Under our non-employee director deferred compensation plan, each non-employee director may defer up to 100% of his or her cash fees. Based on his or her deferral election, the director is credited with a number of share units at the time he or she would have otherwise received the portion of the fees being deferred. Share units are equivalent to shares of our common stock except that share units have no voting rights.
Upon cessation of service on the board, the director receives a share of our common stock for each share unit. Shares are received in a lump sum distribution, and any fractional share units are paid in cash. Share units credited to a director’s account are considered awards granted under the Amended and Restated Fiserv, Inc. 2007 Omnibus Incentive Plan (the “Incentive Plan”) and count against that plan’s share reserve.
Under our stock ownership policy, non-employee directors are required to accumulate and hold our common stock having a market value equal to at least six times the amount of the annual board retainer.
Non-employee directors have five years after they become subject to the policy to meet the ownership requirements provided that interim ownership milestones are achieved during the five yearfive-year period. All non-employee directors are in compliance with our stock ownership policy.
| | | | | (1) The
| (1) | Through June 30, the Chairman’s retainer included, and was not in addition to, the standard board retainer. Beginning July 1, the Chairman’s retainer includes, and is not in addition to the standard board retainer. | | | | | | (2) Upon being elected or continuing as a director at our annual meeting of shareholders, each non-employee director receives stock options and restricted stock units each having approximately $70,000 in value.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
2014 Director Compensation
| | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | | Fees Earned or
Paid in Cash ($)(1) | | | | | Stock Awards($)(2) | | | | | Option Awards($)(2) | | | | | Total ($) | Alison Davis(3) | | | | | | 18,000 | | | | | | 35,885 | | | | | | 35,890 | | | | | | 89,775 | Christopher M. Flink(4) | | | | | | 79,000 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 219,027 | Daniel P. Kearney(5) | | | | | | 95,500 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 235,527 | Dennis F. Lynch(6) | | | | | | 70,000 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 210,027 | Denis J. O’Leary(7) | | | | | | 82,000 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 222,027 | Glenn M. Renwick(8) | | | | | | 77,500 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 217,527 | Kim M. Robak(9) | | | | | | 77,500 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 217,527 | Doyle R. Simons(10) | | | | | | 70,000 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 210,027 | Thomas C. Wertheimer(11) | | | | | | 79,500 | | | | | | 70,011 | | | | | | 70,016 | | | | | | 219,527 | Donald F. Dillon(12) | | | | | | 50,000 | | | | | | — | | | | | | — | | | | | | 50,000 |
| | | | | (1) This column includes the following amounts deferred under our non-employee director deferred compensation plan, a non-qualified defined contribution plan: Mr. O’Leary ($82,000); Mr. Renwick ($77,500); Ms. Robak ($38,750); and Mr. Simons ($70,000).
(2) We granted each non-employee director, other than Ms. Davis, a number of restricted stock units determined by dividing $70,000 by $59.89, the closing price of our common stock on May 28, 2014, the date of the grant. Ms. Davis joined the board on November 18, 2014 and we granted her a pro rata number of restricted stock units based on the number of days between her date of election and the date of our next annual meeting of shareholders and using the closing price of our common stock on November 18, 2014, $70.50. Accordingly, each non-employee director, other than Ms. Davis, received 1,169 restricted stock units, and Ms. Davis received 509 restricted stock units. The restricted stock units vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date.
We granted each non-employee director, other than Ms. Davis, a number of stock options determined by dividing $70,000 by a binomial valuation of an option of one share of our common stock on May 28, 2014, the grant date. We granted Ms. Davis a pro rata number of stock
| | | | options based on the number of days between the date of her election and the date of our next annual meeting of shareholders and using the binomial valuation of an option of one share of our common stock on November 18, 2014, the grant date. Accordingly, we granted an option to purchase 3,548 shares of our common stock at an exercise price of $59.89 to each non-employee director, other than Ms. Davis, and an option to purchase 1,545 shares of our common stock at an exercise price of $70.50 to Ms. Davis. The options vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date.
The dollar amount shown in the table is the grant date fair value of the award. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 8 to our Consolidated Financial Statements for the year ended December 31, 2014.
(3) Ms. Davis’s cash compensation includes pro rata compensation for service on the board and audit committee during the fourth quarter of 2014. As of December 31, 2014, Ms. Davis held 1,545 options to purchase shares of our common stock, none of which were vested, and 509 restricted stock units.
| (2) | Beginning with the equity awards made upon being elected as a director at our annual meeting of shareholders in 2015, each non-employee director receives stock options and restricted stock units each having approximately $86,000 in value. |
(4) Mr. Flink’s cash compensation reflects his service on the audit committee beginning in the second quarter of 2014. As of December 31, 2014, Mr. Flink held 10,900 options to purchase shares of our common stock, 7,352 of which were vested, and 1,1692015 Director Compensation
| | | | | | | | | | | | | | | | | | | | | | | | | Name | | | | Fees Earned or
Paid in Cash ($)(1) | | | | | Stock Awards ($)(2) | | | | | Option Awards ($)(2) | | | | | Total ($) | | | | | | | | | | | | | | | | | | | | | | | | | | | Alison Davis(3) | | | | | 82,500 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 254,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | Christopher M. Flink(4) | | | | | 95,000 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 267,060 | | | | | | | | | | | | | | | | | | | | | | | | | | | Daniel P. Kearney(5) | | | | | 161,500 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 333,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | Dennis F. Lynch(6) | | | | | 81,500 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 253,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | Denis J. O’Leary(7) | | | | | 95,000 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 267,060 | | | | | | | | | | | | | | | | | | | | | | | | | | | Glenn M. Renwick(8) | | | | | 90,250 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 262,310 | | | | | | | | | | | | | | | | | | | | | | | | | | | Kim M. Robak(9) | | | | | 90,250 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 262,310 | | | | | | | | | | | | | | | | | | | | | | | | | | | JD Sherman(10) | | | | | 23,250 | | | | | | 43,017 | | | | | | 43,016 | | | | | | 109,283 | | | | | | | | | | | | | | | | | | | | | | | | | | | Doyle R. Simons(11) | | | | | 81,500 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 253,560 | | | | | | | | | | | | | | | | | | | | | | | | | | | Thomas C.
Wertheimer(12) | | | | | 91,250 | | | | | | 86,058 | | | | | | 86,002 | | | | | | 263,310 | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | | | | | (1) This column includes the following amounts deferred under our non-employee director deferred compensation plan, a non-qualified defined contribution plan: Mr. O’Leary ($95,000); Mr. Renwick ($90,250); Ms. Robak ($45,125); and Mr. Simons ($81,500). (2) We granted each non-employee director, other than Mr. Sherman, a number of restricted stock units determined by dividing $86,000 by $81.11, the closing price of our common stock on May 20, 2015, the date of the grant, rounded up to the next whole restricted stock unit. Mr. Sherman joined the board on November 18, 2015 and we granted him a pro rata number of restricted stock units based on the number of days between his date of election and the date of our next annual meeting of shareholders and using the closing price of our common stock on November 18, 2015 of $96.02. Accordingly, each non-employee director, other than Mr. Sherman, received 1,061 restricted stock units, and Mr. Sherman received 448 restricted stock units. The restricted stock units vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date. We granted each non-employee director, other than Mr. Sherman, a number of stock options determined by dividing $86,000 by a binomial valuation of an option of one share of our common stock on May 20, 2015, the grant date, rounded up to the next whole option. We | | | | | | granted Mr. Sherman a pro rata number of stock options based on the number of days between the date of his election and the date of our next annual meeting of shareholders and using the binomial valuation of an option of one share of our common stock on November 18, 2015, the grant date. Accordingly, we granted an option to purchase 3,297 shares of our common stock at an exercise price of $81.11 to each non-employee director, other than Mr. Sherman, and an option to purchase 1,393 shares of our common stock at an exercise price of $96.02 to Mr. Sherman. The options vest 100% on the earlier of the first anniversary of the grant date or immediately prior to the first annual meeting of shareholders following the grant date. The dollar amount shown in the table is the grant date fair value of the award. Information about the assumptions that we used to determine the fair value of equity awards is set forth in our Annual Report on Form 10-K in Note 7 to our Consolidated Financial Statements for the year ended December 31, 2015. (3) As of December 31, 2015, Ms. Davis held 4,842 options to purchase shares of our common stock, 1,545 of which were vested, and 1,061 restricted stock units. (4) As of December 31, 2015, Mr. Flink held 14,197 options to purchase shares of our common stock, 10,900 of which were vested, and 1,061 restricted stock units. |
| (5) | As of December 31, 2015, Mr. Kearney held 54,401 options to purchase shares of our common stock, 51,104 of which were vested, 1,061 restricted stock units, and 13,448 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
(5) Mr. Kearney assumed the role of Chairman of the Board of Directors on May 28, 2014 and ceased serving on the audit and nominating and corporate governance committees as of that date. Accordingly, his cash compensation reflects his service before and after becoming Chairman. As of December 31, 2014, Mr. Kearney held 51,104 options to purchase shares of our common stock, 47,556 of which were vested, 1,169 restricted stock units, and 13,448 shares eligible for issuance pursuant to the non-employee director deferred compensation plan.
(6) As of December 31, 2014, Mr. Lynch held 12,974 options to purchase shares of our common stock, 9,426 of which were vested, and 1,169 restricted stock units.
(7) As of December 31, 2014, Mr. O’Leary held 42,402 options to purchase shares of our common stock, 38,854 of which were vested, 1,169 restricted stock units, and 14,347 shares eligible for issuance pursuant to the non-employee director deferred compensation plan.
| | | | (8) As of December 31, 2014, Mr. Renwick held 57,948 options to purchase shares of our common stock, 54,400 of which were vested, 1,169 restricted stock units, and 17,663 shares eligible for issuance pursuant to the non-employee director deferred compensation plan.
(9) As of December 31, 2014, Ms. Robak held 37,310 options to purchase shares of our common stock, 33,762 of which were vested, 1,169 restricted stock units, and 6,452 shares eligible for issuance pursuant to the non-employee director deferred compensation plan.
(10) As of December 31, 2014, Mr. Simons held 44,088 options to purchase shares of our common stock, 40,540 of which were vested, 1,169 restricted stock units, and 15,957 shares eligible for issuance pursuant to the non-employee director deferred compensation plan.
(11) As of December 31, 2014, Mr. Wertheimer held 44,968 options to purchase shares of our common stock, 41,420 of which were vested, and 1,169 restricted stock units.
(12) Mr. Dillon served as Chairman of the Board of Directors until May 28, 2014. As of December 31, 2014, Mr. Dillon held no options to purchase shares of our common stock or restricted stock units.
| (6) | As of December 31, 2015, Mr. Lynch held 16,271 options to purchase shares of our common stock, 12,974 of which were vested, and 1,061 restricted stock units. |
| (7) | As of December 31, 2015, Mr. O’Leary held 45,699 options to purchase shares of our common stock, 42,402 of which were vested, 1,061 restricted stock units, and 15,462 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
| (8) | As of December 31, 2015, Mr. Renwick held 54,401 options to purchase shares of our common stock, 51,104 of which were vested, 1,061 restricted stock units, and 18,722 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
| (9) | As of December 31, 2015, Ms. Robak held 33,743 options to purchase shares of our common stock, 30,446 of which were vested, 1,061 restricted stock units, and 6,982 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
| (10) | Mr. Sherman’s cash compensation includes pro rata compensation for service on the board and audit committee during the fourth quarter of 2015. As of December 31, 2015, Mr. Sherman held 1,393 options to purchase shares of our common stock, none of which were vested, and 448 restricted stock units. |
| (11) | As of December 31, 2015, Mr. Simons held 47,385 options to purchase shares of our common stock, 44,088 of which were vested, 1,061 restricted stock units, and 16,914 shares eligible for issuance pursuant to the non-employee director deferred compensation plan. |
| (12) | As of December 31, 2015, Mr. Wertheimer held 48,265 options to purchase shares of our common stock, 44,968 of which were vested, and 1,061 restricted stock units. |
Proposal 2. Advisory Vote to Approve Executive Compensation Background We are conducting a non-binding, advisory vote to approve the compensation of our named executive officers, as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, in accordance with Section 14A of the Exchange Act (commonly referred to as “Say-on-Pay”). Our shareholders previously expressed a preference that we hold Say-on-Pay votes on an annual basis, and our board of directors accordingly determined to hold Say-on-Pay votes every year until the next required advisory vote on the frequency of future Say-on-Pay votes. Proposed Resolution We encourage shareholders to review the Compensation Discussion and Analysis section of this proxy statement as well as the tabular and narrative disclosure under the heading “Executive Compensation.” Our compensation program for named executive officers is designed to create long-term shareholder value by rewarding performance and includes the following key factors for 2014:2015: | | | | | | | —• We delivered strongsolid results in 20142015 highlighted by adjusted internal revenue growth of 4% and a 13%15% increase in adjusted earnings per share. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation through innovation and intergration. Adjusted internalwhich we believe is essential to sustaining future growth. Internal revenue growth and adjusted earnings per share are non-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and a reconciliation to the most directly comparable GAAP measures.
—• Our compensation committee strives to provide total compensation at a level comparable to the 50th percentile of our peers with an opportunity for 75th percentile compensation for superior performance. The base salaries of our named executive officers were below the 50th percentile of our peers. The total compensation of our chief executive officer was between the 50th and 60th percentile of our peers, and the total compensation of our other named executive officers was up to the 60th percentile ofin-line with our peers.compensation philosophy.
—• We have: (i) a stock ownership policy whichthat requires our executive officers to maintain a substantial investment in Fiserv stock; (ii) a policy that prohibits executive officers from hedging or pledging our stock; and (iii) a compensation recoupment, or “clawback,” policy, all of which we believe align the interests of our named executive officers with those of our shareholders.
| | | | | | —• We provided compensation in the form of cash incentive awards based on achievement of annual performance goals and long-term equity compensation that promotes sustained financial and operating performance by delivering incremental value to executive officers to the extent our stock price increases over time. Specifically:
—• As a group, 80%85% of the compensation that we paid to our named executive officers was in the form of incentive awards, more than halfand three-quarters of which wasthe total incentive awards were in the form of equity.
—• More than three-quarters of the aggregate equity awards granted to our named executive officers were in the form of stock options, which are inherently performance-based and havedeliver value only to the extent that the price of our stock increases.
—• We generally did not provide perquisites to our named executive officers in 2014.2015.
—• In 2014,2016, we amended the employment agreements with our compensation committee adoptedchief executive officer to eliminate the excise tax gross-up provisions in those agreements. We do not have excise tax gross-up arrangements with any of our other executive officers, and we have a policy not to enter into new excise tax gross-upsuch arrangements with executive officers.
in the future. |
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The board endorses the compensation of our named executive officers and recommends that you vote in favor of the following resolution: RESOLVED, that the shareholders hereby approve, on an advisory basis, the compensation of the company’s named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including under the heading “Compensation Discussion and Analysis” and in the tabular and narrative disclosures under the heading “Executive Compensation.” Vote Required, Effect of Vote and Recommendation of the Board of Directors To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this proxy statement, the number of votes cast “for” | | | The board endorses the compensation of our named executive officers and recommends that you vote in favor of the following resolution:
RESOLVED, that the shareholders hereby approve, on an advisory basis, the compensation of the company’s named executive officers as disclosed in this proxy statement pursuant to the compensation disclosure rules of the Securities and Exchange Commission, including under the heading “Compensation Discussion and Analysis” and in the tabular and narrative disclosures under the heading “Executive Compensation.”
Vote Required, Effect of Vote and
Recommendation of the Board of Directors
To approve, on an advisory basis, the compensation of our named executive officers as disclosed in this
| | | | | proxy statement, the number of votes cast “for” the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted in favor of this proposal.
Because the vote is advisory, it will not be binding upon the board or the compensation committee, and neither the board nor the compensation committee will be required to take any action as a result of the outcome of the vote on this proposal. Although the outcome of this vote is advisory, the compensation committee will carefully consider the outcome of the vote when considering future executive compensation decisions to the extent it can determine the cause or causes of any significant negative voting results.
The board of directors recommends that you vote in favor of Proposal 2.
| | | |
the proposal must exceed the number of votes cast “against” the proposal. Unless otherwise specified, the proxies solicited hereby will be voted in favor of this proposal. Because the vote is advisory, it will not be binding upon the board or the compensation committee, and neither the board nor the compensation committee will be required to take any action as a result of the outcome of the vote on this proposal. Although the outcome of this vote is advisory, the compensation committee will carefully consider the outcome of the vote when considering future executive compensation decisions to the extent it can determine the cause or causes of any significant negative voting results. The board of directors recommends that you vote in favor of Proposal 2. | | | 26 201528 | | 2016 Proxy Statement |
Compensation Discussion and Analysis Executive Summary | | | | | Named Executive Officer | | | | Title | | | | | | Jeffery W.YabukiW. Yabuki | | | | President and Chief Executive Officer | | | | | | | Thomas J. Hirsch | | | | Former Chief Financial Officer, Treasurer and Assistant Secretary | | | | | | | Mark A. Ernst | | | | Chief Operating Officer | Rahul Gupta | | | | | | Kevin P. Gregoire | | | | Group President, Billing and PaymentsFinancial Institutions Group | | | | | | | Byron C. Vielehr | | | | Group President, Depository Institution Services Group | | | | | |
| | | | | | | Overview The Compensation Discussion and Analysis portion of this proxy statement is designed to provide you with information regarding our executive compensation philosophy, how we determine and structure executive compensation, including the factors we consider in making compensation decisions, and our executive compensation policies. The Compensation Discussion and Analysis focuses on the compensation of the executive officers identified above (our “named executive officers”). Mr. Hirsch served as our Chief Financial Officer, Treasurer and Assistant Secretary until March 14, 2016. Our Business Our mission is to provide integrated technology and services solutions tothat enable best-in-class results for our clients. We pursue this goal with strategies focused on innovative product development, service quality, improved cost effectiveness, aggressive solicitation of new clients and disciplined capital deployment, including strategic acquisitions and divestitures. We face intense competition from domestic and international companies that are aggressive and well financed. Our industry is characterized by rapidly changing technology, evolving industry standards and frequent new product introductions. In order to implement our strategic plan, we need to assemble and maintain a leadership team with the integrity, skills and dedication to execute our initiatives. We believe that executive officer compensation can be used to help us achieve our objectives by “paying for performance,” thereby aligning the interests of our executive officers with those of our shareholders. | | | | | | 20142015 Business Highlights
We delivered strongsolid results in 20142015 highlighted by adjusted internal revenue growth of 4% and adjusted earnings per share of $3.37,$3.87, a 13%15% increase over 2013.2014. We made progress in strategic areas that we believe will enhance our future results, and we continued to enhance our level of competitive differentiation through innovation and integration.which we believe is essential to sustaining future growth. Executive officer compensation for 20142015 was paid or awarded in the context of these results. Adjusted internalInternal revenue growth and adjusted earnings per share are non-GAAP financial measures. See Appendix A to this proxy statement for information regarding these measures and a reconciliation to the most directly comparable GAAP measures.
Executive Compensation Practices Our compensation program is designed to create long-term value for our shareholders by rewarding performance and sustainable growth. The table below summarizes our current compensation practices as well as those practices we have not implemented because we do not believe they advance the goals of our compensation program: |
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What We Do | | | What We Do
ü
| |  | | Our compensation committee strives to provide total compensation at a level comparable to the 50th percentile of our peers with an opportunity for 75th percentile compensation for superior performance. In 2014,2015, the total compensation of our chief executive officer was between the 50th and 60th percentile of our peers, and the total compensation of our other named executive officers was up to the 60th percentile ofin-line with our peers.ücompensation philosophy.
| | | | | | We provide cash incentive awards based on achievement of annual performance goals and equity compensation that promotes long-term financial and operating performance by delivering incremental value to executive officers to the extent our stock price increases over time. ü In early 2016, we began granting performance share units to certain executive officers. The number of shares issued at vesting will be determined by the achievement of performance goals over a three-year period.
| | | | | | We have a stock ownership policy that requires our executive officers to acquire and maintain a significant amount of Fiserv equity;equity, and in 2015, we amended the terms of the equity awards granted to our executive officers to enable them to retain their awards following a qualified retirement, subject to compliance with ongoing non-competition, confidentiality and other obligations, which further alignsalign their long-term interests with those of our shareholders as they approach possible retirement.ü
| | | | | | We have a policy that prohibits our executive officers from hedging or pledging Fiserv stock. ü
| | | | | | We have a compensation recoupment, or “clawback,” policy. |
What We Don’t Do X
| | | | |  | | In 2014,2016, we amended the employment agreements with our compensation committee adoptedchief executive officer to eliminate the excise tax gross-up provisions in those agreements. We do not have excise tax gross-up arrangements with any of our other executive officers, and we have a policy not to enter into new excise tax gross-upsuch arrangements with executive officers.Xin the future.
| | | | | | We don’t provide separate pension programs or a supplemental executive retirement plan or other post-retirement payments to our named executive officers.X
| | | | | | We generally don’t provide personal-benefit perquisites to our named executive officers. |
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2015 Compensation Matters For 2015, we paid cash incentive awards to named executive officers generally around target because although we exceeded our target adjusted earnings per share and, if applicable, target consolidated net operating profit performance goals, our internal revenue growth results were below target. The named executive officers received annual equity incentive awards in 2015 at or above target levels. The value of equity compensation we granted to our chief executive officer as a percentage of his total compensation remained comparable with 2014 and was three times the cash compensation paid to him. As a group, 85% of the compensation that we paid to our named executive officers was in the form of incentive awards, and three-quarters of the total incentive awards were in the form of equity. In addition, more than three-quarters of the aggregate equity awards granted to our named executive officers were in the form of stock options, which are inherently performance-based and deliver value only to the extent that the price of our stock increases. Recent Developments In 2015, our executive officers executed amendments to their outstanding equity award agreements to revise the criteria for retirement and post-retirement treatment of such awards. Following a qualified retirement and subject to compliance with ongoing non-competition, confidentiality and other obligations, unvested equity awards held by an executive officer will continue to vest on their original vesting schedule as if the executive officer had not ceased to be an employee, and vested stock options will remain exercisable until the earlier of five years following retirement or the original expiration date of the stock option. Prior to the modifications, all unvested options and a pro rata portion of restricted stock units granted to our executive officers would vest immediately upon retirement. The modifications apply to both previously granted awards and awards to be granted in the future. The compensation committee approved these changes to enable our executive officers to better align their long-term interests with those of our shareholders and to retain the potential value of their awards as they approach possible retirement. In early 2016, our compensation committee began granting performance share units to certain executive officers. For certain executive officers, the performance share units represent additional compensation; for others they simply change the overall mix of equity incentive awards granted. The | | | 2014 Compensation Matters
We did not increase the base salary of our chief executive officer in 2014. We paid him a cash incentive award equal to 129% of his target award because we exceeded his target adjusted earnings per share and adjusted internal revenue growth performance goals. In 2014, the value of equity compensation we granted to our chief executive officer as a percentage of his total compensation remained comparable with 2013 and was more than two times the cash compensation paid to him.
We paid cash incentive awards to other named executive officers above target levels because, among other things, we exceeded their target adjusted earnings per share, adjusted internal revenue growth and consolidated net operating profit performance goals, as applicable. The other named executive officers received annual equity incentive awards in 2014 generally at or above target levels reflecting performance at or above target. Mr. Vielehr received an equity award upon joining Fiserv at the end of 2013 and therefore did not receive an annual equity incentive award in 2014.
As a group, 80% of the compensation that we paid to our named executive officers was in the form of incentive awards, more than half of which was in the form of equity. In addition, more than three-quarters of the aggregate equity awards granted to our named executive officers were in the form of stock options, which are inherently performance-based and have value only to the extent that the price of our stock increases.
Recent Developments
In 2014, our board of directors adopted a policy that prohibits our directors and executive officers from hedging or pledging our stock, and our compensation committee adopted a policy not to enter into new excise tax gross-up arrangements with executive officers. In 2015, our executive officers executed amendments to their outstanding equity award agreements to revise the criteria for retirement and post-retirement treatment of such awards. Following a qualified retirement and subject to compliance with
| | | | | ongoing obligations, all unvested equity awards held by an executive officer will continue to vest on their original vesting schedule as if the executive officer had not ceased to be an employee, and vested stock options will remain exercisable until the earlier of five years following retirement or the original expiration date of the stock option. Prior to the modifications, all unvested options and a pro rata portion of restricted stock units granted to our executive officers would vest immediately upon retirement. The modifications apply to both previously granted awards and awards to be granted in the future. The compensation committee approved these changes to enable our executive officers to better align their long-term interests with those of our shareholders and to retain the potential value of their awards as they approach possible retirement.
Determining and Structuring Compensation
Compensation Philosophy and Objectives
Our executive officers are critical to our long-term success; therefore, we need to be competitive with companies that require talent aligned to our product, technology and service roadmaps. We seek to pay our executive officers at levels that are competitive with other employers, both within and outside of our industry, to secure the best talent possible for all our stakeholders. Consistent with Fiserv’s “pay for performance” philosophy, the compensation committee strives to set executive officer compensation at a level that is comparable to the 50th percentile of our peers with an opportunity for 75th percentile compensation for superior performance. We also seek to structure our compensation plans in a manner that is understandable to our shareholders and that is consistent with good corporate governance practices.
The goal of our executive compensation program is the same as our goal for operating our company: to create long-term value for our shareholders and clients. To this end, we design our compensation program to reward our executive officers for sustained financial and operating performance, to align their interests with those of our shareholders and to encourage them to remain with the company for long and productive careers.
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performance share units granted in early 2016 have a three-year performance period. The number of shares issued at vesting will be determined by the company’s achievement of internal revenue growth goals, subject to attaining a threshold level of adjusted income from continuing operations over the three-year period, and will range from 0% to 200% of the target award. In addition, in 2016, we entered into amendments to the employment agreement and key executive employment and severance agreement with our chief executive officer. Under the amendments, he will continue to serve as our president and chief executive officer for at least another three-year term followed by automatic one-year renewals, and we eliminated the excise tax gross-up provisions in his agreements. Determining and Structuring Compensation Compensation Philosophy and Objectives Our executive officers are critical to our long-term success; therefore, we need to be competitive with companies that require talent aligned to our product, technology and service roadmaps. We seek to pay our executive officers at levels that are competitive with other employers, both within and outside of our industry, to secure the best talent possible for all our stakeholders. Consistent with Fiserv’s “pay for performance” philosophy, the compensation committee strives to set executive officer compensation at a level that is comparable to the 50th percentile of our peers with an opportunity for 75th percentile compensation for superior performance. We also seek to structure our compensation plans in a manner that is understandable to our shareholders and that is consistent with good corporate governance practices. The goal of our executive compensation program is the same as our goal for operating our company: to create long-term value for our shareholders and clients. To this end, we design our compensation program to reward our executive officers for sustained financial and operating performance, to align their interests with those of our shareholders, and to encourage them to remain with the company for long and productive careers. | | | 29 201531 | | 2016 Proxy Statement |
Determining Compensation The Compensation Committee’s Role The compensation committee of the board of directors is responsible for: approving executive officer compensation approving compensation programs and plans in which our executive officers participate reviewing compensation-related risk administering our equity incentive plans including compliance with executive stock ownership requirements approving severance or similar termination payments to executive officers overseeing regulatory compliance with respect to compensation matters With respect to executive officers, at the beginning of each year, the compensation committee sets base salaries, approves cash incentive awards for the prior year’s performance, approves equity incentive awards, and establishes the objective performance targets to be achieved for the upcoming year and, beginning in 2016, for the three-year performance period associated with performance share units. Management’s Role Our chief executive officer makes recommendations to our compensation committee concerning the compensation of executive officers other than himself, although performance measures included in his recommendations may apply generally to all executive officers. For example, when formulating recommendations to the compensation committee regarding the compensation of a group president, our chief executive officer considers, among other factors, the group’s internal revenue growth, net operating profit, strategic progress, talent development, operational excellence and market data. Our chief executive officer annually completes a self-appraisal of his performance. For 2015, his self-appraisal focused on strategic impact, growth, talent development, risk management and financial results. The appraisal, and the recommendations of the nominating and corporate governance committee, which administers the annual evaluation of the chief executive officer by the board, is considered by the committee in its annual review of our chief executive officer’s performance and compensation. Our chief executive officer does not attend the portion of any compensation committee meeting during which the committee deliberates on matters related specifically to his compensation. | | | Determining Compensation
The Compensation Committee’s Role
The compensation committee of the board of directors is responsible for:
— approving executive officer compensation
— approving compensation programs and plans in which our executive officers participate
— reviewing compensation-related risk
— administering our equity incentive plans including compliance with executive stock ownership requirements
— approving severance or similar termination payments to executive officers
— overseeing regulatory compliance with respect to compensation matters
With respect to executive officers, at the beginning of each year, the compensation committee sets base salaries, approves cash incentive awards for the prior year’s performance, approves equity incentive awards, and establishes the objective performance targets to be achieved for the upcoming year.
Management’s Role
Our chief executive officer makes recommendations to our compensation committee concerning the compensation of our other named executive officers. Our chief executive officer’s recommendations relate only to the compensation of our other named executive officers, although performance measures included in his recommendations may apply generally to all of our named executive officers. For example, when formulating recommendations to the compensation committee regarding the compensation of a group president, our chief executive officer considers, among other factors, the group’s revenue growth, net operating profit, strategic progress, talent development and market data. Our chief executive officer annually completes a self-appraisal of his performance. For 2014, his self-appraisal focused on strategic impact, growth, talent development, risk management and financial results. The appraisal, and the recommendations of the nominating and corporate governance committee, which administers the annual evaluation of the chief executive officer by the board, is considered by the committee in its annual review of our chief executive
| | | | | officer’s performance and compensation. Our chief executive officer does not attend the portion of any compensation committee meeting during which the committee deliberates on matters related specifically to his compensation.
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Consultant’s Role During 2015, the compensation committee engaged Meridian Compensation Partners, LLC (“Meridian”) to advise the committee regarding non-employee director compensation and the design elements of a performance-based equity compensation program. In addition, Meridian provided management with market compensation data and assistance with tally sheet calculations. Management also obtained market compensation data from Towers Watson in 2015 pursuant to a standard data subscription. As further described herein, management used this market data to make recommendations to the committee regarding compensation matters. The committee concluded that management’s work with Meridian did not impair Meridian’s ability to provide independent advice regarding executive compensation matters because of the de minimis revenue associated with the services that Meridian provided and Meridian’s policies and procedures ensuring independence. Consultant’s Role
The committee consulted with Meridian Compensation Partners, LLC (“Meridian”) in 2014 regarding current equity compensation practices in the market. Management also obtained data regarding executive officer compensation pursuant to a standard data subscription with Towers Watson and Meridian in 2014. As further described herein, management used this data to make recommendations to the committee regarding compensation matters.
Tally Sheets The compensation committee reviews executive officer compensation tally sheets each year. These summaries set forth the dollar amount of all components of each named executive officer’s compensation, including base salary, annual target cash incentive compensation, annual target equity incentive compensation, value of unvested equity, potential severance, and employer contributions to 401(k) savings plans, allowing the committee to see what an executive officer’s total compensation is and how a potential change to an element of our compensation program would affect an executive officer’s overall compensation. Shareholder Advisory Vote on Named Executive Officer Compensation At our 20142015 annual meeting, our shareholders approved, by approximately 96%97% of the votes cast, the compensation of our named executive officers as disclosed in our 20142015 proxy statement. The compensation committee considered the results of the 20142015 advisory vote at its meeting in February 2015.2016. Because a substantial majority of our shareholders approved the compensation program described in the proxy statement for the 20142015 annual meeting, the compensation committee did not implement changes to our executive compensation program as a result of the shareholder advisory vote. The compensation committee will continue to consider the results of shareholder advisory votes about our named executive officer compensation.
Structuring Compensation Components of Compensation The elements of compensation that we provided to our named executive officers for 2014 were base salary, annual cash incentive awards and equity incentive awards. | | | | | Type
| | Elements
| | Description
| | | | Short-Term Compensation
| | Base Salary | | — Fixed annual amount
— Provides a level of income security
— Used to determine pay-based incentives
| | | | | | Annual Cash Incentive
| | — Annual cash award based on achievement of defined performance metrics
| | | | Long-Term Compensation
| | Stock Options and
Restricted Stock Units
| | — Equity grants that vest over a period of several years
|
| | | | | Base Salary
We provide base salary to compensate an executive officer for his or her regular work. When determining base salaries, the compensation committee considers market data, an executive officer’s scope of responsiblities, the market value of their experience, overall effectiveness, and, except in the case of the base salary of our chief executive officer, the recommendations of our chief executive officer.
Cash Incentive Award
We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our achievement of long-term objectives. We seek to offer cash awards in large enough proportion to base salary to ensure that a significant portion of each executive officer’s cash compensation is “at risk” and payable only upon the achievement of defined objectives. Our compensation committee annually determines the performance goals for and potential amounts of our cash incentive awards.
| | | | Equity Incentive Award
We provide compensation to our named executive officers in the form of time-vesting stock optionsfor 2015 were base salary, annual cash incentive awards and restricted stock units. Stock options are inherently performance-based because they deliver compensation to an executive officer only to the extent our stock price increases over the term of the award. Restricted stock units are settled in shares of common stock upon vesting. We believe restricted stock units serve as a strong reward and retention device, encouraging our executive officers to stay with the company until the restricted stock units vest.equity incentive awards.
We believe that providing grants of stock options and restricted stock units effectively balances our objective of focusing our executive officers on delivering long-term value to our shareholders with our objective of providing value to executive officers. In addition, equity awards support our objective of aligning our executive officers’ interests with those of our shareholders by tying the value of this component of compensation to changes in shareholder value. When making equity award decisions, we do not consider existing equity ownership because we do not want to discourage executive officers from holding significant amounts of our common stock. We also do not review realized compensation from prior equity awards when making current compensation decisions. If the value of equity awards granted in prior years increases significantly in future years, we do not believe that this positive development should impact current compensation decisions.
Mix of Compensation Components
We believe that the mix of compensation that we pay helps us to achieve our compensation objectives.
| | | Components | | Objectives | | | | Fixed and variable compensation | | We seek to increase the percentage of total pay that is “at risk” as executive officers move to greater levels of responsibility, with direct impact on company results. | | | | | Short-term and long-term focus | | We seek to create incentives to achieve near-term goals by providing annual cash incentives, which are based on annual performance measures. We seek to create incentives to achieve long-term goals by granting equity awards with multi-year vesting periods, the ultimate value of which depends on our share price. These awards promote retention and further align the interests of our executive officers and shareholders. | | | Short-Term Compensation | | | | Base Salary | | | | •
• • | | Fixed annual amount Provides a level of income security Used to determine pay-based incentives | | | | | | | | | | Annual Cash Incentive | | | | • | | Annual cash award based on achievement of defined performance metrics | | Long-Term Compensation | | | | Stock Options and
Restricted Stock Units | | | | • | | Equity grants that vest over a period of several years |
| | | | | | | Base Salary We provide base salary to compensate an executive officer for his or her regular work. When determining base salaries, the compensation committee considers market data, an executive officer’s scope of responsibilities, the market value of their experience, overall effectiveness, and, except in the case of the base salary of our chief executive officer, the recommendations of our chief executive officer. Cash Incentive Award We believe it is important to provide annual cash incentives to motivate our executive officers to attain specific short-term performance objectives that, in turn, further our achievement of long-term objectives. We seek to offer cash awards in large enough proportion to base salary to ensure that a significant portion of each executive officer’s cash compensation is “at risk” and payable only upon the achievement of defined objectives. Our compensation committee annually determines the performance goals for and potential amounts of our cash incentive awards. Equity Incentive Award In 2015, as in prior years, we provided compensation to our named executive officers in the form of time-vesting stock options and restricted stock units. Stock options are inherently performance-based because they deliver compensation to an executive officer only to the extent our stock price increases over the term of the award. Restricted stock units are settled in shares of common stock upon vesting. We believe restricted stock units serve as a strong reward and retention device, encouraging our executive officers to stay with the company until the restricted stock units vest. | | | | | | We believe that providing grants of stock options and restricted stock units in 2015 effectively balanced our objective of focusing our executive officers on delivering long-term value to our shareholders with our objective of providing value to executive officers. In addition, equity awards support our objective of aligning our executive officers’ interests with those of our shareholders by tying the value of this component of compensation to changes in shareholder value. As described above under “– Recent Developments,” in early 2016, our compensation committee granted performance share units to our named executive officers other than Mr. Hirsch. We believe the introduction of these awards reinforces our pay-for-performance philosophy by emphasizing the relationship between compensation and the achievement of long-term performance objectives. When making equity award decisions, we do not consider existing equity ownership because we do not want to discourage executive officers from holding significant amounts of our common stock. We also do not review realized compensation from prior equity awards when making current compensation decisions. If the value of equity awards granted in prior years increases significantly in future years, we do not believe that this positive development should impact current compensation decisions. |
Mix of Compensation Components We believe that the mix of compensation that we pay helps us to achieve our compensation objectives. | | | | | Components | | | | Objectives | | Fixed and variable compensation | | | | We seek to increase the percentage of total pay that is “at risk” as executive officers move to greater levels of responsibility, with direct impact on company results. | | Short-term and long-term focus | | | | We seek to create incentives to achieve near-term goals by providing annual cash incentives, which are based on annual performance measures. We seek to create incentives to achieve long-term goals by granting equity awards with multi-year vesting periods, the ultimate value of which depends on our share price. These awards promote retention and further align the interests of our executive officers and shareholders. In 2016, we also began granting equity awards with multi-year performance periods. | | Cash and equity compensation | | | | We believe that executive officers in positions that more directly affect corporate performance should have as their main priority profitably growing the company. Accordingly, we generally structure the target compensation of these executive officers so that they receive a significant portion of their compensation in the form of equity. Using equity in this manner further aligns executive officers’ interests with those of our shareholders, encourages retention and rewards our executive officers if we succeed. | | |
Peer Group To determine peer group compensation for an executive officer, the committee reviewed publicly available proxy and survey data regarding comparable executive officer positions and the compensation paid to our other executive officers in light of their relative functional responsibilities and experience. Notwithstanding the use of benchmarking as a tool to set compensation, comparison data only provides a context for the decisions that the compensation committee makes. The committee may also consider, among other matters, market trends in executive compensation, the percentage that each component of compensation comprises of an executive officer’s total compensation and the executive officer’s tenure in position. The peer group that we used for 2014 and approved by the committee reviewed publicly available proxy and survey data regarding comparable executive officer positions and the compensation paid to our other executive officers in light of their relative functional responsibilities and experience. Notwithstanding the use of benchmarking as a tool to set compensation, comparison data only provides a context for the decisions that the compensation committee makes. The committee may also consider, among other matters, market trends in executive compensation, the percentage that each component of compensation comprises of an executive officer’s total compensation and the executive officer’s tenure in position. The peer group that we used for 2015 and that the committee approved is set forth below: | | | | | Alliance Data Systems Corporation | | | | | Alliance Data Systems Corporation | | Equifax Inc. | | NCR Corporation | | | | Automatic Data Processing, Inc. | | Fidelity National Information Services, Inc. | | Paychex, Inc. | Convergys Corporation
| | | Total System Services, Inc.
| | | | Discover Financial Services | | Intuit Inc. | | Unisys Corporation | | | | DST Systems, Inc. | | Jack Henry & Associates, Inc. | | Visa Inc. | | | | The Dun & Bradstreet Corporation | | MasterCard Incorporated | | The Western Union Company |
Convergys Corporation Discover Financial Services DST Systems, Inc. The Dun & Bradstreet Corporation | Equifax Inc. Fidelity National Information Services, Inc. Intuit Inc. Jack Henry & Associates, Inc. MasterCard Incorporated NCR Corporation | | Paychex, Inc. Total System Services, Inc. Unisys Corporation Visa Inc. The Western Union Company |
We believe our peer group is comprised of companies comparable to ours based on our industry, company size and competition for managerial talent. In this regard, we include: companies that compete with us for managerial talent; companies that directly compete with us in our primary businesses; companies with similar business models in similar industries because they reflect the complexities inherent in managing an organization with multiple business lines and revenue sources; and other publicly traded business-to-business, service-based companies that are of similar size based primarily on annual revenue and market capitalization.
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2014
We believe our peer group is comprised of companies comparable to ours based on our industry, company size and competition for managerial talent. In this regard, we include: companies that compete with us for managerial talent; companies that directly compete with us in our primary businesses; companies with similar business models in similar industries because they reflect the complexities inherent in managing an organization with multiple business lines and revenue sources; and other publicly traded business-to-business, service-based companies that are of similar size based primarily on annual revenue and market capitalization. 2015 Named Executive Officer Compensation Base Salaries In 2014,2015, we increased the base salaries of Messrs. GuptaErnst and HirschGregoire to recognize their performancecurrent scope of responsibilities and to better align their base salary compensation with those holding comparable positions at peer companies. We did not increase the base salaries of our other named executive officers in 2014.2015. We have not increased the base salary of our chief executive officer in the last nineten years. Cash Incentive Awards Certain Terminology In this section of the proxy statement, we use a number of financial terms. Adjusted earnings per share, adjusted internal revenue growth and consolidated net operating profit are non-GAAP financial measures. See Appendix A to this proxy statement for a definition of these measures. Messrs. Yabuki and Hirsch The cash incentive payments to Messrs. Yabuki and Hirsch for 20142015 were based on adjusted earnings per share and adjusted internal revenue growth. We use adjusted earnings per share as a performance measure because we believe that there is a direct correlation between the increase in adjusted earnings per share and shareholder value. We use adjusted internal revenue growth because we believe that the long-term value of our enterprise depends on our ability to grow revenue without regard to acquisitions. For 2014,2015, we set the target adjusted earnings per share performance goal at $3.31,$3.78, which represented an 11%a 12% increase over our 20132014 adjusted earnings per share. For 2014,2015, we set the target adjusted internal revenue growth performance goal at 3.7%4.6% compared to adjusted internal revenue growth of 2.7%4.3% in 2013.2014. For 2014,2015, the threshold, target, maximum and actual amounts for Messrs. Yabuki and Hirsch were as follows: | | Performance Measure(weighting) | | | Threshold | | | Target | | | Maximum | | | Actual | | | | Threshold | | | | Target | | | | Maximum | | | | Actual | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share (60%) | | | $3.16 | | | | $3.31 | | | | $3.52 or more | | | | $3.37 | | | | | $3.63 | | | | | $3.78 | | | | | $4.01 or more | | | | | $3.87 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Internal Revenue Growth (40%) | | | 1.2% | | | | 3.7% | | | | 6.2% or more | | | | 4.3% | | | Internal Revenue Growth (40%) | | | | | 2.1% | | | | | 4.6% | | | | | 7.1% or more | | | | | 4.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Award as a Percentage of Base Salary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | J. Yabuki | | | 75% | | | | 150% | | | | 300% | | | | 193% | | | | | 75% | | | | | 150% | | | | | 300% | | | | | 158% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | T. Hirsch | | | 50% | | | | 100% | | | | 200% | | | | 129% | | | | | 55% | | | | | 110% | | | | | 220% | | | | | 116% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 33 201535 | | 2016 Proxy Statement |
Mr. Ernst The cash incentive payment to Mr. Ernst for 20142015 was based on achievement of adjusted earnings per share, adjusted internal revenue growth and consolidated net operating profit. Similar to other named executive officers, these company-wide performance measures are designed to drive internal revenue growth and profitability. In addition, we consideredused consolidated net operating profit because we believe Mr. Ernst has the ability to drive high quality revenue growth and effectively managingmanage our costs through operational effectiveness programs. For 2014,2015, the threshold, target, maximum and actual amounts for Mr. Ernst were as follows: | | Performance Measure(weighting) | | | Threshold | | | Target | | | Maximum | | | Actual | | | | Threshold | | | | Target | | | | Maximum | | | | Actual | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share (30%) | | | $3.16 | | | | $3.31 | | | | $3.52 or more | | | | $3.37 | | | | | $3.63 | | | | | $3.78 | | | | | $4.01 or more | | | | | $3.87 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Internal Revenue Growth (40%) | | | 1.2% | | | | 3.7% | | | | 6.2% or more | | | | 4.3% | | | Internal Revenue Growth (40%) | | | | | 2.1% | | | | | 4.6% | | | | | 7.1% or more | | | | | 4.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Consolidated Net Operating Profit (in millions) (30%) | | | $1,415 | | | | $1,465 | | | | $1,560 | | | | $1,475 | | | | | $1,529 | | | | | $1,579 | | | | | $1,674 | | | | | $1,604 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Award as a Percentage of Base Salary | | | 63% | | | | 125% | | | | 250% | | | | 154% | | | | | 68% | | | | | 135% | | | | | 270% | | | | | 137% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
Messrs. GuptaGregoire and Vielehr The cash incentive payment to each of Messrs. GuptaGregoire and Vielehr for 20142015 was based on the achievement of adjusted earnings per share, adjusted internal revenue growth, consolidated net operating profit and group-level results (group net operating profit (20%) and group adjusted revenue, (20%))equally weighted). Similar to other named executive officers, adjusted earnings per share, adjusted internal revenue growth and consolidated net operating profit are designed to drive internal revenue growth and profitability, and Mr. GuptaGregoire and Mr. Vielehr had the ability to significantly impact those results as the president of our Digital SolutionsFinancial Institutions Group and Depository Institution Services Group, respectively. Mr. Gupta served as president of our Digital Solutions Group for most of 2014 and in November 2014 assumed the role of president of our newly created Billing and Payments Group. The committee consideredWe used the group-level results because itwe believed they were most relevant to, and could be most directly influenced by Messrs. GuptaGregoire and Vielehr. The adjusted earnings per share, adjusted internal revenue growth and consolidated net operating profit threshold, target and maximum goals for Messrs. GuptaGregoire and Vielehr were set at the same levels set forth above for our other named executive officers. With respect to group net operating profit and group adjusted revenue, we set the performance goal levels for each of Mr. GuptaGregoire and Mr. Vielehr such that we believed that it would be unlikely that the top end of the range would be achieved, but it would be reasonably likely that the target could be achieved. For 2014,2015, the threshold, target, maximum and actual results were as follows: | | Performance Measure(weighting) | | | | Threshold | | | Target | | | Maximum | | | Actual | | | | Threshold | | | | Target | | | | Maximum | | | | Actual | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Earnings Per Share (10%) | | | $3.16 | | | | $3.31 | | | | $3.52 or more | | | | $3.37 | | | | | $3.63 | | | | | $3.78 | | | | | $4.01 or more | | | | | $3.87 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Adjusted Internal Revenue Growth (35%) | | | 1.2% | | | | 3.7% | | | | 6.2% or more | | | | 4.3% | | | Internal Revenue Growth (35%) | | | | | 2.1% | | | | | 4.6% | | | | | 7.1% or more | | | | | 4.3% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Consolidated Net Operating Profit (in millions) (15%) | | | $1,415 | | | | $1,465 | | | | $1,560 | | | | $1,475 | | | | | $1,529 | | | | | $1,579 | | | | | $1,674 | | | | | $1,604 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Group-Level Results (40%) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Award as a Percentage of Base Salary | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | R. Gupta | | | 55% | | | | 110% | | | | 220% | | | | 118% | | | K. Gregoire | | | | | 50% | | | | | 100% | | | | | 200% | | | | | 113% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | B. Vielehr | | | 55% | | | | 110% | | | | 220% | | | | 137% | | | | | 55% | | | | | 110% | | | | | 220% | | | | | 110% | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
The 2015 award as a percentage of base salary shown in the tables above for all named executive officers includes a reduction of the annual cash incentive payment by the committee, upon the recommendation of management, based on the company’s progress against certain corporate initiatives for 2015. | | | 34 201536 | | 2016 Proxy Statement |
Equity Incentive Awards The committee established threshold, target and maximum values of total equity awards, expressed as a percentage of base salary, which Messrs. Yabuki, Hirsch, Ernst and Gupta could receive. The targetfor the named executive officers. On February 18, 2015, we granted equity awards generally reflectto the committee’s assessment ofnamed executive officers based on the level of an executive officer’s responsibilities within the company. On February 19, 2014, we granted equity awards to Messrs. Yabuki, Hirsch, Ernstcompany and Gupta based on the committee’s judgment of each executive’s performance with respect to organizational capacity, talent development, strategic impact, financial results, including adjusted earnings per share and internal revenue growth, talent development, risk management financial results, and, other than with respect to his own awards, the recommendation of our chief executive officer. The mix of options and restricted stock units granted is determined by the committee based on the expressed preference of the executive officer which is considered in the context of the committee’s overall assessment of the executive officer’s compensation. The equity mix awarded by the committee is consistent with our objective of emphasizing performance-based compensation and aligning our executive officers’ economic interests with those of our shareholders. For 2014,2015, the compensation committee increased the target and maximum equity awards available to Messrs. Hirsch, Ernst and GuptaGregoire to provide them with equity opportunities that are better aligned with the equity compensation available to individuals holding similar positions at our peer companies. Mr. Yabuki’s and Mr. Vielehr’s threshold, target and maximum equity awards were set at levels commensurate with their experience and responsibilities and comparable to the equity compensation available to individuals holding similar positions at our peer companies. The grant date fair value of the annual equity incentive awards, restricted stock units and options combined, as a percentage of base salary were as follows: | | | | | | | | | | | | | | | | | | | | | | | | Percent of Base Salary(%) | | | | | | | | | Annual Equity Incentive Awards | | | | Threshold | | | Target | | | Maximum | | | Actual Award | | | | | | | | | | | | | | | | | | | | | | | | | | | J. Yabuki | | | | | 238% | | | | 476% | | | | 952% | | | | 691% | | | | | | | | | | | | | | | | | | | | | T. Hirsch | | | | | 100% | | | | 250% | | | | 350% | | | | 260% | | | | | | | | | | | | | | | | | | | | | M. Ernst | | | | | 100% | | | | 250% | | | | 350% | | | | 244% | | | | | | | | | | | | | | | | | | | | | R. Gupta | | | | | 75% | | | | 150% | | | | 250% | | | | 149% | | | | | | | | | | | | | | | | | | | | |
Upon joining Fiserv at the end of 2013, Mr. Vielehr received stock options and restricted stock units having an aggregate grant date fair value of approximately $4 million to induce him to join the company. The grant was intended to immediately and strongly align Mr. Vielehr’s interests with those of our shareholders and, in part, recognize that he was forfeiting significant benefits upon leaving his prior employer. As a result, Mr. Vielehr was not eligible for an annual equity incentive award in 2014.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | Percent of Base Salary (%) | | | | | | | | | Annual Equity Incentive Awards | | | | Threshold | | | | | Target | | | | | Maximum | | | | | Actual Award | | | | | | | | | | | | | | | | | | | | | | | | | | | J. Yabuki | | | | | 238% | | | | | | 476% | | | | | | 952% | | | | | | 778% | | | | | | | | | | | | | | | | | | | | | | | | | | | T. Hirsch | | | | | 100% | | | | | | 275% | | | | | | 400% | | | | | | 340% | | | | | | | | | | | | | | | | | | | | | | | | | | | M. Ernst | | | | | 100% | | | | | | 275% | | | | | | 400% | | | | | | 300% | | | | | | | | | | | | | | | | | | | | | | | | | | | K. Gregoire | | | | | 75% | | | | | | 150% | | | | | | 250% | | | | | | 144% | | | | | | | | | | | | | | | | | | | | | | | | | | | B. Vielehr | | | | | 100% | | | | | | 200% | | | | | | 300% | | | | | | 277% | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | | 35 201537 | | 2016 Proxy Statement |
Other Elements of Compensation Employee Stock Purchase Plan We maintain a tax-qualified employee stock purchase plan that is generally available to all employees, including executive officers, which allows employees to acquire our common stock at a discounted price on an after-tax basis. This plan allows employees to buy our common stock at a 15% discount to the market price with up to 10% of their salary and incentives (up to a maximum of $25,000 in any calendar year), with the objective of allowing employees to benefit when the value of our stock increases over time. Post-Employment Benefits We provide severance and change-in-control protections to our named executive officers through key executive employment and severance agreements and, in the case of Messrs. Yabuki, Ernst, GuptaGregoire and Vielehr, employment agreements. We discuss the purposes and terms of the agreements below under the heading “Employment“Employment and Other Agreements with Executive Officers.Officers.” Perquisites In 2014,2015, we did not provide any personal-benefit perquisites to our named executive officers other than relocation-related expenses disclosed in footnote 34 to the Summary Compensation Table below and participation in an executive physical program. Retirement Savings Plan and Health and
Welfare Benefits We provide subsidized health and welfare benefits which include medical, dental, life insurance, disability insurance and paid time off. Executive officers are entitled to participate in our health, welfare and 401(k) savings plans on generally the same terms and conditions as other employees, subject to limitations under applicable law. We subsidize supplemental long-term disability coverage for executive officers. We do not provide a separate pension program or a supplemental executive retirement plan or other post-retirement payments to executive officers.plan. Our employees, including executive officers, are immediately eligible for matching contributions under our 401(k) savings plan. Our matching contributions | | | | are capped at 3% of annual cash compensation and vest after two years. Additional Compensation Policies Securities Trading Policy We prohibit our executive officers from trading in our common stock during certain periods at the end of each quarter until after we disclose our financial and operating results.results unless such trading occurs under an approved Rule 10b5-1 plan. We may impose additional restricted trading periods at any time if we believe trading by executive officers would not be appropriate because of developments that are, or could be, material. In addition, we require pre-clearance by our chief legal officer and our chief executive officer of all stock transactions by designated senior members of management and our board of directors, including the establishment of a Rule 10b5-1 trading plan. We also prohibit our employees, officers and directors from hedging or engaging in short sales of our stock. Furthermore, directors and executive officers are prohibited from pledging our stock and from entering into transactions in derivative instruments in connection with our stock. Stock Ownership We believe that stock ownership by our executive officers is essential for aligning management’s long-term interests with those of our shareholders. To emphasize this principle, we maintain a stock ownership policy that requires our chief executive officer to own equity having a value of at least six times his base salary and our other executive officers to own equity having a value of at least four times their respective base salaries. We believe that these levels are sufficiently high to demonstrate a commitment to value creation, while satisfying our executive officers’ needs for portfolio diversification. All executive officers are expected to satisfy the stock ownership requirements within five years after they become subject to them with minimum attainment levels beginning at the end of the second year. All named executive officers are in compliance with the requirements. |
Compensation Recoupment Policy In the event that we restate our financial results, we may recover all or a portion of the incentive awards that we paid or granted, or that vested, on the basis of such results. Recovery may be sought, in the discretion of the board, from any person who was serving as an executive officer of the company at the time the original results were published. Both cash and equity incentive awards are subject to recoupment; there is no time limit on our ability to recover such amounts, other than limits imposed by law; and recoupment is available to us regardless of whether the individuals subject to recoupment are still employed by us when repayment is required. To the extent recoupment is sought, the board of directors may, in its discretion, seek to recover interest on amounts recovered and/or costs of collection and we have the right to offset the repayment amount from any compensation owed by us to any executive officer. The independent members of our board of directors, or a committee thereof comprised solely of independent directors, are responsible for determining whether recoupment is appropriate and the specific amount, if any, to be recouped by us. Equity Award Grant Practices The compensation committee generally approves annual equity awards during its regularly-scheduled February meeting, after we issue our financial results for the prior year. In addition, in order to accommodate the need for periodic awards, such as in connection with newly hired employees, promotions or retention awards, the compensation committee delegates its authority to our chief executive officer and chief operating officer to enable such individuals to grant equity awards within certain parameters; provided that all grants to directors and executive officers are specifically made by the compensation committee. Our equity grant policy prescribes the timing of awards or specific grant dates. Under the Incentive Plan, the exercise price of all options to purchase shares of our common stock may not be less than the closing price of our common stock on the NASDAQ stock market on the grant date. | Deductibility of Compensation Section 162(m) of the Internal Revenue Code places a limit of $1,000,000 on the amount of compensation that we may deduct from our taxable income for federal income tax purposes in any one year with respect to our named executive officers (other than our chief financial officer). Certain performance-based compensation is not subject to the deduction limit. It is generally our intention to qualify compensation payments for tax deductibility under Section 162(m). Notwithstanding our intentions, because of ambiguities and uncertainties as to the application and interpretation of Section 162(m) and the regulations issued thereunder, no assurance can be given that compensation intended to satisfy the requirements for deductibility under Section 162(m) will so qualify. Our compensation committee reserves the right to provide compensation that does not qualify as performance-based compensation under Section 162(m) to the extent it believes such compensation is necessary to continue to provide competitive arrangements intended to attract and retain, and provide appropriate incentives to, qualified officers and other key employees. Employment and Other Agreements with Executive Officers Yabuki Employment Agreement In 2005,2016, we entered into anamended the employment agreement with Mr. Yabuki to provide that provides that, during the term of his employment, Mr. Yabuki will continue to serve as our president and chief executive officer for at least another three-year term and, subject to election by our shareholders, as a director. After the current three-year term ends in 2018, the agreement automatically renews for one-year terms unless either party gives the other 90 days prior written notice of his or its desire to terminate the agreement. Under his employment agreement, as amended in 2016, Mr. Yabuki is entitled: (i) to receive an annual salary of at least $840,000; (ii) to participate in our executive incentive compensation plan with a target and maximum cash incentive award of not less than 125%175% and 350% of his base salary;salary, respectively; (iii) to receive grants of options, restricted stock and/or other awards under our long-term incentive compensation program
commensurate with his position;position, provided that the grant date fair value of each year’s awards shall not be less than $8 million; and (iv) to receive up to four weeks of vacation; and (v) to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. In addition, the 2016 amendment provides for the elimination of the excise tax gross-up provision in his existing employment agreement and for a one-time grant of performance share units. The agreement automatically renews for one year terms unless either party gives
| | | | | performance share units have a grant date fair value of approximately $12 million and vest at the other 90 days prior written noticeend of his or its desirea three-year performance period only upon the achievement of specified revenue growth and talent development goals, subject to terminate the agreement.attaining a threshold level of adjusted income from continuing operations over such three-year period. In the event of a conflict between his employment agreement and the terms of an equity award agreement, his employment agreement will control unless the equity award agreement provides a more favorable benefit. The terms of Mr. Yabuki’s employment agreement and KEESAkey executive employment and severance agreement, or “KEESA,” resulted from an arm’s-length negotiation, and, as a result, we believe the terms reflect the market terms for the leader of a company of our size in our industry. Ernst, GuptaGregoire and Vielehr Employment Agreements We entered into an employment agreement with each of Messrs. Ernst, GuptaGregoire and Vielehr pursuant to which we agreed to employ them until one party provides the other with a notice of termination. Under their employment agreements, Messrs. Ernst and Vielehr are entitled: (i) to receive an annual salary of at least $525,000 and $470,000, respectively; (ii) to participate in our executive incentive compensation plan; (iii) to participate in our executive long-term incentive compensation program with an annual target of at least 200% of base salary; and (iv) in the case of Mr. Vielehr, a one-time cash payment of $200,000 which was paid on March 15, 2014. Under his employment agreement, Mr. GuptaGregoire is entitled: (i) to receive an annual salary of at least $400,000; (ii) to participate in our executive incentive compensation plan; and (iii) to participate in our executive long-term compensation program; and (iv) to receive a minimum of four weeks paid vacation.program. In addition, Messrs. Ernst, GuptaGregoire and Vielehr are entitled to participate in our employee benefit plans, welfare benefit plans, retirement plans and other standard benefits as are generally made available to our executive officers. Each of Messrs. Ernst, Gupta and Vielehr also received equity awards upon joining Fiserv pursuant to his employment agreement. These awards are reflected in the Outstanding Equity Awards table below. The terms of Mr. Ernst’s, Mr. Gupta’sGregoire’s and Mr. Vielehr’s employment agreements and KEESAs resulted from arm’s-length negotiations, and, as a result, we believe the terms reflect the market terms for a leader of a company of our size in our industry. | | | | Key Executive Employment and Severance Agreements We have entered into key executive employment and severance agreements, or “KEESAs,”KEESAs, with our executive officers that provide for potential benefits in connection with a change in control. A complete discussion of the terms of the KEESAs, together with an estimate of the amounts potentially payable under each KEESA, appears below under the heading “Potential Payments Upon Termination or Change in Control.” |
Compensation Committee Report The compensation committee has reviewed and discussed the “Compensation“Compensation Discussion and Analysis”Analysis” contained in this proxy statement with management. Based on our review and the discussions with management, the compensation committee recommended to the board of directors that the Compensation Discussion and Analysis be included in this proxy statement and incorporated by reference in our Annual Report on Form 10-K for the year ended December 31, 2014. 2015. Glenn M. Renwick, Chairman Dennis F. Lynch Doyle R. Simons | Compensation Committee Interlocks and Insider Participation
There areDuring the last fiscal year, there were no compensation committee interlocks between us and other entities involving our executive officers and directors who serve as executive officers or directors of such other entities. During the last completed fiscal year, no member of the compensation committee was a current or former officer or employee.
