Amendment No. 1
(MARK ONE)
☑ | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
For the fiscal year ended December 31, 2019 |
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
Delaware | 04-3099750 | |
(State or | (I.R.S. Employer Identification | |
P.O. Box 10212 | ||
56 Top Gallant Road | ||
Stamford, | ||
Connecticut | 06902-7700 | |
(Address of | (Zip Code) | |
Title of | Trading Symbol | Name of on which | registered | |
Common Stock, $0.0005 par value | IT | New York Stock Exchange |
None
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. þ
Large accelerated filer | ☑ | Accelerated filer | ☐ | Non-accelerated filer | ☐ | ||
Smaller reporting | ☐ | Emerging growth company | ☐ | ||||
If an emerging growth company, |
The number
outstanding.
None.
Explanatory Note
This Amendment No. 1 on Form 10-K/A (this “Amendment”) amends Gartner, Inc.’s Annual Report on Form 10-KThe definitive Proxy Statement for the year ended December 31, 2016, originally filed with the Securities and Exchange Commission, or SEC,Annual Meeting of Stockholders to be held on February 22, 2017 (the “Original Filing”). We are amending and refilingJune 8, 2020 is incorporated by reference into Part III to include information required by Items 10, 11, 12, 13 and 14. Accordingly, reference to the proxy statement for our annual meeting of stockholders on the cover page has been deleted.
In addition, pursuant to the rules of the SEC, we have also included as exhibits currently dated certifications required under Section 302 of The Sarbanes-Oxley Act of 2002. Because no financial statements are contained within this Amendment, we are not including certifications pursuant to Section 906 of The Sarbanes-Oxley Act of 2002. We are amending and refiling Part IV to reflect the inclusion of those certifications.
Except asextent described above, no other changes have been made to the Original Filing. Except as otherwise indicated herein, this Amendment continues to speak as of the date of the Original Filing, and we have not updated the disclosures contained therein to reflect any events that occurred subsequent to the date of the Original Filing. The filing of this Annual Report on Form 10-K/A is not a representation that any statements contained in items of our Annual Report on Form 10-K other than Part III, Items 10 through 14, and Part IV are true or complete as of any date subsequent to the Original Filing.
AMENDMENT NO. 1
to
FOR THE PERIOD ENDED DECEMBER 31, 2016
10-K
DIRECTORS
Our Board of Directors, or Board, currently has ten directors who serve for annual terms. Our Chief Executive Officer, Eugene A. Hall, has an employment agreement with the Company that obligates the Company to include him on the slate of nominees to be elected to our Board during the term of the agreement. SeeExecutive Compensation – Employment Agreements with Executive Officers included in Item 11 of this Annual Report on Form 10-K. There are no other arrangements between any director or nominee and any other person pursuant to which the director or nominee was selected. None of our directors or executive officers is related to another director or executive officer by blood, marriage or adoption.
Set forth below are the name, age, principal occupation for the last five years, public company board experience, selected additional biographical information and period of service as a director of the Company of each director, as well as a summary of each director’s experience, qualifications and background which, among other factors, support their respective qualifications to continue to serve on our Board.
• | RESEARCH. Gartner delivers independent, objective advice to leaders across an enterprise through subscription services that include on-demand access to published research content, data and |
• | CONFERENCES. Gartner attracts more than 85,000 business and technology |
• | |
CONSULTING. Through its experienced consultants, Gartner Consulting serves chief information officers and | |
EXECUTIVE OFFICERS
Set forth below
SECTION 16(A) BENEFICIAL OWNERSHIP REPORTING COMPLIANCE
Section 16(a)
CORPORATE GOVERNANCE
Code of Ethics and Code of Conduct
Gartner has adopted a CEO & CFO Code of Ethics, which applies to our CEO, CFO, controllerChief Executive Officer, Chief Financial Officer, Controller and other financial managers, and amanagers; (ii) Global Code of Conduct, which applies to all Gartner officers, directors and employees, wherever located. Annually,located; (iii) Principles and Practices of the Board of Directors of Gartner, Inc., the corporate governance principles that have been adopted by our Board; and (iv) charters for each officer, directorof the Board’s standing committees: Audit, Compensation and employee affirmsGovernance/Nominating.
DIRECTOR NOMINATIONS
There have been no material changeswide range of issues related to the procedurescountry’s revenue service, including the procurement and fulfillment of consulting agreements we entered into with the revenue service through a sales agent from late 2014 through early 2017. With respect to Gartner, the commission recommended that the revenue service explore lawful options to invalidate the agreements, in whole or in part, and attempt to recover certain payments it made to us. We are in ongoing discussions with the revenue service regarding the matter. In parallel with our cooperation in South Africa, we commenced an internal investigation regarding this matter and voluntarily disclosed to the SEC and Department of Justice (DOJ) in November 2018 that the commission was reviewing our procurement of these agreements. We are cooperating fully with the SEC and DOJ inquiries into this matter. At this time, we do not believe the ultimate outcome of these matters will have a material effect on our financial results, however, an unexpected adverse resolution of these matters could negatively impact our financial condition, results of operations, and liquidity.
AUDIT COMMITTEE
Gartner has a separately designated standing audit committee establishedour clients, which could materially adversely affect our business.
Period | Total Number of Shares Purchased (#) | Average Price Paid Per Share ($) | Total Number of Shares Purchased Under Announced Programs (#) | Maximum Approximate Dollar Value of Shares That May Yet Be Purchased Under the Plans or Programs (in thousands) | ||||||||||
October 1, 2019 to October 31, 2019 | 25,240 | $ | 138.99 | 25,094 | $ | 773,017 | ||||||||
November 1, 2019 to November 30, 2019 | 54,039 | 158.83 | 15,006 | 770,680 | ||||||||||
December 1, 2019 to December 31, 2019 | 360,836 | 153.85 | 358,877 | $ | 715,473 | |||||||||
Total for the quarter (1) | 440,115 | $ | 153.61 | 398,977 |
(1) | The repurchased shares during the three months ended December 31, 2019 included purchases for both the settlement of stock-based compensation awards and open market purchases. |
(In thousands, except per share data) | 2019 | 2018 | 2017 | 2016 | 2015 | |||||||||||
STATEMENT OF OPERATIONS DATA | ||||||||||||||||
Revenues: | ||||||||||||||||
Research | $ | 3,374,548 | $ | 3,105,764 | $ | 2,471,280 | $ | 1,857,001 | $ | 1,614,904 | ||||||
Conferences | 476,869 | 410,461 | 337,903 | 268,605 | 251,835 | |||||||||||
Consulting | 393,904 | 353,667 | 327,661 | 318,934 | 296,317 | |||||||||||
Other | — | 105,562 | 174,650 | — | — | |||||||||||
Total revenues | $ | 4,245,321 | $ | 3,975,454 | $ | 3,311,494 | $ | 2,444,540 | $ | 2,163,056 | ||||||
Operating income (loss) | $ | 370,087 | $ | 259,715 | $ | (6,329 | ) | $ | 305,141 | $ | 287,997 | |||||
Net income | $ | 233,290 | $ | 122,456 | $ | 3,279 | $ | 193,582 | $ | 175,635 | ||||||
PER SHARE DATA | ||||||||||||||||
Basic income per share | $ | 2.60 | $ | 1.35 | $ | 0.04 | $ | 2.34 | $ | 2.09 | ||||||
Diluted income per share | $ | 2.56 | $ | 1.33 | $ | 0.04 | $ | 2.31 | $ | 2.06 | ||||||
Weighted average shares outstanding: | ||||||||||||||||
Basic | 89,817 | 90,827 | 88,466 | 82,571 | 83,852 | |||||||||||
Diluted | 90,971 | 92,122 | 89,790 | 83,820 | 85,056 | |||||||||||
OTHER DATA | ||||||||||||||||
Cash and cash equivalents | $ | 280,836 | $ | 156,368 | $ | 538,908 | $ | 474,233 | $ | 372,976 | ||||||
Total assets | 7,151,294 | 6,201,474 | 7,283,173 | 2,367,335 | 2,168,517 | |||||||||||
Long-term debt | 2,067,796 | 2,146,514 | 2,943,341 | 672,500 | 790,000 | |||||||||||
Stockholders’ equity (deficit) | 938,593 | 850,757 | 983,465 | 60,878 | (132,400 | ) | ||||||||||
Cash provided by operating activities | $ | 565,436 | $ | 471,158 | $ | 254,517 | $ | 365,632 | $ | 345,561 |
• | On January 1, 2019, the Company adopted Accounting Standards Update No. 2016-02, Leases, which resulted in a net increase of $638.7 million in its total assets on that date. The adoption of this new lease standard did not affect the Company's stockholders’ equity. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases provide additional information regarding the Company's adoption of Accounting Standards Update No. 2016-02. |
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion & Analysis, or “CD&A”, describes and explains the Company’s compensation philosophy and executive compensation program, as well as compensation awarded to and earned by,
• | Conferences provides business professionals across an organization the opportunity to learn, share and network. From our Gartner Symposium/Xpo series, to industry-leading conferences focused on specific business roles and topics, to peer-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. |
• | Consulting combines the power of Gartner market-leading research with custom analysis and on-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action. |
The CD&A is organized into three sections:
BUSINESS SEGMENT | BUSINESS MEASUREMENT | |
Research | ||
The CD&A is followed by the Compensation Tables and Narrative Disclosures, which report and describe the compensation and benefit amounts paid to our NEOs in 2016.
EXECUTIVE SUMMARY
Contract Value – A Unique Key Performance Metric for Gartner
Total contract value |
Unique to the business of Gartner, Contract Value is oursingle most important performance metric. It focuses all of our executives on driving bothshort-term andlong - term success for our business and stockholders.
Contract Value = Both Short-Termand Long-Term Measures of Success
Comparing CV year over year measures the short term growth of our business. More importantly, CV is also an appropriate measure of long – term performance due to the nature of our Research subscription business. Our Research business is our largest business segment (75% of 2016 gross revenues) with our highest margins (69% for 2016). Our Research enterprise client retention (84% in 2016) and retained contract value (104% enterprise wallet retention in 2016) are consistently very high. The combination of annual contracts and high renewal rates are predictive of revenuehighly likely to recur over a 3 – 5 year period.
Accordingly, growing CV drives bothshort- term andlong – term corporate performance and shareholder value due to these unique circumstances. As such, all Gartner executives and associates are focused at all times on growing CV. This, coupled with the fact that our investors are also focused on this metric, ensures that we are aligned on the long - term success of the Company.
Record 2016 Performance
2016 was another year of record achievements for Gartner:
Client retention rate represents a measure of client satisfaction and | ||
Wallet retention rate represents a measure of the amount of contract value we have retained with clients over a twelve-month period. Wallet retention is calculated on a percentage basis by dividing the contract value of our current clients, who were also clients a year | ||
Conferences | Number of destination conferences represents the total number of hosted destination conferences completed during the period. Single day, local meetings are excluded. | |
Number of destination conferences attendees represents the total number of people who attend destination conferences. Single day, local meetings are excluded. | ||
Consulting | Consulting backlog represents future revenue to | |
Utilization rate represents a measure of productivity of our consultants. Utilization rates |
*In the disclosure included in this Item 11, EBITDA refers to Normalized EBITDA, which represents operating income excluding depreciation, accretion on obligations related to excess facilities, amortization, stock-based compensation expense and acquisition-related adjustments. EPS refers to diluted EPS excluding acquisition adjustments.
Gartner 2016 Performance Charts (CV and EBITDA $ in millions)
The laser focus throughout our global organization on growing CV has resulted in a strong, sustained track record of growth across this measure, as well as EBITDA and EPS, over many years, as the following charts demonstrate.
These strong results have fueled stock price growth which leads all comparison groups as follows:
Key Attribute of our Executive Compensation Program – Pay for Performance
Our executive compensation plan design has successfully motivated senior management to drive outstanding corporate performance since it was first implemented in 2006. It is heavily weighted towards incentive compensation.
Its key features are as follows:
Billing rate represents earned billable revenue divided by | ||
Average annualized revenue per billable headcount represents a measure of | ||
Our Compensation Best Practices
Our compensation practices motivate
COMPENSATION SETTING PROCESS FOR 2016
This discussion explains the objectives of the Company’s compensation policies; whatCompany's common stock for an aggregate purchase price of approximately $194.0 million.
The Objectivesuse of the Company’s Compensation Policies
The objectives of our compensationestimates. Our significant accounting policies are threefold:
Whatdescribed in Note 1 — Business and Significant Accounting Policies in the Compensation Program Is DesignedNotes to Reward
Our guiding philosophy is thatConsolidated Financial Statements. Management considers the more executive compensation is linked to corporate performance, the stronger the inducement is for management to strive to improve Gartner’s performance. In addition, we believe that the design of the total compensation package must be competitive with the marketplace from which we hire our executive talent in order to achieve our objectives and attract and retain individuals who are critical to our long-term success. Our compensation program for executive officers is designed to compensate individuals for achieving and exceeding corporate performance objectives. We believe this type of compensation encourages outstanding team performance (not simply individual performance), which builds stockholder value.
Both short-term and long-term incentive compensation is earned by executives only upon the achievement by the Company of certain measurable performance objectives that are deemed by the Compensation Committee and managementpolicies discussed below to be critical to the Company’s short-term and long-term success. The amount of compensation ultimately earned will increase or decrease depending upon Company performance and the underlying pricean understanding of our Common Stock (in the caseconsolidated financial statements because their application requires complex and subjective management judgments and estimates. Specific risks for these critical accounting policies are also described below.
Principal Compensation Elementsour consolidated financial statements requires us to make estimates and Objectives
To achieve the objectives noted above, we have designed executive compensation to consist of three principal elements:
How the Company Determines Executive Compensation
In General
The Company set aggressive performance goals in planning 2016 executive compensation. In order for our executives to earn target compensation, the Company needed to exceed double digit growth in two key performance metrics, as discussed below.
The Compensation Committee established performance objectives for short-term (bonus) and long-term (equity) incentive awards at levels that it believed would motivate performance and be adequately challenging. The target performance objectives were intended to compel the level of performance necessary to enable the Company to achieve its operating plan for 2016.
As in prior years, the short- and long-term incentive compensation elements provided executives with opportunities to increase their total compensation package based upon the over-achievement of corporate performance objectives; similarly, in the case of under-achievement of corporate performance objectives, the value of these incentive elements would fall below their target value (with the possibility of total forfeiture of the short-term element and 70% of the long-term element), and total compensation would decrease correspondingly. We assigned greater weight to the long-term incentive compensation element, as compared to the salary and short-term elements, in order to promote long-term decision-making that would deliver top corporate performance, align management to stockholder interests and retain executives. We believe that previously granted and unvested equity awards serve as a strong retention incentive.
Salary, short-term and long-term incentive compensation levels for executive officers (other than the CEO) are recommended by the CEO and are subject to approval by the Compensation Committee. In formulating his recommendation to the Compensation Committee, the CEO undertakes a performance review of these executives and considers input from human resources personnel at the Company, as well as benchmarking dataother factors, including the general economic environment and actions we may take in the future. We adjust such estimates when facts and circumstances dictate. However, our estimates may involve significant uncertainties and judgments and cannot be determined with precision. In addition, these estimates are based on our best judgment at a point in time and, as such, they may ultimately differ materially from actual results. Ongoing changes in our estimates could be material and would be reflected in the compensation consultantCompany’s consolidated financial statements in future periods.
Salary, short-term and long-term incentive compensation levels
Effect of Stockholder Advisory Vote on Executive Compensation, or Say on Pay
The Board has resolved to present Say on Pay proposals to stockholdersAmerica under FASB Accounting Standards Codification ("ASC") Topic 840,
Benchmarking and Peer Group
Executive compensation planning for 2016 began mid-year in 2015. Our Compensation Committee commissioned Exequity, an independent compensation consultant, to perform a competitive analysis of our executive compensation practices (the “Compensation Study”). Exequity’s findings were considered by the Compensation Committee and by management in planning our 2016 executive compensation program. The Compensation Study utilized market data provided by Aon Hewitt pertaining to 2015 compensation paid to individuals occupying senior executive positions at Gartner’s selected peer group of companies for executive compensation benchmarking purposes (the “Peer Group”).
The Compensation Committee reviews the Peer Group annually to ensure comparability based on Gartner’s operating characteristics, labor market relevance and defensibility. The 2016 competitive analysis compared Gartner’s target compensationrequired cumulative effect adjustments to the Peer Group. The Peer Group comprised 14 publicly-traded high tech
companies that resemble Gartner in size (in terms of revenues and number of employees), have a similar business model and with whom Gartner competes for executive talent. Gartner ranked at the 36th percentile in revenues and 43rd percentile in market cap relative to the Peer Group. Peer Group companies included:
Management and the Compensation Committee concluded that the Peer Group, which remained unchanged from the prior year with the exception of the removal of three companies that no longer reported due to acquisitions or privatization, was appropriate for 2016 executive compensation planning purposes given their continued comparability to Gartner.
The Compensation Committee does not target NEO’s pay to a specified percentile, but rather reviews Peer Group market data at the 25th, 50th and 75th percentile for each element of compensation, including Base Salary, Target Total Cash (Base Salary, plus Target Bonus) and Target Total Compensation (Target Total Cash plus long-term incentives).
The result of the competitive analysis indicated that Gartner’s CEO and NEO Base Salary approximated the Peer Group median, Target Total Cash was below the Peer Group median and Target Total Compensation approximated the median of the Peer Group. As a result, in order to remain competitiveopening balance sheet in the market place and in lightperiod of Gartner’s philosophy to pay a greater percentage of total compensation in the form of performance-based compensation and, in particular, performance-based long-term incentive compensation, the Committee approved a 3% merit increase to base salary, a 5% increase in the short term incentive compensation (bonus) percentage and a 8% merit increase to the long-term incentive compensation award value for all NEOs (other than Mr. Safian). Mr. Safian is relatively new in his role of CFO, and as a result trailed the market median of the Peer Group in all elements of compensation, consistent with the Company’s philosophy of moving executives to fully competitive rates over two to three years. As such, in 2016 the Committee adjusted his compensation to more closely approximate the Peer Group median by increasing his base salary by 10%, increasing his bonus target by 5% and increasing his long-term incentive award by 18.6%.
In addition, the Compensation Committee annually reviews an analysis conducted by Exequity that evaluates the connection between Gartner’s executive pay and Company performance as measured by Total Shareholder Return and Shareholder Value against the relationship exhibited by Gartner’s peer companies. The analysis indicates that pay realized by Gartner’s NEOs is generally well aligned with proven financial results. Gartner has historically performed above its peer group median and has paid at or above median total compensation which is consistent with the Company’s pay-for-performance philosophy.
Executive Compensation Elements Generally
Pay Mix
The following pie charts illustrate the relative mix of target compensation elements for the NEOs in 2016. Long-term incentive compensation consists of performance-based restricted stock units (PSUs) and stock appreciation rights (SARs), and represents a majority of the compensation we pay to our NEOs – 81% to the CEO and 60% to all other NEOs. We allocate more heavily to long-term incentive compensation because we believe that it contributes to a greater degree to the delivery of top performance and the retention of employees than does cash and short-term compensation (bonus).
Base Salary
We set base salaries of executive officers when they join the Company or are promoted to an executive role, by evaluating the responsibilities of the position, the experience of the individual and the marketplace in which we compete for the executive talent we need. In addition, where possible, we consider salary information for comparable positions for members of our Peer Group or other available benchmarking data. In determining whether to award salary merit increases, we consider published projected U.S. salary increase data for the technology industry and general market, as well as available world-wide salary increase data. Mr. Hall’s salary increase is established each year by the Compensation Committee after completion of Mr. Hall’s performance evaluation for the preceding year.
Short-Term Incentive Compensation (Cash Bonuses)
All bonuses to executive officers are awarded pursuant to Gartner’s stockholder-approved Executive Performance Bonus Plan. This plan is designed to motivate executive officers to achieve goals relating to the performance of Gartner, its subsidiaries or business units, or other objectively determinable goals, and to reward them when those objectives are satisfied. We believe that the relationship between proven performance and the amount of short-term incentive compensation paid promotes, among executives, decision-making that increases stockholder value and promotes Gartner’s success. Bonuses awarded under this plan to eligible employees are designed to qualify as deductible performance-based compensation within the meaning of Code Section 162(m).
In 2016, bonus targets for all executive officers, including Mr. Hall, were based solely upon achievement of 2016 company-wide financial performance objectives (with no individual performance component). The financial objectives and weightings used for 2016 executive officer bonuses were:
2016 Earnings Before Interest, Taxes, Depreciation and Amortization (EBITDA), which measures overall profitability from business operations (weighted 50%), on a foreign exchange neutral basis, and
Contract Value (CV) at December 31, 2016, which measures the long–term prospects of our business (weighted 50%), on a foreign exchange neutral basis.
As noted earlier, management and our Compensation Committee continue to believe that EBITDA and CV are the most significant measurements ofprofitabilityand long-term business growth for our Company, respectively. They have been successfully used for several years as performance metrics applicable to short-term incentive compensation that drive business performance and that motivate executive officers to achieve outstanding performance.
For 2016, each executive officer was assigned a bonus target that was expressed as a percentage of salary, varied from 50% to 100% of salary depending upon the executive’s level of responsibility and in most cases was 5% greater than the previous year. Salaries and bonuses were each increased by the amount of the merit increase. With respect to our NEOs, 2016 bonus targets, as a percentage of base salary, were 105% for Mr. Hall and 70% for each of Messrs. Safian, Waern, Godfrey and Dawkins. The maximum payout for 2016 bonus was 200% of target if the maximum level of EBITDA and CV were achieved; the minimum payout was $0 if minimum levels were not achieved.
The chart below describes the performance metrics applicable to our 2016 short–term incentive compensation element. As noted above, for this purpose actual results, measured on a foreign exchange neutral basis, were as follows:
2016 Performance Objective/ Weight | Target (100%) | Target Growth YOY | < Minimum (0%) | =/> Maximum (200%) | Actual (measured at 12/31/16) | Payout (% of Target) | Actual Growth YOY | |||||||||||||||||||||||
2016 EBITDA/50% | $458 million | 13.6 | % | $363 million | $480 million | $446 million | 90.3 | % | 10.7 | % | ||||||||||||||||||||
12/31/16 Contract Value/50% | $1,884 million | 11 | % | $1,527 million | $1,969 million | $1,930 million | 162.0 | % | 13.7 | % |
In 2016, the Company exceeded both the EBITDA and CV target performance objectives. Since each objective was weighted 50%, based on these results, the Compensation Committee determined that earned cash bonuses for executive officers were 126.2% of target bonus amounts. These bonuses were paid in February 2017. SeeSummary Compensation Table – Non-Equity Incentive Plan Compensation elsewhere in this Item 11 for the amount of cash bonuses earned by our Named Executive Officers in 2016. While the Compensation Committee has discretion to eliminate or reduce a bonus award, it did not take any such action in 2016.
Long - Term Incentive Compensation (Equity Awards)
Promoting stock ownership is a key element of our compensation program philosophy. Stock-based incentive compensation awards –especially when they are assigned a combination of performance and time-based vesting criteria – induce enhanced performance, promote retention of executive officers and align executives’ personal rewards with long-term stock price appreciation, thereby integrating management and stockholder interests. We have evaluated different types of long-term incentives based on their motivational value, cost to the Company and appropriate share utilization under our stockholder-approved 2014 Long-Term Incentive Plan (“2014 Plan”) and have determined that stock-settled stock appreciation rights (“SARs”) and performance-based restricted stock units (“PSUs”) create the right balance of motivation, retention, alignment with stockholders and share utilization.
SARs permit executives to benefit from an increase in stock price over time. SAR value can be realized only after the SAR vests. Our SARs are stock-settled and may be exercised seven years from grant. When the SAR is exercised, the executive receives shares of our Common Stock equal in value to the aggregate appreciation in the price of our Common Stock from the date of grant to the exercise date for all SARs exercised. Therefore, SARs only have value to the extent the price of our Common Stock exceeds the grant price of the SAR. In this way, SARs motivate our executives to increase stockholder value and thus align their interests with those of our stockholders.
PSUs offer executives the opportunity to receive our Common Stock contingent on the achievement of performance goals and continued service over the vesting period. PSU recipients are eligible to earn a target fixed number of restricted stock units if and to the extent stipulated one-year performance goals are achieved. They can
earn more units if the Company over-performs (up to 200% of their target number of units), and they will earn fewer units (and potentially none) if the Company under-performs. Shares of Common Stock subject to earned PSU awards are released to the executive on the date they vest, or 25% per year over four years, commencing on the anniversary of the grant date, thereby encouraging executives to increase stockholder value while promoting executive retention over the long-term. Released shares have value even if our Common Stock price does not increase, which is not the case with SARs.
Consistent with weightings in prior years, 30% of each executive’s long-term incentive compensation award value was granted in SARs and 70% was granted in PSUs. PSUs deliver value utilizing fewer shares since the executive can earn the full share rather than just the appreciation in value over the grant price (as is the case with SARs). Additionally, the cost efficiency of PSUs enhances the Company’s ability to conservatively utilize the Plan share pool, which is why we convey a larger portion of the 2014 overall long-term incentive compensation value in PSUsadoption rather than in SARs. Forthe earliest comparative period presented. As such, the Company's historical consolidated financial statements have not been restated. Certain permitted practical expedients were used by the Company upon adoption of the new lease standard, including: (i) combining lease and nonlease components as a single lease component for purposes of determining the number of SARs awarded, the allocated SAR award value is divided by the Black-Scholes-Merton valuationrecognition and measurement requirements under ASU No. 2016-02; (ii) not reassessing a lease arrangement to determine if its classification should be changed under ASU No. 2016-02; and (iii) not reassessing initial direct costs for leases that were in existence on the date of grant using assumptions appropriateadoption.
Both SARs and PSUs vest 25% per year commencing one (1) year from grant and on each anniversary thereof, subject to continued service on the vesting date. We believe that this vesting schedule effectively focuses our executives on delivering long-term value growth for our stockholders and drives retention.Company’s consolidated balance sheets). The maximum payout for 2016 PSUs was 200% of target if the maximum level of CV was achieved; the PSUs are subject to forfeiture if minimum levels are not achieved.
The Compensation Committee approved CV (measured at December 31, 2016) as the performance measure underlying PSUs awarded in 2016. As noted earlier, we continue to believe that CV is the best performance metric to measure the long–term prospects of our business. At the present time, most of these contracts have multi – year terms. For this reason, CV growth continues to be predictive of future revenue for the PSU award.
The chart below describes the performance metrics applicable to the PSU portion of our 2016 long–term incentive compensation element measured on a foreign exchange neutral basis:
2016 Performance Objective/Weight | Target (100%) | Target Growth YOY | <Minimum (0%) | Maximum (200%) | Actual (measured at 12/31/16) | Payout (% of Target) | Actual Growth YOY | |||||||||||||||||||||||
Contract Value/100% | $1,884 million | 11 | % | $1,527 million | $1,969 million | $1,930 million | 162.0 | % | 13.7 | % |
As noted above, in 2016 actual CV was $1,930 million, exceeding the target amount. Based on this, the Compensation Committee determined that 162.0% of the target number of PSUs would be awarded. The PSUs were adjusted by this factor in February 2017 after certification of the achievement of this performance measure by the Compensation Committee, and 25% of the adjusted awards vested on the first anniversary of the grant date. SeeGrants of Plan-Based Awards Table – Possible Payouts Under Equity Incentive Plan Awards and accompanying footnotes elsewhere in this Item 11 for the actual number of SARs and PSUs awarded to our Named Executive Officers in 2016.
No performance objectives for any PSU intended to qualify under Code Section 162(m) (i.e., awards to executive officers) may be modified by the Committee. While the Committee does have discretion to modify other aspects of the awards (subject to the terms of the Plan), no modifications were made in 2016.
Additional Compensation Elements
We maintain a non-qualified deferred compensation plan for our highly compensated employees, including our executive officers, to assist eligible participants with retirement and tax planning by allowing them to defer compensation in excess of amounts permitted to be deferred under our 401(k) plan. This plan allows eligible
participants to defer up to 50% of base salary and/or 100% of bonus to a future period. In addition, as a further inducement to participation in this plan, the Company presently matches contributions by executive officers, subject to certain limits. For more information concerning this plan, seeNon-Qualified Deferred Compensation Tableand accompanying narrative and footnotes elsewhere in this Item 11.
In order to further achieve our objective of providing a competitive compensation package with great retention value, we provide various other benefits to our executive officers that we believe are typically available to, and expected by, persons in senior business roles. Our basic executive perquisites program includes 35 days paid time off (PTO) annually, severance and change in control benefits (discussed below) and relocation services where necessary due to a promotion. Mr. Hall’s perquisites, severance and change in control benefits are governed by his employment agreement with the Company, which is discussed in detail underEmployment Agreements With Executive Officers – Mr. Hallelsewhere in this Item 11. For more information concerning perquisites, seeOther Compensation Table and accompanying footnotes elsewhere in this Item 11.
OTHER COMPENSATION POLICIES AND INFORMATION
Executive Stock Ownership and Holding Period Guidelines
In order to align management and stockholder interests, the Company has adopted stock ownership guidelines for our executive officers as follows: the CEO is required to hold shares of Common Stock with a value at least equal to six (6) times his base salary, and all other executive officers are required to hold shares of Common Stock with a value at least equal to three (3) times their base salary. For purposes of computing the required holdings, officers may count shares directly held, as well as vested and unvested restricted stock units and PSUs, but not options or SARs.
Additionally, the Company imposes a holding period requirement on our executive officers.If an executive officer of the Company is not in compliance with the stock ownership guidelines, the executive is required to maintain ownership of at least 50% of the net after-tax shares of common stock acquired from the Company pursuant to any equity-based awards – PSUs and SARs - received from the Company, until such individual’s stock ownership requirement is met. At December 31, 2016, our CEO and all other executive officers were in compliance with these guidelines.
Clawback Policy
The Company has adopted a clawback policy which provides that the Board of Directors (or a committee thereof) may seek recoupment to the Company from a current or former executive officer of the Company who engages in fraud, omission or intentional misconduct that results in a required restatement of any financial reporting under the securities or other laws, and that the cash-based or equity-based incentive compensation paid to the officer exceeds the amount that should have been paid based upon the corrected accounting restatement, resulting in an excess payment. Recoupment includes the reimbursement of any cash-based incentive compensation (bonuses) paid to the Executive, cancellation of vested and unvested performance-based restricted stock units, stock options and stock appreciation rights, and reimbursement of any gains realized on the sale of released stock unit awards and the exercise of stock options or stock appreciation rights and subsequent sale of underlying shares
Pursuant to the Dodd-Frank Act, the SEC has issued proposed rules applicable to the national securities exchanges (including the NYSE on which our Common Stock is listed for trading) prohibiting the listing of any security of an issuer that does not provide for the recovery of erroneously awarded incentive-based compensation where there has been an accounting restatement. We are awaiting adoption of the final SEC rules on this matter, at which time we will determine whether an amendment to our policy is necessary.
Hedging and Pledging Policies
The Company’s Insider Trading Policy prohibits all executive officers and directors from engagingnew lease standard resulted in any short selling, hedging and/or pledging transactions with respect to Company securities.
Accounting and Tax Impact
In setting compensation, the Compensation Committee and management consider the potential impactrecognition of Code Section 162(m), which precludes a public corporation from deducting on its corporate income tax return individual compensation in excess of $1operating lease liabilities aggregating $851.3 million for its chief executive officer or any of its three other highest-paid officers (other than the chief financial officer). Section 162(m) also provides for certain exemptions to this limitation, specifically compensation that is performance-based (within the meaning of Section 162(m)) and issued under a stockholder-approved plan. Our 2016 short-term incentive (bonus) awards were performance-based and were made pursuant to our stockholder-approved Executive Performance Bonus Plan and, therefore, are deductible under Section 162(m). The PSU component of the 2016 long–term incentive award was performance-based and issued under the 2014 Plan, which has been approved by stockholders and, therefore, is deductible under Section 162(m). Although the Compensation Committee endeavors to maximize deductibility of compensation under Section 162(m), it maintains the discretion in establishing compensation elements to approve compensation that may not be deductible under Section 162(m), if the Committee believes the compensation element to be necessary or appropriate under the circumstances.
Grant of Equity Awards
The Board of Directors has a formal policy with respect to the grant of equity awards under our equity plans. Under our 2014 Long Term Incentive Plan, equity awards may include stock options, stock appreciation rights (SARs), restricted stock awards (RSAs), restricted stock units (RSUs) and performance-based restricted stock units (PSUs). The Committee may not delegate its authority with respect to Section 16 persons, nor in any other way which would jeopardize the plan’s qualification under Code Section 162(m) or Exchange Act Rule 16b-3. Accordingly, our policy specifies that all awards to our Section 16 executive officers must be approved by the Compensation Committee on or prior to the award grant date, and that all such awards will be made and pricedbased on the date of Compensation Committee approval, except in the case of new hires, which is discussed below.
Our equity plan provides for a minimum vesting period of 12 months on all equity awards, subject to certain limited exceptions. It also prohibits the repricing of stock options and the surrender of any outstanding option to the Company as consideration for the grant of a new option with a lower exercise price without stockholder approval. It also prohibits the granting of options with an exercise price less than the fair marketpresent value of the Company’s common stock onremaining minimum lease payments, while the datecorresponding right-of-use assets totaled $651.9 million. Additionally, the Company’s adoption of grant, andASU No. 2016-02 resulted in a cash buyoutnet increase of out-of-the-money options or SARs without stockholder approval.
Consistent with the equity plan, the Compensation Committee annually approves a delegation of authority to the CEO to make equity awards under our equity Plan to Gartner employees (other than Section 16 reporting persons) on account of new hires, retention or promotion without the approval of the Compensation Committee. In 2016, the delegation of authority specified a maximum grant date award value of $500,000 per individual, and a maximum aggregate grant date award value of $2,000,000 for the calendar year. For purposes of this computation,$638.7 million in the case of RSAs, RSUs and PSUs, value is calculated based upon the fair market value (defined as the closing price on the date of grant as reported by the New York Stock Exchange) of a share of our Common Stock, multiplied by the number of RSAs, RSUs or PSUs awarded. In the case of options and SARs, the grant date value of the award will be the Black-Scholes-Merton calculation of the value of the award using assumptions appropriate on the award date. Any awards made under the CEO-delegated authority are reported to the Compensation Committee at the next regularly scheduled committee meeting.
As discussed above, the structure and value of annual long-term incentive awards comprising the long-term incentive compensation element of our compensation package to executive officers are established and approved by the Compensation Committee in the first quarter of each year. The specific terms of the awards (number of PSUs and SARs and related performance criteria) are determined, and the awards are approved and made, on the same date and after the release of the Company’s prior year financial results.
It isTotal Assets and Total Liabilities; however, there was no effect on the Company’s policyTotal Stockholders’ Equity. The Company’s Consolidated Statements of Operations and its cash provided by operating activities in the Consolidated Statements of Cash Flows for 2019 were not to make equity awards to executive officers prior to the release of material non-public information. The 2016 incentive awards to executive officers were approvedmaterially impacted by the Compensation Committee and made on February 8, 2016, after release of our 2015 financial results. Generally speaking, awards for newly hired executives that are given as an inducement to joining the Company are made on the 15th or 30th dayadoption of the month first following the executive’s start date (and after approval by the Compensation Committee),new lease standard. Note 1 — Business and retentionSignificant Accounting Policies and promotion awards are made on the 15th or 30th day of the month first following the date of Compensation Committee approval; however, we may delay making these awards pending the release of material non-public information.
COMPENSATION COMMITTEE REPORT
The Compensation Committee of the Board of Directors of Gartner, Inc. has reviewed and discussed the Compensation Discussion and Analysis with management. Based upon this review and discussion, the Compensation Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016.
Compensation Committee of the Board of Directors
Anne Sutherland Fuchs
Michael J. Bingle
Raul E. Cesan
March 6, 2017
The foregoing compensation committee report shall not be deemed incorporated by reference into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934, and shall not otherwise be deemed filed under these acts, except to the extent we specifically incorporate by reference into such filings.
COMPENSATION TABLES AND NARRATIVE DISCLOSURES
All compensation data contained in this section is stated in U.S. Dollars.
Summary Compensation Table
This table describes compensation earned by our CEO, CFO and next three most highly compensated executive officers (collectively, the “Named Executive Officers” or “NEOs”) in the years indicated. As you can see from the table and consistent with our compensation philosophy discussed above, long-term incentive compensation in the form of equity awards comprises a significant portion of total compensation.
Name and Principal Position | Year | Base Salary (1) | Stock Awards (2) | Option Awards (2) | Non-Equity Incentive Plan Compensation (1), (3) | All Other Compensation (4) | Total | ||||||||||||||||
Eugene A. Hall, Chief Executive Officer (PEO) (5) | 2016 | $ | 901,584 | $ | 5,608,763 | $ | 2,403,764 | $ | 1,203,451 | $ | 141,364 | $ | 10,258,926 | ||||||||||
2015 | 875,324 | 5,193,290 | 2,225,705 | 1,215,044 | 135,844 | 9,645,207 | |||||||||||||||||
2014 | 847,831 | 4,721,176 | 2,023,365 | 1,273,821 | 115,034 | 8,981,227 | |||||||||||||||||
Craig W. Safian, SVP & Chief Financial Officer (PFO) | 2016 | 503,260 | 999,949 | 428,561 | 454,951 | 54,712 | 2,441,433 | ||||||||||||||||
2015 | 457,402 | 842,783 | 361,205 | 419,223 | 28,239 | 2,108,852 | |||||||||||||||||
2014 | 409,869 | 949,977 | — | 321,216 | 11,349 | 1,692,411 | |||||||||||||||||
Per Anders Waern, SVP, Gartner Consulting | 2016 | 448,115 | 834,385 | 357,588 | 398,769 | 59,569 | 2,098,426 | ||||||||||||||||
2015 | 435,063 | 772,577 | 331,090 | 392,545 | 50,480 | 1,981,755 | |||||||||||||||||
2014 | 418,531 | 702,314 | 300,999 | 379,877 | 41,991 | 1,843,712 | |||||||||||||||||
David Godfrey, SVP, Sales | 2016 | 448,115 | 834,385 | 357,588 | 398,769 | 54,742 | 2,093,599 | ||||||||||||||||
Alwyn Dawkins, SVP, Events | 2016 | 448,115 | 834,385 | 357,588 | 398,769 | 54,065 | 2,092,922 | ||||||||||||||||
2015 | 435,063 | 772,577 | 331,090 | 392,545 | 50,637 | 1,981,912 | |||||||||||||||||
2014 | 418,531 | 702,314 | 300,999 | 379,877 | 41,571 | 1,843,292 |
(1) All NEOs elected to defer a portion of their 2016 salary and/or 2016 bonus under the Company’s Non-Qualified Deferred Compensation Plan. Amounts reported include the 2016 deferred portion, and accordingly does not include amounts, if any, released in 2016 from prior years’ deferrals. SeeNon-Qualified Deferred Compensation Tableelsewhere in this Item 11.
(2) Represents the aggregate grant date fair value computed in accordance with FASB ASC Topic 718 for performance restricted stock units, or PSUs (Stock Awards) and stock-settled stock appreciation rights, or SARs (Option Awards) granted to Messrs. Hall, Safian, Waern, Godfrey and Dawkins. The value reported for the PSUs is based upon the probable outcome of the performance objective as of the grant date, which is consistent with the grant date estimate of the aggregate compensation cost to be recognized over the service period, excluding the effect of forfeitures, for the target grant date award value. The potential maximum value of the PSUs, assuming attainment of the highest level of the performance conditions, is 200% of the target value, and all PSUs and SARs are subject to forfeiture. There were no forfeitures in 2016. See also Note 8 – Stock-Based Compensation -7 — Leases in the Notes to Consolidated Financial Statements containedprovide additional information regarding the Company's leases and the adoption of ASU No. 2016-02.
December 31, | |||||||
2019 | 2018 | ||||||
Gross fees receivable | $ | 1,334,012 | $ | 1,262,818 | |||
Allowance for losses | (8,000 | ) | (7,700 | ) | |||
Fees receivable, net | $ | 1,326,012 | $ | 1,255,118 |
(3) Represents performance-basedacquired intangible assets.
(4) SeeOther Compensation Table elsewhere in this Item 11for additional information.
(5) Mr. Hall is a party to an employment agreement with the Company.See Employment Agreements With Executive Officers – Mr. Hallelsewhere in this Item 11.
Other Compensation Table
This table describes each component
Name | Year | Company Match Under Defined Contribution Plans (1) | Company Match Under Non-qualified Deferred Compensation Plan (2) | Other (3) | Total | |||||
Eugene A. Hall | 2016 | 7,200 | 75,951 | 58,213 | 141,364 | |||||
2015 | 7,200 | 78,766 | 49,878 | 135,844 | ||||||
2014 | 7,000 | 60,563 | 47,471 | 115,034 | ||||||
Craig W. Safian | 2016 | 7,200 | 28,841 | 18,671 | 54,712 | |||||
2015 | 7,200 | 11,096 | 9,943 | 28,239 | ||||||
2014 | 7,000 | — | 4,349 | 11,349 | ||||||
Per Anders Waern | 2016 | 7,200 | 25,674 | 26,695 | 59,569 | |||||
2015 | 7,200 | 25,398 | 17,882 | 50,480 | ||||||
2014 | 7,000 | 19,495 | 15,496 | 41,991 | ||||||
David Godfrey | 2016 | 7,200 | 25,674 | 21,868 | 54,742 | |||||
Alwyn Dawkins | 2016 | 7,200 | 25,674 | 21,191 | 54,065 | |||||
2015 | 7,200 | 25,398 | 18,039 | 50,637 | ||||||
2014 | 7,000 | 19,495 | 15,076 | 41,571 |
(1) RepresentsNotes to Consolidated Financial Statements provide additional information regarding the Company’s 4% matching contributionCompany's goodwill and amortizable intangible assets.
(2) Represents the Company’s matching contribution to the executive’s contributions to our Non-Qualified Deferred Compensation Plan. SeeNon-Qualified Deferred Compensation Table elsewhere in this Item 11 for additional information.
(3) In addition to specified perquisites and benefits, includes other perquisites and personal benefits provided to the executive, none of which individually exceeded the greater of $25,000 or 10%each of the totaljurisdictions where the Company operates. This process involves estimating our current tax expense or benefit together with assessing temporary differences resulting from differing treatment of items for tax and accounting purposes. These differences result in deferred tax assets and liabilities, which are included in our consolidated balance sheets. When assessing the realizability of deferred tax assets, we consider if it is more likely than not that some or all of the deferred tax assets will not be realized. In making this assessment, we consider the availability of loss carryforwards, projected reversals of deferred tax liabilities, projected future taxable income, and ongoing prudent and feasible tax planning strategies. The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not that the tax position will be sustained based on the technical merits of the position. Recognized tax positions are measured at the largest amount of perquisitesbenefit with greater than a 50% likelihood of being realized. The Company uses estimates in determining the amount of unrecognized tax benefits associated with uncertain tax positions. Significant judgment is required in evaluating tax law and personalmeasuring the benefits for the executive. In 2016, includes a car allowance of $29,204 received by Mr. Hall per the terms of his employment agreement.
Grants of Plan-Based Awards Table
This table provideslikely to be realized. Uncertain tax positions are periodically re-evaluated and adjusted as more information about their ultimate realization becomes available.
Possible Payouts Under Non- | Possible Payouts Under Equity | Exercise | Grant | |||||||||||||||
Equity Incentive Plan Awards (1) | Incentive Plan Awards (2) | or Base | Date Fair | |||||||||||||||
Price of | Value of | |||||||||||||||||
Option | Stock and | |||||||||||||||||
Awards | Option | |||||||||||||||||
Grant | Threshold | Target | Maximum | Threshold | Target | Maximum | ($/Sh) | Awards | ||||||||||
Name | Date | ($) | ($) | ($) | (#) | (# ) | (#) | ($)(3) | ($)(4) | |||||||||
Eugene A. Hall | 2/8/16 | — | — | — | 0 | 70,057 PSUs | 140,114 | — | 5,608,763 | |||||||||
2/8/16 | — | — | — | — | 145,703 SARs | — | 80.06 | 2,403,764 | ||||||||||
— | 0 | 953,607 | 1,902,2145 | — | — | — | — | — | ||||||||||
Craig W. Safian | 2/8/16 | — | — | — | 0 | 12,490 PSUs | 24,980 | — | 999,949 | |||||||||
2/8/16 | — | — | — | — | 25,977 SARs | — | 80.06 | 428,561 | ||||||||||
— | 0 | 360,500 | 721,000 | — | — | — | — | — | ||||||||||
Per Anders Waern | 2/8/16 | — | — | — | 0 | 10,422 PSUs | 20,844 | 834,385 | ||||||||||
2/8/16 | — | — | — | — | 21,675 SARs | 80.06 | 357,588 | |||||||||||
— | 0 | 315,981 | 631,962 | — | — | — | — | — | ||||||||||
David Godfrey | 2/8/16 | — | — | — | 0 | 10,422 PSUs | 20,844 | 834,385 | ||||||||||
2/8/16 | — | — | — | — | 21,675 SARs | 80.06 | 357,588 | |||||||||||
— | 0 | 315,981 | 631,962 | — | — | — | — | — | ||||||||||
Alwyn Dawkins | 2/8/16 | — | — | — | 0 | 10,422 PSUs | 20,844 | 834,385 | ||||||||||
2/8/16 | — | — | — | — | 21,675 SARs | 80.06 | 357,588 | |||||||||||
— | 0 | 315,981 | 631,962 | — | — | — | — | — |
(1) Represents cash bonuses that could have been earned in 2016expense, which is based solely upon achievementon the fair value of specified financial performance objectives for 2016 and ranging from 0% (threshold) to 200% (maximum)the award on the date of target (100%). Bonus targets (expressed as a percentage of base salary) were 105% for Mr. Hall, and 70% for each of Messrs. Safian, Waern, Godfrey and Dawkins. Performance bonuses earned in 2016 and paid in February 2017 were adjusted to 126.2% of their target bonus and are reported under Non-Equity Incentive Plangrant, over the related service period. Note 10 — Stock-Based Compensation in the Summary Compensation Table. SeeShort-Term Incentive Compensation (Cash Bonuses)Notes to Consolidated Financial Statements provides additional information regarding stock-based compensation. Determining the appropriate fair value model and calculating the fair value of stock-based compensation awards requires the use of certain subjective assumptions, including the expected life of a stock-based compensation award and the Company’s common stock price volatility. In addition, determining the appropriate periodic stock-based compensation expense requires management to estimate the likelihood of the achievement of certain performance targets. The assumptions used in calculating the fair values of stock-based compensation awards and the related periodic expense represent management’s best estimates, which involve inherent uncertainties and the application of judgment. As a result, if circumstances change and the Company deems it necessary in the Compensation Discussion and Analysis included in this Item 11 for additional information.
(2) Representsfuture to modify the number of performance-based Restricted Stock Units (PSUs) and stock-settled Stock Appreciation Rights (SARs) awarded on February 8, 2016 under our 2014 Plan. The target number of PSUs (100%) originally awarded on that date was subjectassumptions it made or to adjustment ranging from 0% (threshold) to 200% (maximum) based solely upon achievement of an associated financial performance objective, and was adjusted to 162.0% of target in February 2017. The adjusted number of PSUs awarded was: Mr. Hall – 113,942; Mr. Safian – 20,233; and Messrs. Waern, Godfrey and Dawkins – 16,883). The PSUs, SARs and RSUs vest 25% per year commencing one year from grant, subject to continued employment on the vesting date except in the case of death, disability and retirement. SeeLong-Term Incentive Compensation (Equity Awards) in the Compensation Discussion and Analysis included in this Item 11 for additional information.
(3) Represents the closing price of our Common Stock on the New York Stock Exchange on the grant date.
(4) See footnote (2) to the Summary Compensation Table included in this Item 11.
Employment Agreements with Executive Officers
Only our Chief Executive Officer, Mr. Hall, is a party to a long-term employment agreement with the Company.
Mr. Hall – Employment Agreement
The Company and Mr. Hall are parties to an Amended and Restated Employment Agreement pursuant to which Mr. Hall has agreed to serve as chief executive officer of the Company and is entitled to be nominated to the board of directors (the “CEO Agreement”) until December 31, 2021. The CEO Agreement provides for automatic one year renewals commencing on January 1, 2022, and continuing each year thereafter, unless either party provides the other with at least 60 days prior written notice of an intention not to extend the term.
Under the CEO Agreement, Mr. Hall is entitled to the following annual compensation components:
| ||
| ||
| ||
Termination and Related Payments – Mr. Hall
Involuntary or Constructive Termination(no Change in Control)
Mr. Hall’s employment is at will and may be terminated by him or us upon 60 days’ notice. If we terminate Mr. Hall’s employment involuntarily (other than within 24 months following a Change In Control (defined below)) and without Business Reasons (as defined in the CEO Agreement) or a Constructive Termination (as defined in the CEO Agreement) occurs,use different assumptions, or if the Company elects not to renew the CEO Agreement upon its expirationquantity and Mr. Hall terminates his employment within 90 days following the expiration of the CEO Agreement, then Mr. Hall will be entitled to receive the following benefits:
| ||
Payment of severance amounts is conditioned upon execution of a general release of claims against the Company and compliance with 36 month non-competition and non-solicitation covenants. In certain circumstances, payment will be delayed for six months following termination under Code Section 409A.
Involuntary or Constructive Termination, and Change in Control
Within 24 months of a Change In Control: if Mr. Hall’s employment is terminated involuntarily and without Business Reasons; or a Constructive Termination occurs; or if the Company elects not to renew the CEO Agreement upon its expiration and Mr. Hall terminates his employment within 90 days following the expiration of the CEO Agreement (i.e., double trigger), Mr. Hall will be entitled to receive the following benefits:
| ||
| ||
| ||
Immediately upon a Change In Control, all of Mr. Hall’s unvested outstanding equity awards will vest in full, all performance goals or other vesting criteria will be deemed achieved at target levels and all stock options and SARs will be exercisable as to all covered shares. Additionally, any ungranted, but accrued Annual Incentive Awards will be awarded prior to consummation of the Change in Control.
Should any payments received by Mr. Hall upon a Change In Control constitute a “parachute payment” within the meaning of Code Section 280G, Mr. Hall may elect to receive either the full amount of his Change In Control payments, or such lesser amount as will ensure that no portion of his severance and other benefits will be subject to excise tax under Code Section 4999 of the Code. Additionally, certain payments may be delayed for six months following termination under Code Section 409A.
The CEO Agreement utilizes the 2014 Plan definition of “Change In Control” which currently provides that a Change In Control will occur when (i) there is a change in ownership of the Company such that any person (or group) becomes the beneficial owner of 50% of our voting securities, (ii) there is a change in the ownership of a substantial portionnature of the Company’s assetsstock-based compensation awards changes, then the amount of expense may need to be adjusted and (iii) there is a changefuture stock-based compensation expense could be materially different from what has been recorded in the effective control of the Company such that a majority of members of the Board is replaced during any 12 month period by directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of appointment or election.
In the CEO Agreement, Mr. Hall also agrees not to engage in any competitive activitiescurrent period.
Terminationseverance costs, contract terminations, asset impairments and Related Payments – Other Executive Officers
In the event of termination for cause, voluntary resignation orother costs as a result of death, disability or retirement, noongoing actions we undertake to streamline our organization, reposition certain businesses and reduce future operating costs. Estimates of costs to be incurred to complete these actions, such as future payments under contractual arrangements, the fair value of assets, and severance and related benefits, are provided. Inbased on assumptions at the event of termination for cause or voluntary resignation, all equity awardstime the actions are forfeited except as discussed below underDeath, Disability and Retirement. Ininitiated. These accruals may need to be adjusted to the event of termination without cause (including in connection with a Change In Control), other executive officers are entitled to receive the following benefits:
In order to receive severance benefits, the executive officers who are terminated are required to execute and comply with a separation agreement and release of claims in which, among other things, the executive reaffirms his or her commitment to confidentiality and non-competition obligations (that bind all employees for one year following termination of employment) and releases the Companyextent that actual costs differ from various employment-related claims.such estimates. In addition, in the case of Named Executive Officers (other than Mr. Hall), severance will not be paid to any executive who refuses to accept an offer of comparable employment from Gartner or who does not cooperate or ceases to cooperate when being considered for a new position with Gartner, in each case as determined by the Company. Finally, under certain circumstances, payments and release of sharesthese actions may be delayed for six months following termination under Code Section 409A.
Death, Disability and Retirement
For all equity awards made prior to 2015, in the case of terminationrevised due to death, disability or retirement (as defined), our executive officers are entitled to immediate vesting of all PSUs and SARschanges in business conditions that would have vested (assuming continued service)we did not foresee at the time such plans were approved. We also record accruals during the 12 months following termination. Commencing with the 2015 equity awards,year for our executive officers are entitled to immediate vesting of all outstanding awards in the case of termination due to death or disability, and continued vesting depending upon the age of the officer in the case of retirement (as defined) as described in the following table:
|
In order to receive retirement vesting, an officer must be retirement “eligible” on the date of retirement; if not, all unvested awards are forfeited upon retirement. Retirement eligibility is defined in our current equity award agreements as follows: (i) on the date of retirement the officer must be at least 55 years old and have at least 5 years continued service and (ii) the sum of the officer���s age and years of continued service must be 65 or greater. At December 31, 2016, of our NEOs, only Mr. Hall qualified for the additional vesting benefit upon retirement. Disability is defined in our current equity award agreements as total and permanent disability.
For all SAR awards prior to 2015, the SARs remain exercisable for the earlier of the applicable expiration date or one year from termination in the case of death, disability or retirement. Commencing with the 2015 SAR awards, the SARs remain exercisable for the earlier of the applicable expiration date or one year from termination in the case of death and disability, and through the expiration date in the case of retirement. In each case, upon termination for any other reason, vested SARs remain exercisable for the earlier of the applicable expiration date or 90 days from the date of termination. In the case of death, disability or retirement, unvested and unadjusted PSUs to which the officer is entitled will be adjusted based upon achievement of the related performance metric upon certification by the Compensation Committee. In all cases related to retirement, the officer must be retirement eligible.
Potential Payments Upon Termination or Change in Control
Employment Agreements With Executive Officers above contains a detailed discussion of the payments and other benefits to which our CEO and other Named Executive Officers are entitled in the event of termination of employment or upon a Change In Control, and the amounts payable assuming termination under various circumstances at December 31, 2016 are set forth below. In each case, each Named Executive Officer would also be entitled to receiveemployee cash incentive programs. Amounts accrued personal time off (PTO) and the balance in his deferred compensation plan account.
Mr. Hall, CEO
The table below quantifies (in dollars) amounts that would be payable by the Company, and the value of shares of Common Stock that would be released, to Mr. Hall had his employment been terminated on December 31, 2016 (the “Termination Date”) as a result of (i) involuntary termination without cause and/or constructive termination; (ii) death, disability or retirement; or (iii) a Change In Control. SeeOutstanding Equity Awards At Fiscal Year End Table included in this Item 11 for a list of Mr. Hall’s unvested equity awards at the end of 2016.Mr. Hall was eligible for retirement benefits at December 31, 2016.
Involuntary | Involuntary | Total | Death, | Change in | Change in | Total | ||||||
7,347,612 | 34,412,566 | 35,147,327 | 33,630,984 | 6,878,322 | 33,655,560 | 40,533,882 |
(1) Representseach reporting period are based on our estimates and may require adjustment as the sum of (w) three times base salary in effect at Termination Date; (x) 300% of the average actual bonusultimate amount paid for these incentives are sometimes not known with certainty until the prior three years (2013, 2014 and 2015); (y) unpaid 2016 bonus; and (z) the amount of health insurance premiums for Mr. Hall, his spouse and immediate family for 36 months (at rate in effect on the Termination Date).
(2) Represents (x) the fair market value using the closing priceend of our Common Stock on December 31, 2016, or $101.07 (the “Year End Price”) of unvested PSUs that would have vested within 36 months following the Termination Date, plus (y) the spread between the Year End Price and the exercise price for all in-the-money SARs that would have vested within 36 months following the Termination Date, multiplied by the number of such SARs.
(3) Represents (x) the fair market value using the Year End Price of (i) unvested PSUs awarded prior to 2015 that would have vested within 12 months following the Termination Date and (ii) all unvested PSUs awarded in 2015 and 2016, plus (y) the spread between the Year End Price and the exercise price for all in-the-money SARs awarded in 2015
and 2016 that would have vested within 12 months following the Termination Date and (ii) all unvested SARs awarded in 2015 and 2016, multiplied by the number of such SARs. 2016 PSUs are adjusted based upon applicable performance metrics.
(4) Represents the sum of (w) three times base salary in effect at Termination Date, (x) three times 2016 target bonus, (y) unpaid 2016 bonus, and (z) the amount of health insurance premiums for Mr. Hall, his spouse and immediate family for 36 months (at premiums in effect on the Termination Date).
(5) Represents (x) the fair market value using the Year End Price of all unvested PSUs on the Termination Date (at target in the case of unadjusted 2016 PSUs), plus (y) the spread between the Year End Price and the exercise price of all in-the-money unvested SARs on the Termination Date, multiplied by the number of such SARs.
Other Named Executive Officers
Named Executive Officer | Involuntary | Value of | Value of | Total Change In | ||||
Craig W. Safian | 537,096 | 4,818,667 | 4,392,151 | 4,929,247 | ||||
Per Anders Waern | 473,596 | 4,984,529 | 4,988,210 | 5,461,806 | ||||
David Godfrey | 473,596 | 4,984,529 | 4,988,210 | 5,461,806 | ||||
Alwyn Dawkins | 473,596 | 4,984,529 | 4,988,210 | 5,461,806 |
(1) Represents 12 months’ base salary in effect on the Termination Date plus the amount of health insurance premiumsOperations for the executive, his spouseyears indicated (in thousands).
Year Ended December 31, 2019 | Year Ended December 31, 2018 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||
Total revenues | $ | 4,245,321 | $ | 3,975,454 | $ | 269,867 | 7 | % | ||||||
Costs and expenses: | ||||||||||||||
Cost of services and product development | 1,550,568 | 1,468,800 | 81,768 | 6 | ||||||||||
Selling, general and administrative | 2,103,424 | 1,884,141 | 219,283 | 12 | ||||||||||
Depreciation | 82,066 | 68,592 | 13,474 | 20 | ||||||||||
Amortization of intangibles | 129,713 | 187,009 | (57,296 | ) | (31 | ) | ||||||||
Acquisition and integration charges | 9,463 | 107,197 | (97,734 | ) | (91 | ) | ||||||||
Operating income | 370,087 | 259,715 | 110,372 | 42 | ||||||||||
Interest expense, net | (99,805 | ) | (124,208 | ) | (24,403 | ) | (20 | ) | ||||||
(Loss) gain from divested operations | (2,075 | ) | 45,447 | (47,522 | ) | >(100) | ||||||||
Other income, net | 7,532 | 167 | 7,365 | >100 | ||||||||||
Provision for income taxes | 42,449 | 58,665 | (16,216 | ) | (28 | ) | ||||||||
Net income | $ | 233,290 | $ | 122,456 | $ | 110,834 | 91 | % |
(2) Represents (x) the fair market value using the closing price of our Common Stock on December 31, 2016, or $101.07 (the “Year End Price”) of (i) unvested PSUs awarded prior to 2015 that would have vested within 12 months following the Termination Date,fulfilled) and (ii) 100% of unvested PSUs awarded in 2015 and 2016, plus (y)revenues by segment for the spread between the Year End Price and the exercise price of (i) all in-the-money SARs awarded prior to 2015 that would have vested within 12 months following the Termination Date, and (ii) 100% of unvested SARs awarded in 2015 and 2016, multiplied by the number of such SARs, in the event of death or disability. 2016 PSUs are adjusted based upon applicable performance metrics. Messrs. Safian, Waern, Godfrey and Dawkins were not eligible for retirement benefits on December 31, 2016 and would have forfeited all unvested equity had they retired on the Termination Date.
(3) Represents (x) the fair market value using the Year End Price of all unvested PSUs on the Termination Date (at target in the case of unadjusted 2016 PSUs), plus (y) the spread between the Year End Price and the exercise price of all in-the-money unvested SARs on the Termination Date, multiplied by the number of such SARs.
Primary Geographic Market | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||
United States and Canada | $ | 2,734,490 | $ | 2,514,952 | $ | 219,538 | 9 | % | |||||||
Europe, Middle East and Africa | 996,004 | 1,000,490 | (4,486 | ) | — | ||||||||||
Other International | 514,827 | 460,012 | 54,815 | 12 | |||||||||||
Total revenues (1) | $ | 4,245,321 | $ | 3,975,454 | $ | 269,867 | 7 | % |
Segment | Year Ended December 31, 2019 | Year Ended December 31, 2018 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||
Research | $ | 3,374,548 | $ | 3,105,764 | $ | 268,784 | 9 | % | |||||||
Conferences | 476,869 | 410,461 | 66,408 | 16 | |||||||||||
Consulting | 393,904 | 353,667 | 40,237 | 11 | |||||||||||
Other (1) | — | 105,562 | (105,562 | ) | >(100) | ||||||||||
Total revenues (1) | $ | 4,245,321 | $ | 3,975,454 | $ | 269,867 | 7 | % |
Outstanding Equity Awards at Fiscal Year-End Table
This table provides information on each option (including stock appreciation rights or SARs) and stock (including restricted stock units (RSUs) and performance restricted stock units (PSUs) award held by each Named Executive Officer at December 31, 2016. All performance criteria associated with these awards (except for the 2016 PSU award (see footnote 4)) were fully satisfied as of December 31, 2016, and the award is fixed. The market value of the stock awards is based on the closing price of our Common Stock on the New York Stock Exchange on December 31, 2016, which was $101.07. Upon exercise of, or release of restrictions on, these awards, the number of shares ultimately issued to each executive will be reduced by the number of shares withheld by Gartner for tax withholding purposes and/or as payment of exercise price in the case of options and SARs.
Option Awards | Stock Awards | |||||||||||||||
Named Executive Officer | Number of Securities Underlying Unexercised Options Exercisable (#) | Number of Securities Underlying Unexercised Options Unexercisable (#) | Option Exercise Price ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested (#) | Market Value of Shares or Units of Stock That Have Not Vested ($) | Equity Incentive Plan Awards: Number of Unearned Shares, Units or Other Rights That Have Not Vested (#) | Equity Incentive Plan Awards: Market or Payout Value of Unearned Shares, Units, or Other Rights That Have Not Vested ($) | ||||||||
Eugene A. Hall | ||||||||||||||||
(1), (5) | 98,062 | 32,687 | 49.37 | 2/12/20 | 26,918 | 2,720,602 | — | — | ||||||||
(2), (5) | 67,491 | 67,490 | 64.64 | 2/10/21 | 63,031 | 6,360,543 | — | — | ||||||||
(3), (5) | 31,688 | 95,062 | 77.92 | 2/9/22 | 79,878 | 8,073,269 | — | — | ||||||||
(4), (5) | — | 145,703 | 80.60 | 2/08/23 | — | — | 70,057 | 7,080,661 | ||||||||
Craig W. Safian | ||||||||||||||||
(1) | — | — | — | — | 2,025 | 204,667 | — | — | ||||||||
(2) | — | — | — | — | 3,480 | 351,727 | — | — | ||||||||
(3) | — | — | — | — | 12,962 | 1,310,069 | — | — | ||||||||
(6) | — | 15,427 | 77.92 | — | 3,566 | 360,416 | — | — | ||||||||
(4), (5) | — | 25,977 | 80.06 | 2/8/23 | — | — | 12,490 | 1,262,364 | ||||||||
Per Anders Waern | ||||||||||||||||
(1), (5) | — | 4,726 | 49.37 | 2/12/20 | 3,892 | 393,364 | — | — | ||||||||
(2), (5) | — | 10,040 | 64.64 | 2/10/21 | 9,376 | 947,632 | — | — | ||||||||
(3), (5) | — | 14,141 | 77.92 | 2/9/22 | 11,883 | 1,201,015 | — | — | ||||||||
(4), (5) | — | 21,675 | 80.60 | 2/08/23 | — | — | 10,422 | 1,053,352 | ||||||||
David Godfrey | • | • | • | • | • | • | • | • | ||||||||
(1), (5) | — | 4,726 | 49.37 | 2/12/20 | 3,892 | 393,364 | — | — | ||||||||
(2), (5) | 10,040 | 10,040 | 64.64 | 2/10/21 | 9,376 | 947,632 | — | — | ||||||||
(3), (5) | 4,714 | 14,141 | 77.92 | 2/9/22 | 11,883 | 1,201,015 | — | — | ||||||||
(4), (5) | — | 21,675 | 80.60 | 2/08/23 | — | — | 10,422 | 1,053,352 | ||||||||
Alwyn Dawkins | ||||||||||||||||
(5) | 20,239 | — | 37.81 | 2/09/19 | — | — | — | |||||||||
(1), (5) | 14,179 | 4,726 | 49.37 | 2/12/20 | 3,892 | 393,364 | — | — | ||||||||
(2), (5) | 10,040 | 10,040 | 64.64 | 2/10/21 | 9,376 | 947,632 | — | — | ||||||||
(3), (5) | 4,714 | 14,141 | 77.92 | 2/9/22 | 11,883 | 1,201,015 | — | — | ||||||||
(4), (5) | — | 21,675 | 80.60 | 2/08/23 | — | — | 10,422 | 1,053,352 |
Option Exercises and Stock Vested Table
This table provides information for the NEOs for the aggregate number of SARs that were exercised, and stock awards that vested and released, during 2016 on an aggregate basis, and does not reflect shares withheld by the Company for exercise price or withholding taxes.
Option Awards | Stock Awards | |||||||
Name | Number of | Value | Number of | Value | ||||
Eugene A. Hall | 45,594 | 4,466,844 | 62,527 | 5,050,620 | ||||
Craig W. Safian | — | — | 7,386 | 613,729 | ||||
Per Anders Waern | 4,198 | 414,930 | 10,332 | 834,974 | ||||
David Godfrey | 9,999 | 980,625 | 10,332 | 834,894 | ||||
Alwyn Dawkins | 4,379 | 419,990 | 9,973 | 805,849 |
(1) Represents the spread between (i) the market price of our Common Stock at exercise and (ii) the exercise price for all SARs exercised during the year, multiplied by the number of SARs exercised.
(2) Represents PSUs awarded in prior years as long-term incentive compensation that released in 2016.
(3) Represents the number of shares that released multiplied by the market price of our Common Stock on the release date.
Non-Qualified Deferred Compensation Table
The Company maintains a Non-Qualified Deferred Compensation Plan for certain officers and key personnel whose aggregate compensation in 2016 was expected to exceed $325,000. This plan currently allows qualified U.S.-based employees to defer up to 50% of annual salary and/or up to 100% of annual bonus earned in a fiscal year. In addition, in 2016 the Company made a contribution to the account of each Named Executive Officer who deferred compensation equal to the amount of such executive’s contribution (not to exceed 4% of base salary and bonus), less $7,200. Deferred amounts are deemed invested in several independently-managed investment portfolios selected by the participant for purposes of determining the amount of earnings to be credited by the Company to that participant’s account. The Company may, but need not, acquire investments corresponding to the participants’ designations.
Upon termination of employment for any reason, all account balances will be distributed to the participant in a lump sum, except that a participant whose account balance is in excess of $25,000 may defer distributions for an
additional year, or elect to receive the balance in 20, 40 or 60 quarterly installments. In the event of an unforeseen emergency (which includes a sudden and unexpected illness or accident of the participant or a dependent, a loss of the participant’s property due to casualty or other extraordinary and unforeseeable circumstance beyond the participant’s control), the participant may request early payment of his or her account balance, subject to approval.
The following table provides information (in dollars) concerning contributions to the Deferred Compensation Plan in 2016 by the participating Named Executive Officers, the Company’s matching contributions, 2016 earnings, aggregate withdrawals and distributions and account balances at year end:
Name | Executive | Company | Aggregate | Aggregate Withdrawals/ | Aggregate | |||||
Eugene A. Hall | 84,665 | 75,951 | 59,669 | 170,643 | 606,327 | |||||
Craig W. Safian | 36,899 | 28,841 | 7,705 | — | 102,503 | |||||
Per Anders Waern | 33,626 | 25,674 | 37,905 | — | 472,648 | |||||
David Godfrey | 57,179 | 25,674 | 30,258 | — | 301,385 | |||||
Alwyn Dawkins | 39,254 | 25,674 | 33,019 | 198,844 | 258,021 |
(1) Executive Contributions are included in the “Base Salary” and/or “Non-Equity Incentive Plan Compensation” columns in the Summary Compensation Table for the NEOs.
(2) Company Contributions are included in the “All Other Compensation” column of the Summary Compensation Table, and in the “Company Match Under Non-qualified Deferred Compensation Plan” column of the Other Compensation Table for the NEOs.
DIRECTOR COMPENSATION
Compensation of Directors
The Governance Committee annually reviews all forms of independent director compensation and recommends changes to the Board, when appropriate. The Governance Committee is supported in this review by Exequity, LLP. The review examines director compensation in relation to two comparator groups: Proxy Peer Group and General Industry Reference Group. The Proxy Peer Group includes the same companies used to benchmark executive pay (see page 21). The General Industry Reference Group includes 100 companies with median revenues similar to that of Gartner. Regular review of the director compensation program ensures that the director compensation is reasonable, and reflects a mainstream approach to the structure of the compensation components and the method of delivery. No changes have been made to the director compensation program since 2013. The section that follows describes the current director compensation program and components.
Directors who are also employees receive no fees for their services as directors. Non-management directors are reimbursed for their meeting attendance expenses and receive the following compensation for their service as director:
• | Research provides trusted, objective insights and advice on the |
2016 Director Compensation Table
This table sets forth compensation earned or paid in cash,
• | Conferences provides business professionals across an organization the opportunity to learn, share and network. From our Gartner Symposium/Xpo series, to industry-leading conferences focused on specific business roles and topics, to peer-driven sessions, our offerings enable attendees to experience the best of Gartner insight and advice live. |
• | Consulting combines the power of Gartner market-leading research with custom analysis and on-the-ground support to help chief information officers and other senior executives driving technology-related strategic initiatives move confidently from insight to action. |
Name | Fees Earned Or Paid ($)(1) | Stock Awards ($)(2)(3) | Total ($) | |||
Michael J. Bingle | 77,500 | 200,000 | 277,500 | |||
Peter Bisson | 24,822 | 162,740 | 187,562 | |||
Richard J. Bressler | 90,000 | 200,000 | 290,000 | |||
Raul E. Cesan | 70,000 | 200,000 | 270,000 | |||
Karen E. Dykstra | 75,000 | 200,000 | 275,000 | |||
Anne Sutherland Fuchs | 92,500 | 200,000 | 292,500 | |||
William O. Grabe | 77,500 | 200,000 | 277,500 | |||
Steven G. Pagliuca | 60,000 | 200,000 | 260,000 | |||
James C. Smith | 175,000 | 200,000 | 375,000 |
As Of And For The Year Ended December 31, 2019 | As Of And For The Year Ended December 31, 2018 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||
Financial Measurements: | ||||||||||||||
Revenues (1) | $ | 3,374,548 | $ | 3,105,764 | $ | 268,784 | 9 | % | ||||||
Gross contribution (1) | $ | 2,351,720 | $ | 2,144,097 | $ | 207,623 | 10 | % | ||||||
Gross contribution margin | 70 | % | 69 | % | 1 point | — | ||||||||
Business Measurements: | ||||||||||||||
Global Technology Sales (2): | ||||||||||||||
Contract value (1), (3) | $ | 2,799,000 | $ | 2,492,000 | $ | 307,000 | 12 | % | ||||||
Client retention | 82 | % | 83 | % | (1) point | — | ||||||||
Wallet retention | 104 | % | 105 | % | (1) point | — | ||||||||
Global Business Sales (2): | ||||||||||||||
Contract value (1), (3) | $ | 647,000 | $ | 594,000 | $ | 53,000 | 9 | % | ||||||
Client retention | 82 | % | 82 | % | — | — | ||||||||
Wallet retention | 101 | % | 95 | % | 6 points | — |
(1) |
(2) |
(3) |
As Of And For The Year Ended December 31, 2019 | As Of And For The Year Ended December 31, 2018 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||
Financial Measurements: | ||||||||||||||
Revenues (1) | $ | 476,869 | $ | 410,461 | $ | 66,408 | 16 | % | ||||||
Gross contribution (1) | $ | 241,757 | $ | 207,260 | $ | 34,497 | 17 | % | ||||||
Gross contribution margin | 51 | % | 50 | % | 1 point | — | ||||||||
Business Measurements: | ||||||||||||||
Number of destination conferences (2) | 72 | 70 | 2 | 3 | % | |||||||||
Number of destination conferences attendees (2) | 85,750 | 78,136 | 7,614 | 10 | % |
Director Stock Ownership
(1) | Dollars in thousands. |
(2) | Single day, local meetings are excluded. |
18% excluding the foreign currency impact. Revenues from both attendees and exhibitors at our destination conferences, as well as revenues from our single day, local meetings, increased by double-digits during 2019 compared to 2018. We held 72 destination conferences in 2019 with a 10% increase in the number of attendees and a 15% increase in exhibitors when compared to 2018, while the average revenue per attendee and exhibitor both increased by 3%. The Board believes directors shouldsegment gross contribution margin was 51% and 50% in 2019 and 2018, respectively. The higher gross contribution margin during 2019 was primarily due to improvements in our average revenue per attendee and exhibitor, improved margins from our single day, local meetings and our continuing efforts to efficiently manage our conference-related expenses. Partially offsetting these items were higher costs associated with increased headcount.
As Of And For The Year Ended December 31, 2019 | As Of And For The Year Ended December 31, 2018 | Increase (Decrease) | Percentage Increase (Decrease) | |||||||||||
Financial Measurements: | ||||||||||||||
Revenues (1) | $ | 393,904 | $ | 353,667 | $ | 40,237 | 11 | % | ||||||
Gross contribution (1) | $ | 118,450 | $ | 102,541 | $ | 15,909 | 16 | % | ||||||
Gross contribution margin | 30 | % | 29 | % | 1 point | — | ||||||||
Business Measurements: | ||||||||||||||
Backlog (1), (2) | $ | 115,700 | $ | 108,400 | $ | 7,300 | 7 | % | ||||||
Billable headcount | 784 | 718 | 66 | 9 | % | |||||||||
Consultant utilization | 62 | % | 63 | % | (1) point | — | ||||||||
Average annualized revenue per billable headcount (1) | $ | 373 | $ | 375 | $ | (2 | ) | (1 | )% |
(1) | Dollars in thousands. |
(2) | Backlog is on a foreign exchange neutral basis. Backlog as of December 31, 2018 has been calculated using the same foreign currency rates as 2019. |
Year Ended December 31, | Increase (Decrease) | ||||||||||
2019 | 2018 | ||||||||||
Cash provided by operating activities | $ | 565,436 | $ | 471,158 | $ | 94,278 | |||||
Cash (used in) provided by investing activities | (160,885 | ) | 384,051 | (544,936 | ) | ||||||
Cash used in financing activities | (285,992 | ) | (1,257,115 | ) | 971,123 | ||||||
Net increase (decrease) in cash and cash equivalents and restricted cash | 118,559 | (401,906 | ) | 520,465 | |||||||
Effects of exchange rates | 3,614 | (6,489 | ) | 10,103 | |||||||
Beginning cash and cash equivalents and restricted cash | 158,663 | 567,058 | (408,395 | ) | |||||||
Ending cash and cash equivalents and restricted cash | $ | 280,836 | $ | 158,663 | $ | 122,173 |
Commitment Description | Due In Less Than 1 Year | Due In 2-3 Years | Due In 4-5 Years | Due In More Than 5 Years | Total | |||||||||||||||
Debt – principal and interest (1) | $ | 237,948 | $ | 1,422,379 | $ | 100,141 | $ | 822,585 | $ | 2,583,053 | ||||||||||
Operating leases (2) | 142,352 | 273,920 | 249,635 | 682,883 | 1,348,790 | |||||||||||||||
Deferred compensation arrangements (3) | 10,116 | 14,725 | 8,784 | 45,931 | 79,556 | |||||||||||||||
Other (4) | 30,836 | 34,606 | 12,712 | 35,834 | 113,988 | |||||||||||||||
Totals | $ | 421,252 | $ | 1,745,630 | $ | 371,272 | $ | 1,587,233 | $ | 4,125,387 |
(1) | Principal repayments of the Company's debt obligations were classified in the above table based on the contractual repayment dates. Interest payments were based on the effective interest rates as of December 31, 2019, including the effects of the Company’s interest rate swap contracts. Note 6 — Debt in the Notes to Consolidated Financial Statements provides information regarding the Company's debt obligations and interest rate swap contracts. |
(2) | The Company leases various facilities, automobiles, computer equipment and other assets under non-cancelable operating lease agreements expiring between 2020 and 2038. The total commitment excludes approximately $360.6 million of estimated future cash receipts from the Company's subleasing arrangements. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases in the Notes to Consolidated Financial Statements provide additional information regarding the Company's leases. |
(3) | The Company has supplemental deferred compensation arrangements with certain of its employees. Amounts payable with known payment dates have been classified in the above table based on those scheduled payment dates. Amounts payable whose payment dates are unknown have been included in the Due In More Than 5 Years category because the Company cannot determine when the amounts will be paid. Note 15 — Employee Benefits in the Notes to Consolidated Financial Statements provides additional information regarding the Company's supplemental deferred compensation arrangements. |
(4) | Other includes: (i) contractual commitments (a) to secure sites for our Conferences business and (b) for software, telecom and other services; (ii) amounts due for share repurchase transactions that occurred in late December 2019 but were settled in cash in January 2020; and (iii) projected cash contributions to the Company's defined benefit pension plans. Note 15 — Employee Benefits in the Notes to Consolidated Financial Statements provides additional information regarding the Company's defined benefit pension plans. |
2019 | ||||||||||||||||
(In thousands, except per share data) | First | Second | Third | Fourth | ||||||||||||
Revenues | $ | 970,444 | $ | 1,070,882 | $ | 1,000,502 | $ | 1,203,493 | ||||||||
Operating income | 48,799 | 116,002 | 69,147 | 136,139 | ||||||||||||
Net income (1) | 20,795 | 103,406 | 41,388 | 67,701 | ||||||||||||
Net income per share (1), (2): | ||||||||||||||||
Basic | $ | 0.23 | $ | 1.15 | $ | 0.46 | $ | 0.76 | ||||||||
Diluted | $ | 0.23 | $ | 1.13 | $ | 0.46 | $ | 0.75 |
2018 | ||||||||||||||||
(In thousands, except per share data) | First | Second | Third | Fourth | ||||||||||||
Revenues | $ | 963,565 | $ | 1,001,336 | $ | 921,674 | $ | 1,088,878 | ||||||||
Operating income (loss) | (8,711 | ) | 86,096 | 52,724 | 129,606 | |||||||||||
Net income (loss) | (19,587 | ) | 46,270 | 11,753 | 84,020 | |||||||||||
Net income (loss) per share: | ||||||||||||||||
Basic | $ | (0.22 | ) | $ | 0.51 | $ | 0.13 | $ | 0.93 | |||||||
Diluted | $ | (0.22 | ) | $ | 0.50 | $ | 0.13 | $ | 0.92 |
(1) | In April 2019, we completed an intercompany sale of certain intellectual property and, as a result, the Company recorded a net tax benefit of approximately $38.1 million. The tax benefit increased our net income and each of our basic and diluted net income per share for the second quarter of 2019 by approximately $0.42 per share. Note 12 — Income Taxes in the Notes to Consolidated Financial Statements provides additional information regarding the tax impact of our intercompany sale of certain intellectual property. |
(2) | The aggregate of the four quarters’ basic and diluted net income per share may not equal the reported full calendar year amounts due to the effects of share repurchases, dilutive equity compensation and rounding. |
Compensation Committee Interlocksfuture periods. Note 1 — Business and Insider Participation.
During 2016, no memberSignificant Accounting Policies in the Notes to Consolidated Financial Statements provides information regarding those accounting standards.
40 East 52nd Street, New York, NY 10022 Plan Category Number of Securities Weighted Average Number of Securities ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR Types of Fees 2015 ($) SCHEDULES. DESCRIPTION OF DOCUMENT /s/ Peter E. Bisson /s/ Richard J. BresslerMATTTERSSECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENTBased on our reviewMATTERS.information on fileCertain Beneficial Owners and Management” in the Company’s Proxy Statement to be filed with the SEC and our stock records,by April 29, 2020. If the following table provides certainProxy Statement is not filed with the SEC by April 29, 2020, such information about beneficial ownership of shares of our Common Stock as of March 1, 2017 (including shares that will release (RSUs) or become exercisable (SARs) within 60 days following March 1, 2017) held by: (i) each person (or group of affiliated persons) which is known by us to own beneficially more than five percent (5%) of our Common Stock; (ii) each of our directors; (iii) each Named Executive Officer who was employed on that date; and (iv) all directors, Named Executive Officers (who were employed on March 1, 2017) and other current executive officers as a group. Unless otherwise indicated, the address for those listed below is c/o Gartner, Inc., 56 Top Gallant Road, Stamford, CT 06904. The amounts shown do not include CSEs that release upon termination of service as a director, or deferred RSUs that will not release within 60 days. Since all stock appreciation rights (SARs) are stock-settled (i.e., shares are withheld for the payment of exercise price and taxes), the number of shares ultimately issued upon settlement will be less than the number of SARS that were settled. Except as indicatedincluded in an amendment to this Annual Report filed by footnote, and subject to applicable community property laws, the persons named in the table directly own, and have sole voting and investment power with respect to, all shares of Common Stock shown as beneficially owned by them. To the Company’s knowledge, none of these shares has been pledged.Beneficial Owner Number of Shares
Beneficially
Owned Percent
OwnedMichael J. Bingle 25,795 * Peter Bisson — * Richard J. Bressler 17,488 * Raul E. Cesan (1) 92,150 * Karen E. Dykstra 18,673 * Anne Sutherland Fuchs 32,736 * William O. Grabe 128,333 * Stephen G. Pagliuca 53,438 * James C. Smith (2) 1,054,628 1.3 Eugene A. Hall (3) 1,505,413 1.8 Craig W. Safian (4) 34,878 * Per Anders Waern — * David Godfrey (5) 40,666 * Alwyn Dawkins (6) 79,297 * All current directors, Named Executive Officers and other
executive officers as a group (21 persons) (7) 3,567,053 4.3 Baron Capital Group, Inc. (8)
767 Fifth Avenue, New York, NY 10153 7,502,738 9.0 Blackrock, Inc. (9) 7,796,236 9.4 The Vanguard Group, Inc. (10)
100 Vanguard Blvd., Malvern, PA 19355 6,388,272 7.7 * Less than 1%(1)Includes 30,000 shares held by a family foundation as to which Mr. Cesan may be deemed a beneficial owner.
April 29, 2020.36(2)Includes 50,000 shares held by members of Mr. Smith’s immediate family and 211,900 shares held by a family foundation as to which Mr. Smith may be deemed a beneficial owner.(3)Includes 331,787 shares issuable upon the exercise of stock appreciation rights (“SARs”).(4)Includes 16,781 shares issuable upon the exercise of SARs.(5)Includes 34,633 shares issuable upon the exercise of SARs.(6)Includes 48,812 shares issuable upon the exercise of SARs.(7)Includes 673,557 shares issuable upon the exercise of SARs(8)Includes shares beneficially owned by Baron Capital Group, Inc. (“BCG”) and Ronald Baron; also includes 7,260,279 shares beneficially owned by BAMCO, Inc. and 242,459 shares beneficially owned by Baron Capital Management, Inc., subsidiaries of BCG. Ronald Baron owns a controlling interest in BCG.(9)Includes shares held by various subsidiaries and/or affiliates of Blackrock, Inc.(10)Includes shares beneficially owned by The Vanguard Group, Inc. as an investment adviser, and includes 43,404 shares beneficially owned by Vanguard Fiduciary Trust Company as investment manager of collective trust accounts, and 66,518 shares beneficially owned by Vanguard Investments Australia, Ltd as investment manager.EQUITY COMPENSATION PLANSThe following table provides information as of December 31, 2016 regarding the number of shares of our Common Stock that may be issued upon exercise of outstanding options, stock appreciation rights and other rights (including restricted stock units, performance stock units and common stock equivalents) awarded under our equity compensation plans (and, where applicable, related weighted-average exercise price information), as well as shares available for future issuance under our equity compensation plans. All equity plans with outstanding awards or available shares have been approved by our stockholders. Column A Column B Column C
to be Issued Upon
Exercise of
Outstanding Options
and Rights
Exercise Price of
Outstanding
Options
and Rights ($)
Remaining Available
For Future Issuance
Under Equity
Compensation Plans
(excluding shares in
Column A)2003 Long - Term Incentive Plan (1) 1,202,355 54.12 — 2014 Long – Term Incentive Plan (2) 1,513,921 79.08 6,710,331 2011 Employee Stock Purchase Plan — — 907,503 Total 2,716,276 61.28 7,617,834 (1)Award shares under the 2003 plan withheld for taxes, surrendered to pay exercise price or cancelled are retired; at the present time all awards are made under the 2014 Plan.(2)Award shares under the 2014 Plan withheld for taxes, surrendered to pay exercise price or cancelled are returned to the available share pool.37INDEPENDENCECERTAIN RELATIONSHIPS AND RELATED TRANSACTIONSGartner is a provider of comprehensive research coverage ofINDEPENDENCE.IT industrycaptions “Transactions With Related Persons” and “Corporate Governance — Director Independence” in the Company’s Proxy Statement to over 10,000 distinct enterprises in over 90 countries. Because of our worldwide reach, itbe filed with the SEC by April 29, 2020. If the Proxy Statement is not unusual for Gartner to engage in ordinary course of business transactions involving the sale of research or consulting services with entities in which one of our directors, executive officers or a greater than 5% owner of our stock, or immediate family member of any of them, may also be a director, executive officer, partner or investor, or have some other direct or indirect interest. We will refer to these transactions generally as related party transactions.Our Governance Committee reviews all related party transactions to determine whether any director, executive officer or a greater than 5% owner of our stock, or immediate family member of any of them, has amaterial direct or indirect interest, or whether the independence from management of our directors may be compromised as a result of the relationship or transaction. Our Board Principles and Practices, which are posted onwww.investor.gartner.com, require directors to disclose all actual or potential conflicts of interest regarding a matter being considered by the Board or any of its committees and to excuse themselves from that portion of the Board or committee meeting at which the matter is addressed to permit independent discussion. Additionally, the memberfiled with the conflict must abstain from voting on anySEC by April 29, 2020, such matter. information will be included in an amendment to this Annual Report filed by April 29, 2020.Governance Committee is charged with resolving any conflictinformation required to be furnished pursuant to this item will be set forth under the caption “Proposal Three: Ratification of interest issues broughtAppointment of Independent Registered Public Accounting Firm” in the Company’s Proxy Statement to its attention and has the power to request the Board to take appropriate action, up to and including requesting the involved director to resign. Our Audit Committee and/or Board of Directors reviews and approves all material related party transactions involving our directors in accordance with applicable provisions of Delaware law andbe filed with the advice of counsel, if deemed necessary.The Company maintains a written conflicts of interest policy whichSEC no later than April 29, 2020. If the Proxy Statement is posted on our intranet and prohibits all Gartner employees, including our executive officers, from engaging in any personal, business or professional activity which conflicts with or appears to conflict with their employment responsibilities and from maintaining financial interests in entities that could create an appearance of impropriety in their dealingsnot filed with the Company. Additionally, the policy prohibits all Gartner employees from entering into agreements on behalf of Gartner with any outside entity if the employee knows that the entity is a related partySEC by April 29, 2020, such information will be included in an amendment to a Gartner employee; i.e., that the contract would confer a financial benefit, either directly or indirectly, on a Gartner employee or his or her relatives. All potential conflicts of interest and related party transactions involving Gartner employees must be reported to, and pre-approved by, the General Counsel.In 2016, there were no related party transactions in which any director, executive officer or a greater than 5% owner of our stock, or immediate family member of any of them, had or will have a direct or indirect material interest.DIRECTOR INDEPENDENCEOur Board Guidelines require that our Board be comprised of a majority of directors who meet the criteria for independence from management set forth by the New York Stock Exchange (“NYSE”) in its corporate governance listing standards.Our committee charters likewise require that our standing Audit, Compensation and Governance/Nominating Committees be comprised only of independent directors. Additionally, the Audit Committee members must be independent under Section 10A-3 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The Compensation Committee members must be independent under Rule 16b-3 promulgated under the Exchange Act as well as applicable NYSE corporate governance listing standards, and they must qualify as outside directors under regulations promulgated under Section 162(m) (“Section 162(m)”) of the Internal Revenue Code of 1986, as amended (the “Code”).Utilizing all of these criteria, as well as all relevant facts and circumstances, the Board annually assesses the independence from management of all non-management directors and committee members by reviewing the38commercial, financial, familial, employment and other relationships between each director and the Company, its auditors and other companies that do business with Gartner.After analysis and recommendation by the Governance Committee, the Board determined that:all non-management directors (Michael Bingle, Peter Bisson, Richard Bressler, Raul Cesan, Karen Dykstra, Anne Sutherland Fuchs, William Grabe, Stephen Pagliuca and James Smith) are independent under the NYSE listing standards;our Audit Committee members (Ms. Dykstra and Messrs. Bressler and Smith) are independent under the criteria set forth in Section 10A-3 of the Exchange Act; andour Compensation Committee members (Ms. Fuchs and Messrs. Bingle and Cesan) are independent under the criteria set forth in Exchange Act Rule 16b-3 as well as under applicable NYSE corporate governance listing standards, and qualify as “outside directors” under Code Section 162(m) regulations.ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICESDuring 2016, KPMG performed recurring audit services, including the audit of our annual consolidated financial statements and the audit of internal controls over financial reporting as of December 31, 2016, reviews of our quarterly financial information, and certain statutory audits and certain tax services for the Company. The aggregate fees billed for professional services by KPMG in 2015 and 2016 for various services performed by them were as follows: 2016 ($) Audit Fees 2,729,400 2,857,000 Audit-Related Fees 7,600 28,000 Tax Fees 513,277 545,000 All Other Fees — 3,000 Total Fees 3,250,277 3,433,000 Audit FeesAudit fees relate to professional services rendered by KPMG for the audit of the Company’s annual consolidated financial statements contained in itsthis Annual Report on Form 10-K, audit of internal controls over financial reporting and reviews of the Company’s quarterly financial information contained in its Quarterly Reports on Form 10-Q, as well as work performed in connection with statutory and regulatory filings.Audit-Related FeesAudit-related fees relate to professional services renderedfiled by KPMG primarily for an agreed upon procedures report and issuance of a consent in connection with the filing of a registration statement.Tax FeesTax fees relate to professional services rendered by KPMG for permissible tax compliance, tax advice and tax planning services.All Other FeesThis category of fees covers all fees for any permissible service not included in the above categories.
April 29, 2020.39Pre-Approval PoliciesThe Audit Committee’s policy is to pre-approve all audit, audit-related and permissible non-audit services provided by KPMG. These services may include domestic and international audit services, audit-related services, tax services and other services. At the beginning of each fiscal year, the Audit Committee pre-approves aggregate fee limits for specific types of permissible services (e.g., domestic and international tax compliance and tax planning services; transfer pricing services, audit-related services and other permissible services) to allow management to engage KPMG expeditiously as needed as projects arise. At each regular quarterly meeting, KPMG and management report to the Audit Committee regarding the services for which the Company has engaged KPMG in the immediately preceding fiscal quarter in accordance with the pre-approved limits, and the related fees for such services as well as year-to-date cumulative fees for KPMG services. Pre-approved limits may be adjusted as necessary during the year, and the Audit Committee may also pre-approve particular services on a case-by-case basis. All services provided by KPMG in 2016 were pre-approved by the Audit Committee.SCHEDULESConsolidated Financial Statements and Schedules consolidated financial statements listed in the Index to Consolidated Financial Statements herein are filed as part of this report.Exhibits:ExhibitsEXHIBIT NUMBER 3.1(1)Agreement and Plan of Merger by and among the Company, Cobra Acquisition Corp. and CEB Inc., dated as of January 5, 2017. Restated Certificate of Incorporation of the Company. 3.2(2) Bylaws as amended through February 2, 2012.4.1(1)By-laws of Gartner, Inc. (January 30, 2020). Form of Certificate for Common Stock as of June 2, 2005. 4.2 (3) Credit Agreement, dated as of June 17, 2016, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent. 4.3 (4)Guarantee and Collateral Agreement, dated as of June 17, 2016, among the Company and certain of its subsidiaries, in favor of JPMorgan Chase Bank, N.A. as administrative agent. First Amendment to Credit Agreement, dated as of January 20, 2017, among the Company, the several lenders from time to time parties thereto, and JPMorgan Chase Bank, N.A. as administrative agent, filed as of January 24, 2017. 10.1(5)Second Amendment, dated as of March 20, 2017, among the Company, each other Loan Party party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. Incremental Amendment, dated as of April 5, 2017, among the Company, each other Loan Party party thereto, the Lenders party thereto and JPMorgan Chase Bank, N.A., as administrative agent. Indenture (including form of Notes), dated as of March 30, 2017, among the Company, the guarantors named therein and U.S. Bank National Association, as trustee, relating to the $800,000,000 aggregate principal amount of 5.125% Senior Notes due 2025. Description of Gartner, Inc.'s Common Stock. Amended and Restated Lease dated April 16, 2010 between Soundview Farms and the Company for premises at 56 Top Gallant Road, 70 Gatehouse Road, and 88 Gatehouse Road, Stamford, Connecticut. 10.2(5) First Amendment to Amended and Restated Lease dated April 16, 2010 between Soundview Farms and the Company for premises at 56 Top Gallant Road, 70 Gatehouse Road, and 88 Gatehouse Road, Stamford, Connecticut. 10.3(6) 2011 Employee Stock Purchase Plan. 10.4(7) 2003 Long -TermLong-Term Incentive Plan, as amended and restated effective June 4, 2009.10.5(8) 2014Gartner, Inc. Long-Term Incentive Plan, as amended and restated effective May 29, 2014.January 31, 2019.10.6(9) Amended and Restated Employment Agreement between Eugene A. Hall and the Company dated as of March 19, 2016.February 14, 2019.4010.7(10) Company Deferred Compensation Plan, effective January 1, 2009. 10.8(11) Form of 2017 Stock Appreciation Right Agreement for executive officers. 10.9(11) Form of 2017 Performance Stock Unit Agreement for executive officers. 10.10 (12) Agreement and Plan of Merger by and among Gartner, Inc., Cobra Acquisition Corp. and CEB Inc., dated as of January 5, 2017.10.11 (12) Commitment Letter among Gartner, Inc., JPMorgan Chase Bank, N.A. and Goldman Sachs Bank USA, dated January 5, 2017.Form of 2017 Restricted Stock Unit Agreement for certain officers.Form of 2018 Stock Appreciation Right Agreement for executive officers. Form of 2018 Performance Stock Unit Agreement for executive officers. Form of 2019 Stock Appreciation Right Agreement for executive officers. Form of 2019 Performance Stock Unit Agreement for executive officers. Form of 2020 Stock Appreciation Right Agreement for executive officers. Form of 2020 Performance Stock Unit Agreement for executive officers. Form of Restricted Stock Unit Agreement for non-employee directors. Enhanced Executive Rewards Policy. Subsidiaries of Registrant. Consent of Independent Registered Public Accounting Firm. Power of Attorney.Attorney (see Signature Page). Certification of chief executive officer under Section 302 of the Sarbanes-Oxley Act of 2002. Certification of chief financial officer under Section 302 of the Sarbanes-Oxley Act of 2002. Certification under Section 906 of the Sarbanes-Oxley Act of 2002. XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. XBRL Taxonomy Extension Schema Document. XBRL Taxonomy Extension Calculation Linkbase Document. XBRL Taxonomy Extension Label Linkbase Document. XBRL Taxonomy Extension Presentation Linkbase Document. XBRL Taxonomy Extension Definition Linkbase Document. Cover Page Interactive Data File, formatted in Inline XBRL (included as Exhibit 101). * Filed with this document. **Previously filed or furnished with the Registrant’s Annual Report on Form 10-K, filed February 22, 2017.+ Management compensation plan or arrangement. (1) Incorporated by reference from the Company’s Current Report on Form 8-K dated June 29, 2005 as filed on July 6, 2005.January 5, 2017.(2) Incorporated by reference from the Company’s Current Report on Form 8-K dated February 2, 2012 as filed on February 7, 2012.July 6, 2005.(3) Incorporated by reference from the Company’s Current Report on Form 8-K dated June 17,filed on February 5, 2020.(4) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on August 4, 2016. (4)(5)Incorporated by reference from the Company’s Current Report on Form 8-K dated January 20, 2017 and filed on January 24, 2017.(5)(6)Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 21, 2017. (7) Incorporated by reference from the Company’s Current Report on Form 8-K filed on April 6, 2017. (8) Incorporated by reference from the Company’s Current Report on Form 8-K filed on March 30, 2017. (9) Incorporated by reference from the Company’s Quarterly Report on formForm 10-Q filed on August 9, 2010.(6)(10)Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 18, 2011. (7)(11)Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 21, 2009 (8)(12)Incorporated by reference from the Company’s Proxy Statement (Schedule 14A) filed on April 15, 2014.(9)Incorporated by reference from the Company’s QuarterlyAnnual Report on Form 10-Q10-K filed on May 5, 2016.February 22, 2019.(10)(13)Incorporated by reference from the Company’s Annual Report on Form 10-K filed on February 20, 2009. (11)(14)Incorporated by reference from the Company’s Current Report on Form 8-K dated February 6, 2017 and filed on February 7, 2017.(12)(15)Incorporated by reference from the Company’s CurrentQuarterly Report on Form 8-K dated and10-Q filed January 5,on November 2, 2017.None.41(16)Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on May 8, 2018. (17) Incorporated by reference from the Company’s Quarterly Report on Form 10-Q filed on August 1, 2018. December 31, 2019 2018 ASSETS Current assets: Cash and cash equivalents $ 280,836 $ 156,368 Fees receivable, net of allowances of $8,000 and $7,700, respectively 1,326,012 1,255,118 Deferred commissions 265,867 235,016 Prepaid expenses and other current assets 146,026 165,237 Total current assets 2,018,741 1,811,739 Property, equipment and leasehold improvements, net 344,579 267,665 Operating lease right-of-use assets 702,916 — Goodwill 2,937,726 2,923,136 Intangible assets, net 925,087 1,042,565 Other assets 222,245 156,369 Total Assets $ 7,151,294 $ 6,201,474 LIABILITIES AND STOCKHOLDERS’ EQUITY Current liabilities: Accounts payable and accrued liabilities $ 788,796 $ 710,113 Deferred revenues 1,928,020 1,745,244 Current portion of long-term debt 139,718 165,578 Total current liabilities 2,856,534 2,620,935 Long-term debt, net of deferred financing fees 2,043,888 2,116,109 Operating lease liabilities 832,533 — Other liabilities 479,746 613,673 Total Liabilities 6,212,701 5,350,717 Stockholders’ Equity: Preferred stock: $0.01 par value, authorized 5,000,000 shares; none issued or outstanding — — Common stock: $0.0005 par value, 250,000,000 shares authorized; 163,602,067 shares issued for both periods 82 82 Additional paid-in capital 1,899,273 1,823,710 Accumulated other comprehensive loss, net (77,938 ) (39,867 ) Accumulated earnings 1,988,722 1,755,432 Treasury stock, at cost, 74,444,288 and 73,899,977 common shares, respectively (2,871,546 ) (2,688,600 ) Total Stockholders’ Equity 938,593 850,757 Total Liabilities and Stockholders’ Equity $ 7,151,294 $ 6,201,474 Year Ended December 31, 2019 2018 2017 Revenues: Research $ 3,374,548 $ 3,105,764 $ 2,471,280 Conferences 476,869 410,461 337,903 Consulting 393,904 353,667 327,661 Other — 105,562 174,650 Total revenues 4,245,321 3,975,454 3,311,494 Costs and expenses: Cost of services and product development 1,550,568 1,468,800 1,320,198 Selling, general and administrative 2,103,424 1,884,141 1,599,004 Depreciation 82,066 68,592 63,897 Amortization of intangibles 129,713 187,009 176,274 Acquisition and integration charges 9,463 107,197 158,450 Total costs and expenses 3,875,234 3,715,739 3,317,823 Operating income (loss) 370,087 259,715 (6,329 ) Interest income 3,026 2,566 3,011 Interest expense (102,831 ) (126,774 ) (127,947 ) (Loss) gain from divested operations (2,075 ) 45,447 — Other income, net 7,532 167 3,448 Income (loss) before income taxes 275,739 181,121 (127,817 ) Provision (benefit) for income taxes 42,449 58,665 (131,096 ) Net income $ 233,290 $ 122,456 $ 3,279 Net income per share: Basic $ 2.60 $ 1.35 $ 0.04 Diluted $ 2.56 $ 1.33 $ 0.04 Weighted average shares outstanding: Basic 89,817 90,827 88,466 Diluted 90,971 92,122 89,790 Year Ended December 31, 2019 2018 2017 Net income $ 233,290 $ 122,456 $ 3,279 Other comprehensive (loss) income, net of tax: Foreign currency translation adjustments 4,169 (31,245 ) 47,363 Interest rate swaps - net change in deferred gain or loss (39,394 ) (10,844 ) 3,892 Pension plans - net change in deferred actuarial loss (2,846 ) 123 (64 ) Other comprehensive (loss) income, net of tax (38,071 ) (41,966 ) 51,191 Comprehensive income $ 195,219 $ 80,490 $ 54,470 Balance at December 31, 2016 $ 78 $ 863,127 $ (49,683 ) $ 1,644,005 $ (2,396,649 ) $ 60,878 Net income — — — 3,279 — 3,279 Other comprehensive income — — 51,191 — — 51,191 Issuances under stock plans and for an acquisition 4 819,313 — — 11,129 830,446 Common share repurchases — — — — (41,272 ) (41,272 ) Stock-based compensation expense — 78,943 — — — 78,943 Balance at December 31, 2017 82 1,761,383 1,508 1,647,284 (2,426,792 ) 983,465 Adoption of ASU No. 2018-02 — — 591 (591 ) — — Adoption of ASU No. 2016-16 — — — (13,717 ) — (13,717 ) Net income — — — �� 122,456 — 122,456 Other comprehensive loss — — (41,966 ) — — (41,966 ) Issuances under stock plans — (3,845 ) — — 14,026 10,181 Common share repurchases — — — — (275,834 ) (275,834 ) Stock-based compensation expense — 66,172 — — — 66,172 Balance at December 31, 2018 82 1,823,710 (39,867 ) 1,755,432 (2,688,600 ) 850,757 Net income — — — 233,290 — 233,290 Other comprehensive loss — — (38,071 ) — — (38,071 ) Issuances under stock plans — 6,555 — — 11,094 17,649 Common share repurchases — — — — (194,040 ) (194,040 ) Stock-based compensation expense — 69,008 — — — 69,008 Balance at December 31, 2019 $ 82 $ 1,899,273 $ (77,938 ) $ 1,988,722 $ (2,871,546 ) $ 938,593 Year Ended December 31, 2019 2018 2017 Operating activities: Net income $ 233,290 $ 122,456 $ 3,279 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 211,779 255,601 240,171 Stock-based compensation expense 69,008 66,172 78,943 Deferred taxes (55,787 ) 1,524 (217,414 ) Loss (gain) from divested operations 2,075 (45,447 ) — Gain on sale of an equity security (9,120 ) — — Reduction in the carrying amount of operating lease right-of-use assets 86,466 — — Amortization and write-off of deferred financing fees 6,497 13,815 15,062 Changes in assets and liabilities, net of acquisitions and divestitures: Fees receivable, net (66,729 ) (115,003 ) (368,516 ) Deferred commissions (30,315 ) (31,247 ) (61,393 ) Prepaid expenses and other current assets 18,985 (50,551 ) 13,251 Other assets (27,303 ) 11,456 (18,529 ) Deferred revenues 181,203 187,147 382,852 Accounts payable and accrued and other liabilities (54,613 ) 55,235 186,811 Cash provided by operating activities 565,436 471,158 254,517 Investing activities: Additions to property, equipment and leasehold improvements (149,016 ) (126,873 ) (110,765 ) Acquisitions - cash paid (net of cash acquired) (25,989 ) (15,855 ) (2,641,780 ) Divestitures - cash received (net of cash transferred) — 526,779 — Proceeds from the sale of an equity security 14,120 — — Cash (used in) provided by investing activities (160,885 ) 384,051 (2,752,545 ) Financing activities: Proceeds from employee stock purchase plan 17,629 14,689 11,711 Proceeds from borrowings 5,000 — 3,025,000 Payments for deferred financing fees — — (51,171 ) Payments on borrowings (109,579 ) (1,010,972 ) (404,438 ) Purchases of treasury stock (199,042 ) (260,832 ) (41,272 ) Cash (used in) provided by financing activities (285,992 ) (1,257,115 ) 2,539,830 Net increase (decrease) in cash and cash equivalents and restricted cash 118,559 (401,906 ) 41,802 Effects of exchange rates on cash and cash equivalents and restricted cash 3,614 (6,489 ) 25,902 Cash and cash equivalents and restricted cash, beginning of year 158,663 567,058 499,354 Cash and cash equivalents and restricted cash, end of year $ 280,836 $ 158,663 $ 567,058 Supplemental disclosures of cash flow information: Cash paid during the year for: Interest $ 102,298 $ 117,500 $ 98,500 Income taxes, net of refunds received $ 119,156 $ 95,800 $ 76,100 SectionASU No. 2016-16, the Company recorded income tax benefits of approximately (i) $38.1 million in 2019 from an intercompany sale of certain intellectual property and (ii) $6.8 million in 2018 related to intra-entity transfers upon the merger of certain foreign subsidiaries. In the future, there could be a material impact from ASU No. 2016-16, depending on the nature, size and tax consequences of intra-entity transfers, if any. December 31, 2019 2018 2017 2016 Cash and cash equivalents $ 280,836 $ 156,368 $ 538,908 $ 474,233 Restricted cash classified in (1), (2): Prepaid expenses and other current assets — 2,295 15,148 25,121 Other assets — — 3,002 — Cash classified as held-for-sale (3) — — 10,000 — Cash and cash equivalents and restricted cash per the Consolidated Statements of Cash Flows $ 280,836 $ 158,663 $ 567,058 $ 499,354 (1) Restricted cash consists of escrow accounts established in connection with certain of the Company's business acquisitions. Generally, such cash is restricted to use due to provisions contained in the underlying stock or asset purchase agreement. The Company will disburse the restricted cash to the sellers of the businesses upon satisfaction of any contingencies described in such agreements (e.g., potential indemnification claims, etc.). (2) Restricted cash is recorded in Prepaid expenses and other current assets and Other assets in the Company's consolidated balance sheets with the short-term or long-term classification dependent on the projected timing of disbursements to the sellers. (3) Represents cash classified as a held-for-sale asset for the CEB Talent Assessment business, which was divested in 2018. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company's 2018 divestitures. Useful Life December 31, Category (Years) 2019 2018 Computer equipment and software 2-7 $ 256,451 $ 210,955 Furniture and equipment 3-8 104,370 85,002 Leasehold improvements 2-15 275,114 218,405 Total cost 635,935 514,362 Less — accumulated depreciation and amortization (291,356 ) (246,697 ) Property, equipment and leasehold improvements, net $ 344,579 $ 267,665 15(d)the “new lease standard”) using a modified retrospective approach. ASU No. 2016-02 significantly changes the accounting for leases because a right-of-use model is now used whereby a lessee must record a right-of-use asset and a related lease liability on its balance sheet for most of its leases. Under ASU No. 2016-02, leases are classified as either operating or finance arrangements, with suchAssets: Cash $ 1,281 Fees receivable 1,402 Prepaid expenses and other assets 166 Goodwill (1) 19,293 Finite-lived intangible assets (2) 5,250 Total assets acquired 27,392 Total liabilities assumed (primarily deferred revenues) 2,417 Net assets acquired $ 24,975 (1) We believe that the recorded goodwill is supported by the anticipated synergies resulting from the acquisition. All of the recorded goodwill is expected to be deductible for tax purposes. (2) The acquired finite-lived intangible assets primarily consisted of customer relationships and content, which are being amortized over 6 years and 1.5 years, respectively. To determine the fair values of the acquired intangible assets, we primarily relied on income valuation methodologies, in particular, discounted cash flow models. CEB L2 Total Cash paid at close (2), (3) $ 2,687,704 $ 134,199 $ 2,821,903 Additional cash paid (2) 12,465 — 12,465 Fair value of Gartner equity (4) 818,660 — 818,660 Total $ 3,518,829 $ 134,199 $ 3,653,028 (1) Includes the total consideration transferred for 100% of the outstanding capital stock of the acquired businesses. (2) The cash paid at close represents the gross contractual amount paid. The Company paid an additional $12.5 million in cash during the third quarter of 2017. Net of cash acquired and for cash flow reporting purposes, the Company paid a total of approximately $2.64 billion in cash for acquisitions in 2017. (3) The Company borrowed a total of approximately $2.8 billion in conjunction with the CEB acquisition (see Note 6 — Debt for additional information). (4) Consists of the fair value of (i) Gartner common stock issued and (ii) stock-based compensation replacement awards. As part of the consideration for the CEB acquisition, the Company issued approximately 7.4 million shares of its common stock at a fair value of $109.65 per common share. The fair value of the Company's common stock was determined based on an average of the high and low prices of the common stock as reported by the New York Stock Exchange on April 5, 2017, the date of the acquisition. Total Assets: Cash $ 194,706 $ 4,852 $ 199,558 Fees receivable 175,440 8,277 183,717 Prepaid expenses and other current assets 53,610 1,167 54,777 Property, equipment and leasehold improvements 51,399 663 52,062 2,349,589 108,202 2,457,791 1,584,300 15,890 1,600,190 Other assets 66,818 13,067 79,885 Total assets 4,475,862 152,118 4,627,980 Liabilities: Accounts payable and accrued liabilities 142,134 3,050 145,184 Deferred revenues (current) 246,472 13,200 259,672 Other liabilities 568,427 1,669 570,096 Total liabilities 957,033 17,919 974,952 Net assets acquired $ 3,518,829 $ 134,199 $ 3,653,028 (1) The Company believes that the goodwill resulting from the CEB and L2 acquisitions is supportable based on synergies that were anticipated prior to the respective closing dates. For CEB, among the factors contributing to the anticipated synergies were a broader market presence, expanded product offerings and market opportunities, and an acceleration of CEB's growth by leveraging Gartner's global infrastructure and best practices in sales productivity and other areas. None of the goodwill is deductible for tax purposes. (2) All of the acquired intangible assets were finite-lived. The determination of the fair values of such intangible assets required judgment and the consideration of a number of factors. In determining the fair values, management primarily relied on income valuation methodologies, in particular, discounted cash flow models. The discounted cash flow models required the use of certain estimates, including projected cash flows related to the asset being evaluated; the useful lives of the affected assets; the selection of royalty and discount rates used in the models; and certain published industry benchmark data. When establishing the estimated useful lives of the finite-lived intangible assets, the Company relied on both internally-generated data for similar assets as well as certain published industry benchmark data. We believe that the values assigned to the finite-lived intangible assets are both reasonable and supportable. (3) The Company's consolidated financial statements include the operating results of CEB beginning on April 5, 2017, the date of acquisition. CEB's operating results and the related goodwill have been reported as part of the Company's Research, Conferences and Other segments. Had the Company acquired CEB in prior periods, the impact on the Company's operating results would have been material. If the Company had acquired CEB on January 1, 2016, the pro forma consolidated financial results for 2017 would have approximated the amounts shown in the table below (in thousands, except per share data). Pro forma total revenue $ 3,726,470 Pro forma net income 150,167 Pro forma basic and diluted income per share $ 1.66 (4) The Company's consolidated financial statements include the operating results of L2 beginning on March 9, 2017, the date of acquisition. L2's operating results and the related goodwill are being reported as part of the Company's Research segment. For 2017, L2's operating results were not material to the Company's consolidated operating results and segment results. Had the Company acquired L2 in prior periods, the impact on the Company's operating results would not have been material and, as a result, pro forma prior period financial information for L2 has not been presented herein. 2018 2017 Liability balance at beginning of the year $ 12,961 $ — Charges and adjustments, net (2) 69,790 13,087 Payments, net of $2,515 in sublease rent during 2018 (26,087 ) (126 ) Liability balance at end of the year (3) $ 56,664 $ 12,961 (1) With the adoption of ASU No. 2016-02 on January 1, 2019, the accrual for exit costs was reclassified to offset the Company's right-of-use assets and the present value of our remaining lease payments was recorded as an operating lease liability. Moreover, there were no new exit cost activities during 2019. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases provide additional information regarding the Company's leases and the adoption of ASU No. 2016-02. (2) During 2018, the Company recognized $7.5 million of expense for changes in the original estimates of its exit cost obligations. The corresponding amount for 2017 was a benefit of $10.1 million. (3) Through December 31, 2018, in the aggregate, we had expensed $82.9 million and had net cash outlays of $26.2 million related to the exit cost activities at all of our facilities. Research Conferences Consulting Other Total Balance at December 31, 2017 (1) $ 2,619,677 $ 187,920 $ 97,798 $ 81,899 $ 2,987,294 Divestitures (2) (2,500 ) — — (90,078 ) (92,578 ) Foreign currency translation impact and other (3) 21,241 (266 ) (734 ) 8,179 28,420 Balance at December 31, 2018 2,638,418 187,654 97,064 — 2,923,136 Additions due to an acquisition (4) 17,557 1,736 — — 19,293 Foreign currency translation impact (4,915 ) 251 (39 ) — (4,703 ) Balance at December 31, 2019 $ 2,651,060 $ 189,641 $ 97,025 $ — $ 2,937,726 (1) The Company does not have any accumulated goodwill impairment losses. The goodwill balance at December 31, 2017 excludes certain amounts related to held-for-sale operations. (2) Represents amounts related to divested businesses. See Note 2 — Acquisitions and Divestitures for additional information. (3) Includes the foreign currency translation impact and certain measurement period adjustments related to the acquisition of CEB. See Note 2 — Acquisitions and Divestitures for additional information. (4) The 2019 additions are due to the acquisition of TOPO. See Note 2 – Acquisitions and Divestitures for additional information. December 31, 2019 Customer
Relationships Software Content Other Total Gross cost at December 31, 2018 $ 1,131,656 $ 110,701 $ 98,842 $ 51,662 $ 1,392,861 Additions due to an acquisition (1) 3,600 — 1,200 450 5,250 Intangible assets fully amortized — — (85,900 ) (21,358 ) (107,258 ) Foreign currency translation impact 9,853 332 (2 ) 84 10,267 Gross cost 1,145,109 111,033 14,140 30,838 1,301,120 Accumulated amortization (2) (283,369 ) (61,564 ) (11,225 ) (19,875 ) (376,033 ) Balance at December 31, 2019 $ 861,740 $ 49,469 $ 2,915 $ 10,963 $ 925,087 December 31, 2018 Customer
Relationships Software Content Other Total Gross cost at December 31, 2017 (3) $ 1,200,316 $ 123,424 $ 104,313 $ 54,929 $ 1,482,982 Intangible assets fully amortized (303 ) (11,715 ) (669 ) (3,311 ) (15,998 ) Divestitures (4) (45,175 ) (321 ) (473 ) (160 ) (46,129 ) Foreign currency translation impact and other (5) (23,182 ) (687 ) (4,329 ) 204 (27,994 ) Gross cost 1,131,656 110,701 98,842 51,662 1,392,861 Accumulated amortization (2) (184,918 ) (38,901 ) (92,717 ) (33,760 ) (350,296 ) Balance at December 31, 2018 $ 946,738 $ 71,800 $ 6,125 $ 17,902 $ 1,042,565 (1) The 2019 additions are due to the acquisition of TOPO. See Note 2 – Acquisitions and Divestitures for additional information. (2) Finite-lived intangible assets are amortized using the straight-line method over the following periods: Customer relationships—4 to 13 years; Software—3 to 7 years; Content—1.5 to 4 years; and Other —2 to 11 years. (3) Excludes certain amounts related to held-for-sale operations. (4) Represents amounts related to divested businesses. See Note 2 — Acquisitions and Divestitures for additional information. (5) Includes the foreign currency translation impact and certain other adjustments. 2020 $ 126,081 2021 105,007 2022 95,194 2023 95,179 2024 89,863 2025 and thereafter 413,763 $ 925,087 December 31, 2019 2018 Benefit plan-related assets $ 84,600 $ 75,653 Non-current deferred tax assets 79,618 34,494 Other 58,027 46,222 Total other assets $ 222,245 $ 156,369 December 31, 2019 2018 Accounts payable $ 32,995 $ 37,508 Payroll and employee benefits payable 165,449 143,803 Severance and retention bonus payable 24,281 28,292 Bonus payable 192,100 170,719 Commissions payable 142,499 126,844 Taxes payable 7,878 19,725 Current portion of operating lease liabilities (1) 76,516 — Other accrued liabilities 147,078 183,222 Total accounts payable and accrued liabilities $ 788,796 $ 710,113 (1) Note 1 — Business and Significant Accounting Policies and Note 7 — Leases provide additional information regarding the Company's leases and certain changes in lease accounting effective January 1, 2019. December 31, 2019 2018 Non-current deferred revenues $ 24,409 $ 21,194 Long-term taxes payable 63,565 66,304 Benefit plan-related liabilities 108,615 96,033 Lease-related matters prior to the adoption of ASU No. 2016-02 (1) — 165,374 Non-current deferred tax liabilities 189,814 214,687 Other, including fair value of interest rate swap contracts 93,343 50,081 Total other liabilities $ 479,746 $ 613,673 (1) With the adoption of ASU No. 2016-02 on January 1, 2019, the accrual for lease-related matters was reclassified to offset the Company's right-of-use assets and the present value of our remaining lease payments was recorded as an operating lease liability. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases provide additional information regarding the Company's leases and the adoption of ASU No. 2016-02. December 31, Description 2019 2018 2016 Credit Agreement - Term loan A facility (1) $ 1,252,969 $ 1,355,062 2016 Credit Agreement - Revolving credit facility (1), (2) 148,000 155,000 Senior notes (3) 800,000 800,000 Other (4) 6,545 2,030 Principal amount outstanding (5), (6) 2,207,514 2,312,092 Less: deferred financing fees (7) (23,908 ) (30,405 ) Net balance sheet carrying amount $ 2,183,606 $ 2,281,687 (1) (2) The Company had approximately $1.0 billion of available borrowing capacity on the revolver (not including the expansion feature) as of December 31, 2019. (3) Consists of 800.0 million principal amount of Senior Notes outstanding. The Senior Notes bear interest at a fixed rate of 5.125% and mature on April 1, 2025. (4) Consists of 2 State of Connecticut economic development loans as of December 31, 2019. One of the loans originated in 2012, has a 10-year maturity and the outstanding balance of $1.5 million as of December 31, 2019 bears interest at a fixed rate of 3.00%. In connection with an expansion project at its Stamford, Connecticut headquarters, the Company borrowed $5.0 million during 2019 under a financial assistance program offered by the State of Connecticut. This second loan has a 10-year maturity and bears interest at a fixed rate of 1.75%. Principal and interest payments are deferred for the first seven years. The loan has a provision whereby some or all of the $5.0 million principal may be forgiven if the Company meets certain employment targets in the State of Connecticut during the first five years of the loan. Both of these loans may be repaid at any time by the Company without penalty. (5) The weighted average annual effective rate on the Company's outstanding debt for 2019, including the effects of its interest rate swaps discussed below, was 4.11%. (6) The contractual due dates of principal amounts by year for the Company's outstanding debt as of December 31, 2019 were as follows: $139.7 million in 2020; $37.6 million in 2021; $1.2 billion in 2022; $800.0 million in 2025 and $5.0 million thereafter. (7) Deferred financing fees are being amortized to Interest expense over the term of the related debt obligation. The Company wrote off approximately $6.9 million of deferred financing fees in 2018 related to the repayment of the Term loan B facility. During 2017, the Company paid $51.2 million for deferred financing fees and recorded a charge of approximately $6.1 million for the write-off of deferred financing fees related to a prior financing arrangement. Description Year Ended December 31, 2019: Operating lease cost (1) $ 144,727 Variable lease cost (2) 16,404 Sublease income (38,901 ) Total lease cost, net (3) $ 122,230 Cash paid for amounts included in the measurement of operating lease liabilities $ 135,799 Cash receipts from sublease arrangements $ 34,441 Right-of-use assets obtained in exchange for new operating lease liabilities $ 136,997 As of December 31, 2019: Weighted average remaining lease term for operating leases (in years) 10.2 Weighted average discount rate for operating leases 6.7 % (1) Included in operating lease cost was $43.2 million of costs for subleasing activities during 2019. (2) These amounts are primarily variable lease and nonlease costs that were not fixed at the lease commencement date or are dependent on something other than an index or a rate. (3) The Company did not capitalize any operating lease costs during 2019. Operating Sublease Lease Cash Period ending December 31, Payments Receipts 2020 $ 134,579 $ 39,941 2021 134,707 44,382 2022 129,741 45,582 2023 126,435 46,520 2024 114,948 40,643 Thereafter 643,129 143,547 Total future minimum operating lease payments and estimated sublease cash receipts (1) 1,283,539 $ 360,615 Imputed interest (374,490 ) Total operating lease liabilities per the Consolidated Balance Sheet $ 909,049 (1) Approximately 82% of the operating lease payments pertain to properties in the United States. Description Accounts payable and accrued liabilities $ 76,516 Operating lease liabilities 832,533 Total operating lease liabilities per the Consolidated Balance Sheet $ 909,049 Year ended or ending December 31, 2019 $ 130,991 2020 121,802 2021 118,945 2022 111,117 2023 106,113 Thereafter 689,360 Total minimum lease payments (1) $ 1,278,328 Balance at December 31, 2016 156,234,415 73,583,172 Issued in connection with the acquisition of CEB (1) 7,367,652 — Issuances under stock plans — (1,186,150 ) Purchases for treasury (2) — 382,183 Balance at December 31, 2017 163,602,067 72,779,205 Issuances under stock plans — (933,246 ) Purchases for treasury (2), (3) — 2,054,018 Balance at December 31, 2018 163,602,067 73,899,977 Issuances under stock plans — (825,115 ) Purchases for treasury (2), (3) — 1,369,426 Balance at December 31, 2019 163,602,067 74,444,288 (1) Note 2 — Acquisitions and Divestitures provides additional information regarding the CEB acquisition. (2) The Company used a total of $199.0 million, $260.8 million and $41.3 million in cash for share repurchases during 2019, 2018 and 2017, respectively. (3) The number of shares repurchased in 2018 included shares repurchased in December 2018 that settled in January 2019. Additionally, the shares repurchased during 2019 included shares repurchased in December 2019 that settled in January 2020. amended,amended), accelerated share repurchases, private transactions or other transactions and will be funded by cash on hand and borrowings.registrantchanges in AOCI/L by component and the related amounts reclassified out of AOCI/L to income during the years indicated (net of tax, in thousands) (1). Interest Rate Swaps Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total Balance - December 31, 2018 $ (7,770 ) $ (5,738 ) $ (26,359 ) $ (39,867 ) Other comprehensive income (loss) activity during the year: Change in AOCI/L before reclassifications to income (36,949 ) (3,011 ) 4,169 (35,791 ) Reclassifications from AOCI/L to income (2), (3) (2,445 ) 165 — (2,280 ) Other comprehensive income (loss) for the year (39,394 ) (2,846 ) 4,169 (38,071 ) Balance - December 31, 2019 $ (47,164 ) $ (8,584 ) $ (22,190 ) $ (77,938 ) Interest Rate Swaps Defined Benefit Pension Plans Foreign Currency Translation Adjustments Total Balance - December 31, 2017 $ 2,483 $ (5,861 ) $ 4,886 $ 1,508 Adoption of ASU No. 2018-02 (4) 591 — — 591 Other comprehensive income (loss) activity during the year: Change in AOCI/L before reclassifications to income (9,447 ) — 29,066 19,619 Reclassifications from AOCI/L to income (2), (3), (5) (1,397 ) 123 (60,311 ) (61,585 ) Other comprehensive income (loss) for the year (10,844 ) 123 (31,245 ) (41,966 ) Balance - December 31, 2018 $ (7,770 ) $ (5,738 ) $ (26,359 ) $ (39,867 ) dulybeen recognized. We record fees receivable for amounts that are billed or billable. We also record contract assets, which represent amounts for which we have recognized revenue but lack the unconditional right to payment as of the balance sheet date due to our required continued performance under the relevant contract, progress billing milestones or other billing-related restrictions.(1) Identifying the contract with the customer; (2) Identifying the performance obligations in the contract; (3) Determining the transaction price for the contract; (4) Allocating the transaction price to the performance obligations in the contract; and (5) Recognizing revenue when (or as) performance obligations are satisfied. Primary Geographic Market Research Conferences Consulting Total United States and Canada $ 2,199,008 $ 295,857 $ 239,625 $ 2,734,490 Europe, Middle East and Africa 751,267 122,591 122,146 996,004 Other International 424,273 58,421 32,133 514,827 Total revenues $ 3,374,548 $ 476,869 $ 393,904 $ 4,245,321 Primary Geographic Market Research Conferences Consulting Other Total United States and Canada $ 1,994,016 $ 256,219 $ 205,874 $ 58,843 $ 2,514,952 Europe, Middle East and Africa 737,129 105,909 119,258 38,194 1,000,490 Other International 374,619 48,333 28,535 8,525 460,012 Total revenues $ 3,105,764 $ 410,461 $ 353,667 $ 105,562 $ 3,975,454 Primary Geographic Market Research Conferences Consulting Other Total United States and Canada $ 1,600,847 $ 210,698 $ 188,022 $ 92,799 $ 2,092,366 Europe, Middle East and Africa 597,943 86,567 111,792 59,119 855,421 Other International 272,490 40,638 27,847 22,732 363,707 Total revenues $ 2,471,280 $ 337,903 $ 327,661 $ 174,650 $ 3,311,494 (1) Revenue is reported based on where the sale is fulfilled. (2) During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating activity has been recorded in the Other segment in 2019. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company's 2018 divestitures. Timing of Revenue Recognition Research Conferences Consulting Total Transferred over time (2) $ 3,083,936 $ — $ 316,042 $ 3,399,978 Transferred at a point in time (3) 290,612 476,869 77,862 845,343 Total revenues $ 3,374,548 $ 476,869 $ 393,904 $ 4,245,321 Timing of Revenue Recognition Research Conferences Consulting Other Total Transferred over time (2) $ 2,851,176 $ — $ 294,397 $ 86,667 $ 3,232,240 Transferred at a point in time (3) 254,588 410,461 59,270 18,895 743,214 Total revenues $ 3,105,764 $ 410,461 $ 353,667 $ 105,562 $ 3,975,454 Timing of Revenue Recognition Research Conferences Consulting Other Total Transferred over time (2) $ 2,275,377 $ — $ 269,720 $ 141,331 $ 2,686,428 Transferred at a point in time (3) 195,903 337,903 57,941 33,319 625,066 Total revenues $ 2,471,280 $ 337,903 $ 327,661 $ 174,650 $ 3,311,494 (1) During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating activity has been recorded in the Other segment in 2019. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company's 2018 divestitures. (2) Research revenues were recognized in connection with performance obligations that were satisfied over time using a time-elapsed output method to measure progress. Consulting revenues were recognized over time using labor hours as an input measurement basis. During 2018 and 2017, Other revenues were recognized using either a time-elapsed output method, performance-based milestone approach or labor hours, depending on the nature of the underlying customer contract. (3) The revenues in this category were recognized in connection with performance obligations that were satisfied at the point in time that the contractual deliverables were provided to the customer. December 31, 2019 2018 Assets: Fees receivable, gross (1) $ 1,334,012 $ 1,262,818 Contract assets recorded in Prepaid expenses and other current assets (2) $ 21,350 $ 26,119 Contract liabilities: Deferred revenues (current liability) (3) $ 1,928,020 $ 1,745,244 Non-current deferred revenues recorded in Other liabilities (3) 24,409 21,194 Total contract liabilities $ 1,952,429 $ 1,766,438 (1) Fees receivable represent an unconditional right of payment from our customers and include both billed and unbilled amounts. (2) Contract assets represent recognized revenue for which we do not have an unconditional right to payment as of the balance sheet date because the project may be subject to a progress billing milestone or some other billing restriction. (3) Deferred revenues represent amounts (i) for which the Company has received an upfront customer payment or (ii) that pertain to recognized fees receivable. Both situations occur before the completion of our performance obligation(s). Award type 2019 2018 2017 Stock appreciation rights $ 6.7 $ 6.3 $ 5.6 Restricted stock units 61.6 59.2 72.6 Common stock equivalents 0.7 0.7 0.7 Total (1) $ 69.0 $ 66.2 $ 78.9 Expense category line item 2019 2018 2017 Cost of services and product development $ 29.1 $ 28.1 $ 25.8 Selling, general and administrative 39.4 36.2 35.5 Acquisition and integration charges (2) 0.5 1.9 17.6 Total (1) $ 69.0 $ 66.2 $ 78.9 (1) Includes charges of $21.5 million, $19.4 million and $22.9 million during 2019, 2018 and 2017, respectively, for awards to retirement-eligible employees. Those awards vest on an accelerated basis. (2) These charges are the result of (i) the acceleration of the vesting of certain restricted stock units related to the CEB acquisition and (ii) restricted stock units granted in connection with the CEB integration process. Outstanding at December 31, 2018 1.2 $ 89.45 $ 19.88 4.33 Granted 0.3 143.23 32.62 6.11 Forfeited (0.1 ) 118.31 26.52 n/a Exercised (0.2 ) 73.64 16.92 n/a Outstanding at December 31, 2019 (1) (2) 1.2 $ 104.05 $ 23.18 4.21 Vested and exercisable at December 31, 2019 (2) 0.5 $ 85.79 $ 18.87 3.13 (1) As of December 31, 2019, 0.7 million of the total SARs outstanding were unvested. The Company expects that substantially all of those unvested awards will vest in future periods. (2) As of December 31, 2019, the total SARs outstanding had an intrinsic value of $58.9 million. On such date, SARs vested and exercisable had an intrinsic value of $37.1 million. 2019 2018 2017 Expected dividend yield (1) — % — % — % Expected stock price volatility (2) 21 % 21 % 22 % Risk-free interest rate (3) 2.5 % 2.5 % 1.8 % Expected life in years (4) 4.59 4.52 4.53 (1) The expected dividend yield assumption was based on both the Company's historical and anticipated dividend payouts. Historically, the Company has not paid cash dividends on its Common Stock. (2) The determination of expected stock price volatility was based on both historical Common Stock prices and implied volatility from publicly traded options in the Common Stock. (3) The risk-free interest rate was based on the yield of a U.S. Treasury security with a maturity similar to the expected life of the award. (4) The expected life represents the Company’s estimate of the weighted average period of time the SARs are expected to be outstanding (that is, the period between the service inception date and the expected exercise date). Outstanding at December 31, 2018 1.4 $ 101.75 Granted (1) 0.5 139.86 Vested and released (0.5 ) 97.33 Forfeited (0.1 ) 116.79 Outstanding at December 31, 2019 (2) (3) 1.3 $ 118.89 (1) The 0.5 million of RSUs granted during 2019 consisted of 0.2 million of performance-based RSUs awarded to executives and 0.3 million of service-based RSUs awarded to non-executive employees and non-management board members. The performance-based awards include RSUs in final settlement of 2018 grants and approximately 0.1 million of RSUs representing the target amount of the grant for 2019 that is tied to an increase in Gartner’s total contract value for such year. The number of performance-based RSUs for 2019 that could have been earned ranged from 0% to 200% of the target amount. The actual increase in Gartner’s total contract value for 2019 as measured on December 31, 2019 yielded approximately 142% of the target amount. The incremental awards based on the actual achievement under the 2019 grant will be issued in 2020. (2) The Company expects that substantially all of the RSUs outstanding will vest in future periods. (3) As of December 31, 2019, the weighted average remaining contractual term of the RSUs outstanding was approximately 1.1 years. Outstanding at December 31, 2018 109,780 $ 24.96 Granted 4,521 153.43 Converted to shares of Common Stock upon grant (2,960 ) 144.88 Outstanding at December 31, 2019 111,341 $ 26.99 2019 2018 2017 Numerator: Net income used for calculating basic and diluted income per common share $ 233,290 $ 122,456 $ 3,279 Denominator: Weighted average common shares used in the calculation of basic income per share 89,817 90,827 88,466 Common stock equivalents associated with stock-based compensation plans 1,154 1,295 1,324 Shares used in the calculation of diluted income per share 90,971 92,122 89,790 Basic $ 2.60 $ 1.35 $ 0.04 Diluted $ 2.56 $ 1.33 $ 0.04 (1) Both basic and diluted income per share for 2019 included a tax benefit of approximately $0.42 per share related to an intercompany sale of certain intellectual property. Additionally, both basic and diluted income per share for 2017 included a tax benefit of approximately $0.66 per share related to the U.S. Tax Cuts and Jobs Act of 2017. Note 12 — Income Taxes provides information about the Company's income taxes. Year Ended December 31, 2019 2018 2017 Anti-dilutive common stock equivalents (in millions) (a) 0.2 — 0.3 Average market price per share of Common Stock during the year $ 148.38 $ 135.60 $ 116.09 2019 2018 2017 U.S. $ 115,543 $ 34,159 $ (135,757 ) Non-U.S. 160,196 146,962 7,940 Income (loss) before income taxes $ 275,739 $ 181,121 $ (127,817 ) 2019 2018 2017 Current tax expense: U.S. federal $ 30,208 $ 2,817 $ 48,339 State and local 11,630 6,969 434 Foreign 53,105 45,042 38,602 Total current 94,943 54,828 87,375 Deferred tax (benefit) expense: U.S. federal (16,389 ) 12,462 (176,046 ) State and local (6,897 ) 1,258 (14,363 ) Foreign (48,186 ) (13,795 ) (25,898 ) Total deferred (71,472 ) (75 ) (216,307 ) Total current and deferred 23,471 54,753 (128,932 ) Benefit (expense) relating to interest rate swaps used to increase (decrease) equity 17,666 3,840 (2,477 ) Benefit from stock transactions with employees used to increase equity 54 58 46 Benefit relating to defined-benefit pension adjustments used to increase equity 1,258 14 267 Total tax expense (benefit) $ 42,449 $ 58,665 $ (131,096 ) December 31, 2019 2018 Accrued liabilities $ 67,577 $ 96,292 Operating leases 54,860 — Loss and credit carryforwards 14,372 14,830 Assets relating to equity compensation 16,842 19,653 Other assets 20,364 14,092 Gross deferred tax assets 174,015 144,867 Property, equipment and leasehold improvements (15,137 ) (3,421 ) Intangible assets (212,498 ) (263,548 ) Prepaid expenses (49,221 ) (41,926 ) Other liabilities (5,799 ) (12,100 ) Gross deferred tax liabilities (282,655 ) (320,995 ) Valuation allowance (1,556 ) (4,066 ) Net deferred tax liabilities $ (110,196 ) $ (180,194 ) 2019 2018 2017 Statutory tax rate 21.0 % 21.0 % 35.0 % State income taxes, net of federal benefit 1.5 — 3.6 Effect of non-U.S. operations 2.7 (10.7 ) 5.9 Intercompany sale of intellectual property (13.8 ) — — Change in the reserve for tax contingencies 4.7 15.7 (2.8 ) Law changes — (1.3 ) 41.8 Stock-based compensation expense (3.9 ) (5.3 ) 11.0 Nondeductible acquisition costs — 0.9 (7.9 ) Nondeductible meals and entertainment costs 1.7 2.7 (3.5 ) Gains/Losses on divested operations and held-for-sale assets — 12.2 13.1 Limitation on executive compensation 2.4 2.7 (0.1 ) Global intangible low-taxed income, net of foreign tax credits 1.9 0.1 — Foreign-derived intangible income (1.0 ) (2.0 ) — Change in the valuation allowance (0.9 ) 0.5 3.0 Goodwill — (3.8 ) — Other items, net (0.9 ) (0.3 ) 3.5 Effective tax rate 15.4 % 32.4 % 102.6 % 2019 2018 Beginning balance $ 90,349 $ 60,269 Additions based on tax positions related to the current year 32,072 27,371 Additions for tax positions of prior years 8,564 14,691 Reductions for tax positions of prior years (16,942 ) (3,939 ) Reductions for expiration of statutes (7,481 ) (6,293 ) Settlements (3,867 ) (472 ) Change in foreign currency exchange rates 75 (1,278 ) Ending balance $ 102,770 $ 90,349 Derivative Contract Type Interest rate swaps (1) 4 $ 1,400,000 $ (64,831 ) Other liabilities $ (47,164 ) Foreign currency forwards (2) 176 604,858 59 Other current assets — Total 180 $ 2,004,858 $ (64,772 ) $ (47,164 ) Derivative Contract Type Interest rate swaps (1) 7 $ 2,100,000 $ (10,681 ) Other liabilities $ (7,770 ) Foreign currency forwards (2) 135 927,375 (1,942 ) Accrued liabilities — Total 142 $ 3,027,375 $ (12,623 ) $ (7,770 ) (1) The interest rate swaps have been designated and are accounted for as cash flow hedges of the forecasted interest payments on borrowings. As a result, changes in the fair values of the swaps are deferred and recorded in AOCI/L, net of tax effect. Note 6 — Debt provides additional information regarding the Company's interest rate swap contracts. (2) The Company has foreign exchange transaction risk because it typically enters into transactions in the normal course of business that are denominated in foreign currencies that differ from the local functional currency. The Company enters into short-term foreign currency forward exchange contracts to mitigate the cash flow risk associated with changes in foreign currency rates on forecasted foreign currency transactions. These contracts are accounted for at fair value with realized and unrealized gains and losses recognized in Other income, net because the Company does not designate these contracts as hedges for accounting purposes. All of the outstanding foreign currency forward exchange contracts at December 31, 2019 matured before January 31, 2020. (3) See Note 14 — Fair Value Disclosures for the determination of the fair values of these instruments. Amount Recorded In 2019 2018 2017 Interest (income) expense, net (1) $ (3,361 ) $ (1,920 ) $ 7,870 Other expense (income), net (2) 2,488 10,365 (801 ) Total (income) expense, net $ (873 ) $ 8,445 $ 7,069 (1) Consists of interest (income) expense from interest rate swap contracts. (2) Consists of net realized and unrealized gains and losses on foreign currency forward contracts. December 31, Description 2019 2018 Assets: Values based on Level 1 inputs: Deferred compensation plan assets (1) $ 2,277 $ 8,956 Total Level 1 inputs 2,277 8,956 Values based on Level 2 inputs: Deferred compensation plan assets (1) 73,419 57,690 Foreign currency forward contracts (2) 1,558 1,318 Total Level 2 inputs 74,977 59,008 Total Assets $ 77,254 $ 67,964 Liabilities: Values based on Level 2 inputs: Deferred compensation plan liabilities (1) $ 79,556 $ 68,570 Foreign currency forward contracts (2) 1,499 3,260 Interest rate swap contracts (3) 64,831 10,681 Senior Notes due 2025 (4) 835,384 776,160 Total Level 2 inputs 981,270 858,671 Total Liabilities $ 981,270 $ 858,671 (1) The Company has a deferred compensation plan for the benefit of certain highly compensated officers, managers and other key employees (see Note 15 — Employee Benefits). The assets consist of investments in money market funds, mutual funds and company-owned life insurance contracts. The money market funds consist of cash equivalents while the mutual fund investments consist of publicly-traded and quoted equity shares. The Company considers the fair values of these assets to be based on Level 1 inputs, and such assets had fair values of $2.3 million and $9.0 million as of December 31, 2019 and 2018, respectively. The carrying amounts of the life insurance contracts equal their cash surrender values. Cash surrender value represents the estimated amount that the Company would receive upon termination of a contract, which approximates fair (2) The Company enters into foreign currency forward exchange contracts to hedge the effects of adverse fluctuations in foreign currency exchange rates (see Note 13 — Derivatives and Hedging). Valuation of these contracts is based on observable foreign currency exchange rates in active markets, which the Company considers to be a Level 2 input. (3) The Company has interest rate swap contracts that hedge the risk of variability from interest payments on its borrowings (see Note 6 — Debt). The fair values of interest rate swaps are based on mark-to-market valuations prepared by a third-party broker. Those valuations are based on observable interest rates from recently executed market transactions and other observable market data, which the Company considers to be Level 2 inputs. The Company independently corroborates the reasonableness of the valuations prepared by the third-party broker by using an electronic quotation service. (4) As discussed in Note 6 — Debt, the Company has $800.0 million of principal amount fixed-rate Senior Notes due in 2025. The estimated fair value of the notes was derived from quoted market prices provided by an independent dealer, which the Company considers to be a Level 2 input. The carrying amount of the Senior Notes was $785.0 million as of December 31, 2019. 2019 2018 2017 Service cost $ 3,659 $ 3,145 $ 2,820 Interest cost 851 840 765 Expected return on plan assets (517 ) (475 ) (360 ) Recognition of actuarial loss 237 340 350 Total defined benefit pension plan expense $ 4,230 $ 3,850 $ 3,575 2019 2018 2017 Weighted average discount rate (1) 1.28 % 1.81 % 1.78 % Expected return on plan assets 2.54 % 2.45 % 2.22 % Average compensation increase 2.58 % 2.58 % 2.66 % (1) Discount rates are typically determined by using the yields on long-term corporate or government bonds in the relevant country with a duration consistent with the expected term of the underlying pension obligations. 2019 2018 2017 Projected benefit obligation at beginning of year $ 44,890 $ 45,450 $ 38,400 Service cost 3,659 3,145 2,820 Interest cost 851 840 765 Actuarial loss (gain) due to assumption changes and plan experience (1) 4,524 (430 ) 690 Contractual termination benefits — (950 ) — Benefits payments (2) (830 ) (1,400 ) (1,780 ) Foreign currency impact (591 ) (1,765 ) 4,555 Projected benefit obligation at end of year (3) $ 52,503 $ 44,890 $ 45,450 (1) The actuarial loss in 2019 was primarily due to a reduction in our weighted average discount rate assumption. (2) The Company projects benefit payments will be made in future years directly to plan participants as follows: $1.6 million in 2020; $1.7 million in 2021; $1.7 million in 2022; $2.2 million in 2023; $2.2 million in 2024; and $13.6 million in total in the five years thereafter. (3) Measured as of December 31. Funded status of the plans 2019 2018 2017 Projected benefit obligation $ 52,503 $ 44,890 $ 45,450 Pension plan assets at fair value (1) (23,444 ) (19,460 ) (18,475 ) Funded status – shortfall (2) $ 29,059 $ 25,430 $ 26,975 Amounts recorded in the Consolidated Balance Sheets for the plans Other liabilities – accrued pension obligation (2) $ 29,059 $ 25,430 $ 26,975 Stockholders’ equity – deferred actuarial loss (3) $ (8,584 ) $ (5,738 ) $ (5,861 ) (1) The pension plan assets are held by third-party trustees and are invested in a diversified portfolio of equities, high-quality government and corporate bonds, and other investments. The assets are primarily valued based on Level 1 and Level 2 inputs under the fair value hierarchy in FASB ASC Topic 820, with the majority of the invested assets considered to be of low-to-medium investment risk. The Company projects a future long-term rate of return on these plan assets of 2.04%, which it believes is reasonable based on the composition of the assets and both current and projected market conditions. Additional information regarding pension plan asset activity is provided below. (2) Funded status – shortfall represents the amount of the projected benefit obligation that the Company has not funded with a third-party trustee. These liabilities of the Company are recorded in Other liabilities on the Consolidated Balance Sheets. (3) The deferred actuarial loss as of December 31, 2019 is recorded in AOCI/L and will be reclassified out of AOCI/L and recognized as pension expense over approximately 14 years, subject to certain limitations set forth in FASB ASC Topic 715. The impact thereof on pension expense is projected to be approximately $0.5 million of additional expense in 2020. The amortization of deferred actuarial losses from AOCI/L to pension expense in each of the years ended December 31, 2019, 2018 and 2017 was immaterial. 2019 2018 2017 Pension plan assets at the beginning of the year $ 19,460 $ 18,475 $ 14,465 Company contributions 4,405 4,478 3,438 Benefit payments (830 ) (1,400 ) (1,780 ) Actual return on plan assets 714 (164 ) 547 Contractual termination benefits — (950 ) — Foreign currency impact (305 ) (979 ) 1,805 Pension plan assets at the end of the year $ 23,444 $ 19,460 $ 18,475 • • • Research Conferences Consulting Consolidated 2019 Revenues $ 3,374,548 $ 476,869 $ 393,904 $ 4,245,321 Gross contribution 2,351,720 241,757 118,450 2,711,927 Corporate and other expenses (2,341,840 ) Operating income $ 370,087 Research Conferences Consulting Other (1) Consolidated 2018 Revenues $ 3,105,764 $ 410,461 $ 353,667 $ 105,562 $ 3,975,454 Gross contribution 2,144,097 207,260 102,541 65,075 2,518,973 Corporate and other expenses (2,259,258 ) Operating income $ 259,715 Research Conferences Consulting Other (1) Consolidated 2017 Revenues $ 2,471,280 $ 337,903 $ 327,661 $ 174,650 $ 3,311,494 Gross contribution 1,653,014 163,480 93,643 90,249 2,000,386 Corporate and other expenses (2,006,715 ) Operating loss $ (6,329 ) (1) During 2018, the Company divested all of the non-core businesses that comprised its Other segment and moved a small residual product from the Other segment into the Research business and, as a result, no operating activity has been recorded in the Other segment in 2019. Note 2 — Acquisitions and Divestitures provides additional information regarding the Company's 2018 divestitures. 2019 2018 2017 Total segment gross contribution $ 2,711,927 $ 2,518,973 $ 2,000,386 Costs and expenses: Cost of services and product development - unallocated (1) 17,174 12,319 9,090 Selling, general and administrative 2,103,424 1,884,141 1,599,004 Depreciation and amortization 211,779 255,601 240,171 Acquisition and integration charges 9,463 107,197 158,450 Operating income (loss) 370,087 259,715 (6,329 ) Interest expense and other, net (92,273 ) (124,041 ) (121,488 ) (Loss) gain from divested operations (2,075 ) 45,447 — Provision (benefit) for income taxes 42,449 58,665 (131,096 ) Net income $ 233,290 $ 122,456 $ 3,279 (1) The unallocated amounts consist of certain bonus and fringe costs recorded in consolidated Cost of services and product development that are not allocated to segment expense. The Company's policy is to allocate bonuses to segments at 100% of a segment employee's target bonus. Amounts above or below 100% are absorbed by corporate. 2019 2018 2017 Long-lived assets (1): United States and Canada $ 867,974 $ 305,928 $ 288,735 Europe, Middle East and Africa 242,729 67,306 84,840 Other International 159,037 50,800 41,674 Total long-lived assets $ 1,269,740 $ 424,034 $ 415,249 (1) Excludes goodwill and intangible assets for all dates and, as of December 31, 2017, held-for-sale assets. Additionally, long-lived assets as of December 31, 2019 included $702.9 million of operating lease right-of-use assets. Note 1 — Business and Significant Accounting Policies and Note 7 — Leases provide additional information regarding the Company's leases and certain changes in lease accounting effective January 1, 2019. Reclassification to Accounts Payable and Accrued Liabilities (1) 2019: Bad debt allowance $ 7,700 $ 14,000 $ — $ (13,700 ) $ — $ 8,000 2018: Bad debt allowance $ 12,700 $ 12,500 $ — $ (11,300 ) $ (6,200 ) $ 7,700 2017: Bad debt allowance and revenue reserve $ 7,400 $ 16,600 $ 5,500 $ (16,800 ) $ — $ 12,700 reportReport on Form 10-K to be signed on its behalf by the undersigned, thereunto duly authorized.authorized, in Stamford, Connecticut, on February 19, 2020. Gartner, Inc. Date: February 19, 2020 By: /s/ Eugene A. Hall Eugene A. Hall Chief Executive Officer March 6, 2017as amended, this reportReport has been signed below by the following persons on behalf of the registrantRegistrant and in the capacities and on the dates indicated.indicated:SignatureName Title Date /s/ Eugene A. Hall Director and Chief Executive Officer March 6, 2017February 19, 2020Eugene A. Hall (Principal Executive Officer) Senior Vice President and Chief /s/ Craig W. Safian Executive Vice President and Chief Financial Officer February 19, 2020 Craig W. Safian (Principal Financial and Accounting Officer) March 6, 2017*Michael J. BingleDirector* Director February 19, 2020 *Peter E. Bisson Director February 19, 2020 *Richard J. Bressler /s/ Raul E. Cesan Director February 19, 2020 Raul E. Cesan Director * /s/ Karen E. Dykstra Director February 19, 2020 Karen E. Dykstra Director * /s/ Anne Sutherland Fuchs Director February 19, 2020 Anne Sutherland Fuchs Director * /s/ William O. Grabe Director February 19, 2020 William O. Grabe Director * /s/ Stephen G. Pagliuca Director February 19, 2020 Stephen G. Pagliuca Director * /s/ Eileen M. Serra Director February 19, 2020 Eileen M. Serra /s/ James C. Smith Director February 19, 2020 James C. Smith Director *By:/s/ Eugene A. HallMarch 6, 2017Eugene A. Hall,��Attorney-in-Fact42