as applicable: (a) stock-based compensation; (b) restructuring and reorganization charges; (c) executive transition costs and (d) acquisition-related expenses (e.g. amortization of acquired intangible assets, earn-out compensation and transaction-related costs). | ||||||||||
(in millions) |
| 2015 Results (1) |
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| 2015 Target (100% Payout) |
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| 2015 Minimum Threshold |
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Revenue (50% weighting) |
| $ | 753 |
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| $ | 763 |
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| $ | 723 |
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Adjusted Operating Income (50% weighting) (2) |
| $ | 128 |
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| $ | 111 |
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| $ | 104 |
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(1) The 2015 results shown above are derived from the audited financial information included in the Company’s 2015 Form 10-K. These results and the determination of the bonus earned are certified by the Committee. |
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(2) The definition of Adjusted Operating Income is determined at the beginning of the year when the financial target is established and is calculated by excluding from our operating income prepared in accordance with accounting principles generally accepted ("GAAP") in the United States ("U.S."): (1) one or more unusual operating items that occur during the year that are not considered reflective of our recurring core business operating results; and (2) certain non-cash expense items, which may or may not exist in any given year. We believe this measure helps investors understand our cash generating capabilities over time. For 2015, the following items were excluded from operating income prepared in accordance with GAAP to determine Adjusted Operating Income: |
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• restructuring and reorganization charges; and |
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• amortization of acquired intangible assets. |
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Revenues were slightly less than the target, yet the Company overachieved against the Adjusted Operating Income target due to strong operating margins; therefore, the CompanyThe Company’s performance percentage achieved for 2021 for the results in the above table was calculated at 122%130% and was certified by the Committee.Compensation Committee in February 2022. The predetermined targets were established by the Compensation Committee in January 2021. The amount is determined by linear extrapolation between the intersection of established weighted percentages based on non-GAAP adjusted revenue on the X axis and non-GAAP adjusted operating margin percentage on the Y axis.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 45 |
Kenneth Kennedy’s COO Revenue Management and Digital Monetization (RMDM) Performance
The COO’s RMDM performance is based on predetermined financial performance measures, excluding financial impact of any mergers and acquisitions: 1) RMDM Recognized Revenue (25% weighting); 2) RMDM Contribution Margin (20% weighting); 3) RMDM Sales Bookings (25% weighting). The remaining 30% weighting is assigned to various strategic business initiatives. Based on actual performance delivered in 2021 against these measures and the outcome of the weighted measure calculation, Mr. Kennedy received a payout of 117%.
NEO Individual Performance Percentage.Percentage
The final component of the annual performance bonusAnnual Performance Bonus Program is a determination by the Committeean evaluation of each NEO’s achievement (up to 100%, which is also the maximum) of individual performance objectives.achievement expressed as a percentage, not to exceed 100%. This evaluation is based uponon the achievement of certain common and unique objectives described below. These non-financial objectives are important to our success and are designed to enhance stockholdershareholder value over the long term.
Common objectives.Objectives Common elements of NEO objectives include operational and functional responsibilities. Specifically, each
Each NEO has multiple objectives associated with the stewardship of the NEO’shis or her areas of responsibility. The particularspecific objectives vary by NEO, but typically include achieving both near- and long-
termlong-term business objectives and meeting budget expectations.
Unique objectives.The following are examples of categories of individual objectives unique to one or more of the NEOs based on area of responsibility withinresponsibility:
Deliver on key development initiatives. We have a technology product road map that requires significant software development investments aimed at achieving specified feature and functional milestones, and overall, at modernizing our platforms and processes to enhance our market competitiveness.
Maintain and expand customer relationships. A significant portion of our revenue is derived from a limited number of key customers, and so a critical objective is to ensure that these relationships remain strong and, when applicable, that important contracts are renewed.
Contribute to growth initiatives. Implementation of our long-term strategic plan is a fundamental objective, including execution on our merger, acquisition, and partnership strategies, and when applicable, successfully integrating acquired assets.
Increase cost efficiency. Our NEOs are expected to identify and implement potential cost savings and process efficiencies in identified areas of the Company:Company.
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Staff development. Succession planning and development of key staff is an important organization-wide objective, including transitioning identified tasks and functions from outgoing personnel to new personnel, where applicable.
28 CSG Systems International, Inc. 2016 Proxy Statement
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The Compensation Committee met in February 20162022 to consider the 20152021 performance of each NEO as compared to the individual’stheir respective performance goals. Mr. GriessShepherd summarized the 20152021 performance of the other NEOs and presented information to the Compensation Committee for consideration. After evaluating each NEO’s performance, the Compensation Committee assigned each NEO an individual performance percentage of 100% for 2015.2021.
Final 2015 Bonus Calculation.Calculation
The following table shows the calculation of theprovides each NEO’s earned 2021 annual performance bonus earned by each NEO for 2015:calculation, with Mr. Tran’s earnings based on a pro-rata base salary of one month during 2021:
NEO | Base Salary |
| x |
| NEO Target Bonus Percentage |
| x |
| Performance Percentage Achieved |
| x |
| NEO Performance Percentage Achieved |
| = |
| 2021 Total Bonus Earned | ||
Brian A. Shepherd | $ | 700,000 |
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| 100% |
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| 130% |
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| 100% |
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| $ | 910,000 |
Hai Tran | $ | 39,583 |
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| 75% |
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| 130% |
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| 100% |
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| $ | 38,594 |
Kenneth M. Kennedy(1) | $ | 475,000
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| 50% 50% |
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| 130% 117% |
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| 100% 100% |
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| $ | 308,750 278,767 |
Elizabeth A. Bauer | $ | 372,000 |
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| 75% |
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| 130% |
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| 100% |
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| $ | 362,700 |
Rolland B. Johns | $ | 435,000 |
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| 75% |
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| 130% |
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| 100% |
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| $ | 424,125 |
(1) Mr. Kennedy’s annual bonus is split between 50% annual company objectives and 50% Revenue Management and Digital Monetization (RMDM). |
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| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 46 |
Back to Contents2015
We use our LTI program to provide variable pay compensation in the form of equity that rewards executives when we achieve long-term results that align with shareholders’ interests.
Under our Annual Performance Bonus Results
| Base Salary |
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| X |
| NEO Target Bonus Percentage |
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| X |
| Company Performance Percentage Achieved |
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| X |
| NEO Individual Performance Percentage Achieved |
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| = |
| 2015 Total Bonus Earned |
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Peter E. Kalan (1) |
| $ | 660,000 |
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| 200% |
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| 100.0 | % |
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| 100 | % |
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| $ | 1,320,000 |
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Randy R. Wiese |
| $ | 403,142 |
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| 100% |
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| 122.1 | % |
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| 100 | % |
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| $ | 492,236 |
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Joseph T. Ruble |
| $ | 371,315 |
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| 100% |
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| 122.1 | % |
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| 100 | % |
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| $ | 453,376 |
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Bret C. Griess (2) |
| $ | 438,597 |
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| 150% |
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| 122.1 | % |
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| 100 | % |
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| $ | 803,290 |
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(1) Mr. Kalan's maximum bonus opportunity is two times his base salary per the plan. As a result, the Company Performance Percentage Achieved is capped at 100%. |
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(2) Mr. Griess was promoted to President and COO in June 2015 and the Board approved a salary increase from $427,193 to $450,000 resulting in a total 2015 annualized salary of $438,597. |
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2015 Long-Term Incentive Awards
The Committee historically has madeLTI program, we generally grant our NEOs both performance and time-based restricted stock awards, which are administered under our Amended and Restated 2005 Stock Incentive Plan. Each NEO is awarded an aggregate LTI value based on a review of market data and recommendations from our Compensation Committee’s independent compensation consultant, allocated between the two types of awards. For 2021, we used the same mix of awards that we used in 2020 to provide an appropriate balance of performance- and time-based compensation to support our long-term strategy. We believe this mix motivates outstanding performance and encourages retention.
Award Type | Allocation Percentage | Alignment to Shareholder Interests |
Performance-Based Restricted Stock |  | Vesting depends on our performance over a |
Time-Based Restricted Stock |  | Value realized for the award |
Our restricted stock award agreements provide for the accrual of dividends for unvested shares. Accrued dividends are only paid when (and to the extent that) shares vest and are forfeited if the underlying shares are not earned.
See the Executive Compensation Tables – 2021 Grants of Plan-Based Awards for additional information on the 2021 grants.
2021 Performance-Based LTI Award
The 2021 performance-based awards have an opportunity to vest at the end of a two-year performance period ending December 31, 2022, based upon the achievement of rigorous predetermined objective and quantifiable performance measures described below. The Compensation Committee selected these rigorous measures and the associated weightings to incentivize and reward long-term strategic progress towards enhancing the success of the business and designed to align our executive compensation to the creation of long-term shareholder value, company financial performance, strategic growth and operational excellence.
2021 PERFORMANCE-BASED LTI AWARD
Two-Year Performance Period Ending December 31, 2022 | ||
Performance Measures | Weighting | Definition |
Non-GAAP EPS |  | Calculated by dividing Non-GAAP Net Income by the weighted average of fully-diluted shares outstanding for the period. Non-GAAP Net Income is defined as pre-tax income calculated in accordance with GAAP, adding back the following items, as applicable: (a) restructuring and reorganization charges; (b) executive transition costs; (c) acquisition-related expenses (e.g. amortization of acquired intangible assets, earn-out compensation and transaction-related costs); (d) stock-based compensation; (e) amortization of original issue discount; (f) gain (loss) on acquisitions and dispositions; and (g) gain (loss) on the extinguishment of debt, less income tax expense, determined by applying an estimated effective income tax rate. |
Revenue |  | Revenue as reported under GAAP. |
Impact Minutes Improvement |  | Impact Minutes is a key internal operational measure linked to customer satisfaction, with the performance target representing our improvement during the performance period. |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 47 |
At the end of the two-year performance period, our NEOs may earn from 0% to 200% of the target number of performance-based shares based on the level of achievement for each performance measure. At maximum performance, these awards vest at 200% of the target value for each performance measure. At threshold performance these awards vest at 50% of target value, and no awards are vested if performance falls below the established threshold for such measure.
Effective for any performance-based equity awards granted starting in two forms: (1) performance-based awards that vest2022, the Compensation Committee approved the inclusion of a relative TSR performance metric measured over a three-year3-year performance period.
Our time-based restricted stock awards are designed to significantly strengthen the retention value of our LTI program by providing a full value component to balance our performance-based awards. The time-based restricted stock generally vests ratably over a four-year period, if specified performance-based criteria are met, and (2) time-based awards that vest in equal incrementsbeginning on the first anniversary of the grant date, over a four-year period.subject to continued employment with the Company.
Our performance-based awards are designed to highlight key financial measures over a three-year period. The program is designed to align both near-term progress and a long-term focus by establishing an opportunity during each year2020 Performance-Based LTI Award
In aggregate, 104.9% of the three year cycle to vest in a ratable portion oftarget shares for the award2020 performance-based LTI awards vested based on actual performance.
In determining the number of shares of restricted stock to be grantedachievement levels for our 2021 financial and operational results certified by the balance between performance-based and time-based shares, theCompensation Committee considered market data and advice from PM&P. See the 2015 Grants of Plan-Based Awards table on page 35 for additional information on 2015 grants.
in February 2022. The following table summarizes key terms of these awards and the NEOs’ long-term incentive awards, as well as the Company's2021 actual performance compared to the financial targets for those tranches eligible to vest for 2015 related to awards granted in 2015, 2014, and 2013.results:
2020 PERFORMANCE-BASED LTI AWARD
Two-Year Performance Period Ended December 31, 2021 | |||||||
Performance Measures | Weighting |
2021 Performance Target (100%) | Performance | Weighted Achievement | |||
Non-GAAP EPS(1) | 45% | $ | 3.36 |
| 97.1% |
| 43.7% |
Revenue(2) | 45% | $ | 1,052.8 |
| 91.7% |
| 41.3% |
Impact Minutes Improvement(3) | 10% |
| 10% |
| 200.0% |
| 20.0% |
| TOTAL WEIGHTED ACHIEVEMENT | 104.9% | |||||
(1) Calculated by dividing Non-GAAP Net Income by the weighted average of fully-diluted shares outstanding for the period. Non-GAAP Net Income is defined as pre-tax income calculated in accordance with GAAP, adding back the following items, as applicable: (a) restructuring and reorganization charges; (b) acquisition-related expenses (e.g. amortization of acquired intangible assets, earn-out compensation and transaction-related costs); (c) stock-based compensation; (d) amortization of original issue discount; (e) executive transition costs; (f) gain (loss) on acquisitions and dispositions; and (g) gain (loss) on the extinguishment of debt, less income tax expense, determined by applying an estimated effective income tax rate. (2) CSG revenue as reported under GAAP. Revenue in millions. (3) Impact Minutes is a key internal operational measure linked to customer satisfaction, with the performance target representing our improvement during the two-year performance period ended December 31, 2021. (4) Performance achieved capped at 200%. | |||||||
CSG Systems International, Inc. 2016 Proxy Statement29
OverviewAs part of Long-Term Incentive Awards
(our stock trading policy, all employees, including our executive officers and non-employee directors (and their designees) are prohibited from engaging in millions, except percentagesshort sales of our securities and per share amounts)engaging in transactions that are designed to hedge, pledge or offset any decrease in the market value of our stock, including certain forms of hedging, pledging and monetization transactions, such as zero-cost collars, prepaid variable forward sale contracts, equity swaps, and exchange funds.
Performance-Based Awards |
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Plan Year |
| 2015 - First Tranche |
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| 2014 - Second Tranche |
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Award Form |
| Restricted Stock |
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Percentage of Total Award Granted |
| 60% |
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| 60% |
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| 60% |
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Vesting (1) (2) |
| 3-Year Period / Ratable |
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Financial Performance Measures |
| Revenue |
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| Adjusted Net Income (3) |
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| Adjusted EPS (4) |
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2015 Actual (5) |
| $ | 753 |
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| $ | 93 |
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| $ | 753 |
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| $ | 93 |
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| $ | 753 |
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| $ | 2.77 |
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Target |
| $ | 763 |
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| $ | 83 |
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| $ | 833 |
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| $ | 91 |
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| $ | 885 |
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| $ | 2.92 |
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Minimum Threshold |
| $ | 746 |
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| $ | 80 |
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| $ | 821 |
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| $ | 90 |
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| $ | 872 |
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| $ | 2.87 |
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Time-Based Awards |
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Plan Year |
| 2015 |
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| 2013 |
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Award Form |
| Restricted Stock |
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Percentage of Total Award Granted |
| 40% |
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| 40% |
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| 40% |
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Vesting |
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(1) Grant vesting for performance-based awards is contingent upon the achievement of both of the predetermined minimum thresholds for each performance measure. If both minimum thresholds are achieved for the current year, vesting can range from 50% to 100% of the vesting potential for each of the three years based on the level of performance achieved for each of the measures. Future minimum thresholds reflect a meaningful growth rate over the previous year’s performance measures. |
| |||||||||||||||||||||||||
(2) If the NEOs earn less than 100% vesting based on the level of achievement against the performance targets for a particular year within the three-year incentive-performance period, the NEOs have the opportunity to earn the remaining vesting percentage if certain performance criteria are met, as follows: (a) Beginning in 2015, if the vesting percentage earned is less than 100% for the first and / or second years but is higher in a subsequent year within the three-year performance period, the NEOs may earn additional vesting to match the higher vesting percentage of the subsequent periods. For example, if the NEOs earned a 60% vesting of the first tranche of the 2015 awards based upon performance against 2015 targets, but earned 80% vesting of the second tranche of the 2015 awards given performance against the 2016 targets, both the first and second tranches of the 2015 awards would vest at 80%. (b) Additionally, if the NEOs do not earn 100% vesting based on achievement of the performance thresholds for a particular year, but the Company’s stock price exceeds the stock price measure for the first 30 trading days after the Company announces financial results in the third, and final year of the award, then any unvested shares from prior years will vest in addition to the shares scheduled to vest in the current year. Stock price measure targets for the third year of the 2015, 2014, and 2013 awards are $40.09, $35.40, and $26.03 per share, respectively. For example, if the 2015 performance targets were missed for the 2013 awards, the unvested shares still can vest up to the 100% level if the third year stock price measure is met. The stock price measure target reflects a meaningful three-year 10% Compound Annual Growth Rate (CAGR) over the Company’s common stock price from the date when the performance shares were originally granted. |
| |||||||||||||||||||||||||
(3) For this purpose, we calculate Adjusted Net Income beginning with pre-tax income from continuing operations in accordance with GAAP. Then we add back to this amount the following items, as applicable: (1) depreciation expense; (2) amortization of intangible assets; (3) amortization of original issue discount on debt; (4) acquisition-related costs (e.g., in-process R&D costs, deal-related costs, change in fair value of contingent considerations (such as an earn-out), etc.); (5) impairment or write-off of intangible assets; (6) restructuring and reorganization charges; (7) the difference between the book gain and the cash/economic gain on retirement of debt; and (8) extraordinary gain or loss on the issuance or retirement of debt obligations. Then we apply an estimated effective income tax rate. |
| |||||||||||||||||||||||||
(4) We divide the Adjusted Net Income as described above in Footnote (3) by the weighted average of diluted shares outstanding for the period to arrive at our Adjusted EPS measure. |
| |||||||||||||||||||||||||
(5) The 2015 actual amounts are derived from the audited financial information of the Company as provided in our 2015 Form 10-K. These results and the determination of the earned vesting level are certified by the Committee. |
| |||||||||||||||||||||||||
30 CSG Systems International, Inc. 2016 Proxy Statement
2015 Performance Compensation Results. Based upon our 2015 financial results as certified by the Committee:
| ||
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT |
|
|
|
|
|
2015 Other Equity Awards. In November 2015, the Committee granted special one-time awardsBack to Mr. Ruble and Mr. Wiese in the form of restricted stock that vests ratably over two years. These awards were retention awards to ensure leadership continuity following Mr. Kalan’s retirement announcement. Mr. Wiese and Mr. Ruble received 19,135 and 17,825 restricted shares, respectively, at $35.56 per share on November 18, 2015.Contents
OTHER BENEFITS AND EMPLOYMENT AGREEMENTS
The Committee granted Mr. Griess a special one-time award in recognition of his forthcoming promotion to CEO that vests ratably over four years. Mr. Griess received 28,337 restricted shares at $35.29 per share on November 19, 2015. See the 2015 Summary Compensation Table on page 33.
Other. NEOs are eligible for substantially the same benefits as our other employees, and also may participate in our nonqualified deferred compensation plans. For more information, see Other Benefits and Employment Agreements on this page below.
Other Benefits and Employment Agreements
The Committee does not believe that perquisites and other benefits should play a major role in the overall compensation program of our NEOs. We offer our NEOs substantially the same benefits as our other employees, including the opportunity to defer a portion of their annual base salary and annual performance bonus through a 401(k) plan that is generally available Company-wide,to our U.S.-based population, and through a more restricted (i.e.(i.e., participation is limited to vice presidentsVice Presidents and above) non-qualified deferred compensation program.program discussed later in 2021 Non-Qualified Deferred Compensation. Both of these plans include Company matching contributions. The Compensation Committee views these deferral programs as individual retirement planning options and not as long-term compensation. Due to the limited historical employee participation rate in the non-qualified deferred compensation program, in 2021 the Board decided to freeze the plan effective January 1, 2022, and as such prohibit any future contributions to the program. The amount of our contributions for each NEO is reported in a footnote to the 20152021 Summary Compensation Table on page 33. in the Executive Compensation Tables that follow. Our NEOs participate in an Executive Severance Plan that provides benefits in the event of involuntary separation from service. See Severance and Change of Control Benefits for details.
Our executive officers also have employment agreements with the Company. See Employment Agreements beginning on page 40 for additional information.
TAX DEDUCTIBILITY OF EXECUTIVE COMPENSATION
Tax Deductibility of Executive Compensation
Section 162(m) of the Internal Revenue Service Code and regulations promulgated thereunder (“Code”) generally limits to $1 million the amount of compensation we can deduct in any one fiscal year for compensation paid to our CEO, CFO, and each of the three most highly-compensated executive officers as of the end of the year (other than our CFO). However,certain other covered employees. Prior to 2018, the $1 million limit generally doesdid not apply to compensation that iswas performance-based and provided under a stockholder-approvedshareholder-approved plan. The Tax Cut and Jobs Act enacted in December 2017 generally eliminated the performance-based exception from Section 162(m) for tax years beginning after 2017. While the Compensation Committee considers the deductibility of compensation as one factor in determining executive compensation, the Committee also looks at other factors in making its decisions andit retains the flexibility to grant discretionary awards and make payments that it determines to be consistent with ourthe goals forof our executive compensation program even if the amounts are not deductible by the Company for tax purposes.
ASC Topic 718, Compensation—Stock Compensation (referred to as ASC Topic 718), requires us to recognize an expense for the fair value of equity-based compensation awards over the expected service period. Grants of stock options, restricted stock and performance restricted stock under our equity incentive award plans will be accounted for under ASC Topic 718. We will consider the accounting implications of significant compensation decisions, especially in connection with decisions that relate to our equity incentive award plans and programs. As accounting standards change, we may revise certain programs to appropriately align accounting expenses of our equity awards with our overall executive compensation philosophy and objectives.
CSG Systems International, Inc. 2016 Proxy Statement31
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 49 |
The following Compensation Committee Report is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A, other than as provided below, or to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company with the SEC under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filings incorporating this Proxy Statement by reference, except to the extent the Company specifically requests that such information be incorporated by reference or treated as soliciting material.
We have reviewed and discussed with management of the Company the Compensation Discussion and Analysis, which appears in this Proxy Statement andproxy statement as is required by Item 402(b) of SEC Regulation S-K.
Based upon such review and discussions, we recommended to the Board that the Compensation Discussion and Analysis be included in this Proxy Statement.proxy statement.
Compensation Committee of the Board of Directors:
Ronald H. Cooper, Chair
Gregory A. Conley (served since October 2021)
Frank V. Sica Chairman
Ronald H. Cooper
John L. M. Hughes
Donald V. Smith
James A. Unruh
Haiyan Song
Silvio Tavares
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 50 |
We are asking our shareholders to vote to approve, on an advisory (nonbinding) basis, the compensation of our NEOs as disclosed in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our shareholders the opportunity to express their views on the compensation of our NEOs. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies, and practices described in this proxy statement.
32 CSG Systems International, Inc. 2016 Proxy Statement
2015 Summary As described in the Compensation Table
The following table containsDiscussion and Analysis, our executive compensation program is designed to attract and retain qualified executives, recognize and reward individual performance, and align executive pay with shareholder return over both the short and long term. Under this program, our NEOs are rewarded for achieving specific annual and long-term strategic, financial, and operational goals, and for increasing shareholder value. For additional information about our executive officers.compensation program and our response on the results of the ”say-on-pay” proposal at the 2021 Annual Meeting, please read the Compensation Discussion and Analysis section of this proxy statement.
We are asking our shareholders to vote “FOR” the following resolution at our Annual Meeting:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to Item 402 of SEC Regulation S-K, including the Compensation Discussion and Analysis, compensation tables, and narrative discussion, is hereby APPROVED.”
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee, or our Board. However, the Board and Compensation Committee value the opinions of our shareholders and will consider the outcome of the vote when considering future decisions on the compensation of our NEOs.
| THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE ADVISORY VOTE ON THE COMPENSATION OF OUR NEOS. |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 51 |
The following table sets forth certain information with respect to the compensation earned by our NEOs during the years ended December 31, 2021, 2020, and 2019, as applicable. All dollar values have been rounded to the nearest dollar.
Name and Principal Position (1) |
| Year |
| Base Salary |
|
| Bonus (2) |
|
| Stock Awards (3)(4) |
|
| Non-Equity Incentive Plan Compensation (5) |
|
| All Other Compensation (6) |
|
| Total |
| ||||||
Peter E. Kalan |
| 2015 |
| $ | 660,000 |
|
| $ | - |
|
| $ | 3,292,781 |
|
| $ | 1,320,000 |
|
| $ | 295,235 |
|
| $ | 5,568,016 |
|
President and CEO |
| 2014 |
| $ | 600,000 |
|
| $ | 100,000 |
|
| $ | 2,000,533 |
|
| $ | 532,800 |
|
| $ | 204,052 |
|
| $ | 3,437,385 |
|
|
| 2013 |
| $ | 600,000 |
|
| $ | - |
|
| $ | 2,006,132 |
|
| $ | 720,900 |
|
| $ | 126,140 |
|
| $ | 3,453,172 |
|
Randy R. Wiese |
| 2015 |
| $ | 403,142 |
|
| $ | - |
|
| $ | 1,780,453 |
|
| $ | 492,236 |
|
| $ | 163,711 |
|
| $ | 2,839,542 |
|
Executive Vice President and CFO |
| 2014 |
| $ | 391,400 |
|
| $ | 100,000 |
|
| $ | 1,000,000 |
|
| $ | 173,782 |
|
| $ | 113,303 |
|
| $ | 1,778,485 |
|
|
| 2013 |
| $ | 380,000 |
|
| $ | - |
|
| $ | 952,924 |
|
| $ | 321,290 |
|
| $ | 72,624 |
|
| $ | 1,726,838 |
|
Joseph T. Ruble |
| 2015 |
| $ | 371,315 |
|
| $ | - |
|
| $ | 1,533,873 |
|
| $ | 453,376 |
|
| $ | 140,827 |
|
| $ | 2,499,391 |
|
Executive Vice President, |
| 2014 |
| $ | 360,500 |
|
| $ | 65,000 |
|
| $ | 799,995 |
|
| $ | 160,062 |
|
| $ | 98,624 |
|
| $ | 1,484,181 |
|
General Counsel, Corporate Secretary |
| 2013 |
| $ | 350,000 |
|
| $ | - |
|
| $ | 802,449 |
|
| $ | 311,500 |
|
| $ | 65,722 |
|
| $ | 1,529,671 |
|
and Chief Administrative Officer |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Bret C. Griess |
| 2015 |
| $ | 438,597 |
|
| $ | - |
|
| $ | 2,350,021 |
|
| $ | 803,290 |
|
| $ | 191,048 |
|
| $ | 3,782,956 |
|
Executive Vice President and COO |
| 2014 |
| $ | 414,750 |
|
| $ | 100,000 |
|
| $ | 1,200,006 |
|
| $ | 184,149 |
|
| $ | 129,384 |
|
| $ | 2,028,289 |
|
|
| 2013 |
| $ | 395,000 |
|
| $ | - |
|
| $ | 1,103,380 |
|
| $ | 333,973 |
|
| $ | 84,758 |
|
| $ | 1,917,111 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) As of December 31, 2015, each of the executive officers named in this table has a written employment agreement with the Company. The material terms of each employment agreement are summarized in the Employment Agreements section on page 40. Mr. Griess was promoted to President and COO in June 2015 and the Board approved a salary increase from $427,193 to $450,000, resulting in a total annualized salary of $438,597. |
| |||||||||||||||||||||||||
(2) For 2014, the Board approved NEO bonuses in recognition of the five-year Comcast contract renewal, which runs through June 30, 2019. |
| |||||||||||||||||||||||||
(3) This column reflects the aggregate grant date fair value of stock awards granted during the year computed in accordance with FASB ASC Topic 718 (ASC 718). The amounts are inclusive of the one-time awards made to the executives in November 2015 as provided under 2015 Other Equity Awards on page 31. The actual amount realized by the individual may differ. The assumptions used in determining the amounts are set forth in Note 11 of our 2015 Form 10-K. The aggregate grant date fair value is calculated using the closing price of our common stock on the date of grant and excludes the impact of estimated forfeitures. The grant date fair value of performance-based stock awards included in this amount is the maximum amount that can be earned under the award. See 2015 Grants of Plan-Based Awards on page 35 for details. |
| |||||||||||||||||||||||||
(4) The 2015 amount of Stock Awards for Mr. Kalan includes an aggregate of $1,142,785 in incremental fair value of stock awards modified in 2015. The awards were modified due to include the acceleration in vesting of 24,914 non-performance based shares under the terms of Mr. Kalan's resignation and retirement agreement. The number of shares modified reflects the remaining unvested shares of the modified awards expected to vest. The aggregate incremental fair value of those modified shares were computed as of the modification date in accordance with ASC 718. The actual amount realized by the individual may differ. The assumptions used in determining the amounts are set forth in Note 11 of our 2015 Form 10-K. The aggregate modification date fair value is calculated using the closing price of our common stock on the date of modification. |
| |||||||||||||||||||||||||
Name and Principal Position | Year | Salary | Stock Awards(2) |
| Non-Equity Incentive Plan Compensation(3) |
| All Other Compensation(4) |
|
| Total | ||||
Brian A. Shepherd President and CEO | 2021 | $ | 696,511 | $ | 3,925,148 |
| $ | 910,000 |
| $ | 231,356 |
| $ | 5,763,015 |
2020 | $ | 473,060 | $ | 3,268,783 |
| $ | 420,202 |
| $ | 109,281 |
| $ | 4,271,326 | |
2019 | $ | 455,000 | $ | 950,030 |
| $ | 662,935 |
| $ | 127,780 |
| $ | 2,195,745 | |
Hai Tran(1) EVP and CFO | 2021 | $ | 36,539 | $ | - |
| $ | 38,594 |
| $ | 11 |
| $ | 75,144 |
Kenneth M. Kennedy COO and President – RMDM | 2021 | $ | 474,413 | $ | 2,065,888 |
| $ | 587,517 |
| $ | 144,391 |
| $ | 3,272,209 |
2020 | $ | 436,671 | $ | 2,241,369 |
| $ | 387,878 |
| $ | 90,590 |
| $ | 3,156,508 | |
2019 | $ | 420,000 | $ | 924,970 |
| $ | 611,940 |
| $ | 115,637 |
| $ | 2,072,547 | |
Elizabeth A. Bauer(1) EVP, CMO and Chief Customer Officer | 2021 | $ | 371,078 | $ | 645,578 |
| $ | 362,700 |
| $ | 38,767 |
| $ | 1,418,123 |
Rolland B. Johns(1) Former EVP and CFO | 2021 | $ | 434,831 | $ | 1,549,367 |
| $ | 424,125 |
| $ | 77,601 |
| $ | 2,485,924 |
2020 | $ | 423,816 | $ | 955,930 |
| $ | 282,384 |
| $ | 57,943 |
| $ | 1,720,073 | |
2019 | $ | 400,000 | $ | 874,973 |
| $ | 437,100 |
| $ | 60,346 |
| $ | 1,772,419 | |
(1) Mr. Tran was appointed as EVP and CFO, effective November 29, 2021, with a Board approved annual salary of $475,000. Ms. Bauer was promoted and appointed to EVP, effective May 20, 2021. Correspondingly, the Board approved a base salary increase to $372,000. Mr. Johns stepped down as CFO effective November 28, 2021, and agreed to serve in a non-executive Transition Consultant role through April 1, 2022. (2) The amounts in the Stock Awards column reflect the aggregate grant date fair value of performance- and time-based restricted stock awards granted in each respective year, computed in accordance with FASB ASC Topic 718, excluding the impact of estimated forfeitures. Assumptions used to determine these amounts are set forth in Note 13 of our 2021 Form 10-K. The aggregate grant date fair value of stock awards, which are comprised of performance- and time-based awards, includes the grant date fair value for the performance-based awards calculated based on the target number of shares. For 2021 the total aggregate fair value of restricted stock awards, assuming the highest level of performance, would be as follows: Mr. Shepherd - $6,280,256, Mr. Tran - $0, Mr. Kennedy - $3,305,411, Ms. Bauer - $903,790, and Mr. Johns - $2,478,997. See 2021 Grants of Plan-Based Awards for details. (3) Represents the annual performance bonus amounts earned by our NEOs in the respective years. Such amounts are paid during the first quarter following the year in which the bonus was earned. Details of the amounts in the “Non-Equity Incentive Plan Compensation” column are presented in Final Bonus Calculation. (4) For 2021, details of the “All Other Compensation” column are as follows: | ||||||||||||||
| All Other Compensation Items | Brian A. Shepherd | Hai Tran | Kenneth M. Kennedy | Elizabeth A. Bauer | Rolland B. Johns | |||||
| Company 401(k) retirement plan contributions | $ | 15,950 | $ | - | $ | 14,500 | $ | 14,317 | $ | 11,600 |
| Accrued dividends(a) |
| 209,018 |
| - |
| 123,503 |
| 17,942 |
| 59,613 |
| Company non-qualified deferred compensation contributions |
| 6,250 |
| - |
| 6,250 |
| 6,250 |
| 6,250 |
| Perquisites or other benefits(b) |
| 138 |
| 11 |
| 138 |
| 258 |
| 138 |
| TOTAL | $ | 231,356 | $ | 11 | $ | 144,391 | $ | 38,767 | $ | 77,601 |
| (a) Represents accrued dividends on restricted stock awards earned in 2021 on shares of unvested restricted stock. (b) Includes amount of imputed income for group term life insurance. |
|
| ||||||||
Original Grant Date |
| Modification Date |
| Number of Shares of Stock Accelerated |
|
| Number of Shares of Stock Modified |
|
| Incremental Fair Value of Stock Awards Modified |
| |||
February 27, 2013 |
| November 19, 2015 |
|
| 10,257 |
|
|
| 20,513 |
|
| $ | 523,296 |
|
February 19, 2014 |
| November 19, 2015 |
|
| 7,519 |
|
|
| 15,038 |
|
|
| 330,686 |
|
February 19, 2015 |
| November 19, 2015 |
|
| 7,138 |
|
|
| 14,276 |
|
|
| 288,803 |
|
Totals |
|
|
|
| 24,914 |
|
|
| 49,827 |
|
| $ | 1,142,785 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CSG Systems International, Inc. 2016 Proxy Statement33
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 52 |
Back to Contents(5) This column reflects annual performance bonus amounts earned by our executives for services performed during 2015, 2014, and 2013. Such amounts are paid during the first quarter following each year. For 2015, details of the “Non-Equity Incentive Plan Compensation” column are reflected in the following table.
2015 |
| Peter E. Kalan |
|
| Randy R. Wiese |
|
| Joseph T. Ruble |
|
| Bret C. Griess |
| ||||
Base salary for Performance Bonus (a) |
| $ | 660,000 |
|
| $ | 403,142 |
|
| $ | 371,315 |
|
| $ | 438,597 |
|
x 2015 Target Bonus Percentage (b) |
|
| 200 | % |
|
| 100 | % |
|
| 100 | % |
|
| 150 | % |
|
|
| 1,320,000 |
|
|
| 403,142 |
|
|
| 371,315 |
|
|
| 657,896 |
|
x 2015 Company Performance Percentage (b) |
|
| 100 | % |
|
| 122.1 | % |
|
| 122.1 | % |
|
| 122.1 | % |
|
|
| 1,320,000 |
|
|
| 492,236 |
|
|
| 453,376 |
|
|
| 803,290 |
|
x 2015 Individual Performance Percentage |
|
| 100 | % |
|
| 100 | % |
|
| 100 | % |
|
| 100 | % |
Totals |
| $ | 1,320,000 |
|
| $ | 492,236 |
|
| $ | 453,376 |
|
| $ | 803,290 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Mr. Griess was promoted to President and COO in June 2015 and the Board approved a salary increase from $427,193 to $450,000 resulting in a total 2015 annualized salary of $438,597. The Performance Bonus awards for the other NEO's are computed using base salary as of December 31, 2015. |
| |||||||||||||||
(b) Mr. Kalan's maximum bonus opportunity is two times his base salary per the plan. As a result, his Company Performance Percentage Achieved is capped at 100% |
| |||||||||||||||
(6) This column reflects 2015, 2014, and 2013 compensation that is not reported in any other column of this table. For 2015, details of the “All Other Compensation” column are as follows:
Compensation Item |
| Peter E. Kalan |
|
| Randy R. Wiese |
|
| Joseph T. Ruble |
|
| Bret C. Griess |
| ||||
2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Company 401(k) retirement plan contributions |
| $ | 17,225 |
|
| $ | 17,225 |
|
| $ | 17,225 |
|
| $ | 17,225 |
|
Accrued dividends (a) |
|
| 275,742 |
|
|
| 138,278 |
|
|
| 114,334 |
|
|
| 165,177 |
|
Company Non-Qualified Deferred Compensation contributions (b) |
| — |
|
|
| 6,250 |
|
|
| 6,250 |
|
|
| 6,767 |
| |
Financial planning benefits |
|
| 2,000 |
|
|
| 1,690 |
|
|
| 2,750 |
|
|
| 1,786 |
|
Other perquisites |
|
| 268 |
|
|
| 268 |
|
|
| 268 |
|
|
| 93 |
|
Totals |
| $ | 295,235 |
|
| $ | 163,711 |
|
| $ | 140,827 |
|
| $ | 191,048 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(a) Represents the amount of accrued dividends on shares of unvested restricted stock where dividends were not factored into the grant date fair value. CSG initiated a dividend on our common stock in June 2013. |
| |||||||||||||||
(b) Mr. Griess contributed both annual bonus and salary into the non-qualified plan. His 2014 bonus deferral is credited in the 2015 calendar year along with his 2015 salary deferral. This results in a higher Company contribution than the Company contribution for the other NEOs for 2015. |
| |||||||||||||||
34 CSG Systems International, Inc. 2016 Proxy Statement
The following table contains information about grants of non-equity and equity incentive plan-based awards by the Company during 20152021 to the executives named in the 2015 Summary Compensation Table.our NEOs. These amounts are not realized income. All dollar values have been rounded to the nearest dollar.
|
|
| Estimated Possible Payouts under Non-Equity Incentive Plan Awards (1) |
|
| Estimated Possible Payouts Under Equity Incentive Plan Awards (2) |
|
| All Other Stock Awards |
|
| Grant Date |
|
| |||||||||||||||||||
Name |
| Grant Date |
| Threshold |
|
| Target |
|
| Maximum |
|
| Measure |
| Target (shares) |
|
| Maximum (shares) |
|
| Number of Shares of Stock (3) |
|
| Fair Value of Stock Awards (4) |
|
| |||||||
Peter E. Kalan |
|
|
| $ | 132,000 |
|
| $ | 1,320,000 |
|
| $ | 1,320,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue and Adjusted Net income |
|
| 42,829 |
|
|
| 42,829 |
|
|
|
|
|
| $ | 1,290,009 |
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 28,552 |
|
| $ | 859,986 |
|
|
|
| November 19, 2015 (5) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 49,827 |
|
| $ | 1,142,786 |
|
|
Randy R. Wiese |
|
|
| $ | 40,314 |
|
| $ | 403,142 |
|
| $ | 705,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue and Adjusted Net Income |
|
| 21,913 |
|
|
| 21,913 |
|
|
|
|
|
| $ | 660,020 |
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 14,608 |
|
| $ | 439,993 |
|
|
|
| November 18, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 19,135 |
|
| $ | 680,441 |
|
|
Joseph T. Ruble |
|
|
| $ | 37,132 |
|
| $ | 371,315 |
|
| $ | 649,801 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue and Adjusted Net Income |
|
| 17,928 |
|
|
| 17,928 |
|
|
|
|
|
| $ | 539,991 |
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 11,953 |
|
| $ | 360,024 |
|
|
|
| November 18, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,825 |
|
| $ | 633,857 |
|
|
Bret C. Griess |
|
|
| $ | 65,790 |
|
| $ | 657,896 |
|
| $ | 877,194 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
| Revenue and Adjusted Net Income |
|
| 26,893 |
|
|
| 26,893 |
|
|
|
|
|
| $ | 810,017 |
|
|
|
| February 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 17,928 |
|
| $ | 539,991 |
|
|
|
| November 19, 2015 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| 28,337 |
|
| $ | 1,000,013 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The actual amounts earned for 2015 are reported in the 2015 Summary Compensation Table on page 33 in the column titled “Non-Equity Incentive Plan Compensation.” The award amounts above assume the executive officers achieve 100% of their personal performance objectives (see Footnote (5) to the 2015 Summary Compensation Table on page 33). These awards were granted under the Company’s Performance Bonus Program plan. | |||||||||||||||||||||||||||||||||
(2) All restricted stock awards considered “equity incentive plan awards” are performance-based awards granted under the Company’s 2005 Stock Incentive Plan. To vest in awards, the executives must attain objective performance goals. The performance-based restricted stock awards granted in 2015 vest, if at all, in approximately three equal installments commencing on the first anniversary of the grant date, subject to continuous service. The objective performance goals are based upon (1) a specified Revenue target; and (2) a specified Adjusted Net Income target. Any amounts that do not vest based on the achievement of the annual Revenue and Adjusted Net Income targets still can vest if the Company achieves a specific stock price target at the end of the vesting period. | |||||||||||||||||||||||||||||||||
(3) All restricted stock awards considered "all other stock awards" are non-performance-based awards granted under the Company's 2005 Stock Incentive Plan. These restricted stock awards vest in four equal annual installments commencing on the first anniversary of the grant date, with the exception of the grants awarded on November 18, 2015 which have a two-year ratable vesting period. | |||||||||||||||||||||||||||||||||
(4) This amount reflects the aggregate grant date fair value for both performance-based and non-performance-based restricted stock awards granted in 2015. |
|
| |||||||||||||||||||||||||||||||
(5) Represents the modification of 49,827 shares, due to the acceleration in vesting of 24,914 of non-performance based awards under the terms of Mr. Kalan's Resignation and Retirement Agreement. The amount reported in the Grant Date Fair Value of Stock Awards column represents the incremental fair value computed as of the modification date in accordance with ASC 718. See the 2015 Summary Compensation Table on page 33 for additional information. | |||||||||||||||||||||||||||||||||
| Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | Estimated Future Payouts Under Equity Incentive Plan Awards(2) |
| All Other Stock Awards |
|
| Grant Date |
| ||||||
NEO | Grant Date |
| Target | Maximum |
| Target (shares) | Maximum (shares) |
| Number of Shares of Stock or Units(3) |
|
| Fair Value of Stock and Option Awards(4) |
| |
Brian A. Shepherd |
| $ | 700,000 | $ | 1,400,000 |
|
|
|
|
|
|
|
|
|
March 10, 2021 |
|
|
|
|
| 48,760 | 97,520 |
|
|
| $ | 2,355,108 |
| |
March 10, 2021 |
|
|
|
|
|
|
|
| 32,506 |
| $ | 1,570,040 |
| |
Hai Tran(5) |
| $ | 29,688 | $ | 59,375 |
|
|
|
|
|
|
|
|
|
Kenneth M. Kennedy |
| $ | 475,000 | $ | 807,500 |
|
|
|
|
|
|
|
|
|
March 10, 2021 |
|
|
|
|
| 25,663 | 51,326 |
|
|
| $ | 1,239,523 |
| |
March 10, 2021 |
|
|
|
|
|
|
|
| 17,109 |
| $ | 826,365 |
| |
Elizabeth A. Bauer |
| $ | 279,000 | $ | 558,000 |
|
|
|
|
|
|
|
|
|
March 10, 2021 |
|
|
|
|
| 5,346 | 10,692 |
|
|
| $ | 258,212 |
| |
March 10, 2021 |
|
|
|
|
|
|
|
| 8,020 |
| $ | 387,366 |
| |
Rolland B. Johns |
| $ | 326,250 | $ | 652,500 |
|
|
|
|
|
|
|
|
|
March 10, 2021 |
|
|
|
|
| 19,247 | 38,494 |
|
|
| $ | 929,630 |
| |
| March 10, 2021 |
|
|
|
|
|
|
|
| 12,831 |
| $ | 619,737 |
|
(1) The amounts represent the potential payouts under our 2021 Annual Performance Bonus Program. The actual amounts earned for 2021 are reported in the 2021 Summary Compensation Table in the column titled “Non-Equity Incentive Plan Compensation." The target award amounts above assume the Company performance percentage achieved is 100% and that the NEOs achieve 100% of their personal performance objectives. For additional information, see Annual Performance Bonus for additional information. (2) Represents the performance-based restricted stock awards granted in 2021. See Long-Term Incentive Awards for additional information regarding our performance-based restricted stock awards. (3) Represents the time-based restricted stock awards granted in 2021. See Long-Term Incentive Awards for additional information regarding our time-based restricted stock awards. These restricted stock awards vest in four equal annual installments commencing on the first anniversary of the grant date. (4) The amounts presented reflect the aggregate fair value of each grant computed in accordance with FASB ASC Topic 718, excluding the impact of estimated forfeitures. Assumptions used to determine these amounts are set forth in Note 13 of our 2021 Form 10-K. (5) According to the terms of Mr. Tran’s offer letter of employment, Mr. Tran was eligible for an annual bonus at a pro-rata amount based on his salary, tenure, and company performance. Mr. Tran was not granted stock during 2021. | ||||||||||||||
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 53 |
Our restricted stock award agreements provide for the accrual of dividends for unvested shares of restricted stock. The accrued dividends are subjectBack to the same vesting schedule as the underlying shares and are forfeited if the underlying shares are forfeited. The Company initiated a quarterly cash dividend in June 2013.Contents
CSG Systems International, Inc. 2016 Proxy Statement35
The following table contains information about all unvested restricted stock awards held atas of December 31, 2015,2021, by the executives named in the 2015 Summary Compensation Table on page 33.our NEOs. All dollar values have been rounded to the nearest dollar.
| Restricted Stock Awards |
| ||||||||||||||
NEO |
| Number of Non-Performance-Based Shares Unvested (2) |
|
| Market Value of Shares of Stock Unvested (1) |
|
| Equity Incentive Plan Awards: Number of Performance-Based Unearned Shares Unvested (3) |
|
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares Unvested (1) |
| ||||
Peter E. Kalan |
|
| 84,904 |
|
| $ | 3,054,846 |
|
|
| 131,039 |
|
| $ | 4,714,783 |
|
Randy R. Wiese |
|
| 61,016 |
|
| $ | 2,195,356 |
|
|
| 64,931 |
|
| $ | 2,336,217 |
|
Joseph T. Ruble |
|
| 52,319 |
|
| $ | 1,882,438 |
|
|
| 53,203 |
|
| $ | 1,914,244 |
|
Bret C. Griess |
|
| 78,503 |
|
| $ | 2,824,538 |
|
|
| 77,653 |
|
| $ | 2,793,955 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) These columns reflect the market value of restricted stock awards that have not vested as of December 31, 2015. The market value was computed by multiplying the number of shares of restricted stock that have not vested as of December 31, 2015, by the closing price of the Company's common stock on December 31, 2015 of $35.98. |
| |||||||||||||||
(2) Detailed information relating to the non-performance-based unvested restricted stock awards as of December 31, 2015 (all unvested restricted stock awards were granted under the Company's 2005 Stock Incentive Plan) is as follows. Shares identified as "forfeit" for Mr. Kalan were relinquished on March 31, 2016 following Mr. Kalan's termination of employment with CSG. See Footnote (4) to the 2015 Summary Compensation Table on page 33 for Mr. Kalan's awards modified in 2015. |
| |||||||||||||||
| Stock Awards | ||||||||
Name | Grant Date | Number of Shares or Units of Stock That Have Not Vested |
| Market Value of Shares of Stock or Units That Have Not Vested(1) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested |
| Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units or Other Rights That Have Not Vested(1) | ||
Brian A. Shepherd | February 22, 2018 | 3,168 | (3) | $ | 182,540 | - |
| $ | - |
March 10, 2019 | 4,618 | (3) |
| 266,089 | - |
|
| - | |
March 10, 2020 | 8,778 | (3) |
| 505,788 | - |
|
| - | |
March 10, 2020 | - |
|
| - | 35,110 | (6) |
| 2,023,038 | |
September 10, 2020 | 24,969 | (4) |
| 1,438,714 | - |
|
| - | |
September 10, 2020 | - |
|
| - | 56,180 | (7) |
| 3,237,092 | |
March 10, 2021 | 32,506 | (3) |
| 1,872,966 | - |
|
| - | |
March 10, 2021 | - |
|
| - | 97,520 | (6) |
| 5,619,102 | |
Hai Tran(2) | - | - |
| $ | - | - |
|
| - |
Kenneth M. Kennedy | February 22, 2018 | 3,085 | (3) | $ | 177,758 | - |
|
| - |
March 10, 2019 | 4,496 | (3) | $ | 259,060 | - |
|
| - | |
March 10, 2020 | 8,788 | (3) | $ | 505,788 | - |
|
| - | |
March 10, 2020 | - |
|
| - | 35,110 | (6) | $ | 2,023,038 | |
September 10, 2020 | 9,364 | (5) | $ | 539,554 | - |
|
| - | |
September 10, 2020 | - |
|
| - | 28,090 | (7) | $ | 1,618,546 | |
March 10, 2021 | 17,109 | (3) | $ | 985,821 | - |
|
| - | |
March 10, 2021 | - |
|
| - | 51,326 | (6) | $ | 2,957,404 | |
Elizabeth A. Bauer | March 10, 2018 | 1,477 | (3) |
| 85,105 | - |
|
| - |
March 10, 2019 | 2,596 | (3) |
| 149,582 | - |
|
| - | |
March 10, 2020 | 3,433 | (3) |
| 197,809 | - |
|
| - | |
March 10, 2020 | - |
|
| - | 6,102 | (6) |
| 351,597 | |
March 10, 2021 | 8,020 | (3) |
| 462,112 | - |
|
| - | |
March 10, 2021 | - |
|
| - | 10,692 | (6) |
| 616,073 | |
Rolland B. Johns | March 10, 2018 | 681 | (3) | $ | 39,239 | - |
|
| - |
June 10, 2018 | 1,492 | (3) | $ | 85,969 | - |
|
| - | |
March 10, 2019 | 4,253 | (3) |
| 245,058 | - |
| $ | - | |
March 10, 2020 | 6,912 | (3) | $ | 398,269 | - |
|
| - | |
March 10, 2020 | - |
|
| - | 27,648 | (6) | $ | 1,593,078 | |
March 10, 2021 | 12,831 | (3) | $ | 739,322 | - |
|
| - | |
March 10, 2021 | - |
|
| - | 38,494 | (6) | $ | 2,218,024 | |
(1) Based on a price of $57.62 per share, which was the closing price of the Company’s common stock on Nasdaq as of December 31, 2021. (2) As of December 31, 2021, Mr. Tran had not been granted any equity awards. (3) Shares of a time-based award which vest in substantially four equal annual installments commencing on the first anniversary of the grant date. (4) Shares of a time-based award which vest in substantially three equal annual installments commencing on December 31, 2021. (5) Shares of a time-based award which vest in substantially two equal annual installments commencing on December 31, 2021. (6) Shares of a performance-based award which vest if certain predetermined performance goals are achieved at the end of the applicable two-year performance period. Share amounts reported are based on the achievement of the maximum performance attainment level of 200%. For additional information, see Long-Term Incentive Awards and Grants of Plan-Based Awards. (7) Shares of a performance-based award which may vest if and when predetermined stock price thresholds are met over a four-year performance period. | |||||||||
36 CSG Systems International, Inc. 2016 Proxy Statement
| Grant Date |
| Unvested Shares |
|
| Vesting Dates |
| Shares Vesting |
| |||
Peter E. Kalan |
| February 23, 2012 |
|
| 13,282 |
|
| February 23, 2016 |
|
| 13,282 |
|
|
| February 27, 2013 |
|
| 20,513 |
|
| February 27, 2016 |
|
| 10,256 |
|
|
|
|
|
|
|
|
| February 27, 2016 |
|
| 10,257 |
|
|
| February 19, 2014 |
|
| 22,557 |
|
| February 19, 2016 |
|
| 7,519 |
|
|
|
|
|
|
|
|
| February 19, 2016 |
|
| 7,519 |
|
|
|
|
|
|
|
|
| Forfeit |
|
| 7,519 |
|
|
| February 19, 2015 |
|
| 28,552 |
|
| February 19, 2016 |
|
| 7,138 |
|
|
|
|
|
|
|
|
| February 19, 2016 |
|
| 7,138 |
|
|
|
|
|
|
|
|
| Forfeit |
|
| 7,138 |
|
|
|
|
|
|
|
|
| Forfeit |
|
| 7,138 |
|
Total |
|
|
|
| 84,904 |
|
|
|
|
|
|
|
Randy R. Wiese |
| February 23, 2012 |
|
| 6,250 |
|
| February 23, 2016 |
|
| 6,250 |
|
|
| February 27, 2013 |
|
| 9,744 |
|
| February 27, 2016 |
|
| 4,872 |
|
|
|
|
|
|
|
|
| February 27, 2017 |
|
| 4,872 |
|
|
| February 19, 2014 |
|
| 11,279 |
|
| February 19, 2016 |
|
| 3,760 |
|
|
|
|
|
|
|
|
| February 19, 2017 |
|
| 3,759 |
|
|
|
|
|
|
|
|
| February 19, 2018 |
|
| 3,760 |
|
|
| February 19, 2015 |
|
| 14,608 |
|
| February 19, 2016 |
|
| 3,652 |
|
|
|
|
|
|
|
|
| February 19, 2017 |
|
| 3,652 |
|
|
|
|
|
|
|
|
| February 19, 2018 |
|
| 3,652 |
|
|
|
|
|
|
|
|
| February 19, 2019 |
|
| 3,652 |
|
|
| November 18, 2015 |
|
| 19,135 |
|
| November 18, 2016 |
|
| 9,567 |
|
|
|
|
|
|
|
|
| November 18, 2017 |
|
| 9,568 |
|
Total |
|
|
|
| 61,016 |
|
|
|
|
|
|
|
Joseph T. Ruble |
| February 23, 2012 |
|
| 5,313 |
|
| February 23, 2016 |
|
| 5,313 |
|
|
| February 27, 2013 |
|
| 8,205 |
|
| February 27, 2016 |
|
| 4,102 |
|
|
|
|
|
|
|
|
| February 27, 2017 |
|
| 4,103 |
|
|
| February 19, 2014 |
|
| 9,023 |
|
| February 19, 2016 |
|
| 3,008 |
|
|
|
|
|
|
|
|
| February 19, 2017 |
|
| 3,007 |
|
|
|
|
|
|
|
|
| February 19, 2018 |
|
| 3,008 |
|
|
| February 19, 2015 |
|
| 11,953 |
|
| February 19, 2016 |
|
| 2,988 |
|
|
|
|
|
|
|
|
| February 19, 2017 |
|
| 2,988 |
|
|
|
|
|
|
|
|
| February 19, 2018 |
|
| 2,988 |
|
|
|
|
|
|
|
|
| February 19, 2019 |
|
| 2,989 |
|
|
| November 18, 2015 |
|
| 17,825 |
|
| November 18, 2016 |
|
| 8,912 |
|
|
|
|
|
|
|
|
| November 18, 2017 |
|
| 8,913 |
|
Total |
|
|
|
| 52,319 |
|
|
|
|
|
|
|
Bret C. Griess |
| February 23, 2012 |
|
| 7,422 |
|
| February 23, 2016 |
|
| 7,422 |
|
|
| February 27, 2013 |
|
| 11,282 |
|
| February 27, 2016 |
|
| 5,641 |
|
|
|
|
|
|
|
|
| February 27, 2017 |
|
| 5,641 |
|
|
| February 19, 2014 |
|
| 13,534 |
|
| February 19, 2016 |
|
| 4,511 |
|
|
|
|
|
|
|
|
| February 19, 2017 |
|
| 4,511 |
|
|
|
|
|
|
|
|
| February 19, 2018 |
|
| 4,512 |
|
|
| February 19, 2015 |
|
| 17,928 |
|
| February 19, 2016 |
|
| 4,482 |
|
|
|
|
|
|
|
|
| February 19, 2017 |
|
| 4,482 |
|
|
|
|
|
|
|
|
| February 19, 2018 |
|
| 4,482 |
|
|
|
|
|
|
|
|
| February 19, 2019 |
|
| 4,482 |
|
|
| November 19, 2015 |
|
| 28,337 |
|
| November 19, 2016 |
|
| 7,084 |
|
|
|
|
|
|
|
|
| November 19, 2017 |
|
| 7,084 |
|
|
|
|
|
|
|
|
| November 19, 2018 |
|
| 7,084 |
|
|
|
|
|
|
|
|
| November 19, 2019 |
|
| 7,085 |
|
Total |
|
|
|
| 78,503 |
|
|
|
|
|
|
|
CSG Systems International, Inc. 2016 Proxy Statement37
NEO |
| Grant Date |
| Unvested Shares |
|
| Vesting Dates |
| Shares Vesting |
| ||
Peter E. Kalan |
| February 27, 2013 |
|
| 43,077 |
|
| March 1, 2016 |
|
| 43,077 |
|
|
| February 19, 2014 |
|
| 45,133 |
|
| March 1, 2016 |
|
| 15,044 |
|
|
|
|
|
|
|
|
| Forfeit |
|
| 30,089 |
|
|
| February 19, 2015 |
|
| 42,829 |
|
| March 1, 2016 |
|
| 14,276 |
|
|
|
|
|
|
|
|
| Forfeit |
|
| 14,276 |
|
|
|
|
|
|
|
|
| Forfeit |
|
| 14,277 |
|
Total |
|
|
|
| 131,039 |
|
|
|
|
|
|
|
Randy R. Wiese |
| February 27, 2013 |
|
| 20,462 |
|
| March 1, 2016 |
|
| 20,462 |
|
|
| February 19, 2014 |
|
| 22,556 |
|
| March 1, 2016 |
|
| 7,518 |
|
|
|
|
|
|
|
|
| March 1, 2017 |
|
| 15,038 |
|
|
| February 19, 2015 |
|
| 21,913 |
|
| March 1, 2016 |
|
| 7,304 |
|
|
|
|
|
|
|
|
| March 1, 2017 |
|
| 7,304 |
|
|
|
|
|
|
|
|
| March 1, 2018 |
|
| 7,305 |
|
Total |
|
|
|
| 64,931 |
|
|
|
|
|
|
|
Joseph T. Ruble |
| February 27, 2013 |
|
| 17,230 |
|
| March 1, 2016 |
|
| 17,230 |
|
|
| February 19, 2014 |
|
| 18,045 |
|
| March 1, 2016 |
|
| 6,015 |
|
|
|
|
|
|
|
|
| March 1, 2017 |
|
| 12,030 |
|
|
| February 19, 2015 |
|
| 17,928 |
|
| March 1, 2016 |
|
| 5,976 |
|
|
|
|
|
|
|
|
| March 1, 2017 |
|
| 5,976 |
|
|
|
|
|
|
|
|
| March 1, 2018 |
|
| 5,976 |
|
Total |
|
|
|
| 53,203 |
|
|
|
|
|
|
|
Bret C. Griess |
| February 27, 2013 |
|
| 23,692 |
|
| March 1, 2016 |
|
| 23,692 |
|
|
| February 19, 2014 |
|
| 27,068 |
|
| March 1, 2016 |
|
| 9,022 |
|
|
|
|
|
|
|
|
| March 1, 2017 |
|
| 18,046 |
|
|
| February 19, 2015 |
|
| 26,893 |
|
| March 1, 2016 |
|
| 8,964 |
|
|
|
|
|
|
|
|
| March 1, 2017 |
|
| 8,964 |
|
|
|
|
|
|
|
|
| March 1, 2018 |
|
| 8,965 |
|
Total |
|
|
|
| 77,653 |
|
|
|
|
|
|
|
The following table contains information concerning shares of restricted stock that vested for the executives named in the 2015 Summary Compensation Table on page 33our NEOs during 2015.2021. All dollar values have been rounded to the nearest dollar.
| Stock Awards | |||
Name | Number of Shares Acquired on Vesting(1) |
| Value Realized on Vesting(2) | |
Brian A. Shepherd |
| 41,553 | $ | 2,072,336 |
Hai Tran |
| - | $ | - |
Kenneth M. Kennedy |
| 37,742 |
| 1,860,523 |
Elizabeth A. Bauer |
| 10,170 | $ | 478,308 |
Rolland B. Johns |
| 24,324 | $ | 1,128,683 |
(1) This column includes both performance- and time-based shares of restricted stock that vested in 2021. (2) This column reflects the total dollar value realized by the NEO upon the vesting of restricted stock in 2021. This amount was determined by multiplying the number of shares of stock or units by the closing market price of the Company’s common stock on Nasdaq on the applicable vesting dates. | ||||
| Restricted Stock Awards |
| ||||||
NEO |
| Number of Shares Acquired on Vesting (1) |
|
| Value Realized on Vesting (2) |
| ||
Peter E. Kalan |
|
| 59,389 |
|
| $ | 1,791,690 |
|
Randy R. Wiese |
|
| 28,215 |
|
| $ | 851,188 |
|
Joseph T. Ruble |
|
| 23,881 |
|
| $ | 720,434 |
|
Bret C. Griess |
|
| 33,095 |
|
| $ | 998,504 |
|
|
|
|
|
|
|
|
|
|
(1) This column includes both time-based and performance-based shares of restricted stock that vested in 2015. |
| |||||||
(2) This column reflects the total dollar value realized by the NEO upon the vesting of restricted stock in 2015. This amount was determined based on the closing market price of the Company’s common stock on the vesting dates. |
| |||||||
38 CSG Systems International, Inc. 2016 Proxy Statement
2015 Non-Qualified Deferred Compensation
The following table contains information about contributions, earnings, withdrawals, and account balances for our executivesNEOs under the Company’s non-qualified Wealth Accumulation Plan, which was in effect during 2021. In 2021, due to the limited historical employee participation rate, the Board decided to freeze the Plan effective January 1, 2022, and prohibit any further contributions to the Wealth Accumulation Plan. All amounts have been rounded to the nearest dollar.
The Wealth Accumulation Plan iswas an elective, unfunded deferred compensation plan intended to build net worth through the deferral of cash compensation.compensation on a before-tax basis. Participation in the Wealth Accumulation Plan iswas limited to vice presidentsVice Presidents and above, including the NEOs. Each participant must elect,have elected by December 15 of the preceding year to defer: (1) up to 25% of the participant’s base salary; andsalary and/or (2) up to 100% of the participant’s cash bonus, notbonus. All eligible employees may elect to exceed andefer up to $700,000 in the aggregate deferral of $700,000 for any one year.
Payment elections for the deferral year also must be We made by December 15 of the preceding year. Participants can elect to receive payment either as an in-service distribution or upon termination of employment. In either event, payment can be made as a lump sum or in monthly installments for up to 180 months. We make a matching contribution equal to 25% of the deferral, up to a maximum of $6,250 per participant for any one plan year. Participants direct all investments under this plan. ChangesThe aggregate amount each NEO elected to defer and the amount that the Company contributed to the investment selectionWealth Accumulation Plan is shown in the Non-Qualified Deferred Compensation Table below.
Payment can be made as a lump sum or in monthly installments for up to 180 months, depending on whether the participant elected to receive payment as an in-service distribution or upon termination of employment, and the payment options offered at anythe time of the participant’s deferral election. Generally, Wealth Accumulation Plan deferral account benefit payments will not begin earlier than the elected commencement date. If a participant dies, the participant’s deferred compensation benefit will be paid to his or her beneficiaries or estate in a lump sum. Participants may request an early withdrawal in the event of an unforeseen emergency, which request is subject to approval. For all participants, distributions triggered by termination of employment are automatically delayed six months. The Company has the right to terminate the Wealth Accumulation Plan and distribute all vested amounts credited to participant accounts upon a change of control.
The participant may select from a wide mix of investment crediting funds that best suits their goals, time horizon, and risk tolerance. The investment options available and their performance, as well as planning tools to assist the participant selecting an appropriate mix, are available online with the record keeper. The participant may change investment crediting elections or request investment exchanges between options whether online or through phone services with the record keeper. Investment crediting options are used to measure the notional gains and losses that will be credited to the participant’s account over time. While no actual investment is made in the investment crediting options selected, the participant’s account is subject to the same market investment risk as the actual investment in such investment crediting options.
Participants are alwaysfully vested immediately in their own salary deferrals and vest 100% in Company matching contributions after three years of service. All ofNEOs who participated in the NEOsplan are fully vested in their Wealth Accumulation Plan account balances.
NEO |
| Aggregate Balance at December 31, 2014 |
|
| Executive Contributions in 2015 (1) |
|
| Company Matching Contributions in 2015 (2) |
|
| Aggregate Earnings in 2015 |
|
| Aggregate Withdrawals/ Distributions in 2015 |
|
| Aggregate Balance at December 31, 2015 (3) |
| ||||||
Peter E. Kalan |
| $ | 918,885 |
|
| $ | - |
|
| $ | - |
|
| $ | 2,292 |
|
| $ | - |
|
| $ | 921,177 |
|
Randy R. Wiese |
| $ | 449,086 |
|
| $ | 27,378 |
|
| $ | 6,250 |
|
| $ | 14,588 |
|
| $ | - |
|
| $ | 497,302 |
|
Joseph T. Ruble |
| $ | 675,667 |
|
| $ | 56,266 |
|
| $ | 6,250 |
|
| $ | (418 | ) |
| $ | - |
|
| $ | 737,765 |
|
Bret C. Griess |
| $ | 1,223,058 |
|
| $ | 37,038 |
|
| $ | 6,767 |
|
| $ | 3,178 |
|
| $ | - |
|
| $ | 1,270,041 |
|
(1) These amounts are also included in the "Base Salary" or "Non-Equity Incentive Plan Compensation" columns in the 2015 Summary Compensation Table on page 33. |
| |||||||||||||||||||||||
(2) These amounts were reported as "All Other Compensation" in the 2015 Summary Compensation Table on page 33 and as "Company Non-Qualified Deferred Compensation contributions" in Footnote (6) on page 34. |
| |||||||||||||||||||||||
(3) The aggregate balance includes the following executive and Company contribution amounts reported in the summary compensation tables in prior year proxy statements beginning with the 2007 proxy statement: Mr. Kalan $336,924, Mr. Wiese $370,708, Mr. Ruble $455,516, and Mr. Griess $285,945. |
| |||||||||||||||||||||||
CSG Systems International, Inc. 2016 Proxy Statement39
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 55 |
Back to ContentsEmployment Agreements
The following table contains information about contributions, earnings, withdrawals, and account balances for our NEOs under the Company’s non-qualified Wealth Accumulation Plan, which was in effect during 2021.
Name | Aggregate Balance at December 31, 2020 | Executive Contributions in 2021(1) | Registrant Contributions in 2021(2) | Aggregate Earnings in 2021 | Aggregate Withdrawals/ Distributions in 2021 |
| Aggregate Balance at December 31, 2021(3) | |||||
Brian A. Shepherd | $ | 177,869 | $ | 69,651 | $ | 6,250 | $ | 13,859 | $ | - | $ | 267,629 |
Hai Tran | $ | - | $ | - | $ | - | $ | - | $ | - | $ | - |
Kenneth M. Kennedy | $ | 1,506,061 | $ | 37,953 | $ | 6,250 | $ | 237,578 | $ | - | $ | 1,787,842 |
Elizabeth A. Bauer | $ | 1,037,369 | $ | 79,556 | $ | 6,250 | $ | 294,299 | $ | - | $ | 1,417,474 |
Rolland B. Johns | $ | 42,659 | $ | 30,438 | $ | 6,250 | $ | 7,779 | $ | - | $ | 87,126 |
(1) These amounts are also included in the “Salary” or “Non-Equity Incentive Plan Compensation” columns in the 2021 Summary Compensation Table. (2) These amounts were reported as “All Other Compensation” in the 2021 Summary Compensation Table and as “Company non-qualified deferred compensation contributions.” (3) The aggregate balance includes the following executive and Company contribution amounts reported in the summary compensation tables in prior year proxy statements beginning with the 2007 proxy statement: Mr. Shepherd - $163,136, Mr. Kennedy - $175,433, and Mr. Johns - $35,917. | ||||||||||||
NEW 2022 EXECUTIVE SEVERANCE PLAN
In November 2015,The Compensation Committee believes that maintaining a competitive level of separation benefits is appropriate as part of an overall program designed to attract, retain, and motivate the Board approved changes tohighest-quality management team.
As part of our comprehensive review of our executive management teamcompensation plans and entered into: (1) amendedpractices, the Compensation Committee determined to implement a new standard Executive Severance Plan, which became effective April 1, 2022. Participation in the Executive Severance Plan is limited to Executive Vice Presidents and restatedabove, and participants may not have a separate employment agreement providing benefits in the event of a separation from service.
Each of Mr. Shepherd, Mr. Kennedy, and Ms. Bauer elected to participate in the Executive Severance Plan and, in connection with executing their respective participation agreements giving effect to their participation in the Executive Severance Plan, terminated their respective employment agreements effective April 1, 2022. Mr. Johns’ separation from service with Mr. Griess, Mr. Wiese,CSG was April 1, 2022 and Mr. Ruble; and (2) a resignation and retirement agreement with Mr. Kalan.
Below is a summary of key terms for these agreements. The agreements have been publicly filed with the SEC. See the Company’s 8-K filing dated November 23, 2015 (and amended on November 30, 2015).
Mr. Kalan
In connection with Mr. Kalan’s retirement, on November 19, 2015 he entered into a resignation and retirement agreement with the Company (the “retirement agreement”). The retirement agreement supersedes his employment agreement except for continuing obligationsis no longer in his employment agreement regarding nondisclosure, non-solicitation of employees,effect.
The Executive Severance Plan streamlines and post-termination noncompetition. The retirement agreementsimplifies the benefits to be provided for his continued employment asto our CEO until December 30, 2015. Effective December 30, 2015, Mr. Kalan retired as our CEO and resigned from our Board. Mr. Kalan remained a non-executive employee of the Company through March 31, 2016, at which time he retired from the Company. During 2016, and prior to his retirement, Mr. Kalan provided transition assistance and received a monthly salary of $2,000 in periodic installments and at the expense of the Company continued group medical, hospital, dental, and long-term disability and group life insurance coverages. As providedexecutives in the retirement agreement, Mr. Kalan remained eligible to receive a 2015 cash incentive bonusevent of termination by CSG for any reason other than cause, death or disability, or by the executive for good reason, as such terms are defined under the terms of our Performance Bonus Program and continued to vest in shares of restricted stock according to their terms prior to his retirement. The retirement agreement provides that the Company agreed in all events (other than death or termination for cause) to continue his employment through March 31, 2016. The retirement agreement includes director and officer insurance coverage. Executive Severance Plan.
In the event of a termination that does not occur within the first 18 months following a change of control of CSG, participants in the Executive Severance Plan would receive the following separation benefits:
a severance payment consisting of an amount equal to 100% of the participant’s annual base salary and target bonus, paid over a 12-month period, plus a lump sum amount equal to the COBRA continuation coverage premiums that would be payable by the participant for the first 18 months of the COBRA continuation period;
if the termination occurs on or after June 1 of the applicable calendar year, an additional lump sum payment consisting of participant’s target bonus, pro-rated for the number of days the participant was employed during the calendar year; and
a prorated portion of the unvested time-based restricted stock vests and a prorated portion of the unvested performance-based restricted stock continuing to vest, with the vesting amount of both based on the number of months employed during the vesting cycle, and with the performance-based stock vesting based on actual performance achieved at the end of the performance period.
In the event of a termination within the first 18 months following a change of control of CSG, participants in the Executive Severance Plan would receive the following separation benefits:
a lump sum severance payment consisting of an amount equal to 200% of the participant’s annual base salary and target bonus, plus a cash amount equal to the COBRA continuation coverage premiums that would be payable by the participant for the first 18 months of the COBRA continuation period;
an additional lump sum payment consisting of participant’s target bonus, pro-rated for the number of days the participant was employed during the calendar year; and
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 56 |
vesting of all unvested time-based and performance-based restricted stock awards, with the vesting amount for the performance-based stock awards determined at target; provided, however, that for any performance-based stock awards on a relative total stockholder return (rTSR) metric, the performance period would be deemed to have ended on the date of the change of control and will be valued on that date.
Payments to participants under the Executive Severance Plan are contingent on, among other things, the participant entering into and complying with a broad-based release of CSG.
The participation agreements entered into by Ms. Bauer, Mr. Kalan’sKennedy, and Mr. Shepherd differ from the standard form participation agreements in order to reflect benefits previously contained in their repective employment agreements. The differences are as follows:
in the event of the participant’s death, prior to March 31, 2016, the retirementparticipation agreement providedprovides for a lump sum payment consisting of the participant’s target bonus, pro-rated for the number of months the participant was employed during the calendar year, plus the payment of any 2015earned or owed salary or other benefits;
in the event of the participant’s disability, in addition to providing for the payment of the same amounts that would be paid in the event of the participant’s death, the participation agreement provides for a lump sum payment equal to the COBRA continuation coverage premiums that would be payable by the participant for the first 18 months of the COBRA continuation period; and
in the event of termination within the first 18 months following a change of control, the participation agreement provides for an increase of the base salary and target bonus and scheduled vestingportion of restricted stock,the severance payment from 200% to 300% (provided that if such amount is paid prior to MarchDecember 31, 2016,2022 and the triggering transaction would not be provided to his estate.
The Company agreed to accelerate the vestingconsidered a change of 24,914 sharescontrol for purposes of Mr. Kalan’s unvested restricted stock, in considerationSection 409A of the following:Internal Revenue Code, such amount would be paid over a 12-month period, rather than in a lump sum).
| 2021 EMPLOYMENT AGREEMENTS |
|
|
|
|
|
Mr. Griess, Mr. Wiese and Mr. Ruble
In November 2015, the Company entered into amended and restated2021, CSG was a party to employment agreements with each of Mr. Griess,Shepherd, Mr. Wiese,Kennedy, Ms. Bauer, and Mr. Ruble. ExceptJohns, which were all substantially similar, except as noted below, the key terms of each of the employment agreements are substantially similar.
The agreement continues in effect until the executive’s termination of employment. Thebelow. Each agreement provides for a base salary at an annual rate not less than the rate for the preceding calendar year. For Mr. Griess, effective January 1, 2016, his base salary is $650,000 per year. For calendar years beginning after December 31, 2015,In addition, the executive’s2021 employment agreements set the NEO’s annual incentive bonus opportunity isat not less than: 150%100% of base salary for Mr. GriessShepherd and 100%Mr. Kennedy, and 75% of base salary for Messrs. WieseMs. Bauer and Ruble.Mr. Johns. The agreement includesemployment agreements include reimbursement of business expenses, vacations and holidays, and other customary benefits. They also contain customary confidentiality, non-solicitation, and non-competition provisions for one year following the termination of employment. Mr. Tran did not enter into an employment agreement upon hire. Instead, in the offer letter for employment, the Company and Mr. Tran agreed that Mr. Tran would be offered the opportunity to enter into an executive severance agreement and change of control severance agreement. In lieu of those agreements, Mr. Tran executed a participation agreement formalizing his participation in the Executive Severance Plan on April 1, 2022.
TERMINATION AND CHANGE OF CONTROL PROVISIONS UNDER 2021 EMPLOYMENT AGREEMENTS
Each employment agreement effective during 2021 contains certain benefits upon termination of the NEO’s employment or Change of Control of the Company, as outlined below.
If the executive’sNEO’s employment is terminated due to death or disability, hethe executive (or histhe executive’s estate) would receive his:receive: (1) accrued and unpaid base salary;salary and (2) earned and unused vacation pay through the employment termination date in a lump sum payment (the “accrued benefits”); (2) any other amounts or benefits earned, accrued, or owed to him but not paid as of the employment termination date; (3) a pro rata portion of histhe executive’s annual incentive bonus for the year in which his employment terminates, payable at the same time as payments to continuing executives;NEOs; and (4) in the event of disability, continued participation at the Company’s expense in group medical, dental, life, and long-term disability benefits (“group insurance benefits”) until age 65, unless restricted or prohibited.
If the executive’sNEO’s employment is terminated for cause, heCause, the executive would receive only his accrued benefits and any other amounts or benefits earned, accrued, or owed to him but not paid through the employment termination date.
40 CSG Systems International, Inc. 2016 Proxy Statement
If the executiveNEO voluntarily resigns, hethe executive would receive only his accrued benefits through the employment termination date and any other amounts or benefits earned, accrued, or owed to him but not paid as of the employment termination date. If histhe NEO’s voluntary resignation iswere effective on December 31 of a particular year, he would receive histhe executive’s annual incentive bonus for that year towould be paid in accordance with the regular payment schedule.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 57 |
If prior to the occurrence of a changeChange of control,Control, the Company terminates the executive’sNEO’s employment for any reason other than cause,Cause, or his death or disability, or hethe executive terminates his employment on account of a constructive termination,Constructive Termination, then hethe executive would receive: (1) his accrued benefits; (2) any other amounts or benefits earned, accrued, or owed to him but not paid through the employment termination date; and (3) if hethe executive executes a release of all claims and the revocation period expires within 45 days, and hethe executive continues to comply with his fiduciary obligations, the restrictive covenants, and any other material ongoing obligations,obligations: (a) an amount equal to 100% of histhe executive’s average W-2 wages for the three prior calendar years payable in monthly installments,accordance with the Company’s normal payroll practices (applicable to Mr. Shepherd once he has been in the CEO position for at least three years; until then, if he remains in the CEO position for less than three years or less than two years then the sum of base salary, target bonus, and the vesting of any LTI awards granted in the last two years or last year, respectively); and (b) continued participation at the Company’s expense in the group insurance benefits up to one year, unless restricted or prohibited.
If within 18 months after the occurrence of a changeChange of control,Control, the Company (or any permitted assignee) terminates the executive’sNEO’s employment for any reason other than cause,Cause, or his death or disability, or hethe executive terminates his employment on account of a constructive termination,Constructive Termination, then hethe executive would receivereceive: (1) his accrued benefits; (2) any other amounts or benefits earned, accrued, or owed to him but not paid through the employment termination date; (3) automatic vesting (subject to limitations) of all unvested restricted stock awards that are in effect on the termination date and whichthat provide for automatic vesting upon his involuntary termination without causeCause after a changeChange of control;Control; and (4) if hethe executive executes a release of all claims and the revocation period expires within 45 days, and hethe executive continues to comply with his fiduciary obligations, the restrictive covenants, and any other material ongoing obligations,obligations: (a) an amount (if any)equal to three (3) times the sum of the executive’s base salary for the calendar year in which the termination occurs plus the performance-based cash bonus the executive would receive for the calendar year in which the termination occurs if the Company attained 100% of its performance goals for such calendar year, reduced as necessary so that the actual amount, if any, payable plus the applicable amounts of any other relevant payments or benefits is $1.00 less than the amount that if paid to him would result in an “excessthe imposition of a tax under Section 4999 of the Code, on "excess parachute payment”payments" (as defined in Section 280G of the Code)minus the fair market value of all other payments or benefits in the nature of compensation for purposes of Section 280G payable in connection with the change of control – less any portion of such fair market value not treated as contingent on the change of control for purposes of Section 280G, payable in a lump sum; and (b) continued
participation at the Company’s expense in the group insurance benefits up to two years, unless restricted or prohibited.
See Definitions below for a summary of key terms. A “clawback” provision has been included in eachClawback
Each of the employment agreements.agreements includes a “clawback” provision. In certain cases, the Company is authorized to reduce or cancel, or require the recovery of all or a portion of the executive’sNEO’s annual performance bonus or long-term incentiveLTI compensation award if the Board determines that the executiveNEO has engaged in intentional misconduct that has led to a material misstatement of our financial statements.
Each employment agreement contains provisions: (1) restricting the disclosure by the executive of confidential information of the Company during the term of the agreement and thereafter; (2) restricting the executive from soliciting employees of the Company for employment with another employer for a period of one year after the termination of the executive’s employment with the Company; and (3) restricting the executive from engaging in various activities directly or indirectly involving competition with the Company for a period of one year after the termination of the executive’s employment with the Company. Each agreement authorizes the Company to seek injunctive relief to prevent a violation or potential violation of the restrictive provisions described in this paragraph, and the Company also can exercise any other rights and remedies that might be available in the particular circumstances.
CauseCause.
Under the employment agreements, the Board may terminate the executive’san NEO’s employment for cause.Cause. Cause generally includes: (1) the executive’sNEO’s confession or conviction of theft, fraud, embezzlement, or other crime involving dishonesty; (2) the executive’sNEO’s certification of materially inaccurate financial or other information pertaining to the Company or any of its subsidiaries with actual knowledge of such inaccuracies; (3) the executive’sNEO’s refusal or willful failure to cooperate with an investigation by a governmental agency pertaining to the financial or other business affairs of the Company or any of its subsidiaries unless such refusal or willful failure is based upon a written direction of the Board or the written advice of counsel; (4) the executive’sNEO’s excessive absenteeism (other than by reason of physical injury, disease, or mental illness) without a reasonable justification and failure on the part of the executiveNEO to cure such absenteeism within 20 days after he receivesreceipt of a written notice from the Board or the CEO setting forth the particulars of such absenteeism; (5) material violation
CSG Systems International, Inc. 2016 Proxy Statement41
by the executiveNEO of his nondisclosure obligations under the employment agreement; (6) habitual and material negligence by the executiveNEO in the performance of his duties and responsibilities under the employment agreement and failure on the part of the executiveNEO to cure such negligence within 20 days after he receivesreceipt of a written notice from the Board or the CEO setting forth in reasonable detail the particulars of such negligence; (7) material non-compliance by the executiveNEO with his performance obligations under the employment agreement and failure to correct such non-compliance within 20 days after his receipt of a written notice from the Board or the CEO setting forth in reasonable detail the particulars of such non-compliance; (8) material failure by the executiveNEO to comply with a lawful directive of the Board or the CEO and failure to cure such non-compliance within 20 days after his receipt of a written notice from the Board or the CEO setting forth in reasonable detail the particulars of such non-compliance; (9) a material breach by the executiveNEO of any of his fiduciary duties to the Company or its subsidiaries and, if such breach is curable, the executive’sNEO’s failure to cure such breach within 10 days after he receivesreceipt of a written notice from the Board or the CEO setting forth in reasonable detail the particulars of such breach; or (10) willful misconduct or fraud on the part of the executiveNEO in the performance of the executive’sNEO’s duties under the employment agreement as determined in good faith by the Board.
In no event will the Company’s results of operations of the Company or any business judgment made in good faith by the executivean NEO constitute an independent basis for termination for cause of the executive’s employmentCause under the employment agreement. Any termination of the executive’san NEO’s employment for causeCause must be authorized by a majority vote of the Board taken within six months after a majority of the members of the Board
(other (other than the executive)NEO) have actual knowledge of the occurrence of the event or conduct constituting the cause for such termination.Cause.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 58 |
For purposes of the employment agreements and the unvested restricted stock awards, a “change“Change of control”Control” of the Company generally includes: (1) the merger or consolidation of the Company into another corporation; (2) the acquisition of 30% or more of the outstanding voting capital stock of the Company by any person, entity, or group of persons; (3) a “going private” transaction involving the Company; (4) the sale or other disposition of all or substantially all of the Company’s property and assets; (5) the disposition to a third party of a major portion or portions of the Company’s business (measured either by the consideration received as a percentage of the market value of the common stock or by the revenues of the Company represented by the business being sold); or (6) a change in a majority of the members of the Board without approval of 75% of the incumbent directors. The foregoing is merely a summary of the more detailed definition of “change“Change of control”Control” that appears in the applicable employment agreements.
Constructive Termination. Termination
For purposes of the employment agreements, a “constructive termination”“Constructive Termination” generally means any action by the Board or CEO or a permitted assignee, without the executive’sNEO’s prior consent, that materially and adversely alters the authority, duties, or responsibilities of the executive.NEO. The executiveNEO must provide written notice to the Board or the permitted assignee of the existence of the condition giving rise to the constructive terminationConstructive Termination within 90 days following the date the executiveNEO first becomes aware of the existence of the condition and the Board or permitted assignee failsmust fail to materially cure the condition within 30 days following the notice.
Separation Agreement with Rolland B. JohnsPotential Payments Upon Termination
In connection with Mr. Johns' transition, we entered into a separation agreement with him. Under the terms of Employmentthe separation agreement, Mr. Johns remained with the Company in a non-executive transition role from November 29, 2021 through April 1, 2022, to cooperate with the Company's reasonable instructions and requests related to transitioning of job tasks and responsibilities during the transition period. Mr. Johns continued to receive his then base salary and continuation of certain other benefits.
The separation agreement specified that he would be entitled to (1) a separation cash payment in the amount of $1,500,000, less all applicable withholding, payable in substantially equal installments in accordance with the Company's normal payroll practices for the next twelve months following the termination date, and (2) a payment equal to $27,800, paid in lump sum, less all applicable withholdings, constituting the equivalent of twelve months of COBRA continuation coverage under Company group health plans.
The following describes the additional amount of compensation that would be paid to each of our NEOs under the 2021 Employment Agreements in the event of a termination of the executive’sNEO’s employment under various scenarios. The amounts shown assume that such termination was effective as of December 31, 2015 and includeare estimates of the amounts that would be paid to each executive upon such termination. TheNEO assuming a termination was effective as of December 31, 2021. We used $57.62 per share, the closing price of our common stock onas of December 31, 2015, $35.98, is used2021 (the last trading day of our 2021 fiscal year), in determining the potential value of accelerated vesting of restricted stock.stock awards. The actual amounts to be paid can only be determined at the time of such executive’san NEO’s separation from us.
In November 2015, The amounts paid or to be paid to Mr. Griess, Mr. Wiese, and Mr. Ruble agreed to the removal of the Section 280G tax gross-up provisionJohns in their legacy employment agreements and, subject to an irrevocable release from each executive, the Company agreed to modify potential cash severance payments for a termination without cause prior to or after a change of control. The design of the potential cash severance payment for a termination without cause after a change of control is intended to provide an amount that togetherconnection with the otherhis separation payments and benefits would not constitute “excess parachute payments”are set forth above under Section 280G of the Code (golden parachute payments).
42 CSG Systems International, Inc. 2016 Proxy Statement
The golden parachute excise tax generally applies to payments of compensation that are contingent on a change in control that exceed a threshold amount. The threshold amount is determined as three times the executive’s base amount (generally the average of the executive’s includible employee gross income from us for the most recent five taxable years before the year of the change in ownership or control). We believe this approach benefits our stockholders and is fair to our executives.Separation Agreement with Rolland B. Johns.
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 59 |
Termination of Employment – Mr. KalanBack to Contents
TERMINATION FOR DEATH, DISABILITY OR VOLUNTARY RESIGNATION
Assuming termination of employment on December 31, 2015 for Mr. Kalan, other than for death or cause, he would receive a continued monthly salary of $2,000 and continued group medical, hospital, dental and long-term disability and group life insurance coverages at the expense of the Company, approximately $886 per month through March 31, 2016. In addition, he, or his estate in the event of death, would also receive his 2015 incentive bonus of $1,320,000; accelerated vesting of 24,914 shares of time-based restricted stock awards with a value of $896,406; vesting of 38,195 shares of time-based restricted stock awards, with a value of $1,374,256, that were scheduled to vest through March 31, 2016; and potential vesting of 72,397 shares of performance-based restricted stock awards, with a value of $2,604,844, subject to vesting prior to March 31, 2016. Both the 2015 incentive bonus and vesting of performance-based restricted stock awards amounts would be based on the Company performance and certification by the Committee.
Termination for Death, Disability, or
Voluntary Resignation
Assuming termination of employment on December 31, 20152021, on account of the death of Mr. Griess,Shepherd, Mr. Wiese,Tran, Mr. Kennedy, Ms. Bauer, or Mr. Ruble,Johns, or by reason of the executive’sNEO’s disability, or his voluntary resignation, the executiveNEO would receive his
accrued benefits, any other amounts or benefits earned, accrued, or owed to him but not paid as of the employment termination datedate; and histhe NEO’s incentive bonus for 2015.2021. In addition, if the executive’sNEO’s employment is terminated by reason of his disability, the executiveNEO would receive continued coverage under the group insurance benefits until the first to occur of the cessation of such disability or the attainment of age 65. The monthly premiums at December 31, 2015,2021, for the group insurance benefits were approximately $1,529$1,774 for Mr. GriessShepherd (age 47)54), $1,744$2,265 for Mr. WieseTran (age 56)52), $2,149 for Mr. Kennedy (age 52), $1,470 for Ms. Bauer (age 59), and $1,735$2,268 for Mr. RubleJohns (age 55)52). In February 2019, the Compensation Committee amended the terms of all outstanding equity awards such that all unvested time-based equity awards will vest in full upon the holder’s death. The values of the unvested time-based awards for each of our NEOs as of December 31, 2021, were $4,266,127 for Mr. Shepherd, $0 for Mr. Tran, $2,467,981 for Mr. Kennedy, $894,608 for Ms. Bauer, and $1,507,857 for Mr. Johns. For more information, see Outstanding Equity Awards as of December 31, 2021.
Termination for CauseTERMINATION FOR CAUSE
Assuming termination of employment on December 31, 20152021, by the Company for causeCause for Mr. Griess,Shepherd, Mr. Wiese,Tran, Mr. Kennedy, Ms. Bauer, or Mr. Ruble,Johns, the executiveNEO would receive his accrued benefits through the termination date and any other amounts or benefits earned, accrued, or owed to him but not paid as of the employment termination date.
Termination Without Cause Prior to a Change of ControlTERMINATION WITHOUT CAUSE PRIOR TO A CHANGE OF CONTROL
Assuming termination of employment on December 31, 20152021, by the Company without causeCause (or a constructive terminationConstructive Termination by the executive)NEO) prior to a changeChange of control for Mr. Griess, Mr. Wiese, or Mr. Ruble,Control, the executiveNEO would receive his accrued benefits through the termination date;date, and any other amounts or benefits earned, accrued, or owed to him but not paid as of the employment termination date; and his incentive bonus for 2015.date. Subject to an irrevocable release, heeach executive would also receive ana cash amount equal to 100% of histhe average W-2 wages for the three prior calendar years, (or approximately one times annual total direct compensation)with the exception of Mr. Shepherd who entered into a different employment agreement upon appointment to CEO, and described within Termination and Change of Control Provisions under 2021 Employment Agreements above, and continued coverage under the group insurance benefits as shown in the following table.
Termination Without Cause Prior to a Change of ControlTERMINATION WITHOUT CAUSE PRIOR TO A CHANGE OF CONTROL
Termination Without Cause Prior to a Change of Control - Payment or Benefit |
| Bret C. Griess |
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| Randy R. Wiese |
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| Joseph T. Ruble |
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Cash Amount (1) |
| $ | 1,573,008 |
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| $ | 1,470,365 |
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| $ | 1,266,769 |
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Group medical, dental, life and long-term disability benefits (2) |
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| 18,345 |
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| 20,928 |
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| 20,820 |
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Acceleration of vesting of restricted stock awards (3) |
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| - |
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| 688,477 |
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| 641,344 |
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Totals |
| $ | 1,591,353 |
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| $ | 2,179,770 |
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| $ | 1,928,933 |
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(1) Amount payable in substantially equal installments in accordance with the Companies' normal payroll practices for the twelve (12) months following the Termination Date; provided, that such payments shall commence on the first regularly scheduled payroll date that is at least sixty (60) days following the Termination Date. |
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(2) Amount represents premiums for 12 months, based upon monthly premiums being paid as of December 31, 2015. Benefits will cease if the executive receives substantially equivalent benefits from another employer. |
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(3) Amount represents the number of shares of unvested restricted stock that would vest upon the termination of employment prior to a change of control, multiplied by the closing market price of the Common Stock on December 31, 2015 of $35.98. |
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Payment or Benefit | Brian A. Shepherd | Hai Tran | Kenneth M. Kennedy | Elizabeth A. Bauer | Rolland B. Johns | |||||
Cash Amount(1) | $ | 1,868,220 | $ | - | $ | 1,819,452 | $ | 868,954 | $ | 1,110,396 |
Group medical, dental, life, and long-term disability benefits(2) |
| 21,291 |
| 27,184 |
| 25,794 |
| 17,635 |
| 27,210 |
TOTALS | $ | 1,889,511 | $ | 27,184 | $ | 1,845,246 | $ | 886,589 | $ | 1,137,606 |
(1) Amount payable in substantially equal installments in accordance with the Company’s normal payroll practices for the 12 months following the termination date starting on the first regularly scheduled payroll date that is at least 60 days following the termination date. (2) Amount represents premiums for 12 months, based upon monthly premiums being paid as of December 31, 2021. Benefits will cease if the NEO receives substantially equivalent benefits from another employer. | ||||||||||
CSG Systems International, Inc. 2016 Proxy Statement43
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 60 |
Back to ContentsTermination Without Cause After a Change of Control
TERMINATION WITHOUT CAUSE AFTER A CHANGE OF CONTROL
Assuming termination of employment on December 31, 20152021, by the Company, without causeCause (including a constructive termination)Constructive Termination) after a changeChange of control (as “cause” and “change of control” are defined above),Control, the executiveNEO would receive his accrued benefits; any other amounts or benefits earned, accrued, or owed to him but not paid as of the employment termination date; his incentive bonus for 2015; and vesting of all unvested shares of restricted stock held on December 31, 2021, subject to
limitations. Subject to an irrevocable release, heeach executive would also receivereceive: (a) an amount (if any) that together with other compensation and benefitsequal to three (3) times the sum of his or her base salary plus the performance-based cash bonus he or she would not exceedreceive if the Company attained 100% of its performance goals (not exceeding excise tax thresholds limits under Section 280G excise tax threshold limit,of the Code), with the exception of Mr. Shepherd who entered into a different employment agreement upon appointment to CEO, and described within Termination and Change of Control Provisions under 2021 Employment Agreements above; and (b) continued coverage under the group insurance benefits for two years as shown in the following table. The table includes
TERMINATION WITHOUT CAUSE AFTER A CHANGE OF CONTROL
Payment or Benefit |
| Brian A. Shepherd | Hai Tran | Kenneth M. Kennedy | Elizabeth A. Bauer |
| Rolland B. Johns | |||
Cash Amount(1) | $ | - | $ | - | $ | 292,338 | $ | 1,895,078 | $ | 897,094 |
Group medical, dental, life, and long-term disability benefits(2) |
| 42,582 |
| 54,368 |
| 51,588 |
| 35,270 |
| 54,420 |
Acceleration of vesting of restricted stock awards(3) |
| 11,324,289 |
| - |
| 6,576,747 |
| 1,378,443 |
| 3,413,409 |
TOTALS | $ | 11,366,871 | $ | 54,368 | $ | 6,920,673 | $ | 3,308,791 | $ | 4,364,923 |
(1) Amount would be paid in a lump sum within 30 days after the termination of employment without regard to other employment. (2) Amount represents premiums for 24 months, based upon monthly premiums being paid as of December 31, 2021. Benefits will cease if the NEO receives substantially equivalent benefits from another employer. (3) Amount represents the maximum number of shares of unvested restricted stock that would vest upon the termination of employment after a Change of Control, multiplied by the closing market price of the common stock on December 31, 2021, the last trading day of the year, of $57.62 per share. Amount may be reduced under Sections 280G and 4999 of the Code. | ||||||||||
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 61 |
Pursuant to Item 402(u) of SEC Regulation S-K, we are required to annually disclose the valueratio of unvested sharesthe annual total compensation of restricted stockour CEO to that of our median employee.
We believe the pay ratio disclosed below is a reasonable estimate calculated in a manner consistent with applicable SEC rules. Because there has been a substantial change in our employee population organization, we recalculated the median employee for 2021. To identify the median employee in 2021 and to determine the annual total compensation of our median employee and our CEO, we took the following steps:
We selected December 31, 2021 as the date on which we would identify our median employee because it enabled us to make such identification in an efficient and reasonable manner;
We identified our median employee, after accumulating annual base pay, bonus earned, and equity granted (“Annual Compensation”) for our entire global employee workforce, excluding our CEO, based on the following share amounts: Mr. Griess (156,156 shares), Mr. Wiese (125,947 shares)local currency of the countries in which they were employed for the fiscal year that ended on December 31, 2021;
Each employee’s Annual Compensation was then converted to U.S. Dollars using average foreign currency rates prevailing during the year, and arrayed high to low to identify our median employee; and
We calculated annual total compensation for the median employee in the same manner that we calculated compensation for our NEOs for our 2021 Summary Compensation Table, resulting in annual total compensation for our median employee to be $60,208 for the year ended December 31, 2021.
Our CEO’s annual total compensation for 2021 was $5,763,015, as reported in the Executive Compensation Tables - 2021 Summary Compensation Table, and Mr. Ruble (105,522 shares):
was approximately 96 times the annual total compensation of the median employee.
Termination Without Cause After a Change of Control
Termination Without Cause After a Change of Control - Payment or Benefit |
| Bret C. Griess |
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| Randy R. Wiese |
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| Joseph T. Ruble |
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Cash Amount (1) |
| $ | 811,800 |
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| $ | 1,691,473 |
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| $ | 1,400,958 |
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Group medical, dental, life and long-term disability benefits (2) |
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| 36,690 |
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| 41,856 |
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| 41,640 |
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Acceleration of vesting of restricted stock awards (3) |
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| 5,618,493 |
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| 4,531,573 |
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| 3,796,682 |
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Totals |
| $ | 6,466,983 |
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| $ | 6,264,902 |
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| $ | 5,239,280 |
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(1) Amount would be paid in a lump sum within 30 days after the termination of employment without regard to other employment. |
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(2) Amount represents premiums for 24 months, based upon monthly premiums being paid as of December 31, 2015. Benefits will cease if the executive receives substantially equivalent benefits from another employer. |
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(3) Amount represents the number of shares of unvested restricted stock that would vest upon the termination of employment after a change of control, multiplied by the closing market price of the Common Stock on December 31, 2015 of $35.98. |
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44 CSG Systems International, Inc. 2016 Proxy Statement
PROPOSAL 2 – Approval of THE performance Bonus PROGRAM, AS AMENDED and restated
We are asking stockholders to approve the CSG Systems International, Inc. Performance Bonus Program, as amended and restated (the “Program”). We are seeking stockholder approval of the Program to permit awards paid to certain executive officers to qualify as performance-based compensation for purposes of Section 162(m) of the Internal Revenue Code, or Section 162(m).
Background
Section 162(m) limits the deduction that a corporation may claim for compensation paid to “covered employees” (the CEO and certain other NEOs). Section 162(m) generally provides that amounts paid to a covered employee in excess of $1 million are not deductible by the corporation for income tax purposes.
The deduction limit of Section 162(m) does not apply to qualifying “performance-based” compensation. Compensation can qualify as “performance-based” only if the material terms of the performance goals are disclosed to and approved by the company’s stockholders and other requirements are satisfied. The material terms include: (1) the employees eligible to receive compensation; (2) the business criteria on which the performance goal is based; and (3) the maximum amount of compensation that could be paid to an employee if the performance goal is achieved.
The Program is an annual cash incentive bonus program that was most recently approved by our stockholders at the 2011 annual meeting. Section 162(m) requires that stockholders re-approve the Program every five years and approve any change in the material terms of the Program. We are asking stockholders to approve the Program, including the revised business criteria for performance goals and revised maximum amount of compensation described below.
The Board Recommends a Vote FOR Approval of the
Performance Bonus Program, as Amended and Restated
Summary of the Performance Bonus Program
The following is a summary of the material terms of the Program, and does not describe all of the Program terms. Please read the complete text of the Program, which appears as Appendix A to this proxy statement.
Purpose. The purpose of the Performance Bonus Program is to provide for annual cash bonus awards to participants that may qualify as “performance-based” compensation for purposes of Section 162(m).
Eligible Employees. Awards under the Program may be granted to executive officers of the Company and any other employee of the Company or its subsidiaries who is or may become a “covered employee” as defined in Section 162(m). As of March 31, 2016, the classes of eligible persons and the approximate number of individuals in each class are approximately as follows: five executive officers.
Administration. The Program is administered by the Compensation Committee or another committee comprised solely of two or more “outside directors” as determined under Section 162(m). Not later than 90 days after the beginning of each calendar year, the Compensation Committee must establish in writing (i) one or more performance goals that must be attained in order for a Program participant to receive an award for such year and (ii) the method, in terms of an objective formula or standard, for computing the amount of the award if the applicable performance goals are attained. The Compensation Committee also may establish additional terms and conditions for the receipt of an award.
CSG Systems International, Inc. 2016 Proxy Statement45
Performance Goals; Business Criteria. A performance goal under the Program is an objective performance goal based entirely on one or more of the following business criteria applicable to the Company:
Business Criteria. The Compensation Committee will pre-establish objective performance goals for awards intended to qualify as performance-based compensation. The performance goals will be based on one or more of the following business criteria, which may be based on one or more measures prepared in accordance with GAAP (as applicable), or by applying certain adjustments to the GAAP measure(s) that the Compensation Committee believes are appropriate to better measure the business performance of the Company(1):
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Certification. Prior to the payment of any awards the Compensation Committee must certify in writing that the applicable performance goals have been attained. No payment under the Program may be made in the absence of such certification.
Payment of Awards. An award generally will be paid in cash as soon as practicable after the Compensation Committee has certified the attainment of the applicable performance goals and the amount of such award has been finally determined. As a further condition of the payment of a Program participant’s award for a particular calendar year, such participant must be employed on the last day of such calendar year. The Compensation Committee may provide, as a further condition of the payment of an award for a particular calendar year, that such participant must be employed by the Company or its subsidiaries on the date of the certification or on any other date subsequent to the last day of such calendar year.
Maximum Amount of Compensation. The maximum amount of compensation payable as a performance award under the Program to a participant for any calendar year is 200% of the annual incentive target of such participant as of the last day of such calendar year. In no event may a Program participant’s maximum award for any calendar year exceed $3 million or such lesser amount established by the Compensation Committee for such calendar year. The Compensation Committee has discretion to reduce or eliminate a Program participant’s award but may not increase a Program participant’s award for any calendar year.
Discretionary Awards. The attainment or failure to attain performance goals under the Program will not preclude the payment of compensation, including discretionary payments, to a participant under any other plan, program, agreement, or arrangement of the Company, whether now existing or established at a later time, although such other payments may not qualify as performance-based compensation for purposes of a tax deduction by the Company. The Company reserves the right to establish, implement, and modify compensation plans, programs, agreements, and arrangements other than and in addition to the Program for persons who are Program participants.
Adjustments. The Compensation Committee must adjust a performance goal for a calendar year if, after such performance goal has been established, the Company or any of its subsidiaries: (1) acquires or disposes of any assets, business division; subsidiary, or other business operations; (2) discontinues any business operations; or (3) incurs any restructuring charge or any item of extraordinary loss or expense, and such subsequent event has a materially positive or negative effect on the attainment of such performance goal. Such an adjustment would have the purpose of making such performance goal as so adjusted comparable to what the original performance goal would have been if the Compensation Committee had taken such subsequent event into account when it originally established such performance goal.
46 CSG Systems International, Inc. 2016 Proxy Statement
Amendment or Termination. The Board from time to time may amend, suspend, or terminate the Program in whole or in part. However, no payment which becomes due under the Program as a result of an amendment of the Program that requires stockholder approval under Section 162(m) of the Code may be made until the Company has obtained such stockholder approval.
New Plan Benefits
The amount of awards payable under the Program, if any, are not determinable. The potential amount payable to any participant depends on the performance goals established for the participant, the determination as to whether the performance goals were met, the participant’s individual performance and the discretion of the Compensation Committee. For information regarding awards granted to our named executive officers during 2015, see the 2015 Grants of Plan-Based Awards table on page 35.
CSG Systems International, Inc. 2016 Proxy Statement47
We are asking stockholders to approveOur Board, upon the material terms of performance goals available under the CSG Systems International, Inc. Amended and Restated 2005 Stock Incentive Plan (the “2005 Plan”). We are seeking stockholder approvalrecommendation of the material termsCompensation Committee, is asking shareholders to allow certain future equity awards granted under the 2005 Plan to qualify as exempt “performance-based” compensation for purposes of Section 162(m). To satisfy the performance-based compensation exception, Section 162(m) requires, among other things, that the material terms of the performance goals be approved by stockholders every five years.
Background
The 2005 Plan is designed to provide stock-based awards to officers and other key employees who are likely to be responsible for achieving our long term financial success and to attract and compensate knowledgeable and experienced non‑employee directors to assist in achievement of our long term financial success.
The 2005 Plan was initially approved by our stockholders on May 27, 2005. On May 17, 2011 our stockholders approved the material terms of performance goals available under the 2005 Plan andapprove an amendment and restatement of the 2005CSG Systems International, Inc. 1996 Employee Stock Purchase Plan including an(the "ESPP" or the "Plan") primarily to increase in the number of shares authorizedof our common stock available for purchase by 1,150,000 shares. Other changes include adding a ten-year expiration to the Plan which remains in effect until the tenth (10th) anniversary of the date of approval by the shareholders.
The non-qualified ESPP was initially approved by the Board and our shareholders in 1996, and our shareholders most recently approved the Second Amended and Restated ESPP at the 2011 annual meeting of shareholders. The proposed third amendment and restatement of the ESPP (the “A&R ESPP”), upon recommendation of the Compensation Committee, was approved by our Board in February 2022, subject to shareholder approval. If approved by our shareholders, the A&R ESPP becomes effective as of the date of the Annual Meeting. If our shareholders do not approve the A&R ESPP, the ESPP will remain as previously approved by our shareholders, and will remain available for new grants to the extent shares remain available for issuance (from 12,400,000under the Plan.
PURPOSE OF THE AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN
The purpose of the ESPP is to 15,800,000)provide eligible employees of the Company and our subsidiaries with a program for the regular purchase of our common stock from the Company through periodic payroll deductions. The ESPP gives participating employees a convenient and cost-effective means of acquiring a proprietary interest in the Company. Under the ESPP, employees acquire our common stock at a 15% discount from the market price as determined on each purchase date. Our executive officers are not eligible to participate in the ESPP.
The ESPP previously authorized the sale of 458,043 shares of our common stock (adjusted to reflect the effect of a 2-for-1 stock split in the form of a 100% stock dividend on March 5, 1999). On May 22, 2014,In 2004, our stockholdersshareholders approved an increase in the number of shares authorizedavailable for issuance (from 15,800,000purchase by 500,000 shares to 18,700,000) in the amended958,043 shares. On November 19, 2009, our Board approved an amendment and restated 2005 Plan.
An important fact about this Proposal 3 – we are not seeking stockholder approvalrestatement of the 2005 PlanESPP to comply with tax law changes and we are not seekingto make other administrative changes. In 2011 our shareholders approved an increaseadditional 750,000 shares to the ESPP.
Employee participation in shares authorized for issuance under the 2005 Plan.
We are seeking stockholder approvalour ESPP has increased since inception of the material termsplan. Currently, 32% of performance goals to allow certain future equity awards granted underour eligible employees make regular contributions and purchases through the 2005 Plan to qualify as exempt “performance-based” compensation.plan. The material terms include: (1) the employees eligible to receive performance-based compensation; (2) the business criteria on which the performance goal is based; and (3) the maximum amount of compensation that could be paid to an employee if the performance goal is achieved. We have updated the business criteria for which the performance goals under the 2005 Plan are based. The performance goals will provide us with flexibility to design appropriate equity awards, including performance‑based awards, to help us achieve our business objectives.
The Board Recommends a Vote FOR Approval of the
Material Terms of Performance Goals Under the Amended and Restated 2005 Stock Incentive Plan
Section 162(m) Material Terms of Performance Goals
Eligible Employees. Officers and other key employees of CSG or any subsidiary and our non‑employee directors of the Company are eligible to receive awards under the 2005 Plan, when selected for participation by the Compensation Committee. As of December 31, 2015, we had approximately 3,277 employees, including our executive officers and nine non-employee directors.
Individual Share Limits. Subject to adjustment for changes in capital, theaverage aggregate number of shares subject to: (1)purchased each month during 2021 by all participants in the ESPP was 5,362. Since its inception in 1996 through December 31, 2021, a total of 1,618,678 shares of common stock options, stock appreciation rights, performance unit awards; (2) restricted stock awards, restricted stock unit awards; or (3) stock awards grantedhad been purchased under the 2005 Plan in any calendar year to any individual may not exceed 600,000 shares. Shares coveredESPP by an award of restricted stock, restricted stock units, performance units, or a stock bonus are considered “Full Value” awards, and count against such aggregate number ofeligible employees, leaving 89,365 shares as two sharesavailable for each one share granted or issued in payment ofsubsequent purchases. If the award (2:1).
48 CSG Systems International, Inc. 2016 Proxy Statement
Business Criteria. The Compensation Committee will pre‑establish objective performance goals for awards intended to qualify awards as performance‑based compensation. The performance goals will be based on one or more of the following business criteria, which may be based on one or more measures prepared in accordance with GAAP (as applicable), or by applying certain adjustments to the GAAP measure(s) that the Compensation Committee believes are appropriate to better measure the business performance of the Company(1):
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In appropriate circumstances, the Compensation Committee may provide for the adjustment of a performance goal if, after such performance goal has been established, the Company or any of its subsidiaries: (1) acquires or disposes of any assets, business division, subsidiary, or other business operations; (2) discontinues any business operations; or (3) incurs any restructuring charge or any item of extraordinary loss or expense, and such subsequent event has a materially positive or negative effect on the attainment of such performance goal.
Performance‑based awards may relate to a single calendar year or may provide for payment or vesting in installments over a multi‑year period with separate performance goals for separate calendar years or for other portions of such multi‑year period. The terms and conditions of each performance‑based award will be set forth in an agreement. Such agreement will contain the method, in terms of an objective formula or standard, for determiningA&R ESPP is approved, the number of shares available for purchase under the ESPP will increase by 1,150,000 shares, which represents approximately 3.8% of our total common stock if any, that will be paid to or vest for a “covered employee” ifoutstanding as of December 31, 2021. If shareholder approval is not obtained, then the applicable performance goals are attained.
Prior toamendment and as a conditionrestatement of the payment or vestingESPP will not be implemented, and the ESPP will continue in effect pursuant to its terms before the proposed amendment and restatement. Approval of any performance‑based award granted to a covered employee, the Compensation Committee must certify in writingA&R ESPP will ensure that the performance goal and any other material terms applicable to the award have been attained.
Below is information about key governance features and a summary of termssufficient shares are available for purchase by our employees for the 2005 Plan.
Key Governance Features Relating to the 2005 Plan
The 2005 Plan includes important features:
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Awards made to our executive officers are covered by a clawback policy and meaningful stock ownership guidelines.next several years.
CSG Systems International, Inc. 2016 Proxy Statement49
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 63 |
Summary of the 2005 PlanA&R ESPP
The following is a summary of the material terms of the 2005our Third Amended and Restated 1996 Employee Stock Purchase Plan and("ESPP") does not describe allpurport to be complete and is subject to and qualified in its entirety by the actual terms of the 2005 Plan terms. Please read the complete text of the 2005 Plan,plan, which appears as Appendix BA to this proxy statement.
Types of Awards. The plan authorizes the grant of incentive stock options, non‑qualified stock options, SARs, performance unit awards, restricted stock awards, restricted stock unit awards,Participation
Full-time and stock bonus awards.
Administration. The Board has delegated authority to the Compensation Committee to administer the plan. The Compensation Committee has authority to interpret the plan, select the officers, key employees, and non‑employee directors to whom awards will be granted, determine type, amount, size, terms and conditions of each award, and make certain other determinations. The Compensation Committee may establish sub‑plans in connection with grants to employees in non‑U.S. jurisdictions. The Compensation Committee may delegate certain of its authority to officers of the Company.
Stock Subject to the Plan. A total of 18,700,000 shares of our common stock may be issued under the plan, which may be authorized and unissued shares or treasury shares. The aggregate number of shares subject to awards granted under the plan in any calendar year to any individual may not exceed 600,000 shares. Each of these share amounts is subject to adjustment in the event of changes in capitalization or other events detailed in the plan.
Eligibility. Officers and other keypart-time employees of the Company or any subsidiary and non‑employee directorsour designated subsidiaries (other than temporary employees) are eligible to participate in the ESPP on a voluntary basis. However, employees of the Company are eligible to receive awards under the plan, when selected for participationwho have been designated by the Compensation Committee.
Share Counting. Shares covered by an awardBoard as executive officers of restricted stock, restricted stock units, performance units, or a stock bonus are considered “Full Value” awards, and count against the maximum number of shares which may be issued under the plan as two shares for each one share granted or issued in payment of the award (2:1). Shares covered by a stock option or a SAR that expires or terminates unexercised will be available again for awards under the plan. Shares granted as restricted stock or subject to a restricted stock unit award that are forfeited, cancelled, or otherwise are reacquired by us due to failure of the shares to vest will remain available for awards under the plan and will be added back in the same manner as the shares reduced the limit (2:1). Shares retained by us in payment of an option or a SAR exercise price or withheld by us to satisfy tax withholding obligations will not be available again for awards under the plan. If a SAR or restricted stock unit award is settled by us entirely in cash, the shares covered by the award as to which the exercise or vesting occurs will be available again for awards under the plan.
Adjustments. In the event of a change in our outstanding shares of common stock due to a stock dividend, stock split, recapitalization, merger, reorganization, or similar change, the Compensation Committee will make appropriate adjustments in: (1) the aggregate number of shares of common stock (i) reserved for issuance; (ii) for which awards may be made to an individual; and (iii) covered by outstanding awards, (2) the exercise price relating to outstanding awards, and (3) the appropriate fair market value and other price determinations relevant to outstanding awards.
Stock Options. The plan permits the grant of incentive stock options and non‑qualified stock options. The option exercise price per share may not be less than the fair market value of our common stock on the date of the grant. The type of option and other terms and conditions of the option will be determined by the Compensation Committee and set forth in the option agreement including the option term, subject to a maximum term of ten years. The Compensation Committee may determine when the option becomes exercisable and may accelerate previously established exercise rights. The agreement may permit payment of the option exercise price in one or more forms including cash, surrender or withholding of shares of our common stock valued at their fair market value on the exercise date, or pursuant to a broker‑assisted exercise program.
Unless otherwise provided in an option agreement, if an optionee’s employment terminates for any reason other than death or disability, then the optionee generally may exercise an option to the extent it was exercisable at the time of the termination for a period of three months after the termination (but not after the expiration date of the option). However, the Compensation Committee has the power to terminate an optionee’s rights under an outstanding option if optionee’s employment was terminated for cause or the optionee has engaged or may engage in employment or activities competitive with the Company or a subsidiary or contrary to our best interests. If termination of employment is on account of optionee’s disability or death, the option will generally be exercisable after termination for six months due to disability and 12 months due to death, or the expiration date, if earlier.
50 CSG Systems International, Inc. 2016 Proxy Statement
If an optionee who is a non‑employee director of the Company ceases to be our director for any reason other than retirement from the Board or death, then the optionee generally may exercise the option (to the extent that it was exercisable at the time the optionee ceased to be our director) for a period of three months (but not after the expiration date of the option). If an optionee who is our non‑employee director ceases service (other than by reason of death) and at such time is at least age 65 with ten or more years of service or is at least age 70 with five or more years of service as a non‑employee director, then the option generally will continue to be exercisable for five years or, if sooner, until the expiration of the option. If an optionee who is a non‑employee director dies, then each outstanding but unexercised option held by the optionee for at least 12 months at the time of the optionee’s death will become exercisable in full upon the optionee’s death; and all options which are or become exercisable at the time of the optionee’s death may be exercised by the optionee’s estate or beneficiaries until the earlier of three years after the optionee’s death or the expiration of the option. At the time of the granting of an option to a non‑employee director, the Compensation Committee may make provisions for the exercise of the option which are different than those described above in this paragraph if the optionee ceases to be a director of the Company.
Stock Appreciation Rights. The Compensation Committee may grant SARs, which entitle the grantee to receive, upon the exercise of a SAR, an award equal to all or a portion of the excess of (1) the fair market value of a specified number of shares of common stock at the time of the exercise divided by (2) a specified price not less than the fair market value of the common stock at the time the SAR was granted. A SAR may be granted independently of or in connection with a stock option grant. Upon the exercise of a SAR, the applicable award may be paid in cash or in shares of common stock (or a combination thereof) as the Compensation Committee may determine. The maximum term of a SAR is 10 years after the date of the grant. The Compensation Committee may determine when a SAR becomes exercisable and may accelerate previously established exercise rights.
The provisions of the plan relating to the exercisability of SARs upon termination of employment or service as a non-employee director are similar to those discussed above in connection with stock options.
Performance Unit Awards. The Compensation Committee may grant performance unit awards (other than to non‑employee directors) which provide for future payments based upon andotherwise subject to the achievement of preestablished long‑term performance targets. The Compensation Committee will establish the (1) performance period of not less than two nor more than five years; (2) value of each performance unit; and (3) maximum and minimum performance targets to be achieved during the performance period. The Compensation Committee may adjust previously established performance targets or other terms and conditions of a performance unit award to reflect major unforeseen events or changes in circumstances, but such adjustments may not increase the payment due upon attainment of the previously established performance targets. Performance unit awards, to the extent earned, may be paid in cash or shares of common stock (or a combination thereof) as the Compensation Committee may determine.
If the employment of a grantee of a performance unit award terminates prior to the end of an applicable performance period other than by reason of disability or death, then the award generally terminates. However, the plan permits the Compensation Committee to make partial payments of performance unit awards if the Compensation Committee determines such action to be equitable. If the employment of a grantee of a performance unit award terminates as a result of the grantee’s disability or death prior to the end of an applicable performance period, then the Compensation Committee may authorize the payment of all or a portion of the performance unit award (to the extent earned under the applicable performance targets) to the grantee or the grantee’s legal representative.
Restricted Stock Awards. The Compensation Committee may grant restricted stock awards consisting of shares of common stock restricted against transfer, subject to a substantial risk of forfeiture and to other terms and conditions. The Compensation Committee will determine the restriction period applicable to the restricted stock award and the amount, form and time of payment (if any) required from the grantee of a restricted stock award in consideration of the issuance of the shares covered by such award. Generally, the Compensation Committee in its discretion may provide for the lapse of restrictions applicable to restricted stock awards and may waive the restrictions in whole or in part.
If the employment of a grantee of a restricted stock award terminates for any reason while some or all of the shares covered by such award are still restricted, then the grantee’s rights with respect to the restricted shares generally terminate. However, the Compensation Committee has the discretion to provide for complete or partial exemptions to such employment requirement.
CSG Systems International, Inc. 2016 Proxy Statement51
Restricted Stock Unit Awards. The Compensation Committee may grant restricted stock unit awards, which represent a right to receive future payments in either shares of our common stock or cash or a combination. The Compensation Committee determines the terms and conditions of the award. The Compensation Committee may grant restricted stock unit awards subject to the attainment of one or more performance goals, or may make the awards subject to time‑based or other vesting conditions. Grantees have no voting rights or rights to receive cash dividends with respect to restricted stock unit awards until shares of common stock are issued in settlement of such awards. However, the Compensation Committee may grant restricted stock units that entitle holders to receive dividend equivalents, which are rights to receive additional restricted stock units based on the value of any cash dividends paid by us.
If the employment or service of a grantee of a restricted stock unit award terminates for any reason before some or all of the restricted stock units vest, then the grantee forfeits any unvested restricted stock units upon termination of employment. However, the Compensation Committee has the discretion to provide for complete or partial exemptions to such employment or service requirement.
Stock Bonus Awards. The Compensation Committee may grant a stock bonus award (other than to non‑employee directors) based upon the performance of the Company, a subsidiary, or a segment thereof in terms of preestablished objective financial criteria or performance goals or, in appropriate cases, such other measures or standards of performance (including but not limited to performance already accomplished) as the Compensation Committee may determine. The Compensation Committee may adjust preestablished financial criteria or performance goals to take into account unforeseen events or changes in circumstances, but such adjustments may not increase the amount of a stock bonus award. The Compensation Committee, in its discretion, may impose additional restrictions upon the shares of common stock which are the subject of a stock bonus award.
Tax Withholding. The Company’s obligation to deliver shares of common stock or make cash payments under the plan is subject to applicable tax withholding requirements. The Compensation Committee has discretion to require tax withholding amounts be paid by the grantee in cash or shares of common stock having a fair market value equal to the required tax withholding amount.
Non‑Assignability. Awards may not be assigned or transferred by the recipient except by will, the laws of descent and distribution or, in the case of awards other than incentive stock options, pursuant to a qualified domestic relations order.
Termination and Amendment. Unless the plan is terminated earlier by the Board, it will terminate for purposes of further grants on December 31, 2020. Awards outstanding at the time of the termination will remain in effect in accordance with their terms. The Board may amend the plan at any time; however, stockholder approval must be obtained for any amendment for which approval is required in order to satisfy the applicable requirementsprovisions of Section 16(b) of the Securities and Exchange Act of 1934 Section 162(m)are not eligible to participate in the ESPP. As of April 1, 2022, pending approval of the Code, Section 422amended and restated ESPP, approximately 5,242 employees of the Code or any regulation issued under anyCompany and our designated subsidiaries may become eligible to participate in the ESPP.
The ESPP provides eligible employees who elect to participate the opportunity to purchase shares of such statutory provisionsour common stock through periodic payroll deductions. If a participant is paid on a biweekly schedule, the minimum payroll deduction for the purchase of shares is $10 and the maximum payroll deduction is $1,000 per pay period (in U.S. dollars or the applicableapproximate equivalent for non-U.S. currency). Proportionate adjustments are made in such amounts for payroll periods other than biweekly. An employee may change the amount of his or her payroll deduction and may cease to participate in the ESPP at any time. If an employee ceases to be eligible to participate in the ESPP, then such employee may no longer purchase shares through the ESPP.
The CEO of the Company (or his or her delegate) generally has the authority to administer the ESPP. The ESPP includes flexibility to determine the duration of purchase periods and the ability to adopt sub-plans to accommodate the specific requirements of local law for our employees outside of the United States. The Company has delegated certain authority to administer the operations of the ESPP to a third-party administrator, an independent agent of the Company. The Company bears the expenses of administering the ESPP, but participants bear any market or exchange onexpenses which the agent incurs in selling shares held in their ESPP accounts.
Unless otherwise determined by the Company, purchase periods under the ESPP will coincide with each calendar month. On the last business day of each purchase period, the Company notifies the agent of the aggregate amount withheld for each participant during that purchase period and instructs the transfer agent for the common stock to issue to the agent that number of full shares which is equal to the aggregate amount withheld for all participants during such period divided by an amount equal to 85% of the last sale price of the common stock are listedon the Nasdaq Stock Market on the last trading day of such period. The agent then allocates such shares proportionately to the accounts of those participants whose payroll deductions provided the funds for such period's purchase. Upon the request of a participant, the agent will sell any or traded.all of the shares then credited to such participant's ESPP account and will remit the net proceeds of such sale to such participant. Participants have the right to vote the shares held for them in their ESPP accounts.
No Repricing. Stockholder approvalAmendment and Termination
Unless earlier terminated by the Board, the ESPP will terminate on the tenth anniversary of the date on which the ESPP is required to reduceapproved by our shareholders. The Board may terminate the exerciseESPP as of the end of any purchase period and may amend the ESPP at any time. If the Board changes the discount from the market price of an outstanding option orour common stock appreciation right orat which shares are to cancel or amend an outstanding option or stock appreciation right forbe purchased under the purpose of repricing, replacing, or regrantingESPP, then the Company will not implement such option or stock appreciation right with an exercise price which is lower than the original exercise pricechange until participants have been notified of such option or stock appreciation right. Additional information with respectchange and given a reasonable opportunity to cease participation in the matters discussed in this paragraph appears in section 22 of the plan.ESPP.
The following brief description ofparagraphs describe certain U.S. federal income tax consequences is based upon present federal income tax laws and regulations and does not purport to be a complete description of the U.S. federal income tax consequences of the 2005 Plan.ESPP. Different rules may apply to participants who are not subject to U.S. federal income tax.
Incentive Stock Options. The grantTo the extent required by applicable laws and regulations, the employer of an incentive stock optiona participant will not result in taxable incomewithhold from such participant's wages any taxes or other amounts required to the grantee or a tax deduction for us. If the grantee holds the shares purchased upon the exercisebe withheld by reason of an incentive stock option for at least one year after the purchase of shares under the shares and untilESPP at least two years aftera price less than the option was granted, thencurrent market price at the grantee’s saletime of the purchase.
As shares will result in a long term capital gain or loss, and we will not be entitled to any tax deduction. Ifof common stock purchased under the grantee sells or otherwise transfers the shares before such holding periods have elapsed, then the grantee generally will recognize ordinary income and we generally would be entitled to a tax deduction in an amount equalESPP are allocated to the lesseraccount of (1)a participant each purchase period, the fair
52 CSG Systems International, Inc. 2016 Proxy Statement
market value ofparticipant will include in his or her gross income the shares on the exercise date minus the option price; or (2) the amount realized upon the disposition minus the option price. Any gain in excess of such ordinary income portion would be taxable as long term or short term capital gain depending upon the grantee’s holding period for the shares. The excess ofdifference between the fair market value of the shares received oncommon stock so allocated and the option exercise date over the option price is an item of tax preference, potentially subjectpayroll deductions elected by such participant for that purchase period. Such difference (the "spread") will be taxable to the alternative minimum tax.participant as current compensation income.
Non‑Qualified Stock Options. The grantWhen a participant sells shares of a non‑qualifiedcommon stock option will not result in taxable income toacquired under the grantee or a tax deduction for us. UponESPP, the exercise of a non‑qualified stock option,difference between the grantee will recognize ordinary income on the excess of the fair market value of shares received over the option exercise price, and we generally will be entitled to a tax deduction in the same amount. The exercisesale price of such shares and the non‑qualified stock option plus the amount included in the grantee’sparticipant's income as a result of the option exercise will be treated as the grantee’stax basis in the shares received, and any gain or loss on the subsequent sale of thesuch shares will be treated asconstitute long term or short term capital gain or loss, depending upon the grantee’ssale price and the participant's holding period for the shares. The grantee’s sale ofshares sold. A participant's income tax basis for shares acquired uponunder the exerciseESPP generally will be the sum of a non‑qualified stock option will have no tax consequencesthe payroll deductions applied to us.
Stock Appreciation Rights, Performance Unit Awardsthe purchase of such shares and Restricted Stock Unit Awards. The grantthe amount of a SAR, a performance unit award, or a restricted stock unit award will not result in taxable income realized by the participant upon such purchase.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 64 |
A participant's employer generally will be entitled to a tax deduction in an amount equal to the fair market value of the shares plus any cash received.
Restricted Stock Awards. The grant of a restricted stock award will generally not result in taxableU.S. federal income for the grantee or a tax deduction for us, provided the shares are subject to a substantial risk of forfeiture and restrictions on transfer. However, the grantee may elect under Section 83(b) of the Code within 30 days after the date of grant to recognize ordinary income on the date of grant equal to the excess of the fair market of the shares on the date of the grant, over the amount paid, if any. If the grantee does not make an Section 83(b) election, then, when the restrictions lapse, the grantee will recognize ordinary income equal to the fair market value of the shares over the amount paid, if any. If and when the grantee recognizes ordinary income with respect to the shares, we generally will be entitled to a tax deduction in the same amount. The amount paid by the grantee for restricted shares plus any amount recognized by the grantee as ordinary income will be treated as the grantee’s basis incompensation income the shares; when the grantee sells the shares covered by a restricted share award following the lapse or other termination of the restrictions, any gain or loss on such sale will be treated as long term or short term capital gain or loss depending upon the grantee’s holding period. Any dividends paidparticipant is required to the grantee of restricted shares while the shares are still subject to the restrictions would be treated as compensationrecognize for U.S. federal income tax purposes.purposes (i.e., the spread) and at the same time as such recognition occurs (i.e., at the time the shares of common stock are acquired for the participant's account).
Stock Bonus Awards. When aNew Plan Benefits
Because (i) participation in the ESPP is voluntary on the part of eligible employees, (ii) participants in their discretion may change the dollar amounts of their purchases from time to time and may cease to participate in the ESPP at any time and (iii) the purchase prices under the ESPP are based on the market value of the common stock bonus awardat the times of the purchases, the Company is paidnot able to a grantee bystate the deliverynumber of shares of common stock that any participant in the granteeESPP will recognize ordinary income and we generally will be entitled to a tax deduction in an amount equal topurchase, the fair market value ofpurchase prices for such shares ator the time of such delivery. If, however, such shares are subject to any restrictions which create a substantial risk of forfeiture, then the tax rules described above with respect to restricted stock awards would be applicable.
Section 162(m). Compensation that qualifies as “performance‑based” compensation is excluded from the $1 million deduction limitation of Section 162(m)dollar amount of the Code. Under the plan, options andpurchase price discount that any participant will receive. The closing price of our common stock appreciation rights granted with an exercise price at least equal to 100 percent of the fair market value of the underlying shares on the date of grant and certain other awards paid to covered employees that are conditioned upon achievement of performance goals are intended to qualify as “performance‑based” compensation. A number of requirements must be met in order for compensation paid or earned with respect to an award granted under the plan to qualify as performance‑based compensation for purposes of Section 162(m).
New Plan Benefits
The award amounts that may be received by any participant are not determinable. For information regarding awards granted to our named executive officers during 2015 under the 2005 Plan, see the 2015 Grants of Plan‑Based Awards tableNasdaq Stock Market on page 35 and for awards granted to our non‑employee directors during 2015 see the 2015 Director Compensation table on page 10.March 25, 2022, was $62.12 per share.
CSG Systems International, Inc. 2016 Proxy Statement53
EQUITY COMPENSATION PLANSEquity Compensation Plan Information
The following table summarizes certain information about our equity compensation plans as of December 31, 2015:
2021:
Plan Category | Number of securities to be issued upon exercise of outstanding options, warrants, and rights | Weighted-average exercise price of outstanding options, warrants, and rights | Number of | remaining |
|
future issuance | ||||||
Equity compensation plans approved by |
| - | $ - |
|
| |||||||
|
|
|
| |||||||||
|
|
|
|
| ||||||||
4,703,890 | ||||||||||||
(1) ThisOf the total number includes 4,223,266 sharesof securities remaining available for future issuance, under4,614,524 shares can be used for various types of stock-based awards, as specified in the equity compensation plan, with the remaining 89,366 shares to be used for our Amended and Restated 2005 Stock Incentive Plan and 440,622 shares availableemployee stock purchase plan. As of December 31, 2021, there were 1,205,603 unvested awards outstanding. See Note 13 to our Consolidated Financial Statements in our 2021 Annual Report on Form 10-K for issuance under our Second Amended and Restated 1996 Employee Stock Purchase Plan. Our 2005 Stock Incentive Plan authorizes the issuance of stock options, restricted stock, restricted stock units, performance shares, and other stock-based awards.
54 CSG Systems International, Inc. 2016 Proxy Statement
PROPOSAL 4 – ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION
We are asking our stockholders to vote to approve, on an advisory (nonbinding) basis, the compensationadditional discussion of our NEOs as disclosed in this proxy statement in accordance with SEC rules.
As described under the heading Compensation Discussion and Analysis, our executiveequity compensation program is designed to attract and retain qualified executives, recognize and reward individual performance, and align executive pay with stockholder return over both the short and long term. Under this program, our named executive officers are rewarded for the achievement of specific annual and long-term strategic, financial, and operational goals, and increases in stockholder value. For additional information about our executive compensation program, please read the Compensation Discussion and Analysis beginning on page 21.plans.
We are asking our stockholders to indicate their support for the compensation of our NEOs, as described in this proxy statement. This proposal, commonly known as a “say-on-pay” proposal, gives our stockholders the
opportunity to express their views on the compensation of our NEOs on an annual basis. This vote is not intended to address any specific item of compensation, but rather the overall compensation of our NEOs and the philosophy, policies, and practices described in this proxy statement. Accordingly, we are asking our stockholders to vote “FOR” the following resolution at our Annual Meeting:
“RESOLVED, that the compensation paid to the Company’s named executive officers, as disclosed pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including the Compensation Discussion and Analysis, compensation tables and narrative discussion is hereby APPROVED.”
The say-on-pay vote is advisory, and therefore not binding on the Company, the Compensation Committee or our Board. The Board and Compensation Committee value the opinions of our stockholders and will consider the outcome of the vote when considering future decisions on the compensation of our NEOs.
| THE BOARD RECOMMENDS A VOTE FOR THE APPROVAL OF THE THIRD AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN |
The Board Recommends a Vote FOR the Approval of the Compensation of Our NEOs,
As Disclosed Pursuant to the Compensation Disclosure Rules of the SEC.
CSG Systems International, Inc. 2016 Proxy Statement55
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 65 |
The firm of KPMG LLP has served as the Company’sour independent registered public accounting firm for 2015since 2002 and has been appointed by the Company’s Audit Committee to serve in such capacity for 2016.2022. The Company expects that a representativerepresentatives of KPMG LLP will be present atattend the Annual Meeting, withMeeting. Such representatives will have the opportunity to make a statement if he or she desires to do so,they wish, and that such representativethey will be available to respond to appropriate questions.
The following table sets forth: (1) as “Auditforth the amounts paid to KPMG in three categories.
“Audit Fees” are the aggregate fees billed by KPMG LLP for 20152021 and 20142020 for professional services rendered for audits of the Company’sour annual consolidated financial statements and reviews of financial statements included in the Company’s quarterly reportsQuarterly Reports on Form 10-Q, as well as for services that are normally provided by KPMG LLP in connection with statutory and regulatory filings or engagements for such periods, such as the attestation on the effectiveness of the Company’s internal control over financial reporting; (2) asreporting.
“Audit-Related Fees” are the aggregate fees billed by KPMG LLP in 20152021 and 20142020 for assurance and related services that are reasonably related to the performance of the audits or reviews of the Company’s financial statements thatand are not reported under “Audit Fees;Fees.” and (3) as “Tax
“Tax Fees” are the aggregate fees billed by KPMG LLP in 20152021 and 20142020 for federal, state, and foreign tax compliance, tax advice, and tax planning services:services.
| 2015 |
|
| 2014 |
|
| 2021 |
| 2020 | |||
Audit Fees |
| $ | 1,430,520 |
|
| $ | 1,510,900 |
| $ | 2,126,360 | $ | 1,882,416 |
Audit-Related Fees |
|
| 410,000 |
|
| — |
|
| 675,000 |
| 635,993 | |
Tax Fees |
|
| 716,380 |
|
|
| 492,650 |
|
| 82,200 |
| 78,259 |
Totals |
| $ | 2,556,900 |
|
| $ | 2,003,550 |
| ||||
TOTAL FEES | $ | 2,883,560 | $ | 2,596,668 | ||||||||
Other than as reported above, no other fees were billed by KPMG LLP for 20152021 or 2014.2020. All (100%) of the services and fees listed under “Audit-Related Fees” and “Tax Fees” above were pre-approved by the Audit Committee under the procedures described below.
Pre-Approval Policies and Procedures
The Audit Committee Chartercharter requires the Audit Committee to approve, in advance of the performance of thebefore services are performed, all audit and permissible non-auditnon-audit-related services to be provided to the Company by the Company’s independent registered public accounting firm. The Audit Committee has delegated to its ChairmanChair the authority to perform the Audit Committee’s responsibilities with respect to such approvals. The Audit Committee ChairmanChair is required to report to the Audit Committee at its next meeting on the manner in which such delegated performance was carried out by him.out. Each year since 2003,2002, the engagement of KPMG LLP to provide services to the Company has been approved in advance either by the Audit Committee or by its ChairmanChair pursuant to this delegated authority.
The Audit Committee annually evaluates the delegated authority referredperformance of the independent registered public accounting firm and determines whether to above.engage the current independent auditors or consider other independent audit firms. Factors considered by the Audit Committee in deciding whether to retain the current independent auditors include:
quality of service and sufficiency of resources;
communication and interaction; and
independence, objectivity, and professional skepticism.
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 66 |
Based on this evaluation, the Audit Committee and the Board believe that retaining KPMG LLP to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2022, is in the best interests of our Company and its shareholders.
Although the Company’s Audit Committee is directly responsible for the appointment of the Company’s
independent registered public accounting firm, the Board is requesting the Company’s stockholders tothat shareholders ratify the Audit Committee’ssuch appointment as a matter of KPMG LLP to serve in such capacity for 2016 so that the Company will have the benefit of its stockholders’ views on such appointment.good corporate governance. If the stockholdersshareholders do not ratify such appointment, the Audit Committee nevertheless may determine that it is in the best interests of the Company and its stockholdersshareholders to keep such appointment in effect for 2016. Whether or not the appointment ofretain KPMG LLP is ratified byfor 2022. Regardless of the stockholders,vote on this proposal, the Audit Committee at any time during the year may appoint a different independent registered public accounting firm for 20162022 if the Audit Committee determines that such a change would be in the best interests of the Company and its stockholders.shareholders.
| THE BOARD RECOMMENDS THAT SHAREHOLDERS VOTE FOR RATIFICATION OF THE APPOINTMENT OF KPMG LLP AS OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR FISCAL 2022. |
| CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 67 |
Back to ContentsThe Board Recommends That Stockholders Vote FOR Ratification of the Appointment of KPMG LLP
As Our Independent Registered Public Accounting Firm for Fiscal 2016.
56 CSG Systems International, Inc. 2016 Proxy Statement
The following report of the Audit Committee is not deemed to be “soliciting material” or to be “filed” with the SEC or subject to Regulation 14A, other than as provided below, or to the liabilities of Section 18 of the Exchange Act. This report shall not be deemed to be incorporated by reference into any prior or subsequent filing by the Company with the SEC under the Securities Act of 1933 or the Securities Exchange Act of 1934, notwithstanding any general statement contained in any such filings incorporating this proxy statement by reference, except to the extent that the Company specifically requests that such information be incorporated by reference or treated as soliciting material.
The primary purposes of the Audit Committee, as set forth in its charter, are to oversee the Company’s accounting and financial reporting processes of the Company and the audits of the Company’s consolidated financial statements of the Company and to provide oversight of our risk and compliance management programs.
We have The Audit Committee has implemented procedures to assist the Audit Committee with its responsibilities under its charter.help it execute these responsibilities. During 2015,2021 and thereafter through the completion of the audit of the Company’s consolidated financial statements for suchthat year, those procedures included regular meetings with management of the Company and with appropriate representatives of the Company’s independent registered public accounting firm.
We reviewed and discussed both with management of the Company and with the Company’s independent registered public accounting firm, KPMG LLP, the Company’s audited consolidated financial statements for 2015.the year ended December 31, 2021.
We also discussed with KPMG LLP the matters required to be discussed by the applicable requirements of the Public Company Accounting Oversight Board Auditing Standard No. 16, “Communications with Audit Committees; Related Amendments to PCAOB Standards;(the “PCAOB”) and Transitional Amendments to AU Sec.380.”the SEC.
We received the written disclosures and the letter from KPMG LLP required by the applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding KPMG LLP’s communications with the Audit Committee concerning independence and have discussed with KPMG LLP its independence.
Based upon thethese reviews and discussions, referred to in the immediately preceding three paragraphs of this report, we recommended to the Board that the audited consolidated financial statements of the Company as of and for 2015the year ended December 31, 2021, be included in the Company’s Annual Report on Form 10-K for such year for filing with the Securities and Exchange Commission.SEC.
Audit Committee of the Board of Directors:
David G. Barnes, Chairman
Chair
Ronald H. Cooper
Janice I. Obuchowski
Donald B. Reed
Silvio Tavares
Tse Li “Lily” Yang
CSG Systems International, Inc. 2016 Proxy Statement57
| CSGI.com | CSG SYSTEMS INTERNATIONAL, INC. 2022 PROXY STATEMENT | 68 |
OurThe Audit Committee Charter, as amended August 21, 2013, requires the Audit Committee to reviewis responsible for reviewing and approveapproving all related party transactions. For purposes of the charter, the term “related party transactions” includestransactions, including all transactions required to be disclosed pursuant to Item 404 of SEC Regulation S-K Item 404. As defined by Item 404, a “related party transaction” is generally any effected or proposed transaction, arrangement, or relationship in which:S-K.
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“Related person” generally means:
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There were no related party transactions during 2015,2021 and there are not any currently proposed transactions, in which the Company was or is a participant withand any related person whichwere or are participants, that would be required to be disclosed pursuant to Item 404 of SEC Regulation S-K,S-K.
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For health and safety reasons, we are keeping the online format for the Annual Meeting. By hosting the Annual Meeting online, we can communicate more effectively with our shareholders, make it easier to attend from anywhere in the world, reduce costs, and increase overall safety for participants.
You can access the virtual Annual Meeting at www.virtualshareholdermeeting.com/CSGS2022. There will be no physical location for shareholders to attend.
You are entitled to participate in the Annual Meeting if you were a shareholder as of the close of business on March 23, 2022, the record date for the Annual Meeting. If you plan to attend the Annual Meeting online, you will need your 16-digit control number. The Annual Meeting will begin promptly at 9:00 a.m. (Central Daylight Time), with online check-in available at 8:45 a.m. (Central Daylight Time). Please give yourself plenty of time to log in and ensure that you can hear streaming audio before the Annual Meeting begins.
The virtual meeting platform is fully supported across browsers (Edge, Firefox, Chrome, and Safari) and devices (desktops, laptops, tablets, and cell phones) running the most updated version of applicable software and plugins, but you should ensure that you have a strong Internet connection where you intend to participate.
The question and answer session will include questions submitted before the Annual Meeting and we will only answer questions relating to the business of the Annual Meeting. If you are a shareholder and would like to submit a question in advance, email your question to john.rea@csgi.com no later than May 4, 2022. If you encounter any technical difficulties with the virtual meeting platform on the day of the Annual Meeting, technical support phone numbers will be posted on the virtual meeting log-in page. Technical support will be available starting at 8:45 a.m. (Central Daylight Time) on May 18, 2022.
An audio webcast of the Annual Meeting will be posted online at the “Investor Relations” section of our website located at https://ir.csgi.com/investors and will remain available for approximately thirty days after posting.
WHY AM I RECEIVING THESE MATERIALS?
These proxy materials explain the items of business that will be brought to a vote at CSG’s Annual Meeting.
As a shareholder, you are invited to attend and vote at our Annual Meeting, or at any adjournment or postponement thereof. To ensure your vote is counted, our Board is soliciting your proxy to vote on your behalf.
HOW CAN I GET ELECTRONIC ACCESS TO THE PROXY MATERIALS?
You may view our proxy materials online at www.proxyvote.com.
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WHAT ITEMS OF BUSINESS WILL BE VOTED ON AT THE ANNUAL MEETING AND HOW DOES THE BOARD SUGGEST I VOTE?
Four proposals are scheduled to be voted on at the Annual Meeting:
Proposal | Board Recommendation |
Proposal 1—To elect three Class I Directors | FOR each nominee |
Proposal 2—To approve, on an advisory basis, the compensation of our named executive officers | FOR |
Proposal 3—To approve the Third Amended and Restated 1996 Employee Stock Purchase Plan | FOR |
Proposal 4—To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2022 | FOR |
We also will transact any other business that properly comes before the Annual Meeting.
You are entitled to one vote for each share of our common stock that you owned as of the close of business on March 23, 2022, the “record date” for the Annual Meeting. You also can vote all shares for which you hold a valid proxy. At the close of business on the record date, there were 32,272,599 shares of our common stock outstanding and entitled to notice of, and to vote at, the Annual Meeting.
MAY I ATTEND THE ANNUAL MEETING?
There will not be a physical location for the meeting. You may attend the virtual Annual Meeting only if you were a shareholder of the Company as of the record date or you hold a valid proxy for the Annual Meeting. You will need the 16-digit control number included in your Notice of Internet Availability, on your proxy card, or on the instructions that accompany your proxy materials.
MAY I VOTE MY SHARES AT THE ANNUAL MEETING?
If you are a shareholder of record—meaning you hold our common stock in your name with our transfer agent (Computershare Trust Company, N.A.)—you may vote your shares online at the Annual Meeting. If you are a beneficial owner—meaning that a broker, bank, trustee, or other nominee holds your common stock in “street name”—you can vote online during the Annual Meeting only if you obtain a valid proxy from the record holder giving you the right to vote the shares. Even if you plan to attend the Annual Meeting, we recommend that you submit your proxy or voting instructions as soon as possible so that your vote will be counted if you later decide not to attend the Annual Meeting.
MAY I VOTE MY SHARES WITHOUT ATTENDING THE ANNUAL MEETING?
You may direct how your shares are voted without attending the Annual Meeting. If you are a shareholder of record, you will receive a Notice of Internet Availability, which explains how to access the proxy materials online, contains a listing of matters to be considered at the Annual Meeting, and describes how shares can be voted by telephone, online, or by completing and returning a proxy card. If you hold shares beneficially in “street name”, your broker, bank, trustee, or other nominee should provide you a means to instruct how your shares should be voted.
WHAT IF I AM A BENEFICIAL OWNER AND DO NOT GIVE VOTING INSTRUCTIONS TO MY BROKER?
If you are a beneficial owner of CSG shares, your broker, bank or other nominee is not permitted to vote on your behalf on the election of directors, the advisory say-on-pay proposal, the Third Amended and Restated 1996 Employee Stock Purchase Plan or any other matter to be considered at the Annual Meeting except for Proposal 4 (the ratification of the appointment of KPMG LLP as our independent auditor for 2022), unless you provide specific instructions by completing and returning the voting
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instruction form or following the instructions you receive about voting your shares on the Internet or by telephone. A broker non-vote occurs when a broker, bank, trustee, or other nominee returns a proxy card, but does not vote on one or more matters because such broker, bank, trustee, or other nominee does not have the authority to do so without instructions from the beneficial owner. Broker non-votes and discretionary authority are further described below. If you do not provide voting instructions, your shares will not be voted on any proposal except for Proposal 4. For your vote to be counted, you will need to communicate your voting instructions in a timely manner as directed by your broker, bank or other nominee.
WHAT IF I RETURN MY PROXY CARD BUT DO NOT PROVIDE VOTING INSTRUCTIONS?
If you are a shareholder of record and you return your signed proxy card without giving specific voting instructions, your shares will be voted as recommended by the Board.
MAY I CHANGE OR REVOKE MY VOTE?
If you are a shareholder of record, there are three ways to change or revoke your vote before the conclusion of voting at the Annual Meeting: (1) deliver a new proxy bearing a later date by mail, telephone, or over the Internet, which automatically revokes your earlier proxy; (2) provide a written notice of revocation to our Secretary at our principal offices listed on the first page of this proxy statement; or (3) vote online during the Annual Meeting. Attending the Annual Meeting without voting will not affect your previously granted proxy.
If you are a beneficial owner, you may change your vote by submitting new voting instructions to your broker, bank, trustee, or other nominee. Alternatively, if you have obtained a valid proxy from your broker, bank, trustee, or other nominee giving you the right to personally vote your shares, you can vote online during the Annual Meeting.
HOW MANY SHARES MUST BE PRESENT OR REPRESENTED TO CONDUCT BUSINESS AT THE ANNUAL MEETING?
We can transact business at the Annual Meeting if a majority of the issued and outstanding shares of common stock entitled to vote are present or represented by proxy. Abstentions are counted for the purpose of determining whether there is a quorum.
“Broker non-votes” will be counted for the purpose of determining whether there is a quorum as long as the bank, broker, or nominee uses its discretionary authority to vote on Proposal 4.
WHAT IS THE VOTING REQUIREMENT TO APPROVE EACH OF THE PROPOSALS?
Proposal | Vote Required to Pass | Effect of Abstentions and Broker Non-votes | |
Proposal 1, Election of Directors | | Each nominee who receives a majority of the votes cast for his or her election (meaning the number of votes cast FOR a director’s election exceeds the number of votes cast AGAINST that director’s election) will be elected as a director. | No effect |
Proposal 2, Advisory Say-on-Pay Vote | | The proposal will be approved if a majority of the shares present or represented by proxy vote FOR approval | Abstentions will have the same effect as AGAINST votes Broker non-votes will have no effect |
Proposal 3, Third Amended and Restated Employee Stock Purchase Plan | | The proposal will be approved if a majority of the shares present or represented by proxy vote FOR approval | Abstentions will have the same effect as AGAINST votes Broker non-votes will have no effect |
Proposal 4, Ratification of Auditors | | The proposal will be approved if a majority of the shares present in person or represented by proxy vote FOR approval | Abstentions will have the same effect as AGAINST votes Broker non-votes will have no effect |
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We use a majority voting standard in the election of directors. Thus, in any “uncontested election” of directors (i.e., an election where the number of nominees does not exceed the number of directors to be elected), each nominee to the Board will be elected by the vote of a “majority of the votes cast,” meaning that the number of votes cast FOR a director’s election must exceed the number of votes cast AGAINST that director’s election. The election of directors at the Annual Meeting is an uncontested election. Abstentions and broker non-votes will not count as votes cast for purposes of this proposal.
If a continuing director seeking re-election does not receive a majority of the votes cast FOR his or her election, that director must submit a resignation to the Board, with a presumption that the resignation will be accepted unless the Board determines there is a compelling reason for the director to remain on the Board. In the case of a contested election, directors will be elected by a plurality vote, meaning that the nominees who receive the greatest number of votes cast FOR their election will be elected.
Votes cast will be tabulated by the inspector of elections appointed for the Annual Meeting. If you provide specific instructions on your proxy card, your shares will be voted as you instruct.
WHAT HAPPENS IF ADDITIONAL MATTERS ARE PRESENTED AT THE ANNUAL MEETING?
We are not aware of any business to be acted upon at the Annual Meeting other than asthe four proposals described in this proxy statement. If you grant a proxy, the individuals named as proxy holders, Brian A. Shepherd and Rasmani Bhattacharya, will have the discretion to vote your shares on any additional matters properly presented for a vote at the Annual Meeting.
WHO WILL BEAR THE COST OF SOLICITING VOTES FOR THE ANNUAL MEETING?
We will pay the entire cost of preparing, assembling, printing, mailing, and distributing these proxy materials, and soliciting votes. Our directors, executives, and regular employees, without additional remuneration, and their appointed agents, may solicit proxies or votes in person, by telephone, or by electronic communication. We will request banks, brokers, and other fiduciaries to forward proxy materials to the owners of stock held in their names and will reimburse their reasonable out-of-pocket expenses incurred in connection with that distribution.
WHERE CAN I FIND THE VOTING RESULTS OF THE ANNUAL MEETING?
We will announce voting results of the Annual Meeting in a Current Report on Form 8-K filed with the SEC no later than four business days after the Annual Meeting.
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Back to ContentsSTOCKHOLDER PROPOSALS
A stockholdershareholder who would like to have a proposal considered for inclusion in our 20172023 proxy statement pursuant to SEC rules must submit the proposal so that we receive it is received by us no later than December 13, 2016, and5, 2022, unless the date of our 2023 annual meeting of shareholders is more than 30 days before or after May 18, 2023, in which case the proposal must contain certain information required bybe received a reasonable time before we begin to print and send our bylaws.proxy materials. SEC rules set standards for eligibility and specify the types of stockholdershareholder proposals that may be excluded from a proxy statement. StockholderShareholder proposals should be addressed to
the Secretary, CSG Systems International, Inc., 9555 Maroon Circle, Englewood, Colorado 80112.6175 S. Willow Drive, Greenwood Village, CO 80111.
For shareholder proposals and shareholder nominations submitted outside of the SEC proposal rules, our bylaws require that the Secretary of the Company receive advance written notice in proper form for matters to be brought before an annual shareholders meeting. We must receive notice of shareholder proposals for the 2023 annual meeting no later than December 5, 2022. If the date of our 2023 annual meeting is changed by more than 30 days from May 18, 2023, proper notice of shareholder proposals and nominations must be received as provided for in our bylaws.
Our bylaws also provide that stockholdershareholder nominations of personsindividuals for election to the Board are subject to certain advance notice and informational requirements. Copies of our bylaws are available to stockholdersshareholders upon request made to our Secretary at the aboveaforementioned address.
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Back to ContentsHOUSEHOLDING
We have adopted a procedure called “householding.” This practice allows us to deliver only one copy of proxy-related materials, annual reports, and information statements to stockholdersshareholders who share the same address and last name and who do not participate in e-mail delivery of these materials, unless one or more stockholdersshareholders notifies us that he or she would like to receive an individual copy. If you share an address with another stockholdershareholder and receive only one set of proxy-related materials and would like to request a separate copy for this year’s Annual Meeting or for future meetings or stockholdershareholder communications, please send your
written request to CSG Systems International, Inc., 9555 Maroon Circle, Englewood, Colorado 80112,6175 S. Willow Drive, Greenwood Village, CO 80111, Attn: Investor Relations Department or to john.rea@csgi.com or call us at (303) 200-2000. Upon request, weWe will promptly deliver a separate copy to you. Similarly, you may also contact us through eitherone of these methods if you receive multiple copies of proxy-related materials and other stockholdershareholder communications and would prefer to receive a single copy in the future.
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A copy of our 2021 Annual Report on Form 10-K is included in the proxy materials and is also available on our website on the Investor Relations page (located at https://ir.csgi.com/investors/financials/sec-filings). If you request, we will provide you with a separate copy of our 2021 Annual Report on Form 10-K for the year ended December 31, 2021, without charge. You should direct your requests to our Investor Relations department at the address or phone number aforementioned. The 2021 Annual Report on Form 10-K does not constitute, and should not be considered, a part of this proxy statement.
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As of the date of this proxy statement, we are not aware of any matter that may come before the Annual Meeting other than the matters discussed in this proxy statement; however,statement. However, if any other matter is properly presented at the Annual Meeting, the personsindividuals named in the accompanying proxy or their substitutes will have discretionary authority to vote on such matter in accordance with their judgment.
By Order of the Board of Directors
Joseph T. Ruble
Rasmani Bhattacharya
Secretary
April 12, 2016
ALL STOCKHOLDERS ARE WELCOME TO ATTEND THE ANNUAL MEETING; HOWEVER, REGARDLESS OF WHETHER YOU PLAN TO ATTEND THE MEETING, PLEASE COMPLETE, DATE, AND SIGN THE ENCLOSED PROXY AND MAIL IT PROMPTLY IN THE ACCOMPANYING ENVELOPE IN ORDER TO ENSURE REPRESENTATION OF YOUR SHARES. NO POSTAGE IS REQUIRED IF THE ACCOMPANYING ENVELOPE IS MAILED IN THE UNITED STATES.
YOU ALSO MAY FILE YOUR PROXY BY TELEPHONE OR THE INTERNET IN ACCORDANCE WITH THE INSTRUCTIONS ACCOMPANYING THE PROXY.
IF YOU ATTEND THE MEETING AND ARE A STOCKHOLDER OF RECORD, YOU MAY VOTE IN PERSON. IF YOU WISH TO ATTEND AND VOTE AT THE MEETING AND YOUR SHARES ARE HELD IN “STREET NAME,” YOU WILL NEED TO OBTAIN A PROXY FROM THE INSTITUTION THAT HOLDS YOUR SHARES AND SHOULD ADVISE SUCH INSTITUTION NOT TO VOTE YOUR SHARES. A PROXY WHICH YOU GIVE WILL NOT BE USED IF YOU ATTEND THE MEETING IN PERSON AND SO REQUEST.
April 4, 2022
CSG Systems International, Inc. 2016 Proxy Statement59
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CSG SYSTEMS INTERNATIONAL, INC.
PERFORMANCE BONUS PROGRAMTHIRD AMENDED AND RESTATED 1996 EMPLOYEE STOCK PURCHASE PLAN
1. Purpose.Article I
Purpose of the Plan.The purpose of the CSG Systems International, Inc. Performance Bonus ProgramThird Amended and Restated 1996 Employee Stock Purchase Plan (the “Program”“Plan”) is to provide for annual cash bonus awards (a “Bonus Award”) under the Program for (i) the persons designated as executive officers of CSG Systems International, Inc. (the “Company”) by the Board of Directors of the Company and (ii) any other employee of the Company or its subsidiaries who is or may be a “covered employee” of the Company or its subsidiaries as defined in Section 162(m)(3) of the Internal Revenue Code of 1986, as amended (the “Code”), that constitute performance‑based compensation within the meaning of Section 162(m)(4)(C) of the Code and Treasury Regulations § 1.162-27. For purposes of the Program, “Participant” means a person referred to in the first sentence of this Section 1. Bonus Awards under the Program shall be paid for services performed by a Participant during a calendar year.
2. Administration.
(a) The Program shall be administered by the Compensation Committee (the “Committee”) of the Company’s Board of Directors (the “Board”). No member of the Committee shall be eligible to participate in the Program. The Committee at all times shall be comprised of two or more members who are “outside directors” for purposes of Section 162(m)(4)(C)(i) of the Code.
(b) The Committee shall have the power and discretionary authority to adopt, amend, and rescind any rules, regulations, and procedures which the Committee deems necessary or appropriate for the operation and administration of the Program and to interpret and rule on any questions relating to any provision of the Program. However, the Committee shall not take any action that would result in the payment of compensation under the Program to any Participant who is a “covered employee” as defined in Section 162(m)(3) of the Code if such payment would not be “performance‑based compensation” within the meaning of Section 162(m) of the Code, as reasonably determined by the Committee.
(c) The decisions of the Committee (including but not limited to decisions as to whether a Participant is entitled to payment of a Bonus Award in whole or in part or not at all) shall be final, conclusive, and binding on all parties, including the Company and each Participant.
(d) The Board from time to time may amend, suspend, or terminate the Program, in whole or in part; provided, that no payment which becomes due under the Program as a result of an amendment of the Program that requires stockholder approval to satisfy the requirements of Section 162(m) of the Code shall be made until the Company has obtained such stockholder approval.
3. Performance Goals.
(a) Not later than ninety (90) days after the beginning of each calendar year, the Committee shall establish in writing (i) one or more Performance Goals (as defined in Section 3(c)) that must be attained in order for a Participant to receive a Bonus Award for such calendar year and (ii) the method, in terms of an objective formula or standard, for computing the amount of the Bonus Award to be paid to a Participant if the applicable Performance Goals are attained. Subject to and consistent with the provisions of the preceding sentence, the Committee shall determine the potential Bonus Award which a Participant shall be eligible to receive for a particular calendar year and may establish terms and conditions in addition to (but not in lieu of) the attainment of Performance Goals that a Participant must satisfy in order to receive such Bonus Award. Actual and potential Bonus Awards and such additional terms and conditions need not be uniform among Participants. The Committee shall have the discretion to revise the amount of a Bonus Award payable to a Participant upon the attainment of Performance Goals solely for the purpose of reducing the amount of or eliminating such Bonus Award. A Participant’s level of satisfaction of any additional terms and conditions established by the
60 CSG Systems International, Inc. 2016 Proxy Statement
Committee for such Participant’s receipt of a Bonus Award shall be relevant only for the purpose of potentially reducing the amount of or eliminating such Participant’s Bonus Award and may not be used to increase such Participant’s Bonus Award beyond that which would be payable based solely upon the Company’s attainment of applicable Performance Goals.
(b) The maximum individual Bonus Award payable to a Participant for any calendar year shall be equal to 200% of the annual incentive target of such Participant as of the last day of such calendar year; provided, however, that in no event may a Participant’s maximum Bonus Award under the Program for any calendar year exceed $3,000,000 or such lesser amount as is established by the Committee for such calendar year.
(c) A “Performance Goal” is an objective performance goal based entirely on one or more of the following business criteria applicable to the Company:
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Except as provided in Section 3(d), Performance Goals for a calendar year may not be changed once established by the Committee; however, the Committee retains discretion to reduce or eliminate a Participant’s Bonus Award as provided in Section 3(a). Performance Goals may be particular to an individual Participant or to a subsidiary or other business unit of the Company or may be based upon the performanceEligible Employees of the Company and its subsidiaries asDesignated Subsidiaries with a whole. Performance Goals may varyprogram for the regular purchase of Shares from Participant to Participant and from calendar year to calendar year.
(d) If, after the Committee has established a Performance Goal for a particular calendar year, the Company or any of its subsidiaries (i) acquires or disposes of any assets, business division, subsidiary, or other business operations, (ii) discontinues any business operations, or (iii) incurs any restructuring charge or any item of extraordinary loss or expense (each eventthrough periodic payroll deductions and dividend reinvestments, thereby giving Participants the opportunity to acquire a proprietary interest in the preceding clauses (i), (ii), and (iii) being referred to as a “Subsequent Event”) and such Subsequent Event has a materially positive or negative effect upon the attainment of such Performance Goal as originally established, then the Committee shall adjust such original Performance Goal so that such Performance Goal as adjusted is comparable to what such Performance Goal would have been had the Committee taken such Subsequent Event into account when the Committee originally established such Performance Goal.
(e) Notwithstanding any other provisionsuccess of the Program,Company.
Definitions. For purposes of the CommitteePlan, the following words and phrases shall have the discretionmeanings indicated, unless the context clearly indicates otherwise:
“Adjusted Price” means an amount equal to pay a Bonus Award to a Participant regardlesseighty-five percent (85%) of the attainment of a Performance Goal inFair Market Value on the event of such Participant’s death or termination of employment on account of a long-term disability as determined by the Committee.
4. Communication.
The Committee promptly shall inform each Participant in writinglast trading day of the Performance Goals applicable to such ParticipantPurchase Period for a particular calendar year and (subject towhich an Adjusted Price is being determined.
“Agent” means the provisions of the Program) the terms and conditions of such Participant’s participation in the Program for such calendar year.
CSG Systems International, Inc. 2016 Proxy Statement61
Prior to the payment of any Bonus Award, the Committee shall certify in writing that the applicable Performance Goals have been attained. No payment shall be made under the Program in the absence of such certification; however, the attainment or failure to attain Performance Goals under the Program shall not preclude the payment of compensation, including discretionary payments, to a Participant under any other plan, program, agreement, or arrangement of the Company or its subsidiaries, whether now existing or established after the adoption of the Program, on the basis of goals or criteria separate from the business criteria set forth in Section 3(c) or pursuant to the terms of such other plan, program, agreement, or arrangement.
6. Payment of Bonus Awards.
The Company shall pay the Bonus Awards for a calendar year in cash as soon as practicable after the certification of the attainment of the Performance Goalsindependent agent appointed pursuant to Section 5 and1.4.
“Board” means the final determinationboard of the amount of each Bonus Award to be paid; provided, that, so long as such certification and determination have occurred, the Company shall pay the Bonus Awards for a calendar year not later than March 15 of the following calendar year; and provided further, that payment of part or all of any Bonus Award shall be deferred by the Company in accordance with the terms of any separate deferred compensation agreement or arrangement applicable to a Participant. As a further condition of the payment of a Participant’s Bonus Award for a particular calendar year, such Participant must be employed by the Company or its subsidiaries on the last day of such calendar year. The Committee may provide, as a further condition of the payment of a Participant’s Bonus Award for a particular calendar year, that the Participant must be employed by the Company or its subsidiaries on the date of the Committee’s certification of the Company’s attainment of the Performance Goals for such calendar year or on any other date subsequent to the last day of such calendar year. Notwithstanding the foregoing, to the extent the payment of the Bonus Award is not subject to any separate deferred compensation agreement, the Bonus Award shall be paid in a cash lump-sum payment made during the calendar year immediately following the calendar year to which the Bonus Award relates (or such other time permitted under Section 409A of the Code).
7. Effective Date of Program.
The Program shall be effective January 1, 2016, subject to approval by stockholders of the Company. No payment shall be made under the Program unless the stockholders of the Company have approved the Program as required by Section 162(m) of the Code and Treasury Regulations § 1.162-27 prior to such payment. The Program shall continue until terminated by the Board but shall be resubmitted to stockholders from time to time as required by Section 162(m) of the Code and Treasury Regulations § 1.162-27.
8. Miscellaneous.
(a) Participants in the Program are unsecured general creditors of the Company, with no secured or preferential right to any assets of the Company or any other entity for payment of Bonus Awards under the Program.
(b) A Participant shall have no right to commute, sell, assign, transfer, pledge, anticipate, mortgage, or otherwise encumber, transfer, hypothecate, or convey in advance of actual receipt the amounts, if any, payable to such Participant under the Program. No part of any amounts payable to a Participant under the Program shall, prior to actual payment, be subject to seizure or sequestration for the payment of any debt, judgment, alimony, or separate maintenance owed by such Participant or any other person or be transferable by operation of law in the event of a Participant’s or any other person’s bankruptcy or insolvency.
(c) The Program does not constitute a contract of employment between the Company or any of its subsidiaries and any Participant and does not entitle any Participant to continued employment with the Company or any of its subsidiaries.
62 CSG Systems International, Inc. 2016 Proxy Statement
(d) The Company and its subsidiaries shall have the right to deduct from all amounts payable to a Participant under the Program any taxes required by law or other amounts authorized by the Participant to be withheld from payments under the Program.
(e) The Company and its subsidiaries reserve the right from time to time to establish, implement, and modify compensation plans, programs, agreements, and arrangements other than and in addition to the Program for persons who are Participants in the Program.
(f) The Program shall be construed and interpreted according to the laws of the State of Delaware, except as preempted by federal law, and without regard to conflict of law principles.
9. Section 409A.
Notwithstanding anything in the Program to the contrary, the Program and Bonus Awards made under the Program are intended to be eligible for certain regulatory exceptions to the limitations of, or to comply with, the requirements of Section 409A of the Code. The Committee, in the exercise of its sole discretion and without the consent of the Participant, may amend or modify a Bonus Award in any manner and delay the payment of any amounts payable pursuant to a Bonus Award to the minimum extent necessary to reasonably comply with the requirements of Section 409A of the Code; provided, that the Company shall not be required to assume any increased economic burden. No action so taken by the Committee with respect to the requirements of Section 409A of the Code shall be deemed to adversely affect a Participant’s right with respect to a Bonus Award or to require the consent of such Participant. The Committee shall have the right to make additional changes to Bonus Awards from time to time to the extent it deems necessary with respect to Section 409A of the Code.
CSG Systems International, Inc. 2016 Proxy Statement63
CSG SYSTEMS INTERNATIONAL, INC.
AMENDED AND RESTATED 2005 STOCK INCENTIVE PLAN
1. Purpose. The purpose of the CSG Systems International, Inc. 2005 Stock Incentive Plan (the “Plan”) is to foster and promote the long‑term financial success of the Company and its Subsidiaries and thereby increase stockholder value by providing incentives to those officers and other key employees of the Company and its Subsidiaries who are likely to be responsible for achieving such financial success and by attracting and compensating knowledgeable and experienced non‑employee directors of the Company whose services on the Board and its committees can assist such officers and other key employees in the achievement of such financial success.
2. Certain Definitions.
“Board” means the Board of Directors of the Company.
“CodeCompany”” means the Internal Revenue Code of 1986, as amended from time to time, or any successor thereto. References to a particular section of the Code shall include any regulations issued under such section.
“Committee” shall have the meaning provided in Section 3 of the Plan.
“Common Stock” means the Common Stock, $0.01 par value per share, of the Company.
“Company” means CSG Systems International, Inc., a Delaware corporation.
“DisabilityDesignated Subsidiary” ” means (i) with respect toa Subsidiary designated by the exercise of an Incentive Stock Option after termination of employment, a disability within the meaning of Section 22(e)(3) of the Code and (ii)Board for all other purposes, a mental or physical condition which,participation in the opinionPlan.
“Eligible Employee” means a person who is of the Committee, rendersmajority age in his or her domicile state or other applicable jurisdiction and is a grantee unablefull-time or incompetent to carry out the job responsibilities which such grantee held or the tasks to which such grantee was assigned (or, in the case of a non‑part-time employee director of the Company or a Designated Subsidiary, except that a temporary employee and an employee who has been designated by the services in such capacity which such non‑employee directorBoard of Directors of the Company as an executive officer of the Company or is expectedotherwise subject to perform) at the time the disability was incurred and which is expected to be permanent or for an indefinite duration exceeding one year.
“Exchange Act” meansprovisions of Section 16(b) of the Securities Exchange Act of 1934 as amended from timeshall not be eligible to time.participate in the Plan.
“Fair Market ValueValue” ” means as determined by the Committee, the last sale price of the Common StockShares as quoted on the NASDAQNasdaq Stock Market on the trading day for which the determination is being made, or, in the event that no such sale takes place on such day, the average of the reported closing bid and asked prices on the NASDAQ Stock Market on such day, or, if the Common Stock of the Company isShares are listed on another national securities exchange, the last reported sale price on the principal national securities exchange on which the Common Stock isShares are listed or admitted to trading on the trading day for which the determination is being made, or, if no such reported sale takes place on such day, the average of the closing bid and asked prices on such day on the principal national securities exchange on which the Common Stock is listed or admitted to trading, or, if the Common Stock is notShares are neither quoted on the NASDAQNasdaq Stock Market nor listed or admitted to trading on another national securities exchange, the average of the closing bid and asked prices in the over‑ the‑counterover-the-counter market on the day for which the determination is being made as reported through NASDAQ,Nasdaq, or, if bid and asked prices for the Common StockShares on such day are not reported through NASDAQ,Nasdaq, the average of the bid and asked prices for such day as furnished by any New York Stock Exchange member firm regularly making a market in the Common StockShares selected for such purpose by the Committee,Chief Executive Officer of the Company, or, if none of the foregoing is applicable, then the fair market value of the Common StockShares as determined in good faith by the CommitteeChief Executive Officer of the Company in itshis sole discretion.
“Incentive Stock Option” means any stock option intended to qualify as an “incentive stock option” within the meaning of Section 422 of the Code.
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“Participant” Non‑Qualified Stock Option” means any stock option that is not intended to be an Incentive Stock Option, including any stock option that provides (as of the time such option is granted) that it will not be treated as an Incentive Stock Option.
“Parent Corporation” means any corporation (other than the Company) in an unbroken chain of corporations ending with the Company if, at the time of the granting of the option, each of the corporations other than the Company owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain.
“Performance Unit Award” means an award grantedEligible Employee who has elected to participate in the Plan pursuant to Section 8.2.1.
“Plan YearPurchase Period”” means the twelve‑month period beginning on January 1 and ending on December 31; provided, thatestablished pursuant to Section 2.2 which determines the first Plan Year shall be a short Plan Year beginning ontimes for the date on which the Plan is approvedissuance of Shares by the stockholders ofCompany to the Company and ending on December 31 of the calendar year during which such stockholder approval occurs.Agent pursuant to Section 2.2.
“Restricted Stock AwardShares”” means an awardshares of Common Stock, granted pursuant to Section 9.
“Restricted Stock Unit Award” means an award granted pursuant to Section 10.
“Rule 16b‑3” means Rule 16b‑3 under the Exchange Act, as in effect from time to time.
“Stock Appreciation Right” means an award granted pursuant to Section 7.
“Stock Bonus Award” means an award of Common Stock granted pursuant to Section 11.
“Stock Option” means any option to purchase Common Stock granted pursuant to Section 6.
“Subsidiary” means (i) as it relates to Incentive Stock Options, any corporation (other than the Company) in an unbroken chain of corporations beginning with the Company if, at the time$0.01 par value per share, of the granting of the option, each of the corporations (other than the last corporation in the unbroken chain) owns stock possessing 50% or more of the total combined voting power of all classes of stock in one of the other corporations in such chain and (ii) for all other purposes,Company.
“Subsidiary” means a corporation or other entity domestic or foreign, of which not less than 50% of the voting shares or other voting interests are held by the Company or by a Subsidiary, whether or not such corporation or other entity now exists or hereafter is organized or acquired by the Company or by a Subsidiary. The plural form of such word is “Subsidiaries”.
3.
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Effective Date and Term of Plan. The original effective date of the Plan was September 1, 1996. This third amendment and restatement of the Plan shall become effective upon its approval by the shareholders of the Company at the 2022 annual meeting of the shareholders of the Company. The Plan shall be administered by a committee composed solely of two or more membersremain in effect until the tenth (10th) anniversary of the Board (the “Committee”) selecteddate of approval by the shareholders of the Company, subject to termination by the Board each of whom shall qualify as a “Non‑Employee Director” within the meaning of Rule 16b‑3 and as an “outside director” within the meaning of Section 162(m) of the Code.
The Committee shall have authorityend of any Purchase Period and subject to grant to eligible employees of the Company and its Subsidiaries and to non‑employee directors of the Company, pursuant to the terms of the Plan, (a) Stock Options, (b) Stock Appreciation Rights, (c) Performance Unit Awards, (d) Restricted Stock Awards, (e) Restricted Stock Unit Awards, (f) Stock Bonus Awards, or (g) any combination of the foregoing; provided, that the Committee may not grant Incentive Stock Options, Performance Unit Awards, or Stock Bonus Awards to non‑employee directors of the Company.
Subject to the applicable provisions of the Plan, the Committee shall have authority to interpret the provisions of the PlanSection 1.5.
Appointment and to decide all questions of fact arising in the application of such provisions; to select the officers and other key employeesRemoval of the Agent. The Company and its Subsidiaries and the non‑employee directors of the Companyshall appoint an independent bank, trust company, brokerage firm, or other financial institution or an affiliate thereof to whom awards or options shall be granted under the Plan; to determine whether and to what extent awards or options shall be granted under the Plan; to determine the types of awards and options to be granted under the Plan and the amount, size, terms, and conditions of each such award or option; to determine the time when awards or options shall be granted under the Plan; to determine whether, to what extent, and under what circumstances the payment of Common Stock and other amounts payable with respect to an award granted under the Plan shall be deferred either automatically or at the election
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of the grantee; to determine the Fair Market Value of the Common Stock from time to time; to authorize persons to execute on behalf of the Company any agreement required to be entered into under the Plan; to adopt, alter, and repeal such administrative rules, guidelines, and practices governing the Plan as the Committee from time to time shall deem advisable; and to make all other determinations and take all other actions necessary or advisable for the administration of the Plan.
Unless otherwise expressly provided in the Plan or by applicable law, all decisions and determinations made by the Committee in the administration and interpretation of the Plan or with respect to any ambiguous or disputed terms of any award or option shall be made in the sole discretion of the Committee and shall be final and binding on all persons, including but not limited to the Company and its Subsidiaries, the officers and other key employees of the Company and its Subsidiaries and the non‑employee directors of the Company to whom awards and options are granted under the Plan, the heirs and legal representatives of such officers, key employees, and non‑employee directors, and the personal representatives and beneficiaries of the estates of such officers, key employees, and non‑employee directors.
The Committee may, in its sole discretion, vary the provisions of the Plan (except the provisions of Sections 4, 13, 14, 21 (other than to require a grantee’s consent to an amendment of an outstanding option or award), and 24 of the Plan) in order to conform such provisions to the legal requirements of each non‑U.S. jurisdiction where a Subsidiary is located or to better accomplish the purpose ofadminister the Plan (including but not limited to the tax treatmentestablishment of granteessuch procedures as reasonably may be necessary to accomplish such administration in a manner consistent with the purposes of awards and options) with respect to (i) persons employed in such non‑U.S. jurisdictions who are eligible to receive awards and optionsthe Plan), keep the records of the Plan reflecting the interests of Participants, hold Shares acquired under the Plan on behalf of Participants, and (ii) non‑employee directorsgenerally act as the agent of Participants in the manner and to the extent provided in the Plan. In the event of the Company who reside in non‑U.S. jurisdictions. The Committee may, where it deems appropriate in its sole discretion, establish oneresignation or more sub‑plans for such purposes; and the Committee may, in its sole discretion, establish administrative rules and procedures to facilitate the operationremoval of the Plan or such sub‑plans in such non‑U.S. jurisdictions. For purposes of clarity, the terms of the Plan which will vary in a particular non‑U.S. jurisdiction shall be reflected in a written addendum to the Plan for such non‑U.S. jurisdiction.
The Committee may delegate to any officer or officers ofAgent, the Company any ofpromptly shall appoint a new Agent.
Shares Available Under the Committee’s duties, powers, and authorities under the Plan upon such conditions and with such limitations as the Committee may determine; provided, that only the Committee may select for awards or options under the Plan, and make grants of awards or options under the Plan to, (i) officers and other key employees of the Company or any Subsidiary who are subject to Section 16 of the Exchange Act at the time of such selection or the making of such a grant and (ii) non‑employee directors of the Company.
4. Common Stock Subject to the Plan.. Subject to adjustment pursuant to Section 20, the The maximum number of shares of Common Stock which the Company may be issuedissue under the Plan on and after the date of the 2022 annual meeting of shareholders of the Company is 18,700,000;the sum of (a) the number of Shares which were available for issuance under the Plan as of the day immediately preceding the date of the 2022 annual meeting of shareholders of the Company, plus (b) 1,150,000 Shares; and the Company shall reserve and keep available for issuance under the Plan such maximum number of shares, subject to adjustment pursuant to Section 20. Such shares may consistshares. In the event of an increase in whole or in part of authorized and unissued shares or treasury shares or any combination thereof. Shares of Common Stock subject to a Stock Option or a Stock Appreciation Right granted under the Plan shall be counted against the maximum number of shares of Common Stock which may be issued under the Plan as one share for each share subject to the Stock Option or the Stock Appreciation Right.outstanding Shares awarded under the Plan as a Performance Unit Award, Restricted Stock Award, Restricted Stock Unit Award, or Stock Bonus Award shall be counted against the maximum number of shares of Common Stock which may be issued under the Plan as two shares for each one share granted as or subject to such Award. Subject to adjustment pursuant to Section 20, the aggregate number of shares of Common Stock subject to (i) Stock Options, (ii) Stock Appreciation Rights, (iii) Performance Unit Awards, (iv) Restricted Stock Awards, (v) Restricted Stock Unit Awards, or (vi) Stock Bonus Awards granted under the Plan in any Plan Year to any individual may not exceed 600,000, with shares awarded under the Plan to such individual as a Performance Unit Award, Restricted Stock Award, Restricted Stock Unit Award, or Stock Bonus Award being counted against such aggregate number as two shares for each one share granted as or subject to such Award. Except as otherwise provided in the Plan, any shares as to which a Stock Option or Stock Appreciation Right expires for any reason or terminates unexercised shall be available again for the grant of awards or options under the Plan. If any shares of Common Stock granted as a Restricted Stock Award or subject to a Restricted Stock Unit Award are forfeited, cancelled, or otherwise reacquired by the Company by reason of a stock dividend, stock split or other change in capitalization of the failure of such shares to vest in the grantee of such Award, thenCompany, the number of shares of Common Stock whichShares then remainremaining available for issuance under the Plan shall be increased proportionately.
Action by two shares for each one share so forfeited, cancelled,the Company. Unless otherwise expressly provided by the Plan or otherwise reacquiredthe Board, whenever an action is required by or permitted to the Company under the Plan and is not expressly required to be taken by the Board, such action shall be taken by the Chief Executive Officer of the Company or his or her delegate.
Enrollment and Payroll Deductions. Participation in the Plan is voluntary. An Eligible Employee may elect to participate in the Plan by completing the necessary enrollment steps prescribed by the Company to authorize periodic payroll deductions by the Company from such Eligible Employee’s wages of the periodic amount specified by such Eligible Employee. Payroll deductions with respect to an Eligible Employee shall commence as soon as administratively practicable after the enrollment and payroll deduction authorization of such Eligible Employee is received and accepted by the Company. SharesIf a Participant’s wages are paid on a biweekly schedule, then the biweekly payroll deduction amount specified by such Participant in his or her payroll deduction authorization must be a minimum of Common Stock retained$10 and may not exceed $1,000 (or such other minimum and maximum amounts or percentage of compensation as may be established by the Company from time to time); in the case of Participants whose compensation is paid in a currency other than United States dollars, the applicable limits shall be the approximate equivalents of such minimum and maximum amounts fixed from time to time by the Company in administratively convenient units of such other currency. If a Participant’s wages are paid on a schedule other than biweekly, then the periodic payroll deductions referred to in this Section 2.1 shall be made with respect to such Participant in accordance with such schedule as reflected in such Participant’s payroll deduction authorization; and the Company shall proportionately adjust the minimum and maximum permitted payroll deductions applicable to such Participant. A Participant may change his or her periodic payroll deduction amount by completing the necessary steps prescribed by the Company; such change shall be effective as soon as administratively practicable after the change form is received and accepted by the Company. A Participant may cease participation in the Plan as of any payroll date by giving notice of such cessation to the Company in such form as the Company may specify at least fifteen (15) days prior to such payroll date. The Agent shall continue to maintain the Plan account of a Participant who ceases participation in the Plan until such Participant instructs the Agent either to issue the Shares held in such Plan account to such Participant or to sell such Shares and remit the net proceeds of such sale to such Participant as provided in Section 2.5.
Purchase Period and Issuance of Shares to Agent. Unless the Company establishes a different Purchase Period, the Purchase Period shall be each calendar month. The Company may change the Purchase Period from time to time, but in no event shall the Purchase Period be longer than six (6) calendar months On the last business day of each Purchase Period, the Company shall notify the Agent in written or electronic form of the aggregate United States dollar amount withheld for each Participant during such Purchase Period and shall instruct the transfer agent for the Shares to issue to the Agent (in such form or nominee name as the Agent may direct) as an original issuance of authorized but unissued Shares or as the reissuance of Shares held by the Company as treasury shares (and shall provide such transfer agent with such additional documentation as may be required for such purpose) that number of full or partial payment of an option exercise priceShares which is equal to (a) the aggregate United States dollar amount withheld pursuant to the Plan for all Participants during such Purchase Period (less all taxes withheld pursuant to Section 6(d)(ii)(B)3.4) divided by (b) the
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Adjusted Price; any portion of such aggregate dollar amount that is insufficient to purchase a full Share shall be carried over to the next Purchase Period. Upon the issuance or withheldreissuance of such number of full Shares, the amount referred to in clause (a) of the preceding sentence (less any amount carried over to the following Purchase Period) shall be deemed to have been paid to and received by the Company, and shall be appropriately reflected on the books of the Company, as the consideration for such number of newly issued or reissued full Shares. For purposes of determining the United States dollar amount withheld from the wages of Participants whose compensation is paid in satisfactiona currency other than United States dollars, the amount withheld in such other currency shall be converted to United States dollars on the basis of any federal, state,the applicable exchange rate quoted in The Wall Street Journal or local tax withholding requirement shall not be available againanother reliable source for the grantnext-to-the-last business day of awardsthe Purchase Period involved.
Allocation of Shares Among Participants. The Agent shall establish and maintain a separate Plan account for each Participant and shall allocate the Shares acquired by the Agent pursuant to Section 2.2 for a particular Purchase Period among the Plan accounts of those Participants whose payroll deductions provided the funds used to acquire such Shares. Such allocation shall be made in the Plan records maintained by the Agent in proportion to the United States dollar amount of funds so provided by each Participant (less all taxes withheld pursuant to Section 3.4) and, if fractional shares are involved, shall be made to three decimal places. Subject to the provisions of Section 2.5, the Agent shall hold in its name or optionsthe name of its nominee, for the benefit of all Participants, all shares acquired under the Plan. If a Stock
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Appreciation Right is exercised by a granteeThe Agent shall regularly make available to each Participant, either in written or a Restricted Stock Unit Award vests in a granteeelectronic form, current information with respect to the Participant’s Plan account showing acquisitions of Shares, dividends credited, sales or issuances of Shares, any applicable commissions or fees charged to such Participant, and the number of Shares then held.
Dividends and Distributions. Dividends and other distributions by the Company payswith respect to Shares held by the awardAgent under the Plan shall be allocated or otherwise dealt with by the Agent as follows:
Cash Dividends. Cash dividends received by the Agent on Shares allocated to Participants’ Plan accounts shall be used by the Agent to acquire additional Shares for such Participants by remitting the aggregate amount of such cash dividends to the grantee entirely in cash,Company to be added to the amount applied to the next acquisition of Shares from the Company pursuant to Section 2.2.
Stock Dividends and Stock Splits. Stock dividends and stock splits shall be credited to Participants having Shares allocated to their Plan accounts to the extent that such stock dividends and stock splits are attributable to such Shares.
Stock Rights. If the Company makes available to its shareholders generally rights to subscribe to additional Shares or other securities, then the shares coveredsuch rights accruing on Shares held by the Stock Appreciation Right or Restricted Stock Unit Award as to which such exercise or vesting occursAgent under the Plan shall be available againsold by the Agent and the net proceeds of such sale shall be applied to the acquisition from the Company of additional Shares for Participants in the grantsame manner as cash dividends are applied.
Issuance of awards or options underShares to Participant; Sale of Shares for Participant. Upon the Plan. Ifrequest of a Stock Appreciation Right is exercised by a grantee as toParticipant, the Agent will arrange for some or all of the shares coveredShares in such Participant’s Plan account to be issued to such Participant as promptly as practicable. Upon the issuance of such Shares, such Participant’s Plan account will be appropriately debited. Upon the request of a Participant, the Agent will sell for the account of such Participant any or all of the Shares in such Participant’s Plan account and shall remit the proceeds of such sale, net of applicable brokerage commissions (if any), to such Participant as promptly as practicable. If a Participant requests that sale proceeds be remitted to such Participant in a currency other than United States dollars, then the requested currency exchange will be made at the prevailing rate for transactions of the size involved as determined in the sole discretion of the Agent or its designee for such purpose, and such Participant will bear all expenses incurred by the Agent in effecting such currency exchange. The Agent shall process transactions involving fractional Shares in such manner as the Agent deems appropriate for the particular transaction. Requests by Participants pursuant to this Section 2.5 may be made in writing or by such Stock Appreciation Rightelectronic or other means as the Agent may provide.
Voting Rights. A Participant will have the right to vote the Shares in his or her Plan account in accordance with the Agent’s customary procedures for the voting of shares held in “street name” or other similar types of accounts; however, a Participant is not a shareholder of record of the Company with respect to any Shares held in such Participant’s Plan account.
Expenses. The Company will bear all of the expenses of administering the Plan, including but not limited to the Agent’s fees and any transfer taxes and expenses of issuing Shares to Participants. However, a Participant will bear any expenses incurred by the Agent in selling Shares held for such Participant under the Plan, including but not limited to applicable brokerage commissions and currency exchange expenses.
Termination of Eligibility. If a Participant ceases to be eligible to participate in the Plan for any reason, including but not limited to the termination of such Participant’s employment by the Company or a Designated Subsidiary, then such Participant may no longer participate in the Plan through payroll deductions. If a Participant ceases to be eligible to participate in the Plan for a reason other than such Participant’s death, then the Agent shall maintain such Participant’s Plan account pending the Agent’s
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receipt of instructions either from the Participant or from the Company as to the issuance or sale of the Shares in such Plan account in accordance with Section 2.5. If a Participant dies, then the Agent shall maintain the deceased Participant’s Plan account pending the Agent’s receipt of instructions as to the disposition of such Plan account from the duly authorized representative of the deceased Participant’s estate.
Termination of Plan. If the Company terminates the Plan, then the Agent shall arrange for the full Shares in a Participant’s Plan account to be issued to such Participant as promptly as practicable and shall sell for the account of such Participant any fractional Shares in such Participant’s Plan account and remit the proceeds of such sale, net of applicable brokerage commissions (if any), to such Participant as promptly as practicable. However, in its discretion, the Company may provide additional alternatives for the disposition of the Shares in a Participant’s Plan account upon the termination of the Plan.
Rules for Foreign Jurisdictions. Notwithstanding any other provisions of the Plan to the contrary, the Company and, to the extent permitted under applicable law, the Chief Executive Officer of the Company or his or her delegate may, in its or his or her sole discretion, amend or vary the terms of the Plan in order to conform such terms to the tax, employment, securities law, or other requirements of each non-U.S. jurisdiction where a Designated Subsidiary is located or to accomplish the purpose of the Plan with respect to the Eligible Employees employed in such non-U.S. jurisdiction. Each of the Company and, to the extent permitted under applicable law, the Chief Executive Officer of the Company or his or her delegate may, where it or he or she deems appropriate in its or his or her sole discretion, establish one or more sub-plans of the Plan for such purposes. The Company and, to the extent permitted under applicable law, the Chief Executive Officer of the Company or his or her delegate may, in its or his or her sole discretion, establish administrative rules and procedures to facilitate the operation of the Plan in such non-U.S. jurisdictions. For purposes of clarity, the terms of the Plan which vary for a particular non-U.S. jurisdiction or the terms of any sub-plan of the Plan for a particular non-U.S. jurisdiction shall be reflected in a written addendum to the Plan or a written sub-plan document for such non-U.S. jurisdiction.
Interpretation and Administration. The Chief Executive Officer of the Company or his or her delegate shall have the authority from time to time (a) to establish rules and regulations for the operation of the Plan, (b) to interpret the Plan, (c) to decide any and all questions which may arise in connection with the Plan, and (d) to modify any of the administrative provisions of the Plan to facilitate the proper and efficient administration of the Plan. Any delegate of the Chief Executive Officer of the Company for purposes of the Plan shall not make any discretionary decision which pertains directly to such delegate as a Participant and not to all Participants generally.
Nonassignability. A Participant shall not have any right to sell, assign, transfer, pledge, or otherwise encumber or convey such Participant’s Plan account or any interest therein except pursuant to Section 2.5. No Plan account shall be subject to attachment, garnishment, or seizure for the payment of any debts, judgments, alimony, child support, or separate maintenance owed by a Participant nor be transferable by operation of law in the event of a Participant’s bankruptcy or insolvency.
Employment Rights. An Eligible Employee’s election to participate in the Plan and the Company’s acceptance of such Eligible Employee’s enrollment in the Plan shall not be deemed to constitute a contract of employment between such Eligible Employee and the Company paysor any Designated Subsidiary. No provision of the exercised awardPlan shall be deemed to give any Participant any right (i) to be retained in the employ or other service of the Company or any Designated Subsidiary for any specific length of time, (ii) to interfere with the right of the Company or any Designated Subsidiary to discipline or discharge the Participant at any time, (iii) to hold any particular position or responsibility with the Company or any Designated Subsidiary, or (iv) to receive any particular compensation from the Company or any Designated Subsidiary.
Withholding; Payroll Taxes. The Company or the Designated Subsidiary by whom such Participant’s wages are paid shall have the authority to withhold from the Participant’s wages or from the Participant’s accumulated payroll deductions credited to the granteeParticipant’s account, any taxes or other obligations required to be withheld under federal, state, local, or other laws by reason of such payroll deductions and the purchase of Shares under the Plan for the benefit of such Participant at a price less than Fair Market Value.
Transfer Upon Death. The Shares held in the Plan account of a Participant may be transferred by will or the laws of descent and distribution upon the death of such Participant, but the Company may require any transferee of a deceased Participant’s Plan account promptly to elect either the issuance or the sale of all of the Shares in such Plan account pursuant to Section 2.5.
Amendment. The Board may amend the Plan at any time in whole or in part in shares of Common Stock, then nonewithout terminating the Plan; however, that, without the approval of the shareholders of the Company, no amendment may increase the number of shares as to which such exercise occurs will again be available for the grant of awards or options under the Plan.
5. Eligibility to Receive Awards and Options. Awards and optionsthat may be grantedissued under the Plan to those officers and other key employees of(except as provided in Section 1.5), (ii) extend the Company or any Subsidiary who are responsible for or contribute to, or are likely to be responsible for or contribute to, the management, growth, and success of the Company or any Subsidiary and to non‑employee directors of the Company. The granting of an award or option under the Plan to an officer or other key employee of the Company or any Subsidiary shall conclusively evidence the Committee’s determination that such grantee meets one or more of the criteria referred to in the preceding sentence.
6. Stock Options. A Stock Option may be an Incentive Stock Option or a Non‑Qualified Stock Option. To the extent that any Stock Option does not qualify as an Incentive Stock Option, it shall constitute a separate Non‑Qualified Stock Option. Stock Options may be granted alone or in addition to other awards made under the Plan. Stock Options shall be evidenced by agreements in such form as the Committee shall approve from time to time. The agreements shall contain in substance the following terms and conditions and may contain such additional terms and conditions, not inconsistent with the termsterm of the Plan, asor (iii) reduce the Committee shall deem appropriate:
(a) Type of Option. Each option agreement shall identify the Stock Option represented thereby as an Incentive Stock Option or a Non‑Qualified Stock Option, as the case may be.
(b) Option Price. The option exercise price per share shall not beAdjusted Price to less than the Fair Market Value of the Common Stock on the date the Stock Option is granted and in no event shall be less than the par value of the Common Stock.
(c) Term. Each option agreement shall state the period or periods of time within which the Stock Option may be exercised, in whole or in part, which shall be such period or periods of time as the Committee may determine at the time of the Stock Option grant; provided, that no Stock Option granted under the Plan shall be exercisable more than ten years after the date of its grant; and provided further, that each Stock Option granted under the Plan shall become exercisable one year after the date of its grant, unless the option agreement specifically provides otherwise. The Committee shall have authority to accelerate previously established exercise rights, subject to the requirements set forth in the Plan, under such circumstances and upon such terms and conditions as the Committee shall deem appropriate.
(d) Payment for Shares. The Committee may permit all or part of the payment of the option exercise price to be made (i) in cash, by check, or by wire transfer or (ii) in shares of Common Stock (A) which already are owned by the optionee and which are surrendered to the Company in good form for transfer or (B) which are retained by the Company from the shares of the Common Stock which would otherwise be issued to the optionee upon the optionee’s exercise of the Stock Option. Such shares shall be valued at their Fair Market Value on the date of exercise of the Stock Option. In lieu of payment in fractions of shares, payment of any fractional share amount shall be made in cash or check payable to the Company. The Committee also may provide that the exercise price may be paid by delivering a properly executed exercise notice in a form approved by the Committee together with irrevocable instructions to a broker to promptly deliver to the Company the amount of the applicable sale or loan proceeds required to pay the exercise price. No shares of Common Stock shall be issued to any optionee upon the exercise of a Stock Option until the Company receives full payment therefor as described above.
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(e) Rights upon Termination of Employment. In the event that an optionee ceases to be employed either by the Company or by a Subsidiary for any reason other than such optionee’s death or Disability, any rights of the optionee under any Stock Option then in effect immediately shall terminate; provided, that the optionee (or the optionee’s legal representative) shall have the right to exercise the Stock Option during its term within a period of three months after such termination of employment to the extent that the Stock Option was exercisable at the time of such termination or within such other period and subject to such other terms and conditions as may be specified by the Committee. Notwithstanding the foregoing provisions of this Section 6(e), the optionee (and the optionee’s legal representative) shall not have any rights under any Stock Option, and the Company shall not be obligated to sell or deliver shares of Common Stock (or have any other obligation or liability) under any Stock Option, if the Committee shall determine that (i) the employment of the optionee with the Company or any Subsidiary has been terminated for cause or (ii) the optionee has engaged or may engage in employment or activities competitive with the Company or any Subsidiary or contrary, in the opinion of the Committee, to the best interests of the Company or any Subsidiary. In the event of such determination, the optionee (and the optionee’s legal representative) shall have no right under any Stock Option to purchase any shares of Common Stock regardless of whether the optionee (or the optionee’s legal representative) shall have delivered a notice of exercise prior to the Committee’s making of such determination. Any Stock Option may be terminated entirely by the Committee at the time of or at any time subsequent to a determination by the Committee under this Section 6(e) which has the effect of eliminating the Company’s obligation to sell or deliver shares of Common Stock under such Stock Option.
In the event that an optionee ceases to be employed either by the Company or by a Subsidiary by reason of such optionee’s Disability, prior to the expiration of a Stock Option and without such optionee’s having fully exercised such Stock Option, such optionee or such optionee’s legal representative shall have the right to exercise such Stock Option during its term within a period of six months after such termination of employment to the extent that such Stock Option was exercisable at the time of such termination or within such other period and subject to such other terms and conditions as may be specified by the Committee.
In the event that an optionee ceases to be employed either by the Company or by a Subsidiary by reason of such optionee’s death, prior to the expiration of a Stock Option and without such optionee’s having fully exercised such Stock Option, the personal representative of such optionee’s estate or the person who acquired the right to exercise such Stock Option by bequest or inheritance from such optionee shall have the right to exercise such Stock Option during its term within a period of twelve months after the date of such optionee’s death to the extent that such Stock Option was exercisable at the time of such death or within such other period and subject to such other terms and conditions as may be specified by the Committee.
The foregoing provisions of this Section 6(e) shall not be applicable to non‑employee directors of the Company.
(f) Rights Upon Termination of Service as a Director. Unless the applicable option agreement provides otherwise, if an optionee who is a non‑employee director of the Company ceases to be a director of the Company for any reason other than retirement from the Board under the circumstances described in the following paragraph of this Section 6(f) or death, then each outstanding but unexercised Stock Option held by such optionee shall continue to be exercisable only to the extent that it was exercisable at the time that such optionee ceased to be a director of the Company and only until the earlier of (i) three months after such optionee ceased to be a director of the Company or (ii) the expiration of the term of such Stock Option.
Unless the applicable option agreement provides otherwise, if an optionee who is a non‑employee director of the Company ceases to be a director of the Company (other than by reason of death) and at the time of such occurrence (the “Retirement Date”eight-five percent (85%) is at least age 65 with ten or more years of service as a non‑employee director of the Company or is at least age 70 with five or more years of service as a non‑employee director of the Company, then each outstanding but unexercised Stock Option held by such optionee on the Retirement Date shall continue to be or become exercisable in accordance with its terms until the earlier of (i) five years after the Retirement Date or (ii) the expiration of the term of such Stock Option.
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Unless the applicable option agreement provides otherwise, if an optionee who is a non‑employee director of the Company dies, then each outstanding but unexercised Stock Option which had been held by such grantee for at least twelve months as of the date of such optionee’s death automatically shall become exercisable in full (if not already exercisable) upon such optionee’s death. Each outstanding but unexercised Stock Option which becomes exercisable pursuant to the preceding sentence and each outstanding but unexercised Stock Option held by such optionee which was exercisable on the date of such optionee’s death may be exercised by the legal representative of such optionee’s estate or by the beneficiaries of such estate to whom such Stock Option is distributed until the earlier of (i) three years after the date of such optionee’s death or (ii) the expiration of the term of such Stock Option.
The foregoing provisions of this Section 6(f) shall be applicable only to non‑employee directors of the Company.
To the extent that the aggregate Fair Market Value (determined as of the time the option is granted) of the Common Stock with respect to which Incentive Stock Options granted under the Plan (and all other plans of the Company and its Subsidiaries) become exercisable for the first time by any individual in any calendar year exceeds $100,000, such Stock Options shall be treated as Non‑ Qualified Stock Options. No Incentive Stock Option shall be granted to any employee if, at the time the option is granted, the employee (in his or her own right or by reason of the attribution rules applicable under Section 424(d) of the Code) owns more than 10% of the total combined voting power of all classes of stock of the Company or any Parent Corporation or Subsidiary unless at the time such option is granted the option price is at least 110% of the Fair Market Value of the stock subject to such Stock Option and such Stock Option by its terms is not exercisable after the expiration of five years from the date of its grant.
7. Stock Appreciation Rights. Stock Appreciation Rights shall enable the grantees thereof to benefit from increases in the Fair Market Value of shares of Common Stock and shall be evidenced by agreements in such form as the Committee shall approve from time to time. The agreements shall contain in substance the following terms and conditions and may contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate:
(a) Award. A Stock Appreciation Right shall entitle the grantee, subject to such terms and conditions as the Committee may prescribe, to receive upon the exercise thereof an award equal to all or a portion of the excess of (i) the Fair Market Value of a specified number of shares of Common Stock at the time of the exercise of such right over (ii) a specified price which shall not be less than the Fair Market Value of the Common Stock at the time the right is granted. Subject to the limitations set forth in Section 4, such award may be paid by the Company in cash, in shares of Common Stock (valued at their then Fair Market Value), or in any combination thereof, as the Committee may determine. Stock Appreciation Rights may be, but are not required to be, granted in connection with a previously or contemporaneously granted Stock Option.
(b) Term. Each agreement shall state the period or periods of time within which the Stock Appreciation Right may be exercised, in whole or in part, subject to such terms and conditions prescribed for such purpose by the Committee; provided, thatShares. Further, no Stock Appreciation Right shall be exercisable more than ten years after the date of its grant; and provided further, that each Stock Appreciation Right granted under the Plan shall become exercisable one year after the date of its grant, unless the agreement specifically provides otherwise. The Committee shall have authority to accelerate previously established exercise rights, subject to the requirements set forth in the Plan, under such circumstances and upon such terms and conditions as the Committee shall deem appropriate.
(c) Rights upon Termination of Employment. In the event that a grantee of a Stock Appreciation Right ceases to be employed either by the Company or by a Subsidiary for any reason other than such grantee’s death or Disability, any rights of the grantee under any Stock Appreciation Right then in effect immediately shall terminate; provided, that the grantee (or the grantee’s legal representative) shall have the right to exercise the
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Stock Appreciation Right during its term within a period of three months after such termination of employment to the extent that the Stock Appreciation Right was exercisable at the time of such termination or within such other period and subject to such other terms and conditions as may be specified by the Committee. Notwithstanding the foregoing provisions of this Section 7(c), the grantee (and the grantee’s legal representative) shall not have any rights under any Stock Appreciation Right, and the Company shall not be obligated to pay or deliver any cash, Common Stock or any combination thereof (or have any other obligation or liability) under any Stock Appreciation Right, if the Committee shall determine that (i) the employment of the grantee with the Company or any Subsidiary has been terminated for cause or (ii) the grantee has engaged or may engage in employment or activities competitive with the Company or any Subsidiary or contrary, in the opinion of the Committee, to the best interests of the Company or any Subsidiary. In the event of such determination, the grantee (and the grantee’s legal representative) shall have no right under any Stock Appreciation Right regardless of whether the grantee (or the grantee’s legal representative) shall have delivered a notice of exercise prior to the Committee’s making of such determination. Any Stock Appreciation Right may be terminated entirely by the Committee at the time of or at any time subsequent to a determination by the Committee under this Section 7(c) which has the effect of eliminating the Company’s obligations under such Stock Appreciation Right.
In the event that a grantee of a Stock Appreciation Right ceases to be employed either by the Company or by a Subsidiary by reason of such grantee’s Disability, prior to the expiration of a Stock Appreciation Right and without such grantee’s having fully exercised such Stock Appreciation Right, such grantee or such grantee’s legal representative shall have the right to exercise such Stock Appreciation Right during its term within a period of six months after such termination of employment to the extent that such Stock Appreciation Right was exercisable at the time of such termination or within such other period and subject to such other terms and conditions as may be specified by the Committee.
In the event that a grantee of a Stock Appreciation Right ceases to be employed either by the Company or by a Subsidiary by reason of such grantee’s death, prior to the expiration of a Stock Appreciation Right and without such grantee’s having fully exercised such Stock Appreciation Right, the personal representative of the grantee’s estate or the person who acquired the right to exercise such Stock Appreciation Right by bequest or inheritance from such grantee shall have the right to exercise such Stock Appreciation Right during its term within a period of twelve months after the date of such grantee’s death to the extent that such Stock Appreciation Right was exercisable at the time of such death or within such other period and subject to such other terms and conditions as may be specified by the Committee.
The foregoing provisions of this Section 7(c) shall not be applicable to non‑employee directors of the Company.
(d) Rights Upon Termination of Service as a Director. Unless the applicable agreement provides otherwise, if a grantee of a Stock Appreciation Right who is a non‑employee director of the Company ceases to be a director of the Company for any reason other than retirement from the Board under circumstances described in the following paragraph of this Section 7(d) or death, then each outstanding but unexercised Stock Appreciation Right held by such grantee shall continue to be exercisable only to the extent that it was exercisable at the time that such grantee ceased to be a director of the Company and only until the earlier of (i) three months after such grantee ceased to be a director of the Company or (ii) the expiration of the term of such Stock Appreciation Right.
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Unless the applicable agreement provides otherwise, if the grantee of a Stock Appreciation Right who is a non‑employee director of the Company ceases to be a director of the Company (other than by reason of death) and at the time of such occurrence (the “Retirement Date”) is at least age 65 with ten or more years of service as a director of the Company or is at least age 70 with five or more years of service as a director of the Company, then each outstanding but unexercised Stock Appreciation Right held by such grantee on the Retirement Date shall continue to be or become exercisable in accordance with its terms until the earlier of (i) five years after the Retirement Date or (ii) the expiration of the term of such Stock Appreciation Right.
Unless the applicable agreement provides otherwise, if the grantee of a Stock Appreciation Right who is a non‑employee director of the Company dies, then each outstanding but unexercised Stock Appreciation Right which had been held by such grantee for at least twelve months as of the date of such grantee’s death automatically shall become exercisable in full (if not already exercisable) upon such grantee’s death. Each outstanding but unexercised Stock Appreciation Right which becomes exercisable pursuant to the preceding sentence and each outstanding but unexercised Stock Appreciation Right held by such grantee which was exercisable on the date of such grantee’s death may be exercised by the legal representative of such grantee’s estate or by the beneficiaries of such estate to whom such Stock Appreciation Right is distributed until the earlier of (i) three years after the date of such grantee’s death or (ii) the expiration of the term of such Stock Appreciation Right.
The foregoing provisions of this Section 7(d) shall be applicable only to non‑employee directors of the Company.
8. Performance Unit Awards. Performance Unit Awards shall entitle the grantees thereof to receive future payments based upon and subject to the achievement of preestablished long‑term performance targets and shall be evidenced by agreements in such form as the Committee shall approve from time to time. The agreements shall contain in substance the following terms and conditions and may contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate:
(a) Performance Period. The Committee shall establish with respect to each Performance Unit Award a performance period of not fewer than two years nor more than five years.
(b) Unit Value. The Committee shall establish with respect to each Performance Unit Award a value for each unit which shall not change thereafter or which may vary thereafter on the basis of criteria specified by the Committee.
(c) Performance Targets. The Committee shall establish with respect to each Performance Unit Award maximum and minimum performance targets to be achieved during the applicable performance period. The achievement of the maximum targets shall entitle a grantee to payment with respect to the full value of a Performance Unit Award. The achievement of less than the maximum targets, but in excess of the minimum targets, shall entitle a grantee to payment with respect to a portion of a Performance Unit Award according to the level of achievement of the applicable targets as specified by the Committee. To the extent the Committee deems necessary or appropriate to protect the Company against the loss of deductibility pursuant to Section 162(m) of the Code, such targets shall be established in conformity with the requirements of Section 162(m) of the Code.
(d) Performance Measures. Performance targets established by the Committee shall relate to corporate, division, subsidiary, group, or unit performance in terms of objective financial criteria or performance goals which satisfy the requirements of Section 162(m) of the Code or, with respect to grantees not subject to Section 162(m) of the Code, such other measures or standards of performance as the Committee may determine. Multiple targets may be used and may have the same or different weighting, and the targets may relate to absolute performance or relative performance measured against other companies, businesses, or indexes.
(e) Adjustments. At any time prior to the payment of a Performance Unit Award, the Committee may adjust previously established performance targets or other terms and conditions of such Performance Unit Award,
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including the Company’s or another company’s financial performance for Plan purposes, in order to reduce or eliminate, but not to increase, the payment with respect to a Performance Unit Award that otherwise would be due upon the attainment of such previously established performance targets. Such adjustments shall be made to reflect major unforeseen events or changes in circumstances affecting the Company such as but not limited to changes in laws, regulations or accounting principles, mergers, acquisitions or divestitures, or other extraordinary, unusual, or nonrecurring items or events.
(f) Payment of Performance Unit Awards. Upon the conclusion of each performance period, the Committee shall determine the extent to which the applicable performance targets have been attained and any other terms and conditions have been satisfied for such period and shall provide such certification thereof as may be necessary to satisfy the requirements of Section 162(m) of the Code. The Committee shall determine what, if any, payment is due on a Performance Unit Award and, subject to the limitations set forth in Section 4, whether such payment shall be made in cash, in shares of Common Stock (valued at their then Fair Market Value), or in a combination thereof. Payment of a Performance Unit Award shall be made in a lump sum or in installments, as determined by the Committee, commencing as promptly as practicable after the end of the performance period unless such payment is deferred upon such terms and conditions as may be specified by the Committee.
(g) Termination of Employment. In the event that a grantee of a Performance Unit Award ceases to be employed either by the Company or by a Subsidiary for any reason other than such grantee’s death or Disability, any rights of such grantee under any Performance Unit Award then in effect whose performance period has not ended shall terminate immediately; provided, that the Committee may authorize the partial payment of any such Performance Unit Award if the Committee determines such action to be equitable.
In the event that a grantee of a Performance Unit Award ceases to be employed either by the Company or by a Subsidiary by reason of such grantee’s death or Disability, any rights of such grantee under any Performance Unit Award then in effect whose performance period has not ended shall terminate immediately; provided, that the Committee may authorize the payment to such grantee or such grantee’s legal representative of all or any portion of such Performance Unit Award to the extent earned under the applicable performance targets, even though the applicable performance period has not ended, upon such terms and conditions as may be specified by the Committee.
9. Restricted Stock Awards. Restricted Stock Awards shall (i) consist of shares of Common Stock restricted against transfer, (ii) be subject to a substantial risk of forfeiture and to other terms and conditions intended to further the purpose of the Plan as the Committee may determine, and (iii) be evidenced by agreements in such form as the Committee shall approve from time to time. The agreements shall contain in substance the following terms and conditions and may contain such additional terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate:
(a) Restriction Period. The Common Stock covered by Restricted Stock Awards shall be subject to the applicable restrictions established by the Committee over such period as the Committee shall determine. To the extent the Committee deems necessary or appropriate to protect the Company against the loss of deductibility pursuant to Section 162(m) of the Code, Restricted Stock Awards also may be subject to the attainment of one or more preestablished performance objectives which relate to corporate, subsidiary, division, group, or unit performance in terms of objective financial criteria or performance goals which satisfy the requirements of Section 162(m) of the Code; provided, that any such preestablished financial criteria or performance goals subsequently may be adjusted by the Committee to reduce or eliminate, but not to increase, a Restricted Stock Award in order to take into account unforeseen events or changes in circumstances affecting the Company such as but not limited to changes in laws, regulations or accounting principles, mergers, acquisitions or divestitures, or other extraordinary, unusual, or nonrecurring items or events.
(b) Restriction upon Transfer. Shares of Common Stock covered by Restricted Stock Awards may not be sold, assigned, transferred, exchanged, pledged, hypothecated, or otherwise encumbered, except as provided in
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the Plan or in any Restricted Stock Award agreement entered into between the Company and a grantee, during the restriction period applicable to such shares. Notwithstanding the foregoing provisions of this Section 9(b), and except as otherwise provided in the Plan or the applicable Restricted Stock Award agreement, a grantee of a Restricted Stock Award shall have all of the other rights of a holder of Common Stock including but not limited to the right to receive dividends and the right to vote such shares.
(c) Payment. The Committee shall determine the amount, form and time of payment, if any, that shall be required from the grantee of a Restricted Stock Award in consideration of the issuance and delivery of the shares of Common Stock covered by such Restricted Stock Award.
(d) Certificates. Each certificate issued in respect of shares of Common Stock covered by a Restricted Stock Award shall be registered in the name of the grantee and shall bear substantially the following legend (in addition to any other legends which may be appropriate):
“This certificate and the shares of stock represented hereby are subject to the terms and conditions (including forfeiture provisions and restrictions against transfer) contained in the CSG Systems International, Inc. 2005 Stock Incentive Plan and a Restricted Stock Award Agreement entered into between the registered owner and CSG Systems International, Inc. Release from such terms and conditions may be obtained only in accordance with the provisions of such Plan and Agreement, a copy of each of which is on file in the office of the Secretary of CSG Systems International, Inc.”
The Committee may require the grantee of a Restricted Stock Award to enter into an escrow agreement providing that the certificates representing the shares covered by such Restricted Stock Award will remain in the physical custody of an escrow agent until all restrictions are removed or expire and may require that the certificates held in such escrow be accompanied by a stock power, endorsed in blank by the grantee, relating to the Common Stock covered by such certificates. The Company also may use a book‑entry system of uncertificated shares to administer grants of Restricted Stock Awards and to effect any withholding required by Section 15.
(e) Lapse of Restrictions. Except for preestablished performance objectives established with respect to Restricted Stock Awards to grantees subject to Section 162(m) of the Code, the Committee may provide for the lapse of restrictions applicable to Common Stock subject to Restricted Stock Awards in installments and may waive such restrictions in whole or in part based upon such factors and such circumstances as the Committee shall determine. Upon the lapse of such restrictions, subject to the provisions of Section 15, certificates for shares of Common Stock, free of the restrictive legend set forth in Section 9(d), shall be issued to the grantee or the grantee’s legal representative automatically in the case of certificated shares or upon the request of the grantee in the case of uncertificated shares. The Committee shall have authority to accelerate the expiration of the applicable restriction period with respect to all or any portion of the shares of Common Stock covered by a Restricted Stock Award except, with respect to grantees subject to Section 162(m) of the Code, to the extent such acceleration would result in the loss of the deductibility of such Restricted Stock Award pursuant to Section 162(m) of the Code.
(f) Termination of Employment or Service as a Director. If a grantee of a Restricted Stock Award ceases to be employed either by the Company or by a Subsidiary or to serve as a director of the Company for any reason, then any rights of such grantee with respect to shares of Common Stock that remain subject to restrictions under such Restricted Stock Award shall terminate immediately, and any shares of Common Stock covered by a Restricted Stock Award with unlapsed restrictions shall be subject to reacquisition by the Company upon the terms set forth in the applicable agreement with such grantee. The Committee may provide for complete or partial exceptions to such employment or service requirement if the Committee determines such action to be equitable.
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10. Restricted Stock Unit Awards. Restricted Stock Unit Awards shall entitle the grantees thereof to receive future payments from the Company either in shares of Common Stock or in cash or in a combination of Common Stock and cash at such time or times and on such terms as the Committee shall approve from time to time. The following provisions shall be applicable to Restricted Stock Unit Awards:
(a) Award Agreement. Each Restricted Stock Unit Award shall be evidenced by an agreement, in a form approved by the Committee, which sets forth the number of Restricted Stock Units covered by such Award, the time or times when such Restricted Stock Units will vest in the grantee, and such other terms and conditions, not inconsistent with the terms of the Plan, as the Committee shall deem appropriate.
(b) Payment of Award. Upon the vesting of a Restricted Stock Unit, the Company shall pay the amount of such Restricted Stock Units to the grantee either (i) in shares of Common Stock on the basis of one share of Common Stock for each vested Restricted Stock Unit, (ii) in cash in an amount equal to the Fair Market Value on the vesting date of one share of Common Stock for each vested Restricted Stock Unit, or (iii) in a combination of cash and shares of Common Stock as the Committee in its discretion shall determine with respect to such Award either in the applicable Award agreement or at the time of the vesting of such Restricted Stock Unit.
(c) Termination of Employment or Service as a Director. If a grantee of a Restricted Stock Unit Award ceases to be employed either by the Company or by a Subsidiary or to serve as a director of the Company for any reason, then any rights of such grantee with respect to the unvested portion of such Restricted Stock Unit Award shall terminate immediately. The Committee may provide for complete or partial exceptions to such employment or service requirement if the Committee determines such action to be equitable.
(d) Performance Objectives. To the extent the Committee deems necessary or appropriate to protect the Company against the loss of deductibility pursuant to Section 162(m) of the Code, Restricted Stock Unit Awards may be subject to the attainment of one or more preestablished performance objectives which relate to corporate, subsidiary, division, group, or unit performance in terms of objective financial criteria or performance goals which satisfy the requirements of Section 162(m) of the Code; provided, that any such preestablished financial criteria or performance goals subsequently may be adjusted by the Committee to reduce or eliminate, but not to increase, a Restricted Stock Unit Award in order to take into account unforeseen events or changes in circumstances affecting the Company such as but not limited to changes in laws, regulations or accounting principles, mergers, acquisitions or divestitures, or other extraordinary, unusual, or nonrecurring items or events.
11. Stock Bonus Awards. The Committee may grant a Stock Bonus Award to an eligible grantee under the Plan based upon corporate, division, subsidiary, group, or unit performance in terms of preestablished objective financial criteria or performance goals or, with respect to participants not subject to Section 162(m) of the Code, such other measures or standards of performance (including but not limited to performance already accomplished) as the Committee may determine; provided, that any such preestablished financial criteria or performance goals subsequently may be adjusted to reduce or eliminate, but not to increase, a Stock Bonus Award in order to take into account unforeseen events or changes in circumstances affecting the Company such as but not limited to changes in laws, regulations or accounting principles, mergers, acquisitions or divestitures, or other extraordinary, unusual, or nonrecurring items or events.
If appropriate in the sole discretion of the Committee, Stock Bonus Awards shall be evidenced by agreements in such form as the Committee shall approve from time to time. In addition to any applicable performance goals or standards and subject to the terms of the Plan, shares of Common Stock which are the subject of a Stock Bonus Award may be (i) subject to additional restrictions (including but not limited to restrictions on transfer) or (ii) granted directly to a grantee free of any restrictions, as the Committee shall deem appropriate.
12. General Restrictions. Each award or grant under the Plan shall be subject to the requirement that if at any time the Committee shall determine that (i) the listing, registration, or qualification of the shares of Common Stock subject or related thereto upon any securities exchange or under any state or federal law, (ii) the consent or approval of any governmental regulatory body, or (iii) an agreement by the grantee of an award or grant with respect to the disposition of
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the shares of Common Stock subject or related thereto is necessary or desirable as a condition of, or in connection with, such award or grant or the issuance or purchase of shares of Common Stock thereunder, then such award or grant may not be consummated and any rights thereunder may not be exercised in whole or in part unless such listing, registration, qualification, consent, approval, or agreement shall have been effected or obtained upon conditions acceptable to the Committee. Awards or grants under the Plan shall be subject to such additional terms and conditions, not inconsistent with the Plan, as the Committee in its sole discretion deems necessary or desirable, including but not limited to such terms and conditions as are necessary to enable a grantee to avoid any short‑swing profit recapture liability under Section 16 of the Exchange Act.
13. Single or Multiple Agreements. Multiple forms of awards or grants or combinations thereof may be evidenced either by a single agreement or by multiple agreements, as determined by the Committee.
14. Rights of a Stockholder. Unless otherwise provided by the Plan, the grantee of any award or grant under the Plan shall have no rights as a stockholder of the Company with respect to the shares of Common Stock subject or related to such award or grant unless and until certificates for such shares of Common Stock are issued to such grantee or until uncertificated shares have been credited to an account established for such grantee.
15. No Right to Continue Employment or Service as a Director. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any grantee who is an employee of the Company or any Subsidiary the right to continue in the employment of the Company or any Subsidiary or affect any right which the Company or any Subsidiary may have to terminate the employment of such grantee with or without cause. Nothing in the Plan or in any agreement entered into pursuant to the Plan shall confer upon any grantee who is a non‑employee director of the Company the right to continue to serve as a director of the Company.
16. Withholding. The Company’s obligation to (i) deliver shares of Common Stock or pay cash upon the exercise of any Stock Option or Stock Appreciation Right, (ii) deliver shares of Common Stock or pay cash in payment of any Performance Unit Award, (iii) deliver stock certificates upon the vesting of any Restricted Stock Award, (iv) deliver shares of Common Stock or pay cash upon the vesting of any Restricted Stock Unit Award, or (v) deliver shares of Common Stock upon the grant of any Stock Bonus Award shall be subject to applicable federal, state, and local tax withholding requirements. In the discretion of the Committee, amounts required to be withheld for taxes may or must be paid by the grantee in cash or shares of Common Stock (either through the surrender of previously held shares of Common Stock or the withholding of shares of Common Stock otherwise issuable or deliverable upon the exercise, payment or vesting of such Stock Option, Stock Appreciation Right, or Award) having a Fair Market Value equal to the required tax withholding amount and upon such other terms and conditions as the Committee shall determine; provided, that any election by a grantee subject to Section 16(b) of the Exchange Act to pay any tax withholding in shares of Common Stock shall be subject to and must comply with any applicable rules under Section 16(b) of the Exchange Act.
17. Indemnification. No member of the Board or the Committee, and no officer or employee of the Company or a Subsidiary acting on behalf of the Board or the Committee, shall be personally liable for any action, determination, or interpretation taken or made in good faith with respect to the Plan or any award or option granted under the Plan; and all members of the Board or the Committee and each and any officer or employee of the Company or any Subsidiary acting on their behalf shall, to the fullest extent permitted by law, be fully indemnified and held harmless by the Company in respect of any such action, determination or interpretation.
18. Non‑Assignability. No award or grant under the Plan shall be assignable or transferable by the recipient thereof except by will, by the laws of descent and distribution, or, in the case of awards or grants other than Incentive Stock Options, pursuant to a qualified domestic relations order. No right or benefit under the Plan shall be liable for the debts, liabilities, or alimony or child support obligations of the person entitled to such right or benefit, either by assignment, attachment, or any other method, and shall not be subject to be taken by the creditors or alimony or child support obligees of the person entitled to such right or benefit by any process whatsoever.
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19. Nonuniform Determinations. The Committee’s determinations under the Plan (including but not limited to determinations of the persons to receive awards or grants, the form, amount, and timing of such awards or grants, the terms and provisions of such awards or grants and the agreements evidencing them, and the establishment of values and performance targets) need not be uniform and may be made by the Committee selectively among the persons who receive, or are eligible to receive, awards or grants under the Plan, whether or not such persons are similarly situated.
20. Adjustments. In the event of any change in the outstanding shares of Common Stock, by reason of a stock dividend or distribution, stock split, recapitalization, merger, reorganization, consolidation, split‑up, spin‑ off, combination of shares, exchange of shares, or other change in corporate structure affecting the Common Stock, the Committee shall make appropriate adjustments in (a) the aggregate number of shares of Common Stock (i) reserved for issuance under the Plan, (ii) for which grants or awards may be made to an individual grantee, and (iii) covered by outstanding awards and grants denominated in shares or units of Common Stock, (b) the exercise or other applicable price related to outstanding awards or grants, and (c) the appropriate Fair Market Value and other price determinations relevant to outstanding awards or grants and shall make such other adjustments not inconsistent with the provisions of Section 22 as may be equitable under the circumstances; provided, that the number of shares subject to any award or grant always shall be a whole number.
21. Terms of Payment. Subject to any other applicable provisions of the Plan and to any applicable laws, whenever payment by a grantee is required with respect to shares of Common Stock which are the subject of an award or grant under the Plan, the Committee shall determine the time, form, and manner of such payment, including but not limited to lump‑sum payments and installment payments upon such terms and conditions as the Committee may prescribe. Installment payment obligations of a grantee may be evidenced by full‑recourse, limited‑recourse, or non‑recourse promissory notes or other instruments, with or without interest and with or without collateral or other security as the Committee may determine.
22. Termination and Amendment. The Board may terminate the Plan or amend the Plan or any provision thereof at any time, including but not limited to amendments to the Plan necessary to comply with the requirements of Section 16(b) of the Exchange Act, Section 162(m) of the Code, Section 422 of the Code, or regulations issued under any of such statutory provisions. The termination or any amendment of the Plan shall not, withoutdecrease the consentnumber of a grantee, adversely affect such grantee’s rights under an award or grant previously madeShares already credited to such grantee under the Plan. The Committee may amendPlan accounts of Participants. If the terms of any award or grant previously madeBoard decreases the discount from Fair
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Market Value at which Shares are to be acquired under the Plan, prospectively or retroactively; but, subject tothen the provisions of Section 20, noCompany shall not implement such amendment shall, except as otherwise expressly permitted bychange until the Plan, adversely affect the rights of the granteethen Participants have been notified of such award or grant without such grantee’s consent. Except in connection withchange and have been given a transaction involving the Common Stock (such as but not limitedreasonable opportunity to a stock dividend, stock split, extraordinary cash dividend, recapitalization, reorganization, merger, consolidation, split‑up, spin‑off, combination of shares, or exchange of shares), the Committee may not, without stockholder approval, (i) amend the terms of an outstanding Stock Option so as to reduce the exercise price of such Stock Option, (ii) amend the terms of a Stock Appreciation Right so as to reduce the specified stock price applicable to such Stock Appreciation Right at the time of its grant, or (iii) cancel an outstanding Stock Option or Stock Appreciation Right in exchange for cash, other awards, Stock Options with an exercise price that is less than the exercise price of the original Stock Option, or Stock Appreciation Rights with a specified stock price that is less than the specified stock price applicable to the original Stock Appreciation Right. Notwithstanding the foregoing provisions of this Section 22, stockholder approval of any action referred to in this Section 22 shall be required whenever necessary to satisfy the applicable requirements of Section 16(b) of the Exchange Act, Section 162(m) of the Code, Section 422 of the Code, or any regulations issued under any of such statutory provisions or the applicable requirements of any market or exchange on which shares of the Common Stock are listed or traded.
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23. Severability. With respect to participants subject to Section 16 of the Exchange Act, (i) the Plan is intended to comply with all applicable conditions of Rule 16b‑3 or any successor to such rule, (ii) all transactions involving grantees who are subject to Section 16(b) of the Exchange Act are subject to such conditions, regardless of whether the conditions are expressly set forthcease participation in the Plan, and (iii) any provision of the Plan that is contrary to a condition of Rule 16b‑3 shall not apply to grantees who are subject to Section 16(b) of the Exchange Act. If any of the terms or provisions of the Plan, or awards or grants made under the Plan, conflict with the requirements of Section 162(m) or Section 422 of the Code with respect to awards or grants intended to be subject to or governed by Section 162(m) or Section 422 of the Code, as the case may be, then such terms or provisions shall be deemed to be inoperative to the extent they so conflict with the requirements of Section 162(m) or Section 422 of the Code, as the case may be. With respect to an Incentive Stock Option, if the Plan does not contain any provision required to be included in the Plan under Section 422 of the Code (as amended from time to time) or any successor to such section, then such provision shall be deemed to be incorporated in the Plan with the same force and effect as if such provision had been expressly set out in the Plan.
24. Effect on Other Plans.Securities Law Compliance Participation in the Plan shall not affect the eligibility of an employee or a non‑employee director. The obligation of the Company to participate in any other benefit or incentive plan of the Company or any Subsidiary. Any awards madesell and issue Shares pursuant to the Plan shall not be taken into accountis subject to the approval of any governmental authority required in determiningconnection with the benefits providedauthorization, issuance, or to be provided under any other plan of the Company or any Subsidiary unless otherwise specifically provided in such other plan.
25. Term of Plan. The Plan shall become effective on the date of its approval by the stockholders of the Company and shall terminate for purposes of further grants on the first to occur of (i) December 31, 2020, or (ii) the effective date of the termination of the Plan by the Board pursuant to Section 22. No awards or options may be granted under the Plan after the termination of the Plan, but such termination shall not affect any awards or options outstanding under the Plan at the timesale of such terminationShares and to the satisfaction of any legal preconditions to such issuance or the authoritysale.
Governing Law. The provisions of the Committee to continue to administer the Plan apart from the making of further grants.
26. Governing Law. The Plan shall be governed by and construed in accordance withaccording to the laws of the State of Delaware.
27. Section 409A.
(a) TimeNumber and FormGender. Unless the context otherwise requires, for all purposes of Payment. Notwithstanding anything containedthe Plan, words in the Plan orsingular include their plural, words in an award agreementthe plural include their singular, and words of one gender include the other genders.
Successors. The provisions of the plan shall be binding upon and inure to the contrary, the time and form of payment of an award that is subject to the limitations imposed by Section 409Abenefit of the Code shall be set forth in the applicable award agreement on or before the time at which the granteeCompany, each Participant, and their respective heirs, personal representatives, successors, and permitted assigns (if any).
Section Titles. The titles of the award obtains a legally binding right to the award (or such other time permitted under Section 409Avarious sections of the Code)Plan are for convenient reference only and such time and form of payment shall comply with the requirements of Section 409A of the Code.
(b) Delay in Payment. Notwithstanding anything contained in the Plan or an award agreement to the contrary, if the grantee of the award is deemed by the Company at the time of such grantee’s “separation from service” with the Company to be a “specified employee” as determined under Section 409A of the Code, any nonqualified deferred compensation to which such grantee is entitled under the Plan in connection with such separation from service shall not be paid or commence payment untilconsidered in the date which is the first business day following the six‑month period after such grantee’s separation from service (or if earlier, such grantee’s death). Such delay in payment shall only be effected with respect to each separate payment to the extent required to avoid adverse tax treatment to such grantee under Section 409Ainterpretation of the Code. Any compensation which would have otherwise been paid during the delay period (whether in a lump sum or in installments) in the absence of this Section 27 shall be paidCompany.
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CSG Systems International, Inc. 2016 Proxy Statement77
(c) Amendments. Notwithstanding anything in the Plan to the contrary, the Plan and awards granted under the Plan are intended to be eligible for certain regulatory exceptions to the limitations of, or to comply with, the requirements of Section 409A of the Code. The Committee, in the exercise of its sole discretion and without the consent of the grantee of an award under the Plan, may amend or modify the terms of an award in any manner and delay the payment of any amounts payable pursuant to an award to the minimum extent necessary to reasonably comply with the requirements of Section 409A of the Code, provided that the Company shall not be required to assume any increased economic burden. No action so taken by the Committee with respect to the requirements of Section 409A of the Code shall be deemed to adversely affect the rights of a grantee of an award under the Plan with respect to an award or to require the consent of such grantee. The Committee reserves the right to make additional changes to the Plan and awards from time to time to the extent it deems necessary with respect to Section 409A of the Code.
78 CSG Systems International, Inc. 2016 Proxy Statement
THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. KEEP THIS PORTION FOR YOUR RECORDS DETACH AND RETURN THIS PORTION ONLY TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: Signature [PLEASE SIGN WITHIN BOX] Date Signature (Joint Owners) Date 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0000272833_1 R1.0.1.25 CSG SYSTEMS INTERNATIONAL, INC. 9555 MAROON CIRCLE ENGLEWOOD, CO 80112 JOSEPH T. RUBLE VOTE BY INTERNET - www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you access the web site and follow the instructions to obtain your records and to create an electronic voting instruction form. ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to reduce the costs incurred by our company in mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically via e-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years. VOTE BY PHONE - 1-800-690-6903 Use any touch-tone telephone to transmit your voting instructions up until 11:59 P.M. Eastern Time the day before the cut-off date or meeting date. Have your proxy card in hand when you call and then follow the instructions. VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717. The Board of Directors recommends you vote FOR the following nominees: 1. Election of Directors Nominees For Against Abstain 1a Ronald H. Cooper 1b Janice I. Obuchowski 1c Donald B. Reed The Board of Directors recommends you vote FOR Proposals 2, 3, 4 and 5. For Against Abstain 2. To approve the Performance Bonus Program, as amended and restated; 3. To approve the material terms of the performance goals under the Amended and Restated 2005 Stock Incentive Plan; 4. To approve, on an advisory basis, our executive compensation; and 5. To ratify the appointment of KPMG LLP as our independent registered public accounting firm for fiscal 2016. NOTE: Any other business that properly comes before the meeting or any adjournment or postponement of the meeting. Please sign exactly as your name(s) appear(s) hereon. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name, by authorized officer.
0000272833_2 R1.0.1.25 Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting: The Notice and Proxy Statement and Form 10-K are available at www.proxyvote.com. CSG SYSTEMS INTERNATIONAL, INC. Annual Meeting of Stockholders May 26, 2016 8:00 AM CDT This proxy is solicited by the Board of Directors The undersigned hereby constitutes and appoints Bret C. Griess and Joseph T. Ruble, and each or either of them, as attorneys and proxies of the undersigned, with full power of substitution to each of them, to vote all shares of stock of CSG Systems International, Inc. (the "Company") standing in the name of the undersigned at the Annual Meeting of stockholders of the Company to be held at the Sofitel Chicago Water Tower Hotel, 20 East Chestnut Street, Chicago, Illinois, at 8:00 a.m. (Central Daylight Time) on May 26, 2016, and at any adjournments or postponements of the meeting, on the matters set forth on the reverse side hereof and in their discretion on any other matters that properly may come before such meeting or any adjournments thereof. THIS PROXY, WHEN PROPERLY SIGNED, WILL BE VOTED AS SPECIFIED. IF NO SPECIFICATION IS GIVEN, THIS PROXY WILL BE IN ACCORDANCE WITH THE BOARD OF DIRECTORS' RECOMMENDATIONS. The undersigned hereby ratifies and confirms all that either of such attorneys and proxies, or their substitutes, may do or cause to be done by virtue hereof and acknowledges receipt of the Notice of Annual Meeting of Stockholders of the Company to be held on May 26, 2016, the Proxy Statement of the Company for such Annual Meeting, and the 2015 Form 10-K of the Company. Continued and to be signed on reverse side
No repricing or replacing of underwater options without shareholder approval