UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
Proxy Statement Pursuant to Section 14(a) of the
Securities Exchange Act of 1934
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CORELOGIC, INC.
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if Other than the Registrant)
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March 20, 201719, 2019
Dear Fellow Stockholders,
You are cordially invited to attend our annual meeting of stockholders at 2:00 p.m. Pacific timeTime on Wednesday, May 3, 2017,Tuesday, April 30, 2019, at the executive offices of CoreLogic, Inc., located at 40 Pacifica, Irvine, California 92618. We have included a map and directions to our executive offices on the inside back cover of this proxy statement for your convenience.
Details regarding admission to the meeting and the business to be conducted are described in the accompanying notice of annual meeting and proxy statement. We have also made available a copy of our 20162018 Annual Report to Stockholders (the “Annual Report”) with this proxy statement. We encourage you to read ourthe Annual Report. ItReport, which includes our audited financial statements and provides information about our business.
As in prior years, we have elected to provide access to our proxy materials over the Internet by mailing our stockholders a Notice of Internet Availability of Proxy Materials (the "Notice"“Notice”). The Notice provides information on how stockholders can obtain paper copies of our proxy materials if they so choose. This method expedites the receipt of your proxy materials, lowers the costs of our annual meeting and supports conservation of natural resources. If you would like more information, please see the Questions and Answers section of this proxy statement.
YOUR VOTE IS VERY IMPORTANT.Thank you very much for your continued interest in CoreLogic.
Paul F. Folino | Frank D. Martell | |
Chairman of the Board | President and Chief Executive Officer |
NOTICE OF ANNUAL MEETING OF STOCKHOLDERS
Date and Time April 30, 2019 2:00 p.m. Pacific Time Place CoreLogic, Inc. 40 Pacifica, Irvine, CA 92618 | Matters to be voted on at the 2019 Annual Meeting of Stockholders 1. To elect the eleven persons named in the accompanying proxy statement to serve on our board of directors until the next annual meeting and until their respective successors are duly elected and qualified; 2. To approve, on an advisory basis, the compensation of our named executive officers; 3. To ratify the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019; and 4. To transact such other business as may properly come before the meeting or any postponements or adjournments thereof. |
Record Date Only stockholders of record at the close of business on March 4, 2019 are entitled to notice of and to vote at the Annual Meeting.
How to Vote Your Shares | ||||||
By Internet: Visit the website listed on your proxy card, notice or voting instruction form | By Telephone: Call the phone number listed on your proxy card or voting instruction form | |||||
By Mail: Complete, sign, date, and return your proxy card or voting instruction form in the envelope provided | In Person:Attend our Annual Meeting and vote by ballot |
Your Vote is Very Important Even if you plan to attend the annual meeting of stockholders,Annual Meeting, we encourage you to vote via the Internet, by telephone or by mail as soon as possible to ensure that your vote is counted.shares are represented at the Annual Meeting. We look forward to seeing you at the meeting.Annual Meeting.
Thank you very much for your continued interest in CoreLogic.By Order of the Board of Directors,
Arnold A. Pinkston
Chief Legal Officer and
Corporate Secretary
Irvine, California
March 19, 2019
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of Stockholders to be held on April 30, 2019 Our Notice of Annual Meeting of Stockholders, Proxy Statement and Annual Report to Stockholders for the |
TABLE OF CONTENTS |
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NOTICE OF ANNUAL MEETING OF STOCKHOLDERSTo be Held on May 3, 2017
The annual meeting of stockholders of CoreLogic, Inc., a Delaware corporation (the "Company"), will be held at 2:00 p.m. Pacific time on Wednesday, May 3, 2017, at the executive offices of CoreLogic, Inc., located at 40 Pacifica, Irvine, California 92618, for the following purposes:
Only stockholders of record at the close of business on March 6, 2017 are entitled to notice of the annual meeting and an opportunity to vote at the annual meeting.
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact:
ALLIANCE ADVISORS, LLC200 Broadacres Drive, 3rd FloorBloomfield, New Jersey 07003Stockholders May Call Toll-Free: 855-325-6671
YOUR VOTE IS VERY IMPORTANT. Even if you plan to attend the annual meeting of stockholders, we encourage you to cast your vote and submit your proxy as soon as possible by one of the methods below to ensure that your vote is counted:
Registered stockholders. You may authorize your proxy:
Beneficial stockholders. If your shares are held by a broker, bank or other nominee, please follow the instructions they send to you regarding how you may vote your shares at the annual meeting.
Stockholders may also vote in person at the annual meeting. If you are a registered stockholder (that is, you hold your shares in your name as a holder of record with our transfer agent), you must present valid identification to vote at the meeting. If your shares are held by a broker, bank, or other nominee, you will also need to obtain a "legal proxy" from the holder of record to vote at the meeting. For specific instructions, please refer to the Questions and Answers section at the end of the proxy statement and the instructions on the proxy card or Notice of Internet Availability of Proxy Materials you receive.
Stergios Theologides
Senior Vice President, General Counseland Secretary
Irvine, CaliforniaMarch 20, 2017
Proposal 1 – Election of Directors
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Proposal 3 |
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Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters |
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Corporate Governance and Board Matters |
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Director Compensation |
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Executive Officers |
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Compensation Discussion and Analysis |
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Compensation Committee Report |
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Compensation Committee Interlocks and Insider Participation |
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Executive Compensation Tables |
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Grants of Plan-Based Awards for |
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Employment Agreements |
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Outstanding Equity Awards at Fiscal Year-End |
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Nonqualified Deferred Compensation for |
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Potential Payments upon Termination or Change in Control |
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Questions and Answers about Voting |
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Stockholder Proposals |
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General Information |
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Corporate Social Responsibility |
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Appendix A: Unaudited Reconciliation of Non-GAAP Adjusted Numbers | A-1 | ||
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PROXY STATEMENT
SUMMARYSolicitation of Proxies by the Board of Directors
The board of directors (the "Board" or the "Board of Directors") of CoreLogic, Inc., a Delaware corporation ("CoreLogic," the "Company," "we," or "us"), is soliciting proxies from holders of our shares of common stock for use at the annual meeting of stockholders. This proxy statement and form of proxy are first being sent or made available to our stockholders on or about March 20, 2017.
If you have questions or require assistance with voting your shares, or if you need additional copies of the proxy materials, please contact:
ALLIANCE ADVISORS, LLC200 Broadacres Drive, 3rd FloorBloomfield, New Jersey 07003
Stockholders May Call Toll-Free: 855-325-6671
YOUR VOTE IS VERY IMPORTANT. Even if you plan to attend the annual meeting of stockholders, we encourage you to cast your vote and submit your proxy as soon as possible by one of the methods below to ensure that your vote is counted.
Registered stockholders. You may authorize your proxy:
Beneficial stockholders. If your shares are held by a broker, bank or other nominee, please follow the instructions they send to you regarding how you may vote your shares at the annual meeting.
Stockholders may also vote in person at the annual meeting. If you are a registered stockholder (that is, you hold your shares in your name as a holder of record with our transfer agent), you must present valid identification to vote at the meeting. If your shares are held by a broker, bank, or other nominee, you will also need to obtain a "legal proxy" from the holder of record to vote at the meeting. For specific instructions, please refer to the Questions and Answers section at the end of this proxy statement and the instructions on the proxy card or Notice of Internet Availability of Proxy Materials (the "Notice") you receive.
IMPORTANT NOTICE REGARDING THE AVAILABILITY OF PROXY MATERIALS FOR THE STOCKHOLDER MEETING TO BE HELD ON MAY 3, 2017
Our Notice of Annual Meeting of Stockholders, 2017 Proxy Statement and Annual Report to Stockholders for the year ended December 31, 2016 are available at www.viewproxy.com/corelogic/2017. You are encouraged to access and review all of the important information contained in our proxy materials before voting.
This summary highlights information contained elsewhere in this proxy statement. It does not contain all of the information that you should consider prior to casting your vote at the 2017 Annual Meeting2019 annual meeting of Stockholdersstockholders (the "Annual Meeting"“Annual Meeting”), and you should read the entire proxy statement carefully before voting.
ANNUAL MEETING INFORMATION AND STOCKHOLDER VOTING MATTERS
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Date & Time April 30, 2019 2:00 p.m. PT Place CoreLogic 40 Pacifica Irvine, CA 92618 Record Date March 4, 2019 | 1 | Election of the eleven persons named in this proxy statement to | FOR each nominee | |||||||
2 | Approval, on an advisory basis, of the | FOR | ||||||||
3 | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2019 | FOR |
Mailing Date:This proxy statement and form of proxy are first being sent or made available to our stockholders on or about March 19, 2019.
CORELOGIC AT A GLANCE
We delivered strong operating and financial results in 2018 despite significant US mortgage market headwinds. In the face of these headwinds, we reduced our overall cost structure by more than $20 million through productivity initiatives and cost management, continued to invest in future growth and productivity initiatives, and completed targeted acquisitions to enhance our business mix by increasing ournon-mortgage and international footprints while driving higher technology platform revenues. We invested in next generation technology capabilities focusing on data structures and visualization, technology platforms, and advanced automation techniques, which we expect will set a foundation for future growth and margin expansion. Finally, we enhanced our infrastructure capabilities as we initiated our migration to the Google Cloud platform.
Notable financial accomplishments in 2018 include:
Significant market outperformance as our 2018 revenues were down 3%, as compared with a 15% estimated drop in overall US mortgage market unit volumes.
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1. | Election of the nine persons named in this proxy statement to serve on our board of directors until the next annual meeting and until their successors are duly elected and qualified | FOR | 7 | |||||||||||||
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2. | Approval, on an advisory basis, of the compensation of our named executive officers | FOR | 13 | |||||||||||||
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3. | Vote, on an advisory basis, on the frequency of future advisory votes on the compensation of our named executive officers | EVERY ONE YEAR | 16 | |||||||||||||
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4. | Ratification of the selection of PricewaterhouseCoopers LLP as our independent registered public accounting firm for the fiscal year ending December 31, 2017 | FOR | 17 | |||||||||||||
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5. | Transaction of such other business as may properly come before the meeting or any postponements or adjournments thereof | |||||||||||||||
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Since 2011 we grew revenues at an annual compounded rate of 12%,Increased adjusted EBITDA by 15%3% and adjusted EPS by 31%.15%, supported by our productivity and cost initiatives.
We achieved strong results
Generated $258 million of free cash flow (“FCF”) while reinvesting to drive future growth and margin expansion.
Delivered more than $20 million in 2016. Our 2016 financial success is the direct resultcost management and productivity benefits.
Repurchased approximately 3% of our abilityoutstanding common shares.
Please seeAppendix A for a detailed reconciliation of adjusted EBITDA, adjusted EPS and FCF to provide clientsthe most directly comparable financial measures calculated in accordance with data-driven solutions to improve underwriting decisions, manage risks, and capitalize on developing business opportunities.
We returned $195 million to stockholders and reduced our outstanding share count by 5 million shares, or 6%.
We accomplished key operational improvements in 2016. In addition to our solid financial results in 2016, we successfully achieved a number of key operational goals in 2016 that will enable future success, including:
BOARD OF DIRECTOR NOMINEES
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The following graphics and table providesprovide summary information about each director nominee. The Nominating and Corporate Governance Committee makes an annual recommendation to our Boardnominee as to whetherof the directors have the relevant skills and experience to oversee us and to stand for re-election, and the Nominating and Corporate Governance Committee and Board have recommended the nominees below. Based on the timingdate of Mr. Martell's selection as a director nominee, he was nominated directly by the Board.this proxy statement. All of the directors possess strength of character, inquiring and independent minds, mature judgment and a deep commitment to our success.
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Name | | | Age | | Director Since | | Principal Occupation | | AC | | ASPC | | CC | | NCGC | | |||||||||||||||||
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J. David Chatham | 66 | 1989 | President and chief executive officer of Chatham Holdings Corporation and the Chatham family of real estate businesses | ✓ | C | ✓ | |||||||||||||||||||||||||||
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Douglas C. Curling | 62 | 2012 | Principal and managing director of New Kent Capital LLC | ✓ | ✓ | ||||||||||||||||||||||||||||
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John C. Dorman | 66 | 2012 | Former chairman of Online Resources Corporation | ✓ | C | ||||||||||||||||||||||||||||
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Paul F. Folino (Chairman of the Board) | 72 | 2011 | Former executive chairman of the board of directors of Emulex Corporation | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||||||||||||
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Frank D. Martell (1) | 57 | 2017 | President and Chief Executive Officer of CoreLogic, Inc. | ||||||||||||||||||||||||||||||
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Thomas C. O'Brien | 63 | 2008 | Former chief executive officer and president of Insurance Auto Auctions Inc. | ✓ | C | ||||||||||||||||||||||||||||
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Jaynie Miller Studenmund | 62 | 2012 | Former chief operating officer of Overture Services, Inc. | ✓ | |||||||||||||||||||||||||||||
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David F. Walker | 63 | 2010 | Chairman of the board of directors of Chico's FAS, Inc. | C | ✓ | ||||||||||||||||||||||||||||
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Mary Lee Widener | 78 | 2006 | Former president and chief executive officer of Neighborhood Housing Services of America, Inc. | ✓ | |||||||||||||||||||||||||||||
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Currently, all of our directors, other than our CEO, are independent, and our Audit, Compensation and Nominating and Corporate Governance Committees consist exclusively of independent directors.
Our Board is composed of directors with a wide range of views, ethnicities, ages, genders and backgrounds, which reflect the diversity and complexity of the businesses and markets in which we operate. As the following chart illustrates, all of our non-management directors have served on other public company boards, 66% of our directors have been CEOs and all except one have held C-suite positions. In addition, 78% of our directors have deep industry experience in data analytics, financial services, or real estate, averaging 18 years of industry experience.Independent Gender Age Tenure
The following chart highlights that our Board composition also reflects a mix of tenure, which gives a balance of historical perspective and deep CoreLogic knowledge, with fresh perspectives and insights. Currently, the median director tenure is 5 years.
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The following table summarizes some of our key governance practices:
Committee Membership | ||||||||||||||||||||||
Director | Joined CLGX Board | Public Company CEO/CFO | Technology | Real Estate/ Insurance | Financial/ M&A | Private Equity/ Investing | AC | SC | CC | NC | ||||||||||||
Paul F. Folino Chairman of the Board | 2011 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
Frank D. Martell | 2017 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | |||||||||||||||
J. David Chatham | 2010 | * | ✓ | ✓ | ✓ | ✓ | Chair | |||||||||||||||
Douglas C. Curling | 2012 | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||
John C. Dorman | 2012 | ✓ | ✓ | ✓ | ✓ | Chair | ||||||||||||||||
Claudia Fan Munce | 2017 | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Thomas C. O’Brien | 2010 | * | ✓ | ✓ | ✓ | ✓ | Chair | |||||||||||||||
Vikrant Raina | 2017 | ✓ | ✓ | ✓ | ✓ | ✓ | ||||||||||||||||
Jaynie Miller Studenmund | 2012 | ✓ | ✓ | ✓ | ✓ | |||||||||||||||||
David F. Walker | 2010 | ✓ | ✓ | Chair | ✓ | |||||||||||||||||
Mary Lee Widener | 2010 | * | ✓ | ✓ |
* Denotes the year that director joined our board of directors (“Board”) pursuant to the separation from our predecessor, The First American Corporation (“FAC”), in 2010. Messrs. Chatham and O’Brien joined the predecessor FAC board in 1989 and 2008, respectively, and Ms. Widener joined the predecessor FAC board in 2006. |
AC Audit Committee
SC Strategic Planning and Acquisition Committee
CC Compensation Committee
NC Nominating & Corporate Governance Committee
Audit Committee Financial Expert
CORPORATE GOVERNANCE HIGHLIGHTS
We are committed to sound and effective corporate governance practices that serve the long-term interests of our stockholders. The Board diligently exercises its oversight responsibilities with respect to the Company’s business and affairs consistent with the highest principles of business ethics and corporate governance.
Board Independence | Ten of our eleven directors (91%) are independent. | |||||||
Independent Chairman | The offices of CEO and Chairman of the Board are separate, and our Chairman of the Board is an independent director. | |||||||
Annual Election of Directors | Our Amended and Restated Bylaws (“Bylaws”) mandate that directors be elected annually. | |||||||
Board Diversity | We have a diverse Board that includes the perspectives of three women, different professional and educational backgrounds, prior experience on other boards of directors, multiple political and social perspectives as well as directors of varying race and national origin. | |||||||
Board Refreshment | The Board regularly reviews the skills and experience of current and prospective Board members to | |||||||
Active Stockholder Engagement | We actively engage with our stockholders to discuss strategy, operational performance, financial results, corporate governance, compensation programs and related matters. | |||||||
Majority Voting Standard, with Resignation Policy | ||||||||
Our Bylaws mandate that directors be elected under a | Guidelines and the Board determines to accept the resignation. | |||||||
Director Overboarding Policy | Our Corporate Governance Guidelines provide that our directors may not serve on more than five public company boards (including our Board), and our Audit Committee members may not serve on more than three public company audit committees (including our audit committee) without prior Board approval. | |||||||
Annual Board and Committee Evaluations | The Board and each of its committees performs an annual evaluation under the direction of the Nominating and Corporate Governance Committee. | |||||||
Director Stock Ownership Guidelines | All directors receive annual equity grants and must meet equity ownership requirements during their service with us. | |||||||
Single Voting Class | We have only one class of voting securities. | |||||||
Stockholder Right to Call Special Meetings | ||||||||
Stockholders holding 10% of more of our outstanding stock have the right to call a special | ||||||||
Stockholder Right to Act by Written Consent | Stockholders may act by written consent on matters that could otherwise be acted upon at a meeting of stockholders. | |||||||
No Poison Pill | We do not have a |
STOCKHOLDER ENGAGEMENT PROGRAM
The Board and executive management are committed to engaging with our stockholders. Throughout the year, executive management proactively and consistently meets with current and prospective stockholders to discuss our strategic priorities, operational performance, and financial results. Also, through these discussions or separate outreach efforts, we seek to engage our top stockholders to solicit feedback on corporate governance, our compensation program, and related matters. In 2018, we conducted such outreach to our top stockholders representing a majority of our outstanding shares; these stockholders did not express concerns over our corporate governance practices or compensation program design.
EXECUTIVE COMPENSATION
We Pay for Performance. Our philosophy is designed to:
attract, motivate and retainhighly-qualified executive officers critical to ourlong-term success;
align the interests of our executive officers with the interests of our stockholders;
reward executive officers for achievingpre-defined rigorous financial goals and strategic objectives that may not yieldcurrent-period financial results but are expected to position us for enhanced results in future periods;
encourage strategiclong-term development and profitable investment in the business;
motivate and reward appropriaterisk-taking to grow the business; and
support pay practices with strong corporate governance and independent board oversight.
We aligned annual incentives to rigorous financial targets. The Company’s underlyingpay-for-performance approach is intended to reward management appropriately in light of below- and above-expected performance results through use of a weighted combination of three performance metrics—revenue, adjusted EBITDA, and FCF.
We assessed and rewarded our most significant strategic accomplishments. Our decisions on ICP awards took into consideration a number of key accomplishments in 2018 across our three strategic areas of focus—growth and innovation, operational excellence, and high performing organization.
We did not make across-the-board increases in base salaries for the 6th consecutive year.Notwithstanding strong results, consistent with our practices in recent years, our Compensation Committee did not increase NEO base salaries for market trends. The Compensation Committee adjusted Mr. Martell’s salary in recognition of his strong leadership and management of the business through a challenging US mortgage market environment. Our Compensation Committee also adjusted the salary for Mr. Balas in recognition of his continued strong leadership in his CFO role. The new salaries for Mr. Martell and Mr. Balas move each of them to more competitive pay levels.
What We Do |
The following chart demonstrates our Board meeting cadence:
✓ | Review total compensation relative to the median of a Peer Group ofindustry-aligned companies with similar executive talent needs |
✓ | Tie annual incentives to achievement of multiple rigorous financial and operating goals |
✓ | Useperformance-based vesting for 50% oflong-term compensation, tied to achievement of stretch EPS targets and total stockholder return (“TSR”) relative to our peers |
✓ | Cap performance-based vesting of performance shares at 150% of target if3-year TSR ranks below 55th percentile |
✓ | Require achievement of threshold adjusted net income level to be eligible to vest in RSU awards |
✓ | Maintain robust stock ownership guidelines and require covered executives to retain 50% of netafter-tax shares earned until the guidelines are met |
✓ | Maintain a claw-back policy for incentive payments |
✓ | Use an independent compensation consultant retained directly by our Compensation Committee, in its sole discretion, who performs no consulting or other services for management |
✓ | Require double-trigger for accelerated vesting upon termination of employment following a change in control |
✓ | Assess annually potential risks relating to the Company’s compensation policies and practices |
What We Don’t Do |
× | Incentivize participants to take excessive risks |
× | Award bonuses to our executive officers outside of our incentive compensation plan (“ICP”) |
× | Allow margining, derivative, or speculative transactions, such as hedges, pledges, and margin accounts, by executive officers |
× | Provide excessive perquisites |
× | Provide excise taxgross-ups upon termination with a change in control or taxgross-ups for other compensation |
× | Allow for repricing of stock options without stockholder approval |
× | Pay “single-trigger”change-of-control cash payments or have “single-trigger” equity vesting |
OUR BOARD RECOMMENDS EACH OF THE DIRECTOR | ||||||||||||
GeneralOur Amended and Restated Bylaws (the "Bylaws") require that directors be elected annually, and our Amended and Restated Certificate of Incorporation provides that the Board shall consist of such number of directors, as is determined from time to time, exclusively by resolution adopted by the affirmative vote of a majority of the directors then in office. Pursuant to resolutions adopted by the Board, our Board consists of nine directors.11 directors, all of whom, other than Frank D. Martell, our President and Chief Executive Officer, is “independent” pursuant to the applicable rules of the New York Stock Exchange (“NYSE”).
The Board, upon the recommendation of the Nominating and Corporate Governance Committee, has nominated the nine11 individuals set forth under "—Nominees"“Nominees” below for election at the Annual Meeting, to serve until the 20182020 annual meeting of stockholders and until the directors'their respective successors are duly elected and qualified.
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Under our Bylaws, in an uncontested election, each director nominee will be elected to the Board to serve until the next annual meeting and as soon thereafter as their successors areuntil his or her successor is duly elected and qualified, if the nominee receives a majority of votes cast (meaning the number of shares voted "for"“for” a nominee must exceed the number of shares voted "against"“against” such nominee) with respect to such director nominee'snominee’s election. Under our Corporate Governance Guidelines, each director nominee for director who was in office prior to the election (each, an "incumbent director"“incumbent director”) is required to submit, and has submitted, to the Board an irrevocable letter of resignation from the Board and all committees thereof, which will become effective if the director does not receive a majority of votes cast and the Board determines to accept the resignation. The Nominating and Corporate Governance Committee will make a recommendation to the Board about whether to accept or reject the resignation, or whether to take other action. The Board will act on the recommendation of the Nominating and Corporate Governance Committee within 90 days from the date the election results are certified and thereafter promptly disclose its decision in a Current Report onForm 8-K. Abstentions and broker non-votes are not considered votes cast for the foregoing purpose, and will not be counted in determining the outcome of the election of the director nominees.
The majority voting standard does not apply, however, in a contested election, where the number of nominees for director exceeds the number of directors to be elected. In a contested election, directors are instead elected by a plurality of shares represented in person or by proxy at any such meeting and entitled to vote on the election of directors (meaning that the number of director nominees who receive the highest number of shares voted "for"“for” their election are elected). The election of directors at the Annual Meeting will not be contestedcontested. Abstentions and each director nominee must receive a majority ofbrokernon-votes are not considered votes cast for the foregoing purpose and, therefore, will not be counted in orderdetermining the outcome of the election of the director nominees.
NomineesSet forth below is information concerning each person nominated and recommended to be elected as a director by our Board. The information set forth below is as of the date of this proxy statement. All of the nominees currently serve as our directors and were previously elected to the Board.present term of office at our 2018 annual meeting of stockholders.
All of the director nominees listed below have consented to being named in this proxy statement and to serve as directors if elected. If any nominee should become unable or unwilling for good cause to serve as a director, the proxies will be voted for such substitute nominee(s) as shall be designated by our Board or our Board may reduce the number of directors on our Board. Our Board currently has no knowledge that any of the nominees will be unable or unwilling to serve.
Set forth below is information concerning each person nominated and recommended to be elected by our Board. All of the nominees currently serve as our directors and, other than Mr. Martell, were previously elected to the present term of office by our stockholders.
See the section entitled "Security“Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters"Matters” for information pertaining to stock ownership of the nominees. There are no family relationships among any of the nominees or any of our executive officers. In addition, there were and are no arrangements or understandings between any director and any other person pursuant to which any director was or is to be selected as a director.
J. David Chatham | ||||||
| Director since 2010 | |||||
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Biographical InformationMr. Chatham has served as President and Chief Executive Officer of Chatham Holdings Corporation and the Chatham family of real estate businesses, specializing in real estate development, building, brokerage, asset management, mortgage lending, valuation/independent appraisal and other associated industries,
of First Advantage Corporation, | ||||||
solutions. During his career, Mr. Chatham received a gubernatorial appointment to both the Georgia Growth Strategies Commission and the Department of Community Affairs Board. In addition, he received the Free Enterprise Award from the Georgia Society of CPAs and serves as an Emeritus Trustee of the University of Georgia, as well as on numerous industry boards.
| Through his significant experience in the real estate arena, Mr. Chatham enhances our Board’s understanding of the mortgage, |
Douglas C. Curling Age 64 | Director since 2012 | |||||||
Board Committees |Nominating and Corporate Governance, | Public Company Board |Aaron’s, Inc. | |||||||
| Since 2010, Mr. Curling has been a principal and managing director of New Kent Capital LLC, afamily-run a principal at New Kent Consulting LLC, held various executive positions at ChoicePoint Inc., a provider of identification and credential verification services that was sold to Reed Elsevier,
including serving as President
from 2002 to 2008, as Chief Operating Officer
from 1999 to 2008 and as Executive Vice President, Chief Financial Officer and Treasurer from 1997 to 1999. Mr. Curling also served as a director of ChoicePoint Inc. from 2000 to 2008. Prior to joining ChoicePoint Inc., Mr. Curling served in various financial roles at Equifax, Inc., a credit bureau,
| |||||
| Mr. Curling brings his experience operating a publicly traded data business and deep knowledge of the insurance industry | |||||
John C. Dorman | ||||||
| Director since 2012 | |||||
Board Committees |Audit, Strategic Planning and Acquisition (Chair) | ||||||
Biographical InformationMr. Dorman is a private investor. He previously served as the Chairman from 2010 to March 2013, in 2010 and interim Chief Executive Officer in 2010 of Online Resources Corporation,
Prior to that, from 1998 to 2003, he served as Chief Executive Officer of Digital Insight Corporation,
as Senior Vice President of the Global Financial Services Division of Oracle Corporation from 1997 to 1998. From 1983 to 1997, Mr. Dorman was the Chief Executive Officer of Treasury Services Corporation,
lender serving consumers, and DeepDyve, Inc., an online rental service for scientific and scholarly
| ||||||
| Mr. | |||||
Paul F. Folino, | ||||||
Chairman of the Board
| Director since 2011 | |||||
Public Company Board |Lantronix, Inc. | ||||||
Biographical InformationMr. Folino was Executive Chairman of the Board of Emulex Corporation,
from 2002 to 2006, and as Chief Executive Officer
Lantronix, Inc., a provider of device networking and remote access products for remote IT management,
Commercial Bank of California, afull-serviceFDIC-insured
| ||||||
| Mr. Folino brings significant expertise regarding information technology and intellectual property. With his strong executive background, Mr. Folino provides valued input on a variety of leadership, strategy, corporate governance and organizational matters. His extensive experience as a director of | |||||
Frank D. Martell | ||||||
|
Director since 2017 | |||||
| ||||||
Biographical InformationMr. Martell has served as our President and Chief Executive Officer
since March 2017. Prior to that he served as our Chief Financial Officer from August 2011 to April 2016 and Chief Operating Officer
from July 2014 to March 2017. Before joining the Company, Mr. Martell served as the President and Chief
of the Western Institutional Review Board from 2010 to 2011, a leading provider of review, approval and oversight for clinical research studies involving human subjects,
before that as Chief Financial Officer of Information Services Group, Inc.
Advantage Solutions from 2009 to 2010. From 1996 to 2006, Mr. Martell held various leadership positions at ACNielsen Corporation, including President of Asia Pacific and Emerging Markets, Executive Vice President of the Marketing Information Group, and Chief
of Bank of the West, awholly-owned
| ||||||
Qualifications and Experience Mr. Martell has worked with us in |
Claudia Fan Munce Age 59 | Director since 2017 | ||||||
Board Committees |Compensation, Strategic Planning and Acquisition Public Company Board |Best Buy Co., Inc. | |||||||
Biographical InformationMs. Munce has served as a Venture Advisor at New Enterprise Associates, one of the world’s largest and most active venture capital firms, since January 2016. Previously, she served as a Managing Director of IBM Venture Capital Group and Vice President of Corporate Strategy at IBM Corp. from 2004 to 2015; Director of Strategy, IBM Venture Capital Group from 2003 to 2004; and Head of Technology Transfer and Licensing, IBM Research from 1994 to 2000. Ms. Munce serves on the Board of Best Buy Co., Inc., a retailer of electronic goods and services, and Bank of the West, awholly-owned subsidiary of BNP Paribas, as well as several industry boards of directors. Qualifications and ExperienceMs. Munce has been certified as a cybersecurity oversight director by the NACD and brings extensive experience in identifying emerging technologies and helping firms advance growth, and provides particular expertise in technology, innovation and strategy. This experience is particularly useful as a member of our Strategic Planning and Acquisition Committee. |
Thomas C. | ||||||
| Director since 2010 | |||||
| ||||||
Biographical InformationMr. O’Brien served as the Chief Executive Officer and President of Insurance Auto Auctions Inc., a provider of specialized services for automobile insurance
in June 2010. Mr. O’Brien is the Chairman of the Board of PartsTrader Markets Limited, an online tendering system based in New Zealand. He previously served on the Board of KAR Auction Services, Inc., a provider of vehicle auction services in North America,
| ||||||
| As a result of his experience as a |
Vikrant Raina Age 51 | Director since 2017 | ||||||
Board Committees |Nominating and Corporate Governance, Strategic Planning and Acquisition | |||||||
Biographical InformationMr. Raina has served as Managing Partner of BV Investment Partners, amiddle-market private equity firm focused on technology services and business services sectors, since 1999, where he currently manages the firm’s investment strategy, risk management and limited partnership relations activities and chairs the Investment, Operating and Valuation committees. Prior to that, he was an Executive Director in the communications, media and technology group at Goldman Sachs (Asia) and a project leader at The Boston Consulting Group. Through his role at BV Investment Partners, Mr. Raina serves on a variety of private company boards of directors. Qualifications and ExperienceMr. Raina brings extensive experience in identifying emerging technologies and helping firms advance growth, and contributes deep experience in technology services, business services, risk management and investment strategies. This experience is particularly useful as a member of our Strategic Planning and Acquisition Committee. |
Jaynie Miller Studenmund | ||||||
| Director since 2012 | |||||
Public Company Boards |ExlService Holdings, Inc., Western Asset Management | ||||||
Biographical InformationFrom January 2001 to January 2004, Ms. Studenmund was Chief Operating Officer of Overture Services, Inc., the creator of paid search advertising, which was acquired by Yahoo, Inc.
From 1999 to 2001, Ms. Studenmund was President and Chief Operating Officer of PayMyBills.com, a leading online bill management company. Prior to this, Ms. Studenmund held senior positions in the financial services industry, serving as Executive Vice President and head of retail banking at Great Western Bank and Home Savings Bank
at First Interstate Bank (now part of Wells Fargo) from 1984 to 1995. Ms. Studenmund has served as a director of ExlService Holdings, Inc., an operations management and analytics company, since September 2018; as a director for several public funds as well as other funds for Western Asset Management, a major fixed income fund, since 2004; and as a director of several private companies. Previously, Ms. Studenmund served as a director of Pinnacle Entertainment, Inc., an owner, operator and developer of casinos and related hospitality and entertainment facilities,
from 2012 to 2018, LifeLock, Inc., an identity theft protection company, from 2015 to 2017, Orbitz Worldwide, Inc., an online travel company,
| ||||||
| eHarmony, an online dating service and match provider. Ms. Studenmund has more than 35 years of executive management and operational experience across a diverse group of businesses and is also a seasoned director. Qualifications and ExperienceMs. Studenmund has spent much of her career in financial services, including serving as the senior executive for some of the largest consumer and | |||||
David | ||||||
| Director since 2010 | |||||
| ||||||
Biographical InformationMr. Walker served as the director of the Program of Accountancy at the University of South Florida in St. Petersburg
Distinction in Social Responsibility and Corporate Reporting at the University during that time. From 1986 to 2002, Mr. Walker was a partner with Arthur Andersen LLP,
of CommVault Systems, Inc., a data and information management
and Chico’s FAS, Inc., a women’s specialty retailer, where he is currently Chairman of the Board. Mr. Walker previously served as a director of Technology Research Corporation, Inc.
| ||||||
| Mr. Walker is a certified public accountant and certified fraud examiner. His extensive experience in public accounting and on corporate boards, including as | |||||
Mary Lee Widener | ||||||
| Director since 2010 | |||||
| ||||||
Biographical InformationMs. Widener is a community investment consultant. From 1974 until her retirement in 2009, Ms. Widener was President and Chief Executive Officer of Neighborhood Housing Services of America, Inc., a
| ||||||
| Given her extensive experience with organizations dedicated to revitalizing neighborhoods and increasing homeownership opportunities, Ms. Widener brings to our Board a valuable perspective on housing policy. She provides a strong understanding of the opportunities we have to improve home ownership in underserved communities and the challenges residents face in purchasing homes in those communities. Her executive experience is also particularly relevant background for her service as a member of our Audit Committee. | |||||
PROPOSAL 2 –ADVISORY VOTE TO APPROVE NAMED EXECUTIVE OFFICER COMPENSATION |
OUR BOARD RECOMMENDS THE APPROVAL, ON AN ADVISORY BASIS, OF THE OF OUR NAMED EXECUTIVE OFFICERS | ||||||||||||
We are providing our stockholders with the opportunity to cast anon-binding vote to approve, on an advisory basis, the compensation of our named executive officers, or NEOs, as disclosed pursuantNEOs. We urge stockholders to read the SEC's“Compensation Discussion and Analysis” section below, which describes in more detail how our executive compensation disclosure rulespolicies and set forth in this proxy statement (including inpractices are designed and operate to achieve our pay for performance compensation philosophy, as well as the “Summary Compensation Table” and other related compensation tables and narratives accompanying those tables as well as in the Compensation Discussion and Analysis section below).narratives.
As described more fully in the Compensation Discussion and Analysis section below, ourOur compensation program is heavily weighted towardperformance-based compensation that provides a direct link between rigorous goals for corporate performance and pay outcomes for our executive officers. Our annual incentive plan also ties pay outcomes to the achievement of key strategic objectives that we believe will drivelonger-term value to stockholders. We believe that our compensation program provides effective incentives for strong operating results by appropriately aligning pay and performance.
WeIn the advisory vote at our 2018 annual meeting, 98% of the votes cast by our stockholders supported our executive compensation policies and practices. While we have regularly received strong support for our executive pay for performance. Our philosophy is designed to:
Accordingly, the business;
| ||||||||
| ||||||||
|
Our compensation program rewarded strong financial results. Our 2016 financial performance exceeded targets and resulted in above-target payouts. Results for revenue, adjusted EBITDA, and free cash flow generated funding of the ICP (our annual cash bonus plan) at 146% of target.
Notwithstanding these strong results, management and the Compensation Committee reduced bonus payouts by 5%. Despite our strong financial results and above-target payout, management recommended and the Compensation Committee approved a reduction in ICP funding by 5% across the enterprise because acquisition-related assumptions used in setting target performance did not meet timing expectations. This reduced the calculated bonus funding to 139% of target. In addition, the payout for the strategic goals portion of the ICP, relative to the funded amount, was increased for one NEO, reduced for one NEO, and unchanged for three NEOs. Finally, results for adjusted EPS and our three-year total stockholder return
relative to our peer group generated a payout of 124.5% in our long-term performance share plan for 2014-2016.
No across the board increase in base salaries for 4th consecutive year. Notwithstanding strong operating results, consistent with our practices in recent years, the Compensation Committee did not increase NEO base salaries for 2016, except for Mr. Balas in consideration of his promotion to Chief Financial Officer.
Please see Appendix A for a detailed reconciliation of adjusted EBITDA, adjusted EPS and free cash flow to the most directly comparable GAAP financial measures.
As required by Section 14A of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), which was added by the Dodd-Frank Wall Street Reform and Consumer Protection Act and the related rules of the SEC, the Board of Directors requests your advisory vote to approve the following resolution at the Annual Meeting:
"“RESOLVED, that the compensation paid to the Company'sCompany’s named executive officers, as disclosed in this proxy statement pursuant to Item 402 ofRegulation S-K (which disclosure includes the Compensation Discussion and Analysis, the compensation tables and the narrative discussion that accompanies the compensation tables), is hereby APPROVED."”
This proposal to approve the compensation paid to our NEOs is advisory only and will not be binding upon us or the Board, of Directors, and will not be construed as overruling a decision by us or the Board of Directors or creating or implying any additional fiduciary duty for us or our Board of Directors.Board. The Board of Directors and the Compensation Committee value the opinions of our stockholders. The Compensation Committee will consider the outcome of the vote when considering future executive compensation arrangements.
Our current policy is to provide stockholders with an annual opportunity to approve the compensation of the NEOs. We have included a proposal in this proxy statement for an advisory vote on the frequency of future advisory votes on the compensation of our NEOs and are recommending that we continue with the current policy of holding such a vote every year. Accordingly, if stockholders approve EVERY ONE YEAR as the preferred frequency option in Proposal 3, we expect theThe next advisory vote on the compensation of our NEOs will occur at the 20182020 annual meeting of stockholders.
Voting StandardApproval, on an advisory basis, of the compensation of our NEOs requires the affirmative vote of the holders of a majority of shares of common stock present in person or represented by proxy and entitled to vote on the matter (meaning that of the shares represented at the meeting and entitled to vote on the proposal, a majority of them must be voted "for"“for” the proposal for it to be approved). Abstentions will have the same effect as a vote "against"“against” this proposal, andbroker-non votes will not be counted in determining the outcome of this proposal.
| ||||||||||||
We are providing our stockholders with the opportunity to cast a non-binding, advisory vote for their preference as to how frequently we should seek future advisory votes on the compensation of our NEOs as disclosed pursuant to the SEC's compensation disclosure rules. By voting on this proposal, stockholders may indicate whether they would prefer that we conduct future advisory votes on NEO compensation every one, two, or three years.
Consistent with the views our stockholders expressed in 2011, we have held our advisory vote on the compensation of our NEOs every year since then. The Board is recommending that the annual advisory vote be continued so that stockholders may continue to provide timely, direct input on our executive compensation program.
This vote is advisory, which means that the vote will not be binding upon us or the Board of Directors, or the Compensation Committee, and will not be construed as overruling a decision by us or the Board of Directors or creating or implying any additional fiduciary duty for us or our Board of Directors. The Board of Directors and the Compensation Committee value the opinions of our stockholders. The Compensation Committee will consider the outcome of the vote in considering the frequency with which the advisory vote on compensation of our NEOs will be held in the future.
The Board recommends that you vote for the advisory vote on executive compensation to be held every one year.
Under our Bylaws, the affirmative vote of a majority of the shares of our common stock represented in person or by proxy at the Annual Meeting and entitled to vote on the proposal is required to approve, on a non-binding, advisory basis, a frequency option for future advisory votes on executive compensation (meaning that of the shares represented at the meeting and entitled to vote on the proposal, a majority of them must be voted in favor of one of the frequency options for it to be approved). However, if no frequency option receives the affirmative vote of at least a majority of the shares present in person or represented by proxy and entitled to vote on the proposal at the Annual Meeting, then the Board of Directors will consider the option receiving the highest number of votes as the preferred option of the stockholders. Abstentions have the effect of votes "AGAINST" each of the frequency options in determining whether any of the frequency options has been approved by a majority of the shares of our common stock represented at the Annual Meeting and entitled to vote on the proposal, but will not be counted in determining the frequency option receiving the highest number of votes. Broker non-votes will not be counted in determining the outcome of this proposal.
PROPOSAL |
REGISTERED PUBLIC ACCOUNTING FIRM |
OUR BOARD | ||||||||||||
THE RATIFICATION OF THE SELECTION OF OUR INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM |
The Audit Committee of the Board of Directors (the "Audit Committee") is responsible for the appointment, compensation, retention, and oversight of the independent registered public accounting firm retained to audit the Company'sCompany’s financial statements. The Audit Committee conducts an annual evaluation of the independent registered public accounting firm'sfirm’s qualifications, performance, and independence. The Audit Committee exercises sole authority to approve all audit engagement fees. In addition to ensuring the regular rotation of the lead audit engagement partner at least every five years as required by law, the Audit Committee is involved in the selection of, and reviews and evaluates, the lead audit engagement partner.
The Audit Committee has selected PricewaterhouseCoopers LLP ("PwC"(“PwC”) to serve as our independent registered public accounting firm for the fiscal year ending December 31, 2017.2019. PwC has audited the historical consolidated financial statements of our Company or itssince June 2010, and of our predecessor, The First American Corporation,FAC, for all annual periods since 1954. To help ensure continuing auditor independence, the Audit Committee periodically considers whether there should be a regular rotation of the independent registered public accounting firm.
Representatives of PwC will be present at the Annual Meeting, will have an opportunity to make a statement if they wish and will be available to respond to appropriate questions.
Selection of our independent registered public accounting firm is not required to be submitted for stockholder approval by our Bylaws, but the Audit Committee is seeking ratification of its selection of PwC from our stockholders as a matter of good corporate governance. If the stockholders do not ratify this selection, the Audit Committee willmay, in its discretion, reconsider its selection of PwC and will either continue to retain PwC or appoint a new independent registered public accounting firm. Even if the selection is ratified, the Audit Committee may, in its discretion, appoint a different independent registered public accounting firm at any time during the year if it determines that such a change would be in our and our stockholders'stockholders’ best interests.
Voting StandardRatification of the selection of PwC as the Company'sCompany’s independent registered public accounting firm for the fiscal year ending December 31, 20172019 requires the affirmative vote of the holders of a majority of shares of common stock present in person or represented by proxy and entitled to vote on the matter (meaning that
of the shares represented at the meeting and entitled to vote on the proposal, a majority of them must be voted "for"“for” the proposal for it to be approved). Abstentions will have the same effect as a vote "against"“against” this proposal. We do not expect any brokernon-votes on this matter.
Report of the Audit Committee
|
The following report of the Audit Committee is not soliciting material, is not deemed filed with the U.S. Securities and Exchange Commission (the “SEC”) and is not incorporated by reference in any filing of the Company under the Securities Act of 1933, as amended (the "Securities Act"“Securities Act”), or the Securities Exchange Act of 1934, as amended (the “Exchange Act”), whether made before or after the date of this proxy statement and irrespective of any general incorporation language in such filing.
The Audit Committee consists of fivenon-management directors: Messrs. Walker, Chatham, Dorman and Folino and Ms. Widener. All of the members meet the independence criteria and financial literacy requirements of the NYSE and additional, heightened independence criteria applicable to members of the Audit Committee under SEC and NYSE rules. The Audit Committee has certain duties and powers as described in its written charter adopted by the Board of Directors.Board. A copy of the charter can be found under "Investors-Leadership & Governance-Highlights" on the Company'sInvestors section of our website under Leadership & Governance—Highlights at www.corelogic.com.www.corelogic.com.
The Audit Committee reviews the Company'sCompany’s accounting policies and financial reporting and disclosure practices, system of internal controls, internal audit process and the process for monitoring compliance with laws, regulations and corporate policies on behalf of the Board of Directors.Board. The Company'sCompany’s management is responsible for establishing and maintaining adequate internal controlscontrol over financial reporting, for preparing the financial statements and for the public reporting process. The Audit Committee has reviewed the Company'sCompany’s audited consolidated financial statements and discussed them with management, although the Audit Committee members are not the auditors or certifiers of the Company'sCompany’s financial statements.
PwC, the Company'sCompany’s independent registered public accounting firm for 2016,2018, is responsible for expressing opinions on the conformity of the Company'sCompany’s audited financial statements with generally accepted accounting principles and on the Company'sCompany’s internal control over financial reporting. The Audit Committee has discussed with PwC the matters required to be discussed by applicable auditing standards.standards, including Auditing Standard 1301,Communications with Audit Committees. The Audit Committee has received the written disclosures and the letter from PwC required by applicable requirements of the Public Company Accounting Oversight Board regarding the independent registered public accounting firm'sfirm’s communications with the Audit Committee, and has discussed with PwC its independence.
Based on the reviews and discussions noted above, the Audit Committee recommended to the Board that the audited consolidated financial statements be included in the Company'sCompany’s Annual Report onForm 10-K for the fiscal year ended December 31, 20162018 and be filed with the U.S. Securities and Exchange Commission.SEC.
Audit Committee
David F. Walker (Chairman)
J. David Chatham
John C. Dorman
Paul F. Folino
Mary Lee Widener
Independent Auditor Information
Principal Accounting Fees and Services |
|
The Audit Committee oversees the audit andnon-audit services provided by PwC and receives periodic reports on the fees paid. The aggregate fees billed for each of the last two fiscal years for professional services rendered by PwC in the four categories of service set forth in the table below are as follows:
| | | | | | | | | | | | | | |
Aggregate fees billed in year | | | 2016 | | | 2015 | | |||||||
| | | | | | | | | | | | | | |
Audit Fees | $ | 2,861,040 | $ | 2,977,369 | ||||||||||
| | | | | | | | | | | | | | |
Audit-Related Fees(1) | 231,600 | 596,000 | ||||||||||||
| | | | | | | | | | | | | | |
Tax Fees(2) | 41,057 | 48,305 | ||||||||||||
| | | | | | | | | | | | | | |
All Other Fees(3) | 16,228 | 5,638 | ||||||||||||
| | | | | | | | | | | | | | |
Total Fees | $ | 3,149,925 | $ | 3,627,312 | ||||||||||
| | | | | | | | | | | | | | |
Aggregate fees billed in year | 2018 | 2017 | ||||||
Audit Fees | $ | 3,084,333 |
| $ | 3,088,466 |
| ||
Audit-Related Fees (1) |
| 1,430,496 |
|
| 1,326,016 |
| ||
Tax Fees (2) |
| 70,387 |
|
| 118,162 |
| ||
All Other Fees (3) |
| 15,901 |
|
| 13,889 |
| ||
Total Fees | $ | 4,601,117 |
| $ | 4,546,534 |
|
(1) |
|
(2) | Fees incurred for tax advice, compliance and planning over transfer pricing and acquisition of certain businesses. |
(3) | Fees primarily incurred for services related to the compilation of statutory financial statements. |
Policy on Audit CommitteePre-Approval of Audit andNon-Audit Services of Independent Auditor
The Audit Committee retained PwC (along with other accounting firms) to providenon-audit services in 2016.2018. We understand the need for PwC to maintain objectivity and independence as the auditor of our financial statements and our internal control over financial reporting. Accordingly, the Audit Committee has established the following policies and processes related to audit andnon-audit services.
The Audit Committee'sCommittee’s policy is topre-approve all engagements of our independent registered public accounting firm for audit andnon-audit services. The Audit Committee's Committee’spre-approval policy identifies specific services and assignspre-approved spending thresholds for each group ofnon-audit services. This policy works in conjunction with our independent registered public accounting firm'sfirm’s annual audit services fee schedule, which is also approved by the Audit Committee. Any services notpre-approved or not covered by the policy or the audit services fee schedule are submitted to the Audit Committee'sCommittee’s chairman, as the Audit Committee'sCommittee’s designee, for review and approval and are subsequently ratified by the Audit Committee at its next meeting, as appropriate.
All services provided by PwC during the fiscal years ended December 31, 20162018 and 20152017 werepre-approved by the Audit Committee or its designee.
The Audit Committee has concluded that PwC'sPwC’s provision of audit andnon-audit services to the Company is compatible with PwC'sPwC’s independence.
SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT AND RELATED STOCKHOLDER MATTERS |
The following table sets forth information regarding the ownership of our common stock as of December 31, 20162018 by the persons or groups of stockholders who are known to us to be the beneficial owners of 5% or more of our shares of common stock as of March 6, 2017.4, 2019 (using the number of shares outstanding on this date for calculating the percentage). The information regarding beneficial owners of 5% or more of our shares of common stock is based solely on public filings made by such owners with the SEC.
| | | | | | | | | | | | |
| Name of Beneficial Owner | | Amount and Nature of Beneficial Ownership | | Percent of Class | | ||||||
| | | | | | | | | | | | |
| T. Rowe Price Associates, Inc.(1) | 10,308,213 | 11.0% | |||||||||
| | | | | | | | | | | | |
| The Vanguard Group(2) | 6,911,533 | 8.0% | |||||||||
| | | | | | | | | | | | |
| BlackRock, Inc.(3) | 6,767,893 | 7.8% | |||||||||
| | | | | | | | | | | | |
Name of Beneficial Owner
|
Amount and
| Percent of
| ||||||
T. Rowe Price Associates, Inc. (1)
|
|
13,841,628
|
|
|
17.3
|
%
| ||
The Vanguard Group (2)
|
|
7,641,666
|
|
|
9.5
|
%
| ||
BlackRock, Inc. (3)
|
|
7,208,307
|
|
|
9.0
|
%
| ||
Harris Associates L.P. and affiliates (4)
|
|
4,029,333
|
|
|
5.0
|
%
|
(1) |
|
(2) | According to a Schedule 13G/A filed February 11, 2019, as of December 31, 2018, these securities are owned by The Vanguard Group and twowholly-owned subsidiaries, Vanguard Fiduciary Trust Company (“VFTC”) and Vanguard Investments Australia, Ltd. (“VIA”), as investment managers of collective trust accounts and Australian investment offerings, respectively. The Schedule 13G/A reports that VFTC is the beneficial owner of 34,065 shares and VIA is the beneficial owner of 20,661 shares. The Vanguard Group is a registered investment adviser and has sole voting power with respect to 44,104 shares, shared voting power with respect to 10,622 shares, sole dispositive power with respect to 7,596,979 shares and shared dispositive power with respect to 44,687 shares. The address of the principal business office of the reporting entity is 100 Vanguard Boulevard, Malvern, PA 19355. |
(3) | According to a Schedule 13G/A filed February 4, 2019, as of December 31, 2018, BlackRock, Inc. is a parent holding company with sole voting power with respect to 6,892,909 shares and sole dispositive power with respect to 7,208,307 shares, reporting on behalf of certain related subsidiaries. The address of the principal business office of the reporting entity is 55 East 52nd Street, New York, New York 10055. |
(4) | According to a Schedule 13G filed February 14, 2019, as of December 31, 2018, Harris Associates L.P., and Harris Associates Inc. each have sole voting power with respect to 3,277,333 shares and sole dispositive power with respect to 4,029,333 shares. The Schedule 13G provides that by reason of advisory and other relationships giving it the power to vote the shares, Harris Associates L.P. may be deemed to be the beneficial owner of the shares reported therein. Harris Associates Inc. is the general partner of Harris Associates L.P. The address of the principal business office of the reporting entities is 111 S. Wacker Drive, Suite 4600, Chicago, Illinois 60606. |
SECURITY OWNERSHIP OF MANAGEMENT
The following table sets forth the total number of shares of our common stock beneficially owned and the percentage of the shares so owned as of March 6, 20174, 2019 by:
each director;
• | each executive officer named in the “Summary Compensation Table”; and |
all directors and current executive officers as a group.
Unless otherwise indicated in the notes following the table, the persons listed in the table below are the beneficial owners of the listed shares with sole voting and investment power (or, where applicable, shared power with such individual'sindividual’s spouse and subject to community property laws) over the shares listed. Shares vesting or subject to rights exercisable within 60 days after March 6, 20174, 2019 are treated as outstanding in determining the amount and percentage beneficially owned by a person or entity.
Stockholders
|
Number of
| Percent if greater than 1%
| ||||||||
Directors
| ||||||||||
J. David Chatham
|
|
43,063
|
|
|
—
|
| ||||
Douglas C. Curling
|
|
46,913
|
|
|
—
|
| ||||
John C. Dorman
|
|
13,190
|
|
|
—
|
| ||||
Paul F. Folino
|
|
11,002
|
|
|
—
|
| ||||
Frank D. Martell
|
|
410,869
|
|
|
—
|
| ||||
Claudia Fan Munce
|
|
4,945
|
|
|
—
|
| ||||
Thomas C. O’Brien
|
|
28,058
|
|
|
—
|
| ||||
Vikrant Raina
|
|
4,945
|
|
|
—
|
| ||||
Jaynie Miller Studenmund
|
|
27,014
|
|
|
—
|
| ||||
David F. Walker
|
|
43,280
|
|
|
—
|
| ||||
Mary Lee Widener
|
|
8,068
|
|
|
—
|
| ||||
Current NEOs who are not directors
| ||||||||||
James L. Balas
|
|
68,547
|
|
|
—
|
| ||||
Barry M. Sando
|
|
198,215
|
|
|
—
|
| ||||
Arnold A. Pinkston
|
|
1,936
|
|
|
—
|
| ||||
All directors and current executive officers as a group (14 persons)
|
|
910,045
|
|
|
1.1
|
%
|
| | | | | | | ||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|
| | | | | | | | | | | | |
| Stockholders | | Number of shares of Common Stock | | Percent if greater than 1% | | ||||||
| | | | | | | | | | | | |
| Directors | |||||||||||
| | | | | | | | | | | | |
| J. David Chatham | 40,443 | — | |||||||||
| | | | | | | | | | | | |
| Douglas C. Curling | 40,533 | — | |||||||||
| | | | | | | | | | | | |
| John C. Dorman | 15,533 | — | |||||||||
| | | | | | | | | | | | |
| Paul F. Folino | 11,022 | — | |||||||||
| | | | | | | | | | | | |
| Frank D. Martell | ��410,471 | — | |||||||||
| | | | | | | | | | | | |
| Thomas C. O'Brien | 21,678 | — | |||||||||
| | | | | | | | | | | | |
| Jaynie Miller Studenmund | 20,634 | — | |||||||||
| | | | | | | | | | | | |
| David F. Walker | 38,115 | — | |||||||||
| | | | | | | | | | | | |
| Mary Lee Widener | 8,664 | — | |||||||||
| | | | | | | | | | | | |
| NEOs who are not directors (1) | |||||||||||
| | | | | | | | | | | | |
| James Balas | 50,162 | — | |||||||||
| | | | | | | | | | | | |
| Barry M. Sando | 214,507 | — | |||||||||
| | | | | | | | | | | | |
| Stergios Theologides | 132,895 | — | |||||||||
| | | | | | | | | | | | |
| All directors and current executive officers as a group (12 persons) | 1,004,657 | 1.2% | |||||||||
| | | | | | | | | | | | |
The shares set forth in the table above include shares that the following directors and NEOs, as well as directors and current executive officers as a group, have the right to acquire within 60 days of March 6, 20174, 2019 pursuant to the vesting of restricted stock units (“RSUs”) or the exercise of stock options in the amounts set forth below:
|
| Number of | Percent | ||||||||||||
J. David Chatham
| | 3,190 | |||||||||||||
|
| — | |||||||||||||
Douglas C. Curling | |||||||||||||||
| | 3,190 | |||||||||||||
| | — | |||||||||||||
John C. Dorman
| | 3,190 | |||||||||||||
| | — | |||||||||||||
Paul F. Folino
| | 3,190 | |||||||||||||
| | — | |||||||||||||
Frank D. Martell
| | 242,763 | |||||||||||||
| | — | |||||||||||||
Claudia Fan Munce
| | 3,190 | |||||||||||||
| | — | |||||||||||||
Thomas C. O’Brien
|
| 3,190 | — | ||||||||||||
Vikrant Raina | 3,190 | — | |||||||||||||
Jaynie Miller Studenmund | 3,190 | — | |||||||||||||
David F. Walker | 3,190 | — | |||||||||||||
Mary Lee Widener | 3,190 | — | |||||||||||||
James L. Balas | 27,937 | — | |||||||||||||
Barry M. Sando | 75,711 | — | |||||||||||||
Arnold A. Pinkston | 0 | — | |||||||||||||
All directors and current executive officers as a group | 378,311 | — | |||||||||||||
|
Securities Authorized for Issuance under Equity Compensation Plans
We currently maintain two equity compensation plans: the CoreLogic, Inc. 2018 Performance Incentive Plan (the “2018 Plan”) and the 2012 Employee Stock Purchase Plan (“2012 ESPP”). We currently have outstanding awards under The CoreLogic, Inc. Amended and Restated 2011 Performance Incentive Plan, as amended ("(“2011 Plan"Plan”) and the 2012 Employee Stock Purchase Plan ("2012 ESPP"). The 2006 Incentive Compensation Plan (the "2006 Plan"“2006 Plan”) was terminated and replaced by; however, we are no longer authorized to grant new awards under these plans. Each of the 2011 Plan. We currently have outstanding options under the 20062018 Plan, and the 2011 Plan. Each of the 2011 Plan, the 2012 ESPP and the 2006 Plan was approved by our stockholders.
The following table sets forth, for each of our equity compensation plans, the number of shares of common stock subject to outstanding awards, theweighted-average exercise price of outstanding options, and the number of shares remaining available for future award grants as of December 31, 2016.2018.
Plan category
| Number of
| Weighted-average
|
Number of securities
| |||||||||
Equity compensation plans approved by stockholders
|
| 3,204,731
| (1)
| $
| 20.17
| (2)
|
| 11,614,373
| (3)
|
(1) | ||||||||||||||||
Of these shares, 471,520 were subject to options still outstanding under the 2011 Plan, |
(2) | This | exercise price does not reflect the shares that will be issued upon the payment of outstanding restricted stock units and |
(3) | Represents 10,656,593 shares available for | |||||||||||||||
|
CORPORATE GOVERNANCE AND BOARD MATTERS
Committees of the Board; Committee Charters
There are currently four standing committees of the Board: the Audit Committee, the Compensation Committee, the Nominating and Corporate Governance Committee and the AcquisitionStrategic Planning and Strategic PlanningAcquisition Committee. In addition to the four standing committees, the Board may approve, and has from time to time approved, the creation of special committees or subcommittees to act on behalf of the Board.
Each of the standing committees operates under a written charter adopted by the Board. The charters of the Audit Committee, Compensation Committee and Nominating and Corporate Governance Committee are available on the Investors section of our web sitewebsite under Leadership & Governance—Highlights atwww.corelogic.com. Each committee reviews and reassesses the adequacy of its charter annually, conducts annual evaluations of its performance with respect to its duties and responsibilities as laid out in the charter, and reports regularly to the Board with respect to the committee'scommittee’s activities.
Audit Committee | ||
Members | Committee Functions | |
David F. Walker*,Chairman J. David Chatham John C. Dorman* Paul F. Folino Mary Lee Widener Meetings in 2018: six * Our Board has determined that each of Messrs. Walker and Dorman is an “audit committee financial expert” within the meaning of the SEC’s rules and regulations and that each member of our Audit Committee is “independent” under applicable SEC rules and the listing standards of the NYSE and is “financially literate” under the listing standards of the NYSE. | • overseeing the integrity of our financial reporting processes in consultation with the independent auditor, management and our internal audit function; • reviewing internal auditing procedures and results; • appointing, compensating, retaining, evaluating and overseeing our independent registered public accounting firm; • engaging with our compliance and risk management executives to review the state of enterprise risk management and compliance programs with a view to understanding the steps management has taken to monitor and control our major risk exposures; • reviewing with internal counsel the state of litigation, claims and regulatory matters and overseeing our compliance with legal and regulatory matters; • discussing with management, internal audit and external advisors the state of internal controls and our practices with respect to financial disclosure; • directing and supervising investigations into matters within the scope of its duties; and • reviewing with the independent registered public accounting firm the plan and results of its audit and determining the nature of other services to be performed by, and fees to be paid to, such firm. The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters, and for the submission by our employees or third parties of concerns regarding questionable accounting or auditing matters or other ethics and compliance-related matters. Our24-hour, toll-free hotline is available for the submission of such concerns or complaints at1-888-632-5395 or concerns or complaints may also be reported online athttps://corelogic.alertline.com. To the extent required by applicable law, individuals wishing to remain anonymous or to otherwise express their concerns or complaints confidentially are permitted to do so. |
We have a standing Audit Committee of the Board of Directors. The current members of the Audit Committee are Messrs. Walker (Chairman), Chatham, Dorman, Folino and Ms. Widener. During 2016, our Audit Committee met six times.
Our Board has determined that each of Messrs. Walker and Dorman is an "audit committee financial expert" within the meaning of the SEC's rules and regulations and that each member of our Audit Committee is "independent" under applicable SEC rules and the listing standards of the NYSE and is "financially literate" under the listing standards of the NYSE.
The functions performed by the Audit Committee include, but are not limited to:
The Audit Committee has established procedures to receive, retain and address complaints regarding accounting, internal accounting controls or auditing matters, and for the submission by our employees or third parties of concerns regarding questionable accounting or auditing matters or other ethics and compliance-related matters. Our 24-hour, toll-free hotline is available for the submission of such concerns or complaints at 1-888-632-5395 or concerns or complaints may also be reported online athttps://corelogic.alertline.com. To the extent required by applicable law, individuals wishing to remain anonymous or to otherwise express their concerns or complaints confidentially are permitted to do so.
Compensation Committee | ||
Members | Committee Functions | |
J. David Chatham,Chairman Paul F. Folino Claudia Fan Munce Thomas C. O’Brien Jaynie Studenmund Meetings in 2018: six | • establishing and reviewing our compensation philosophy; • overseeing the design and reviewing the operation of all executive compensation and employee benefit plans and programs; • reviewing and approving corporate goals and objectives relevant to the compensation of our chief executive officer, including annual performance objectives, and evaluating our chief executive officer in light of those objectives; • reviewing and approving the compensation of our executive officers; • reviewing and approving awards of equity under the Company’sequity-based plans; • responsibility for review and approval of employment agreements with our chief executive officer and other executive officers; and • exercising oversight of the Company’s disclosures regarding executive compensation, including reviewing the Compensation Discussion and Analysis contained in our proxy statement and preparing the Compensation Committee Report for inclusion in our proxy statement. The Compensation Committee also has key oversight responsibilities in the following areas, all of which are described in more detail elsewhere in this proxy statement: • assessing risk in relation to the Company’s compensation policies and practices; • reviewing and making recommendations to the Board concerning development and succession planning; and • reviewing and recommending to the Board the form and level ofnon-management director compensation. |
The current members of the Compensation Committee are Messrs. Chatham (Chairman), Folino, O'Brien and Ms. Studenmund. During 2016, the Compensation Committee met nine times.
In making its independence determination for each member of the Compensation Committee as described above, our Board considered whether the director has a relationship with us that is material to the director's ability to be independent from management in connection with the duties of a compensation committee member. In addition, our Board has determined that each of Messrs. Chatham, Folino, O'Brien and Ms. Studenmund is a "non-employee director" for purposes of Rule 16b-3 under the Exchange Act and satisfies the requirements of an "outside director" for purposes of Section 162(m) of the Internal Revenue Code (the "Code").
The functions of the Compensation Committee include, but are not limited to:
The Compensation Committee has the authority to delegate responsibilities to a subcommittee of one or more members of the Compensation Committee, who must regularly report on their activities to the Compensation Committee as a whole. In March 2015, the Board created a talent development
subcommittee of the Compensation Committee to aid the Compensation Committee in fulfilling its responsibility for oversight of development and succession planning for key executives. Ms. Studenmund is the sole committee member. For 2016, Advisors.Pay Governance LLC ("(“Pay Governance"Governance”) was retained as the Compensation Committee'sCommittee’s independent compensation consultant. The Compensation Committee also seeks input from our Chief Executive Officer, Chief Financial Officer, Senior Vice President,Chief Human Resources Officer and General CounselChief Legal Officer when making decisions regarding compensation matters. During 2016,2018, Pay Governance attended nineall six Compensation Committee meetings.
During 2016, Pay Governance provided to the Compensation Committee, among other things, guidance as to:
Pay Governance did not perform any services for usthe Company and the Compensation Committee does not believe that the services performed by Pay Governance raised any conflict of interest. The Compensation Committee regularly reviews the services provided by its independent compensation consultant.
In addition, the Company
Committee Independence.Our Board has engaged Mercer LLC ("Mercer") to provide certain compensation-related services on behalfdetermined that each member of our Compensation Committee is “independent” under applicable listing standards of the Company and management.NYSE. In 2016, Mercer assisted us with the selection of a peer group of companies, advised on industry best practices and emerging trends in executive compensation, prepared pay survey data, made recommendations on the structuring of compensation programs and advised on our public disclosures regarding executive compensation. In connection withmaking its engagement, Mercer did not attend any meetingsindependence determination for each member of the Compensation Committee, our Board considered whether the director has a relationship with us that is material to the director’s ability to be independent from management in 2016. Mercer performed no servicesconnection with the duties of a compensation committee member. In addition, our Board has determined that each of Messrs. Chatham, Folino, O’Brien and Ms. Studenmund is a“non-employee director” for purposes ofRule 16b-3 under the Compensation Committee.Exchange Act and satisfies the requirements of an “outside director” for purposes of Section 162(m) of the Code.
Additional information concerning the executive compensation policies and objectives established by the Compensation Committee, the Compensation Committee's processes and procedures for consideration and determination of executive compensation, and the role of executive officers and our and the Compensation Committee's compensation consultants in determining executive compensation is included in the "Compensation Discussion and Analysis" section below.
Equity Awards Committee.The Equity Awards Committee was created by the Board in October 20152016 and has been delegated limited authority to grantapprove and establish the terms of equity awards granted to eligible participants under the 2011 Plan in accordance with applicable policies and as evidenced by and subject to the terms of applicable award agreements.our equity incentive plans. Mr. ChathamMartell is currently the sole committee member.
Nominating and Corporate Governance Committee | ||
Members | Committee Functions | |
Thomas C. O’Brien,Chairman Douglas C. Curling Paul F. Folino Vikrant Raina Jaynie Studenmund Meetings in 2018: three | • identifying individuals qualified to become directors on our Board; • recommending to the Board candidates for election at annual meetings by the stockholders and candidates to fill vacancies andnewly-created directorships; • overseeing the evaluation of the Board; and • developing, recommending to the Board and periodically reviewing the corporate governance principles and policies applicable to us. |
Board Diversity.We do not have a formal policy for the consideration of diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and, as indicated above, considers diversity as a factor when identifying and evaluating candidates for membership on our Board. The current membersNominating and Corporate Governance Committee utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards of directors (both public and private), political and social perspectives as well as race, gender and national origin. Utilizing these factors, and the factors described below under “Evaluation of Director Nominees”, the Nominating and Corporate Governance Committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of the Nominating and Corporate Governance Committee are Messrs. O'Brien (Chairman), Chatham, Curling and Folino. The Nominating and Corporate Governance Committee held four meetings during 2016.
The Nominating and Corporate Governance Committee is responsible for, among other items:
Stockholder Recommendations for election at annual meetings by the stockholders and candidates to fill vacancies and newly-created directorships;
Director Nominees.The Nominating and Corporate Governance Committee has adopted procedures by which certain of our stockholders may recommend director nominees to the Board. In particular, the Nominating and Corporate Governance Committee has established a policy whereby it will accept and consider, in its discretion, director recommendations from any stockholder holding in excess of 5% of our outstanding common stock. Such recommendations must include the name and credentials of the recommended nominee and should be submitted to our Secretary at our address included in this proxy statement. The Nominating and Corporate Governance Committee will evaluate director candidates recommended by stockholders for election to our Board in the same manner and using the same criteria as used for any other director candidate (as described below). If the Nominating and Corporate Governance Committee determines that astockholder-recommended candidate is suitable for membership on our Board, it will include the candidate in the pool of candidates to be considered for nomination upon the occurrence of the next vacancy on our Board or in connection with the next annual meeting of stockholders.
Evaluation of Director Nominees.While the Nominating and Corporate Governance Committee has no specific minimum qualifications in evaluating a director candidate, it takes into account all factors it considers appropriate in identifying and evaluating candidates for membership on our Board, including some or all of the following: strength of character, an inquiring and independent mind, practical wisdom, mature judgment, career specialization, relevant industry experience, relevant technical skills, reputation in the community, diversity and the extent to which the candidate would fill a present need on the Board. The Nominating and Corporate Governance Committee makes recommendations to the full Board as to whether or not incumbent directors should stand forre-election. However, if we are legally required by contract or otherwise to provide third parties with the ability to nominate directors, the Nominating and Corporate Governance Committee may adjust its evaluation process for the designated candidates to reflect our contractual obligations with respect to their nomination. The Nominating and Corporate Governance Committee conducts all necessary and appropriate inquiries into the background and qualifications of possible candidates and may engage a search firm to assist in identifying potential candidates for nomination.
We do not have a formal policy for the consideration of diversity in identifying nominees for director. However, the Nominating and Corporate Governance Committee recognizes the benefits associated with a diverse board and, as indicated above, considers diversity as a factor when identifying and evaluating candidates for membership on our Board. The Nominating and Corporate Governance Committee utilizes a broad conception of diversity, including professional and educational background, prior experience on other boards of directors (both public and private), political and social perspectives as well as race, gender and national origin. Utilizing these factors, and the factors described above, the Nominating and Corporate Governance Committee makes recommendations, as it deems appropriate, regarding the composition and size of the Board. The priorities and emphasis of the Nominating and Corporate Governance Committee and of the Board may change from time to time to take into account changes in business and other trends and the portfolio of skills and experience of current and prospective Board members.
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The current members of the Acquisition and Strategic Planning Committee are Messrs. Dorman (Chairman), Curling, Folino and Walker. The Acquisition and Strategic Planning Committee has the authority to (i) oversee and approve certain investment, merger, acquisition and divestiture transactions proposed by
our management which are below a certain size and which do not involve our equity and (ii) provide counsel to management's development of longer-term business and product strategies. The Acquisition and Strategic Planning Committee held one meeting during 2016. In March 2015, the Board created an insurance strategy subcommittee focused on overseeing our strategic plans in the insurance vertical. Mr. Curling is the sole member of this subcommittee and provides reports to the Acquisition and Strategic Planning Committee or the full Board as appropriate.
Members | Committee Functions | |
John C. Dorman, Douglas C. Curling Paul F. Folino Frank D. Martell Claudia Fan Munce Vikrant Raina David F. Walker Meetings in 2018: three | • formulating, monitoring and revising a strategic plan for the Company, as well as product and business strategies; • considering market and industry trends that could impact the Company’s strategic plans; • ensuring the Board is presented with all necessary and desirable information and advice to assess, review, challenge and approve the Company’s strategic plan; • reviewing acquisition strategies and acquisition candidates with the Company’s management; • recommending acquisition strategies and candidates to the Board, as appropriate; and • overseeing and approving certain investment, merger, acquisition and divestiture transactions proposed by the Company’s management within the size and other limitations delegated by the Board from time to time. |
Independence of Directors
Pursuant to the corporate governancelisting rules of the NYSE, for listed companies, a majority of the Board must be independent. A director will not qualify as independent unless the Board affirmatively determines that the director has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us). To assist in its determination of director independence, the Board has adopted categorical director independence standards, which are contained in our Corporate Governance Guidelines. The Corporate Governance Guidelines are available to stockholders on the Investors section of our web sitewebsite under Leadership & Governance—Highlights atwww.corelogic.com.
In accordance with theapplicable NYSE listing rules and our categorical director independence standards, the Board has affirmatively determined that each of Messrs. Chatham, Curling, Dorman, Folino, O'BrienO’Brien, Raina and Walker, and Mses. Munce, Studenmund and Widener is "independent" as that term is defined in the corporate governance rules of the NYSE for listed companies.“independent”. Mr. Martell is not considered an inside directorindependent because he is employed by us as a senior executive.
During 2016,2018, each member of the Audit Committee, the Compensation Committee and the Nominating and Corporate Governance Committee was determined by the Board to be independent as defined in accordance with the corporate governanceapplicable NYSE listing rules of the NYSE for listed companies and in accordance with theour categorical standards ofdirector independence included in our Corporate Governance Guidelines as discussed below.standards. The Board further determined that each member of the Audit Committee and the Compensation Committee met the additional independence standards applicable to those committees.committees under the NYSE listing rules and the SEC.
Board Leadership Structure
|
The offices of Chief Executive Officer and Chairman are separate. Mr. Folino has served as Chairman of our Board since July 2014. Our Board believes that the separation of the offices of Chairman and Chief Executive Officer continues to be appropriate as it allows our Chief Executive Officer to focus primarily on his management responsibilities and the Chairman to oversee and manage the Board and its functions. Having an independent Chairman promotes the independence of our Board and provides appropriate oversight of management and ensures free and open discussion and communication among thenon-management members of our Board. In 2016, the non-management directors met five times in executive session without management present. The Chairman also chairs and coordinates the agenda for these executive sessions of thenon-management directors.
Our Corporate Governance Guidelines provide that the Board shall annually elect a lead director by a majority vote of the independent directors unless the Chairperson of the Board is an independent director, in which case the Chairperson of the Board will perform the functions of a lead director and no lead director shall be elected. Mr. Folino, an independent director, is the Chairman and, as a result, we do not currently have a lead director.
Table of ContentsDirector Education
|
Directors are strongly encouraged to attend educational seminars regarding the Company’s business, corporate governance and other issues pertaining to their directorship. We also provide the Board with educational training from time to timetime-to-time on subjects applicable to the Board and the Company, including with regard to industry and regulatory developments, accounting, financial reporting, and corporate governance, using both internal and external resources.
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Among the Compensation Committee'sCommittee’s responsibilities described in its charter is to oversee development and succession planning for executive officers, and the Compensation Committee also oversees this for other key members of senior management. In March 2015, the Board created a talent development subcommittee of the Compensation Committee to aid the Compensation Committee in fulfilling these responsibilities. The Board plans for succession of the CEO and annuallyperiodically reviews senior management selection and succession planning that is undertaken by the Compensation Committee. As part of this process, thenon-management directors annually review the Compensation Committee'sCommittee’s recommended candidates for senior management positions to see that qualified candidates are available for all positions and that development plans are being utilized to strengthen the skills and qualifications of the candidates. 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. In 2017, the Board implemented its succession plan with Mr. Nallathambi's passing and appointed Frank D. Martell as our President and CEO.
Risk Oversight
To maximize long-term stockholder value, the Board’s responsibilities in overseeing our businesses include oversight of our key risks and management’s processes and controls to regulate them appropriately. Our management, in turn, is responsible for theday-to-day management of risk and implementation of appropriate risk management controls and procedures. Although risk oversight permeates many elements of the work of the full Board, the Board has delegated to certain committees specific risk oversight matters. |
To maximize long-term stockholder value, the Board's responsibilities in overseeing our businesses include oversight of our key risks and management's processes and controls to regulate them appropriately. Our management, in turn, is responsible for the day-to-day management of risk and implementation of appropriate risk management controls and procedures.
Audit Committee
The Audit Committee has the most direct and systematic responsibility for overseeing risk management. The Audit Committee charter provides for a variety of regular and recurring responsibilities relating to risk, including:
• having responsibility for the internal audit function, with that function having a direct line of communication to the
Audit Committee;
• receiving reports from management and the internal audit function regarding the adequacy and effectiveness of various internal controls;
• reviewing periodically with internal counsel legal and regulatory matters that could have a significant impact on us and could indicate emerging areas of risk;
• overseeing accounting and risk management processes, including receiving regular reports from our Chief Legal Officer; and
• discussing with management our guidelines and policies with respect to risk assessment and enterprise risk management, including our major risk exposures and the steps management has taken to monitor and control such exposures.
In performing these functions, the Audit Committee regularly receives reports from management (including the Chief Executive Officer, the Chief Financial Officer, the Controller and the Chief Legal Officer) and internal auditors regarding our risk management program (which incorporates our compliance, information & cyber security, and business continuity programs), extraordinary claims and losses, and significant litigation. The Board receives updates on risk oversight from the Audit Committee and members of management.
Compensation Committee
The Compensation Committee oversees our compensation policies and practices and has assessed whether our compensation policies encourage excessive risk-taking. The Compensation Committee has concluded that these policies and practices are not reasonably likely to have a material adverse effect on us. In arriving at that conclusion, the Compensation Committee considered, among other factors:
Although risk oversight permeates many elements of the work of the full Board and the committees, the Audit Committee has the most direct and systematic responsibility for overseeing risk management. The Audit Committee charter provides for a variety of regular and recurring responsibilities relating to risk, including:
In performing these functions, the Audit Committee regularly receives reports from management (including the Chief Executive Officer, the Chief Financial Officer, the Controller, the General Counsel and the Chief Risk Officer) and internal auditors regarding our risk management program (including our compliance
program, information security and business continuity programs), extraordinary claims and losses, and significant litigation.
Separately, the Compensation Committee oversees our compensation policies and practices and has assessed whether our compensation policies encourage excessive risk taking. The Compensation Committee has concluded that these policies and practices are not reasonably likely to have a material adverse effect on us. In arriving at that conclusion, the Compensation Committee considered, among other factors, the metrics used to determine variable compensation;
• the portion of variable compensation paid in equity, which is either time-vested or tied to the achievement of long-term Company objectives;
• the amount of compensation paid as sales commissions and the number of people to whom such compensation is paid; and
• controls, such as pricing limits, a recoupment policy and financial reconciliation processes for sales crediting, quality checks that we employ and the approval process for certain compensation-related activities.
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Board Meetings and Attendance
Our Board held six meetings during 2016.2018 and ournon-management directors also met five times in executive session without management present. Each director attended 75% or more of the total number of meetings of the Board and meetings of the committees (if any) on which the director served during his or her respective tenure on the Board.Board during 2018. From time to time, our Board and committees also actsact by unanimous written consent as permitted by our Bylaws and the Delaware General Corporation Law.
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The Board and all of its committees have authority to retain outside advisors and consultants that they consider necessary or appropriate in carrying out their respective responsibilities. The independent accountants are retained by, and report directly to, the Audit Committee. In addition, the Audit Committee is responsible for the selection, assessment, and termination of the internal auditors to which we have outsourced our internal audit function. Similarly, the consultant retained by the Compensation Committee to assist in the evaluation of senior executive compensation reports directly to that committee.
Code of Conduct
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The Board has adopted a codeCode of ethicsConduct (the “Code”) that applies to all employees, including our principal executive officer, principal financial officer, principal accounting officer or controller,directors, Chief Executive Officer, Chief Financial Officer, Controller, and persons performing similar functions. A copy of this code of ethics is posted on the Investors section of our web site under Leadership & Governance — Highlights atwww.corelogic.com. The Board also has adopted a broader code of ethics and conduct, applying to all employees, officers and directors,functions, which also has been posted under "Investors — “Investors—Leadership & Governance — Highlights"Governance—Highlights” on our web site at the address stated above.websitewww.corelogic.com. If we waive or amend any provisions of these codes of ethicsthe Code that apply to our directors and executive officers, including our principal executive officer, principal financial officer, principal accounting officer, or controllerChief Executive Officer, Chief Financial Officer, Controller and persons performing similar functions, we will disclose such waivers or amendments on our web site,website, at the address and location specified above, to the extent required by applicable SEC and NYSE Rules.rules.
Corporate Governance Guidelines
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The Board has adopted Corporate Governance Guidelines which have been posted under “Investors—Leadership & Governance—Highlights” on the Investors section of our web site under Leadership & Governance — Highlights atwebsitewww.corelogic.com. In addition to stating the standards that the Board applies in determining whether or not its members are independent, these guidelines stateaddress, among other items, the qualifications and responsibilities of our directors and describe fundamental aspects of our Board and certain of its committees.
Table of ContentsDirector Overboarding Policy
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Our Corporate Governance Guidelines provide that our directors may not serve on more than five public company boards (including our Board), and our Audit Committee members may not serve on more than three public company audit committees (including our Audit Committee), in each case, without prior Board approval. In each case, in determining whether to grant such approval, the Board will consider the director'sdirector’s ability to devote sufficient time to the activities of the Board and/or Audit Committee and the director'sdirector’s qualifications and contribution, or potential contribution, to the Board and/or Audit Committee. AllAs of the date of this proxy statement, all of our directors are in compliance with the overboarding policy.
Board and Committee Evaluations
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To increase their effectiveness, the Board and each of its committees perform an annualself-evaluation under the direction of the Nominating and Corporate Governance Committee. The evaluation addresses, among other items, attendance, preparedness, participation, candor and other measures of performance selected by the Board.
Director Attendance at Annual Meetings
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We encourage our directors to attend the annual meetings of our stockholders, either in person or telephonically. All of our nineeleven directors nominated for election in 2017 attended the 20162018 annual meeting.
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Stockholders and other interested parties may communicate directly with members of the Board, including the Chairman of the Board or any of the othernon-management directors of our Company (individually or as a group), by writing to such director(s) at:
CoreLogic, Inc.
c/o General CounselChief Legal Officer and Secretary
40 Pacifica, Suite 900
Irvine, CA 92618
Our Corporate Secretary reviews and promptly forwards communications to the directors, as appropriate. Communications involving substantive accounting or auditing matters are forwarded to the Chair of the Audit Committee. Certain items that are unrelated to the duties and responsibilities of the Board will not be forwarded such as: business solicitation or advertisements;product- orservice-related inquires; junk mail or mass mailings; resumes or otherjob-related inquires; and spam and overlyinappropriately hostile, threatening, potentially
illegal or similarly unsuitable communications. Directors receiving communications will respond as such directors deem appropriate, including the possibility of referring the matter to management of our Company, to the full Board or to an appropriate committee of the Board.
Transactions with Management and Others
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The Board has adopted a written policy regarding transactions with related persons that requires the approval or ratification by the Board or the Nominating and Corporate Governance Committee of any transaction exceeding $120,000 in which we are a participant and any related person has a direct or indirect material interest. A related person includes a director, nominee for election as a director, executive officer, person controlling over 5% of our common stock and the immediate family members of each of these individuals. Once a transaction has been determined to require approval, the transaction will be reviewed and approved by either the Board or the Nominating and Corporate Governance Committee. The Board or the Nominating and Corporate Governance Committee will review and consider the terms, business purpose and benefits of the transaction to usthe Company and the related person.
If a related party transaction is notpre-approved, then it must be brought to the Board or the Nominating and Corporate Governance Committee for ratification as promptly as possible. No member of the Board or the Nominating and Corporate Governance Committee may participate in the review or approval of a related party transaction in which he or she has a direct or indirect interest, unless the Chairman of the Board or the chairperson of the Nominating and Corporate Governance Committee requests such individual to participate.
The following types of transactions do not requirepre-approval:
compensatory arrangements for service as an officer or director of ours, provided such compensation is approved by the Compensation Committee;
transactions between us and our affiliates (other than directors and officers);
transactions involving a related person with only an indirect interest resulting solely from ownership of less than 10% of, or being a director of, the entity entering into a transaction with us;
ordinary course transactions involving annual payments of $100,000 or less; or
transactions involving indebtedness between us and a beneficial owner of more than 5% of our common stock or an immediate family member of such beneficial owner, provided that the beneficial owner or family member is not an executive officer, director or director nominee of ours or an immediate family member thereof.
We have entered into the transactions discussed below, which have been approved or ratified in accordance with our related party transactions policy.
Price Associates beneficially owns greater than 5% of our common stock and is therefore a related party. During 2016, Price Associates or its affiliates purchased approximately $208,000 of data, analytics and other Company products. These transactions occurred pursuant to contracts entered into on an arm's-length basis and were ratified by the Nominating and Corporate Governance Committee in accordance with our related party transactions policy.
BlackRock, Inc. beneficially owns greater than 5% of our common stock and is therefore a related party. During 2016, BlackRock, Inc. or its affiliates purchased approximately $395,000 of data, analytics and other Company products. These transactions occurred pursuant to contracts entered into on an arm's-length basis and were ratified by the Nominating and Corporate Governance Committee in accordance with our related party transactions policy.
The following table sets forth certain information concerning the compensation of our directors other than Mr. Martell for the fiscal year ended December 31, 2016.2018.
| | | | | | | | | | | | | | | | | | | |
Name | | | Fees Earned or Paid in Cash ($) | | | Stock Awards(1)(2) ($) | | | Total ($) | | |||||||||
| | | | | | | | | | | | | | | | | | | |
J. David Chatham | 122,000 | 121,519 | 243,519 | ||||||||||||||||
Douglas C. Curling | 95,000 | 121,519 | 216,519 | ||||||||||||||||
John C. Dorman | 100,000 | 121,519 | 221,519 | ||||||||||||||||
Paul F. Folino | 207,000 | 121,519 | 328,519 | ||||||||||||||||
Thomas C. O'Brien | 104,500 | 121,519 | 226,019 | ||||||||||||||||
Jaynie Miller Studenmund | 94,500 | 121,519 | 216,019 | ||||||||||||||||
David F. Walker | 112,500 | 121,519 | 234,019 | ||||||||||||||||
Mary Lee Widener | 82,500 | 121,519 | 204,019 | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | |
Name
|
Fees Earned or
|
Stock ($)
| Total ($)
| ||||||||||||
J. David Chatham
|
|
125,000
|
|
|
159,978
|
|
|
284,978
|
| ||||||
Douglas C. Curling
|
|
96,500
|
|
|
159,978
|
|
|
256,478
|
| ||||||
John C. Dorman
|
|
112,500
|
|
|
159,978
|
|
|
272,478
|
| ||||||
Paul F. Folino
|
|
223,500
|
|
|
159,978
|
|
|
383,478
|
| ||||||
Claudia Fan Munce
|
|
104,079
|
|
| 159,978
|
|
|
264,057
|
| ||||||
Thomas C. O’Brien
|
|
113,500
|
|
|
159,978
|
|
|
273,478
|
| ||||||
Vikrant Raina
|
|
102,417
|
|
| 159,978
|
|
|
262,395
|
| ||||||
Jaynie Miller Studenmund
|
|
101,500
|
|
|
159,978
|
|
|
261,478
|
| ||||||
David F. Walker
|
|
125,000
|
|
|
159,978
|
|
|
284,978
|
| ||||||
Mary Lee Widener
|
|
95,000
|
|
|
159,978
|
|
|
254,978
|
|
(1) | The amounts shown reflect the aggregate grant date fair value of stock awards granted in 2018 computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718,Compensation-Stock Compensation. We value the RSUs as of the grant date by multiplying the closing price of our common stock on that date by the number of RSUs awarded. The stock awards were granted on May 1, 2018 to eachnon-management director. |
(2) | The aggregate numbers of RSUs held by each currentnon-management director as of December 31, 2018 were as follows: |
Name | Restricted Stock Unit | |||||||||||||
J. David Chatham | 3,190 | |||||||||||||
Douglas C. Curling | 3,190 | |||||||||||||
John C. | 3,190 | |||||||||||||
Paul F. Folino | 3,190 | |||||||||||||
Claudia Fan Munce | 3,190 | |||||||||||||
Thomas C. O’Brien | 3,190 | |||||||||||||
Vikrant Raina | 3,190 | |||||||||||||
Jaynie Miller Studenmund | 3,190 | |||||||||||||
David F. Walker | 3,190 | |||||||||||||
Mary Lee Widener | ||||||||||||||
3,190 | ||||||||||||||
The Compensation Committee reviews and recommends to the Board the form and level of director compensation. In March 2016, the Compensation Committee reviewed and recommended to the Board a new Directors' Compensation Policy that memorialized the current compensation paid by the Company to its non-management directors and included a deferral feature that permits non-management directors to elect to defer the receipt of their annual RSU awards until the earlier of termination of their Board service or a change in control of the Company. The Board approved and adopted the Directors' Compensation Policy in April 2016.
As described in the Compensation Discussion and Analysis, Pay Governance served as independent compensation consultant for the Compensation Committee for 20162018 and will continue to advise on the compensation of our directors for 2017.2019. During 2016,2018, as part of its engagement with the Committee, Pay Governance:
provided advice on the selection of a peer group of companies for director compensation comparison purposes;
reviewed director compensation;
provided advice on determining the structure and amounts payable under our director compensation program.
The Compensation Committee reviews and recommends to the Board the form and level of director compensation. In December 2018, the Compensation Committee reviewed the Directors’ Compensation Policy and recommended no changes for 2019; the Board affirmed the recommendation of the Compensation Committee.
The table below describes the components of thenon-management director compensation program in effect during 2016. No changes have been made to the non-management director compensation program for 2017.
| | | | | | | |
Compensation Element | | 2016 | | ||||
| | | | | | | |
Annual Retainer — Non-Management Director (1) | $ | 70,000 | |||||
Annual Equity Compensation — RSUs (2) | $ | 135,000 | |||||
Annual Retainer — Non-Management Board Chairman | $ | 100,000 | |||||
Annual Retainer — Committee Chairs (1) | |||||||
Audit Committee | $ | 25,000 | |||||
Compensation Committee | $ | 20,000 | |||||
Nominating and Corporate Governance Committee | $ | 15,000 | |||||
Acquisition and Strategic Development Committee (3) | $ | 12,500 | |||||
Annual Retainer — Committee Members (1) | |||||||
Audit Committee | $ | 12,500 | |||||
Compensation Committee | $ | 10,000 | |||||
Talent Development Committee (3) | $ | 12,500 | |||||
Nominating and Corporate Governance Committee | $ | 7,500 | |||||
Acquisition and Strategic Development Committee (3) | $ | 5,000 | |||||
Insurance Strategy Subcommittee (3) | $ | 12,500 | |||||
Fee for attendance of Board and Committee Meetings in Excess of Designated Number (4) | $ | 2,000 | |||||
| | | | | | | |
Table of Contents2018:
Compensation Element | 2018 | |||
Annual Retainer —Non-ManagementDirector | $ | 80,000 | ||
Annual Equity Compensation — RSUs(2) | $ | 160,000 | ||
Annual Retainer —Non-Management Board Chairman | $ | 100,000 | ||
Annual Retainer — Committee Chairs(1) | ||||
Audit Committee | $ | 25,000 | ||
Compensation Committee | $ | 20,000 | ||
Nominating and Corporate Governance Committee | $ | 15,000 | ||
Strategic Planning and Acquisition Committee | $ | 12,500 | ||
Annual Retainer — Committee Members(1) | ||||
Audit Committee | $ | 15,000 | ||
Compensation Committee | $ | 10,000 | ||
Nominating and Corporate Governance Committee | $ | 7,500 | ||
Strategic Planning and Acquisition Committee | $ | 5,000 | ||
Fee for attendance of Board and Committee Meetings in Excess of Designated Number (3) | $ | 2,000 |
(1) | Committee chair retainer represents amounts paid to each committee chair for their service in addition to the committee member annual retainer. Fees are paid in cash in equal quarterly installments. Fees are paidpro-rata for directors joining the Board after the payment date. |
(2) | The award is granted and priced on the day of our annual meeting or, in the event of anout-of-cycle annual meeting, such earlier date as may be approved by the Board, and vest on the first anniversary of the grant date (or the day prior to the date of the annual meeting if earlier). Vesting of the award will accelerate upon death, disability, retirement from the Board or a change in control. Directors joining the Board after the date of the Annual Meeting will receive a pro rata annual RSU award on the date the director joins the Board, which will vest on the same terms as the other annual RSU awards. |
(3) | Meeting fees paid only for meetings in excess of eight meetings of the Board, Audit Committee and Compensation Committee, and in excess of four meetings of the Nominating and Corporate Governance Committee and Strategic Planning and Acquisition Committee. Fees are paid in cash in connection with each such additional meeting. |
Director Share Ownership Guidelines
We require ournon-management directors to own a fixed amount of Company stock. The guidelines are based on a multiple of the annual retainer and, beginning in 2018, require a value of at least $350,000$400,000 be held by each director. Directors have five years from their date of election to the Board to reach the ownership requirement. All Company securities owned outright or earned and subject only totime-based vesting restrictions, countincluding deferred awards, are credited toward the requirement.
Anti-Hedging and Pledging Policy
|
The Company maintains a policy that prohibits director transactions in put options, call options or other derivative securities on an exchange or in any other organized market, as well as holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Set forth below is information regarding our current executive officers. Our executive officers are appointed annually by the Board.
Frank D. Martell | ||||||||
President and Chief | Biography is set forth under the heading Proposal 1 — Election of Directors | |||||||
James L. Balas Age 48 | ||||||||
Chief Financial Officer | ||||||||
Mr. Nallathambi, the Company's former President and Chief Executive Officer, was granted a temporary leave of absence on February 13, 2017 and passed away on March 2, 2017. Effective March 6, 2017, the Board appointed Mr. Martell to the position of President and Chief Executive Officer and principal executive officer.
has served as the Company’s Chief Financial Officer
since April 2016. Mr. Balas joined CoreLogic in March 2011, as Senior Vice President, Controller
| ||||||
Barry M. Sando Age 59 | ||||||
Managing Director, Underwriting and Workflow Solutions | Mr. Sando has served as the Company’s Managing Director of Underwriting and Workflow Solutions (and predecessor business segments) since June 2010, when we became astand-alone public company. Mr. Sando has more than 30 years’ experience in the housing finance and property information business and previously served in various executive positions with our predecessor company, FAC. | |||||
Arnold A. Pinkston Age 60 | ||||||
Chief Legal Officer and Corporate Secretary | ||||||
| ||||||
Corporate Secretary since January 2018. In this role, he oversees the | ||||||
| ||||||
| ||||||
health care company, from 2011 to March 2015. From 2005 to 2011, Mr. Pinkston served as Senior Vice President, General Counsel and Secretary | ||||||
| ||||||
| ||||||
| ||||||
COMPENSATION DISCUSSION & ANALYSIS
This Compensation Discussion and Analysis (CD&A)(“CD&A”) describes our compensation program, including our compensation strategy, philosophy, polices, programs and practices (our compensation program) for our named executive officers (NEOs)NEOs and the positions they held in 2016.2018. For purposes of this CD&A, the Committee refers to the Compensation Committee of our Board of Directors.
Named Executive Officer | Position as of December 31, | |||||||
Frank D. Martell | President and Chief Executive Officer | |||||||
James L. Balas | Chief Financial Officer | |||||||
Barry M. Sando | ||||||||
Arnold A. Pinkston | ||||||||
|
Our compensation program is designed to align the interestinterests of our executive officers with those of our stockholders through execution in three areas of strategic focus:growth and scale,innovation, operational excellence, and high performing organization. A significantorganization. In 2018, a majority of our NEOs'NEOs’ compensation is dependentcontinued to be based upon our financial performance and execution ofagainst these strategic priorities. Our 2016
As we set our 2018 performance goals early in the year, we anticipated the potential for a high degree of volatility and unpredictability based on expectations for the economic environment such as:
An increasing interest rate environment due to a strong US economy.
A decline in overall US mortgage origination unit volumes by approximately 10% compared to 2017 levels as the onset of rising interest rates would unfavorably impact mortgage refinance activity.
Continuing impact on mortgage origination purchase volumes due to multiple factors such as tight inventory supply, insufficient supply of new housing stock, and affordability, all of which we expect to continue for the foreseeable future.
We delivered strong operating and financial success is the direct result of our ability to provide clients with data-driven solutions to improve underwriting decisions, manage risks, and capitalize on developing business opportunities.
We achieved strong results in 2016. Highlights2018 despite significant US mortgage market headwinds. In the face of these headwinds, we reduced our 2016 operating resultsoverall cost structure by more than $20 million through productivity initiatives and cost management, continued to invest in future growth and productivity initiatives, and completed targeted acquisitions to enhance our business mix by increasing ournon-mortgage and international footprints while driving higher technology platform revenues. We invested in next generation technology capabilities focusing on data structures and visualization, technology platforms, and advanced automation techniques, which we expect will set a foundation for future growth and margin expansion. Finally, we enhanced our infrastructure capabilities as we initiated our migration to the Google Cloud platform.
Notable financial accomplishments in 2018 include:
Significant market outperformance as our 2018 revenues were down 3%, as compared to 2015 include the following:with a 15% estimated drop in overall US mortgage market unit volumes.
Please see Appendix A for a detailed reconciliation ofIncreased adjusted EBITDA by 3% and adjusted EPS by 15%, supported by our productivity and cost initiatives.
Generated $258 million of free cash flow (FCF)while reinvesting to the most directly comparable GAAP financial measures.drive future growth and margin expansion.
Delivered more than $20 million in cost management and productivity benefits.
Repurchased approximately 3% of our outstanding common shares.
We also invested for our long-term growthattribute these results to management’s ability to navigate market volatility and maintain focus in 2016 while returning substantial capital to stockholders in the forma time of share repurchases of approximately 6% of total shares outstanding.significant change, with strong leadership from Mr. Martell.
We accomplished key operational improvements in 2016. In addition to our solid financial results,EXECUTIVE COMPENSATION HIGHLIGHTS
Since 2011, we successfully achieved a number of key operational goals in 2016 that will enable future success, including:
We simplified our capital structure, which provided both additionalaligned annual incentives to rigorous financial flexibilitytargets. The Company’s underlyingpay-for-performance approach is intended to reward management appropriately in light of below- and above-expected performance results through use of a significant reduction in borrowing costs.
|
Our compensation program rewarded strong financial results. Our 2016 financialweighted combination of three performance metrics. For 2018, the Company exceeded targetsits adjusted EBITDA target by 2.7%, but fell below target for revenue(-4.6%) and resulted in above-target payouts. ResultsFCF(-2.4%). Combined results for revenue, adjusted EBITDA and free cash flowFCF generated funding of the ICP (ourfor corporate participants in our annual cash bonus plan) at 146% of target.
Notwithstanding these strong results, management and the Committee reduced bonus payouts by 5%. Despite our strong financial results and above-target payout, management recommended and the Committee approved a reduction in ICP funding by 5% across the enterprise because acquisition-related assumptions used in setting target performance did not meet timing expectations. This reduced the calculated bonus to 139% of target. In addition, the payout for the strategic goals portion ofplan, the ICP, relative to the funded amount, was increased for one NEO, reduced for one NEO,of 96.7% of target.
We assessed and unchanged for three NEOs. Finally, results for adjusted EPS and our three-year total stockholder return (TSR) relative to our peer group generated a payout of 124.5% in our long-term performance share plan for 2014-2016.
No across the board increase in base salaries for 4thconsecutive year. Notwithstanding strong operating results, consistent with our practices in recent years, the Committee did not increase NEO base salaries for 2016, except for Mr. Balas in consideration of his promotion to Chief Financial Officer.
Our compensation program also rewarded our manymost significant strategic accomplishments. The chart below highlightsOur decisions on ICP awards took into consideration a number of key accomplishments in 20162018 across our three strategic focus areas:areas as noted below. Based on overall strong strategic accomplishments in the face of a challenging revenue environment, and individual contributions to those accomplishments, the Committee awarded our four NEOs from 110% to 131% of target. Total resulting payouts for our NEOs ranged from 95% to 100% of the overall ICP target for 2018.
| ||||||||
| ||||||||
| ||||||||
|
Strategic Focus | 2018 Accomplishments | |||
Growth and Innovation | ✓ Core mortgage businessesout-performed US mortgage market volume trends ✓ Expanded deployment of solutions bundling intended to secure significant market share gains ✓ Completed several acquisitions to expand and scale our platform, international, and insurance capabilities footprint | |||
Operational Excellence | ✓ Exceeded productivity savings targets ✓ Invested in data technology enhancements, artificial intelligence, and visualization to enhance future growth and offering capabilities ✓ Launched migration to Google Cloud to further technology infrastructure capabilities and efficiencies ✓ Enhanced the vendor supply chain to improve quality, security, and IP protection ✓ Generated strong free cash flow, which was modestly below target, despite enhanced investment levels to support future growth and productivity | |||
High Performing Organization | ✓ Developed employee engagement action plans based on a global employee satisfaction survey (93% employee participation) ✓ Expanded the talent review process to emphasize the development of high-potential talent ✓ Continued transformation of shared services functions to enhance quality and reduce cost, and invested in automation and systems related to finance and human capital ✓ Initiated a focused, long-term incentive program for our top 40 business leaders (excluding the CEO) to accelerate growth and margins |
We have had strong support from stockholdersStrong Stockholder Support on Say on Pay.Pay
Our Board and management are committed to maintaining sound and effective compensation and governance policies and programs designed to build value for our stockholders. At our 20162018 Annual Meeting, 97%98% of the votes cast were in favor of the advisory vote to approve our executive compensation.compensation paid in 2017. With this support in favor of our existing compensation program, absence of negative feedback from our stockholder outreach effort, and following its regular review of our practices, the Committee determined to maintaincontinue our 20162017 compensation program for 2017.in 2018 with only minor adjustments.
We engage
Active Engagement with Our Stockholders
The Board and executive management are committed to engaging with our major stockholders. Throughout the year, executive management proactively and consistently meets with current and prospective stockholders to discuss our strategic priorities, operational performance, and financial results. Also, through these discussions or separate outreach efforts, we seek to engage our top stockholders to solicit feedback on corporate governance, our compensation program, and related matters. In early 2017, as part of our stockholder engagement strategy,2018, we conducted such outreach to 20 of our top stockholders representing approximately 60% ownership. Our stockholder outreach includes ongoing discussions with manya majority of our investors and we often solicit their feedback on a variety of topics, including executive compensation. Theoutstanding shares; these stockholders we reached out to did not express concerns over our corporate governance practices or compensation program design or practices. In addition to soliciting feedback fromdesign.
We did not make across-the-board increases in base salaries for the 6th consecutive year.Notwithstanding strong results, consistent with our stockholders,practices in recent years, the Committee routinely assesses our compensation programsdid not increase NEO base salaries for market trends. The Committee adjusted Mr. Martell’s salary in recognition of his strong leadership and seeks to
maximize alignment between stockholder return and executive compensation while incentivizing and retaining a high-performing management team.
|
We pay for performance. Our compensation program is heavily weighted toward performance-based compensation that provides a direct link between rigorous goals for corporate performance and pay outcomes for our executive officers. Our annual incentive plan also ties pay outcomes to the achievement of key strategic objectives that we believe will drive longer-term value to stockholders. We believe that our compensation program provides effective incentives for strong operating results by appropriately aligning pay and performance. Our philosophy is designed to:
|
We have four elements of total compensation:
86% of our CEO compensation and 74% of the compensationbusiness through a challenging US mortgage market environment. The Committee also adjusted the salary for the other NEOs is performance-based.Mr. Balas in recognition of his continued strong leadership in his CFO role. The chart below demonstrates our pay mix.
Tablenew salaries for Mr. Martell and Mr. Balas move each of Contents
Performance-Vested Equity Awards. In 2016, 50% of the target value of our long-term incentive awards for our CEO and other NEOs was granted in the form of performance-based restricted stock units ("PBRSUs") that vest based on adjusted EPS results relativethem to target and TSR relative to the companies in our peer group (see description of the peer group later in this section). The remaining 50% of target value was granted in the form of time-vested restricted stock units ("RSUs") that require us to achieve a threshold adjusted net income level in order to be eligible to vest.
Use of Rigorous Goals in Our Incentive Plans. We set challenging goals for both our annual incentive and long-term equity plans. The chart below demonstrates the variance in payouts since 2014, outcomes that reflect our pay for performance approach to compensation. Because acquisition-related assumptions used in setting target performance did not meet timing expectations, management recommended and the Committee approved a 5% decrease in the 2016 ICP pool on an enterprise basis. This reduced the overall calculated bonus from 146% to 139% of target.
NEO ICP Corporate Financial Funding as a% of Target3 Year Overview
| | | | | | | | | | | | | | | | | |||
| Performance vs. Budget (% of Target) | | |||||||||||||||||
| | | | | | | | | | | | | | | | | |||
| | | 2014 | | | 2015 | | | 2016 | | |||||||||
| | | | | | | | | | | | | | | | | |||
| Revenue | | | 99% | | | 102% | | | 106% | | ||||||||
| | | | | | | | | | | | | | | | | |||
| Adjusted EBITDA | | | 87% | | | 107% | | | 102% | | ||||||||
| | | | | | | | | | | | | | | | | |||
| Free Cash Flow | | | 134% | | | 144% | | | 132% | | ||||||||
| | | | | | | | | | | | | | | | |
Long-term Incentives. Payouts under our PBRSU awards also illustrate our use of rigorous performance targets and our adherence to pay for performance. Because we had a sub-optimal result on adjusted EPS in 2014, the 2013 PBRSU award (with a 2013-2015 performance period) paid out at less than half of target value. In contrast, the 2014 PBRSU award (with a 2014-2016 performance period) paid out at 124.5% of target based on particularly strong results in 2015 and 2016.
Average NEO PBRSU Payout as a %of Target2 Performance Cycle(4-Year) Overview
No Base Salary Increases Each Year. Our practice is to benchmark compensation annually but to increase an NEO's base salary only when warranted by an increase in the scope of responsibilities or significant gaps tomore competitive pay levels. Only Mr. Balas received a base salary increase in 2016 in consideration of his appointment to Chief Financial Officer. In light of anticipated mortgage market headwinds in 2017, the Committee decided that all NEOs will forego base salary increases for 2017, except for Mr. Martell whose salary was increased in connection with his promotion to President and Chief Executive Officer in March 2017.
Use of Strategic Goals in Our ICP. The achievement of strategic goals represents 25% of the annual ICP opportunity for our executive officers. We believe this approach rewards the accomplishment of key objectives that will drive future performance. The strategic goals portion is funded by the results on financial goals. The Committee separately determines the portion of the funded amount that should be paid as a result of achievement of the individual objectives. The Committee carefully evaluates management's accomplishments relative to the goals, as further described below.GOOD PAY GOVERNANCE PRACTICES
Our CEO pay is aligned to stock price performance. The alignment of CEO total direct compensation (base salary, ICP and LTI) and our TSR over the past three years, depicted in the table below, demonstrates alignment of CEO actual pay with results for stockholders. These pay amounts do not include change in pension value or "All Other Compensation" in the 2016 Summary Compensation Table below.
CEO Compensation-TSR Alignment
|
We employ good governance practices.The Committee oversees the design and administration of our compensation program and evaluates it against competitive practices, legal and regulatory developments and corporate governance trends. The Committee has incorporated the following leading governance features into our compensation program:
What We Do |
✓ |
Review total compensation relative to the median of a peer group ofindustry-aligned companies with similar executive talent needs |
✓ |
Tie annual incentives to achievement of multiple |
✓ | Useperformance-based
|
✓ | Cap performance-based vesting of performance shares at 150% of target if3-year TSR ranks below 55th percentile |
✓ | Require achievement of threshold adjusted net income level to be eligible to vest in RSU awards |
✓ | Maintain robust stock ownership guidelines and require covered executives to retain 50% of netafter-tax shares earned until the guidelines are met |
✓ |
Maintain a |
✓ |
Use an independent compensation consultant retained directly by the Committee, in its sole discretion, who performs no consulting or other services for |
✓ |
Require double-trigger for accelerated vesting upon termination of employment following a change in control |
✓ |
Assess annually potential risks relating to the |
× |
Incentivize participants to take excessive risks |
× |
Award |
× |
Allow margining, derivative, or speculative transactions, such as hedges, pledges, and margin accounts, by executive officers |
× |
Provide excessive perquisites |
× |
Provide excise taxgross-ups upon termination with a change in control or taxgross-upsfor other |
× |
Allow for repricing of stock options without stockholder approval |
× |
Pay |
PAY PHILOSOPHY
We pay for performance.Our compensation program is heavily weighted towardperformance-based compensation that provides a direct link between rigorous goals for corporate performance and pay outcomes for our executive officers. Our annual ICP also ties pay outcomes to the achievement of key strategic objectives that we believe will drivelonger-term value to stockholders. We believe that our compensation program provides effective incentives for strong operating results by appropriately aligning pay and performance. Our philosophy is designed to:
Compensation Philosophy | • Attract, motivate and retainhighly-qualified executive officers critical to ourlong-term success • Align the interests of our executive officers with the interests of our stockholders • Reward executive officers for achievingpre-defined rigorous financial goals and strategic objectives that may not yieldcurrent-period financial results but are expected to position us for enhanced results in future periods • Encourage strategiclong-term development and profitable investment in the business • Motivate and reward appropriaterisk-taking to grow the business • Support pay practices with strong corporate governance and independent board oversight | |||||||
| 1 Base salary 2 Annual cash incentive compensation plan award 3 Long-term equity incentives 4 Other compensation (welfare, retirement, termination and other benefits) |
Our compensation program emphasizes performance-based incentives.86% of our CEO compensation and 75% of the compensation for the other NEOs isperformance-based. The chart below illustrates our pay mix.
We increase base salaries based on performance or promotion.Our practice is to benchmark compensation annually but to increase an NEO’s base salary only when warranted by sustained performance, an increase in the scope of responsibilities or significant gaps to competitive pay levels. Only Messrs. Martell and Balas received base salary increases in 2018 to recognize performance and move their respective salaries to more competitive levels.
We set rigorous goals in our incentive plans. We set challenging goals for both our annual incentive and long-term equity plan. We outperformed US mortgage market trends and delivered single-digit top line growth in our core operations, resulting in the achievement of our adjusted EBITDA target and near-achievement of our revenue and FCF targets.
We use strategic goals in our ICP.Results on strategic goals represent 25% of the annual ICP opportunity for our executive officers. We believe this approach rewards the accomplishment of key objectives that will drive future performance. The Committee separately determines the portion of the funded amount that should be paid as a result of achievement of the assigned objectives. The Committee carefully evaluates management’s accomplishments relative to the goals, as further described below.
We focus on long-term stockholder value.Nearly 70% of the total compensation opportunity for our CEO is based on achievement ofstockholder-aligned performance and the value of our shares. For other NEOs, over half of their total target compensation opportunities are tied to these stockholder results.
Our equity grants are tied to performance.In 2018, 50% of the target value of ourlong-term incentive awards for our CEO and other NEOs was granted in the form ofperformance-based restricted stock units (“PBRSUs”) that vest based on achievement of adjusted EPS results relative to target and TSR relative to the companies in our Peer Group (as described and defined later in this section). The remaining 50% of the target value of our long-term incentive awards was granted in the form of RSUs that require us to achieve a threshold adjusted net income level in order to be eligible to vest. We set rigorous goals in our PBRSU awards, as reflected in the variability of payouts in the last three awards. The payouts above target reflect improved performance. In addition, to further incentivize the expansion of adjusted EBITDA margin between 2018 and 2020, we granted certain key executives, including our NEOs but excluding our CEO, an additional performance-based long-term incentive award in 2018 (see the description of the A30 Award below).
3-Year PBRSU Payouts
2018 COMPENSATION PROGRAM OVERVIEW
The following table describes our pay program including the role and purpose for each aspect of it.
ELEMENT | ||||||||||||||||
DESCRIPTION | ROLE AND PURPOSE | |||||||||||||||
REWARDS STRATEGY | Review target total pay relative to market median and determine individual pay based on experience and performance Tie approximately 75% or more of target pay opportunity to operating results and share price performance | Provide
Align compensation to results for our stockholders | ||||||||||||||
BASE SALARY | | |||||||||||||||
| Competitive fixed compensation Base salary increased primarily for promotions or adjusted for competitive pay levels | |||||||||||||||
| Provide competitive level of fixed pay to attract, motivate and retainhighly-qualified executives
Limited salary increases control fixed costs and emphasize pay for | |||||||||||||||
ANNUAL INCENTIVE PROGRAM (ICP) | Base incentives on performance against rigorous targets for revenue, adjusted EBITDA, FCF and strategic goals | Motivate and reward achievement of key financial goals and strategic accomplishments that drive stockholder value | ||||||||||||||
LONG-TERM EQUITY INCENTIVES | Performance- Based Restricted Stock Units (PBRSUs) | |||||||||||||||
50% of Shares earned based on 3 years of adjusted EPS performance, modified by TSR relative to our peers | Focus and Use of operating results and relative TSR ensures alignment of payouts with our performance relative to the broader market EPS growth historically has been highly aligned with our share price | |||||||||||||||
50% of Grants vest ratably over three years Requires achievement of threshold | Enhance retention of key talent Value at vesting based on | |||||||||||||||
RETIREMENT PROGRAMS | ||||||||||||||||
401(k) program for all employees Legacy supplemental executive retirement plan frozen in 2010 with no new entrants allowed Limited benefits available | Provide
Focus executives on accumulating savings | |||||||||||||||
Focus executives on rewards fromvalue-creating activities | ||||||||||||||||
PERQUISITES |
Determining Pay
|
Generally, in determining base salary, target annual ICP and guidelines forlong-term equity awards, the Committee considers a number ofseveral factors including, but not limited to, the executive officer's:officer’s:
role, including the scope and complexity of responsibilities;
experience and capabilities, including institituionalinstitutional knowledge;
contributions or responsibilities beyond the typical scope of the role;
individual performance;
positioning relative to our other executive officers;
difficulty in recruiting a replacement; and
competitive compensation opportunities provided by our peers and other competitors for similar execuitiveexecutive talent.
|
Our philosophy is to incentivize and reward executive officers for future performance. While the Committee regularly reviews executive officer equity grants and vesting, it does not consider prior stock compensation gains (option gains(PBRSU payouts or restricted stock awarded in prior years) in setting future compensation levels.
|
In order toTo monitor competitive compensation practices, the Committee relies primarily upon data compiled from public filings of selected companies (our peer group)“Peer Group”) that it considers to be competitors or appropriate comparators for executive talent. The Committee reviews and approves the Peer Group annually. Criteria for peer groupPeer Group selection include firms that operate in data, information and analytics and related businesses. Our 2016 peer group2018 Peer Group is presented in the table below.
CORELOGIC 2018 PEER GROUP | ||||||||||||||||||||
Comparator Group Rationale | ||||||||||||||||||||
Company | Revenue | Market Value | EBITDA Margin | Comparable Revenue Size | Comparable Market Value | Data Analytics | Direct Talent Competitor | |||||||||||||
($MM) | ($MM) | (%) | ||||||||||||||||||
Fidelity National Financial, Inc. | $ | 7,875 | $ | 8,653 | 14 | % | ✓ | |||||||||||||
First American Financial Corporation | $ | 5,812 | $ | 4,990 | 14 | % | ✓ | ✓ | ✓ | |||||||||||
Broadridge Financial Solutions, Inc. | $ | 4,330 | $ | 11,237 | 19 | % | ✓ | |||||||||||||
Gartner, Inc. | $ | 3,901 | $ | 11,620 | 15 | % | ✓ | ✓ | ✓ | |||||||||||
Global Payments Inc. | $ | 3,540 | $ | 16,316 | 36 | % | ✓ | |||||||||||||
Equifax Inc. | $ | 3,415 | $ | 11,229 | 25 | % | ✓ | ✓ | ||||||||||||
Paychex, Inc. | $ | 3,381 | $ | 23,395 | 42 | % | ✓ | |||||||||||||
Euronet Worldwide, Inc. | $ | 2,492 | $ | 5,279 | 19 | % | ✓ | ✓ | ||||||||||||
FleetCor Technologies, Inc. | $ | 2,400 | $ | 16,464 | 54 | % | ✓ | |||||||||||||
Verisk Analytics, Inc. | $ | 2,352 | $ | 17,950 | 45 | % | ✓ | ✓ | ✓ | |||||||||||
Teradata Corporation | $ | 2,202 | $ | 4,534 | 7 | % | ✓ | ✓ | ✓ | ✓ | ||||||||||
Jack Henry & Associates, Inc. | $ | 1,537 | $ | 9,780 | 31 | % | ✓ | ✓ | ||||||||||||
Black Knight, Inc. | $ | 1,096 | $ | 6,732 | 34 | % | ✓ | ✓ | ✓ | ✓ | ||||||||||
Fair Isaac Corporation | $ | 1,032 | $ | 5,415 | 23 | % | ✓ | ✓ | ✓ | ✓ | ||||||||||
CSG Systems International, Inc. | $ | 833 | $ | 1,059 | 19 | % | ✓ | ✓ | ||||||||||||
75th Percentile | $ | 3,901 | $ | 16,316 | 36 | % | — | — | — | — | ||||||||||
50th Percentile | $ | 2,492 | $ | 9,780 | 23 | % | — | — | — | — | ||||||||||
25th Percentile | $ | 1,537 | $ | 5,279 | 15 | % | — | — | — | — | ||||||||||
CoreLogic, Inc. | $ | 1,839 | $ | 2,692 | 23 | % | — | — | — | — | ||||||||||
Notes:
Data above reflects most recent fiscal year (2018) results when available; if FY18 financial results not yet released at the time of this report, revenue and EBITDA data reflect12-month trailing results for Q4 of 2017 and Q1 - Q3 of 2018. |
| | | | | | | | | | | | | | | | | | | | | |
| CoreLogic 2016 Peer Group | | |||||||||||||||||||
|
| | | | Comparator Group Rationale | | |||||||||||||||
| Company | | Revenue | | Market Value | | EBITDA Margin | Comparable Revenue Size | Comparable Market Value | Data Analytics | Direct Talent Competitor | ||||||||||
|
| | ($MM) | | ($MM) | | (%) | | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Fidelity National Financial | $ | 9,554 | $ | 9,622 | 17 | % | ✔ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| First American Financial | $ | 5,576 | $ | 3,904 | 11 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Equifax | $ | 3,145 | $ | 14,159 | 36 | % | ✔ | ✔ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Broadridge Financial Solutions | $ | 2,897 | $ | 7,708 | 20 | % | ✔ | ✔ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Gartner | $ | 2,445 | $ | 7,515 | 17 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Verisk Analytics | $ | 1,995 | $ | 13,592 | 50 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Dun & Bradstreet | $ | 1,704 | $ | 4,463 | 29 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| DST Systems | $ | 1,557 | $ | 3,504 | 23 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Henry (Jack) & Associates | $ | 1,355 | $ | 6,884 | 35 | % | ✔ | ✔ | ||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Neustar | $ | 1,210 | $ | 1,829 | 41 | % | ✔ | ✔ | ✔ | |||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Black Knight Financial Services | $ | 1,026 | $ | 2,612 | 43 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Fair Isaac | $ | 881 | $ | 3,844 | 23 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | �� | | |
| ACXIOM(1) | $ | 880 | $ | 1,666 | 14 | % | ✔ | ✔ | ✔ | ✔ | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| CSG Systems | $ | 761 | $ | 1,562 | 23 | % | ✔ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Ciber(1) | $ | 680 | $ | 279 | -5 | % | ✔ | |||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| IHS(2) | — | — | — | — | — | ✔ | ||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| 75th Percentile | $ | 2,671 | $ | 7,611 | | 35 | % | — | — | — | — | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| 50th Percentile | $ | 1,557 | $ | 3,904 | | 23 | % | — | — | — | — | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| 25th Percentile | $ | 954 | $ | 2,220 | | 17 | % | — | — | — | — | | ||||||||
| | | | | | | | | | | | | | | | | | | | | |
| CoreLogic | $ | 1,953 | $ | 3,181 | 23 | % | — | — | — | — | ||||||||||
| | | | | | | | | | | | | | | | | | | | | |
| Notes: | ||||||||||||||||||||
| Data above reflects end of the most recently disclosed fiscal year. | ||||||||||||||||||||
| (1) FY16 year-end financial results not yet released at the time of this report, Revenue & EBITDA data reflect 12-month trailing results. | ||||||||||||||||||||
| (2) IHS completed a merger with Markit Ltd in July 2016. | ||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | |
The CommmitteeCommittee reviews executive officer pay relative to the median pay of comparable positions in peer groupPeer Group companies and, as appropriate, relevant survey data fromnationally-recognized consulting and data firms such as Willis Towers Watson, Mercer and Equilar, scoped to a comparable revenue size for us, from both general industry and the high technology sector.
2019 Peer Group Considerations
Historically, the Company’s peer group has been challenging to construct as there are few firms that operate with highly comparable business mixes. Peers have generally been information and service providers, with some financial technology firms also included. For 2019, the Company refreshed its peer group to provide greater alignment with businesses that are sensitive to mortgage origination volumes and interest rates. As was evident in 2018, despite our diversification efforts, there continues to be a strong relationship between the Company’s stock performance and these volatile demand factors.
The following organizations will be added to the 2019 compensation peer group:
Fidelity National Information Services, Inc.
Realogy Holdings Corporation
Mr. Cooper Group, Inc. (Formerly Nationstar Mortgage Holdings)
Radian Group, Inc.
PennyMac Financial Services, Inc.
Zillow Group, Inc.
MGIC Investment Corporation
Altisource Portfolio Solutions
Furthermore, four peers in the 2018 compensation peer group were acquired in 2018 and, therefore, will be removed:
DST Systems
Dunn & Bradstreet
Convergys Corporation
Acxiom Corporation
The new 2019 compensation peer group is intended to better reflect the Company’s business portfolio and provide greater alignment with mortgage origination volumes and interest rate movements.
Base Salary
The Committee reviews base salaries annually and adjusts them, if appropriate, to recognize performance, changes to roles andpromotions, expansion in scope of responsibilities, and gaps relative to base salaries of similar individuals in the peer groupPeer Group and survey data described above.
The Committee has not increased CEO base salary in five years. In an effort to To increase the weighting of variable,performance-based pay in the compensation mix, in recent years the Committee has in recent years withheld base salary increasesnot increased salaries for executive officers, withexcept where there has been a promotion, expansion of role and responsibilities, or to recognize performance.
In 2018, the exception of promotions or expansions of roles and responsibilities. The Committee has maintained this practice even in years of outstanding company performance. Mr. Nallathambi's base salary has not increased since 2011. The Committee increased the base salarysalaries for Mr. Martell and Mr. Balas, as both made major contributions to the successful execution of the Company’s strategic plan in 2016 in recognition of his promotion to Chief Financial Officer.2018. In addition, there were significant gaps between their salaries and the competitive market rate. No other NEOs
NEO received a base salary increase in 2016 and no2018.
Annualized base salaries were increased for 2017 other than Mr. Martell in connection with his promotion to President and Chief Executive Officer in March 2017.
Base salaries of the executive officers for 2015, 20162017 and 20172018 are set forth in the table below:
| | | | | | | | | | |
| Named Executive Officer | 2015 | 2016 | 2017 | | |||||
| | | | | | | | | | |
| ||||||||||
| Anand Nallathambi | $800,000 | $800,000 | $800,000 | ||||||
| Frank D. Martell(1) | $650,000 | $650,000 | $725,000 | ||||||
| James L. Balas(1) | $350,000 | $425,000 | $425,000 | ||||||
| Barry M. Sando | $550,000 | $550,000 | $550,000 | ||||||
| Stergios Theologides | $425,000 | $425,000 | $425,000 | ||||||
| | | | | | | | | | |
Named Executive Officer | 2017 | 2018 | ||||||
Frank D. Martell | $ | 725,000 | $ | 780,000 | ||||
James L. Balas | $ | 425,000 | $ | 450,000 | ||||
Barry M. Sando | $ | 550,000 | $ | 550,000 | ||||
Arnold A. Pinkston (1) | — | $ | 425,000 |
(1) |
|
Annual Incentives (ICP)
The Incentive Compensation Plan (ICP)ICP rewards executive officers for financial and operating performance relative to rigorous, predetermined financial goals and strategic objectives. As part of our business planning process, management prioritizes a range of value drivers based on anticipated market demand including estimated mortgage origination volumes, prior year performance, business strategy and risk factors. The Committee then evaluates management'smanagement’s recommendations in light of stockholder expectations and establishes final ICP financial and strategic goals, including performance and payout range.ranges.
2018 Target Incentives.The Committee established the following 20162018 target bonus opportunities for our NEOs:
| | | | | | | | | | | | |
| ICP Target Bonus | | ||||||||||
| Name | Title | Base Salary ($000s) | % of Salary | ($000s) | | ||||||
| | | | | | | | | | | | |
| Anand Nallathambi | President and Chief Executive Officer | $800 | 125% | $1,000 | |||||||
| Frank D. Martell | Chief Operating Officer | $650 | 125% | $ 813 | |||||||
| James L. Balas | Chief Financial Officer | $425 | 90% | $ 383 | |||||||
| Barry M. Sando | Senior Executive Vice President, Group Executive, Risk Management and Workflow | $550 | 100% | $ 550 | |||||||
| Stergios Theologides | Senior Vice President, General Counsel and Secretary | $425 | 80% | $ 340 | |||||||
| | | | | | | | | | | | |
ICP Bonus | ||||||||||||||||||||||||
Name | Title | Base Salary ($000s) | % of Salary | Target ($000s) | Maximum ($000s) | |||||||||||||||||||
Frank D. Martell | President and CEO | $ | 780 | 140 | % | $ | 1,092 | $ | 2,184 | |||||||||||||||
James L. Balas | Chief Financial Officer | $ | 450 | 100 | % | $ | 450 | $ | 900 | |||||||||||||||
Barry M. Sando | Managing Director, Underwriting and Workflow Solutions | $ | 550 | 100 | % | $ | 550 | $ | 1,100 | |||||||||||||||
Arnold A. Pinkston | Chief Legal Officer and Corporate Secretary | $ | 425 | 80 | % | $ | 340 | $ | 680 |
ICP Performance Metrics.For 2016,2018, the Committee selected the following three performance measures for the ICPICP:
Revenue
Adjusted EBITDA — anon-GAAP — metric calculated as net income from continuing operations adjusted for interest, taxes, depreciation and amortization, stock compensation,non-operating gains/losses and other adjustments, as set forth in the Performance Unit Agreementadjustments.
The Committee selected these measures in order to reflect a balanced perspective on performance including growth, profitability and cash management. The Committee believes results for these measures drive stockholder value.
the valuation of our stock. Please seeAppendix A for a detailed reconciliation of adjusted EBITDA adjusted EPS and free cash flowFCF to the most directly comparable GAAP financial measures.
Threshold Performance Requirement.
For 2016, no award was payable unless our 2016 adjusted net income exceeded the performance threshold of $55 million. The performance threshold was increased to $57.5 million for 2017.
Calculation of Awards. For 2016,2018, 75% of the ICP opportunity was based on our financial performance goals and 25% on established strategic objectives for each executive officer in the three major planks of our business strategy: (1) grow and scale, (2) operational excellence, and (3) high performing organization. The Committee determined that these were the critical strategic initiatives for aligning annual operating performance with our long-term strategy.
officer. Results for achievement of revenue, adjusted EBITDA, and free cash flowFCF goals were weighted as follows in 2016:determining ICP funding:
Revenue | ||||
Adjusted EBITDA | ||||
Free Cash Flow |
Threshold Performance Requirement.For 2018, no award was payable unless our 2018 adjusted net income exceeded $62.5 million.
Funding FormulasFormula for Financial Results.At least 80% of targeted performance (threshold) for a metric must be achieved to generate any funding. At threshold, 34% offunding for that metric. The funding formula is set out in the target award is funded. At 120% of targeted performance (maximum), the maximum of 200% of the target award is funded.table below. For performance levels greater thanbetween threshold but less thanand target or between target and maximum, the bonus awardfunding is determined by linear interpolation. The funding formula parameters are set out in the following table:
| | | | | | | | | | | | | | | | | | | | |
| Performance Level | | Less than Threshold | | Threshold | | Target | | Maximum and Above | | ||||||||||
| | | | | | | | | | | | | | | | | | | | |
Performance as % of Target | < 80% | 80% | 100% | 120% | ||||||||||||||||
Payout as a % of Target | 0% | 34% | 100% | 200% | ||||||||||||||||
| | | | | | | | | | | | | | | | | | | | |
The sum of the weighted results of the three financial metrics funds the ICP awards. NEOs receive 75% of the funded amount based on financial results. The remaining 25% of the funded amount is earned based on evaluation of performance on strategic goals. Notwithstanding the actual ICP funding results, the Committee retains the discretion to decrease the actual payment for an ICP participant.
Performance Level | Less than Threshold | Threshold | Target | Maximum and Above | ||||||||||||
Performance as % of Target | < 80% | 80% | 100% | 120% | ||||||||||||
Payout as a % of Target | 0% | 34% | 100% | 200% |
The sum of the weighted results of the three financial metrics funds the ICP awards. For 2018, NEOs received 75% of the funded amount based on financial results. Awards for the remaining 25% of the funded amount were based on an evaluation of performance on strategic goals. For outstanding performance on strategic objectives, the ICP structure permits the strategic goal payment percentage of up to 200% of target.
Financial results were measured at the corporate level for NEOs except for Mr. Sando, whose financial results were weighted 33.3% on the corporate metrics previously outlined and 66.7% onsegment-level revenue and adjusted EBITDA results for the segment he manages. Funding for his strategic objectives component was determined by corporate results alone in alignment with the other NEOs.
Determining Awards for Strategic Goal Achievement. 2016 executive officerThe Committee determined that three major areas of our business strategy should be used for ICP strategic objectives are measurable accomplishments which accelerategoals: (1) growth and innovation, (2) operational excellence, and (3) high performing organization. The Committee believed that these were the critical strategic focal areas for accelerating achievement of our long-term strategy andlong-strategy which are not otherwise measurable through annual financial performance metrics. Success indicators included top- and bottom-line growth, operational milestones and business and program innovation.
The threshold level of the ICP adjusted net income goal must be achieved as a condition for funding awards for achievement of strategic objectives. As described above, the award opportunity for strategic goals flexes up or down based on overall financial results and funding, such that the portion of each executive officer's bonus tied to strategic objectives is aligned with our financial performance.
Awards for strategic goal achievement can range from a minimum of no payment to a maximum of 200% of the funded opportunity. The CEO provides the Committee with his assessment of individual results on strategic goals for the other executive officers and the Committee assesses the achievement level of the CEO. Based on these assessments, the Committee determines strategic goal achievement awards for each of the NEOs.
The following chart sets forth the steps in setting goals, measuring results and determining awards under the 2016 ICP:
2016 Incentive Compensation Plan Award Determination
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Financial results were measured at the Corporate level for NEOs except for Mr. Sando. For Mr. Sando, funding for revenue and adjusted EBITDA was weighted 50% on corporate results and 50% on results for the RMW segment that he manages. Funding for his strategic objectives was determined by corporate results on adjusted EBITDA, in alignment with the other executive officers.
The Committee established performance goals at the beginning of the year based on our 2016 operating plan and targeted performance. Over the course of the year, as the business evolved, we increased our guidance as we expected better-than-targeted performance based on an improved market environment. The 2016 targets included significant increases from 2015 actual results, other than for FCF, which was in line with 2015 actual results, but a significant increase from 2015 target. 2015 actual FCF results were $250 million, which exceeded the 2015 target of $178 million. For 2016, FCF was established in line with our long-term targeted rate of converting 50% of adjusted EBITDA into FCF. We outperformed targets across each of our financial measures, delivering strong growth in our core operations and continued success in cost-efficiency programs.
20162018 Financial Results and Funding.As set out in the table below, 20162018 corporate financial performance resulted in 146.3%96.7% of target funding. Because acquisition-related assumptions used in setting target performance did not meet timing expectations, management recommended and the Committee approved a 5% decrease in the 2016 ICP pool on an enterprise basis. This reduced the overall calculated bonus from 146% to 139% of target.
Financial Performance Metric | Weight | Target ($000) | Actual 2018 Results ($000) | Percentage Achieved | Funding Percentage | ||||||||||||||||||||
2018 Revenue | 34% | $ | 1,875 | $ | 1,788 | 95.4% | 84.7% | ||||||||||||||||||
2018 Adjusted EBITDA | 33% | $ | 480 | $ | 493 | 102.7% | 113.5% | ||||||||||||||||||
2018 Free Cash Flow | 33% | $ | 264 | $ | 258 | 97.6% | 92.1% | ||||||||||||||||||
Total | 100% | 96.7% |
| | | | | | | | | | | | | | | |
| Financial Performance Metric | Weight | | Target ($000) | Actual 2016 Results ($000) | Percentage Achieved | Funding Percentage | | |||||||
| | | | | | | | | | | | | | | |
| 2016 Revenue | 34% | $1,845 | $1,954 | 105.9% | 129.3% | |||||||||
| 2016 Adjusted EBITDA | 33% | $490 | $500 | 102.0% | 110.2% | |||||||||
| 2016 Free Cash Flow | 33% | $245 | $333 | 135.9% | 200.0% | |||||||||
| | | | | | | | | | | | | | | |
| Total | 100% | 146.3% | ||||||||||||
| | | | | | | | | | | | | | | |
Strategic Goal Results and Awards.For Messrs. Nallathambi,Martell, Balas, Sando and Martell,Pinkston, the Committee determined that each of these executive officers achieved hisdemonstrated performance above a targeted expectation on the achievement of strategic objectives at a level that either equaled or exceeded the level ofobjectives. An overarching factor was management’s success in achieving strong financial results achieved, and set each executive officer's bonus funding for achievementagainst the backdrop of the strategic objectives at 139%, the level that was funded based on financial results. The Committee elected to adjust Mr. Theologides' payout on strategic objectives downward by 19% and to increase the payout on strategic objectives by 11% for Mr. Sando. The table below summarizes the target and actual incentive bonus awards for each executive officer.a more difficult economic environment than had been anticipated.
2016 ICP Awards. The Committee approved the following ICP awards for performance in 2016:
ICP Target | Financial Results | Individual Strategic Results | ICP Award | ||||||||||||||||||||||||||||||||||||||||||
Name | ($000) | % of Target | 75% Weight | % of Target | 25% Weight | % of Target | Award ($000) | ||||||||||||||||||||||||||||||||||||||
Frank D. Martell | $ | 1,092 | 96.7 | % | 72.5 | % | 110 | % | 27.5 | % | 100.0 | % | $ | 1,092 | |||||||||||||||||||||||||||||||
James L. Balas | $ | 450 | 96.7 | % | 72.5 | % | 110 | % | 27.5 | % | 100.0 | % | $ | 450 | |||||||||||||||||||||||||||||||
Barry M. Sando (1) | $ | 550 | 83.2 | % | 62.4 | % | 131 | % | 32.6 | % | 95.0 | % | $ | 523 | |||||||||||||||||||||||||||||||
Arnold A. Pinkston | $ | 340 | 96.7 | % | 72.5 | % | 110 | % | 27.5 | % | 100.0 | % | $ | 340 |
All numbers represented in 000s
| | | | | | | | | | | | | | |
|
| Financial | Strategic Goals (25%) | Funded ICP Award | Actual Total ICP | | ||||||||
| Name | Goals (75%)(1) | Funding | Actual | (Before Adjustment) | (Reduced to 95%) | | |||||||
| | | | | | | | | | | | | | |
| Anand Nallathambi | $1,097 | $366 | $366 | $1,463 | $1,390 | ||||||||
| Frank D. Martell | $891 | $297 | $297 | $1,188 | $1,129 | ||||||||
| James L. Balas | $419 | $140 | $140 | $559 | $532 | ||||||||
| Barry M. Sando(2) | $554 | $201 | $224 | $778 | $740 | ||||||||
| Stergios Theologides | $373 | $124 | $101 | $474 | $450 | ||||||||
| | | | | | | | | | | | | | |
(1) |
|
Long-Term Incentives (LTI)
Our long-term incentive compensationLTI program is designed to motivate and reward profitable growth and stockholder value creation through awards ofperformance-based andtime-vested equity. The Committee believes that usingperformance-based andtime-vesting equity vehicles reinforces both performance and retention of key executives while aligning their interests with those of our stockholders and encouraging an appropriate level ofrisk-taking.
Long-term incentives represent the largest component of executive officer compensation. In 2016,2018, we granted 50% of total LTI value in PBRSUs, and 50% in RSUs. As outlined in more detail below, we also granted a special performance-based incentive ofone-times base salary for Messrs. Balas, Sando, and Pinkston, the A30 Awards, focused on achievement of aggressive EBITDA margin expansion from 2018 to 2020.
In determining the amount of the equity compensation awarded to each executive officer, the Committee primarily considered company and individual performance. However, the Committee may also considerevaluate any factor it considers relevant including competencies, skills, prior experiences, scope of responsibility and accountability within the organization, and the long-term incentiveLTI awards made by peer groupPeer Group companies tosimilarly-situated executive officers.
LTI Targets.The Committee established the following 20162018 LTI targets for our NEOs:
Base Salary | Target LTI | ||||||||||||||||
Name | Title | ($000s) | % of Salary | ($000s) | |||||||||||||
Frank D. Martell | President and CEO | $ | 780 | 475 | % | $ | 3,705 | ||||||||||
James L. Balas | Chief Financial Officer | $ | 450 | 200 | % | $ | 900 | ||||||||||
Barry M. Sando | MD, Underwriting and Workflow Solutions | $ | 550 | 200 | % | $ | 1,100 | ||||||||||
Arnold A. Pinkston | Chief Legal Officer and Corporate Secretary | $ | 425 | 200 | % | $ | 850 |
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| Base Salary | Target LTI | | ||||||||
| Name | Title | ($000s) | % of Salary | ($000s) | | ||||||
| | | | | | | | | | | | |
| Anand Nallathambi | President and Chief Executive Officer | $800 | 535% | $4,280 | |||||||
| Frank D. Martell | Chief Operating Officer | $650 | 350% | $2,275 | |||||||
| James L. Balas | Chief Financial Officer | $425 | 150% | $637.5 | |||||||
| Barry M. Sando | Senior Executive Vice President, Group Executive, Risk Management and Workflow | $550 | 200% | $1,100 | |||||||
| Stergios Theologides | Senior Vice President, General Counsel and Secretary | $425 | 200% | $ 850 | |||||||
| | | | | | | | | | | | |
The following chart summarizes our LTI components for 2016:2018:
LTI VEHICLE | ||||||||||
PBRSUs | ||||||||||
50% | ||||||||||
| • Earn the greater number of shares from:
• Annual measurement against1-year targets and banking of earned shares
• Shares earned also subject to • Shares earned from adjusted EPS performance subject to modification based on | |||||||||
RSUs | ||||||||||
50% | ||||||||||
• Vests in equal annual installments over 3 years | ||||||||||
• Vesting subject to achievement of threshold level of adjusted net income |
PBRSUs Granted in 2016.2018.The 20162018 PBRSUs are earned based on annual adjusted EPS achieved relative to annual targets for each of the three years of the performance period. Please see Appendix A for a detailed reconciliation of adjusted EBITDA, adjusted EPS and free cash flow to the most directly comparable GAAP financial measures.period 2018 through 2020.
Shares earned are calculated as follows:
Table of ContentsStep 2 (described in Step 3).
The number of PBRSUs earned is then subject to modification based on our relative total stockholder return compared to our 2016 peer group. The following table illustrates the 2016 PBRSU award calculation.
Step 1: Calculate Annual PBRSUs Earned Versus Target
Annually
As illustrated in the graphic below, adjusted EPS and relative TSR results determine the portion of the PBRSUs that are earned each year.
| | | | | | | | | | | | |
| (A) PBRSUs Eligible to be Earned Based on Annual | | ||||||||||
| | | | | | | | | | | | |
| 2016 | 2017 | 2018 | |||||||||
| | | | | | | | | | | | |
| 30% | 50% | 20% | |||||||||
| | | | | | | | | | | | |
| | | | | | | | |
| (B) PBRSUs Earned Based on Adjusted EPS Results | | ||||||
| | | | | | | | |
| Performance Level | Adjusted Annual EPS Results (% of Target) | Accrued PBRSUs Earned (% of Target) | |||||
| | | | | | | | |
| Less than Threshold | < 80% | 0% | |||||
| Threshold | 80% | 50% | |||||
| Target | 100% | 100% | |||||
| Maximum+ | 120% | 200% | |||||
| | | | | | | | |
(A) | For the PBRSUs granted in 2018, 30% of the PBRSUs may be earned based on 2018 performance, 50% based on 2019 performance, and 20% based on 2020 performance. |
(A) PBRSUs Eligible to be Earned Based on Annual Adjusted EPS Results (% of Total PBRSUs Granted) | ||||
2018 | 2019 | 2020 | ||
30% | 50% | 20% |
(B) | The number of PBRSUs earned is based on a schedule that provides for 50% of PBRSUs to be earned for annual adjusted EPS results at 80% of target (threshold), 100% of PBRSUs to be earned for results at 100% of target (target), and 200% of PBRSUs to be earned for results at 120% of target (maximum). |
(B) PBRSUs Earned Based on Adjusted EPS Results | ||||||||
Performance Level | Adjusted Annual EPS Results (% of Target) | Accrued PBRSUs Earned (% of Target) | ||||||
Less than Threshold | < 80% | 0% | ||||||
Threshold | 80% | 50% | ||||||
Target | 100% | 100% | ||||||
Maximum+ | 120% | 200% |
(C) | The number of PBRSUs earned is then subject to modification based on our relative total stockholder return compared to our 2018 Peer Group (“TSR Modifier”). The TSR Modifier ensures alignment of PBRSU payouts and results for stockholders. |
(C) TSR Modifier | ||||||||||||||||
| Annual TSR
| |||||||||||||||
| Modifier | |||||||||||||||
150% to 200% of Target | 55 Percentile | No modification | ||||||||||||||
Below | 55 Percentile | Earnout capped at 150% of target | ||||||||||||||
50% to 150% of Target | — | No modifications | ||||||||||||||
0% |
| Above | Earnout is 50% of target | |||||||||||||
Below | No earnout |
(D) | ||||||||||||
PBRSUs earned each year are accrued until the end of thethree-year performance period. |
The TSR modifier ensures alignment of PBRSU payouts and results for stockholders.
Step 2: Calculate PBRSUs Earned at End of3-Year EPS Results
Performance Period
Three-year calculations
Calculations of PBRSUs earned at the end of the3-year performance period use the same PBRSUschedules as for annual calculations:
Adjusted EPS earnout schedule (calculation B above, based on aggregate resultsabove) measured using cumulative adjusted EPS over 3 years versus 3-year target) and relative to the3-year EPS target
TSR modifierModifier schedule (calculation C above,above) measured over 3 years versus 3-year target) as for annual calculations.
Step 3: PBRSUs earned equals the greater of cumulative PBRSUs earned ineach of the 3 annual calculations during the grant cycle (from Step 1) or overall
the3-year calculation (from Step 2)
2018 Performance for 2018 PBRSU Grant.We achieved strong financial and operating results in 2016,2018 despite the macro-economic headwinds, as evidenced by adjusted EPS well above defined targetoutcomes at above-target performance levels. However, our TSR was not in the top quartile of the Peer Group. As a result, the PBRSUs earned for 2016 performance were capped at 150% of target, as illustrated below.
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2016 Portion of 2016-2018 Performance Period | | % of Award Subject to Crediting in 2016 | | Adj EPS Target | | Adj EPS Results | | % of Adj EPS Target Achieved | | Adj EPS Performance Level | | % of Award Subject to Crediting for Adj EPS Results | | Adjusted for TSR Modifier | | |||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2016 | 30% | $2.18 | $2.42 | 111% | 155% | 47% | 45% | |||||||||||||||||||||||||
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The calculation of PBRSUs granted in 2014 and which paid out after the end of the 2014-2016 performance period is presented in the table below. Three-year adjusted EPS results exceeded the total of the single-year achievements, and participants earned 124% of target PBRSUs.
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2014-2016 Performance Period | | % of Award Subject to Crediting | | Adjusted EPS Target | | Adj EPS Results | | % of Adj EPS Target Achieved | | Adj EPS Performance Level | | % of Award Subject to Crediting for Adj EPS Results | | Adjusted for TSR Modifier | | % Vesting | | |||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 | 30% | $1.65 | $1.33 | 81% | 0% | 0% | 0% | 0% | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2015 | 60% | $1.81 | $1.90 | 105% | 133% | 80% | n/a | 80% | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2016 | 10% | $1.99 | $2.42 | 122% | 200% | 20% | 15% | 15% | ||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Total of 3 1 Year Achievements | 100% | 95% | ||||||||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Cumulative 3 Year Achievement | 100% | $5.45 | $5.65 | 104% | 124% | n/a | 124% | |||||||||||||||||||||||||||||
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The number of shares earnedperformance did not trigger a payout above 150%, there was no modification from the 2014 PBRSU award is presented in the table below.TSR Modifier.
| | | | | | | | |
| | 2014 PBRSU Grant (2016 Vesting) | | |||||
Name | Target | Earned | | |||||
| | | | | | | | |
Anand Nallathambi | 56,940 | 70,870 | ||||||
Frank D. Martell | 16,928 | 21,069 | ||||||
James L. Balas | 3,077 | 3,829 | ||||||
Barry M. Sando | 15,389 | 19,153 | ||||||
Stergios Theologides | 8,079 | 10,055 | ||||||
| | | | | | | | |
2016
PBRSUs | % of Award Subject to Crediting in 2018 | Adjusted EPS Target | Adjusted EPS Results | Adjusted EPS Performance | % of Award Credited for Adjusted EPS Results | % of Award Credited Adjusted for TSR Modifier | ||||||||||||||||||||||||
2018 | 30 | % | $ | 2.50 | $ | 2.72 | 109 | % | 43.20 | % | 43.20 | % |
Restricted Stock Units.Units Granted in 2018.Vesting of RSUs granted in February 20162018 was subject to the achievement of $55$62.5 million in adjusted net income for 2016, which was achieved. For 2017 the performance threshold was increased to $57.5 million.2018. Adjusted net income results exceeded this threshold.
RSUs vest in three equal installments on the first, second, and third anniversaries of the grant date. These awards encourage executive officer retention (as the vesting condition is continuous employment by the executive officer following the grant date) and align the interests of executive officers with those of stockholders (as the value increases or decreases with our stock price).stockholders.
2016
2018 Annual LTI Awards to NEOs.Awards.2018long-term 2016 long-term incentive awards were made at targettargeted grant value for each of the NEOs. As described earlier in this section, target awards were established relative to market medians, which provides a competitive long-term incentive opportunity while allowing for additional value to be earned if
performance is strong. Details of the 20162018 grant awards are presented in the table below (with award amounts rounded to the nearest hundred).
| | | | | | | | |
| | 2016 Grants | | |||||
Named Executive Officer | RSUs | PBRSUs(1) | | |||||
| | | | | | | | |
Anand Nallathambi | $2,140,000 | $2,140,000 | ||||||
Frank D. Martell | $1,137,500 | $1,137,500 | ||||||
James L. Balas | $319,000 | $319,000 | ||||||
Barry M. Sando | $550,000 | $550,000 | ||||||
Stergios Theologides | $425,000 | $425,000 | ||||||
| | | | | | | | |
2018 Annual Grant Values | ||||||||
Named Executive Officer | RSUs | PBRSUs (1) | ||||||
Frank D. Martell | $ | 1,852,500 | $ | 1,852,500 | ||||
James L. Balas | $ | 450,000 | $ | 450,000 | ||||
Barry M. Sando | $ | 550,000 | $ | 550,000 | ||||
Arnold A. Pinkston | $ | 425,000 | $ | 425,000 |
(1) | PBRSU amount shown at target performance level. Based on 2018 performance, the portion of the PBRSUs tied to 2018 performance will be eligible to vest contingent upon continued employment through December 31, 2020. |
PBRSUs Settled After 2018.PBRSUs granted in 2016 were paid out after the end of the PBRSUs tied to2016-2018 performance period. The calculation of the payout is presented in the table below.Three-year adjusted EPS resulted in above-target performance on both the annual and3-year calculation basis. As performance did not trigger a payout above 150% of target, there was no modification from the TSR Modifier and the payout was set at the3-year cumulative result of 141.07%.
2016-2018 PBRSU Performance Period | % of Award Subject to Crediting for Annual Performance | Adjusted EPS Target | Adjusted EPS Results | % of Adjusted EPS Target Achieved | Adjusted EPS Performance | % of Award Subject to Credit for Adjusted EPS Results | % Vesting- Adjusted for TSR Modifier | ||||||||||||||||||||||||||||
2016 | 30 | % | $ | 2.18 | $ | 2.42 | 111.01 | % | 155.05 | % | 46.5 | % | 45.0 | % | |||||||||||||||||||||
2017 | 50 | % | $ | 2.31 | $ | 2.37 | 102.60 | % | 112.99 | % | 56.5 | % | 56.5 | % | |||||||||||||||||||||
2018 | 20 | % | $ | 2.45 | $ | 2.72 | 111.02 | % | 155.10 | % | 31.0 | % | 30.0 | % | |||||||||||||||||||||
Total of 31-Year Results | 100 | % | 134.0 | % | 131.5 | % | |||||||||||||||||||||||||||||
3-Year Results | 100 | % | $ | 6.94 | $ | 7.51 | 108.21 | % | 141.07 | % |
The number of shares earned from the 2016 performance will be eligible to vest contingent upon continued employment through December 31, 2018.
2016 PBRSU Grant — 2018 Vesting | ||||||||||
Name | Target | Earned | ||||||||
Frank D. Martell | 32,555 | 45,925 | ||||||||
James L. Balas | 9,129 | 12,878 | ||||||||
Barry M. Sando | 15,741 | 22,205 |
Timing of Equity Grants.Awards.After Committee approval, we generally issue annual equity awards to executive officers on the second day on which the NYSE is open for trading following the filing of our Annual Report onForm 10-K, using the last sale price reported for a share of our common stock on the NYSE on that date. Grants to new hires or other grants outside the annual grant cycle follow the same methodology, except that awards are generally issued on the 20th day (or the next succeeding business day if the market is closed on the 20th day) of the third month of the calendar quarter that follows the date on which the Committee approved the awards.
SpecialOne-Time A30 Award. In 2018, the Compensation Committee approved a specialone-time award (the “A30 Award”) to provide a focused incentive for achievement of an aggressive adjusted EBITDA margin expansion between 2018 and 2020. The award is also intended to enhance executive retention and promote the achievement of major strategic initiatives (e.g., workflow automation and adoption of related technologies). The specialone-time award was granted to senior leaders (including our NEOs but excluding the CEO) and leaders of our centers of excellence. For each of the NEO recipients, the target award value was equal to 1.0x the executive’s 2018 salary. The awards are presented in the table below for the NEO recipients.
Name | 2018 A30 Special Award Target Value | ||||
James L. Balas | $ | 450,000 | |||
Barry M. Sando | $ | 550,000 | |||
Arnold A. Pinkston | $ | 425,000 |
A30 Award Performance Metric and Targets. The A30 Award consists of units that are settled and vest at the end of 2020. Each unit converts to one share. The units have a target grant value equal to 100% of base salary and are earned based on achievement ofpre-determined 2020 adjusted EBITDA margin targets.
Retirement and Employee Benefit Plans |
Executive officers are entitled to the same benefits generally available to allfull-time employees (subject to fulfilling any minimum service requirement) including the 401(k) plan, health care,healthcare, life insurance and other welfare benefit programs. In designing these benefits, we seek to provide an overall level of benefits that is competitive with those offered by similar companies in the markets in which we operate. We believe that these employee benefits provide a valuable recruiting and retention mechanism for our executive officers and enable us to compete more successfully for qualified executive talent.
Executive Supplemental Benefit Plan and the Pension Restoration Plan. Two of our executive officers — Messrs. Nallathambi andMr. Sando — became participantsa participant in our Executive Supplemental Benefit Plan (the "Executive“Executive Supplemental Benefit Plan"Plan”) prior to its closure to new participants in 2010. On November 18, 2010, we amended the Executive Supplemental Benefit Plan to freeze benefits effective as of December 31, 2010. As a result, compensation earned after 2010 is not taken into accountconsidered in determining covered compensation and final average compensation; service after 2010 is not recognized, except for vesting purposes. Mr. Sando is also a participant in the Pension Restoration Plan, which is limited to individuals who became participants before 1995. Explanation of these plans can be found in the Pension Benefits table below.
Deferred Compensation Plan.The Deferred Compensation Plan is anon-qualified retirement plan that allows eligible participants to defer up to 80% of their salary and annual incentive bonus. Participation is limited to executive officers and certain other key employees. In 2010, we amended the Deferred Compensation Plan to provide additional Company contributions in the form of 401(k) restoration contributions and discretionary retirement savings contributions to a limited number of executive officers who were not eligible to participate in the Executive Supplemental Benefit Plan. Mr. Theologides received discretionary contributions in the amount of $85,000 in 2016.restoration.
Other Benefits.We also maintain an executive life insurance program for executive officers and other key employees. This program provides the participant with up to two times their annualized base salary (up to a maximum of $1 million) in group universal life insurance.
Further details regarding perquisites are found in the 20162018 Summary Compensation Table and accompanying footnotes.
TableRole of Contentsthe Committee and the Chief Executive Officer
|
The Committee is composed solely of independent members of our Board. The Committee reviews and approves executive officer base salaries, annual incentive bonus programs,long-term incentive compensation and other incentive and executive benefit plans. The Committee, in consultation with its independent compensation consultant, analyzes the reasonableness of executive officer compensation, in part by reviewing compensation data from comparable companies and from relevant other industry sources.
Decisions regarding compensation of the Chief Executive OfficerCEO are made solely by the Committee based on its deliberations with input from its independent compensation consultant. Decisions regarding other executive officers are made by the Committee after considering recommendations from the Chief Executive OfficerCEO as appropriate, as well as input from the Committee'sCommittee’s independent compensation consultant. Our Chief Executive Officer,CEO and, as appropriate, General Counsel, Chief OperatingLegal Officer, Chief Financial Officer and SVP,Chief Human Resources Officer, may attend the portion of the Committee'sCommittee’s meetings where individual executive officer performance is discussed. Only Committee members may vote on executive officer compensation decisions.
The Committee regularly meets in executive session with its independent compensation consultant at most meetings.consultant.
Role of Independent Compensation Consultant
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The Committee retained Pay Governance LLC as its independent compensation consultant to advise on the executive officer compensation for 2016.2018. The independent compensation consultant generally advises the Committee on the appropriatenessall aspects of our compensation philosophy, peer group selection and generalthe executive compensation program design.design and governance process. During 2016,2018, as part of its engagement with the Committee, the independent compensation consultant:
advised on the selection of a peer group of companies for executive officer compensation comparison purposes;
provided guidance on industry best practices, and emerging trends and developments in executive officer compensation;
consulted on incentive design;
advised on determining the total compensation of each of our executive officers and the material elements of total compensation, including (1) annual base salaries, (2) target cash bonus amounts, and (3) the structure and target amount oflong-term incentive awards.awards;
Consulted onnon-employee director compensation; and,
Assisted on a compensation risk assessment.
The Committee retained its independent compensation consultant directly, although in carrying out assignments, the consultant also interacted with Company management toon behalf of the extent necessary and appropriate.Committee. Pay Governance performed no services for the Company, and the Committee does not believe the independent compensation consultants'consultant’s work has raised any conflict of interest. The Committee has the sole authority to select, retain, and terminate the independent compensation consultants.
Adjustment or Recovery of Awards(Claw-backs)
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In 2012, the Committee formally adopted new compensation policies and provisions to further improve alignment with best practices. We adoptedThe Company maintains a recoupment provisions which allow us to recover policy that enables recovery ofperformance-based compensation to the extent that it is later determined that applicable performance goals were not actually achieved due totaking into account a financial restatement or ethical misconduct. We also addedclaw-backs in termination agreements for all executive officers. This policy applies to allperformance-based incentive
plans including but not limited to the annual incentive cash bonus andperformance-based equity awards described above.
Anti-Hedging and Pledging Policy
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The Company maintains a policy that prohibits executive officer transactions in put options, call options or other derivative securities, on an exchange or in any other organized market as well as holding Company securities in a margin account or otherwise pledging Company securities as collateral for a loan.
Executive Stock Ownership Guidelines and Retention Requirements
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We require our executive officers to own a fixed amount of our stock. The rigorous guidelines are based on a multiple of base salary as outlined below:
Position | Ownership Guidelines | |||||||
Chief Executive Officer | 6x base salary | |||||||
Chief Financial Officer | 3x base salary | |||||||
Managing Directors | 3x base salary | |||||||
Other Executive Officers | 1x base salary | |||||||
Covered officers have five years from their date of hire or promotion to the covered position to reach the ownership requirement. All Company securities owned outright or earned and subject only totime-based vesting restrictions count toward the requirement; stock options do not count toward the ownership requirement. Furthermore, we have adopted a share retention requirement which provides that all covered executives must hold at least 50% of net (after tax) shares until the stock ownership guidelines described above are achieved. All NEOs have met their ownership requirements.
Actual Share Ownership vs. Minimum Share Ownership Requirement
(As multiple of base salary)
President and CEO 1x 2x 3x 4x 5x 6x 7x 8x 9x 10x >10x F. Martell CFO J. Balas Managing Director, UWS B. Sando Other Named Executive Officers A. Pinkston Holdings as of December 31, 2018 as a multiple of base salary using stock price of $33.42 Minimum ownership requirement Current actual holdings as of December 31, 2018 Employment Agreements and Severance Arrangements |
Each currently employed executive officer is party to an employment agreement with us. The Committee believes that offering employment agreements to key executive officers is consistent with peer practices and serves as an
effective retention tool. Each agreement is individually negotiated and terms may vary. For additional information regarding the terms of the employment agreements, including severance arrangements that we have entered into with our executive officers see "Employment Agreements"“Employment Agreements” below.
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All equityEquity awards are grantedcurrently issued under the 2018 Plan, which was approved by our stockholders at our annual meeting held in May 2018. Prior to the approval of the 2018 Plan, we issued share-based awards under the 2011 Performance Incentive Plan, (the "2011 Plan"), as amended. The 2011 Plan doesand 2018 Plan do not include an automatic "single trigger"“single trigger” change in control vesting provision. Instead, the "double trigger" provides forboth plans include a change in control provision where automatic
accelerated vesting of an award in connection with a change in control will only occur if an acquirer or successor to us fails to assume or continue the awards or the awards otherwise do not survive the transaction. Additionally, award agreements include "double-trigger"“double-trigger” severance protections and provide for accelerated vesting of awards that remain outstanding following a change in control transaction in the event of a termination without cause following a change in control.
The Deferred Compensation Plan generally provides for accelerated vesting of awards or benefits, as the case may be, in the event of a change in control of the Company. In addition, the Executive Supplemental Benefit Plan provides that when a participant incurs an involuntary separation from service without good cause subsequent to a change in control, payment of benefits will commence in the same manner and in the same amount as if the participant had attained his or her normal retirement age on the date of termination.
In addition to the plan and award agreement provisions described above, we have entered into a change in control agreement (a "Change“Change in Control Agreement"Agreement”) with each of our executive officers.NEOs. Under the Change in Control Agreement, a "change“change in control"control” means the consummation of any one of the following:
a merger or consolidation of the Company in which our stockholders end up owning less than 50% of the voting securities of the surviving entity;
the sale, transfer or other disposition of all or substantially all of our assets or the complete liquidation or dissolution of the Company;
a change in the composition of our Board of Directors over atwo-year period as a result of which fewer than a majority of the directors are incumbent directors, as defined in the agreement; or
the acquisition or accumulation by any person or group, subject to certain limited exceptions, of at least 30% of our voting securities.
In addition, ifIf the termination of theour executive officer'sofficer’s employment occurs without cause or if the executive officer terminates his employment for good reason within the twenty-four monthtwenty-four-month period following a change in control, we will pay the following benefits in one lump sum in the month following the month in which the date of the termination occurs:
the executive officer'sofficer’s base salary through and including the date of termination and any accrued but unpaid annual incentive bonus;
between two and three times the executive officer'sofficer’s target annual cash bonus amount established for the fiscal year in which the termination occurs; and
between two and three times the executive officer'sofficer’s annual base salary in effect immediately prior to the date of termination.
Furthermore, under the Change in Control Agreement, for a period ranging fromtwenty-four tothirty-six months and subject to the covered executive officer'sofficer’s continued payment of the same percentage of the applicable
premiums as the executive officer was paying immediately prior to the date of termination or, if more favorable to the executive officer, at the time at which the change in control occurred, we will provide medical and dental coverage pursuant to COBRA for the executive officer (and if applicable, the executive officer'sofficer’s dependents). To the extent that the executive officer cannot participate in the plans previously available, we will provide such benefits on the sameafter-tax basis as if they had been available. These obligations are reduced by any welfare benefits made available to the executive officer from subsequent employers.
The Change in Control Agreement provides that if any excise tax imposed by Section 4999 of the Code (or any similar tax), applies to the payments, benefits or other amounts payable under the agreement or otherwise, including without limitation, any acceleration of the vesting of outstanding stock options, restricted stock or performance shares (collectively, the "Total Payments"“Total Payments”), then the Total Payments will be reduced (but not below zero) so that the maximum amount of the Total Payments (after reduction) will be $1.00 less than the amount which would cause the Total Payments to be subject to the excise tax; provided that such reduction to the Total Payments will be made only if theafter-tax benefit to the executive officer is greater after giving effect to such reduction than if no such reduction had been made. This type of provision is often referred to as a "modified “modifiedcut-back,"” and is included because the Change in Control Agreement does not provide for any type of "gross up"“gross up” or similar benefit.
The Change in Control Agreement had an initial term through December 31, 2011 and is automatically extended for additionalone-year periods unless either party notifies the other not later than the preceding January 1 that it does not wish to extend the term for an additional year. All agreements with current executive officers have since been extended through December 31, 2016.2019. For a description of the calculations and further explanation of the payments due to the executive officers upon termination of employment and/or a change in control, see Potential Payments upon Termination or Change in Control tables below.
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As a general matter, the Committee takes into accountconsiders the various tax and accounting implications of the compensation vehicles we employ. When determining amounts oflong-term incentive grants to executive officers and employees, the Committee examines the accounting cost associated with the grants. Under accounting guidance, grants of stock options, RSUs and PBRSUs result in an accounting charge for the Company. The accounting charge is equal to the fair value of the instruments being issued. For RSUs, the cost is generally equal to the fair value of the stock on the date of grant times the number of shares granted. This expense is amortized over the requisite service period. With respect to stock options, we calculate the fair value of the option and take that value into account as an expense over the vesting period, after adjusting for possible forfeitures. For PBRSUs, we calculate the fair value of the award upon grant and adjust the value to be expensed on a quarterly basis over the performance period based on expected award payouts, after adjusting for possible forfeitures.
Section 162(m) of the Code generally prohibits any publicly held corporationapublicly-held company from taking a federal income tax deduction for compensation paid in excess of $1 million in any taxable year to each of the chief executive officer and certain of the other most highly compensated executive officers. Exceptions are made for qualified performance-based compensation, among other things. RSUs, PBRSUs and performance units granted to executive officers have been structured in a manner intended to qualify under this exception for performance-based compensation. As such, RSUs and ICP awards are earned contingent upon our achievement of adjusted net income for 2016 of $55 million or more, which performance target was achieved. PBRSUs are earned contingent upon our achievement of the adjusted EPS levels and relative TSR results described above. Other compensation may be subject to the $1 million deduction limit. We generally intend to seek to qualify most of the variablededucting compensation paid to oura current or former NEO that exceeds $1.0 million during the tax year. Certain awards granted before November 2, 2017 that were based upon attainingpre-established performance measures that were set by the Committee under a plan approved by the Company’s stockholders, as well as amounts payable to former executive officers pursuant to a written binding contract that was in effect on November 2, 2017, may qualify for an exception to the "performance-based compensation" exemption from$1.0 million deductibility limit.
As one of the deduction limit. As such,factors in approving the amount and formits consideration of compensation for our executive officers,matters, the Committee considers all elementsnoted this deductibility limitation. However, the Committee has the flexibility to take anycompensation-related actions that it determines are in the best interests of the cost.Company and our stockholders, including awarding compensation that may not be deductible for tax purposes. There can be no assurance that any compensation will in fact be deductible.
The Compensation Committee has reviewed and discussed the foregoing CD&A with management. Based on its review and discussions, the Compensation Committee has recommended to the Board that the CD&A be included in the Company'sCompany’s Annual Report onForm 10-K for the year ended December 31, 2016,2018 and in the Company'sCompany’s proxy statement for its 2017 annual meeting2019 Annual Meeting of stockholders.
Members of the Compensation Committee J. David Chatham, Chair Paul F. Folino Claudia Fan Munce Thomas C. O’Brien Jaynie Miller Studenmund |
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COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Messrs. Chatham (Chair), Folino, O'BrienO’Brien and Ms.Mmes. Munce and Studenmund served on the Compensation Committee during 2016.2018. No person who served as a member of the Compensation Committee during 20162018 was or is an officer or employee of the Company. No executive officer of the Company serves or served as a director or member of the compensation committee of another company who employed or employs any member of the Company'sCompany’s Compensation Committee or the Board.
20162018 Summary Compensation Table
The following table sets forth certain information concerning compensation of each named executive officer who served as such during the fiscal years ended December 31, 2016, 20152018, 2017 and 2014,2016, other than for Mr. Balas,Pinkston, for whom compensation information is provided only for the fiscal year ended December 31, 2016,2018, the firstonly year thatin which he becamewas a named executive officer. The positions listed below are as of December 31, 2016.2018.
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Name and Principal Position | | | Year | | | Salary | | | Stock Awards | | | Option Awards | | | Non-Equity Incentive Plan Compensation | | | Change in Pension Value and Nonqualified Deferred Compensation Earnings | | | All Other Compensation | | | Total | ||||||||||||||||||||
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(3) | (4) | (5) | (6) | (7) | (8) | |||||||||||||||||||||||||||||||||||||||
($) | ($) | ($) | ($) | ($) | ($) | |||||||||||||||||||||||||||||||||||||||
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Anand Nallathambi | | | 2016 | | | 800,000 | | | 4,279,940 | | | — | | | 1,390,030 | | | 386,990 | | | 78,609 | | | 6,935,569 | | |||||||||||||||||||
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President and Chief | | | 2015 | | | 800,000 | | | 3,699,990 | | | — | | | 1,477,400 | | | — | | | 89,197 | | | 6,066,587 | | |||||||||||||||||||
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| Executive Officer (1) | | | 2014 | | | 800,000 | | | 2,959,969 | | | 827,452 | | | 985,075 | | | 1,049,258 | | | 43,288 | | | 6,665,042 | | ||||||||||||||||||
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Frank D. Martell | 2016 | 650,000 | 2,274,943 | — | 1,129,400 | — | 61,490 | 4,115,833 | ||||||||||||||||||||||||||||||||||||
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Chief Operating Officer (1) | 2015 | 650,000 | 1,624,975 | — | 1,200,400 | — | 74,139 | 3,549,514 | ||||||||||||||||||||||||||||||||||||
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2014 | 600,000 | 879,959 | 245,990 | 800,380 | — | 31,330 | 2,557,659 | |||||||||||||||||||||||||||||||||||||
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James Balas | | | 2016 | | | 396,538 | | | 637,935 | | | — | | | 531,700 | | | — | | | 24,714 | | | 1,590,887 | | |||||||||||||||||||
Chief Financial Officer (2) | | | | | | | | | | | | | | | | | | | | | | | | | | |||||||||||||||||||
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Barry M. Sando | 2016 | 550,000 | 1,099,981 | — | 740,000 | 378,594 | 51,503 | 2,820,078 | ||||||||||||||||||||||||||||||||||||
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Senior Executive Vice | 2015 | 540,192 | 1,099,963 | — | 730,000 | 63,949 | 2,434,104 | |||||||||||||||||||||||||||||||||||||
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President, Group Executive, Risk Management and Workflow | 2014 | 500,000 | 799,969 | 223,635 | 492,540 | 1,349,113 | 31,571 | 3,396,828 | ||||||||||||||||||||||||||||||||||||
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Stergios Theologides | | | 2016 | | | 425,000 | | | 849,950 | | | — | | | 450,000 | | | — | | | 115,500 | | | 1,840,450 | | |||||||||||||||||||
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Senior Vice President, | | | 2015 | | | 410,000 | | | 637,439 | | | — | | | 502,400 | | | — | | | 125,511 | | | 1,675,350 | | |||||||||||||||||||
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General Counsel & Secretary | | | 2014 | | | 350,000 | | | 419,966 | | | 117,406 | | | 295,830 | | | — | | | 85,204 | | | 1,268,406 | | |||||||||||||||||||
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Name and Principal Position | Year | Salary | Stock Awards | Option Awards | Non-Equity Incentive Plan Compensation | Change in Pension Value and Nonqualified Deferred Compensation Earnings | All Other Compensation | Total | ||||||||||||||||||||||||
(3) ($) | (4) ($) | (5) ($) | (6) ($) | (7) ($) | (8) ($) | ($) | ||||||||||||||||||||||||||
Frank D. Martell | 2018 | 778,942 | 3,704,964 | — | 1,092,000 | — | 65,748 | 5,641,654 | ||||||||||||||||||||||||
President and Chief Executive Officer (1) | 2017 | 710,577 | 3,262,445 | — | 1,250,000 | — | 61,177 | 5,284,199 | ||||||||||||||||||||||||
2016 | 650,000 | 2,274,943 | — | 1,129,400 | — | 61,490 | 4,115,833 | |||||||||||||||||||||||||
James L. Balas | 2018 | 449,519 | 1,349,905 | — | 450,000 | — | 30,856 | 2,280,280 | ||||||||||||||||||||||||
Chief Financial Officer | 2017 | 425,000 | 849,992 | — | 525,000 | — | 31,411 | 1,831,401 | ||||||||||||||||||||||||
2016 | 396,538 | 637,935 | — | 531,700 | — | 24,714 | 1,590,887 | |||||||||||||||||||||||||
Barry M. Sando | 2018 | 550,000 | 1,649,903 | — | 522,500 | — | 50,556 | 2,772,959 | ||||||||||||||||||||||||
Managing Director, Underwriting & Workflow Solutions | 2017 | 550,000 | 1,099,985 | — | 690,000 | 634,144 | 52,523 | 3,026,652 | ||||||||||||||||||||||||
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| 550,000 | 1,099,981 | — | 740,000 | 378,594 | 51,503 | 2,820,078 | |||||||||||||||||||||||
Arnold A. Pinkston Chief Legal Officer & Corporate Secretary (2) | 2018 | 415,192 | 1,274,903 | — | 340,000 | — | 12,847 | 2,042,943 |
(1) | Effective March 6, 2017, the Board appointed Mr. Martell to the position of President and Chief Executive Officer and principal executive officer. |
(2) | Arnold A. Pinkston was appointed Chief Legal Officer & Corporate Secretary on January 2, 2018. |
(3) | Amounts include any amounts electively deferred by the NEO under the Deferred Compensation Plan. |
(4) | For 2018, reflects the aggregate grant date fair value of stock awards, consisting of RSUs and PBRSUs, computed in accordance with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 718,Compensation-Stock Compensation. We valued the RSUs as of the grant date by multiplying the closing price of our common stock on that date by the number of RSUs awarded. We valued the PBRSUs as of the grant date by multiplying the closing price of our common stock on that date by the target number of PBRSUs that will vest upon achievement of the target performance. The RSUs were granted and vest contingent upon the satisfaction of certain performance criteria through December 31, 2018, which criteria were satisfied, and thereafter vest based on continued employment through December 31, 2020. The PBRSUs were granted and vest contingent upon satisfaction of certain performance criteria and continued employment through December 31, 2020. If the highest performance target is met or exceeded, the value of the awards at grant date would be as follows: Mr. Martell $3,704,964; Mr. Balas $1,799,880; Mr. Sando $2,199,861; and Mr. Pinkston $1,699,856. |
(5) | The Company did not grant stock options in 2016, 2017 or 2018. |
(6) | For 2018, represents the annual incentive bonus that was paid to each NEO and includes any amounts electively deferred by the NEO under the Deferred Compensation Plan. |
(7) | For 2018, the change in the present value of the life annuity from the end of fiscal year 2017 to the end of fiscal year 2018 for the Executive Supplemental Benefit Plan and the Pension Restoration Plan with respect to Mr. Sando only decreased due to an increase in the interest rate assumptions and is therefore excluded The actual change in the present values is as follows: ($411,002) under the Executive Supplemental Benefit Plan and ($8,715) under the Pension Restoration Plan. The amounts in this column do not include earnings under the Deferred Compensation Plan as such earnings were neitherabove-market nor preferential. See the Pension Benefits table below under “Pension Benefits for 2018” for assumptions used in calculating these amounts.
Grants ofPlan-Based Awards for 2018 The following table sets forth information
Effective March 6, 2017, we entered into
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