As required by Section 14A of the
beneficial ownership of more than 35% of either the Company's outstanding shares of common stock or combined voting power of then outstanding voting securities, except acquisitions of shares (a) directly from the Company, (b) by the Company, (c) by an employee benefit plan sponsored, maintained or controlled by the Company, or (d) by any corporation pursuant to a transaction described below;
•a change in a majority of the members of our Board, without the approval of at least two-thirds of the then incumbent members of the Board;
•the completion of a reorganization, merger or consolidation, sale of the Company or any subsidiary of the Company, or a disposition of all or substantially all of the assets, unless (a) all or substantially all of the beneficial owners immediately prior to the transaction own more than 50% of the outstanding shares of common stock and the combined voting power of the corporation resulting from the transaction in substantially the same proportions as their ownership of the Company immediately prior to the transaction, (b) no person beneficially owns 50% or more of the outstanding shares of common stock or the combined voting stock of the surviving entity, and (c) a majority of the directors of the surviving entity were directors of the Company prior to the transaction;
•liquidation or dissolution of the Company; or
•acquisition by the Company's institutional holders and their affiliates of more than 45% of the beneficial ownership of the Company's outstanding common stock or outstanding voting stock, except acquisitions of shares (a) directly from the Company, (b) by the Company, or (c) by any corporation pursuant to a transaction described above. Termination Due to Death or Disability. If Mr. McDonald's employment terminates due to death or if he is terminated by the Company due to disability, he (or his beneficiary) is entitled to receive:
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•up to 18 months of Subsidized COBRA Coverage;
•Pro-rated Short-term Bonus;
•Pro-rated Long-term Bonus; and
•Pro-rated Accelerated Equity Vesting.
Termination Due to Expiration of Employment Term. If Mr. McDonald's employment terminates due to the expiration of the employment term under the agreement, he is entitled to receive:
•all Accrued Benefits;
•a lump sum cash severance payment equal to the sum of (a) his base salary at the rate in effect when the notice of termination is given, plus (b) an amount equal to his target bonus opportunity for the year in which the termination occurs;
•any earned but unpaid long-term incentive award that would have been paid within one-year following the termination;
•all unvested equity awards will fully and immediately vest; and
•up to 18 months of the Subsidized COBRA Coverage.
Voluntary Resignation. Upon termination of employment due to voluntary resignation, Mr. McDonald is entitled to receive all Accrued Benefits.
Termination for Cause by the Company. If the Company terminates Mr. McDonald's employment for cause, Mr. McDonald is entitled to receive Accrued Benefits (other than any unpaid bonus).
Obligations of Mr. McDonald. Payment and benefits under the Employment AgreementExchange Act, we are subject to compliance by Mr. McDonaldproviding stockholders with the restrictive covenants in the agreement, including non-disclosure, non-competition and non-solicitation covenants. The non-competition and non-solicitation covenants expire eighteen months after the termination of Mr. McDonald's employment. The non-disclosure covenant does not expire. If Mr. McDonald violates any of these covenants, he will not be entitled to further payments and benefits under the Employment Agreement. All payments or benefits under the Employment Agreement are conditioned on the execution of a general release of claims by Mr. McDonald in favor of the Company, its affiliates, and their officers, directors and employees.
Executive Transition Plan
Messrs. Jones, Humenik, and Gatto are eligible to receive severance benefits and are subject to certain restrictive covenants under the Executive Transition Plan. Effective as of the consummation of the Merger, the Company assumed all obligations of SuperMedia under this plan. The Executive Transition Plan provides specified payments and other benefits to our NEOs, other than our Chief Executive Officer, in the event the officer's employment is terminated under the circumstances described below. During 2010, the Compensation Committee of SuperMedia amended the Executive Transition Plan to eliminate tax gross-up payments for new participants and bring it into compliance with Section 409A requirements. The Company is not required to provide any payment or benefit under the Executive Transition Plan that duplicates any payment or benefit that an executive officer is entitled to receive under any other Company compensation or benefit plan, award agreement, or other arrangement. Payments and other benefits payable to our Chief Executive Officer in the event his employment is terminated are covered by the terms of his Employment Agreement. For a description of these payments and other benefits, see "President and CEO Employment Agreement" above.
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Termination Without Cause. If the Company terminates the employment of an executive officer without cause, unrelated to a change in control, then the officer is entitled to receive the following payments and benefits:
•an amount equal to a multiple (the "Severance Multiplier") of (a) the officer's highest annual rate of base salary at any time during the preceding 24 months, plus (b) the officer's target short-term incentive award for the calendar year in which the termination occurs (or, if greater, the actual short-term incentive award earned by the officer for the preceding calendar year). The Severance Multiplier is 1.0 for payments and benefits payable in the event of a termination without cause;
•an amount equal to the officer's target short-term incentive award for the year in which the termination occurs, prorated by the number of days elapsed since the beginning of that year to the date of termination;
•an amount equal to the officer's unpaid base salary earned through the date of termination and unpaid short-term incentive award earned for the preceding year;
•any payments or benefits payable to the officer or the officer's spouse or other dependents under any other Company employee plan or program;
•continued participation by the officer and the officer's spouse and other dependents in the Company's group health plan, at the same benefit and contribution levels in effect immediately before the termination for a number of months equal to 12 times the Severance Multiplier or, if sooner, until similar coverage is obtained under a new employer's plan. If continued coverage is not permitted by the Company's plan or applicable law, the Company will pay the cost of COBRA continuation coverage to the extent any of these persons elects and is entitled to receive COBRA continuation coverage;
•if applicable, continued participation in the Company's executive life insurance program for the greater of (a) a number of months equal to 12 times the Severance Multiplier as if the officer's employment had continued at the officer's highest annual rate of base salary in effect at any time during the 24 months preceding termination of employment, and (b) the period provided by the program;
•continued receipt of perquisites made available to the officer during the 12 months preceding the termination for a number of months equal to 12 times the Severance Multiplier; and
•outplacement services for up to one year following the termination.
In addition, the Committee, in its sole discretion, may accelerate vesting of any outstanding long-term incentive awards held by the executive officer.
Under the Executive Transition Plan, an executive officer is deemed to have been terminated without cause if the executive officer is terminated for any reason other than:
•a conviction of or plea of nolo contendere to a felony;
•fraud or a material act or omission involving dishonesty with respect to the Company;
•willful failure or refusal to carry out material employment responsibilities;
•gross negligence, willful misconduct or a pattern of behavior likely to have an adverse effect on the Company; or
•a willful, material violation of a material Company policy.
Termination in Connection with a Change in Control. If the Company terminates the employment of an executive officer without cause during the period beginning six months prior to the date of a
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change in control (or, if earlier, the date a definitive agreement is signed that would result in a change in control) and ending on the first anniversary of the change in control, or if an executive officer terminates employment for good reason within one year after a change in control, then the officer is entitled to receive the payments and benefits described above, except that the Severance Multiplier is 2.0.
In the event a change in control occurs, all outstanding long-term incentive awards held by an executive officer will become fully vested if the officer is employed by the Company immediately before the change in control occurs. The payout under any performance-based award will equal the target amount. Under the Executive Transition Plan, a change in control is defined in the same manner as in the LTIP, as described above.
An executive officer is deemed to have terminated his or her employment for good reason if the termination follows:
•a material adverse change in status or position, including, without limitation, any material adverse change resulting from a diminution in the executive officer's position, duties, responsibilities, authority or assignment of duties to the executive officer that are materially inconsistent with his or her status or position;
•a reduction in base salary or target incentive opportunities;
•the relocation of the covered Named Executive Officer's principal place of business of more than 50 miles; or
•at the time of a change in control, a failure by the successor company to assume the Company's obligations under the Executive Transition Plan.
Termination Due to Death or Disability. If an executive officer's employment terminates due to death or is terminated by the Company due to disability, the officer (or the officer's beneficiary) is entitled to receive a cash payment equal to six months' base salary plus a prorated portion of the officer's target short-term incentive award for the year in which the termination occurs. Vesting of the officer's outstanding long-term incentive awards is subject to the discretion of the Committee. An executive officer whose employment is terminated by the Company due to disability is also entitled to receive two years of continuing group health and welfare benefits (including continued participation in the Company's executive life insurance program and conversion of any life or disability policies) at the Company's expense.
Obligations of the Officer. Payment and benefits under the Executive Transition Plan are subject to compliance by the former officer with the restrictive covenants in the Executive Transition Plan, including non-disclosure, non-competition and non-solicitation covenants. The non-competition and non-solicitation covenants expire on the first anniversary of the termination of the officer's employment. The non-disclosure covenant does not expire. If the former officer violates any of these covenants, the officer will not be entitled to further payments and benefits under the Executive Transition Plan and must repay the Company for the payments and the value of benefits previously received under the Executive Transition Plan. All payments or benefits under the Executive Transition Plan are conditioned on the execution of a general release of claims by the former officer in favor of the Company, its affiliates, and their officers, directors and employees.
Tax Gross-Up Payments. In the event an executive officer is subject to federal excise taxes for benefits he or she is entitled to under the Executive Transition Plan or otherwise from the Company, the officer is entitled to receive an amount necessary to offset the excise taxes and any related income taxes, penalties and interest. This benefit was grandfathered in 2010; therefore, all new officers that join the Company after January 1, 2010 do not receive tax gross-up payments.
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Restricted Stock Awards and Stock Option Awards
On September 5, 2013, the Board and the Committee approved restricted stock and stock option awards under the LTIP and EIP. The restricted stock awards vest on December 31, 2015, subject to the terms of the applicable award agreement. All unvested shares of restricted stock will be forfeited upon the employee's termination of employment with the Company for any reason on or before December 31, 2015, except that the Committee, in its sole discretion, may provide for the accelerated vesting of the restricted stock. If the employee terminates employment without cause or for good reason within six months prior to or two years following a change in control, all unvested shares of restricted stock will immediately vest as of the date of such termination.
The stock option awards vest over four years in equal installments of one-fourth on March 31, 2014, March 31, 2015, March 31, 2016 and March 31, 2017. Any unvested portion of the stock option award will be forfeited upon the employee's termination of employment with the Company for any reason before the date the option vests, except that the Committee, at its sole discretion, may provide for the accelerated vesting of the stock option award. If the employee terminates employment without cause or for good reason within six months prior to or two years following a change in control, any unvested portion of the stock option award will immediately vest on the date of such termination.
Under the award agreements the change in control is defined as set forth in the Transition Plan, as described above.
2013-2015 Cash Long-Term Incentive Plan
The Company's 2013-2015 Cash LTIP comprises three performance periods. Each of 2013 (post-Merger), and fiscal years 2014 and 2015 represents one performance period, with 2013 measured on a pro rata basis from the effective date of the Merger through December 2013. If, at the end of a measurement period, the Company's performance against the specified performance metrics results in an award being payable to any participating executive officer, the payment of such award shall be made in December of the following year.
Following a change in control of the Company, under the 2013-2015 Cash LTIP, awards for the performance period in progress would be deemed to be earned at the target amount and for any performance period that has not been started as of the change in control, potential future awards will be forfeited. Under 2013-2015 Cash LTIP the change in control is defined as set forth in the Transition Plan, as described above.
Pension and Retirement Benefits
Upon retirement or other termination of employment, certain of the Named Executive Officers are entitled to pension benefits under the Management Plan, the Excess Plan, Dex One Retirement Account and Dex One PBEP. See "Executive and Director Compensation—Executive Compensation—2013 Pension Benefits" for further information regarding the pension benefits payable to the eligible Named Executive Officers under these plans.
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Incremental Value of Payments and Benefits Upon Change in Control ("CIC") and Various Types of Terminations
| | | | | | | | | | | | | | | | |
| | Mr. McDonald | | Mr. Jones | | Mr. Humenik | | Mr. Gatto | | Mr. Stover(1) | |
---|
Termination Without Cause | |
Compensation | | | | | | | | | | | | | | | | |
Separation Benefits | | $ | 3,908,000 | | $ | 950,900 | | $ | 850,000 | | $ | 731,000 | | $ | — | |
Short-Term Incentive Cash | | $ | 977,000 | | $ | 436,900 | | $ | 350,000 | | $ | 301,000 | | $ | — | |
Long Term Incentive Cash | | $ | 750,000 | | $ | 500,000 | | $ | 367,000 | | $ | 334,000 | | $ | — | |
Restricted Stock | | $ | 84,650 | | $ | 225,508 | | $ | 165,237 | | $ | 150,338 | | $ | — | |
Stock Options | | $ | 65,213 | | $ | 289,717 | | $ | 212,506 | | $ | 193,377 | | $ | — | |
Benefits | | | | | | | | | | | | | | | | |
Health & Welfare Benefits | | $ | 30,243 | | $ | 18,125 | | $ | 18,449 | | $ | 12,966 | | $ | — | |
Executive Life Insurance Program | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Flexible Allowance | | $ | — | | $ | 15,600 | | $ | 15,600 | | $ | 15,600 | | $ | — | |
Financial Planning | | $ | — | | $ | 13,535 | | $ | 13,535 | | $ | 13,535 | | $ | — | |
Physical Examination | | $ | — | | $ | 2,000 | | $ | 2,000 | | $ | 2,000 | | $ | — | |
Outplacement Services | | $ | — | | $ | 9,500 | | $ | 9,500 | | $ | 9,500 | | $ | — | |
Excise Tax Gross-Up | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 5,815,105 | | $ | 2,461,785 | | $ | 2,003,826 | | $ | 1,763,316 | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Termination Without Cause or for Good Reason in Conjunction with a Change in Control | |
Compensation | | | | | | | | | | | | | | | | |
Separation Benefits | | $ | 5,862,000 | | $ | 1,901,800 | | $ | 1,700,000 | | $ | 1,462,000 | | $ | 1,309,000 | |
Short-Term Incentive Cash | | $ | 977,000 | | $ | 436,900 | | $ | 350,000 | | $ | 301,000 | | $ | 269,500 | |
Long Term Incentive Cash | | $ | 750,000 | | $ | 500,000 | | $ | 367,000 | | $ | 334,000 | | $ | 300,000 | |
Restricted Stock | | $ | 338,600 | | $ | 225,508 | | $ | 165,237 | | $ | 150,338 | | $ | 135,440 | |
Stock Options | | $ | 434,750 | | $ | 289,717 | | $ | 212,506 | | $ | 193,377 | | $ | 173,900 | |
Benefits | | | | | | | | | | | | | | | | |
Health & Welfare Benefits | | $ | 30,243 | | $ | 36,251 | | $ | 36,897 | | $ | 25,932 | | $ | 31,335 | |
Executive Life Insurance Program | | $ | — | | $ | — | | $ | — | | $ | — | | $ | 375,396 | |
Flexible Allowance | | $ | — | | $ | 31,200 | | $ | 31,200 | | $ | 31,200 | | $ | 31,200 | |
Financial Planning | | $ | — | | $ | 27,070 | | $ | 27,070 | | $ | 27,070 | | $ | 27,070 | |
Physical Examination | | $ | — | | $ | 4,000 | | $ | 4,000 | | $ | 4,000 | | $ | 4,000 | |
Outplacement Services | | $ | — | | $ | 9,500 | | $ | 9,500 | | $ | 9,500 | | $ | 9,500 | |
Excise Tax Gross-Up | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 8,392,593 | | $ | 3,461,946 | | $ | 2,903,410 | | $ | 2,538,417 | | $ | 2,666,341 | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Death | |
Compensation | | | | | | | | | | | | | | | | |
Separation Benefits | | $ | — | | $ | 693,900 | | $ | 600,000 | | $ | 516,000 | | $ | — | |
Short-Term Incentive Cash | | $ | 977,000 | | $ | — | | $ | — | | $ | — | | $ | — | |
Long Term Incentive Cash | | $ | 750,000 | | $ | — | | $ | — | | $ | — | | $ | — | |
Restricted Stock | | $ | 84,650 | | $ | — | | $ | — | | $ | — | | $ | — | |
Stock Options | | $ | 65,213 | | $ | — | | $ | — | | $ | — | | $ | — | |
Benefits | | | | | | | | | | | | | | | | |
Health & Welfare Benefits | | $ | 30,243 | | $ | — | | $ | — | | $ | — | | $ | — | |
Executive Life Insurance Program | | $ | — | | $ | — | | $ | — | | $ | 3,660,000 | | $ | — | |
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| | | | | | | | | | | | | | | | |
| | Mr. McDonald | | Mr. Jones | | Mr. Humenik | | Mr. Gatto | | Mr. Stover(1) | |
---|
Flexible Allowance | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Financial Planning | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Physical Examination | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Excise Tax Gross-Up | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 1,907,105 | | $ | 693,900 | | $ | 600,000 | | $ | 4,176,000 | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
Disability | |
Compensation | | | | | | | | | | | | | | | | |
Separation Benefits | | $ | — | | $ | 693,900 | | $ | 600,000 | | $ | 516,000 | | $ | — | |
Short-Term Incentive Cash | | $ | 977,000 | | $ | — | | $ | — | | $ | — | | $ | — | |
Long Term Incentive Cash | | $ | 750,000 | | $ | 500,000 | | $ | 367,000 | | $ | 334,000 | | $ | — | |
Restricted Stock | | $ | 84,650 | | $ | 225,508 | | $ | 165,237 | | $ | 150,338 | | $ | — | |
Stock Options | | $ | 65,213 | | $ | 289,717 | | $ | 212,506 | | $ | 193,377 | | $ | — | |
Benefits | | | | | | | | | | | | | | | | |
Health & Welfare Benefits | | $ | 30,243 | | $ | 36,251 | | $ | 36,897 | | $ | 25,932 | | $ | — | |
Executive Life Insurance Program | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Flexible Allowance | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Financial Planning | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Physical Examination | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
Excise Tax Gross-Up | | $ | — | | $ | — | | $ | — | | $ | — | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
Total | | $ | 1,907,105 | | $ | 1,745,376 | | $ | 1,381,640 | | $ | 1,219,647 | | $ | — | |
| | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | |
| | | | | | | | | | | |
(1)Mr. Stover's employment terminated effective January 3, 2014. The amounts represented here are actual payments, future payments, and values.
Compensation and Benefits Committee Interlocks and Insider Participation
Thomas D. Gardner, Richard L. Kuersteiner, Mark A. McEachen and Thomas S. Rogers served as members of the Compensation and Benefits Committee since April 30, 2013 through December 31, 2013. No such member of that Committee is or has been an officer or employee of the Company and none had interlocking relationships with any other entities of the type that would be required to be disclosed in this proxy statement.
Director Compensation
The Committee periodically reviews the level and balance of our non-employee director compensation with the input and assistance of its independent compensation consultant. Following the Merger, the Committee and the new Board reviewed the director compensation program and implemented the following revised non-employee director compensation program which took effect as of April 30, 2013, the first day of the term for which the Board was appointed to serve as the Board of the Company:
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Cash Compensation. The table below shows cash compensation payable to the non-management directors of the Company, except Mr. Slater1, for Board and Board committee services, effective as of April 30, 2013.
| | | | |
Service | | Fee Amount | |
---|
Annual Retainer for Board Service | | $ | 75,000 | |
Annual Retainer for Board Chairman Service | | $ | 100,000 | |
Annual Audit and Finance Committee Membership Retainer | | $ | 7,500 | |
Annual Audit and Finance Committee Chairman Retainer | | $ | 25,000 | |
Annual Compensation and Benefits Committee Membership Retainer | | $ | 7,500 | |
Annual Compensation and Benefits Committee Chairman Retainer | | $ | 25,000 | |
Annual Corporate Governance Committee Membership Retainer | | $ | 5,000 | |
Annual Corporate Governance Committee Chairman Retainer | | $ | 15,000 | |
Board and Committee Meeting Fee | | $ | 2,000 | |
Annual cash director retainers are paid quarterly at the beginning of each quarter and include Board and committee retainers. Board and committee meeting fees are paid on a quarterly basis in arrears based on attendance.
Annual Equity Based Compensation. Non-management directors, except Mr. Slater, received an annual award of restricted stock equal to $75,000 divided by the closing price of our common stock on the grant date.
Effective as of the first quarter of 2014, upon the recommendation of the Committee, the Board approved a decrease in the amount of annual awards of restricted stock to $30,000 and corresponding increases in annual cash retainers for the Board service to $120,000 and annual cash retainer for the Board Chairman service to $145,000.
The following table sets forth certain information regarding the compensation earned by each non-employee director who served on our Board of Directors in 2013, following the consummation of the Merger on April 30, 2013.
Director Compensation—2013
| | | | | | | | | | |
Name(1) | | Fees Earned or Paid in Cash(2) | | Stock Awards(3) | | Total | |
---|
Jonathan B. Bulkeley(2) | | $ | 185,542 | | | — | | $ | 185,542 | |
Thomas D. Gardner(2)(4) | | $ | 248,250 | | | — | | $ | 248,250 | |
Richard L. Kuersteiner(2) | | $ | 244,125 | | | — | | $ | 244,125 | |
W. Kirk Liddell(2)(3) | | $ | 201,584 | | $ | 10,000 | | $ | 211,584 | |
Mark A. McEachen(2)(4) | | $ | 266,167 | | | — | | $ | 266,167 | |
Thomas S. Rogers(2) | | $ | 223,375 | | | — | | $ | 223,375 | |
Alan F. Schultz(2)(3) | | $ | 195,917 | | $ | 60,000 | | $ | 255,917 | |
John Slater | | | — | | | — | | | — | |
Douglas D. Wheat(2)(3) | | $ | 186,250 | | $ | 60,000 | | $ | 246,250 | |
(1)Peter J. McDonald, our President and Chief Executive Officer, is not included in this table because he was an employee of the Company during 2013 and, therefore, did not receive compensation for his service as a director. See "Executive
1At his request, Mr. Slater, an officer of Paulson, one of our largest stockholders, has waived all director compensation.
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Compensation—Summary Compensation Table" for a discussion of the compensation earned by Mr. McDonald during 2013.
(2)Annual cash director Board and committee retainers are paid quarterly at the beginning of each quarter; retainers for the first quarter of 2014 were paid out in December 2013, and are included in the table above.
Prior to the completion of the Merger each of the Compensation Committee of SuperMedia and the Compensation and Benefits Committee of Dex One, granted each non-management director serving on their respective Boards of Directors, an award in cash equal to $70,000 and $75,000, respectively, in lieu of the 2013 annual equity awards, which awards were paid out upon the completion of the Merger (and are included in the amounts shown in the table). In addition, following the Merger, the Board approved an award in cash equal to $5,000 to each of Messrs. Gardner, Rogers and Wheat, the former SuperMedia non-management directors, in lieu of the remaining portion of the 2013 annual stock award payable in cash, with such award payable at the beginning of the third fiscal quarter of 2013 (included in the amounts shown in the table).
In addition to the cash compensation disclosed above, each of Messrs. Jonathan B. Bulkeley, Richard L. Kuersteiner, W. Kirk Liddell, Mark A. McEachen and Alan F. Schultz, the former Dex One directors, received the following cash compensation for their service on the Dex One board of directors prior to the Merger, from January 1, 2013 through April 30, 2013: $36,500; $54,500; $53,333; $56,000 and $66,500, respectively (not included in the amounts shown in the table).
(3)In recognition of their significant contributions to the completion of the Merger in August 2013, the Board granted each of Mr. Schultz and Mr. Wheat, an award of fully vested restricted stock pursuant to the terms of the EIP, each equal to $50,000 divided by the closing price of the Corporation's common stock on the grant date.
In recognition of their services to the Company, in connection with evaluation of potential strategic transactions, in October 2013, the Board granted each of Mr. Liddell, Mr. Wheat and Mr. Schultz, an award of fully vested restricted Stock pursuant to the terms of the EIP, each equal to $10,000 divided by the closing price of the Corporation's common stock on the grant date.
The amounts in the table represent the aggregate grant date fair value of restricted stock granted to our non-management directors in 2013. Pursuant to the SEC rules, the dollar amounts were computed in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation-Stock Compensation ("ASC Topic 718"), and exclude the impact of estimated forfeitures related to service-based vesting conditions. See Note 11 to the consolidated financial statements in the Company's annual report on Form 10-K for the year ended December 31, 2013, for a description of the assumptions used in determining the accounting expense associated with these awards.
(4)In October 2013, Board has established a special committee of the Board, comprising Messrs. Mark A. McEachen, Thomas D. Gardner and John Slater, to assist the management in its preparation of the 2014 annual operating budget of the Corporation. The Board approved a meeting attendance fee of $2,000 payable to each such special committee member (other than Mr. Slater) on a per-meeting basis, for each special committee meeting attended. The special committee held three meetings in 2013.
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The following table sets forth the number of shares held by each of the non-management directors that are standing for re-election at the 2014 Annual Meeting as of March 17, 2014.
| | | | |
Name of Director
| | Number of
Shares Held(1)(2) | |
---|
Jonathan B. Bulkeley
| | | 16,169 | |
Thomas D. Gardner
| | | 11,654 | |
W. Kirk Liddell
| | | 32,229 | |
Thomas S. Rogers
| | | 11,654 | |
Alan F. Schultz
| | | 31,589 | |
John Slater
| | | — | |
Douglas D. Wheat
| | | 17,131 | |
(1)Following the Merger, each issued and outstanding share of SuperMedia common stock was converted into 0.4386 shares of Dex Media common stock and Dex One stockholders received 0.2 shares of Dex Media common stock for each share of Dex One common stock that they owned. The table includes SuperMedia and Dex One shares of common stock, as applicable, held by non-management directors prior to the Merger, converted into shares of common stock of Dex Media.
(2)On January 2, 2014, our non-management directors, except Mr. Slater, received an annual award of fully vested 4,595 shares of restricted stock (equal to $30,000 divided by the closing price of our common stock on the grant date).
(3)In recognition of their significant contributions to the completion of the Merger, the Board granted each of Mr. Schultz and Mr. Wheat, an award of fully vested 3,260 shares of restricted stock pursuant to the terms of the EIP.
In recognition of their services to the Company, in connection with evaluation of potential strategic transactions, the Board granted each of Mr. Liddell, Mr. Wheat and Mr. Schultz, an award of fully vested 1,460 shares of restricted stock pursuant to the terms of the EIP.
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ADVISORY VOTE APPROVING THE COMPANY'S EXECUTIVE COMPENSATION
(ITEM NO. 2)
Recently enacted rules enable our stockholders to voteopportunity to approve, on an advisory basis, the compensation of our NEOs as disclosed in this proxy statement.
Background. Dex Media was formed on April 30, 2013 through the Merger which brought together Dex One and SuperMedia, two major providers of local, social, and mobile marketing solutions to businesses in communities across the United States. Dex Media's consumer services include online and mobile search portals and applications, as well as local printed yellow pages directories, white page directories, community, and companion directories in various markets across the U.S.
In addition to bringing the two companies together in 2013, we experienced a challenging business environment throughout the year. Challenges included an industry trend of decreased demand for print based advertising and broader uneven economic trends impacting the Company's core retail customer segment. These trends in particular resulted in Dex Media's experiencing a decline in revenue. In addition, Dex Media is highly leveraged, with long-term debt greater than revenue. Repaying a large portion of that debt was a key focus of our Company following the Merger.
Dex Media's 2013named executive compensation program is best understood in the context of the Merger and these business trends. 2013 was both a transitional and transformational year for the Company. We focused on both top-line and bottom-line performance, all while continuing our post-Merger integration activities. We redefined our strategy and worked to transform our business from a principally print-based advertising and media company to a multi-platform marketing solutions provider, introducing digital solutions that are relevant and valuable to our customers. Throughout the year, we focused on integrating two organizations, we right-sized the organization (people, facilities and resources), re-negotiated multiple key contracts and moved to single IT and financial platforms.
Compensation Philosophy and Objectives. Dex Media's compensation program is designed to reward executives for Company and individual performance through awards of annual and long-term incentives. Annual and long-term incentives encourage our executive officers to achieve the Company's financial, operational and strategic goals and reward individual and Company performance. Our compensation program is also intended to be competitive with our peer companies so that we can attract and retain highly qualified personnel and recognize their knowledge, skills and attributes. To increase the retentive power of the compensation program, annual and long-term goals are established at challenging but achievable levels. Finally, we strive to design our compensation program to be transparent to our executive officers and to shareholders, and to evidence positive governance principles.
2013 Compensation Design. Following the Merger, the Committee approved an annual incentive design for the remainder of 2013 that largely replicated the annual incentive approach that had been in place previously at Dex One and SuperMedia. This annual incentive design included metrics tied to the financial plan that had been approved as part of the Merger plan. The Committee also approved long-term incentives covering 2013 through 2015 that include a strong cash component, a restricted stock component and a stock option component. The Committee also updated the peer group used to benchmark compensation for executive officers, adopted stock ownership guidelines for executive officers and non-management directors and negotiated a three year extension to the CEO's employment agreement. All of these items are described in more detail in "Compensation Discussion and Analysis" above.
For the reasons discussed above, we are asking our stockholders to indicate their support for our executive compensation as described in this proxy statement by voting "FOR"Compensation Discussion and Analysis and the following resolution. Compensation Tables. At our 2021 annual meeting of stockholders, stockholders voted on a non-binding proposal to advise on whether the advisory vote on executive compensation should occur every one, two or three years. As a majority of our stockholders voted in favor of an annual vote, our board of directors decided to annually provide our stockholders with an advisory vote on the compensation of our named executive officers. The next vote on the frequency of the advisory vote on executive compensation will be held at our 2027 annual meeting of stockholders.