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To the Stockholders:We will hold our 2012 annual meeting of stockholders at 9:00 a.m. on Monday, May 14, 2012 at our World Headquarters in Stamford, Connecticut.The Notice of Meeting and Proxy Statement and accompanying proxy card describe in detail the matters to be acted upon at the meeting.It is important that your shares be represented at the meeting. Whether or not you plan to attend, please submit a proxy to vote your shares through one of the three convenient methods described in this proxy statement. Your vote is important so please act at your first opportunity.We have elected to furnish proxy materials and the Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2011, to many of our stockholders over the Internet pursuant to Securities and Exchange Commission rules. We urge you to review our Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2011, as well as our Proxy Statement for information on our financial results and business operations over the past year and our strategy. The Internet availability of our proxy materials affords us an opportunity to reduce costs while providing stockholders the information they need. On or about March 23, 2012 we started mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and annual report and how to vote online along with instructions on how to receive a printed copy of the proxy statement and annual report. We provided a copy of the annual meeting materials to all other stockholders by mail or, if specifically requested, through electronic delivery.If you receive your annual meeting materials by mail, the Notice of Meeting and Proxy Statement, Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2011 and proxy card are enclosed. Whether or not you plan to attend the annual meeting in person, please mark, sign, date and return your proxy card in the enclosed prepaid envelope, or submit your proxy to vote via telephone or the Internet, as soon as possible. If you decide to attend the annual meeting and wish to change your vote, you may do so by voting in person at the annual meeting. If you received your annual meeting materials via e-mail, the e-mail contains voting instructions and links to the proxy statement and annual report on the Internet, which are also available at www.proxyvote.com.We look forward to seeing you at the meeting.Murray D. MartinChairman, President andChief Executive OfficerStamford, ConnecticutMarch 23, 2012
NOTICE OF THE 2014 PITNEY BOWES INC. WORLD HEADQUARTERS 1 ELMCROFT ROAD STAMFORD, CONNECTICUT 06926-0700 (203) 356-5000 To the Stockholders: We will hold our 2014 annual meeting of stockholders at 9:00 a.m. on Monday, May 12, 2014 at our World Headquarters in Stamford, Connecticut. The Notice of Meeting and Proxy Statement and accompanying proxy card describe in detail the matters to be acted upon at the meeting. It is important that your shares be represented at the meeting. Whether or not you plan to attend, please submit a proxy through one of the three convenient methods described in this proxy statement in order for your shares to be voted at the meeting. Your vote is important so please act at your first opportunity. We have elected to furnish proxy materials and the Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2013 to many of our stockholders via the Internet pursuant to Securities and Exchange Commission rules. We urge you to review those materials as well as our proxy statement for information on our financial results and business operations over the past year. The Internet availability of our proxy materials affords us an opportunity to reduce costs while providing stockholders the information they need. On or about March 27, 2014, we started mailing to many of our stockholders a Notice of Internet Availability of Proxy Materials containing instructions on how to access our proxy statement and annual report and how to submit a proxy online along with instructions on how to receive a printed copy of the proxy statement and annual report. We provided a copy of the annual meeting materials to all other stockholders by mail or through electronic delivery. If you receive your annual meeting materials by mail, the Notice of Meeting and Proxy Statement, Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2013 and proxy card are enclosed. Whether or not you plan to attend the annual meeting in person, please mark, sign, date and return your proxy card in the enclosed prepaid envelope, or submit your proxy via telephone or the Internet, as soon as possible in order for your shares to be voted at the meeting. If you decide to attend the annual meeting and wish to change your vote, you may do so by submitting a later dated proxy or by voting in person at the annual meeting. If you received your annual meeting materials via e-mail, the e-mail contains voting instructions and links to the proxy statement and annual report on the Internet, which are also available atwww.proxyvote.com. We look forward to seeing you at the meeting. Michael I. Roth Non-Executive Chairman of the Board Stamford, Connecticut Notice of Meeting: The annual meeting of stockholders of Pitney Bowes Inc. will be held on Monday, May 12, 2014, at 9:00 a.m. at the company’s World Headquarters, 1 Elmcroft Road, Stamford, Connecticut 06926-0700. Directions to Pitney Bowes’ World Headquarters appear on the back cover page of the proxy statement. Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on May 12, 2014: Pitney Bowes’ 2014 Proxy Statement and Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2013, are available atwww.proxyvote.com. The items of business at the annual meeting are: Stockholders also will act on such other matters as may properly come before the meeting, including any continuation of the meeting caused by any adjournment or postponement of the meeting. March 14, 2014 is the record date for the meeting. This proxy statement and accompanying proxy card are first being distributed or made available via the Internet beginning on or about March 27, 2014. Amy C. Corn Corporate Secretary NOTICE: Your vote is important. Brokers TABLE OF CONTENTS Want Electronic Delivery of Annual Report and Proxy Statement Stockholder Proposals and Other Business for the Security Ownership of Directors and Executive OfficersNotice of Meeting:The annual meeting of stockholders of Pitney Bowes Inc. will be held on Monday, May 14, 2012, at 9:00 a.m. at the company’s World Headquarters, 1 Elmcroft Road, Stamford, Connecticut 06926-0700. Directions to Pitney Bowes’ World Headquarters appear on the back cover page of the proxy statement.Important Notice Regarding the Availability of Proxy Materials for the Stockholders Meeting to be held on May 14, 2012:Pitney Bowes’ 2012 Proxy Statement and Annual Report to Stockholders, including the Report on Form 10-K for the year ended December 31, 2011, are available at www.proxyvote.com.The items of business at the annual meeting are:1.Election of 10 Directors named in the proxy statement.2.Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2012.3.Advisory Vote to Approve Executive Compensation.4.Such other matters as may properly come before the meeting, including any continuation of the meeting caused by any adjournment of the meeting.March 16, 2012 is the record date for the meeting.This proxy statement and accompanying proxy card are first being distributed or made available via the Internet beginning on or about March 23, 2012.Amy C. CornCorporate Secretary 
ANNUAL MEETING
AND
PROXY STATEMENT
March 27, 20141. Election of 10 directors named in the proxy statement. 2. Ratification of the Audit Committee’s Appointment of the Independent Accountants for 2014. 3. Advisory Vote to Approve Executive Compensation. 4. Approval of the Pitney Bowes Directors’ Stock Plan. banks and other nominees arenot permitted to vote on our proposals regarding the election of directors, or executive compensation and other matters to be considered at the meeting (except on ratification of the Audit Committee’s appointment of the Independent Accountants for 2014) without instructions from the beneficial owner. Your vote is important. Therefore, if your shares are held through a broker, bank or other nominee, please instruct your broker, bank or other nominee on how to vote your shares. Unless you provide instructionsFor your vote to your broker, banker or other nominee on how to vote your shares, your shares will not be votedcounted with respect to proposals 1, 3 or 3.4, you will need to communicate your voting decisions to your broker, bank, financial institution or other nominee.Page Page5 510 The Annual Meeting and Voting 10 510 510 510 510 510 510 611 611 611 611 720132015 Annual Meeting11 712 713 713 13 7713 814 814 914 915 15 101015 1016 16 101116 11Role of Governance Committee in Determining Director Compensation11111212121320 1420 14 Table21 1522 1622 1723 1723 1724 Vote Required 24 Nominees 24 3 Page 181819212
In this summary we highlight certain information contained elsewhere in this proxy statement. This is only a summary and does not contain all the information you should consider before you submit your proxy or vote. Please read the complete proxy statement and Annual Report on Form 10-K before you submit your proxy or vote. Annual Meeting Information Governance Structure and Leadership Roles The board reappointed Michael Roth, an independent member of the board of directors, to serve as Non-Executive Chairman of the Board in May 2013. A description of the Independent Chairman role appears in the Board of Directors Governance Principles, which can be found on the company’s website atwww.pb.com under the caption “Our Company—Leadership & Governance.” In December 2012, Marc Lautenbach became the company’s President and Chief Executive Officer. In his first year as President and CEO, Mr. Lautenbach focused on resetting the strategic direction of the company, assembling the right team to lead the company’s critical areas of development over the next several years and beginning to execute on initiatives consistent with the new strategies. 2013 Performance and Payout SUMMARY OF 2013 BUSINESS RESULTS In 2013, the company achieved significant success in executing on its strategy to transform the company for the future. This success was evidenced through our financial results and attainment of certain objectives targeted at longer-term success, including solidifying our balance sheet and divesting businesses no longer in line with the company’s long-term strategy. Our total shareholder return for the year was an extraordinary 132%, which placed us fifth in year-over-year total stockholder return among all S&P 500 companies for 2013. We believe the stock price increase reflected stockholder recognition that our first steps in executing on our new strategy to unlock the value embedded in our company were successful and position us well for the future. We identified three major objectives for the company that would determine our progress towards transforming our businesses and made significant progress on each. These objectives were as follows: (1) stabilize the mailing business; (2) achieve operational excellence and (3) invest in growth initiatives. PROXY SUMMARY SUMMARY OF 2013 COMPENSATION PAYOUTS Based on the 2013 financial results summarized above when compared against the pre-determined financial goals, the annual incentive payout multiplier for the named executive officers (NEOs) was 109.5% and the long-term 2011-2013 cash incentive award payout was $1.50. PROXY SUMMARY Summary of 2013 Executive Compensation Changes At the annual meeting in 2013, stockholders overwhelmingly approved our executive compensation (Say-on-Pay) with nearly 93% of votes cast in favor. The vote reflected stockholder approval for the compensation changes the Executive Compensation Committee adopted in late 2012 and early 2013 in connection with executive compensation. These actions included: Continuing to make improvements in the executive compensation structure in 2013, the Executive Compensation Committee adopted the following changes to further strengthen the alignment of executive compensation incentives with stockholder interests: We have a “pay-for-performance” philosophy that is the foundation of all decisions regarding compensation of our NEOs. With the changes approved by the Executive Compensation Committee and the independent board members, we have enhanced the link between pay and performance in the design of our executive compensation program. Please see “Compensation Discussion and Analysis” beginning on page 35 of this proxy statement for a more detailed discussion of the 2013 executive compensation awards and payouts. Direct Compensation Components and Mix For each NEO, the Executive Compensation Committee sets target total direct compensation levels (base salary plus annual and long-term incentives) so that the base salary, total cash compensation, and total direct compensation is at +/– 20% of the median for each position of the competitive data based on the Towers Watson Regressed Compensation Report, as regressed for companies approximately our size, and the Radford High-Tech Industry Survey focusing on companies with revenue scopes similar to ours (Survey Reports). NEO direct compensation is weighted toward variable compensation, where the actual amount earned may vary from the targeted amounts due to company performance. PROXY SUMMARY Meeting Agenda Items Proposal 1: Election of Directors You are being asked to elect 10 directors. Each of the directors is standing for election to a one-year term ending as of the next annual meeting of stockholders in 2015 and until his or her successor has been duly elected and qualified. All directors attended over 75% of the meetings of the board and board committees on which they served in 2013. Summary Information about our Director Nominees PROXY SUMMARY Proposal 2: Ratification of the Audit Committee’s Appointment of the IndependentAccountants for 2014 The board is asking stockholders to ratify the selection of PricewaterhouseCoopers LLP as our independent accountants for 2014. Proposal 3: Advisory Vote to Approve Executive Compensation The board is asking stockholders to approve, on an advisory basis, the compensation of the named executive officers as disclosed in this proxy statement. The board has determined to hold this advisory vote on an annual basis. The next advisory vote will be at the 2015 annual meeting of stockholders. The vote on executive compensation is an advisory vote and the results will not be binding on the board or Pitney Bowes Inc. The affirmative vote of the majority of the votes cast will constitute the stockholders’ non-binding approval with respect to our executive compensation programs. Abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote. Proposal 4: Approval of the Pitney Bowes Directors’ Stock Plan The board is asking stockholders to approve the Directors’ Stock Plan. The plan will govern grants of stock-based awards to non-employee directors. The plan does not require the authorization of additional shares. All awards under the Directors’ Stock Plan will be satisfied from the shares approved in 2013 in connection with the 2013 Employee Stock Plan. Our board of directors is soliciting proxies to be used at the annual meeting of stockholders to be held on May An admission ticket, which is required for entry into the annual meeting, is attached to your proxy card if you hold shares directly in your name as a If your shares are held in the name of a bank, broker or nominee and you plan to attend the meeting, you must present proof of your ownership of Pitney Bowes stock as of the record date (such as a bank or brokerage account statement) to be admitted to the meeting. If you have received a Notice of Internet Availability of Proxy Materials (a “Notice”), your Notice is your admission ticket. If you plan to attend the annual meeting, please submit your proxy, but keep the Notice and bring it to the annual meeting. Stockholders also must present a form of photo identification, such as a driver’s license, in order to be admitted to the annual meeting.No cameras, recording equipment, large bags, or packages will be permitted in the annual meeting. Many cellular phones have built-in cameras, and, while these phones may be brought into the annual meeting, the camera function may not be used at any time. Record stockholders of Pitney Bowes common stock and $2.12 convertible preference stock at the close of business on March If you are a registered stockholder Alternatively, you may attend the meeting and vote in person. If you hold your shares through a broker, bank, trustee or other nominee, you are a beneficial owner and should refer to instructions provided by that entity on voting methods. May I revoke my proxy or change my vote? If you are a registered stockholder, you may revoke your proxy or change your vote at any time before your proxy is voted at the meeting by any of the following methods: Attendance at the meeting alone will not revoke your proxy. If you hold your shares through a broker, bank, trustee or other nominee, you are a beneficial owner and should refer to instructions provided by that entity on how to revoke your proxy or change your vote. The holders of shares representing a majority of the you will be considered part of the quorum. Abstentions and broker non-votes are included in the count to determine a quorum. If a quorum is present, director candidates receiving the affirmative vote of a majority of votes cast will be elected. Proposals 2, 3 and Your broker is not permitted to vote on your behalf on the election of directors, Under New York Stock Exchange rules, if your broker holds your shares in its “street” name, the broker may vote your shares in its discretion on proposal 2 if it does not receive instructions from you. GENERAL INFORMATION If your brokerdoes nothave discretionary voting authority and you do not provide voting instructions, or if you abstain on one or more agenda items, the effect would be as follows: Proposal 1: Election of Directors Broker non-votes and abstentions would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes Proposal 2: Ratification of Audit Committee’s Appointment of the If you choose to abstain in the ratification of the Audit Committee’s selection of the independent accountants for Proposal 3: Advisory Vote to Approve Executive Compensation The vote to approve executive compensation is an advisory vote and the results will not be binding on the board of directors or the company. The board of directors will review the results and take them into consideration when making future decisions regarding executive compensation. Proposal 4: Approval of the Pitney Bowes Inc. Directors’ Stock Plan Under our By-laws, broker non-votes and abstentions would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes and abstentions will have no effect on the vote on the Directors’ Stock Plan. However, for purposes of approval under New York Stock Exchange rules, abstentions are treated as votes cast, and, therefore, will have the same effect as an “against” vote, and broker non-votes are not considered votes cast, and, therefore, will have no effect on the outcome of the vote. How do Dividend Reinvestment Plan participants or employees with shares in the 401(k) plans vote by proxy? If you are a registered stockholder Shares held in Broadridge Financial Solutions, Inc. Only one Notice or, if paper copies are requested, only one proxy statement and annual report to stockholders including the report on Form 10-K are delivered to multiple stockholders sharing an address unless Similarly, any stockholder currently sharing an address with another stockholder but nonetheless receiving separate copies of the materials may request delivery of a single copy in the Requests can be made to: Broadridge Householding Department by phone at Broadridge Householding Department 51 Mercedes Way Edgewood, New York 11717. If you own shares of stock through a bank, broker, trustee or other nominee and receive more than one Investor Relations, Pitney Bowes Inc. 1 Elmcroft Road, MSC 63-02 Stamford, CT 06926-0700. Want Electronic Delivery of the Annual Report and Proxy We want to communicate with you in the way you prefer. You may During the Stockholder Proposals and Other Business for the If a stockholder wants to submit a proposal for inclusion in GENERAL INFORMATION meeting is more than 30 days before or more than 60 days after the anniversary of our 2014 annual meeting, then the stockholder’s notice must be delivered no earlier than the close of business on the 120th day prior to the meeting and no later than the close of business on the later of the 90th day prior to the meeting or, if the first public announcement of the date of the annual meeting is less than 100 days prior to the date of such meeting, the 10th day after the first public announcement of the meeting date. There are other procedural requirements in the By-laws pertaining to stockholder proposals and director nominations. The By-laws are posted on We encourage stockholders to visit Effective December 3, 2012, the board of directors separated the roles of Chairman and CEO. The board appointed Michael I. Roth, an independent director, as Non-Executive Chairman of the board of directors and reappointed him to this role in May 2013 for a term of one year. The board of directors believes it should have the flexibility to establish a leadership structure that works best for the company at a particular time, and was Mr. Roth’s role prior to his appointment as Non-Executive Chairman, were similar in most respects to those of a Non-Executive Chairman, this was an appropriate time to separate the roles of CEO and Chairman. The board of directors has established well-defined responsibilities, qualifications and selection criteria Among the board’s most important responsibilities is to oversee succession planning and leadership development. As part of this process, the Governance Committee oversees long-term and short-term plans for CEO succession. The board of directors is responsible for evaluating the performance of the In Periodically, but not less than annually, the board of directors 4 Time and Date: Monday, May 12, 2014 at 9:00 a.m. Place: Pitney Bowes World Headquarters
1 Elmcroft Road
Stamford, CT 06926-0700Requirements for
Attending the Meeting:Admission ticket, which is attached to your proxy card, or Notice of Internet Availability of Proxy Materials, together with a form of photo identification, such as a driver’s license. If your shares are held in the name of a bank, broker or nominee, you must present proof of your ownership as of the record date (such as bank or brokerage account statement). Record Date: March 14, 2014 Voting: Registered stockholders as of the record date (March 14, 2014) are entitled to submit proxies by Internet atwww.proxyvote.com; telephone at 1-800-690-6903; or completing your proxy card; or you may vote in person at the annual meeting. If you hold your shares through a broker, bank, trustee or other nominee, you are a beneficial owner and should refer to instructions provided by that entity on voting methods. • Stabilize the Mailing Business.The recurring revenue streams in 2013 for our global Mailing business continued to decline at a slower rate than in prior years contributing to the overall stabilization of the Mailing business. Equipment sales in the Production Mail and Small and Medium Business Solutions (SMB) segments improved and grew year-over-year. Our new go-to-market strategy implementation in the SMB business is improving our sales process and enhancing our client experience, while reducing costs. back cover• Achieve Operational Excellence.Our efforts in reducing expenses in 2013 resulted in a $71 million decline in selling, general and administrative expenses compared to the prior year. We are in the early stages of implementing a new 5 enterprise resource planning (ERP) system to streamline and consolidate many of our back-office operations. We signed a contract to sell our World Headquarters building in 2014. This is another example of our commitment to reducing operating expenses going forward. In addition, in 2013, we sold three businesses, Pitney Bowes Management Services (PBMS), International Mailing Services (IMS) and the Nordic furniture business. We sold these businesses because they did not fit within our future strategic intent for the company. We used the net proceeds from the sale of the North American portion of the PBMS sale to strengthen our balance sheet by redeeming $300 million in bonds originally scheduled to mature in 2014. Also in 2013, our clear focus on initiatives surrounding inventory and accounts receivables, two key components of working capital, generated over $100 million of cash improvements. • Invest in Growth Initiatives.In 2013, we continued to invest in our e-commerce business which grew revenue sequentially at a high double digit rate. In our software business, we brought in new leadership with skill sets to support our new go-to-market strategy, which we expect will bring revenue growth in the software business. Effective in 2014, we also increased our investment to 100%, in our high growth potential Brazilian joint venture by purchasing our joint venture partner’s interest in the business. 3
We urge stockholders to read our Annual Report on Form 10-K for the year ended December 31, 2013, filed with the Securities and Exchange Commission (SEC) on February 21, 2014, which describes our business and 2013 financial results in more detail.Funding of the 2013 Annual Incentive Pool and Payout Multiplier 
The sum of the metrics may not exactly equal the total due to rounding. For additional detail on the calculation of the financial metrics shown in this chart please refer to the table on page 55 “Accounting Items and Reconciliation of GAAP to non-GAAP Measures.” 2013 Funding of the Cash Incentive Unit Pool and Payout Value 
The amounts above include the impact of the Modifier for total shareholder return (TSR). The sum of the metrics may not exactly equal the total due to rounding. The amounts shown in the charts above are based on non-GAAP measures. For additional detail on the calculation of the financial metrics shown in this chart please refer to the table on page 55 “Accounting Items and Reconciliation of GAAP to non-GAAP Measures.” 6 • Reducing the CEO’s annual incentive target from 165% to 130% of base salary; • Enhancing the rigor and transparency of our annual incentive objectives; • Changing the mix of long-term incentives (LTI) to increase the performance-based component; • Enhancing the disclosure of performance targets; and • Eliminating excise tax gross-ups; • Changing the LTI mix beginning with 2014 grants to 100% equity, firmly placing the executive in the shoes of the stockholder with respect to LTI payouts; • Revising our peer group in light of the evolving strategic direction of the company, making more appropriate comparisons in the way we compensate our executives; • Increasing the weighting of financial metrics to 100% for the annual incentive program; • Utilizing as part of the LTI program a three-year cumulative TSR metric; • Expanding the executive stock ownership policy to include more senior executives, while at the same time, restricting shares that count toward the stockholding requirement; • Reducing severance benefits payable upon a change of control by one-third at most senior management levels; and • Introducing premium-priced stock options as a manner of making special compensatory awards. 
The percentage in the above illustration is based on target compensation. Mr. Lautenbach’s long-term incentive amount includes the value of his one-time sign-on grant of premium-priced stock options. 7 Director
Nominee Age Director
Since Occupation Independent Committees Other Public
BoardsLinda G. Alvarado 62 1992 President and CEO, Alvarado Construction, Inc. X • Finance
•Governance 3M Company Anne M. Busquet 64 2007 Principal, AMB Advisors, LLC X • Executive Compensation
•Governance — Roger Fradin 60 2012 President and CEO, Honeywell Automation and Control Solutions, Honeywell International, Inc. X • Audit
•Finance MSC Industrial Direct Co., Inc. Anne Sutherland
Fuchs 66 2005 Consultant to private equity firms X • Audit
• Executive Compensation Gartner, Inc. S. Douglas
Hutcheson 58 2012 Former CEO, Leap Wireless International, Inc. X • Audit
•Finance — Marc B. Lautenbach 52 2012 President and CEO, Pitney Bowes Inc. • Executive — Eduardo R. Menascé 68 2001 Retired President, Enterprise Solutions Group, Verizon Communications Inc. X • Executive
•Executive Compensation**
• Governance John Wiley & Sons Inc., Hill-Rom Holdings, Inc., Hillenbrand, Inc. Michael I. Roth* 68 1995 Chairman and CEO,
The Interpublic Group of Companies, Inc. X • Audit
• Executive**
• Finance** Ryman Hospitality Properties Inc., The Interpublic Group of Companies, Inc. David L. Shedlarz 65 2001 Retired Vice Chairman, Pfizer Inc. X • Audit**
•Executive
• Finance Teachers Insurance and Annuity Association, The Hershey Company David B. Snow, Jr. 59 2006 Managing Partner and CEO, Cedar Gate Partners LLC X • Executive
•Executive
Compensation
• Governance** — * Non-Executive Chairman, Pitney Bowes Inc. ** Committee Chair 8 9 14, 2012,12, 2014, at 9:00 a.m. at the company’s World Headquarters, 1 Elmcroft Road, Stamford, Connecticut, and at any adjournment or postponement of the meeting. This proxy statement contains information about the items being voted on at the annual meeting.stockholder of record.registered stockholder. If you plan to attend the annual meeting, please submit your proxy but keep the admission ticket and bring it to the annual meeting.16, 201214, 2014 (the record date) can vote at the meeting. As of the record date, 200,204,924202,609,582 shares of Pitney Bowes common stock and 24,12720,853 shares of $2.12 convertible preference stock were issued and outstanding. Each stockholder has one vote for each share of common stock owned as of the record date, and 16.53 votes for each share of $2.12 convertible preference stock owned as of the record date.(whichwhich means you hold shares in your name),name, you may choose one of three methods to grant your proxy to have your shares voted: (i) you may grant your proxy on-line via the Internet by accessing the following website and following the instructions provided: www.proxyvote.com; (ii) you may grant your proxy by telephone (1-800-690-6903); or (iii) • you may grant your proxy on-line via the Internet by accessing the following website and following the instructions provided:www.proxyvote.com; • you may grant your proxy by telephone (1-800-690-6903); or (i) you may send in a revised proxy dated later than the first proxy; (ii) you may vote in person at the meeting; or (iii) you may notify the corporate secretary in writing prior to the meeting that you have revoked your proxy. • you may send in a revised proxy dated later than the first proxy; • you may vote in person at the meeting; or • you may notify the corporate secretary in writing prior to the meeting that you have revoked your proxy. sharesvotes entitled to votebe cast at the annual meeting constitutes a quorum. If you submit your proxy by Internet, telephone or proxy card,534 will be approved if a quorum is present and a majority of the votes cast by the stockholders are voted for the proposal.Brokers, banks and other nominees areor on executive compensation and other matters withoutto be considered at the stockholders meeting (except on ratification of the selection of PricewaterhouseCoopers LLP as auditors for 2014), unless you provide specific instructions fromby completing and returning the beneficial owner, as discussed in more detail below. Your vote is important. Therefore, if your shares are held through a broker, bankvoting instruction form or other nominee, please instruct your broker, bank or other nominee on howfollowing the instructions provided to you to vote your shares. Unlessstock via telephone or the Internet. If you provide instructions to your broker, banker or other nominee on how to votedo not own your shares of record, for your shares will notvote to be votedcounted with respect to proposals 1, 3 or 3.4, you will need to communicate your voting decisions to your broker, bank, financial institution or other nominee.10 wouldand abstentions will have no effect. If you choose to abstaineffect in the election of directors,directors.abstention will have no effect.Independent Accountants for 2014Proposal 2:2012,2014, the abstention will have no effect.If you choose to abstain, the abstention will have no effect. Broker non-votes and abstentions would not be votes cast and therefore would not be counted either for or against. As a result, broker non-votes wouldand abstentions will have no effect.effect on the advisory vote on executive compensation. of record and participate in the company’sour Dividend Reinvestment Plan, or the company’sour employee 401(k) plans, your proxy includes the number of shares acquired through the Dividend Reinvestment Plan and/or credited to your 401(k) plan account.the company’sour 401(k) plans are voted by the plan trustee in accordance with voting instructions received from plan participants. The plans direct the trustee to vote shares for which no instructions are received in the same proportion (for, against or abstain) indicated by the voting instructions given by participants in the plans.(“Broadridge”)(Broadridge) will tabulate the votes and act as Inspector of Election.Multiple Copies of Annual Report to StockholdersIn addition to furnishing proxy materials over the Internet, the company takes advantageWant more copies of the Securities and Exchange Commission’s “householding” rules to reduce the delivery cost of materials. Under such rules, onlyproxy statement? Getting too many copies?the company has received contrary instructions from one or more of the stockholders. If a stockholder sharing an address wishesstockholders give us contrary instructions. You may request to receive a separate Notice or copy of the proxythese materials, heeither now or she may so request by contacting Broadridge Householding Department by phone at 1-800-579-1639 or by mail to Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York 11717. A separate copy will be promptly provided following receipt of a stockholder’s request, and such stockholder will receive separate materials in the future. Anyfuture, and we will promptly deliver the requested materials.future by contacting future.the number1-800-579-1639 or address shown above.Additional copies of our annual report to stockholders, including the report on Form 10-K or proxy statement will be sent to stockholders free of charge upon written request to Investor Relations, Pitney Bowes Inc., 1 Elmcroft Road, MSC 63-02, Stamford, CT 06926-0700.by mail to:Pitney Bowes annual report,copy of the materials, please contact that entity to eliminate duplicate mailings.6
Additional copies of our annual report to stockholders, including the report on Form 10-K or the proxy statement will be sent to stockholders free of charge upon written request to:StatementStatement?This proxy statement and our 2011 annual reportbe viewed online at www.proxyvote.com. If you are a stockholder of record and receivechoose to receive:• a full set of printed materials, including the proxy statement, annual report and proxy card; or • an email with instructions for how to view the annual meeting materials and vote online. annual meeting material by mail,voting season, you can elect to receiveselect the method of delivery for the future annual reports and proxy statements electronically or by following the instructions provided ifwhen you grant your proxy by Internetvote online or by telephone. If you choose this option,to receive the annual meeting materials electronically, you will receive an e-mail for future meetings listing the website locations of these documents and your choice will remain in effect until you notify us that you wish to resume mail delivery of these documents. If you hold your Pitney Bowes stock through a bank, broker, trustee or other nominee, you should refer to the information provided by that entity for instructions on how to elect this option. This proxy statement and our 2013 annual report may be viewed online atwww.proxyvote.com.20132015 Annual Meetingthe company’sour proxy material for the 20132015 annual meeting, which is scheduled to be held on Monday, May 13, 2013,11, 2015, it must be received by the corporate secretary by the close of business on November 23, 2012.27, 2014. Also, under our By-laws, a stockholder can present other business at an annual meeting, including the nomination of candidates for director, only if written notice of the business or candidates is received by the corporate secretary byno earlier than the close of business on January 12, 2015 and no later than the close of business on February 13, 2013.11, 2015. However, in the event that the date of the 2015 annual11 the company’sour Corporate Governance website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance.” If notice of a matter is not received within the applicable deadlines or does not comply with the By-laws, the chairman of the meeting may refuse to introduce such matter. If a stockholder does not meet these deadlines, or does not satisfy the requirements of Rule 14a-4 of the Exchange Act, the persons named as proxies will be allowed to use their discretionary voting authority when and if the matter is raised at the annual meeting.Stockholders are encouragedthe company’sour Corporate Governance website atwww.pb.com under the caption “Leadership“Our Company—Leadership & Governance” for information concerning the company’s governance practices, including the Governance Principles of the Board of Directors, charters of the committees of the board, and the directors’ Code of Business Conduct and Ethics. The company’sOur Business Practices Guidelines, which is the company’s Code of Ethics for employees, including the company’s chief executive officerour Chief Executive Officer and chief financial officer,Chief Financial Officer, is also available on the company’sour Leadership & Governance website. We intend to disclose any future amendments or waivers to certain provisions of the directors’ Code of Business Conduct and Ethics or the Business Practices Guidelines on our website within four business days following the date of such amendment or waiver.Key Corporate Governance Practices Enhancing the Board’s Independent Leadership,
Accountability and Oversight• Separate Chairman and CEO.Our Governance Principles include well-defined responsibilities, qualifications and selection criteria with respect to the Chairman role. The board has appointed Michael I. Roth, an independent director, as Non-Executive Chairman. • Independent Committees.The board of directors determined that all board committees, other than the Executive Committee, should consist entirely of independent directors. • Executive Sessions.At each regular board meeting, our independent directors meet without the CEO or other members of management present to discuss issues, including matters concerning management. The Non-Executive Chairman presides at these executive sessions. • Majority Voting in Director Elections.Our By-Laws provide that in uncontested elections, director nominees must be elected by a majority of the votes cast. • Annual Election of Directors.Our By-Laws provide that our stockholders elect all directors annually. • Stock Holding Requirements.Under the current Directors’ Stock plan, restricted stock awards may not be transferred or sold, subject to limited exceptions, until the later of (i) termination of service as a director, or, if earlier, the date of a change of control (as defined in the Directors’ Stock Plan), and (ii) the expiration of the six-month period following the grant of such shares. • No Hedging or Pledging.Directors may not pledge or transfer for value Pitney Bowes securities, engage in short-term speculative (“in and out”) trading in Pitney Bowes securities, or participate in hedging and other derivative transactions, including short sales, “put” or “call” options, swaps, collars or similar derivative transactions, with respect to Pitney Bowes securities. 12 can reviewit reviews that structure from time to time. The company’s chief executive officer also serves astime, including in the chairmancontext of the board of directors.a change in leadership. The board decided that, with the election of directors has a Lead Director who is an independent member of the board of directors. In determining the appropriate leadership structure, the board of directors considered a number of factors, including the effectiveness of the role of independent Lead Director, the candorMr. Lautenbach as CEO, and dynamics of discussion among the directors and between directors and management, the facility with which directors influence the content of board meeting agendas, and the significance attributed by the company’s external constituents in the worldwide postal marketsdue to the title of chairman.The board of directors believesfact that the leadership structure it has chosen for Pitney Bowes is appropriate in light of the constructive and candid nature of the discussion at board and committee meetings, as well as the directors’ freedom to participate in the agenda-setting process, the directors’ access to members of senior management outside the presence of the chief executive officer, and the robust roleresponsibilities of the Lead Director.Director, whichand term and term limits with respect to the position of Lead Director.Chairman role. This information is set forth in detail in the Governance Principles of the Board of Directors, which can be found on the company’sour website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance.” A descriptionLead Director responsibilitiesCEO and characteristics appears below. Additional information may be found infor selection of successors to that position. The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic vision and leadership, operational excellence, financial management, executive officer leadership development, ability to motivate employees, and an ability to develop an effective working relationship with the board. The Governance Principles of the Board of Directors.Directors, which are posted on the company’s website atwww.pb.com under the caption “Our Company—Leadership & Governance,” include additional information about succession planning.May 2008,late 2012, the board used the succession planning process described above to plan for the succession from our former CEO to the hiring of our new President and CEO, Mr. Lautenbach, and to the appointment of a new Non-Executive Chairman of the board, Michael I. Roth.appointed James Keyes, oneconsiders management’s recommendations concerning succession planning for senior management roles other than the role of the independent directors, to serve as the board’s Lead Director for an initial termCEO. As part of two years. In May 2010 and May 2011,this process, the board reviews development plans to strengthen and supplement the skills and qualifications of directors appointed Mr. Keyes to serve as Lead Director for additional one-year terms. In February 2012, the board appointed Michael Roth to serve as Lead Director for an initial term of two years.internal succession candidates.Responsibilities and Characteristics of the Lead DirectorThe Lead Director chairs meetings of the board of directors in executive session; acts as chairman of the board in situations where the chairman and chief executive officer is unable to serve in that capacity; briefs the chief executive officer, as needed, following7
Role of the Board of Directors in Risk Oversight The board of Upon the recommendation of the Governance Committee, committee as described in its charter or the nature of the enterprise risk warranting review by the full board. For example, the Finance Committee oversees risks relating to liquidity and the Audit Committee oversees risks relating to internal controls. Each enterprise risk and its related mitigation plan is reviewed by either the board of directors or the designated board committee on an annual basis. The Audit Committee is responsible for overseeing and reviewing on an ongoing basis the overall process by which management identifies and manages Management monitors the CORPORATE GOVERNANCE The board of directors conducts an annual review of the independence of each director under the New York Stock Exchange listing standards and Based upon its review, the board of directors has concluded in its business judgment that the following directors are independent: In discussions by the board in executive session; reviews, revises, and provides comment, as appropriate, concerning proposed agendas for meetings of the board of directors; reviews and provides comment, as appropriate, on draft minutes of board of directors meetings prior to their distribution to the full board; communicates informally with the other directors between meetings of the board to foster free and open dialog among directors; reviews and responds, as appropriate, in accordance with guidelines established by the board of directors to communications from stockholders and other interested parties; partners with the Chair of the Governance Committee to provide performance and other feedback to the chief executive officer following the annual joint meeting of the Governance and Executive Compensation Committees; and partners with the Chair of the Executive Compensation Committee to provide compensation information to the chief executive officer following meetings of the board of directors where compensation action is taken with respect to the chief executive officer.The Lead Director must exhibit the following characteristics and skills: diplomacy, sound judgment, the ability to work collaboratively, to communicate effectively, with clarity and candor, and to recognize and act in accordance with an appropriate balance between (i) active mentor to the chief executive officer and communications aide to the board of directors, and (ii) maintaining an oversight (rather than management) perspective as a member of the board of directors. the directors is responsible for oversight of the company’s risk assessment and risk management process. Management is responsible for risk management, including identification and mitigation planning. The company established the enterprise risk management process was established to identify, assess, monitor and address risks across the entire company and its business operations. The description, assessments, mitigation plan and status for each enterprise risk are developed and monitored by management, including management “risk owners” and an oversight management risk committee.Oversight responsibility for each of the company’s identified enterprise-wide risks is assigned, uponand approval by the board of directors assigns oversight responsibility for each of the identified enterprise-wide risks to either a specific committee of the board, or to the full board. In addition to the board, each committee, with the exceptionsexception of the Executive Committee and the Executive Compensation Committee, is responsible for oversight of one or more of the company’s risks. Where possible, theThe assignments are generally made based upon in each case, the type of enterprise risk and the linkage of the subject matter to the responsibilities of thethe company’s risks. On an annual basis the board of directors receives a report on the status of all enterprise risks and their related mitigation plans. company’s risks and determines, from time to time, whether new risks should be considered either due to changes in the external environment, changes in the company’s business, or for other reasons. Management also determines whether previously identified risks should be combined with new or emerging risks.The process for the board’s oversight of mitigation of the company’s enterprise risks was developed by the Governance Committee and presented to the board of directors for review and adoption and is reviewed and updated as appropriate from time to time.13 theour standards of independence, which are set forth in the Governance Principles of the Board of Directors which are available on the company’sour website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance.” In making these determinations, the board of directors considers, among other things, whether any director has had any direct or indirect material relationship with Pitney Bowes or its management, including current or past employment with Pitney Bowes or its independent accountants by the director or the director’s immediate family members.Rodney C. Adkins, Linda G. Alvarado, Anne M. Busquet, Roger Fradin, Anne Sutherland Fuchs, James H. Keyes,S. Douglas Hutcheson, Eduardo R. Menascé, Michael I. Roth, David L. Shedlarz, and David B. Snow, Jr. and Robert E. Weissman.making this determination,addition, the board of directors consideredpreviously determined that inRodney C. Adkins, James H. Keyes and Robert E. Weissman, who served on the ordinary course of business, transactions may occur betweenboard until May 2013, were independent. Marc B. Lautenbach is not independent because he is a Pitney Bowes and its subsidiaries and companies or other entities at which some of our directors are executive officers. Under the company’s independence standards, business transactions meeting the following criteria are not considered to be material transactions that would impair a director’s independence:officer.The director is an employee or executive officer of another company that does business with Pitney Bowes and our annual payments to or from that company in each of the last three fiscal years are in8
Communications with the Board of Directors Stockholders and other interested parties may communicate with the The board of directors has instructed the corporate secretary to assist the (i) Customer, vendor or employee complaints or concerns are investigated by management and copies are forwarded to the If any complaints or similar communications regarding accounting, internal accounting controls or auditing matters are received, they will be forwarded by the corporate secretary to the General Auditor and to the Audit Committee chair for review and copies will be forwarded to the Chairman. Any such matter will be investigated in accordance with the procedures established by the Audit Committee; and (iii) Other communications raising matters that require investigation will be shared with appropriate members of management in order to permit the gathering of information relevant to the directors’ review, and will be forwarded to the director or directors to whom the communication was addressed. Except as provided above, the corporate secretary will forward written communications to the full board of directors or to any individual director or directors to whom the communication is directed unless the communication is threatening, illegal or similarly inappropriate. Advertisements, solicitations for periodical or other subscriptions, and other similar communications generally will not be forwarded to the directors. Board Committees and Meeting Attendance During Members of the board of directors serve on one or more of the five standing committees described below. As the need arises, the board may establish ad hoc committees of the board to consider specific issues. Mr. The members of all other board committees are independent directors pursuant to New York Stock Exchange independence standards. Each committee of the board operates in accordance with a charter. The members of each of the board committees are set forth in the following chart. It is the CORPORATE GOVERNANCEan amount less than the greater of $1 million or two percent of the annual consolidated gross revenues of the company by which the director is employed.During 2011, Messrs. Adkins, Fradin, Roth, and Snow were employed at corporations with which Pitney Bowes engages in ordinary course of business transactions.We reviewed all transactions with each of these entities and determined these transactions were made in the ordinary course of business and were below the threshold set forth in our director independence standards referenced above.The board of directors has established procedures by which stockholdersLead Director,Non-Executive Chairman of the Audit Committee chair, the independent directors, or the board. Such parties may communicate with the Lead Directorboard via e-mail at lead.director@pb.com, withboardchairman@pb.com, the Audit Committee chair via e-mail at audit.chair@pb.com or they may write to one or more directors, care of the Corporate Secretary, Pitney Bowes Inc., 1 Elmcroft Road, MSC 65-19, Stamford, CT 06926-0700.Lead Director, theNon-Executive Chairman, Audit Committee chair and the board in reviewing all electronic and written communications, as described above, as follows:Lead Director;(ii) (ii) to the Audit Committee chair for review and copies will be forwarded to the Lead Director.It is the longstanding practice and the policy of the board of directors that the directors attend the annual meeting of stockholders. All but one director attended the May 2011 annual meeting.2011,2013, each director attended at least 75% of the total number of board meetings and meetings held by the board committees on which he or she served. The board of directors met seventen times in 2011,2013, and the independent directors met in executive session, without any member of management in attendance, sixseven times.Martin serves as the chairLautenbach is a member of the Executive Committee. Asneed arises,longstanding practice and the board may establish ad hoc committeespolicy of the board to consider specific issues.of directors that the directors attend the annual meeting of stockholders. All directors attended the May 2013 annual meeting.14 9
Name Audit Executive Executive Finance Governance Rodney C. Adkins X X Linda G. Alvarado X X Anne M. Busquet X X Roger Fradin X X Anne Sutherland Fuchs X X James H. Keyes X X Murray D. Martin X * Eduardo R. Menascé X X* X Michael I. Roth X X X * David L. Shedlarz X * X X David B. Snow, Jr. X X X* Robert E. Weissman X X Number of meetings in 2011 6 0 7 5 5 Rodney C. Adkins, James H. Keyes and Robert E. Weissman served on the Executive Compensation Committee The Audit Committee monitors internal accounting controls and the scope and results of The board of directors has determined that the following members of the Audit Committee, S. Douglas Hutcheson, Michael I. Roth and David L. Shedlarz are “audit committee financial experts,” as that term is defined by The Executive Committee can act, to the extent permitted by applicable law and the company’s Restated Certificate of Incorporation and its The Executive Compensation Committee is responsible for ficers. The committee also recommends the “Compensation Discussion and Analysis” for inclusion in CORPORATE GOVERNANCE The Finance Committee reviews financial condition, reviewing and board approval major investment decisions including financing, mergers and acquisitions, divestitures and overseeing the financial operations of The Governance Committee recommends nominees for election to the board of directors, The Governance Committee generally identifies qualified candidates for nomination for election to the board of directors from a variety of sources, including other board members, management and stockholders. The committee also may retain a third-party search firm to assist the committee members in identifying and evaluating potential nominees to the board of directors. Stockholders wishing to recommend a candidate for consideration by the Governance Committee may do so by writing to vote at the meeting; (iv) a statement in support of the stockholder’s recommendation, including a description of the candidate’s qualifications; (v) information regarding the candidate as would be required to be included in a proxy statement filed in accordance with the rules of the The Governance Committee evaluates candidates If the Governance Committee believes that a potential candidate may be appropriate for recommendation to the board of directors, there is generally a mutual exploration process, during which the committee seeks to learn more about the candidate’s qualifications, background and interest in serving on the board of directors, and the candidate has the opportunity to learn more about the company, the board, and its governance practices. The final selection of the board’s nominees is within the sole discretion of the board of directors. Alternatively, as referenced on page Directors’ During The for their out-of-pocket expenses incurred in attending board and committee meetings. The board of directors maintains directors’ stock ownership guidelines, requiring, among other things, that each director accumulate and retain a minimum of 7,500 CORPORATE GOVERNANCE shares of Stock Plan” below. All members of the board of directors are in compliance with these guidelines. The directors’ stock ownership guidelines are available on Under the Directors’ Stock Plan, in rector effecting the disposition had accumulated and will retain 7,500 shares of common stock. Permitted dispositions are limited to: (i) transfer to a family member or family trust or partnership; and (ii) donations to charity after the expiration of six months from date of grant. The original restrictions would continue to apply to the donee except that a charitable donee would not be bound by the restriction relating to termination of service from the board of directors. Shares shown in the table on page Directors’ Deferred Incentive Savings We maintain a Directors’ Deferred Incentive Savings Plan under which directors may defer all or part of the cash portion of their compensation. Deferred amounts will be notionally “invested” in any combination of eral institutional investment funds. The investment choices available to directors under this plan are the same as those offered to employees under the company’s 401(k) plan. Directors’ Retirement The Linda G. Alvarado is the only current director who is eligible to receive a retirement benefit under the plan after termination of service on the board of directors. the date the plan was frozen, she had completed five years of service as a director, the minimum years of service required to receive an annual retirement benefit of 50% of her retainer as of CORPORATE GOVERNANCE DIRECTOR COMPENSATION FOR Each non-employee director receives an annual retainer of $65,000 ($16,250 per quarter) and a meeting fee of $1,500 for each board and committee meeting attended. Committee chairs (except for the Audit Committee chair) receive an additional $1,500 for each committee meeting that they chair, and the Audit Committee chair receives an additional $2,000 for each Audit Committee meeting chaired.
Compensation Name Audit Executive Executive
Compensation(1) Finance Governance Linda G. Alvarado X X Anne M. Busquet X X Roger Fradin X X Anne Sutherland Fuchs X X S. Douglas Hutcheson X X Marc B. Lautenbach X Eduardo R. Menascé X Chair X Michael I. Roth X Chair Chair David L. Shedlarz Chair X X David B. Snow, Jr. X X Chair Number of meetings in 2013 6 0 11 4 6 *ChairTheAudit Committeetheour financial reporting standards and practices of the company and the company’sour internal financial controls to confirm compliance with the policies and objectives established by the board of directors and oversees the company’sour ethics and compliance programs. The committee appoints independent accountants to conduct the annual audits, and discusses with the company’sour independent accountants the scope of their examinations, with particular attention to areas where either the committee or the independent accountants believe special emphasis should be directed. The committee reviews the annual financial statements and independent accountant’s report, invites the independent accountant’s recommendations on internal controls and on other matters, and reviews the evaluation given and corrective action taken by management. It reviews the independence of the independent accountants and approves their fees. It also reviews the company’s ourthe company’sour internal auditing activities, and submits reports and proposals on these matters to the board. The committee is also responsible for overseeing the process by which management identifies and manages the company’s risks. The committee meets in executive session with the independent accountants and internal auditor at each committee meeting.regulation of the Securities and Exchange Commission.SEC. All audit committeeAudit Committee members are independent as independence for audit committee members is defined in the New York Stock Exchange standards.TheExecutive CommitteeBylaws,By-laws, on matters concerning management of the business which may arise between scheduled board of directors meetings and as described in the committee’s charter.TheExecutive Compensation Committeethe company’sour executive compensation policies and programs. The committee chair frequently consults with, and the committee periodically meets in executive session with, Frederic W. Cook & Co., (“FWC”),Pay Governance LLC, its outsideindependent compensation consultant. The committee recommends to all of the independent directors for final approval policies, programs and specific actions regarding the compensation of the chairman and the chief executive officer,CEO, and approves the same for all of theour other executive officers of the company.of-the company’sour proxy statement, in accordance with the rules and regulations of the Securities and Exchange Commission,SEC, and reviews and approves allocations of sharesstock grants and other stock-based compensation awards. All Executive Compensation Committee members are independent as independence for compensation committee members is defined in the company’s employee stock plans in connection with the granting of stock and other stock based awards.New York Stock Exchange standards.15 TheFinance Committeethe company’sour financial condition and capital structure, and evaluates significant financial policies and activities, oversees the company’sour major retirement programs, advises management and recommends financial action to the board of directors. The committee’s duties include monitoring the company’sour current and projected10approvingrecommending forthe company’sour retirement plans. The committee recommends for approval by the board of directors the establishment of new plans and any amendments that materially affect cost, benefit coverages, or liabilities of the plans.TheGovernance Committeedetermines the duties of and recommends membership in, and functions of, the board committees, reviews executives’ potential for growth, reviews and recommends to the board of directors the amount and form of compensation to non-employee members of the board, and, with the Lead DirectorNon-Executive Chairman and the chief executive officer,CEO, is responsible for CEO succession planning and ensuring management continuity. The Governance Principles of the Board of Directors, which are posted on the company’sour website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance,” include additional information about succession planning. The committee reviews and evaluates the effectiveness of board administration and its governing documents, and reviews and monitors company programs and policies relating to directors. The committee reviews related-person transactions in accordance with company policy.to theto: c/o Corporate Secretary, Pitney Bowes Inc., 1 Elmcroft Road, MSC 65-19, Stamford, CT 06926-0700. Recommendations submitted for consideration by the committee in preparation for the 20132015 annual meeting of stockholders must be received by January 2, 2013,5, 2015, and must contain the following information: (i) the name and address of the stockholder; (ii) the name and address of the person to be nominated; (iii) a representation that the stockholder is a holder of the company’sour stock entitledSecurities and Exchange Commission;SEC; and (vi) the candidate’s written, signed consent to serve if elected.recommended by stockholders recommend based on the same criteria it uses to evaluate candidates from other sources. The Governance Principles of the Board of Directors, which are posted on the company’sour Corporate Governance website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance,” include a description of director qualifications. A discussion of the specific experience and qualifications identified by the committee identified for directors and nominees may be found under “Director Qualifications” on page 1723 of this proxy statement.711 of this proxy statement, stockholders intending to nominate a candidate for election by the stockholders at the meeting must comply with the procedures in Article II,I, Section 65 of the company’s By-laws. The By-laws are posted on the company’sour Corporate Governance website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance.”Role of Governance Committee in Determining Director Compensation.In accordance with the Governance Principles of the Board, the Governance Committee reviews and recommends to the board of directors the amount and form of compensation to non-employee members of the board of directors. The Governance Committee reviews the director compensation policy periodically and may consult from time to time with a compensation consultant, selected and retained by the committee, as to the competitiveness of the program. The following is a summary of the director compensation program.Fees.Fees2011,2013, each director who was not an employee of the company received an annual feeretainer of $65,000 and a meeting fee of $1,500 for each board and committee meeting attended. Committee chairs (except for the Audit Committee chair) receive an additional $1,500 for each committee meeting that they chair, and the Audit Committee chair receives an additional $2,000 for each Audit Committee meeting chaired.Lead DirectorNon-Executive Chairman receives an additional annual retainer of $10,000.$50,000. All directors are reimbursed1116 companyour common stock within five years of becoming a director of Pitney Bowes. The stock ownership guidelines provide limited exceptions for the transfer of these shares while the director continues to serve on our board, as discussed in more detail under “Directors’the company’sour Corporate Governance website atwww.pb.com under the caption “Our Company-LeadershipCompany—Leadership & Governance.”20112013 each director who was not an employee of the company received an award of 2,200 shares of restricted stock which are fully vested uponafter six months from the date of grant. (Directors appointed by the board to fill a vacancy during the year receive a prorated grant of shares as described in the Directors’ Stock Plan.) The shares carry full voting and dividend rights upon grant but, unless certain conditions are met, may not be transferred or alienatedsold until the later of (i) termination of service as a director, or, if earlier, the date of a change of control (as defined in the Directors’ Stock Plan), and (ii) the expiration of the six-month period following the grant of such shares. The Directors’ Stock Plan permits certain dispositions of stock granted under the restricted stock program provided that the directordi-Ownership of shares granted under the Directors’ Stock Plan is reflected1521 of this proxy statement showingdisclosing security ownership of directors and executive officers.officers include shares granted to the directors under the Directors’ Stock Plan.Plan.The company maintainsPlanseveralsev- Deferral elections made with respect to plan years prior to 2004 also included as an investment choice the ability to invest in options to purchase common stock of the company.Stock options selected by directors as an investment vehicle for deferred compensation were granted through the Directors’ Stock Plan. The Directors’ Stock Plan permits the exercise of stock options granted after October 11, 1999 during the full remaining term of the stock option by directors who have terminated service on the board of directors, provided that service on the board is terminated: (i) after ten years of service on the board; (ii) due to director’s death or disability; or (iii) due to the director having attained mandatory directors’ retirement age. The stock options may be exercised for three months following termination for any other reason. The Directors’ Stock Plan also permits the donation of vested stock options, regardless of the date of grant, to family members and family trusts or partnerships. All outstanding stock options are fully vested.Plan.Plancompany’sboard discontinued the Directors’ Retirement Plan, was discontinued, and thewith all benefits previously earned by directors were frozen as of May 12, 1997.Under this plan, there is no benefit paid to a director who served for less than five years as of May 12, 1997. A director who had met the five-year minimum vesting requirement as of May 12, 1997 would receive an annual retirement benefit calculated as 50% of the director’s retainer in effect as of May 12, 1997, and a director with more than five years of service at retirement would receive an additional ten percent of such retainer for each year of service over five, to a maximum of 100% of such retainer for ten or more years of service. The annual retainer fee in effect as of May 12, 1997, was $30,000. The annual retirement benefit is paid for life.SheAs ofthe date the plan was frozen, andMay 12, 1997. Therefore she will therefore receive an annual benefit of $15,000.17 1220112013 Name Fees Earned or
Paid in Cash
($)(1) Stock
Awards
($)(2) Change in
Pension Value
and Nonqualified
Deferred
Compensation
Earnings ($)(3) All Other
Compensation
($)(4) Total ($) Rodney C. Adkins(5) 34,875 0 0 0 34,875 Linda G. Alvarado 96,500 33,363 0 0 129,863 Anne M. Busquet 98,000 33,363 0 0 131,363 Roger Fradin 93,500 33,363 0 5,000 131,863 Anne Sutherland Fuchs 105,500 33,363 0 5,000 143,863 S. Douglas Hutcheson 95,000 33,363 0 5,000 133,363 James H. Keyes(5) 40,875 0 0 0 40,875 Eduardo R. Menascé 119,000 33,363 0 0 152,363 Michael I. Roth 160,000 33,363 0 5,000 198,363 David L. Shedlarz 107,000 33,363 0 0 140,363 David B. Snow, Jr. 108,500 33,363 0 0 141,863 Robert E. Weissman(5) 40,875 0 0 0 40,875 (1) NameFees Earned orPaid in Cash($)(1)StockAwards($)(2)Change inPension Valueand NonqualifiedDeferredCompensationEarnings ($)(3)All OtherCompensation($)(4)Total ($)Mr. Adkins89,00054,26300143,263Ms. Alvarado90,50054,26314,5120159,275Ms. Busquet92,00054,26305,000151,263Ms. Fuchs93,50054,26300147,763Mr. Green(5)40,00000040,000Mr. Keyes115,50054,26300169,763Mr. Menascé92,00054,26300146,263Mr. Roth101,00054,26305,000160,263Mr. Shedlarz104,00054,26300158,263Mr. Snow87,50054,26300141,763Mr. Weissman92,00054,26300146,263(1)TheIn 2012, the Lead Director received an additional annual retainer of $10,000. Effective January 1, 2013, the Non-Executive Chairman receives an additional annual retainer of $10,000.(2) (2) On May 9, 2011,13, 2013, each non-employee director then serving received an award of 2,200 shares of restricted stock. The fair market value of the restricted share awards was calculated using the average of the high and low stock price, $24.78$15.40 and $24.55,$14.93, respectively, as reported on the New York Stock Exchange on May 9, 2011,13, 2013, the date of grant. The closing price on May 9, 201113, 2013 on the New York Stock Exchange was $24.74.$15.01. The grant date fair market value of the restricted stock awards was computed in accordance with the share-based payment accounting guidance under ASC 718.ASC718. The aggregate number of shares of restricted stock held by each director as of December 31, 20112013 is as follows: Mr. Adkins – 10,343 shares; Ms. Alvarado – 29,00033,400 shares; Ms. Busquet – 9,92214,322 shares; Mr. Fradin – 4,997 shares; Ms. Fuchs – 13,36317,763 shares; Mr. KeyesHutcheson – 24,0004,056 shares; Mr. Menascé – 18,99223,392 shares; Mr. Roth – 25,80030,200 shares; Mr. Shedlarz – 18,99223,392 shares; and Mr. Snow – 12,400 shares; and Mr. Weissman – 18,99216,800 shares. Stock options were not awarded to non-employee directors during 2011. Stock options formerly were available to non-employee directors as an investment choice under the Directors’ Deferred Incentive Savings Plan. Cash fees deferred with respect to plan years prior to 2004 could be invested in options to purchase common stock of the company. The aggregate number of stock options held by each director as of December 31, 2011 is as follows: Mr. Weissman – 1,789.2013.(3) (3) Ms. Alvarado is the only non-employee director who served on the board of directors during 20112013 eligible to receive payments from the now-suspendeddiscontinued Directors’ Retirement Plan. Ms. Alvarado is eligible to receive payments upon her retirement from the board of directors. The change in Ms. Alvarado’s pension value was ($10,710).(4) (4) Ms. BusquetFuchs, Messrs. Fradin, Hutcheson and Mr. Roth utilized the Pitney Bowes Non-Employee Director Matching Gift Program during 2011.2013. The company matches individual contributions by current and retired non-employee directors, dollar for dollar to a maximum of $5,000 per board member per calendar year.(5) (5) Mr. GreenAdkins completed his term as a director in May 2013, having expressed his preference not to be re-nominated. Messrs. Keyes and Weissman retired in May 2011.2013.13
Role of Governance Committee in Determining Director Compensation
In accordance with the Governance Principles of the Board, the Governance Committee reviews and recommends to the board of directors the amount and form of compensation to non-employee members of the board of directors. The Governance Committee reviews the di-
rector compensation policy periodically and may consult from time to time with a compensation consultant, to be selected and retained by the committee, as to the competitiveness of the program.
Revised Director Compensation Program
The Governance Committee undertook a review of director compensation in 2013. The compensation for the board of directors was last modified in 2007. The Governance Committee retained an independent compensation consultant, Farient Advisors, to assist in its review. Farient provides no other consulting services to the company.
Farient presented a recommendation to the Governance Committee for changes to the board of directors compensation program, based upon an extensive analysis of comparative data, including director compensation at companies in the peer group used for executive com-
pensation purposes. Farient concluded that the company’s director compensation was below market, particularly in the equity component of the program, when compared with the peer group and the broader benchmark of comparably sized companies.
Based upon its review, including the information Farient provided, the Governance Committee recommended that the board of directors approve changes to the director compensation program. The Governance Committee recommended that the compensation level be set at about the 50th percentile of the total compensation in the peer and broader benchmark groups. The board of
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directors approved the changes to the compensation program, subject to the approval by our stockholders of an amended and restated Directors’ Stock Plan. No new
shares need to be authorized to satisfy awards under the amended and restated Directors’ Stock Plan.
A comparison of the current directors’ compensation program and the new program is shown in the table below.
COMPARISON OF CURRENT AND NEW DIRECTOR COMPENSATION PROGRAMS
| Incremental Leadership | ||||||||||||||||||
| Board Member | Premiums | |||||||||||||||||
| Compensation Element | Current | New | Current | New | ||||||||||||||
| Board service | (Board Chairman) | |||||||||||||||||
| Cash retainer | $65,000 | $75,000 | $50,000 | $100,000 | ||||||||||||||
| Meeting fee | $1,500 | $0 | $0 | $0 | ||||||||||||||
| Equity Award | 2,200 shares | $100,000 | ||||||||||||||||
| Annual Equity Grant | value-based grant | |||||||||||||||||
| Committee service | Committee | |||||||||||||||||
| Cash retainer | Chairmen | |||||||||||||||||
| • Audit | $0 | $12,000 | $0 | $12,000 | ||||||||||||||
| • Executive Compensation | $0 | $10,500 | $0 | $10,500 | ||||||||||||||
| • Governance | $0 | $9,000 | $0 | $9,000 | ||||||||||||||
| • Finance | $0 | $9,000 | $0 | $9,000 | ||||||||||||||
| Meeting Fee | ||||||||||||||||||
| • Audit | $1,500 | $0 | $2,000 | $0 | ||||||||||||||
| • Executive Compensation | $1,500 | $0 | $1,500 | $0 | ||||||||||||||
| • All Other Committees | $1,500 | $0 | $1,500 | $0 | ||||||||||||||
| Total Compensation | @$125,000 | @$195,000 | ||||||||||||||||
| Ownership Guidelines | 7,500 shares; | 5 times cash retainer; | ||||||||||||||||
| 5 years to reach | 5 years to reach | |||||||||||||||||
| compliance | compliance | |||||||||||||||||
Highlights of the Revised Directors’ Compensation Program are:
| • | Cash component will be paid as annual retainers rather than as a combination of a retainer and meeting attendance fees | |
| • | Leadership premiums will be paid to Committee Chairmen rather than as a higher meeting attendance fee | |
| • | Increase in leadership premium for Chairman of the Board | |
| • | Annual equity grant will be in the form of restricted stock units, the number of which is to be calculated by dividing $100,000 by the fair market value of share of the company’s common stock as of the award date | |
| • | The changes to the Directors’ Stock Plan further our goal of providing market-based equity compensation to board members to both attract and retain them, and the potential change in value of that equity compensation to the board members over time directly aligns their interests with the long-term interests of our stockholders | |
| • | The stock ownership requirement, to be attained over a five-year period, will be shares having a market value of five times the annual cash retainer, or $375,000 |
A meeting attendance fee of $2,000 will be paid with respect to meetings of the Executive Committee. The Executive Committee did not meet in 2013.
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CORPORATE GOVERNANCE
Certain Relationships and Related-Person Transactions
The board of directors has a written “Policy on Approval and Ratification of Related-Person Transactions” which states that the Governance Committee of the board of directors of Pitney Bowes Inc. is responsible for reviewing and approving any related-personrelated person transactions between Pitney Bowes and its directors, nominees for director, executive officers, beneficial owners of more than five percent of any class of Pitney Bowes voting stock and their “immediate family members” as defined by the rules and regulations of the Securities and Exchange Commission (“related persons”)SEC (related persons). It is the expectation and policy of the board of directors that all related-person transactions will be at arms’ length and on terms that are fair to the company.
Under the related-person transaction approval policy, any newly proposed transaction between Pitney Bowes and a related person must be submitted to the Governance Committee for approval if the amount involved in the transaction or series of transactions is greater than $120,000. Any related-person transactions that have not been pre-approved by the Governance Committee must be submitted for ratification as soon as they are identified. Ongoing related-person transactions are reviewed on an annual basis. The material facts of the transaction and the related person’s interest in the transaction must be disclosed to the Governance Committee. It is the expectation and policy of the board of directors that any related-person transactions will be at arms’ length and on terms that are fair to the company.
If the proposed transaction involves a related person who is a Pitney Bowes director or an immediate family member of a director, that director may not participate in the deliberations or vote regarding approval or ratification of the transaction but may be counted for the purposes of determining a quorum.
The following related-person transactions do not require approval by the Governance Committee:
| 1. | Any transaction with another company with which a related person’s only relationship is as an employee or beneficial owner of less than ten percent of that company’s shares, if the aggregate amount invested does not exceed the greater of $1 million or two percent of that company’s consolidated gross revenues; | ||||||||||||||||||
| 2. | A relationship with a firm, corporation or other entity that engages in a transaction with Pitney Bowes where the related person’s interest in the transaction arises only from his or her position as a director or limited partner of the other entity that is party to the transaction; | ||||||||||||||||||
|
| 3. | Any charitable contribution by Pitney Bowes to a charitable organization where a related person is an officer, director or trustee, if the aggregate amount involved does not exceed the greater of $1 million or two percent of the charitable organization’s consolidated gross revenues; |
|
| 4. | Any transaction involving a related person where the rates or charges involved are determined by competitive bids; and |
|
| 5. | Any transaction with a related person involving services as a bank depositary of funds, transfer agent, registrar, trustee under a trust indenture, or similar services. |
The Governance Committee may delegate authority to approve related-person transactions to one or more of its members. The member to whom such authority is delegated must report, for informational purposes only, any approval or ratification decisions to the Governance Committee at its next scheduled meeting.
During 2013, the company submitted one transaction to the Governance Committee for review and ratification. Abby F. Kohnstamm was appointed Executive Vice President and Chief Marketing Officer, effective as of June 17, 2013. Prior to the effective date of her appointment as Chief Marketing Officer, on February 1, 2013, Pitney Bowes had entered into a consulting agreement for a period of four months with Abby F. Kohnstamm & Associates, Inc., a marketing consulting firm which Ms. Kohnstamm founded and served as President and Chief Executive Officer. Pitney Bowes paid Abby F. Kohnstamm & Associates, Inc. $200,000 during 2013 under the consulting agreement. The term of the consulting agreement, and all services performed thereunder, ended prior to the effective date of Ms. Kohnstamm’s appointment as Chief Marketing Officer.
Compensation Committee Interlocks and Insider Participation
During 2011,2013, there were no compensation committee interlocks and no insider participation in Executive Compensation Committee decisions that were required to be reported under the rules and regulations of the Securities Exchange Act of 1934, as amended.
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14CORPORATE GOVERNANCE
SECURITY OWNERSHIP OF DIRECTORS AND EXECUTIVE OFFICERS Title of Name of Beneficial Owner Shares Options % of Class Common Rodney C. Adkins 10,568 0 * Common Linda G. Alvarado 33,028 0 * Common Anne M. Busquet 11,482 0 * Common Roger Fradin 5,597 0 * Common Anne Sutherland Fuchs 14,363 0 * Common James H. Keyes 26,102 0 * Common Eduardo R. Menascé 19,692 0 * Common Michael I. Roth 34,250 0 * Common David L. Shedlarz 21,492 0 * Common David B. Snow, Jr. 13,400 0 * Common Robert E. Weissman 28,354 1,789 * Common Murray D. Martin 2,678,744 2,522,326 1.33 % Common Michael Monahan 501,361 467,457 * Common Leslie Abi-Karam 475,390 452,542 * Common Vicki A. O’Meara 162,274 151,109 * Common Johnna G. Torsone 413,573 377,645 * Common All executive officers and directors as a group (20) 4,923,843 4,406,085 2.46 % * Less than 1% of Pitney Bowes Inc. common stock. (1) These shares represent common stock beneficially owned as of March 1, (2) Other than with respect to ownership by family members, the reporting persons have sole voting and investment power with respect to the shares listed. (3) Includes shares that are held indirectly through the Pitney Bowes 401(k) Plan and its related excess plan. (4) The director or executive officer has the right to acquire beneficial ownership of this number of shares within 60 days of March 1, The only persons or groups known to the company to be the beneficial owners of more than five percent of any class of the company’s voting securities are reflected in the chart below. The following information is based solely upon Schedules 13G and amendments thereto filed by the entities shown with the Name and Address of Beneficial Owner Amount and Nature of Percent of (2) As of December 31, Section 16(a) Beneficial Ownership Reporting Compliance Directors and persons who are considered “officers” of the company for purposes of Section 16(a) of the Securities Exchange Act of 1934 and greater than ten percent stockholders (“Reporting Persons”) are required to file reports with the Proposal 1: Election of Directors The board of directors believes that, as a whole, the board should include individuals with a diverse range of experience to give the board depth and breadth in the mix of skills represented for the board to oversee management on behalf of The board of directors, with the assistance of the Governance Committee, is responsible for assembling appropriate experience and capabilities within its membership as a whole, including financial literacy and expertise needed for the Audit Committee as required by applicable law and New York Stock Exchange listing standards. The Governance Committee seeks to include individuals with a variety of occupational and personal backgrounds on the board of directors in order to obtain a range of viewpoints and perspectives and to enhance the diversity of the board of directors in such areas as experience and geography, as well as race, gender, ethnicity and age. Among other things, the board of directors has determined that it is important that the board should include members with the following skills and experiences: • • • • • • Additionally, the board believes all directors should demonstrate integrity and ethics, business acumen, sound judgment, and the ability to commit sufficient time and attention to the activities of the board of directors, as well as the absence of any conflicts with our interests. The Governance Committee assesses the effectiveness of its criteria when evaluating and recommending new candidates. Each director brings experience and skills that complement those of the other directors. The board of directors believes that all the directors nominated for election PROPOSAL 1: ELECTION OF DIRECTORS Directors are elected to one year. The board of directors Information about each nominee for director, Should any nominee become unable to accept nomination or election as a director (which is not now anticipated), the persons named in the enclosed proxy will vote for such substitute nominee as may be selected by the board of directors, unless the size of the board is reduced. At the annual meeting, proxies cannot be voted for more than the ten director nominees. Vote In accordance with The board of directors recommends that stockholders vote FOR the election of all the Anne M. Busquet, PROPOSAL 1: ELECTION OF DIRECTORS Roger Fradin, As the chief executive officer of a Anne Sutherland Fuchs, Ms. Fuchs has experience as a senior executive with operational responsibility within the media and marketing industries, as well as experience as global chief executive officer of a unit of LMVH Moet Hennessy Louis Vuitton. Her experience in the publishing industry includes senior level operational roles at Hearst, Conde Nast, Hachette and CBS. She possesses experience in product development, marketing and branding, international operations, as well as in human resources and executive compensation. Her experience in managing a number of well-known magazines contributes to her knowledge and understanding of businesses closely tied to the mailing industry. Her work for the City of New York has further informed her understanding of government operations and government partnerships with the private sector. Mr. Hutcheson brings to the board of directors significant operational and As a experience. Eduardo R. Menascé, Mr. Menascé has broad experience as a former senior executive responsible for a significant international operation of a public company, as well as experience in senior leadership positions with a number of European and Latin American businesses, including business operations, finance and capital markets, international and emerging markets, technology, customer communications and marketing channels, and executive compensation. His experience on other public company boards and as a director of the New York chapter of the National Association of Corporate Directors contributes to his knowledge of public company matters. Michael I. Roth,68, chairman and chief executive officer, The Interpublic Group of Companies, Inc., a global marketing communications and marketing services company, since 2005. Pitney Bowes director since 1995. (Also a director of Ryman Hospitality Properties, Inc. and The Interpublic Group of Companies, Inc.) Mr. Roth has broad experience as the chief executive officer of a public company and as a member of other public company boards of directors, as well as previous experience as a certified public accountant and attorney. In addition to his experience as chief executive officer of The Interpublic Group of Companies, his experience includes service as the chief executive officer of The MONY Group Inc. prior to its acquisition by AXA Financial, Inc. He brings to the board of directors his deep financial expertise, and experience in business operations, capital markets, international markets, emerging technologies and services, marketing channels, corporate governance, and executive compensation. David L. Shedlarz,65, retired vice chairman of Pfizer Inc., a pharmaceutical, consumer and animal products health company. Formerly vice chairman of Pfizer Inc., 2005 – 2007; executive vice president and chief financial officer, 1999 – 2005, Pfizer Inc. Pitney Bowes director since 2001. (Also a director of Teachers Insurance and Annuity Association and The Hershey Company.) Mr. Shedlarz has broad experience as a former senior executive of a public company, experience as a former chief financial officer and as a member of other public company boards of directors. He possesses financial expertise, knowledge of business operations and capital markets, international markets, emerging technologies and services, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, product development, and corporate governance. David B. Snow, Jr.,59, managing partner and chief executive officer, Cedar Gate Partners, LLC, a provider of consulting, analytic and information technology services to doctor and hospital organizations entering risk-based reimbursement arrangements with insurers, since February 2014. Until April 2012, chairman and chief executive officer of Medco Health Solutions, Inc., a leading pharmacy benefit manager. Pitney Bowes director since 2006. (Formerly a director of Medco Health Solutions, Inc.) In addition to his experience as the chief executive officer of a public company, Mr. Snow has a strong background in operations, having served in senior leadership positions at several companies including WellChoice (Empire Blue Cross Blue Shield) and Oxford Health Plans. Mr. Snow also brings to the board of directors a broad range of experience, including finance and capital markets, emerging technologies, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, corporate governance, and product development. The Audit Committee functions pursuant to a charter that is reviewed annually and was last amended in In the performance of its responsibilities, the committee has reviewed and discussed the audited financial statements with management and the independent accountants. The committee has also discussed with the independent accountants the matters required to be discussed under the rules adopted by the Public Company Accounting Oversight In determining whether to recommend that the stockholders ratify the selection of PricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as Pitney Bowes’ independent auditor for 2014, management and the committee, as they have done in prior years, engaged in a review of PricewaterhouseCoopers. In that review, the committee considers the continued independence of PricewaterhouseCoopers, its geographic presence compared to that of Pitney Bowes, its industry knowledge, the quality of the audit and its services, the audit approach and supporting technology, any Securities and Exchange Commission actions and other legal issues as well as PCAOB inspection reports. Pitney Bowes management prepares an annual assessment that includes an analysis of (1) the above criteria for PricewaterhouseCoopers and the other “Big Four” accounting firms; (2) an assessment of whether firms outside of the “Big Four” should be considered; and (3) a detailed analysis of the PricewaterhouseCoopers’ fees. In addition, PricewaterhouseCoopers reviews with the committee its analysis of its independence. Based on the results of this review this year, the committee concluded that PricewaterhouseCoopers is independent and that it is in the best interests of Pitney Bowes and its investors to appoint PricewaterhouseCoopers to serve as Pitney Bowes’ independent registered accounting firm for 2014. Based upon the review of information received and discussions as described in this report, the committee recommended to the board of directors that the audited financial statements be included in the company’s Annual Report on Form 10-K for the year ended December 31, By the Audit Committee of the board of directors, David L. Shedlarz, Chair Roger Fradin Anne Sutherland Fuchs S. Douglas Hutcheson Michael I. Roth Proposal 2: Ratification of the Audit Committee’s Appointment of the Independent Accountants for The Audit Committee has appointed to reconsider its appointment of Principal Accountant Fees and Services Aggregate fees billed for professional services rendered for the company by PricewaterhouseCoopers for the years ended December 31, 2011 2010 Audit $ 7.4 $ 7.3 Audit-Related .8 .5 Tax .6 .9 All Other .2 — Total $ 9.0 $ 8.7 Audit fees:The Audit fees for the years ended December 31, Audit-Related Fees:The Audit-Related fees for the years ended December 31, and consultations concerning financial accounting and reporting standards. Tax Fees:The Tax fees for the years ended December 31, The Audit Committee has adopted policies and procedures to pre-approve all services to be performed by PricewaterhouseCoopers. Specifically the committee’s policy requires pre-approval of the use of PricewaterhouseCoopers for audit services as well as detailed, specific types of services within the following categories of audit-related and non-audit services: merger and acquisition due diligence and audit services; employee benefit plan audits; tax services; Vote Ratification of the appointment of Pitney Bowes’ independent accountants requires the affirmative vote of a majority of votes cast. Abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote. The board of directors recommends that stockholders vote FOR the ratification of PricewaterhouseCoopers LLP as Proposal 3: Advisory Vote to Approve Executive Compensation In accordance with SEC rules, stockholders are This proposal, commonly known as a The stockholders have approved the board of The The following are the most critical factors driving the board and the committee’s conclusion in establishing the incentive compensation payouts: best performing stock on the Based on these financial results when compared against the pre-determined financial goals established by the committee for 20131, the annual incentive payout multiplier for the NEOs was 109.5% and the 2011-2013 long-term cash incentive units award payout was $1.50. As discussed in the CD&A, the committee has structured our executive compensation program based on the following central principles: (1) (2) (3) (4) (5) We believe our executive compensation program demonstrates a strong link between pay and performance in its design and exhibits strong pay governance practices. PROPOSAL 3: ADVISORY VOTE TO APPROVE EXECUTIVE COMPENSATION The committee has also acted to make changes in 2013 in accordance with good pay governance, changing market practices and stockholder feedback by eliminating tax gross-ups, reducing severance benefits, providing onlyde minimisfringe benefits and reducing duplicative financial metrics between the annual and long-term incentive plans. Finally, the committee and the company have made continual efforts to contact stockholders with respect to their thoughts on our compensation structure. Over the past years, the committee has adopted changes in executive compensation that directly relate to comments received from the stockholders. Key Changes Made to our Executive Compensation Program in 2013 In addition to the changes summarized above, we are maintaining the existing compensation practices that represent strong corporate governance policies. We urge stockholders to read the CD&A beginning on page In accordance with Section 14A of the Exchange Act, and as a matter of good corporate governance, we are asking stockholders to indicate their support for our NEO compensation by votingFORthis RESOLVED, that the stockholders of Pitney Bowes Inc. approve on an advisory basis the compensation of the company’s named executive officers disclosed in the Compensation Discussion and Analysis, the Summary Compensation Table and the related compensation tables, notes and This advisory resolution, commonly referred to as a Vote The vote on executive compensation is an advisory The board of directors recommends that stockholders vote FOR the approval of the advisory resolution on executive compensation. Proposal 4: Approval of the Pitney Bowes Inc. Directors’ Stock Plan Proposal 4: Approval of the Pitney Bowes Inc. The board of directors recommends that stockholders approve the Pitney Bowes Inc. Directors’ Stock Plan, as amended and restated (Plan). The board of directors unanimously approved the Plan in February 2014. The Plan will become effective May 12, 2014, upon stockholder approval at our annual meeting. The Plan governs grants of stock-based awards to non-employee directors, which is an important component of our non- employee director compensation program, enabling us to attract and retain persons of outstanding competence to serve as non-employee directors and encouraging the alignment of non-employee director compensation with stockholder interests. The complete text of the Plan approved by the board of directors is attached as Annex A to this Proxy Statement. The following discussion is qualified in all respects by reference to Annex A. Why We Believe You Should Approve the Plan Equity compensation is an essential part of our non-employee director compensation program and enables us to attract and retain persons of outstanding ability. We believe our future success depends on our ability to attract, motivate and retain high quality non-employee directors and approval of the Plan is critical to achieving this success. The potential change in value of the equity compensation to the board members over time directly aligns their interests with the long-term interests of our stockholders. We believe that we have demonstrated our commitment to sound equity compensation practices. We recognize that equity compensation awards dilute stockholder equity and, therefore, we have carefully managed our equity incentive compensation. In fact, the equity to be utilized under the new Directors’ Stock Plan will be drawn from the Pitney Bowes Stock Plan equity reserve which the stockholders previously approved in 2013. The board targeted its compensation, including the equity component, to be consistent with the market median, and we believe our historical share usage has been responsible and mindful of stockholder interests, as described further below. Plan Highlights The Plan provides for automatic annual grants of restricted stock units for non-employee directors. Awards granted under the Plan will be settled by the issuance of shares of common stock, $1 par value per share, of the company (Common Stock), that are drawn from the shares of Common Stock available for issuance under the Pitney Bowes Inc. 2013 Stock Plan (2013 Stock Plan), previously approved by the company’s stockholders. As has historically been and continues to be the case, however, non-employee directors will not participate in the 2013 Stock Plan. Approval of the Plan will not result in an increase in the number of shares that are available for issuance under our equity compensation plans. As of December 31, 2013, 19,180,600 shares remain available for issuance under the 2013 Stock Plan. Based on our past experience, we believe the previously approved share pool under the 2013 Stock Plan will provide us an opportunity to grant equity awards under the 2013 Stock Plan and the Plan for approximately four more years before we would need to seek stockholder approval of more shares. Provisions Designed to Protect Stockholder Interests The Plan has several provisions designed to protect stockholder interests and promote effective corporate governance including: PROPOSAL 4: APPROVAL OF THE PITNEY BOWES INC. DIRECTORS’ STOCK PLAN Plan Terms and Conditions Purpose of the Plan The purpose of the Plan is to enable the company to attract and retain persons of outstanding competence to serve as non-employee directors of the company by paying such persons a portion of their compensation in stock of the company pursuant to the terms of the Plan. Plan Administration This Plan is to be administered by the Governance Committee of the board or any successor committee having responsibility for the remuneration of the directors (hereinafter in this Proposal referred to as the “Committee”). Eligibility and Participation Persons who serve as members of the board of directors of the company and who are not “employees” of the company or its subsidiaries are eligible to participate in the Plan. Currently, all of the company’s nine (9) non-employee directors are eligible to, and do participate in, the Plan. Shares Available under the Plan Awards granted under the Plan will be settled by the issuance of shares of Common Stock that are drawn from the shares of Common Stock available for issuance from time to time under the 2013 Stock Plan, previously approved by the company’s stockholders. Shares of Common Stock issued pursuant to awards of restricted stock units under the Plan shall reduce, on a one-for-one basis, both (a) the overall maximum number of shares of Common Stock available for issuance under the 2013 Stock Plan and (b) the sub-limit under the 2013 Stock Plan for the number of shares that may be issued for awards that are not options or stock appreciation rights. As of December 31, 2013, 19,180,600 shares remain available for issuance under the 2013 Stock Plan share pool. In addition to the number of shares described in the preceding sentence, any shares associated with outstanding awards under the prior plans (as defined in the 2013 Stock Plan) as of April 30, 2013 that on or after such date cease for any reason to be subject to such awards (other than by reason of exercise or settlement of the awards to the extent they are exercised for or settled in vested and nonforfeitable shares) will become available for issuance under the 2013 Stock Plan share pool. Shares delivered out of the 2013 Stock Plan share pool will be authorized but unissued shares of Common Stock, treasury shares or shares purchased in the open market or otherwise. To the extent that any award payable in shares is forfeited, cancelled, returned to the company for failure to satisfy vesting requirements or upon the occurrence of other forfeiture events, or otherwise terminates without payment being made, the shares covered thereby will no longer be charged against the maximum share limitation under the 2013 Stock Plan share pool and may again become available under the 2013 Stock Plan share pool. Terms and Conditions of Restricted Stock Units Awards Each non-employee director then serving as a director of the company will receive an annual award on the date of the first meeting of directors after each annual stockholders’ meeting of restricted stock units with respect to a number of shares of Common Stock having a fair market value equal to $100,000; provided, however, that a non-employee director who joins the board after such date will receive a pro-rated award of restricted stock units. Each restricted stock unit granted under the Plan will represent the right to receive one share of Common Stock on the date that is one year following the date the award is granted; provided, however, that with respect to each annual grant the company may, in its sole discretion, provide non-employee directors with the one-time opportunity to elect to defer the settlement of the restricted stock units until the termination of the non-employee director’s service as a director of the company. Unless the Committee determines otherwise, non-employee directors will have the right to receive dividend equivalents in connection with the restricted stock units granted under the Plan pursuant to which the non-employee directors will be entitled to receive payments equivalent to dividends with respect to the number of shares subject to the corresponding award of restricted stock units, which payments, unless the Committee determines otherwise, shall be paid to the non-employee directors in cash as and when such dividends are paid to the holders of Common Stock. Unless the Committee provides otherwise, non-employee directors have no voting or other rights (other than the dividend equivalent rights described above) as a stockholder with respect to the shares of Common Stock subject to and/or issuable pursuant to any awards of restricted stock units granted under the Plan until such shares are actually issued. The restricted stock units granted under the Plan may not be sold, assigned, pledged or otherwise transferred by the non-employee director, other than by will or the laws of descent and distribution. PROPOSAL 4: APPROVAL OF THE PITNEY BOWES INC. DIRECTORS’ STOCK PLAN Adjustments for Corporate Changes In the event of any change in the number or kind of outstanding shares of Common Stock of the company by reason of a recapitalization, merger, consolidation, dividend, combination of shares or any other change in the corporate structure or shares of stock of the company, the board will make equitable and appropriate adjust- ments in the number of restricted stock units to be awarded to non-employee directors, in the number of shares subject to and any other affected provisions of outstanding awards of restricted stock units to prevent enlargement or diminution of the benefits intended to be granted under the Plan. Amendment and Termination The company reserves the right to amend, modify or terminate the Plan at any time by action of the board, provided that such action will not adversely affect any non-employee director’s rights under the provisions of the Plan with respect to awards that were made prior to such action. Plan Benefits As described above, each non-employee director then serving as a director of the company will receive an annual award on the date of the first meeting of directors after each annual stockholders’ meeting of restricted stock units with respect to a number of shares of Common Stock having a fair market value equal to $100,000; provided, however, that a non-employee director who joins the board after such date will receive a pro-rated award of restricted stock units. On February 28, 2014, the closing price of our common stock traded on the New York Stock Exchange was $25.45 per share. U. S. Federal Income Tax Consequences The following discussion summarizes the material U.S. federal income tax consequences to the company and the participating non-employee directors in connection with the Plan under existing applicable provisions of the IRC and the accompanying regulations. The discussion is general in nature and does not address issues relating to the income tax circumstances of any individual non-employee director. The discussion is based on federal income tax laws in effect on the date of this proxy statement and is, therefore, subject to possible future changes in the law. The discussion does not address the consequences of state, local or foreign tax laws. Restricted Stock Units Non-employee directors do not recognize income at the time of the grant of restricted stock units. When the award vests or is paid, non-employee directors generally recognize ordinary income in an amount equal to the fair market value of the restricted stock units at such time, and the company will receive a corresponding deduction. Vote Required; Recommendation of the Board of Directors Approval of the Pitney Bowes Inc. Directors’ Stock Plan as amended and restated, requires the affirmative vote of a majority of votes cast. Under our By-laws, abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote. However, for purposes of approval under New York Stock Exchange rules, abstentions are treated as votes cast, and, therefore, will have the same effect as an “against” vote, and broker non-votes are not considered votes cast, and, therefore, will have no effect on the outcome of the vote. The board of directors recommends that stockholders vote FOR the proposal to approve the Pitney Bowes Inc. Directors’ Stock Plan. Equity Compensation Plan Information The following table provides information as of December 31, 2013 regarding the number of shares of common stock that may be issued under our equity compensation plans. Report of the Executive Compensation Committee The Executive Compensation Committee By the Executive Compensation Committee of the board of directors, Eduardo R. Menascé, Chairman Compensation Discussion and Analysis The following discussion and analysis contains statements regarding company performance targets and goals. These targets and goals are disclosed in the limited context of our compensation programs and should not be understood to be statements of management’s expectations or estimates of results or other guidance. Investors should not apply these statements to other contexts. Executive Summary Overview This Compensation Discussion and Analysis, or CD&A, In 2013, the company’s NEOs included two former executive Effective December 3, 2012, the board of directors elected Marc B. Lautenbach President and CEO and appointed Michael I. Roth non-executive chairman of the board of directors. In his first year as our new President and CEO, Mr. Lautenbach focused on Summary of 2013 Business Results2 In 2013, the company achieved significant success in the early stages of executing on its strategy to We identified three major objectives for the company that would determine our progress towards transforming our businesses and made significant progress on each. These objectives were as The financial results discussed in this summary are on a GAAP and non-GAAP basis. See detailed discussion under the table on page 55 “Accounting Items and Reconciliation of GAAP to non-GAAP Measures.” COMPENSATION DISCUSSION AND ANALYSIS Turning to our financial performance in 2013, revenue was $3.869 billion compared to $3.915 billion in 2012; however the 1% decrease was more favorable than the year-over-year trend from prior years. Also, we grew revenue in the fourth quarter of 2013, with total revenue of $1 billion representing an increase of 2% over the prior year’s fourth quarter. Adjusted earnings per diluted share from continuing operations for 2013 were $1.88, compared to $1.96 in 2012. Adjusted earnings before interest and taxes were $711 million compared to $744 million in 2012. Adjusted free cash flow for the year was $635 million, and we generated $625 million in cash from operations. Our digital commerce solutions segment experienced higher growth with revenue increasing 3% year over year, including a 17% growth rate in the fourth quarter. Our digital commerce solutions revenue for the year increased from $578 million to $596 million. Our production mail business had an outstanding year due to the growth in its revenue and gross margin. In 2013, we reduced debt on the balance sheet by $671 million compared to year-end 2013. In aggregate, the 2013 financial results were within the guidance the company provided to the investment community. In addition, in 2013: In summary, in 2013, we saw improving trends in our business and made significant progress to unlocking the long-term value embedded in our company for the benefit of our clients, our shareholders, and our employees. Some of the amounts in the CD&A portion of this proxy statement are shown on a non-GAAP basis. For additional detail on the calculation of the financials reported, please refer to the table on page 55 “Accounting Items and Reconciliation of GAAP to Non-GAAP Measures”. We urge stockholders to read our Annual Report on Form 10-K for the year ended December 31, COMPENSATION DISCUSSION AND ANALYSIS CEO 2013 Compensation The In the above illustration, because the peer median and Survey Reports average median data is reported at target, Mr. Lautenbach’s compensation elements are also illustrated at target for comparison purposes. Mr. Lautenbach’s long-term incentive amount includes the value of his one-time sign-on grant of premium-priced stock The COMPENSATION DISCUSSION AND ANALYSIS Summary of 2013 Executive Compensation Changes At the company’s annual meeting of stockholders in 2013, stockholders overwhelmingly approved the company’s executive compensation by a vote of approximately 93% of the votes cast in favor. During 2013, management and the Committee maintained their commitment to obtaining and considering stockholder feedback on the company’s compensation program by soliciting feedback over the course of the year. The following highlights the changes that we made to the program in 2013. These highlights will be discussed in more detail in “2013 Compensation” beginning on page 43 of this proxy statement. Snapshot of 2013 Compensation Payout Decisions In making its compensation decisions and recommendation for the 2013 performance year, the Committee considered, among other things, our financial results, the achievement of the compensation objectives (see discussion beginning on page 44), our relative and absolute TSR and the feedback received from stockholders. Our one year TSR placed us at the top of our peer group, while our three year TSR placed us at the 25th percentile, further illustrating the significant improvement that occurred in our businesses in 2013. Based on 2013 financial results, the Committee and independent board members approved an annual incentive payout of 109.5% of target, after application of the Strategic Modifier. For the 2011 – 2013 CIU long-term incentive award, the Committee approved a CIU payout of $1.50 per unit, after application of the TSR Modifier. The following tables compare the actual payouts in 2013 and 2012. See “2013 Compensation” beginning on page 43 of this proxy statement for a discussion of each of the compensation components and the respective payouts. COMPENSATION DISCUSSION AND ANALYSIS Pay For Performance Alignment We have designed our compensation program to link pay with performance. COMPENSATION DISCUSSION AND ANALYSIS Our executive compensation program is designed to recognize and reward outstanding achievement and to attract, retain and motivate our leaders. In addition, we directly engaged with many of our stockholders in 2013 to solicit feedback on our executive compensation programs to ensure they are appropriately aligned with stockholder interests. Below is an overview of key aspects of our pay philosophy. COMPENSATION DISCUSSION AND ANALYSIS We Design our Compensation Mix to Focus on Variable Pay The chart below shows the We design the mix of short and long-term incentives to reward and motivate short-term performance, while at the same time providing significant incentives to keep our executives focused on longer-term corporate goals that drive stockholder value. In addition, we believe this balance of short-term and long-term incentive compensation and mix of performance criteria helps mitigate the incentive for executives to take excessive risk that may have the potential to harm the company in the long-term. We monitor the structure annually to make sure that it does not incentivize excessive risk and report our findings to the Committee. In determining our executive’s grant levels, we take into consideration the following: Due to the Overview of Compensation Components The levels COMPENSATION DISCUSSION AND ANALYSIS The following table outlines the components of direct compensation for our NEOs and how Equity Competitive in the markets in which we operate enabling us to attract and retain executive talent Fixed compensation Achievement of pre-determined short-term objectives established in the first quarter of each year Competitive incentive targets enable us to attract and retain executive talent Performance-based compensation primarily measured on achievement of enterprise-wide metrics Achievement of Payout dependent on achievement of long-term objectives aligning pay to long-term performance Performance-based compensation measured on enterprise-wide metrics • 3-year performance period cycle thereby promoting retention COMPENSATION DISCUSSION AND ANALYSIS Achievement of a pre-determined performance objective established at the time of grant Vesting dependent on achievement of a pre-determined performance objective aligning pay to performance Performance-based compensation measured on a threshold financial target for IRC 162(m) purposes Market Stock Units (granted only in 2012) • Performance-based compensation measured on a threshold financial metric for IRC 162(m) purposes The All long-term incentives are subject to a “clawback” (See “Clawback Policy” on We also provide certain other benefits for our NEOs, including retirement benefits and deferred compensation plans. For additional information, please see “Other Overview In February 2013, the Committee implemented changes to the changes ensured a stronger link between company financial performance and executive compensation and will be reflected beginning with the February 2014 payouts. Base Salary In February 2013, based on the business results for company also imposed a freeze on the base salaries of COMPENSATION DISCUSSION AND ANALYSIS Annual Incentives NEOs are eligible for annual incentives under the KEIP primarily for achieving challenging enterprise-wide financial each year. Individual performance and its impact on financial, strategic, unit or individual objectives may be considered. In 2013, 100% of the annual incentive Financial Objectives Weighting Target Actual Performance Adjusted Earnings Per Share1 28 % $ 2.23 $ 2.70 121 % Revenue Growth1 21 % 1.5 % −4.2 % 0 % Adjusted Free Cash 21 % $ 819 $ 994 121 % Flow1 million million Adjusted earnings before interest and taxes, Revenue growth and Adjusted free cash flow are non-GAAP measures. For a reconciliation and additional information, please see “Accounting Items and Reconciliation of GAAP to Non-GAAP Measures” on page We believe that together these financial objectives effectively measure how well our business is performing on a short-term basis and thus represent appropriate metrics upon which to base annual incentive awards. In 2012 our stockholders expressed concern regarding duplicative financial metrics in our short and long-term compensation programs. In response to that concern, we replaced the earnings per share metric with an Adjusted earnings before interest and taxes metric for the 2013 annual incentive program. Each of these metrics exclude the impact of certain special items, both positive and negative, which could mask the underlying trend or performance within a business. We set the targets for the Adjusted earnings before interest and taxes and Adjusted free cash flow financial objectives at approximately the midpoint of our guidance provided to stockholders and the financial community at the beginning of 2013. We set the target for 2013 revenue at the lower end of guidance because we believed achieving that goal would be challenging in light of continuing uncertainties in the core business environment and the transformational changes being made inside the company. The ment to place more rigor in the payouts and reflects stockholder feedback. While strategic Funding of the Annual Incentive Pool and Funding of the annual incentive pool begins with the sum of the annual incentive targets of eligible Pitney Bowes Incentive Plan (PBIP) participants. For more information on setting the target see “Assessing Competitive Practice” on page 51. After the close of the calendar year, the Committee determines the company’s achievement of the overall financial results against each metric (see above) and approves a multiplier to be applied to the sum of the annual incentive targets. For NEOs, executive officers, unit presidents and staff vice presidents the annual incentive is only paid if the company achieves its IRC 162(m) threshold target of $276,086,000 in income from continuing operations, excluding certain special events. (See “Treatment of Special Events” beginning on page 55 of this proxy statement.) This IRC 162(m) target is an additional target intended to ensure tax deductibility of compensation paid. Actual 2013 Adjusted income from continuing operations, excluding all special events, was $380,668,000. The IRC 162(m) threshold target income from continuing operations was restated to exclude the PBMS, IMS and Nordic furniture businesses sold. The chart below shows actual financial results and the COMPENSATION DISCUSSION AND ANALYSIS The Noting the significant progress made in addressing client satisfaction across the four key business units and achieving outstanding results in implementing a culture change throughout the organization, the Committee, and independent board members with respect to the CEO, added a 9% strategic modifier resulting in a final Based on the above analysis, Mr. Long-term Incentives Long-term incentives Cash Incentive Units (CIUs) CIUs are long-term cash awards granted annually with The our long-term viability and performance and thus appropriate metrics upon which to base long-term incentive The Committee generally sets the financial targets at the midpoint of the guidance we provide to stockholders and the CIU The 2011 – 2013 financial objectives, each weighted at 50%, are stated below: 2013 Funding of the For the The Committee modifies the resulting unit value For NEOs, executive officers, unit presidents and staff vice presidents the 2011 – 2013 CIU cycle is only paid if the company achieves an IRC 162(m) threshold target of average income from continuing operations over the cycle of $298,086,000, excluding certain special events. (See “Treatment of Special Events” beginning on page 55 of this proxy statement.) Adjusted average annual income from continuing operations for the 2011 – 2013 CIU cycle exceeded the threshold and was $426,332,000. The IRC 162(m) threshold target for income from continuing operations on the 2011 – 2013 period was restated to exclude PBMS, IMS and Nordic furniture. COMPENSATION DISCUSSION AND ANALYSIS The 2009 – 2011 LTI Target Actual 2009 $ 2.67 $ 2.28 2010 $ 2.40 a $ 2.23 2011 $ 2.23 b $ 2.70 2009 – 2011 LTI Target Actual 2009 $ 745 $ 889 2010 $ 670 a $ 951 2011 $ 819 b $ 994 million million Adjusted free cash flow are non-GAAP measures. For a The TSR The CIU payout in Performance-Based Restricted Stock An annual grant of performance-based restricted stock For NEOs, executive officers, unit presidents and staff vice presidents, no performance-based restricted stock The 2013 award Performance-based market stock units (MSUs) were granted to executive officers, including NEOs, in February Because the IRC 162 (m) threshold target was achieved, the 2012 award will vest on the third anniversary of the grant date. The number of performance-based MSUs that will vest at that time is contingent on our TSR over the vesting period and the executives’ continued employment until the vesting date. The vesting percentage is determined by multiplying the number of units by a fraction, the numerator of which is the Pitney Bowes ending stock price1plus cumulative dividends paid on outstanding company stock during the vesting period, and the denominator, of which is the Pitney Bowes beginning stock price.2 In 2013, the Committee determined that MSUs would no longer be a part of the company’s executive compensation structure. COMPENSATION DISCUSSION AND ANALYSIS Periodic Off-Cycle Long-Term Awards In special circumstances, the Committee, or in the case of the CEO, the independent board members, may determine that it is appropriate to make additional long-term award grants to executives during the course of the year. In February 2013, the independent board members awarded the second and final tranche of premium-priced stock options promised to Mr. Lautenbach upon commencement of his employment in December See details of 2014 LTI Design Mix In November 2013, reflecting the tenor of comments made by stockholders, the Committee changed the design mix for the 2014 LTI awards to 100% equity to further align long-term incentives with long-term stockholder interests. The 2014 LTI design mix will be 70% performance stock units (PSUs) and 30% performance-based RSUs, both paid in stock. The long-term executive compensation structure will be entirely impacted by changes in company stock price. PSUs, which the Committee decided will be granted in place of CIUs beginning in 2014, have many of the same features as the previously granted CIUs, except that the PSUs are based on and settled in stock instead of cash. The new LTI mix of 100% equity further aligns the LTI program with market best practices. In addition, the vesting period for the RSUs was changed from four years to three years. Because PSUs are equity-based and CIUs are cash-based, beginning in 2014, the Summary Compensation Table will reflect for reporting purposes only a “bunching” of award values. The outstanding and previously granted cash-based CIU awards will continue to be reflected as required under SEC rules when paid, but the equity denominated PSUs are required to be reported when granted. The result will look like the total value of LTI has increased when in fact it only reflects the different timing of when cash versus equity is reported. Since outstanding and previously awarded CIU awards will continue to vest through 2016, this “bunching” effect will continue through 2016. Other Indirect Compensation Retirement Compensation In the United States, retirement benefits include: Nonqualified plans are unfunded obligations of the company subject to claims by our creditors. The 401(k) Restoration Plan: The Pension Restoration Plan applies the same standard actuarial rules as are applied under the qualified Pension Plan. Effective April 1, 2013, the board of directors approved the freezing of all future Pension Plan benefit accruals for employees with fewer than 16 years of service as of March 31, 2013. Employees with 16 or more years of service on March 31, 2013 will continue to accrue pension benefits through December 31, 2014, after which date no further benefits will accrue under the Pension Plan. Similar amendments were adopted with respect to the Pension Restoration Plan. At the same time, the board of directors amended the 401(k) Plan, effective April 1, 2013, to provide eligibility to participate in the 2% employer core contribution to those employees who will no longer accrue benefits under the Pension Plan. The 2% employer core contribution has been in effect since 2005 when the Pension Plan was closed to employees hired after December 31, 2004. For additional information, please see the narrative accompanying the “Pension Benefits as of December 31, Other Benefits Other benefits include: COMPENSATION DISCUSSION AND ANALYSIS to provide guidance in managing complex investment, tax, legal and estate matters; up to a maximum of $7,500 per year Form of Compensation Period Target Total Performance Results During Performance Period Base Salary 2011 $ 980,000 $ 975,000 Due to his position relative to the market and to reflect his experience as chief executive officer, our CEO received a 3% merit increase in March 2011. Annual Incentive 2011 $ 1,617,000 $ 1,584,660 The company surpassed its 2011 income from continuing operations objective. The independent members of the board of directors then compared the pre-determined financial and strategic objectives and targets to actual performance to determine the resulting payout. Based on 2011 results, the resulting payout was 98%. For additional information, please see "Annual Incentives" on pages 30 and 31 of this proxy statement. Performance Award Payout 2008-2011 $ 475,000 $ 337,250 Performance award based on actual 2008 adjusted earnings per share of $2.78. Once achieved, awards were payable 50% in August 2009 and another 50% in February 2011 provided the executive was actively employed. Cash Incentive Units 2009-2011 $ 2,375,000 $ 2,541,250 The company’s average income from continuing operations during the period surpassed its initial objective. The independent members of the board of directors then compared pre-determined financial objectives and targets to actual performance to determine the initial payout factor. The TSR modifier adjusted the payment downwards. Based on 2011 results, the total CIU payout was $1.07 per unit. For additional information, please see "Long-Term Incentives" on pages 31 to 32 of this proxy statement. Stock Option Exercises 2011 N/A $ 0 There were no stock option exercises in 2011. RSU Vesting 2011 $ 593,744 $ 619,318 Vesting of performance-based RSU grants of 11,995 shares from February 9, 2009 and 13,439 shares from February 8, 2010. The $619,318 value was determined based on the average of the high and low trading price on February 1, 2011, the vesting date. All Other 2011 N/A $ 62,758 For additional information, please see footnote 6 to the “Summary Compensation Table” on page 40 of this proxy statement. Total Payments 2011 N/A $ 6,120,236 This total represents the value of the payments received by our CEO in 2011. The Committee is responsible for reviewing the performance of and the actual performance against those objectives and the TSR. In addition, the Committee may exercise negative discretion in its sole determination. The Committee works closely with its independent consultant, Pay Governance LLC, and management to examine various pay and performance matters throughout the year. Independent Compensation Consultant The Committee hired Pay Governance as its independent compensation consultant in June, 2012. The Committee considers advice and information from its independent compensation consultant in determining the compensation for the CEO and the other NEOs. The consultant advises on a range of matters, including peer group composition and plan design. The consultant regularly attends the Committee meetings. The consultant does not perform other services for the company. We incurred $145,396 in fees for Pay Governance for services performed for the Committee during 2013. The Committee considered the following six factors and determined there was no conflict in the engagement of Pay Governance and that Pay Governance is independent: i) the provision of other services to the company by Pay Governance; (ii) the amount of fees received from the company by Pay Governance, as a percentage of the total revenue of Pay Governance; (iii) the policies and procedures of Pay Governance that are designed to prevent conflicts of interest; (iv) any business or personal relationship of the Pay Governance consultant with a member of the Committee; (v) any company stock owned by the Pay Governance consultants; and (vi) any business or personal relationship of the Pay Governance consultant or Pay Governance with any of the company’s executive officers. The Committee has the sole authority to hire and terminate its consultant. COMPENSATION DISCUSSION AND ANALYSIS Determining At the beginning of each year our CEO, on behalf of senior management, recommends to the After reviewing benchmarking data presented by The At the end of each year, each NEO completes a written self-assessment of his or her performance against his or her objectives. The CEO evaluates the pany’s performance against the predetermined financial To evaluate whether each NEO’s compensation package is competitive with the marketplace, the Committee, and with respect to the CEO, the independent board members, also reviews each executive’s total direct compensation against market data during the benchmarking process as more fully described in “Assessing Competitive Practice” below. Based on the structure of our current management team, the Committee and the board strive to ensure that the relationship between the compensation paid to the CEO and the second highest paid NEO are within acceptable market norms, subject to considerations such as performance, the market median compensation of the respective positions, contributions to the company and experience that may lead to deviations from market relationships. COMPENSATION DISCUSSION AND ANALYSIS Assessing Competitive Practice To evaluate whether Pitney Bowes’ executive compensation is competitive in the marketplace, the This market data provides important reference points for the
Class of Stock
Deemed to
be Beneficially
Owned(1)(2)(3)(4)
Exercisable
Within
60 Days(5) Title of
Class of
Stock Name of Beneficial Owner Shares
Deemed to
be Beneficially
Owned(1)(2)(3)(4) Options
Exercisable
Within
60 Days(4) % of Class Common Linda G. Alvarado 37,428 0 * Common Anne M. Busquet 15,882 0 * Common Roger Fradin 9,997 0 * Common Anne Sutherland Fuchs 18,763 0 * Common S. Douglas Hutcheson 9,256 0 * Common Eduardo R. Menascé 24,092 0 * Common Michael I. Roth 39,085 0 * Common David L. Shedlarz 25,892 0 * Common David B. Snow, Jr. 17,800 0 * Common Marc B. Lautenbach 334,981 250,000 * Common Michael Monahan 600,282 527,720 * Common Mark F. Wright 18,672 0 * Common Daniel J. Goldstein 59,109 39,855 * Common Abby F. Kohnstamm 0 0 * Common Leslie Abi-Karam(5) 526,720 526,720 * Common Vicki A. O’Meara(5) 276,136 226,295 * Common All executive officers and directors as a group (19) 2,400,222 1,894,798 1.17 % 20122014 and shares for which such person has the right to acquire beneficial ownership within 60 days thereafter. To our knowledge, none of these shares are pledged as security. There were 200,124,037202,535,888 shares of our sharescommon stock outstanding as of March 1, 2012.Includes, with respect to Mr. Martin, 38,560 shares held in a grantor retained annuity trust.(5)20122014 by exercising outstanding stock options. Amounts in this column are also included in the column titled “Shares Deemed to be Beneficially Owned.”(5) Ms. Abi-Karam and Ms. O’Meara terminated their employment with the Company in September, 2013. See page 68 for further details. 21 15CORPORATE GOVERNANCESecurities and Exchange CommissionSEC as of the date appearing below.
Beneficial Ownership
of Common Stock
Common Stock(1)(1)State Street CorporationState Street Financial CenterOne Lincoln StreetBoston, MA 0211125,343,954(2)12.7%BlackRock, Inc.40 East 52nd StreetNew York, NY 1002216,287,856(3)8.16%The Vanguard Group, Inc.100 Vanguard Blvd.Malvern, PA 1935512,756,164(4)6.38%Allianz Global Investors Capital LLC600 West Broadway, Suite 2900San Diego, CA 9210110,995,200(5)5.5%NFJ Investment Group LLC2100 Ross Avenue, Suite 700Dallas, TX 75201 Capital Research Global InvestorsBlackRock, Inc.333 South Hope40 East 52nd StreetLos Angeles, CA 9007110,135,127New York, NY 10022(6)5.1%(1) 14,279,704(2) 7.1% The Vanguard Group, Inc.
100 Vanguard Blvd
Malvern, PA 1935514,216,972(3) 7.0% Iridian Asset Management LLC
David L. Cohen, Harold J. Levy
276 Post Road West
Westport, CT 06880-470412,913,791(4) 6.4% (1) There were 199,751,070202,535,888 shares of our sharescommon stock outstanding as of December 31, 2011.March 1, 2014.2011, State Street Corporation2013, BlackRock, Inc. disclosed sharedsole investment power with respect to 14,279,704 shares and sole voting power with respect to 25,343,95412,847,417 shares. SSgA FundsThe foregoing information is based on a Schedule 13G/A filed with the SEC on January 30, 2014.(3) As of December 31, 2013, The Vanguard Group, Inc. disclosed sole investment power with respect to 13,960,812 shares, shared investment power with respect to 256,160 shares and sole voting power with respect to 271,260 shares. The foregoing information is based on a Schedule 13G/A filed with the SEC on February 11, 2014. (4) As of December 31, 2013, Iridian Asset Management Inc., anLLC, David L. Cohen and Harold J. Levy disclosed shared investment advisor subsidiary of State Street Corporation, disclosedpower and shared voting power and shared investment power of 19,777,309with respect to 12,913,791 shares. The foregoing information is based on a Schedule 13G filed with the SEC on February 9, 2012.(3)As of December 30, 2011, BlackRock, Inc. disclosed sole investment power and sole voting power with respect to 16,287,856 shares. The foregoing information is based on a Schedule 13G filed with the SEC on February 10, 2012.(4)As of December 31, 2011, The Vanguard Group, Inc., an investment advisor, disclosed sole investment power with respect to 12,486,878 shares, shared investment power with respect to 269,286 shares and sole voting power with respect to 269,286 shares. The foregoing information is based on a Schedule 13G filed with the SEC on February 9, 2012.(5)As of December 31, 2011, NFJ Investment Group LLC (“NFJ”), an investment advisor, disclosed sole investment power with respect to 10,995,200 shares and sole voting power with respect to 8,929,000 of these shares. Because Allianz Global Investors Capital LLC (“Allianz”) is the parent holding company of NFJ, Allianz may be deemed to beneficially own the securities held by NFJ’s clients or accounts. The foregoing information is based on a Schedule 13G filed with the SEC on February 13, 2012.(6)As of December 30, 2011, Capital Research Global Investors, an investment advisor, disclosed sole investment power with respect to 10,135,127 shares and sole voting power with respect to 6,135,127 of these shares. The foregoing information is based on a Schedule 13G filed with the SEC on February 9, 2012.16Securities and Exchange CommissionSEC showing their holdings of and transactions in the company’s securities. It is generally the practice of the company to file the forms on behalf of its Reporting Persons who are directors or officers. The company believesBased solely on a review of such forms and amendments furnished to us and written representations that no other reports were required, we believe that all such forms have been timely filed for 2011.2013. 22 the company’sour stockholders. In addition, the board of directors believes that there are certain attributes that each director should possess, as described below. Therefore, the board of directors and the Governance Committee consider the qualifications of directors and nominees both individually and in the context of the overall composition of the board of directors. Among the other criteria applicable to all directors, which are set forth in the Governance Principles of the Board of Directors, are integrity and ethics, business acumen, sound judgment, and the ability to commit sufficient time and attention to the activities of the board of directors, as well as the absence of any conflicts with the company’s interests. The Governance Committee is responsible for reviewing and revising, as needed, criteria for the selection of directors. It also reviews and updates, from time to time, the board candidate profile used in the context of a director search, in light of the current and anticipated needs of the company and the experience and talent then represented on the board of directors. The Governance Committee reviews the qualifications of director candidates in light of the criteria approved by the board of directors and recommends candidates to the board for election by the stockholders at the Annual Stockholders Meeting.annual stockholders meeting.• Financial acumenfor evaluation of the company’s financial statements and capital structure.• • Significant internationalInternational experience and experience with emerging marketsto help oversee the company’sevaluate our global operations.• Software and technology acumen, , coupled with in-depth understanding of the company’sour business and markets, to provide counsel and oversight with regard to the company’sour strategy.• Significant operatingOperating experience,, providing the company with specific insight into developing, implementing and assessing the company’sour operating plan and business strategy.• Human resources experience, including executive compensation experience tohelp the companyus attract, motivate and retain world-class talent.• Corporate governance experienceat publicly traded companies to support the goals of greater transparency, accountability for management and the board, and protection of stockholder interests. • Understanding of customer communications and marketing channelsto support the company’s customerour client focus and customer communications and marketing strategy.• Turnaround experienceto help us assess opportunities to reposition certain of our businesses. • Leadership to motivate others and identify and develop leadership qualities in others. or continuing to serve are highly qualified, and have the attributes, skills and experience required for service on the board of directors. Additional information about each director is included with biographical information for each appearing below.1723 Priorthe 2010 Annual Meetingterms of Stockholders our board of directors was divided into three classes. Each class consisted, as nearly as possible, of one-third of the total number of directors, and each class had a three-year term ending in successive years. At the 2010 Annual Meeting of Stockholders, a proposal by our board of directors to amend the company’s Certificate and the company’s By-laws to phase out the classification of the board of directors, to provide instead for the annual election of directors, and to make such other conforming and technical changes to the Certificate and By-laws as may be necessary or appropriate was approved by the stockholders. The amended Certificate effecting such changes was filed with the Secretary of State of the State of Delaware on May 12, 2010. The amended Certificate provides for the annual election of directors beginning at the 2011 Annual Meeting of Stockholders. However, any director elected by the stockholders of the company to a three-year term prior to the 2011 Annual Meeting of Stockholders may complete the term to which he or she has been elected.presently has twelve members. There are ten directorsmembers whose term of office expiresterms expire in 2012.2014. Each of the nominees for election at the 2012 Annual Meeting2014 annual meeting of Stockholdersstockholders is currently a director of the companycurrent board member and was selected by the board of directors as a nominee in accordance with the recommendation of the Governance Committee. If elected at the 2012 Annual Meeting2014 annual meeting of Stockholders,stockholders, each of the nominees would serve until the 2013 Annual Meeting2015 annual meeting of Stockholdersstockholders and until his or her successor is elected and has qualified, or until such director’s death, resignation or removal.Ms. Alvarado, and Mr. Menascé were elected in 2010 to three-year terms expiring at the 2013 annual meeting. For the 2012 annual meeting, the Governance Committee recommended to the board of directors, and the board approved, the nomination of Mr. Adkins, Ms. Busquet, Mr. Fradin, Ms. Fuchs, Mr. Keyes, Mr. Martin, Mr. Roth, Mr. Shedlarz, Mr. Snow, and Mr. Weissman to one-year terms expiring at the 2013 annual meeting.and each incumbent director, including the nominee’s or incumbent’s age, as of March 1, 2012,2014, is set forth beginning on page 19 of this proxy statement. Unless otherwise indicated, each nominee or incumbent has held his or her present position for at least five years.below.Should you choose not to vote for a nominee, you may list on the proxy the name of the nominee for whom you choose not to vote and mark your proxy under proposal 1 for all other nominees, or grant your proxy by telephone or the Internet as described in the proxy voting instructions. RequiredRequired; Recommendation of the Board of Directorsthe company’sour By-laws, in an uncontested election, a majority of the votes cast is required for the election of directors. OurAbstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote. The Board of Directors Governance Principles provide that any nominee for director in this election who fails to receive a majority of votes cast in the affirmative must tender his or her resignation for consideration by the Governance Committee. The Governance Committee will recommend to the board of directors the action to be taken with respect to such offer of resignation. The board of directors will act on the Governance Committee’s recommendation and publicly disclose its decision within 90 days from the date of the certification of the election results.18following nominees:director nominees.NOMINEES FOR ELECTION TO TERMS EXPIRING AT THE 2013 ANNUAL MEETING
Rodney C. Adkins, 53, senior viceLinda G. Alvarado,62, president Systems and Technology Group, International Business Machines Corporation (IBM)chief executive officer of Alvarado Construction, Inc., a leading manufacturercommercial general contractor, design/build, construction management and development company in the United States and internationally, since 1978. Ms. Alvarado is also co-owner of information technologies, since October, 2009. The Systemsthe Colorado Rockies Major League Baseball Club and Technology Group encompasses all aspectsPresident of IBM’s semiconductor, server, storage, system softwarePalo Alto, Inc. which owns and retail store solutions businesses. Formerly senior vice president, development & manufacturing, May 2007 – October 2009, and vice president of development, December 2003 – May 2007, IBM Systems and Technology Group.operates YUM! Brands restaurants in multiple states. Pitney Bowes director since 2007.1992. (Also a director of 3M Company. Formerly a director of Lennox International Inc., The Pepsi Bottling Group Inc. and Qwest Communications International Inc.)
As a senior executiveprincipal of a public technology company, Mr. Adkinsseveral diverse businesses, Ms. Alvarado brings to the board of directors her significant operational experience, as well as an understanding of marketing, finance and human resources issues. Her experience as a broad rangemember of experience,other public company boards of directors contributes to her understanding of global public company issues, including emerging technologies and services, global business operations,those relating to international and emerging markets and product development.government affairs.
, 62, 64, principal of AMB Advisors, LLC, an independent consulting firm;firm, since 2006; former chief executive officer, IAC Local & Media Services, a division of IAC/Interactive Corp., an Internet commerce conglomerate, 2004 – 2006. Pitney Bowes director since 2007. (Also(Formerly a director of Meetic S.A. and Blyth, Inc. and Meetic S.A.)
Ms. Busquet has experience as a senior public company executive, including as American Express Company Division President, leading global interactive services initiatives. As former chief executive officer of the Local and Media Services unit of InterActiveCorp, she has experience in electronic media, communications and marketing. In addition, Ms. Busquet brings to the board of directors her substantial operational experience, including in international markets, marketing channels, emerging technologies and services, and product development.24 
, 58,60, president and chief executive officer of Honeywell Automation and Control Solutions, Honeywell International, Inc., a diversified technology and manufacturing company.company, since 2004. Pitney Bowes director since February 1, 2012. (Also a director of MSC Industrial Direct Co., Inc.)$15$17 billion division of a major diversified technology and manufacturing company, Mr. Fradin brings to the board substantial operational experience, financial expertise, and experience in capital markets, product development, and marketing, including in international markets. He possesses a strong entrepreneurial background, with experience in driving robust growth for businesses under his leadership, and has deep experience in entering new markets, both organically and through acquisition.
, 64,66, consultant to private equity firms. Formerly group president, Growth Brands Division, Digital Ventures, a division of J.C.J. C. Penney Company, Inc., a retailer, since November 2010. Formerly, a consultant to private equity firms.2010 – April 2012; former Chair of the Commission on Women’s Issues for New York City, since 2002.2002 – 2013. Pitney Bowes director since 2005. (Also a director of Gartner, Inc.)19
James H. Keyes, 71, retired chairman, Johnson Controls,S. Douglas Hutcheson,58, until March 2014, chief executive officer, Leap Wireless International, Inc., a supplierprovider of automotive systemswireless services and facility managementdevices through its subsidiary, Cricket Communications, Inc. since February 2005; president and control.chief executive officer, February 2005 – November 2012. Pitney Bowes director since 1998. (Also2012. (Formerly a director of NavistarLeap Wireless International, CorporationInc.)a trustee of Fidelity Funds. Formerly a director of LSI Logic Corporation.)Mr. Keyes has broad experiencefinancial expertise as an experienced former chief executive officer of a public company,wireless communications company. His broad business background includes strategic planning and product and business development and marketing. His expertise in developing and executing successful wireless strategies is an asset to Pitney Bowes as more products and services are transitioned to the cloud. In addition, his experience as a certified public accountant, and experience as a member of other public company boardschief executive contributes to his knowledge of directors. He brings to the board of directors his substantial operational experience, financial expertise, experience in capital markets, international markets, corporate governance and human resources and executive compensation. public company matters.
Murray D. Martin, 64, chairman,Marc B. Lautenbach,52, president and chief executive officer of Pitney Bowes Inc. since January 2009; presidentDecember 3, 2012. Formerly, Managing Partner, North America, Global Business Services, International Business Machines Corporation (IBM), a global technology services company, 2010 – 2012, and chief executive officer, May 2007General Manager, IBM North America, 2005 – December 2008; president and chief operating officer, October 2004 – May 2007.2010. Pitney Bowes director since 2007. (AlsoDecember 3, 2012.director of The Brink’s Company.)
former senior operating executive at a global technology services company, Mr. MartinLautenbach possesses substantial operational experience, including in technology services, software solutions, application development, and infrastructure management, as well as marketing, sales and product development. Mr. Lautenbach has extensive experience working with a breadth of client segments, including in the small and medium sized business operations, finance,segment and public and enterprise markets. He also has significant international and emerging markets, emerging technologies and services, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, and product development. With more than twenty years of management experience with Pitney Bowes, Mr. Martin possesses in-depth knowledge and understanding of the company’s business operations, technologies and customers. 
Michael I. Roth, 66, chairman and chief executive officer, The Interpublic Group of Companies, Inc., a global marketing communications and marketing services company. Pitney Bowes director since 1995. (Also a director of Gaylord Entertainment Company and The Interpublic Group of Companies, Inc.)Mr. Roth has broad experience as the chief executive officer of a public company and as a member of other public company boards of directors, as well as previous experience as a certified public accountant and attorney. In addition to his experience as chief executive officer of the Interpublic Group of Companies, his experience includes service as the chief executive officer of The MONY Group Inc. prior to its acquisition by AXA Financial, Inc. He brings to the board of directors his deep financial expertise, and experience in business operations, capital markets, international markets, emerging technologies and services, marketing channels, corporate governance, and executive compensation.
David L. Shedlarz, 63, retired vice chairman of Pfizer Inc., a pharmaceutical, consumer and animal products health company. Formerly vice chairman of Pfizer Inc., 2005 – 2007; executive vice president and chief financial officer, 1999 – 2005, Pfizer Inc. Pitney Bowes director since 2001. (Also a director of Teachers Insurance and Annuity Association and The Hershey Company.)Mr. Shedlarz has broad experience as a former senior executive of a public company, experience as a former chief financial officer and as a member of other public company boards of directors. He possesses financial expertise, knowledge of business operations and capital markets, international markets, emerging technologies and services, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, product development, and corporate governance. 20
David B. Snow, Jr., 57, chairman and chief executive officer of Medco Health Solutions, Inc., a leading pharmacy benefit manager. Pitney Bowes director since 2006. (Also a director of Medco Health Solutions, Inc.)In addition to his experience as the chief executive officer of a public company, Mr. Snow has a strong background in operations, having served in senior leadership positions at several companies including WellChoice (Empire Blue Cross Blue Shield) and Oxford Health Plans. Mr. Snow also brings to the board of directors a broad range of experience, including finance and capital markets, emerging technologies, customer communications and marketing channels, human resources and executive compensation, regulatory and government affairs, corporate governance, and product development.
Robert E. Weissman, 71, retired chairman, IMS Health Incorporated, a leading provider of information solutions to the pharmaceutical and healthcare industries. Pitney Bowes director since 2001. (Also a director of Cognizant Technology Solutions Corporation, Information Services Group, Inc. and State Street Corporation.)Mr. Weissman has broad experience as the former chief executive officer of several public companies, including IMS Health Incorporated, Cognizant Corp. and Dun & Bradstreet, as well as experience as a member of other public company boards of directors. He brings to the board of directors his financial expertise, extensive understanding of business operations, including international operations, capital markets, emerging technologies and services, corporate governance, and executive compensation.INCUMBENTPROPOSAL 1: ELECTION OF DIRECTORS WHOSE TERMS EXPIRE AT THE 2013 ANNUAL MEETING
Linda G. Alvarado, 60, president and chief executive officer of Alvarado Construction, Inc., a Denver-based commercial general contractor, construction management and development firm. Alvarado Construction has successfully developed and constructed numerous multi-million dollar commercial, government, transportation, office, communications, energy, retail, heavy engineering, utility, and technology projects throughout the United States and Latin America. Ms. Alvarado is also co-owner of the Colorado Rockies Major League Baseball Club and President of Palo Alto, Inc. which owns and operates YUM! Brands restaurants in multiple states. Pitney Bowes director since 1992. (Also a director of 3M Company. Formerly a director of Lennox International Inc., The Pepsi Bottling Group Inc. and Qwest Communications International Inc.)As a principal of several diverse businesses, Ms. Alvarado brings to the board of directors her significant operational experience, as well as an understanding of marketing, finance and human resources issues. Her experience as a member of other public company boards of directors contributes to her understanding of global public company issues, including those relating to international markets and government affairs.
, 66,68, retired president, Enterprise Solutions Group, Verizon Communications Inc., a leading provider of wireline and wireless communications.communications, since 2006. Pitney Bowes director since 2001. (Also a director of John Wiley & Sons, Inc., Hill-Rom Holdings, Inc. and Hillenbrand, Inc. Formerly a director of KeyCorp.)
2126 February 2012.September 2013. The committee represents and assists the board of directors in overseeing the financial reporting process and the integrity of the company’s financial statements. The committee is responsible for retaining the independent accountants and pre-approving the services they will perform, and for reviewing the performance of the independent accountants and the company’s internal audit function. The board of directors, in its business judgment, has determined that all sixfive of the members of the committee are “independent,” as required by applicable listing standards of the New York Stock Exchange.Board.Board (“PCAOB”). Finally, the committee has received the written disclosures and the letter from the independent accountants required by applicable requirements of the Public Company Accounting Oversight BoardPCAOB regarding the independent accountants’accountant’s communications with the audit committee concerning independence, and has discussed with the independent accountants their independence.2011,2013 as filed with the Securities and Exchange Commission on February 23, 2012.21, 2014. Rodney C. AdkinsAnne M. Busquet27 20122014Pricewaterhouse-CoopersPricewaterhouseCoopers LLP (“PricewaterhouseCoopers”) as the independent accountants for Pitney Bowes for 2012.2014. Although not required by law, as a matter of good corporate governance this matter is being submitted to the stockholders for ratification.ratification, as a matter of good corporate governance. If this proposal is not ratified at the annual meeting by the affirmative vote of a majority of the votes cast, the Audit Committee intendsPricewaterhouseCoo-persPricewaterhouseCoopers as its independent accountants. Pricewaterhouse-CoopersPricewaterhouseCoopers has no direct or indirect financial interest in Pitney Bowes or any of its subsidiaries. A representative from PricewaterhouseCoopers willis expected to attend the annual meeting and willto be available to respond to appropriate questions and will have the opportunity to make a statement if he or she desires to do so.20112013 and 2010,2012, were (in millions): 2013 2012 Audit $ 8.8 $ 7.0 Audit-Related .3 .4 Tax .6 1.1 All Other — — Total $ 9.7 $ 8.5 20112013 and 20102012 were for services rendered for the audits of the consolidated financial statements and internal control over financial reporting of the company and selected subsidiaries, statutory audits, issuance of comfort letters, consents, income tax provision procedures, and assistance with review of documents filed with the Securities and Exchange Commission.SEC. The Audit fees were higher in 2013 compared with 2012 due to the additional audit services required in connection with the divestiture of Pitney Bowes Management Services in 2013.20112013 and 20102012 were for assurance and related services related to employee benefit plan audits, procedures performed for SSAE 16 reports, attestation services pertaining to financial reporting that are not required by statute or regulation20112013 and 20102012 were for services related to tax compliance, including the preparation and/or review of tax returns and claims for refunds.The All Other fees for the year ended December 31, 2011 related to services provided by a consulting firm that was acquired by PricewaterhouseCoopers during the course of it engagement with the company.22and procedures required to meet certain regulatory requirements.requirements; and selected consulting services. The committee will not approve any service prohibited by regulation and does not anticipate approving any service in addition to the categories described above.regulation. In each case, the committee’s policy is to pre-approve a specific annual budget by category for such audit, audit-related and tax services which the company anticipates obtaining from Pricewaterhouse-Coopers,PricewaterhouseCoopers, and has required management to report the actual fees (versus budgeted fees) to the committee on a periodic basis throughout the year. In addition, any new, unbudgeted engagement for audit services or within one of the other pre-approved categories described above must be pre- approvedpre-approved by the committee or its chair.RequiredRequired; Recommendation of the Board of Directorsthe company’sour independent accountants for 2012.2014.28 Weasking stockholdersbeing asked to approve, on an advisory resolution onor non-binding basis, the company’scompensation of our named executive compensationofficers as reporteddisclosed in this proxy statement.“say-on-pay”“Say-On-Pay” proposal and required by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 or Dodd-Frank Act, provides our stockholders with the opportunity to express their views, on an advisory (non-binding) basis, on our executive compensation for our named executive officers (“NEOs”) for fiscal year 20112013 as described in “Compensation Discussion and Analysis” or (“CD&A”)(CD&A) beginning on page 2435 of this proxy statement, as well as the “Summary Compensation Table” and other related compensation tables and narratives, on pages 3957 through 5373 of this proxy statement.At the 2011 Annual Meeting,directors recommended and the stockholders voted in favor of holding annual advisory votesdirectors’ recommendation to approve executive compensation. Consequently, the board of directors decided to hold future advisory votes on executive compensation annually untilannually. At the next stockholder vote oncompany’s annual meeting of stockholders in 2013, stockholders overwhelmingly approved the frequency of review issue, which under applicable regulations will occur no later than our Annual Meeting in 2017. Accordingly, the next advisory vote to approvecompany’s executive compensation will occur atby a vote of approximately 93% of the 2013 Annual Meeting.votes cast in favor.committeeExecutive Compensation Committee and the board of directors believe that the compensation program described in the CD&A is anestablishes effective incentiveincentives for the sustainable achievement of positive results without encouraging unnecessary or excessive risk-taking. Our compensation program appropriately aligns pay and performance incentives with stockholder interests and enables the company to attract and retain talented executives. The company and the committee have reached out to stockholders to solicit their views on the company’s executive compensation structure.For 2011, our pay-for-performance can be highlightedfollows:the fifth• declinebasis of total shareholder return in the entire S&P 500;• the financial results in 2013 were within the guidance provided by the company to its stockholders; and • the rate of decrease in revenue was the lowest in recent years, and earnings per diluted share and adjusted earnings before interest and taxes both showed an improvement in the company’s stock price led to a decrease in the value of executive’s equity compensation;•our achievements against predetermined financial and strategic objectives resulted in a decrease in cash compensation from annual bonusesperformance as compared to the prior year; and•the performance of our company’s stock price as compared to S&P 500 companies resulted in a reduction of the long-term cash compensation payout.(1) Compensation should be tied to performance and long-term stockholder return;return and performance-basedperformance based compensation should be a greater part of total compensation for more senior positions;(2) Compensation should reflect leadership position and responsibility; (3) Incentive compensation should reward both short-term and long-term performance; (4) Compensation levels should be sufficiently competitive to attract and retain talent; and (5) Executives should own meaningful amounts of Pitney Bowes stock to align their interests with Pitney Bowes stockholders. 1 See detailed discussion of the 2013 pre-determined financial goals beginning on page 44. Existing Pay for Performance and Strong Pay Governance Practices • The overwhelming majority, 86%, of our CEO’s target total direct compensation is variable, and is subject to financial performance metrics. In addition, 69% of target total direct compensation for the other executive officers is variable and is subject to performance metrics; • 100% of the 2014 long-term incentive mix is equity-based; • An independent compensation consultant who reports directly to the committee and performs no other services for the company; • A direct line of communication between our stockholders and the board of directors; • No employment agreements with our executive officers; • No special arrangements whereby extra years of prior service are credited under our pension plans; • No perquisites other than limited financial counseling and an executive physical benefit; • “Double-trigger” vesting provisions in our Change-of-Control arrangements; • A “clawback” policy that permits the company to recover bonuses from senior executives whose fraud or misconduct resulted in a significant restatement of financial results; • Prohibitions against pledging and hedging our stock; • An annual risk assessment of our pay practices; • Significant stock ownership guidelines that align executives’ and directors’ interests with those of stockholders; and • An annual stockholder advisory vote on executive compensation. 29 • Increased the weighting of financial objectives to 100% for the annual incentive program; • Utilizing as part of the LTI program a three-year cumulative TSR metric; • Reduced duplicative metrics across award types by replacing the Adjusted earnings per share financial objective with an Adjusted earnings before interest and taxes objective in annual incentive; • Enhanced disclosure of performance targets in the 2013 and 2014 proxy; • Revised our peer group in light of the evolving strategic direction of the company with increasing emphasis in the software and technology arena and to reflect the divestiture of PBMS; • Restructured the LTI design to be implemented in 2014 awards, making all long-term awards stock based; • Expanded the executive stock ownership policy to: (i) include more senior executives, and (ii) restrict the shares that will count toward stock holding requirement; • Introduced the Radford Survey High-Tech Industry in addition to the Towers Watson Regressed Compensation Report in determining the competitiveness of executive compensation; and • Reduced severance benefits payable on account of a Change of Control from three to two times participant’s annual salary and average annual incentive award and eliminated the excise tax gross-up. 2435 of this proxy statement, which describes in more detail how our executive compensation policies and procedures operate and are designed to achieve our compensation objectives, as well as the “Summary Compensation Table” and other related compensation tables and narratives on pages 3957 through 53,73, which provide detailed information on the compensation of our NEOs.Since the third quarter of 2009, management has been focusing on our Strategic Transformation program, the goal of which is to improve operating efficiencies, the23way we go to market and how we interact with customers while also reducing our cost structure to make it more flexible. This initiative allowed us to take many steps over the past several years to become more agile, efficient and responsive to the changing needs of our customers. While revenues declined 2.7% for fiscal year 2011 compared to the previous year, management continued to position the company for profitable growth even as it continued to deal with challenging global economic and business conditions, especially for mail intensive enterprises. During the period, we solidified our growth strategies, by completing the work of identifying what management believes to be our most attractive market opportunities. We also continued to invest in new products and solutions which enhance customer communications allowing our customers to grow their businesses.Other significant accomplishments relating to fiscal year 2011 include:•Achieved adjusted Earnings Per Share (“EPS”) of $2.70 which exceeded the upper-end of our guidance range to the market;•Improved working capital and reduced capital expenditures to achieve $1,030 million in free cash flow (and $994 million in adjusted free cash flow);•Achieved benefits from our Strategic Transformation program that we expect to yield approximately $300 million net annual savings;•The board of directors increased the dividend in 2011;•Made significant progress in contracting with third-party mailers following the January 2011 introduction of Vollyä, our new secure digital mail delivery system; and•Increased year-over-year global sales of Connect+ä.We urgeinvite stockholders to read our Annual Report on Form 10-K for the year ended December 31, 2011,2013, as filed with the Securities and Exchange Commission on February 23, 2012,21, 2014, which describes our business and 20112013 financial results in more detail. resolution. This vote is not intended to address any specific item of compensation, but rather the overall compensation for our NEOs. Accordingly, we are asking our stockholders to vote for the following advisory resolution at the 20122014 Annual Meeting:narrativenarratives in this proxy statement for the company’s 20122014 Annual Meeting of Stockholders.“say-on-pay”“Say-On-Pay” resolution, is non-binding on the board of directors. Although non-binding, our board of directors and the committee will carefully review and consider the voting results when making future decisions regarding our executive compensation program. The next “Say-on-Pay” advisory vote will occur at the 2015 annual meeting.RequiredRequired; Recommendation of the Board of Directorsvote and the results will not be binding on the board of directors or the company.vote. The affirmative vote of the majority of the votes cast will constitute the stockholders’ non-binding approval with respect to our executive compensation programs. Abstentions and broker non-votes will not be votes cast and therefore will have no effect on the outcome of the vote.30
Directors’ Stock Plan, as Amended and Restated• Limit on grants of awards (specific annual grant amounts are “hard-wired” into the Plan); • Prohibition on share recycling or “Liberal Share Counting” practices (pursuant to the share counting provisions of the 2013 Stock Plan); and • No “evergreen” provision to automatically increase the number of shares issuable under the Plan (shares issuable under the Plan are drawn from the 2013 Stock Plan share pool). 31 32 33 (c) Number of securities (a) remaining available for Number of securities to be (b) future issuance under equity issued upon exercise of Weighted-average exercise compensation plans outstanding options, price of outstanding options, excluding securities Plan Category warrants and rights warrants and rights reflected in column (a) Equity compensation plans approved by security holders 14,526,633 $31.78 19,180,600 Equity compensation plans not approved by security holders — — — Total 14,526,633 $31.78 19,180,600 (“committee”) of the board of directors 1)(1) has reviewed and discussed with management the section included below in this proxy statement entitled “Compensation Discussion and Analysis” (“CD&A”) and 2)(2) based on thethat review and discussions referred to in item 1) above,discussion, the committeeCommittee has recommended to the board of directors that the CD&A be included in the company’s Annual Report on Form 10-K for the year ended December 31, 20112013 and this proxy statement.James H. Keyes, Chair
Anne M. Busquet
Anne Sutherland FuchsEduardo R. Menascé
David B. Snow, Jr.Robert E. Weissman34 24describessection explains our compensation philosophy, summarizes the material components of our compensation programs and reviews compensation decisions made by the Executive Compensation Committee (the Committee) and the independent board members. The Committee, comprised of only independent directors, makes all compensation decisions regarding the seven executives identified as Named Executive Officers (NEOs) in the Summary Compensation Table below. The independent board members, based on recommendations by the Committee, decide compensation actions impacting the Chief Executive Officer (CEO).compensation programofficers (Leslie Abi-Karam and Vicki A. O’Meara) who would have been in the top five highly paid officers had they still been employed by the company at the end of the year (see page 68 for our NEOs. Theadditional details). As a result, there are seven NEOs for 2011 are:2013:2013 Named Executive Officers •• Mr. Murray D. Martin, Chairman,Marc B. Lautenbach, President and Chief Executive Officer•• Mr. Michael Monahan, Executive Vice President and Chief Financial Officer• Abby F. Kohnstamm, Executive Vice President and Chief Marketing Officer • Mark F. Wright, Executive Vice President and President, PB Digital Commerce Solutions1 • Daniel J. Goldstein, Executive Vice President and Chief Legal & Compliance Officer Ms. •Leslie Abi-Karam, former Executive Vice President and President, Pitney Bowes Communications Solutions •• Ms. Vicki A. O’Meara, former Executive Vice President and President, Pitney Bowes Services Solutions���Ms. Johnna G. Torsone, Executive Vice President and Chief Human Resources OfficerOur compensation program is basedfive central principles:1.Compensation should be tied to performance and long-term stockholder return, and performance-based compensation should be a greater part of total compensation for more senior positions;2.Compensation should reflect leadership position and responsibility;3.Incentive compensation should reward both short-term and long-term performance;4.Compensation levels should be sufficiently competitive to attract and retain talent; and5.Executives should own meaningful amounts of Pitney Bowes stock to align their interests with Pitney Bowes stockholders.Business Results HighlightsSinceresetting the third quarterstrategic direction of 2009, management has been focusingthe company and beginning to execute on our Strategic Transformation program,that strategy, assembling the goalright team to lead the company’s critical areas of which is to improve operating efficiencies, the way we go to market and how we interact with customers while also reducing our cost structure to make it more flexible. This initiative allowed us to take many stepsdevelopment over the pastnext several years and beginning to become more agile, efficient and responsiveexecute on initiatives consistent with the new strategies outlined below. Considering the future prospects of the company, Mr. Lautenbach invested $1,000,000 of his own financial resources in company stock. In addition, two newly hired executive business unit heads also purchased company stock from their own financial resources.the changing needs of our customers. While revenues declined 2.7% for fiscal year 2011 compared to the previous year, management continued to positiontransform the company for profitable growth eventhe future. This success was evidenced through our financial results and attainment of certain objectives targeted at longer-term achievement, including solidifying our balance sheet and divesting businesses no longer in line with the company’s long-term strategy. Our total shareholder return (TSR) for the year was an extraordinary 132%, which placed us fifth in year-over-year TSR among all S&P 500 companies for 2013. We believe the stock price increase reflected stockholder recognition that our first steps in executing on our new strategy to unlock the value embedded in our company were successful and position us well for the future.it continued to deal with challenging global economicfollows: (1) stabilize the mailing business; (2) achieve operational excellence; and business conditions, especially for mail intensive enterprises. During the period, we solidified our growth strategies by completing the work of identifying what management believes to be our most attractive market opportunities. We also continued to(3) invest in new products and solutions which enhance customer communications allowing our customers to grow their businesses.growth initiatives.Other significant accomplishments relating to fiscal year 2011 include:• Stabilize the Mailing Business.The recurring revenue streams in 2013 for our global Mailing business continued to decline at a slower rate compared to prior years contributing to the overall stabilization of the Mailing business. Equipment sales in the Production Mail and Small and Medium Business Solutions (SMB) segments improved. Our new go-to-market strategy implementation in the SMB business is improving our sales process and enhancing our client experience, while reducing costs. 1 Title effective as of February 2014. •35 • Achieve Operational Excellence.Our efforts in reducing expenses in 2013 resulted in a $71 million savings in selling, general and administrative expenses compared to the prior year. We are in the early stages of implementing a new enterprise resource planning (ERP) system to streamline and consolidate many of our back-office operations. We signed a contract to sell our World Headquarters building in 2014. This is another example of our commitment to reducing operating expenses going forward. In addition, in 2013, we sold three businesses, Pitney Bowes Management Services (PBMS), International Mailing Services (IMS) and the Nordic furniture business. We sold these businesses because they did not fit within our future strategic intent for the company. We used the net proceeds from the North American portion of the PBMS sale to strengthen our balance sheet by redeeming $300 million in bonds originally scheduled to mature in 2014. Also in 2013, our clear focus on initiatives surrounding inventory and accounts receivables, two key components of working capital, generated over $100 million of cash improvements. Achieved adjusted EPS of $2.70 which exceeded the upper-end of our guidance range to the market;• Invest in Growth Initiatives.In 2013, we continued to invest in our e-commerce business which grew revenue sequentially at a high double digit rate. In our software business, we brought in new leadership with skill sets to support our new go-to-market strategy, which we expect will bring revenue growth in the software business. We also moved to increase our investment to 100% effective 2014, in our high growth potential Brazilian joint venture by purchasing our joint venture partner’s interest in the business. • We accelerated globalization of key shared service functions including Information Technology, supply chain, service, and client care which will standardize and consolidate key business processes. • • We created a single global marketing organization, which will enable us to better serve our clients, leverage our size, and create the foundation to enable us to integrate our organization. Improved• We reorganized our business into three segments: (i) a Digital Commerce solution; (ii) SMB Solution Group; and (iii) an Enterprise Business Solutions Group, which will better align our businesses for which we have a similar strategic intent and will enable us to better serve our clients. • We took important steps to improve our go-to-market capabilities by deepening our specialization in our software business and creating a more robust go-to-market capability in our SMB business. • We announced a multi-year licensing agreement with Twitter, the leading global real-time information network, to provide location intelligence solutions for its mobile platform. • We announced an interactive digital communications exchange with Broadridge Financial Solutions, Inc. utilizing technology developed by VollyTMthat will make it easier for businesses to communicate with consumers about their most important transactions. This new platform, powered by Amazon Web Services (AWS), enables consumers to securely receive and store comments and manage payments on any participating online channel they choose. • We solidified our financial flexibility by strengthening our balance sheet, reducing our dividend payments and implementing key initiatives to reduce our cost structure, working capital and reduced capital expenditures to achieve $1,030 million in free cash flow (and $994 million in adjusted free cash flow);improve our overall efficiency.• Achieved benefits from•We enhanced the company’s existing strong business talent with outside recruits of seasoned executives with critical skills and pertinent experience necessary to lead our Strategic Transformation program that we expect to yield approximately $300 million net annual savings;•The board of directors increasedcompany’s transformative development over the dividend in 2011;•Made significant progress in contracting with third-party mailers following the January 2011 introduction of Vollyä, our new secure digital mail delivery system; and•Increased year-over-year global sales of Connect+ä.2011,2013, filed with the Securities and Exchange CommissionSEC on February 23, 2012,21, 2014, which describes our business and 20112013 financial results in more detail.36 Decisionsmaterial elements and objectivescompensation package of our executive compensation program did not change from fiscal year 2010 to fiscal year 2011. Our executive compensation program continues to be based on performance measures directly relatedPresident and CEO reflects the enhanced performance-linked pay philosophy the board adopted in 2012 and further enhanced in 2013 and is competitive when compared to our financial goalspeer group and to external market performancetwo third-party compensation survey reports. Mr. Lautenbach’s total direct compensation is 91% of the company’smarket median of total direct compensation for CEOs in our peer group and 94% of the average of the median CEO total direct compensation using the Towers Watson Regressed Compensation Report and Radford High Tech Industry Survey (Survey Reports). Mr. Lautenbach’s base compensation is 87% of the market median of the peer group and 85% of the average of the median of the Survey Reports. His total cash compensation is 86% of the market median of the peer group and 88% of the average of the median of the Survey Reports.
price, without encouraging unnecessary or excessive risks. options.committee strives to maintain a balancedfollowing highlights 2013 compensation program that effectively motivates and retains our executives. The compensation decisions over the past year generally reflected the financial and operational results and objectivesactions for the fiscal year:President and CEO approved by the board of directors:•• In 2011, we resumed merit increases toBase salary remained at $850,000 in 2013 (the board of directors and the Committee approved a freeze of base salaries for the broad-based employee population includingCEO and NEOs in 2013);• Annual incentive target remained at 130%, resulting in a payout of $1,209,975 (after applying the NEOs. Committee-approved 2013 Annual Incentive multiplier (see pages 44 and 45 for details));• Long-term incentive target remained at $4,000,000 with the February 2013 grant consisting of 60% Cash Incentive Units (CIUs) and 40% Restricted Stock Units (RSUs); and • The committee approvedsecond and final tranche of a one-time sign-on grant of 400,000 premium-priced stock options was granted in February 2013 with an exercise price equal to 160% of the closing price of company stock on February 11, 2013.º The option awards will vest in four equal annual installments beginning on December 3, 2013 and long-termending on December 3, 2016, the fourth anniversary of the grant.37 • Increased the weighting of financial objectives to 100% for the annual incentive objectives of adjustedprogram;• Reduced duplicative metrics across award types by replacing the Adjusted earnings per share revenue growthfinancial objective with an Adjusted earnings before interest and adjustedtaxes objective in the annual incentive plan;• Enhanced disclosure of performance targets in the 2013 proxy statement; • Revised our peer group in light of the evolving strategic direction of the company with increasing emphasis in the software and technology arena and to reflect the divestiture of PBMS; • Restructured the LTI design to be implemented in 2014 awards, making all long-term awards stock based; • Expanded the executive stock ownership policy to: (i) include more senior executives, and (ii) restrict the shares that will count toward stock holding requirement; • Introduced the Radford High-Tech Industry Survey Report in addition to the Towers Watson Regressed Compensation Report in determining the competitiveness of executive compensation; and • Reduced severance benefits payable on account of a Change of Control from three to two times the participant’s annual salary and average annual incentive award and eliminated the excise tax gross-up. 2013 Actual Payout 2012 Actual Payout Percentage change Annual Incentive Factor as a % of Target Factor as a % of Target 2013 vs. 2012 Financial Objectives 100.5 % 64.0 % Strategic Objectives n/a 11.0 % Payout Modifier 9.0 % 0.0 % Subtotal 109.5 % 75.0 % Negative Discretion 0 % (11.0 %) Total Payout Factor 109.5 % 64.0 % 71.1 % 2013 Actual Unit Payout 2012 Actual Unit Payout Percentage change Long-Term Incentive Value (2011 – 2013 cycle) Value (2010 – 2012 cycle) 2013 vs. 2012 Adjusted Earnings per Share $0.83 $0.62 Adjusted Free Cash Flow $0.77 $0.80 TSR Modifier1 ($0.10 ) ($0.28 ) Subtotal $1.50 $1.14 Negative Discretion $0.00 ($0.40 ) Total Payout Value $1.50 $0.74 102.7 % 1 The TSR Modifier for 2011 – 2013 and 2010 – 2012 CIU cycles is an annual modifier aggregated over each three year cycle, which modifies the final payout by up to +/– 25% based on the company’s TSR as compared to the TSR of companies within the S&P 500. The relative TSR for 2010, 2011, 2012 and 2013 was –10%, –25%,–25%, and +25% respectively. 38 • 2013 Program Design.86% of target total direct compensation for our CEO is variable and is subject to performance metrics. In addition, 69% of target total direct compensation for the other executive officers is variable and subject to performance metrics. In 2014, the LTI mix has been changed to 100% equity based. • 2014 Actual Payout.In 2013, in the aggregate, the company exceeded 100% of its financial targets for its annual incentive and long-term incentive plans. º Annual incentive.With respect to its annual incentive targets, the company achieved 98% of its Adjusted earnings before interest & taxes target, 105% of its Adjusted free cash flow as well as strategic incentivetarget and exceeded threshold on its revenue growth target, with fourth quarter 2013 results showing positive revenue growth for the first time in recent years. These results supported a payment for achievement of financial objectives of growth100.5% of target. The Committee awarded a 9.0% strategic modifier add-on in connection with the enterprise segmentcompany’s achievement of strategic goals including improved client satisfaction and improving the core business.25implementing a culture change. The combination of financial and strategic performances resulted in a payment of 109.5% of target. The previous year annual incentive payout was 64% of target. • The committee reviewedºLong-term incentive.With respect to its long-term incentive targets, the designcompany achieved an average of 110% of target for the Adjusted earnings per share metric and implementationan average of 109% of target for the Adjusted free cash flow metric over the three-year award cycle. This level of performance supported a CIU payout of $1.60 per unit. However, in applying the company’s TSR Modifier, which compares the company’s TSR to the TSR of S&P 500 companies over the three year cycle, the Committee reduced the payout to $1.50 per unit. Although the TSR for 2013 placed us fifth among S&P 500 companies, the TSR applicable to the long-term incentive award for 2011-2013 compares the company’s TSR to the TSR of S&P 500 companies in each of the Key Employees’ Incentive Plan (“KEIP”) and our 2007 Stock Plan and determined that the plans do not create risks that are reasonably likely to have a material adverse effect on the company.•In February 2011, the board of directors granted a performance cash award under the KEIP to Mr. Martin of $2.0 million designed to encourage enterprise-wide business results and to assist the board of directors in the completion of a successful succession plan. For additional information, please see “Other Performance-Based Award” on page 32 of this proxy statement.•The committee agreed to recommend to the board an annual vote on “Say-on-Pay” frequency for the 2011 annual stockholders meeting.•The committee reviewed the voting results for “Say-on-Pay” from the 2011 annual stockholders meeting. Due to the strong support we received, the committee did not make any material changes to the executive compensation program and agreed to continue to focus on the pay for performance link in the program.•The committee reviewed various long-term incentive (“LTI”) vehicles in an effort to further strengthen the performance characteristics of the company’s compensation program. It considered factors such as executive motivation, external shareholder and economic environment, and the financial impact to the company. The committee decided to replace stock options with performance-based market stock units (“MSUs”) beginning with the 2012 grant. MSUs are performance-based stock units directly tied to total shareholder return (“TSR”). This will further align our LTI awards with TSR and company performance.Pay for PerformanceFor 2011, our pay-for-performance can be highlighted as follows:•39the decline in the company’s stock price led to a decrease in the value of executive’s equity compensation;•our achievement against predetermined financial and strategic objectives resulted in a decrease in cash compensation from annual bonuses as compared to the prior year; and•the performance of our company’s stock price as compared to S&P 500 companies resulted in a reduction of the long-term cash compensation payout.Highlights of Executive Compensation Program StructureThe committee reviews our executive compensation program on an ongoing basis. We do not as a hiring practice, grant extra years of credited service under our pension plans. Additionally, we have no fixed employment agreements with our executive officers and we do not provide perquisites other than a limited financial counseling benefit.Highlights of our program include:Compensation Philosophy•Compensation Tied to Enterprise Performance and Stockholder Return. We link executive compensation to the performance of the company as a whole. We believe executives with higher levels of responsibility and a greater ability to influence enterprise results should have a greater percentage of variable total compensation. Compensation for our NEOs varies from year to year primarily based on achievement of enterprise-wide objectives and individual performance. We emphasize enterprise-wide performance to break down any internal barriers that can arise in organizations that emphasize individual performance.Overall Objectives • Compensation levels should be sufficiently competitive to attract and retain talent; • Compensation should reflect leadership position and responsibility; • Executive compensation should be linked to the performance of the company as a whole; • Compensation should motivate our executives to deliver the short and long-term business objectives and strategy; and • Compensation packages should be designed to preserve tax deductibility; however, this should not be the sole objective. Pay Mix Principles • Compensation should be tied to performance and long-term stockholder return; • Performance-based compensation should be a significant portion of total compensation for executives with higher levels of responsibility and a greater ability to influence enterprise results should have a greater percentage of variable total compensation. Compensation for our NEOs varies from year to year based on company stock performance as well as an assessment of the success of the NEO in achieving enterprise-wide objectives. This means that our executives may be paid below or above market rates depending on enterprise-wide performance.results;• Incentive compensation should reward both short-term and long-term performance; and •• Compensation Targeted to Market Median. The compensation packagesExecutives should own meaningful amounts of our NEOs are targeted to the median of their respective functional area, based on Towers Watson’s published executive compensation reports (the “Towers Watson Compensation Report”). The committee also reviews target and actual payments against our peer group. Through this process, the company ensures the competitiveness of the total compensation packages for its executives.•Stock Ownership Guidelines. Our stock ownership guidelines provide that our executive officers should hold a minimum value of companyPitney Bowes stock to further align their interests with thosePitney Bowes stockholders.Pay for Performance • A significant portion of our stockholders. For additional information, please see “Executive Stock Ownership Policy”compensation should be variable based on page 36 of this proxy statement.performance.• The annual and long-term incentive components should be linked to operational outcomes, financial results or stock price performance: • º Annual incentive compensation is earned only if pre-determined financial objectives are met; Compensation Recovery Policies. We haveºPerformance-based cash incentive units are earned only if certain financial objectives are met and which can be modified plus or minus 25% based on relative performance compared with our peer group over a recoupment policy that allows us to “claw-back” equity or cash awards. For additional information, please see the “Clawback Policy” on pages 35cumulative three-year period; and 36 of this proxy statement.• º Change of Control Arrangements. Our change of control severance paymentsPerformance-based restricted stock units and vesting of equity awards occurcash incentive units are earned only onif a “double trigger” basis. Before severancethreshold financial target is paid and equity awards vest, a change of control must occur and an executive officer’s employment must be terminated in qualifying circumstances26within two years following the change of control. For additional information, please see “Change of Control Arrangements” on page 53 of this proxy statement.•Compensation Consultant. The committee’s compensation consultant is Frederic W. Cook & Co., Inc.. FWC consults and advises the committee on all significant compensation decisions, and provides compensation data, reports and analysis. FWC independently reviews all compensation reports and proposals made by management, including compensation information provided by Towers Watson to the company. For additional information, please see “Role of the Committee and its Compensation Consultant in Determining Executive Compensation” on page 34 of this proxy statement.•Accessible Leadership. To encourage and facilitate dialogue between our stockholders and the board of directors about our practices and policies, including those relating to executive compensation, we have established direct lines of communication for our stockholders to the board of directors. For additional information, please see “Board of Directors — Communications with the Board of Directors” on page 9 of this proxy statement.•Internal Equity of Compensation. Based on the structure of our current management team, we believe that the relationship between the compensation paid to the CEO and the second highest paid NEO should be within acceptable market norms, subject to considerations such as the CEO’s performance, the market median compensation of the respective positions, contributions to the company and experience that may lead to deviations from market relationships.•Succession Planning. Our CEO is directly accountable to assist the board in the completion of a successful succession plan and the smooth transition of his successor into the CEO role.20112013 targeted compensation mix for the CEO and other NEOs compared with the targeted average compensation of our peer group as reported in their 20112013 proxy statements. TheAs illustrated in the chart, shows that our compensation is (i) well aligned to the compensation mix forof our peer group.group and (ii) predominantly variable. The specific proportion of each compensation element below may change with changes in market practice or performance considerations.
Conclusion
The committee believescompensation program design and implementation satisfiestalent during this period of transition.program objectives and demonstrates the company’s commitmentqualitative nature of these considerations, we do not assign specific weightings or numerical goals to and execution of, an effective pay-for-performance compensation program.them.Components of Compensationindependent members of the Executive Compensation Committee of the board of directors areis responsible for determining the compensation for all NEOs, other than the CEO, and for recommending for approval byto the board of directors each specific element of compensation for the CEO. The Committee considers recommendations from the CEO regarding the compensation of the other NEOs. The independent board members are responsible for determining the CEO’s compensation. No member of the management team, including the CEO, has a role in determining his or her own compensation. For each NEO, the committee targetsCommittee sets, as a guideline, target total direct compensation27that strive to ensure that the sum ofso the base salary, target annual incentivetotal cash compensation, and target long-term incentivetotal direct compensation is at +/– 20% of the median of the competitive data usingbased on the Towers Watson Regressed Compensation Report, (as describedas regressed for companies approximately our size, and the Radford High-Tech Industry Survey focusing on companies with revenue scopes similar to ours for each position. We describe these two reports in more detail under “Benchmarking — Use of Market Data”“Assessing Competitive Practice” beginning on page 3551 of this proxy statement) for each position.statement. In 2011, for NEOs that sum is on average 113%order to attract specific talent, the general +/– 20% of the median inguideline may be exceeded. For 2013, the Towers Watson Compensation Report.We believe that executives should havetotal target cash compensation (base salary plus annual incentive) and total target direct compensation (base salary plus annual incentive plus long-term incentive) for Mr. Lautenbach were 88% and 92%, respectively, of the average of the Survey Reports for chief executive officers. For the NEOs, as a greater percentagegroup, the average total target cash compensation and total direct compensation were 107% and 108%, respectively, of variable total compensation than mid-level employees to help ensure that the interestsaverage of senior executives are aligned with stockholders. Annual and long-term incentives are designed to reward executives predominately for the achievement of enterprise-wide financial and strategic objectives. However, individual payout and grant levels are also influenced by the factors listed below, for which no specific goals or weightings are assigned:Survey Reports.41 •potential impact the individual may make on the company now and in the future;•internal pay equity;•level of experience and skill;•individual performance compared with annually established financial, strategic, unit or individual objectives;•market competitive salary rates for similar positions; and•need to attract and retain executive talent during this period of Strategic Transformation.it alignsthey align with our compensation principles.ELEMENT WHAT ITREWARDSHow it Aligns HOW ITALIGNS WITHOUR PRINCIPLES FIXED ORPERFORMANCE-BASEDWhat it Rewards CASH OREQUITYBase Salary • Base Salary •
•Performance of daily job duties
Highly developed skills and abilities critical to the success of the company• ••
•••Cash•Highly developed skills and abilities critical to the success of the company•Targeted within plus or minus 10% of the median of competitive data using the Towers Watson Compensation Report (See “Benchmarking — Use of Market Data” on page 35 of this proxy statement)•
Increases based oninfluenced by executive’s individual performance rating• Cash Annual Incentive Annual Incentive••
•
•••Performance-based compensation measured on enterprise-wide metrics•Cash•
Payout dependent on achievement of objectives aligning pay to performance
Subject to a “clawback” (See “Clawback Policy” on page 53 of this proxy statement)•
•
••
Individual performance may be considered in establishing executives’ annual incentive opportunity
Up to a maximum of $4,000,000 per NEO granted under the KEIP• Cash Long-term Incentives •Subject to a “clawback” (See “Clawback Policy” on pages 35 and 36 of this proxy statement)28ELEMENTWHAT ITREWARDSHOW ITALIGNS WITHOUR PRINCIPLESFIXED ORPERFORMANCE-BASEDCASH OREQUITYLong-termIncentives
Cash Incentive Units (CIUs) (50%)•
••a pre-determined long-term objectiveobjectives and annual objectives established in the first quarter of the first year and the first quarter of each year, respectively, of the three year cycle
Change in company’s stock price versus S&P 500 companies for the 2011-2013 CIU award and versus the company’s peer group for the 2012-2014 CIU award payout•
•
•••Performance-based compensation measured on enterprise-wide metrics•Cash•Change in company’s stock price versus S&P 500 companies•
The resulting unit value is modified by up to +/–25% based on total stockholder return asTSR. For the CIU award cycle 2011-2013, the company’s TSR was compared to the TSR of companies within the S&P 500, therefore linking500. For subsequent CIU award cycles, the comparison is to the company’s peer group. The application of the TSR Modifier links the CIU payout to stockholder return
3-year performance period cycle thereby promoting retention•
••
Up to a maximum in any one year of $8,000,000 per NEO granted under the KEIP• Cash Performance Stock Units (PSUs) (0% in 2013; 70% in 2014) •
•Achievement of pre-determined long-term objectives and annual objectives established in the first quarter of the first year and the first quarter of each year, respectively, of the three year cycle
Change in company’s stock price compared to peer group starting in 2014•
•Shares vested dependent on achievement of long-term objectives aligning pay to performance
The resulting number of shares vested is modified by up to +/-25% based on 3-year cumulative TSR as compared to 3-year cumulative TSR of our peer group, further linking compensation to stockholder return. TSR Modifier cannot be positive if there is a negative TSR over the three-year cycle•
•Performance-based compensation measured on enterprise-wide metrics
Up to a maximum of 1,200,000 shares including RSUs per NEO in any plan year granted under the 2013 Stock Plan• Equity 42 How it Aligns Fixed or Cash or What it Rewards With Our Principles Performance-Based Equity Long-termIncentives
Performance-Based Restricted Stock Units (RSUs) (25%)•
••
Company stock value•
•
••
3-year pro-rata vesting beginning 2014 thereby promoting retention for executives; 4-year pro-rata vesting in 2013
Award value linked to company’s stock price•
••an enterprise-wide metric•Equity•Company stock value•4-year pro-rata vesting thereby promoting retention•
Up to a maximum of 600,0001,200,000 shares including performance stock units per NEO, including grants of stock options, in any plan year granted under the 20072013 Stock Plan• Equity Long-term Incentives •
•Achievement of a pre-determined performance objective established at the time of grant
Company stock value
•
•Vesting dependent on achievement of a pre-determined performance objective aligning pay to performance and on formula based on TSR over the three-year cycle
3-year cliff vesting thereby promoting retention
Award value linked to company’s stock price•
•Long-termIncentivesStock Options (25%)•Increase in company’s stock price•Inherently performance-based as the company’s stock price must increase for optionees to realize any benefit••Equity•3-year pro-rata vesting thereby promoting retention•
Up to a maximum number of 600,000 shares per NEO (600,000 in 2012), including grants of RSUs, in any plan year granted under the 2007 Stock Plan• Equity •Award value linked to long-term stockholder returnPeriodic Off-cycle Long-term Awards Other Long-term Incentive Awards•committeeCommittee may also grant other long-term incentive awards in unique circumstances where needed for attracting, retaining or motivating executive talent• •pages 35 and 36page 53 of this proxy statement)• Depends on award granted • Cash or Equity 29Benefits”Indirect Compensation” on page 3348 of this proxy statement.Base SalaryWe align base salary for NEOs with reference2013 Compensationcompetitive market median datacompensation program in response to feedback received from the company’s stockholders. Thesebase salary using2012, the Towers Watson Compensation Report. For additional information, please see “Benchmarking — Use of Market Data” on page 35 of this proxy statement. Salaries are reviewed annually.In 2011, the committee determined that increases would be re-instated in order to remain competitive. The committeeCommittee and the boardindependent directors froze the base salaries for the CEO and the NEOs. Thedirectors approved increases effective March 2011 between 2% and 4% for NEOs.the broad-based employee population.43 and strategic objectives pre-establishedestablished at the beginning ofThe 20112013 Annual Incentive Objectives and Metricstarget for our CEO was 165% of base salary. The annual incentive targets for the other NEOs ranged from 56-80% of base salary. Annual incentive payments for 2011 were subject to the company first achieving a threshold income from continuing operations objective of $322,619,000, excluding all one-time items.Adjusted 2011 income from continuing operations was $548,093,000. The maximum annual incentive an NEO could receive under the KEIP is $4,000,000 before the committee applies “negative discretion” to reflect the company’s performance against its financial and strategic objectives and the individual’s and business unit performance. The 2011based on financial objectives were designed to align management’s objectives withwhich are shown in the financial guidance given tochart below. The chart also shows the public.threshold, target, and maximum ranges.The 2011 financial objectives, weighted at 70% at target, were as follows:
Against
Target Financial Objectives Weighting Threshold Target Maximum Adjusted Earnings Before
Interest and Taxes(1)35% $673 million $727 million $779 million Revenue Growth(1) 25% –1.2% 0.6% 2.8% Adjusted Free Cash Flow(1) 40% $573 million $623 million $673 million 1(1)3855 of this proxy statement.2011only revision to targets during the course of the year reflected the revision to guidance announced as a result of the sale of PBMS, IMS and our Nordic furniture business. We believe that the 2013 financial objectives at each level (threshold, target and maximum) accurately balance difficulty of attainment of the level with the related payout. In 2013, we increased the weighting of the financial metrics to be 100%, from 70%, of the annual incentive design. This demonstrates our commit-performance objectives were designedmetrics did not play a primary role in the annual incentive design, we included these important goals as a zero to encourage management10% modifier to focus on the future development and growthultimate payout. Strategic goals are targets that are important to the successful operation of the enterprise group while sustainingabove and beyond financial goals. The strategic goals for 2013 included improving client satisfaction and implementing a culture change throughout the core mail business.The 2011organization. These important strategic objectives, weighted at 30% at target, were as follows:Strategic ObjectivesTargetWeightingActualPerformanceagainstTargetDemonstrate progress on meaningful growth ingoals are the enterprise group15%7.0%47%Improve the corefoundation for our future business15%10.2%68%Demonstrate progress on meaningful growth in the enterprise group – this objective consists of two equally weighted elements:•achieving targeted revenue growth of 2.5% for the enterprise group; and•achieving specific foundational milestones to implement our strategic direction for the future. These include:•significant progress in the build-out of VollyTM;•continuing to identify and enhance customer communications capabilities and solutions throughout the enterprise group as a basis for growth; and•significant progress in developing an enterprise customer management program.Improve the core business– this objective was to improve the core mailing business by improving global customer retention and the meter population net loss rate over the prior year.The committee believed that these objectives had a high degree of difficulty for achievement. The specific targets are highly confidential and not reported publicly because such disclosure would provide competitors insight into our internal planning processes and would result in meaningful competitive harm.The payout factor may be modified by between 0 and 15% based success. Depending on the achievement of pre-determined customerthe strategic goals, the annual incentive multiplier may be increased by 0% to 10%.employee objectives, TSR2013 Actual Payoutquality of our earnings. payout as compared to target.44 Objectives Target Weighting Actual Result Actual Payout as a % of Target Financial Objectives: Adjusted Earnings Before 35% $714 million 32.4% Interest and Taxes(1) Revenue Growth(1) 25% (-0.8%) 19.0% Adjusted Free Cash Flow(1) 40% $655 million 49.0% Total 100% n/a 100.5% (1) Adjusted EBIT, Revenue growth and Adjusted free cash flow are non-GAAP measures. For a reconciliation and additional information on the adjustments, please see “Accounting Items and Reconciliation of GAAP to Non-GAAP Measures” beginning on page 55 of this proxy statement. committeeCommittee compared the 2011 actual2013 performance against the financial targets and approved a 2013 annual incentive multiplier of 100.5%. Next the Committee assessed the predetermined strategic goals for 2013 which included improving client satisfaction and implementing a culture change throughout the organization.pre-determined targetsclient satisfaction goal, the Committee noted that the company successfully implemented the Net Promoter Score (NPS) universal metric across four key business units, established a baseline metric and increaseda monthly management process. The Committee also noted that the final payout by 7% based oncompany showed improvement among four core relationship drivers - sales support, products and services, customer support and customer communications - within those business units. The client satisfaction threshold, target, and maximum objectives were to achieve a 3%, 5% or 10% improvement in these four core relationship drivers in reducing the gap to goal. The company ultimately achieved a 9% improvement in closing the gap to goal among these relationship drivers, which was slightly below the maximum achievement of those objectives. The10%.payout factor was 13% less than 2010.annual incentive multiplier of 109.5%.MartinLautenbach made specific recommendations to the committeeCommittee for his direct reports. The committee reviewed Mr. Martin’sCommittee considered those recommendations and awarded each of the NEOs an incentive payment in line with the above results.30In February 2012, the committee compared 2011 actual performance toagainst objectives as shown, resulting in the pre-determined targets.The resulting annual incentive awards to our NEOs were as follows:Executive Target Award Payout Payout Percent to Target Marc B. Lautenbach $ 1,105,000 $ 1,209,975 109.5 % Michael Monahan $ 462,720 $ 506,678 109.5 % Abby F. Kohnstamm(1) $ 241,797 $ 264,768 109.5 % Daniel J. Goldstein $ 286,440 $ 313,652 109.5 % Mark F. Wright $ 300,000 $ 328,500 109.5 % Leslie Abi-Karam $ 444,320 N/A N/A Vicki A. O’Meara $ 419,200 N/A N/A Annual Incentive Payout(1) Ms. Kohnstamm’s annual incentive is prorated based on her June 17, 2013 start date. ExecutivePayoutMurray D. Martin$1,584,660Michael Monahan$440,294Leslie Abi-Karam$427,907Vicki A. O’Meara$403,760Johnna G. Torsone$244,545Long-TermCOMPENSATION DISCUSSION AND ANALYSISWe pay long-termto drive our overall performance by linkinglink the NEOs’ long-term rewards to our long-term companyfinancial performance and to the company’sour stock price performance. We also pay long-term incentives in order to be competitive in the markets in which we operate.Stock ownershipoperate and equity-related compensation arrangements are key elementsin order to focus executives on increasing stockholder valueattract and to encourage executives to act like a business owner. A substantial portion of an executive’s long-term incentive compensation is awarded in the form of stock compensation and CIUs, which serve as primary vehicles in aligning the interests of executives with long-term stockholders.For the 2011 awardretain high-performing executives. In 2013, the long-term incentive mix was comprisedconsisted of three award types:60% CIUs and 40% RSUs.•50% CIUs;•25% performance-based RSUs; and•25% stock options.In determining the amount of long-term awards, the committee considers the factors discussed under “Overview of Compensation Components” beginning on page 27 of this proxy statement. The committee sets the award targets based on the median in the Towers Watson Compensation Report. The total LTI award is determined based on a dollar value in line with the Towers Watson Compensation Report and then converted into the long-term incentive mix described above. For additional information, please see “Benchmarking — Use of Market Data” on page 35 of this proxy statement.three-yearthree year performance and vesting cycles. The vesting of long-term incentive awards are generally subject to achieving an initial financial threshold target established for purposes of IRC 162(m). At any given time there are three cycles outstanding. NEOs are awarded CIUs with payouts based on achieving challenging enterprise-wide financial objectives established at the beginning of each individual year of the three-year cycle. If the threshold level of performance is not met for a calendar year for both of these goals, one-third of the award value will be forfeited. IfBeginning with the income from continuing operations threshold is not met over the three year2014 – 2016 cycle, the entire award will be forfeited. we have eliminated this component of LTI compensation and replaced it with Performance Stock Units, discussed below.maximumCommittee believes that Adjusted earnings per share and Adjusted free cash flow are important indicators ofpayoutawards. Adjusted earnings per share is an NEO could receive underappropriate measure of long-term profitability, and a strong Adjusted free cash flow provides us with the KEIP is $8,000,000resources we need to reposition and pursue new growth opportunities.committee applies negative discretionfinancial community at the beginning of each year. Subsequent revisions of guidance during the course of the year do not affect the targets set at the beginning of a year. Before finalizing payouts, the Committee compares the company’s cumulative three-year TSR to reduce awards based on enterprise financial performance.a cumulative three-year TSR of the company’s peer group. The Committee believes it sets the 2013 objectives with the appropriate level of difficulty and stretch for each target.payments forObjectives and Metrics2011 – 2013 LTI Adjusted Earnings Per Share(1) Threshold Target Maximum 2011 $1.78 $2.23 $2.27 2012 $1.72 $2.15 $2.19 2013 $1.53 $1.71 $1.88 2011 – 2013 LTI Adjusted Free Cash Flow(1) Threshold Target Maximum 2011 $729 $819 $850 2012 $684 $760 $790 2013 $573 $623 $673 (1) Adjusted earnings per share and Adjusted free cash flow (in millions) are non-GAAP measures. For a reconciliation and additional information on the adjustments, please see “Accounting Items and Reconciliation of GAAP to non-GAAP Measures” beginning on page 55 of this proxy statement. 2009 – 2011 cycle were subject to the company achieving a threshold financial objective of a three-year average of income from continuing operations over the cycle of $408,263,000, excluding all one-time items (as discussed below under the heading “Treatment of Special Events” on page 37 of this proxy statement). Adjusted average income from continuing operations for the 2009 – 2011 CIU cycle was $494,125,000. Cash Incentive Unit Pool and Actual Payout20092011 – 20112013 CIU cycle, the unit value at target is $1.00.Since the threshold objective was achieved, the range of the The CIU value will berange is between $0 and $1.80 based upon the achievement of the pre-determined financial goalsobjectives described below,above, each weighted at 50%.•Adjusted earnings per share; and•Adjusted free cash flow.is modified by up to +/−– 25% based on total stockholder returnour TSR as compared to the TSR of companies within the S&P 500, (“TSR modifier”), therefore linking payout to stockholder return.our relative TSR.46 targets andchart below shows actual results as compared to target before and after applying the TSR modifierModifier for the 20092011 – 2011 CIU cycle were:2013 cycle.
Adjusted Earnings Per Share1 Metric Final Objectives Actual Result Payout Value TSR Modifier Payout Value 2011 – 2013 LTI Adjusted Earnings Per Share(1) 2011 $2.70 $0.30 (25%) $0.23 2012 $2.16 $0.20 (25%) $0.15 2013 $1.88 $0.33 25% $0.41 2011 – 2013 LTI Adjusted Free Cash Flow(1) 2011 $994 million $0.30 (25%) $0.23 2012 $767 million $0.20 (25%) $0.15 2013 $655 million $0.27 25% $0.34 Total $1.60 $1.50 a1)Also 2010 component of 2010 – 2012 CIU cyclebAlso 2011 component of 2010 – 2012Adjusted earnings per share and 2011 – 2013 CIU cycles
Adjusted Free Cash Flow1 Also 2010 component of 2010 – 2012 CIU cyclebAlso 2011 component of 2010 – 2012 reconciliation and 2011 – 2013 CIU cycles1For additional information on the adjustments, please see “Accounting Items and Reconciliation of GAAP to Non-GAAP Measures” beginning on page 3855 of this proxy statement.31modifierModifier in aggregate decreased the CIU payoutpay-out level for the 20092011 – 20112013 cycle by 19% resulting6%.a final payout of $1.07 per unit.February 2014, for 2011-2013 cycle, was $1.50. This compares to the 2010-2012 cycle pay-out which was $0.74, after the Committee applied negative discretion.OptionsUnitsoptionsunits (RSUs) is made during the first quarter of the year, typically after our fourth quarter earnings release has been widely disseminated. The committee may, from time to time, grantyear.options to new executive hires. These grants are typically made at the committee’s next regularly scheduled meeting.In special circumstances, the committee, or in the case of the CEO, the independent members of the board of directors, may determine that it is appropriate to make additional grants to executives during the course of the year. These grants are made at a committee meeting.On February 14, 2011, the NEOs were awarded an annual grant of stock options to purchase common stock ofunits (RSUs) will vest unless the company under the 2007 Stock Plan at an exercise priceachieves its IRC 162(m) threshold target of $26.07 per share, the closing price of our common stock on the day of grant. These stock options have a ten-year exercise period and will vest and become exercisable in equal installments over three years commencing on the first anniversary after the date of grant.Performance-Based Restricted Stock UnitsAn annual grant of performance-based RSUs is made during the first quarter of the year, typically after our fourth quarter earnings release has been widely disseminated.In the case of the executive officers, including the NEOs, commencement of the vesting of the performance-based RSUs is subject to the company achieving an initial financial threshold objective, which, for the 2011 award, was 2011$276,086,000 income from continuing operations, equaling or exceeding $322,619,000, excluding all one-time items (as discussed in more detail undercertain special events. (See “Treatment of Special Events” onbeginning page 37). Since adjusted 201155 of this proxy statement.) Actual 2013 Adjusted income from continuing operations, excluding all special events, was $548,093,000,$380,668,000, which exceeded the 2011target. The IRC 162(m) threshold targets for income from continuing operations and actual 2013 income from continuing operations were restated to exclude PBMS, IMS and Nordic furniture.will vestvests in four equal installments commencing on the first anniversary of the grant date if the executive is still employed on the vesting date. If the initial threshold had not been achieved, the performance-based RSUs granted in 20112013 would have been forfeited.Other Performance-Based AwardMarket Stock UnitsIn2011,2012 for the boardfirst and only time. The number of directors granted a performance cash award underMSUs that can vest is capped at 200% of the KEIP to Mr. Martinnumber of $2.0 million to incentivize enterprise-wide business results and to assistMSUs originally granted. A minimum number of shares, comprising 50% of the board of directors in the completion of a successful succession plan. This cash award, will vest at the end of the three-year performance period.(1) Pitney Bowes ending stock price is the average of the closing price of company stock for the 20 trading days ending on the last day of the month prior to the vesting date. (2) Pitney Bowes beginning stock price is the average of the closing price of company stock for the 20 trading days ending with the grant date. 47 2013 subject2012. These options were awarded at a 160% premium to the company achievingaward date stock price. In July 2013, the Committee awarded a pre-determined 2011 incomeone-time grant of 400,000 premium-priced stock options, with a premium ranging from continuing operations objective of $322,619,000. Provided this initial objective is achieved, the final amount115% to 160% of the award is subjectdate stock price, to two equally weighted strategic objectivesMr. Monahan for retention purposes.enterprise-wide business resultsthe grants for Mr. Lautenbach and succession planning. SinceMr. Monahan in the specific performance objectives for this award are forward-looking, we will not disclose them. The committee believes that these objectives are aggressive enough to challenge Mr. Martin to maximize year-over-year growth in certain business units but are at the same time reasonable in that they can be achieved by the efficient and diligent execution of operating plans.For additional information about these awards, please see “Grants of Plan Based Awards”Plan-Based Awards in 2013” table on page 4159 of this proxy statement.The company also offers the following retirement benefits:•non-qualifiednonqualified restoration pension plans for employees hired prior to January 1, 2005. (All Pension Plan accruals will be frozen on December 31, 2014, with no further accruals.)•non-qualifiednonqualified restoration 401(k) plans with company matching contributions up to 4% of eligible compensation and 2% company core contribution for those not eligible for the pension plan.Pension Plan.Non-qualifiedNonqualified restoration plans make available supplemental pension(pension and 401(k) savings) are based on the same formulas as are used under the qualified plans to employees, including the NEOs, toand make up for benefits that otherwise would be unavailable due to limitations set forth under the Internal Revenue Code of 1986, as amended (the “Code”)(IRC). Restoration plans are available to employees including the NEOs.Non-qualified•subject to claims by our creditors;•adjusted on the basis of notional investment returns; and•do not receive any above-market earnings.2011”2013” table on pages 45 to 46page 65 and the narrative accompanying the “Nonqualified Deferred Compensation for 2011”2013” table on pages 46 to 4866 and 67 of this proxy statement.32The company also offers the following additional benefits:º Provides a savings vehicle in a tax efficient manner º Provides certain executives the ability to voluntarily defer payouts of annual cash incentives, CIUs and base pay into a nonqualified deferred compensation plan •48 Non-qualified Deferred Compensation Plan•Provides a savings vehicle in a tax efficient manner.•Provides the ability to voluntarily defer payouts of annual cash incentives, CIUs and base pay into a non-qualified deferred compensation plan.•Limited additional benefits, including financial counseling to assist with compliance of regulations and to provide guidance in managing complex investment, tax, legal and estate matters, up to a maximum of $7,500 as well as an executive physical.•Relocation assistance for executives asked to move to a new work location; facilitates the placementment of the right person in the job and aids in developing talent.The supplemental table below is designed to provide additional details on the payments received by our CEO in 2011. This table differs substantially from the “Summary Compensation Table” required by the U.S. Securities and Exchange Commission and is not meant to be a substitute for the “Summary Compensation Table”.SUPPLEMENTAL TABLE OF CEO PAY RECEIVED IN 2011
Covered
Compensation
($)
Received
($)
That Produced the Compensation
Compensation
Received in 2011* talent * This amount does not include the value of other benefits, such as pension plan value attributed to 2011, since they are not payments Mr. Martin received in 2011.• Executive physical • Spousal travel 33
Process for Determining Named Executive Officer CompensationExecutive Compensation Policies, PracticesCommitteeGuidelinesRoleapproving compensation awarded to our executive officers, other than the CEO. The independent board members, with the input of the Committee, annually set the CEO’s individual target compensation, review his performance and determine his compensation payout in the context of the established objectives,49 Executive CompensationCompensation—The Decision Process
committee reviews theCommittee financial and strategic objectives for the company for that calendar yearincentive plans based on the metrics that have been recommended by senior management and approvedfinancial objectives set by the board of directors. In addition,The Committee and the committee reviewsindependent directors review the recommendations madeof management particularly with respect to the appropriateness and rigor of the objectives and approve the final annual and long term objectives.senior management regarding base salaryexternal consultants, our CEO and theExecutive Vice President and Chief Human Resources Officer recommend compensation target levels offor total direct compensation as well as the annual and long-term incentive compensation for executive officers, including the NEOs, other than the CEOCEO. The Committee reviews management’s recommendations and determines the appropriate financial and strategic objectives, base salary and the target levels of annual and long-term incentive compensation.committeeCommittee also recommends for approval by the independent members of the board of directorsmembers the CEO’s base salary and annual and long-term incentive target levels. In making its decisions,Generally at this time the committee consults with FWC, its outside consultant. FWC representatives attended all committee meetings in 2011 and performed no other servicesCommittee also approves any changes to the compensation program for the company or its management. The committee has the sole authority to hire and terminate its consultant.coming year.committeeperformance of his executive officer direct reports and recommends incentive compensation actions other than for himself to the Committee. The Committee recommends to the independent board members an individual rating for the CEO. The Committee reviews the financial and strategic accomplishments of the company, taking into account predetermined objectives for that calendarthe preceding year, and determines actual base salary increases as well as the annual and long-term incentive compensation for the NEOs and recommends for approval by the independent members of the board of directorsmembers the CEO’s compensation. The committee also reviews tally sheets provided by the company to evaluate the individual components and the total mix of compensation.Role of Management in Determining Executive CompensationAt the beginning of each year the CEO, on behalf of senior management, recommends to the committee financial and strategic objectives for the incentive plans based on the company’s financial and strategic objectives set by the board of directors. In addition, the CEO and the Executive Vice President and Chief Human Resources Officer recommend target levels of annual and long-term incentive compensation for the NEOs other than the CEO.At the end of each year, each NEO completes a written self assessment of his or her performance against his or her objectives. The CEO recommends individual ratings for each NEO other than himself and these ratings are considered by the committee in determining annual merit base salary increases. The committee recommends to the independent members of the board of directors an individual rating for the CEO. The Executive Vice President and Chief Human Resources Officer is also consulted in developing recommendations regarding executive compensation as is the Towers Watson Compensation Report. The committee or the independent members of the board of directors, as applicable, determines the actual base salary increases, if any, that will be awarded.The CEO evaluates the performance of his executive officer direct reports and recommends incentive compensation actions to the committee. The actual payout levels for annual incentive compensation are based upon the company’scom-and strategic objectives and other criteria, such as TSR and customer value, as discussed in further detail under “Annual Incentives” beginning on pages 30 and 31.page 44. For long-term incentive compensation, the recommendation to the committeeCommittee for payout levels is based on pre-determined financial objectives and a TSR modifier,Modifier, as discussed in further detail under “Long-Term“Long-term Incentives” beginning on pages 31 to 32page 46 of this proxy statement.Tally SheetsManagement providesTo assist in this process, the committee and FWC withCommittee also reviews tally sheets which demonstratethe Human Resources department prepares to evaluate the individual components and the total mix of the components of compensation for executive officers.compensation. The tally sheets show the dollar amount of each of the components of each executive officer’s compensation, including:•total cash compensation (base salary and annual incentive);•long-term incentive grants and payouts (stock options, performance-based RSUs, restricted stock and long-term cash awards);•financial counseling;•qualified and non-qualified pension, defined contribution and other deferred compensation plans balances;•equity and long-term cash plan balances; and•amounts that would be payable under various termination scenarios, including involuntary termination, retirement, termination following a change of control, death or disability.The purposesummarizing the total compensation opportunity, including the executive’s fixed and variable compensation, perquisites and potential payments upon termination or Change of theseControl. In addition, the tally sheets is to allowinclude a summary of historical compensation. These tally sheets aid the committee to analyzeCommittee in analyzing the individual compensation components individually as well as the compensation mix and weighting of the components within the total compensation package.34Benchmarking—Use of Market Data50 committeeCommittee annually reviews the competitiveness ofcompares each executive’s total direct compensation (base salary, annual incentive and long-term incentives) against two independent reports with a view towards determining the optimal mix of compensation. To achieve this, we use two sourcesand level of compensation, information. We use the Towers Watson Regressed Compensation Report to determine(Towers Watson Report), and the compensation targets annually andRadford High-Tech Industry Survey Report (Radford Report). We then we review the targets and actual payouts against publicly available data from our peer group to evaluate ongoing compensation opportunity.The committeeopportunity and competitiveness. Finally, the Committee’s independent compensation consultant reviews the data presented to the Committee, before the Committee establishes the target total direct compensation structure basedstructure. The Committee sets compensation targets on companies with revenues in the $6assumption that specific incentive award performance objectives are achieved at their target level. The Towers Watson data is regressed for corporate revenue of approximately $4.0 billion for corporate leaders and actual regressed revenue for business unit leaders. The Radford Report bases its analysis on applicable revenue ranges as they pertain to $10 billion rangevarious roles. The Committee believes using the Towers Watson Compensation Report. The report is comprised of 78 companies in all industry areas other than thoseReport regressed revenue scope and the revenue ranges in the financial and energy sector.Radford Report more accurately reflect market competitiveness against outside companies. However, the exact number of companies included in the data for each executive position may vary depending on the structure of the applicable company and whether the company submitted the relevant data. The reportTowers Watson Report is a sub-section of the 20112013 US CDB General Industry Executive Database reportDatabase. The Radford Report is derived from Towers Watson. The complete report can be purchaseda database of survey results from Towers Watson.high-tech companies.committee,Committee but is not the sole basis for determining appropriate compensation design, compensation targets, or individual pay levels. CompensationUse of comparative industry data and outside surveys only serves to indicate to the Committee whether those decisions are in line with industry in general and our peer group in particular. The Committee believes that the comparative industry data used from the Towers Watson Report, the Radford Report and the peer group are consistent with our compensation philosophy. In addition, compensation targets and individual pay levels may vary from the median for various reasons, including:
