NOTICE OF 2017 ANNUAL MEETING
Notice of 2018 Annual Meeting and 2018 Proxy Statement
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 14A
(Rule14a-101)
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Teradata Corporation
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NOTICE OF 2017 ANNUAL MEETING
Notice of 2018 Annual Meeting and 2018 Proxy Statement
AND PROXY STATEMENT
Message to Stockholders
MESSAGE TO STOCKHOLDERS
March 1, 20176, 2018
Dear Fellow Stockholder:
I am pleased to invite you to attend Teradata Corporation’s 20172018 Annual Meeting of Stockholders on April 19, 2017.17, 2018. The meeting will begin promptly at 8:00 a.m. local time at the Waldorf Astoria Chicago, 11 East WaltonHotel Nikko San Francisco, 222 Mason Street, Chicago, Illinois 60611.San Francisco, California 94102.
This proxy statement, which includes a notice of the 20172018 annual meeting, tells you more about the agenda and procedures for the meeting. It also describes how our Board of Directors operates and gives information about director candidates and general compensation and corporate governance matters.
Since last year’s annual meeting, Teradata continued its
We made significant progress in transforming our business transformation processin 2017. Our success was propelled by our outstanding technology and took a numberconsulting offerings, our skilled and committed workforce, and our winning strategy of significant actionsdelivering high-impact business outcomes. During the year, we completed several organizational changes designed to increase shareholder value, principallyimprove our market positioning, including the development and initial implementationconsolidation of our newsales and analytics consulting businesses to support ourgo-to-market strategy that is focused on the 500 companies with the world’s largest analytical opportunities, and restructuring our research and development around strategic direction as announced atofferings, products and innovation for our Analyst Day on November 17, 2016. During 2016, Teradata made great strides in developing and implementing key stepsfuture. Our entire team is driving increased usage of our business transformation, including: refocusing the Company’s strategy away from simply selling technology to information technology buyerscore database software and toward delivering business value to business users as a trusted advisor; expanding our core data warehouse market opportunity by making it easier for customers to buy our solutions and by providing Teradata data warehousing in the public cloud; and transitioning from perpetual togrowth of subscription-based Teradata database licenses,license revenue, which will result inlead to a more predictable, recurring revenue streamstream. We introduced Teradata Everywhere™, bringing together our expanded offerings for analytics across cloud andon-premises with flexible pricing and subscription licensing options that help companiesde-risk their decisions in analytics, allowing them to move forward with confidence knowing their investments are protected. Additionally, we have created a high-performing culture with an infusion of new talent to add to our highly experienced people and bring new perspectives. We now have both the company.confidence and momentum to continue our transformation and return Teradata to profitable revenue growth and long-term stockholder value.
In addition, as described on page 37 of this proxy statement, stockholder engagement has always beenremains an importantintegral part of Teradata’s business practices, and we greatly value the input we receive from our investors. We are in frequent communication with stockholders on a variety ofkey business matters, including operations,strategic direction, corporate governance practices and executive compensationcompensation. Moreover, we have designed and have designedmade changes to our executive compensation program in a way that addresses the inputfeedback provided through our stockholder outreach efforts. During 2016, we continued to modify our executive compensation program to address common themes expressed by our investors. These changes further connect pay and performance more closely than ever and enhance the
alignment of our executive compensation program with your long-term interests.
Our Board of Directors continues to evolve, and we remainbe actively involved in establishing the strategic direction of the company. The board remains committed to ensuring that it includes a highly qualified and diverse group of directors who are well-equipped to oversee the success of Teradata’s business and effectively represent your interests. Just recently, we added two directors who bring new technological and business growth expertise to the board. We encourage you to review the qualifications, skills and experience that we have identified as important attributes for each of our directors contributes to our Board of Directors as described beginning on page 64 of this proxy statement.
Victor Lund, Teradata’s new President and Chief Executive Officer, and I look forward to seeing you at the annual meeting. If you plan to attend, please send an email toinvestor.relations@teradata.com to receive a meeting reservation request form. In addition, you are welcome to share your thoughts or concerns with us on any topic. Communications can be addressed to directors in care of the Corporate Secretary, Laura Nyquist, at 10000 Innovation Drive, Dayton, Ohio 45342 or by email at the address listed above.
Every vote is important. Whether or not you plan to attend the annual meeting, I urge you to authorize your proxy as soon as possible so that your stock may be represented at the meeting.
We value your support and thank you for your commitment to Teradata.
Sincerely,
James M. Ringler
Chairman of the Board
TERADATA CORPORATION
NOTICE OF ANNUAL MEETING
OF STOCKHOLDERS
TIME
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TIME 8:00 a.m. local time | DATE Tuesday, April 17, 2018 | PLACE Hotel Nikko San Francisco 222 Mason Street San Francisco, CA 94102 | ||
8:00 a.m. local time
DATE
Wednesday, April 19, 2017
PLACE
Waldorf Astoria Chicago
11 East Walton Street, Chicago, Illinois 60611
PURPOSEPurpose
Elect Ms. CooperBacus and Messrs. Fishback, KeplerChou, Ringler and StavropoulosSchwarz to serve as Class III directors for three-year terms expiring at the 20202021 annual meeting of stockholders and to hold office until their respective successors are duly elected and qualified;
AdvisoryConsider an advisory(non-binding) vote to approve executive compensation (a“say-on-pay” vote);
Advisory(non-binding)Consider and vote onupon the frequencyapproval ofsay-on-pay votes;
Vote onConsider and vote upon the ratification of the appointment of our independent registered public accounting firm for 2017;2018; and
Transact such other business as may properly come before the meeting and any adjournment or postponement of the meeting by or at the direction of the Board of Directors.
OTHER IMPORTANT INFORMATIONOther Important Information
Record holders of Teradata common stock at the close of business on February 22, 2017,20, 2018, may vote at the meeting.
Your shares cannot be voted unless they are represented by proxy or in person by the record holder at the meeting. Even if you plan to attend the meeting, please submit a proxy to ensure that your shares are represented at the meeting.
INTERNET AVAILABILITYInternet Availability
Important Notice Regarding the Availability of Proxy Materials for the 20172018 Annual Meeting of Stockholders to Be Heldbe held on April 19, 2017: 17, 2018: This notice of the 20172018 annual meeting of stockholders and proxy statement, our 20162017 annual report, and form of proxy and voting instruction card are available athttp:https://www.proxyvote.com.
| By order |
March 1, 2017
10000 Innovation Drive
Dayton, OH 45342
PROXY STATEMENT
General Information
On behalf of the Board of Directors,
Laura Nyquist
General Counsel and Secretary
March 6, 2018
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This summary highlights information contained elsewhere in the proxy statement that is being provided to you by Teradata Corporation a Delaware corporation (“Teradata”,Teradata,” the “Company”, “we”“Company,” “we,” or “us”), we are requesting your proxy for the 2017 in connection with its 2018 annual meeting of stockholdersstockholders. This summary is not a complete description, and any adjournments or postponements that follow. The meeting will be held at 8:00 a.m. local time, on April 19, 2017, atyou should read the Waldorf Astoria Chicago, 11 East Walton Street, Chicago, Illinois 60611. At the meeting, we will: (1) consider the election of Ms. Cooper and Messrs. Fishback, Kepler and Stavropoulos as Class I directors for three-year terms expiring in 2020; (2) vote on an advisory(non-binding) basis to approve executive compensation as disclosed in thisentire proxy statement (acarefully“say-on-pay”before vote); (3) vote on an advisory(non-binding) basis to approve the frequency ofsay-on-pay votes; (4) vote on the ratification of the appointment of our independent registered public accounting firm for 2017; and (5) transact such other business as may properly come before the meeting and any adjournment or postponement thereof. voting.
This proxy statement contains important information about the 20172018 annual meeting of stockholders, as well as information regarding the voting process, director elections, our corporate governance programs, and executive and director compensation, among other things. We are furnishing this proxy statement together with our 20162017 annual report and form of proxy and voting instruction card (“proxy card”). Proxy materials for the 20172018 annual meeting of stockholders are being made available in printed form on or about March 13,9, 2018, and they will be available online on or about March 14, 2017.12, 2018. On behalf of the Teradata Board of Directors, we are requesting your proxy for the 2018 annual meeting of stockholders and any adjournments or postponements that follow.
Voting Methods – Your Vote is Important!
Even if you plan to attend the 2018 annual meeting of stockholders in person, we urge you to vote in advance of the meeting using one of these advance voting methods.
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By Internet: www.proxyvote.com | By Phone: 1-800-690-6903 | By Mail: 51 Mercedes Way Edgewood, NY 11717 | ||||||
2018 Annual Meeting Information
| Meeting Date: | April 17, 2018 | |
| Meeting Place: | Hotel Nikko San Francisco 222 Mason Street San Francisco, California 94102 | |
| Record Date: | February 20, 2018 | |
| Meeting Time: | 8:00 a.m. (Pacific) | |
| Voting: | All common stockholders of record as of February 20, 2018 may vote. Each outstanding share of common stock is entitled to one vote on each matter to be voted upon at the annual meeting. | |
| Admission: | You will need an admission ticket or proof of ownership of Teradata common stock, as well as a form of personal photo identification, to be admitted to the annual meeting. If you plan to attend, please send an email toinvestor.relations@teradata.com to receive a meeting reservation request form. Please refer to page 78 of this proxy statement under “Other General Information” for more information about attending the meeting. | |
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Meeting Agenda
MATTER | BOARD VOTE RECOMMENDATION | PAGE REFERENCE (FOR MORE DETAIL) | ||||
Proposal 1 | Elect Ms. Bacus and Messrs. Chou, Ringler and Schwarz to serve as Class II directors for three-year terms expiring at the 2021 annual meeting of stockholders and to hold office until their respective successors are duly elected and qualified | FOR each nominee | 4 | |||
Proposal 2 | Consider an advisory(non-binding) vote to approve executive compensation (a“say-on-pay” vote) | FOR | 62 | |||
Proposal 3 | Consider and vote upon the approval of the amended and restated Teradata Employee Stock Purchase Plan | FOR | 64 | |||
Proposal 4 | Consider and vote upon the ratification of the appointment of our independent registered public accounting firm for 2018 | FOR | 68 |
2017 Financial Highlights vs. Prior Year
TOTAL STOCKHOLDER RETURN (TSR) |
RECURRING REVENUE AS A % OF TOTAL REVENUE |
ANNUAL RECURRING REVENUE (ARR) |
Board of Directors
NAME | CLASS | AGE | POSITION | |||
James M. Ringler* | II | 72 | Chairman | |||
Lisa R. Bacus* | II | 53 | Director | |||
Timothy C.K. Chou* | II | 63 | Director | |||
John G. Schwarz* | II | 67 | Director | |||
Daniel R. Fishback | I | 56 | Director | |||
David E. Kepler | I | 65 | Director | |||
William S. Stavropoulos | I | 78 | Director | |||
Cary T. Fu | III | 69 | Director | |||
Michael P. Gianoni | III | 57 | Director | |||
Victor L. Lund | III | 70 | President and Chief Executive Officer |
* Nominees for election
| 2 | 2018 PROXY STATEMENT |
Board and Governance Highlights
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| all directors (other than CEO) and | |||||||
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| separate CEO and | |||||||
| highly qualified and | |||||||
| active board oversight of risk and operational plans | |||||||
| ongoing board refreshment (4 new directors in the | |||||||
| regular executive sessions of independent directors at board and committee meetings | |||||||
| independent compensation consultant engaged to | |||||||
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| robust stock ownership requirements for directors and executive officers and prohibitions on hedging and pledging stock | |||||||
| compensation clawback and harmful activity policies | |||||||
Only stockholders of record may vote at the meeting. A stockholder of record is a stockholder as of the close of business on February 22, 2017, the record date for the meeting. On the record date, there were 130,887,589 shares of common stock outstanding.
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For each share of common stock you own, you are entitled to cast one vote on each director candidate submitted for election and to cast one vote on each other matter properly brought before the meeting.
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Proxy materials for the 2017 annual meeting of stockholders are being made available in printed form on or about March 13. They will be available online on or about March 14.
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Notice and Access. Proxy materials (including our 2016 annual report, notice of the 2017 annual meeting of stockholders and proxy statement, and proxy card) are being made available via the Internet pursuant to the “notice and access” rules of the Securities and Exchange Commission (“SEC”). A Notice of Internet Availability of Proxy Materials (“Notice”) is being mailed to most of our record and beneficial stockholders. The Notice includes instructions on how to access the proxy materials on the Internet or request printed copies of these materials. To receive future proxy materials by mail or email, follow the instructions included with the Notice. If you previously elected to receive materials via mail or email delivery, you will not receive the Notice, but you will receive your materials via the delivery method you requested.
Electronic Delivery. At their request, many stockholders are receiving an email providing them with links to receive the Notice and Internet access to the proxy materials rather than receiving a printed copy of the Notice or printed proxy materials.
Paper Copies. If you have previously requested paper copies of your proxy materials, or are otherwise required to receive paper copies, you will receive the 2017 proxy materials, including notice of the meeting, in printed form unless you consent to receive these documents electronically in the future.
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If you are a stockholder of record (i.e., you directly own your common stock through an account with our transfer agent, Computershare Investor Services), you can choose to access your Teradata proxy materials electronically and save the cost of producing and mailing a Notice and other documents by following the instructions provided athttp://www.investordelivery.com or by following the prompt if you choose to authorize your proxy over the Internet. You must provide your sixteen-digit control number listed on your Notice or proxy card to make this election.
Your election to receive proxy materials by electronic access will remain in effect until you revoke your consent athttp://www.proxyvote.com, or your consent is deemed to be revoked under applicable law. You must provide your sixteen-digit control number to revoke your consent.
If you are a beneficial owner (i.e., you indirectly hold your common stock through a nominee such as a bank or broker), please review the information provided by your nominee for instructions on how to elect to view future proxy statements and annual reports over the Internet.
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To save costs, only one set of proxy materials is being printed and mailed to stockholders who have requested printed copies and share an address, unless otherwise requested or required under applicable law. If you have multiple Teradata common stock record accounts and/or share an address with a family member who is a Teradata stockholder and want to receive more than one copy of the Notice and/or proxy materials, you may contact our mailing agent, Broadridge Financial Solutions, at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 (phone:1-800-542-1061). Broadridge will mail you a separate copy of the proxy materials and will remove you from the householding program within thirty days after receipt of this request.
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Your vote is important. Your shares can be voted at the annual meeting only if you are a record stockholder and present in person or represented by proxy. Even if you plan to attend the meeting, we urge you to authorize your proxy in advance. You may vote your shares by authorizing a proxy over the Internet or by telephone. In addition, if you received paper copies of the proxy materials by mail, you can also submit a proxy by mail by following the instructions on the proxy card. Voting your shares by authorizing a proxy over the Internet, by telephone or by written proxy card will ensure your representation at the annual meeting regardless of whether you attend in person.
If you are a stockholder of record, please authorize your proxy electronically by going to thehttp://www.proxyvote.comwebsite or by calling the toll-free number (for residents of the United States and Canada) listed on your Notice and proxy card. Please have your Notice or proxy card in hand when going online or calling. If you authorize your proxy via the Internet, you do not need to return your proxy card. If you choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided.
If you hold your shares beneficially through a nominee (such as a bank or broker), you may be able to authorize your proxy by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares.
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You may revoke your proxy at any time before it is voted at the meeting by:
properly executing and delivering a later-dated proxy (including a telephone or Internet proxy authorization);
voting by ballot at the meeting; or
sending a written notice of revocation to the inspectors of election in care of our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342.
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The method by which you vote and authorize your proxy will in no way limit your voting rights if you later decide to vote in person at the meeting. If you beneficially own your shares through a nominee (such as a bank or broker), you must obtain a proxy executed in your favor from your nominee to be able to vote at the meeting.
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Your shares will be voted at the meeting as directed by the instructions on your proxy card, voting instructions or electronic proxy if (1) you are entitled to vote, (2) your proxy was properly executed or properly exercised electronically, (3) we received your proxy prior to the voting deadlines for the annual
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meeting (April 18, 2017 at 11:59 p.m. for record stockholders who do not vote at the meeting, such time as directed by the nominee for beneficial owners, and April 14, 2017 for participants in our 401(k) savings plan), and (4) you did not revoke your proxy prior to or at the meeting.
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If you are a participant in the Teradata 401(k) savings plan, your proxy includes the number of Teradata common stock units (share interests) allocated to your plan account. You may instruct the trustee how to vote the number of share interests allocated to your plan account. The trustee will vote the share interests allocated to your plan account in accordance with your instructions. If you do not vote your share interests in the Teradata 401(k) savings plan, the trustee will vote the unallocated share interests, as well as any allocated share interests held by the plan, in the same proportion as the share interests for which it received timely voting instructions.
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To have a quorum necessary to conduct business at the meeting, it is necessary to have shares that represent (in person or by proxy) the holders of a majority of our shares of common stock outstanding on the record date, which is the close of business on February 22, 2017. Shares of common stock represented in person or by proxy (including shares that abstain with respect to a particular proposal to be voted upon and “brokernon-votes”) will be counted as present for the purpose of determining whether a quorum exists at the meeting for that proposal. If a quorum is not present, the meeting will be adjourned until a quorum is obtained.
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With respect to Proposal 1 (the election of directors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on the election of directors is required to elect each director.
With respect to Proposal 2 (the advisory“say-on-pay” vote on executive compensation), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such question is required to adopt this advisory resolution in accordance with Teradata’s bylaws. However, the results of this vote are not binding on the board, whether or not any resolution is passed under this voting standard.
With respect to Proposal 3 (the frequency of the advisorysay-on-pay vote on executive compensation), the voting option (e.g., 1 year, 2 years or 3 years), if any, that receives the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business will be the option adopted by the stockholders in accordance with the voting standard established in Teradata’s bylaws. Like thesay-on-pay vote, the results of this vote are not binding on the board, whether or not any option is passed under this voting standard.
With respect to Proposal 4 (the ratification of the appointment of the Company’s independent auditors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item of business is required to ratify the appointment.
Abstentions effectively count as votes “against” the adoption of a proposal and the election of a director. Moreover, if you do not instruct your nominee (such as your bank or broker) how to vote your shares with respect to the election of directors, the advisory vote on executive compensation, and the advisory vote on the frequency of votes on executive compensation, the nominee may not vote on these proposals. However, broker“non-votes” will have no effect on the outcome of the vote for any proposal or the election of any director. Broker“non-votes” occur when a nominee returns a properly executed proxy but does not vote on a particular item because the nominee has not received voting instructions from the beneficial owner and, therefore, does not have the authority to vote on a proposal.
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The Teradata Board of Directors recommends that you vote:
FOR the election of each of the four Class I director nominees, Ms. Cooper and Messrs. Fishback, Kepler and Stavropoulos (see page 6);
FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement (see page 73);
FOR the approval, on an advisory basis, of a frequency of once every year for future advisorysay-on-pay votes on executive compensation (see page 75); and
FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2017 (see page 76).
If you submit your proxy without specific voting instructions, your shares represented by that proxy will be voted as recommended by our board. As discussed above, if you hold your shares beneficially through a nominee (such as a bank or a broker) and fail to provide specific voting instructions to that nominee, your shares will not be voted in the election of directors, the advisory“say-on-pay” vote on executive compensation, or the advisory vote on the frequency of future advisorysay-on-pay votes on executive compensation.
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If you plan to attend the meeting in person, please send an email to us atinvestor.relations@teradata.com to request a meeting reservation request form. You may attend the meeting if you are a stockholder of record, hold a proxy for a stockholder of record, or are a beneficial owner of our common stock with evidence of ownership. If you are a beneficial owner (i.e., you hold your common stock through a nominee such as a bank or broker), please include evidence of your ownership of common stock with the form (such as an account statement showing you own Teradata common stock as of the record date). If you do not have a reservation for the meeting, you may still attend if we can verify your stock ownership at the meeting.
We will include the results of the votes taken at the meeting, as well as the frequency with which the Company intends to conduct thesay-on-pay vote in light of the results of the advisory frequency vote, in a Form8-K filed with the SEC within four business days after the date of the annual meeting or any adjournment or postponement thereof. You may also find information on how to obtain a transcript of the meeting by writing to our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342.
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(Item 1 on Proxy Card)
The Board of Directors is currently divided into three classes. Directors are elected by stockholders for terms of three years and hold office until their successors are elected and qualified. One of the three classes is elected each year to succeed the directors whose terms are expiring. As of the 20172018 annual meeting, the terms for the directors in Classes I, II and III of the Board of Directors expire in 2017,2020, 2018 and 2019, respectively.
Ms. CooperBacus and Messrs. Fishback, KeplerChou, Ringler and StavropoulosSchwarz currently are Class III directors whose terms are expiring at the 20172018 annual meeting.
For the reasons described below, each of the Class III directors has been nominated by the board forre-election through the 20202021 annual meeting of stockholders and until his or her successor is elected and qualified.
Proxies solicited by the board will be voted for the election of the nominees, unless you provide a contrary instructioninstruct otherwise on your proxy. Each of the nominees has indicated his or her willingnessis willing to serve if elected. The board has no reason to believe that these nominees will be unable to serve. However, if one of them should become unavailable, the board may further reduce the size of the board or designate a substitute nominee. If the board designates a substitute, shares represented by proxies will be voted for the substitute nominee.
 | The Board of Directors recommends that you vote FOR the election of each of the Class |
Election of each nominee requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item.election. If a nominee does not receive a majority vote, he or she is required to tender theirhis or her resignation for consideration by the disinterested members of the Board of Directors in accordance with the board’sour Corporate Governance Guidelines as described on page 1912 of this proxy statement. Proxies solicited by the Board of Directors will be voted FOR each nominee, unless you specify otherwise in your proxy. Abstentions will have the same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote.
Director Qualifications
Our Board of Directors currently consists of eleventen members who we believe are extremely well-qualified to serve on the board and represent our stockholders’ best interests. As described belowon page 15 of this proxy statement under the caption “Selection of Nominees for Directors,” the board and its Committee on Directors and Governance (the “Governance Committee”) select nominees with a view to establishing a Board of Directors that is comprised of members who:
have extensive business leadership experience, bring diverse perspectives to the board, are independent and collegial, have high ethical standards as well as sound business judgment and acumen, and understand and are willing to make the time commitment necessary for the board to effectively fulfill its responsibilities. Key Qualifications and Attributes
We believe that each of the director nominees and other directors bring these qualifications to our Board of Directors. Moreover, they provide our board with a diverse complement of specific business skills, experience and perspectives, including: extensive financial and accounting expertise, public-company board experience, knowledge of the technology and software industries and of Teradata’s business, experience with companies with a global presence and with growth and/or transformation strategies, and extensive operational and strategic planning experience. In addition, the board believes that each of the director nominees and other directors has demonstrated outstanding achievement in his or her professional career, the willingness to participate actively in board activities and share policy-making and strategic thinking experiences, an ability to articulate independent perspectives, make analytical inquiries and take tough positions that challenge management, and a high degree of personal and professional integrity. The following describes the key qualifications, business skills, experience and perspectives that each of our directors brings to the Board of Directors, in addition to the general qualifications and attributes described above and information included in the biographical summaries provided below for each director. Based on all of these qualifications and attributes,
Class
Biography: Mr. Ringler, age 72, was named Chairman of the Board of Teradata in September 2007. He previously served as Chairman of the Board of NCR Corporation from July 2005 to September 2007, and served as NCR’s President and Interim Chief Executive Officer for approximately 6 months in 2005. He served as Vice Chairman of Illinois Tool Works Inc., a multi-billion dollar diversified manufacturer of highly engineered components and industrial systems, from 1999 until he retired in 2004. Prior to joining Illinois Tool Works, from 1997 to 1999, Mr. Ringler was Chairman of Premark International, Inc. He also served as Premark’s Chief Executive Officer from 1995 to 1999 when it merged with Illinois Tool Works. Mr. Ringler serves as a director of Autoliv, Inc., DowDuPont, Inc., TechnipFMC plc, and John Bean Technologies Corporation and served on the board of Ingredion Incorporated from 2002 until May 2014. He joined our board in September 2007.
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Election of Directors
| Director since: 2015 | |||
Key Qualifications and Attributes: • Deep marketing expertise with focus on strategic planning and data analytics,in-depth knowledge of communication and marketing strategies and customer service operations • Experience as senior executive of large global companies • Diverse perspectives given gender and Hispanic heritage | ||||
Biography:
Ms. Bacus, age 53, is the Executive Vice President, Global Chief Marketing and Customer Officer of Cigna Corporation, a global health care products and services company. Previously, from May 2013 until February 2017, Ms. Bacus was the Executive Vice President and Global Chief Marketing Officer. Prior to joining Cigna, Ms. Bacus was the Executive Vice President and Chief Marketer at American Family Insurance Group, a personal and commercial property and casualty insurance company, from February 2011 until May 2013, and its Vice President, Marketing, from 2008 to 2011. Before joining American Family Insurance, she held a number of marketing management positions with increasing responsibility at the Ford Motor Company from 1986 to 2008. She has served on the board of Shoutlet, Inc., a provider of enterprise social media management software, and currently serves on the board of another privately-held company and a number ofnon-profit boards. Ms. Bacus joined our board in January 2015.
TIMOTHY C.K. CHOU | Former President of Oracle On Demand, a division of Oracle Corporation | Director since: 2017 | ||
Key Qualifications and Attributes: • Extensive experience with technology companies • Recognized as an industry leader in cloud computing, having been featured in various publications including Forbes, Business Week, The Economist, and The New York Times as well as on CNBC and NPR • Diverse perspective given Chinese heritage and experience teaching a course on cloud computing in China | ||||
Biography:
Mr. Chou, age 63, served as President of Oracle On Demand, a division of Oracle Corporation, a multi-billion dollar global provider of enterprise software and computer hardware products and services, from November 1999 until his retirement in January 2005. Prior to that, Mr. Chou served as Chief Operating Officer of Reasoning, Inc., an information technology services firm, and as Vice President, Server Products, of Oracle Corporation. Mr. Chou is a distinguished author and lecturer on cloud computing at Stanford University and Tsinghau University in Beijing, China, and he also serves on the board of directors of Blackbaud, Inc. He joined our board in January 2017.
| 6 | 2018 PROXY STATEMENT |
Election of Directors
JOHN G. SCHWARZ | Founder and Chief Executive Officer of Visier Inc. | Director since: 2010 | ||
• Extensive experience within the software and technology industries, including as the chief executive officer and director of global, analytics technology companies • Operational and strategic planning experience leading a business organization that experienced high growth through both acquisitions and organic growth strategies • Broad global experience and perspective | ||||
Biography:
Mr. Schwarz, age 67, is the founder and Chief Executive Officer of Visier Inc., a business analytics software firm, a position he has held since April 2010. Previously, he served as Chief Executive Officer of SAP Business Objects, a unit of SAP AG, from 2008 to 2010, during which time he was a member of the executive board of SAP AG and also served on the board of directors of SAP Business Objects. From 2005 until its acquisition by SAP in 2008, he served as Chief Executive Officer of Business Objects S.A., a provider of business intelligence software and services. Mr. Schwarz served as President and Chief Operating Officer of Symantec Corporation, a provider of infrastructure security and storage management software, from 2001 to 2005. From 2000 to 2001, he served as President and Chief Executive Officer of Reciprocal Inc., which providedbusiness-to-business securee-commerce services for digital content distribution over the Internet. Prior to joining Reciprocal, Mr. Schwarz spent 25 years at IBM Corporation with his last position being General Manager of IBM’s Industry Solutions unit, a worldwide organization focused on building business applications and related services for IBM’s large industry customers. Mr. Schwarz serves as a director of Synopsys, Inc. and Avast Software, and served as a director of SuccessFactors, Inc. from 2010 to 2011. He is also a member of the Dalhousie University Advisory Board. He joined our board in September 2010.
Class I — Current Terms Expiring in 2020:
DANIEL R. FISHBACK | Former President and Chief Executive Officer of DemandTec, Inc. | Director since: 2017 | ||
Key Qualifications and Attributes:
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Biography:
Mr. Fishback, age 56, served as the President and Chief Executive Officer of DemandTec, Inc. from 2001 to 2013. DemandTec is a provider of a cloud-based collaborative optimization network for retailers and consumer products companies that was acquired by IBM in 2012. From 2000 to 2001, Mr. Fishback served as Vice President of Channels for Ariba, Inc., a provider of solutions to help companies manage their corporate spending. Prior to that, he held sales and executive leadership positions at Trading Dynamics Company and Hyperion Solutions Corporation. Mr. Fishback currently serves on the board of directors for several private technology companies and serves as advisor and consultant to a number of companies, focusing on the application of analytic solutions to solve complex business problems. He joined our board in January 2017.
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Election of Directors
| Retired Executive Vice President, Chief Sustainability Officer and Chief Information Officer of The Dow Chemical Company | Director since: 2007 | ||||
Key Qualifications and Attributes:
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Biography:
Mr. Kepler, age 65, served as the Executive Vice President, Chief Sustainability Officer and Chief Information Officer (“CIO”) of The Dow Chemical Company (“Dow”) from 2008 until his retirement in December 2014. Mr. Kepler joined Dow in 1975. He was appointed Vice President and CIO of Dow in 1998 and Corporate Vice President in 2001. At Dow, Mr. Kepler assumed responsibility for Business Services in 2004, was appointed Senior Vice President in 2006, with added responsibilities for the company’s sustainability initiatives, and appointed Executive Vice President in February 2008. He also serves on the board of directors of TD Bank Group and Autoliv, Inc. Mr. Kepler serves as a trustee of the University of California Berkeley and as a board member of the Michigan Baseball Foundation and previously served on the U.S. National Infrastructure Advisory Council that advises the President on the protection of critical infrastructure and homeland security issues. He joined our board in November 2007.
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Chairman Emeritus of the Board of Directors of The Dow Chemical Company | Director since: 2007 | |||
Key Qualifications and Attributes:
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Biography:
Mr. Stavropoulos, age 78, retired as Chairman of the Board of Dow on April 1, 2006. He had served in such capacity since November 2000. Mr. Stavropoulos was the President and Chief Executive Officer of Dow from 1995 to 2000 and was Chief Executive Officer from 2002 to November 2004. He is the lead director of Univar, Inc., a global distributor of commodity and specialty chemicals. In addition, he is on the advisory board for Metalmark Capital LLC, a private equity investment firm, is a trustee of the Fidelity Equity and High Income Funds, and is a director of Kissner Global Holdings, LP. He is the Chairman and CEO of the Michigan Baseball Foundation, serves as a trustee of the Rollin M. Gerstacker Foundation, and serves on the board of Artis–Naples. Mr. Stavropoulos served on the boards of Maersk Inc. from July 2002 to 2014 and Tyco International, Inc. from March 2007 until 2013 and as a special advisor to Clayton, Dubilier & Rice, Inc., from November 2006 until July 2017. Mr. Stavropoulos joined our board in September 2007.
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2018 PROXY STATEMENT |
Other
Election of Directors
Class II —III – Current Terms Expiring in 20182019:
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Class III — Current Terms Expiring in 2019
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Co-founder and retired Chairman and Chief Executive Officer of Benchmark Electronics, Inc. | Director since: 2008 | |||
Key Qualifications and Attributes:
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Biography:
Mr. Fu, age 69, is theco-founder of Benchmark Electronics, Inc. (“Benchmark”), a publicly-held electronics manufacturing services provider. He served as Chairman of the Board of Benchmark from 2009 until his retirement in December 2012 and had been a director of Benchmark since 1990. In 2011, Mr. Fu retired as Benchmark’s Chief Executive Officer, a position he had held since September 2004. Prior to becoming Chief Executive Officer of Benchmark, he served as its President and Chief Operating Officer from May 2001 to September 2004, Executive Vice President from 1992 to 2001, and Executive Vice President, Financial Administration, from 1990 to 1992. He also serves on the board of directors of Littelfuse, Inc., and is a certified public accountant. He joined our board in July 2008.
| President and Chief Executive Officer of Blackbaud, Inc. | Director since: 2015 | ||||
Key Qualifications and Attributes:
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Biography:
Mr. Gianoni, age 57, is the President and Chief Executive Officer of Blackbaud, Inc., a provider of software and services specifically designed for nonprofit organizations, a position he has held since joining the company in January 2014. Previously, Mr. Gianoni was the Executive Vice President and Group President, Financial Institutions, at Fiserv, Inc., a global technology provider serving the financial services industry, from January 2010 to December 2013. He joined Fiserv as President of its Investment Services division in 2007, where he was responsible for product, technology, sales, finance, operations, and strategy. From 2006 until its acquisition by Fiserv, Mr. Gianoni was Executive Vice President and General Manager of CheckFree Corporation, a leading provider of financiale-commerce solutions. Prior to that time, he held a number of senior management positions at DST Systems Inc., an information processing and software services company. Mr. Gianoni serves as a director of Blackbaud and joined our board in January 2015.
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Election of Directors
| President and Chief Executive Officer of Teradata Corporation | Director since: 2007 | ||||
Key Qualifications and Attributes:
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Biography:
Mr. Lund, age 70, is President and Chief Executive Officer of Teradata. Previously, he served as thenon-executive Chairman of the Board of DemandTec from December 2006 until February 2012, and was a member of its board until 2012. Mr. Lund served as Chairman of the Board of American Stores Company from 1995 until its acquisition by Albertson’s, Inc. in June 1999, and as Chief Executive Officer of American Stores from 1992 until 1999. From 1999 until 2002, he served as Vice Chairman of Albertson’s. Prior to joining American Stores in 1977, Mr. Lund was a practicing certified public accountant. He also currently serves on the board of directors of Service Corporation International and has served on a number of publicly-traded company boards, including Del Monte Foods Company and Delta Airlines. He joined our board in September 2007.
No family relationship exists among any of the directors, nominees or executive officers. No arrangement or understanding exists between any director, nominee, or executive officer and any other person pursuant to which any director, nominee or executive officer was selected as a director, nominee or executive officer of the Company.
| 10 | 2018 PROXY STATEMENT |
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ADDITIONAL INFORMATION CONCERNING THE
BOARD OF DIRECTORS
The Board of Directors oversees the overall performance of the Company on your behalf. Members of the board stay informed of our business by actively participating in numerous board and committee meetings, through discussions with the Chief Executive Officer (“CEO”) and other members of management and staff, and by reviewing other materials and communications provided to them.
Corporate Governance
Our Board of Directors is elected by the stockholders to govern our business and affairs.business. The board selects the senior management team, whichwho is charged with conducting our business. Having selected the senior management team, the boardbusiness, and acts as an advisor to senior management, and monitors its performance. The board reviews our strategies, financial objectives, operating plans, major risks,performance, and plans for mitigating such risks. It also plans for management successionapproves its compensation. Our Board of Directors engages in active discussion and oversight of the CEO,Company’s business plans and strategy. It dedicates atwo-day meeting each year as well as time at other regular meetings to cover strategic planning and monitoring. As part of this process, the board considers how best to capture opportunities and balance risks with potential stockholder returns in light of many factors such as our competitive landscape, technology developments, organizational structure, and financial objectives, among other things. The board’s responsibilities also include planning for senior management positions,succession, overseeing the integrity of our financial statements, and oversees ourmonitoring enterprise risks and compliance efforts.
To support these important duties, the board employs a strong framework of corporate governance practices, including those outlined below:
| Independent Leadership and Oversight |
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| Executive Compensation Best Practices |
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Stockholder Engagement & Alignment |
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Stockholder Rights |
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Ethics and Sustainability |
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Additional Information Concerning the Board of Directors
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Stockholder Outreach
Stockholder engagement is an important part of our business practices, and we greatly value the input we receive from our stockholders. Teradata Investor Relations and members of Teradata management are in frequent communication with stockholders on a variety of matters, including strategy, operations, corporate governance practices, and executive compensation. In November 2016, the Company hosted an Analyst Day for investors at which the management team directly engaged with stockholders regarding Teradata’s business transformation, including the Company’s strategic and financial plans. From time to time, independent members of the board also engage with stockholders.
In 2015, and 2016, at the direction of the board, Teradata engaged in a robust stockholder outreach effort to better understand and address any concerns stockholders might have relating to the Company’s executive compensation program. InThis outreach continued in 2016 and 2017, and in addition to compensation-related matters, a number of corporate governance matters were discussed with our stockholders during the outreach process. As described below on page 3731 of the Compensation Discussion and Analysis section of this proxy statement, this engagement has been very productive and informative and, accordingly,informative. Accordingly, stockholder interests have been taken into consideration in establishing a number of meaningful changes to Teradata’s executive compensation program.program and corporate governance framework.
Corporate Governance Guidelines
To help discharge its responsibilities, the Board of Directors has adopted Corporate Governance Guidelines on significant corporate governance issues. These guidelines address, among other things, such matters as director independence, committee membership and structure, meetings and executive sessions, the annual self-assessments of the board and its committees, and director selection, retirement, and training. The board’s Corporate Governance Guidelines which were updated in November 2016, are found on our corporate governance website athttp://www.teradata.com/governance-guidelines. The board’s independent directors meet regularly in executive session without management present and, as provided in the Corporate Governance Guidelines, the Board of Directors has selected the Chairman of the Board, who is an independent director, to preside at its executive sessions during 2017.2018.
Board Independence and Related Transactions
We believe that the Company benefits from having a strong and independent board. For a director to be considered independent, the board must determine that the director does not have any direct or indirect material relationship with the Company that would affect his or her exercise of independent judgment. The Board of Directors has established independence standards as part of its Corporate Governance Guidelines. In general, the board must determine whether a director is considered independent, taking into account the independence guidelines of the New York Stock Exchange (“NYSE”) and the factors listed immediately following this paragraph (which are included as Exhibit B, Director Independence Standards, to the board’s Corporate Governance Guidelines referenced above) in addition to those other factors it may deem relevant. No director may qualify as independent unless the board affirmatively determines (i) under the NYSE listing standards, that he or she has no material relationship with us (either directly or as a partner, stockholder or officer of an organization that has a relationship with us), and (ii) under our independence standards, that the director or director candidate does not have any direct or indirect material relationship with us. Our independence standards include the following minimum criteria:
| 1. | A director will not be independent if: |
| (i) | at any time during the last three years, he or she has been an employee of Teradata, or an immediate family member of the director has been an executive officer of Teradata; |
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| (ii) | he or she has received, or has an immediate family member who has received, during any12-month period within the last three years, more than $120,000 in direct compensation from Teradata, other than certain limited circumstances, including: (a) compensation and other fees paid for service as a director; or (b) compensation received by an immediate family member for service as an employee of Teradata (other than as an executive officer); |
| (iii) | he or she has certain relationships with any firm that serves as Teradata’s internal or external auditor, including (a) the director is a current partner or employee of such firm; (b) the director has an immediate family member who is a current partner of such firm; (c) the director has an immediate family member who is a current employee of such firm and personally works on Teradata’s audit; or (d) the director or an immediate family member of the director was within the last three years a partner or employee of such a firm and personally worked on Teradata’s audit within that time; |
| 12 | 2018 PROXY STATEMENT |
Additional Information Concerning the Board of Directors
| (iv) | at any time within the past three years, the director or his or her immediate family member has been employed as an executive officer of another company where any of Teradata’s present executive officers at the same time serves or served on that company’s compensation committee; or |
| (v) | he or she is a current employee, or an immediate family member of the director is a current executive officer, of a company that has made payments to, or received payments from, Teradata for property or services in an amount which, in any of the last three fiscal years, exceeds the greater of $1 million, or 2% of such other company’s consolidated gross revenues (in each case, as reported in the other company’s last completed fiscal year). |
| 2. | A director will not be independent if he or she is an employee, or any member of the director’s immediate family is an executive officer, of a company which is indebted to Teradata or to which Teradata is indebted, and the total amount of the indebtedness exceeds the greater of $1,000,000 or 2% of the consolidated annual gross revenues of either company. |
| 3. | A director will not be independent if he or she or any member of the director’s immediate family is an officer, director or trustee of a charitable or othertax-exempt organization, and donations by Teradata during any single fiscal year to the charitable or othertax-exempt organization within the last three years exceeds the greater of $1,000,000 or 2% of the organization’s consolidated annual gross revenues. |
| 4. | A relationship arising solely from a director’s interest in another company or similar entity that is party to a transaction with Teradata will not be considered to be a material relationship with Teradata that would impair the director’s independence if: (i) such interest arises only from: (a) the director’s position as a director, trustee or similar position of such other company or entity, and/or (b) the direct or indirect ownership by the director and the director’s immediate family members, in the aggregate, is less than 10% of the equity or similar ownership interest in such other company or entity; and (ii) the director is not involved in the negotiation of the terms of the transaction with Teradata and does not receive any special benefits as the result of the transaction. |
The board’s independence standards also provide for additional criteria for members of the Audit and Compensation and Human Resource Committees as required under applicable NYSE rules.
Our Board of Directors has affirmatively determined that all of ournon-employee directors and nominees, namely Mses.Ms. Bacus and Cooper, and Messrs. Chou, Fishback, Fu, Gianoni, Kepler, Ringler, Schwarz, and Stavropoulos, meet the NYSE listing independence standards and our independence standards for the board and the committees on which they serve. In making this
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determination, the board considered transactions in 20152016 and 20162017 pursuant to which Cigna and its affiliate purchased data warehouse and marketing applications products and related services from Teradata, and Teradata purchased employee benefit program services, with aggregate sales attributed to such purchases significantly below 2% of the annual revenues of either company. The board concluded that Ms. Bacus’ relationship as an officer of Cigna does not disqualify her from being deemed independent under these standards. There were no other transactions, relationships or arrangements in fiscal year 20162017 that required review by the board for purposes of determining director independence.
Board Leadership Structure
While our Corporate Governance Guidelines do not require that our Chairman and CEO positions be separate, our board believes that having separate positions and having an independent director serve as Chairman is the appropriate leadership structure for us at this time and demonstrates our commitment to good corporate governance. Our board is led by an independent Chairman, Mr. Ringler. Our CEO, Mr. Lund, is the only member of the board who is not an independent director. We believe that this leadership structure enhances the accountability of the CEO to the board, strengthens the board’s independence from management and benefits independent risk oversight of the Company’sday-to-day risk management activities. In addition, separating these roles allows Mr. Lund to focus his efforts on running our business, meeting with customers and investors, and managing the Company in the best interests of our stockholders, while we are able to benefit from Mr. Ringler’s prior leadership experience as a chairman of other public company boards.
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Additional Information Concerning the Board of Directors
Board Oversight of Risk
Management is responsible for the Company’sday-to-day risk management activities, and our board’s role is to engage in informed risk oversight. In fulfilling this oversight role, our Board of Directors focuses on understanding the nature of our enterprise risks, including our operations and strategic direction, as well as the adequacy of our risk management process and overall risk management system. The board’s committee structure and the collective knowledge and experience of its members promotes a broad perspective, open dialogue and useful insights regarding risk, thereby increasing the effectiveness of the board’s role in risk oversight. There are a number of ways our board performs this function, including the following:
at its regularly scheduled meetings, the board receives management updates on our business operations, financial results, and strategy and discusses risks related to the business;
the Audit Committee assists the board in its oversight of risk management by overseeing the Company’s enterprise risk management process and discussing with management – particularly, the Chief Financial Officer, Vice President, Information Systems, Vice President, Enterprise Risk and Assurance Services, and Chief Ethics, Compliance & Privacy Officer and Director, Corporate Security – the Company’s guidelines and policies regarding financial and enterprise risk management and risk appetite, including: (i) major risk exposures such as, for example, financial, cybersecurity, data privacy, business continuity, and legal and regulatory risks, and the steps management has taken to monitor and control such exposures; and (ii) internal audit and ethics and compliance updates, as well as whistleblower updates, if any; and
through management updates and committee reports, the board monitors our risk management activities, including the enterprise risk management process, risks relating to our compensation programs, and financial and operational risks being managed by the Company.
Compensation Risk Assessment
Based on an analysis conducted by management and reviewed by the Board of Directors, we do not believe that our compensation programs for employees are reasonably likely to have a material adverse effect on the Company.
Director Education
The Company encourages directors to participate in continuing education programs focused on the Company’s business and industry, committee roles and responsibilities and legal and ethical responsibilities of directors, and the Company reimburses directors for their expenses associated with this participation. We also encourage our directors to attend Teradata events such as our annual users’ conference (Partners) and our investor day events. Continuing director education is also provided during board meetings and other board discussions as part of the formal meetings and may include internally developed materials and presentations as well as programs presented by third parties.
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Executive Management Succession Planning
In consultation with its Compensation and Human Resource Committee and CEO, the Board of Directors regularly reviews short- and long-term succession plans for all senior management positions and, in particular, our CEO. The criteria used when assessing the qualifications of potential CEO successors include, among others, strategic vision and leadership, continuity of our culture, operational excellence and execution, financial management, executive officer leadership skills, ability to motivate employees particularly in a dynamic and changing work environment, as well as an ability to develop an effective working relationship with the board and engender the confidence of our stockholders. Our current CEO, management team and Board of Directors are committed to overseeing a robust succession plan for the Company. To that end, we are identifying and developing a team of capable, willing and enthusiastic internal CEO and senior management candidates through increased responsibilities, additional opportunities to engage with investors and our board, as well as outside development education, and other similar leadership enhancement activities.
Code of Ethics
We have a Code of Conduct that sets the standard for ethics and compliance for all of our employees, including our officers, directors, chief accounting officer, and corporate controller. Our Code of Conduct is available on our corporate governance website athttp://www.teradata.com/code-of-conduct.
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Additional Information Concerning the Board of Directors
Section 16(a) Beneficial Ownership Reporting Compliance
To the best of our knowledge, all of our executive officers and directors timely filed the reports required under Section 16(a) of the Securities Exchange Act of 1934, other thanexcept that Mr. Ringler, who, because ofRatzesberger filed one late report due to an inadvertent error in describing certain estate planning transactions, was late in filing 4 reports reporting 16 related transfers of shares to family entities for estate planning purposes. None ofadministrative oversight by the transactions resulted in any change in the total number of shares reported as beneficially owned by Mr. Ringler.Company.
Meetings and Meeting Attendance
The Board and its committees met throughout the year on a set schedule, held special meetings, and acted by written consent from time to time as appropriate. At each of its regular meetings, the board held sessions for the independent directors to meet without the CEO present. Members of the senior management team regularly attend board meetings to present information on our business and strategy, and board members are welcome and encouraged to meet with employees worldwide and to attend industry, analyst, and other major events.
The board and its committees met a total of 2930 times last year. In 2016,2017, each of the directors attended 75% or more of the total number of meetings of the board and the committee(s) on which he or she serves. In addition, under the board’s Corporate Governance Guidelines, our directors are expected to attend our annual meeting of stockholders each year. All of our directors attended the 20162017 annual meeting of stockholders.
Selection of Nominees for Directors
The Board of Directors and the Governance Committee are responsible for recommending candidates for membership to the board. The director selection process and director qualification guidelines are described in detail in the board’s Corporate Governance Guidelines, which are posted on our corporate governance website athttp://www.teradata.com/governance-guidelines.
In determining candidates for nomination, the Governance Committee will seek the input of the Chairman of the Board, and the CEO and other directors, and will consider individuals recommended for board membership by our stockholders in accordance with our bylaws and applicable law. In general, we desire to have a balanced group of directors thatwho can perpetuate the Company’s long-term success and represent stockholder interests generally through the exercise of sound business judgment using itsbased on a diversity of experiences and perspectives.
As part of the selection process, the board and the Governance Committee use the qualification factors listed in our Corporate Governance Guidelines and examine candidates’ business skills and experience, personal integrity, judgment, and ability to devote the appropriate amount of time and energy to serving the best interests of stockholders, in addition to the objectives and desired
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composition of the board as a whole and the Company’s current and future needs. Although we do not have a formal diversity policy, the Governance Committee and the board also consider the desire for diverse perspectives that can be gained through different professional experiences, backgrounds, and education, as well as gender, race or ethnic diversity. In addition, while the board does not have age or term limits, it seeks to balance director turnover. The board believes that new perspectives and ideas are critical to a forward-looking and strategic board as is the ability to benefit from the valuable experience and familiarity that longer-serving directors bring to the board room.
As reported by the Company, Nancy Cooper retired from the board as of December 31, 2017, and the Governance Committee has engaged the outside search firm of Spencer Stuart LLP to assist it in identifying and contacting qualified candidates should the board decide to expand its size. As described under the caption “Director Qualifications” on pages 64 to 710 of this proxy statement, we believe our current directors haverepresent a highly qualified and capable board with very diverse perspectives business skills, experience, and backgrounds.balanced tenure.
Stockholders wishingIf you wish to recommend individuals for consideration as directors, shouldyou can submit theiryour suggestions in writing to theour Corporate Secretary of the Companyas outlined in accordance with the provisions ofour bylaws. Under our bylaws, which require the recommending stockholderyou will need to provide, among other things, the candidate’s name, age, residential and business contact information, detailed biographical data and qualifications for service as a board member, the class or series and number of shares of Teradata’s capital stock (if any) which are owned beneficially or of record by the candidate, a document signed by the candidate indicating the candidate’s willingness to serve, if elected, and evidence of the stockholder’s ownership of our stock. Recommendations by stockholders that are made in this manner will be evaluated in the same manner as other candidates. Stockholders who intend to nominate directors for election at our next annual meeting of stockholders must follow the procedures described in our bylaws, which are available on our corporate governance website athttp://www.teradata.com/articles-and-bylaws. See “Procedures for Stockholder Proposals and Nominations” on page 8173 of this proxy statement for further details regarding how to nominate directors.
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Additional Information Concerning the Board of Directors
The directors nominated by the Board of Directors for election at the 20172018 annual meeting were recommended by each of the members of Governance Committee following the process described above. See “Director Qualifications” and “Nominees” on pages 64 through 910 of this proxy statement for further details regarding the reasons and director attributes supporting these nominations. All of these candidates for election are currently serving as our directors and have been determined by the board to be independent.
Under the board’s Corporate Governance Guidelines, if any director who is nominated for election at the 20172018 annual meeting is notre-elected by the required majority vote, such director is required to promptly offer his or her resignation. The Board of Directors, giving due consideration to the best interests of the Company and our stockholders, is required to evaluate the relevant facts and circumstances, including whether the underlying cause of the director’s failure to receive the required majority vote can be cured, and make a decision on whether to accept the offered resignation. Any director who offers a resignation pursuant to this provision cannot participate in the board’s decision process. The Board of Directors will promptly disclose publicly its decision and, if applicable, the reasons for rejecting the offered resignation. If the board accepts a director’s resignation pursuant to this process, the Governance Committee will recommend to the Board of Directors whether to fill the resulting vacancy or reduce the size of the board.
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Committee Structure and Responsibilities
Our Board of Directors has four committees: the Audit Committee, the Compensation and Human Resource Committee, the Committee on Directors and Governance, and the Executive Committee.
Audit Committee:
The Audit Committee is the principal agent of the Board of Directors in overseeing our accounting and financial reporting processes and audits of our financial statements and internal controls, including assisting in the board’s oversight of (i) the integrity of our financial statements, (ii) our compliance with ethical, legal and regulatory requirements, (iii) the qualifications, independence and performance of our independent registered public accounting firm, and (iv) the qualifications and performance of our internal audit function and internal auditors.
The Audit Committee also:
is directly responsible for the appointment, compensation, retention, and oversight of our independent registered public accounting firm andpre-approving all audit services, as well as any audit-related, tax and othernon-audit services, to be performed by such firm;
oversees the negotiation of audit fees in connection with the retention of our independent registered public accounting firm;
reviews and discusses with our independent registered public accounting firm its quality control procedures;
regularly reviews the annual audit plan of our independent registered public accounting firm, including the scope of audit activities, and monitors the progress and results of the annual audit;
meets with the independent registered public accounting firm, the internal auditors and management to review and discuss the internal audit scope and plan, the results of internal audit activities, and the adequacy of our internal controls and financial, accounting and reporting processes;
oversees the appointment, removal performance, and compensationperformance of our chief audit executive;
discusses with management and the independent registered public accounting firm our annual audited financial statements and unaudited quarterly financial statements, and recommends to the board that the audited financial statements be included in the Company’s annual report filing with the SEC;
discusses with management and the independent registered public accounting firm (i) all critical accounting policies and practices used, (ii) any significant financial reporting issues and judgments made in connection with the preparation of our financial statements, including analyses of the effects of alternative accounting methods under generally accepted accounting principles that have been discussed with management and the treatment preferred by the independent registered public accounting firm, (iii) the effect of regulatory and accounting initiatives andoff-balance sheet structures on our financial statements, and (iv) any other reports required by law to be delivered by the independent registered public accounting firm, including any management letter or schedule of unadjusted differences;
is directly responsible for oversight of our major financial and enterprise risk exposures such as, for example, financial, cybersecurity, information technology, (“IT”), data privacy, business continuity, and legal and regulatory risks, and regularly discusses management’s plans and actions related to these areas;
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receives periodic reports from our internal auditors on findings of fraud, if any, and its significant findings regarding the design and/or operation of internal control over financial reporting as well as management responses to such findings;
reviews our periodic SEC filings and our quarterly earnings releases;
oversees our ethics and compliance program;
prepares the committee report required pursuant to the rules of the SEC for inclusion in our proxy statements;
ensures that the Company has established procedures for the confidential submission of employee concerns regarding accounting or auditing matters, as required by The Sarbanes-Oxley Actmatters; and
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Committees of 2002; andthe Board
The Audit Committee has three members, Ms. Cooper and Messrs. Chou, Fu and Kepler, each of whom meets the NYSE listing independence standards, is independent under our recently-updated independence standards and financially literate, as determined by the board under applicable NYSE standards. In addition, the board has determined that because of theirhis accounting and financial management expertise, two out of three of the members of the Audit Committee, including the committee Chair, areMr. Fu is an “audit committee financial experts,expert,” as defined under SEC regulations. No member of the committee may receive any compensation, consulting, advisory or other fee from us, other than board compensation described belowbeginning on page 25 of this proxy statement under the caption “Director Compensation,” as determined in accordance with applicable SEC and NYSE rules. Each Audit Committee member is limited to serving on the audit committees of two other public companies, unless the Board of Directors evaluates and determines that these other commitments would not impair the director’s effective service to us.
A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Audit Committee Charter. A copy of this charter, which was last amended by the committee on November 29, 2016,July 10, 2017, can be found on our corporate governance website athttp://www.teradata.com/audit-committee-charter. A report of the Audit Committee is set forth below on page 7769 of this proxy statement.
Compensation and Human Resource Committee:
In general, this committee (i) discharges our board’s responsibilities relating to the compensation of our executives, (ii) provides general oversight of our management compensation philosophy and practices, benefit programs, and strategic workforce initiatives, (iii) oversees succession planning and leadership development activities, and (iv) reviews and approves our overall compensation principles, objectives and programs covering executive officers and key management employees as well as the competitiveness of our total executive officer compensation practices. The Compensation and Human Resource Committee also:
evaluates and reviews the performance levels of our executive officers in light of the Company’s goals and objectives and determines base salaries and equity and incentive awards for such officers;
establishes the annual goals and objectives of the CEO, after consulting with the independent members of the board;
at executive session of the Board of Directors, discusses its evaluation of, and determination of compensation for, the CEO based on the CEO’s performance against annual goals and objectives;
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reviews and, as needed, recommends to our Board of Directors for approval our executive compensation plans, including incentive compensation plans, and all equity-based compensation plans;
oversees our plans for management succession and development and, on an annual basis, assists the Board of Directors in reviewing and monitoring succession planning, particularly with respect to the CEO;
reviews and discusses with management the disclosures in our proxy statements with respect to executive compensation policies and procedures and produces the committee’s annual report related to such disclosure for inclusion in our proxy statements;
reviews management’s proposals to make significant organizational changes or significant changes to existing executive officer compensation plans;
reviews the stock ownership guidelines and compliance of the CEO and other executive officers with such guidelines;
exercises administrative and oversight functions assigned to the committee under the Company’s various benefit plans, including the Company’s 401(k) savings plan;
oversees the Teradata Benefits Committee to which it delegated oversight and management responsibilities for U.S.-based employee benefit plans;
periodically reviews and monitors the Company’s diversity and inclusion practices; and
reviews and makes recommendations to the board with respect to stockholder approval of executive compensation(say-on-pay votes) and the frequency ofsay-on-pay votes, including review of stockholder feedback as appropriate.
| 18 | 2018 PROXY STATEMENT |
Committees of the Board
The Compensation and Human Resource Committee has threefour members, Ms. Bacus and Messrs. Fishback, Ringler and Schwarz, each of whom the Board of Directors has determined meets the NYSE listing independence standards and our independence standards. The committee may form subcommittees with authority to act on the committee’s behalf as it deems appropriate and has delegated authority to our CEO and Chief Human ResourceResources Officer to award equity to individuals other than executive officers in limited instances. In addition, the CEO conducts annual performance evaluations of executives and, after consulting with the Chief Human ResourceResources Officer, provides this committee with his assessments and recommendations with respect to the amount and form of compensation for such executives.
In July 2016,August 2017, this committee extended the engagement of Semler Brossy Consulting Group, LLCengaged Frederic W. Cook & Co. (“FW Cook”) as its outside compensation consultant to assist the committee in the development of our executive compensation and benefit programs, including the amount and form of such compensation, and in the evaluation of our CEO. Prior to August 2017, Semler Brossy Consulting Group, LLC, served as the committee’s compensation consultant. The rules for the use of the compensation consultantconsultants by the committee and management include the following: (i) only the committee and its Chair can hire or fire the consultant;consultant with respect to such services; (ii) on an annual basis, the consultant will provide the committee with a letter of the projected scope of services for the year; (iii) the consultant’s work will be coordinated with our Chief Human ResourceResources Officer and any project undertaken at management’s request will be with the knowledge and consent of the committee Chair; (iv) the consultant will have direct contact with the committee; and (v) the committee will evaluate the performance of the consultant on an annual basis. In 2016,2017, management did not engage the outside compensation consultantconsultants to perform any executive compensation consulting services for the Company. Moreover, the Compensation and Human Resource Committee reviewed the independence of the consultant in light of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that the firm’s work for the committee is independent and does not raise any conflicts of interest. A more detailed discussion of the committee’s mission, composition, and responsibilities is contained in the Compensation and Human Resource Committee Charter, which was last amended on April 29, 2013, and is available on our corporate governance website athttp://www.teradata.com/compensation-committee-charter. A report of the committee is set forth below on page 3227 of this proxy statement.
22
Committee on Directors and Governance:
This committee is responsible for reviewing the board’s corporate governance practices and procedures, and:
establishes procedures for evaluating the performance of the Board of Directors and oversees such evaluation;
reviews the composition of our Board of Directors and the qualifications of persons identified as prospective directors, recommends to the board the candidates to be nominated for election as directors, and, in the event of a vacancy on the board, recommends any successors;
reviews and makes recommendations to the board concerningnon-employee director compensation;
sees that proper attention is given, and appropriate responses are made, to stockholder concerns regarding corporate governance matters; and
oversees the Company’s Related Person Transactions Policy and Corporate Governance Guidelines.
TheIn January 2018, the Committee on Directors and Governance Committee has directly engaged Semler Brossy Consulting Group, LLCFW Cook as its consultant to review our director compensation programprogram. The Governance Committee reviewed the independence of FW Cook in prior years. However, becauselight of SEC rules and NYSE listing standards regarding compensation consultants and has concluded that the firm’s work for the committee didis independent and does not makeraise any changes to such program in 2016, it did not engage a compensation consultant last year.conflicts of interest.
The Governance CommitteeThis committee is composed entirely of independent directors, Messrs. Gianoni, Ringler and Stavropoulos. The committee approved the nomination of the candidates reflected in Proposal 1. A more detailed discussion of the committee’s mission, composition and responsibilities is contained in its charter, which was last amended on November 29, 2016, and is available on our corporate governance website athttp://www.teradata.com/committee-on-directors-and-governance-charter.
Executive Committee:
The Executive Committee has threefive members, Messrs. Gianoni, Kepler, Lund, Ringler, and Stavropoulos.Schwarz. This committee has the authority to exercise all powers of the full Board of Directors, except those prohibited by applicable law, such as amending the bylaws or approving a merger that requires stockholder approval. This committee meets between regular board meetings if urgent action is required.
| 19 |
Committees of the Board
23
Board Committee Membership as of December 31, 2017
| Board Committee Membership as of December 31, 2016 | ||||||||||||||||
| Name | Executive Committee | Compensation and Human Resource Committee | Audit Committee | Committee on Directors and Governance | ||||||||||||
James M. Ringler |  | * | | | ||||||||||||
Lisa R. Bacus | | |||||||||||||||
Timothy C.K. Chou | ||||||||||||||||
Nancy E. Cooper | | * | ||||||||||||||
Daniel R. Fishback | ||||||||||||||||
Cary T. Fu | | |||||||||||||||
Michael P. Gianoni | | |||||||||||||||
David E. Kepler | | |||||||||||||||
Victor L. Lund | | |||||||||||||||
John G. Schwarz | | * | ||||||||||||||
William S. Stavropoulos | | | | * | ||||||||||||
Number of meetings in 2016 | 0 | 8 | 9 | 4 | ||||||||||||
NAME | EXECUTIVE COMMITTEE | COMPENSATION AND HUMAN RESOURCE COMMITTEE | AUDIT COMMITTEE | COMMITTEE ON DIRECTORS AND GOVERNANCE | ||||
James M. Ringler
|  * | | | |||||
Lisa R. Bacus
|  | |||||||
Timothy C.K. Chou
| | |||||||
Daniel R. Fishback
| | |||||||
Cary T. Fu
| | |||||||
Michael P. Gianoni
| | * | ||||||
David E. Kepler
| | * | ||||||
Victor L. Lund
| | |||||||
John G. Schwarz
| | * | ||||||
William S. Stavropoulos
| | |||||||
Number of Meetings in 2017
| 0 | 8 | 11 | 4 |
| * | Committee Chair |
Note: Since the end of 2016, Mr. Gianoni has been appointed Chair of theCompensation Committee on DirectorsInterlocks and Governance, and Mr. Stavropoulos no longer serves on the Compensation and Human Resource Committee.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATIONInsider Participation
During our fiscal year 2016,2017, no member of the Compensation and Human Resource Committee was a current or former officer or employee of the Company. None of our executive officers served as a member of the compensation committee (or board of directors serving the compensation function) or director of another entity where such entity’s executive officers served on our Compensation and Human Resource Committee or board.
COMMUNICATIONS WITH DIRECTORSCommunications with Directors
Stockholders and interested parties wishing to communicate directly with our Board of Directors, any individual director, the Chairman of the Board, or ournon-management or independent directors as a group are welcome to do so by writing our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342. The Corporate Secretary will forward any communications as directed. Any matters reported by stockholders or interested parties relating to our accounting, internal accounting controls or auditing matters will be referred to members of the Audit Committee as appropriate. Anonymous and/or confidential communications with the Board of Directors may also be made by writing to this address. For more information on how to contact our board, please see our corporate governance website athttp://www.teradata.com/contact-the-board.
| 20 | 2018 PROXY STATEMENT |
24
Our Related Person Transactions Policy was adopted by the Board of Directors in 2007, and the board approved minor amendments to the policy in January 2013. Under this policy, the board’s Committee on Directors and Governance (the “Governance Committee”) is responsible for reviewing and approving each transaction in which Teradata was a participant involving or potentially involving an amount in excess of $120,000 and in which a related person had a material interest. A related person is any director or executive officer, any immediate family member of a director or executive officer, a 5% or more stockholder, and any immediate family member of a 5% or more stockholder.
This policy provides for approval or ratification of each related person transaction in accordance with the procedures and policies discussed below (i) by our Governance Committee, or (ii) if the Governance Committee determines that the approval or ratification of such related person transaction should be considered by all of the disinterested members of the Board of Directors, by a majority vote of the disinterested members of the board.
The policy provides forrequires our General Counsel to advise the Chair of the Governance Committee of any potential related person transaction involving in excess of $120,000 of which the General Counsel becomes aware, including management’s assessment of whether the related person’s interest in the potential related person transaction is material. The Governance Committee is required to consider such potential related person transaction, including whether the related person’s interest in the potential related person transaction is material, unless the Governance Committee determines that the approval or ratification of such potential transaction should be considered by all of the disinterested members of the Board of Directors, in which case such disinterested members of the board will consider the potential transaction. Except as set forth below, we will not enter into a related person transaction that is not approved in advance unless the consummation of such transaction is expressly subject to ratification.
If we enter into a transaction that we subsequently determine is a related person transaction or a transaction that was not a related person transaction at the time it was entered into but thereafter becomes a related person transaction, then in either such case the related person transaction must be presented to the Governance Committee or the disinterested members of the Board of Directors, as applicable, for ratification. If the related person transaction is not ratified, then we are required to take all reasonable actions to attempt to terminate our participation in the transaction.
Factors that are reviewed by the Governance Committee or the Board of Directors, as applicable, when evaluating a potential related person transaction include: (i) the size of the transaction and the amount payable to a related person; (ii) the nature of the interest of the related person in the transaction; (iii) whether the transaction may involve a conflict of interest; (iv) whether the transaction is fair to the Company; (v) whether the transaction might impair independence of an outside director of the Company; and (vi) whether the transaction involves the provision of goods or services to us that are available from unaffiliated third parties and, if so, whether the transaction is on terms and made under circumstances that are at least as favorable to us as would be available in comparable transactions with or involving unaffiliated third parties.
| 21 |
25
CORPORATE SOCIAL RESPONSIBILITY
Optimizing Our World
Teradata continues to foster a culture of sustainability and responsibility. We have advanced our commitment to corporate responsibility through a number of sustainability initiatives.
 | Our People and Communities: We hire the most qualified people possible, and we endeavor to retain our talented resources. Our people reflect the diversity of our global marketplace and, through our employee resource groups, we actively support diversity throughout our Company because we believe that inclusion creates better outcomes. Our Teradata Cares Program empowers our employees to make a difference in their communities through volunteerism and giving. Employees are dedicated to improving education, strengthening communities and helping the environment. Through Teradata Cares, our employees volunteered more than 25,000 hours of service in 2017. | |
 | Corporate Giving: Our strategic giving focus of data philanthropy aligns with our corporate emphasis on data and analytics. Together, our employees, partners, and customers come together and use our collective analytic skills to helpnon-profit agencies around the world mine their data troves to reveal insights that serve the public good. We support numerous hackathons and coding events to advance Doing Good with Data™. | |
 | Our Products: We design technology for the future, and the future demands powerful analytic solutions that are intended to meet increasingly stringent standards to support the earth’s precious resources, including efficient usage of power and water, as well as space efficiency. Therefore, we focus on providing customers withbest-in-class products that are not only highly scalable, but environmentally sustainable as well. To that end, we continuously search to find and leverage technology alternatives that can improveperformance-per-watt, reduce cooling requirements, and shrink floor space needs in data center requirements as part of our product design initiatives. | |
 | Ethical Business Conduct: Teradata has been included on the Ethisphere Institute’s list of the World’s Most Ethical Companies every year since 2010. We have azero-tolerance policy fornon-ethical behavior and expect the highest standards of compliance throughout the world. | |
| Our Suppliers: Our suppliers and business partners are expected to meet or exceed the standards of our Code of Conduct which includes adherence to ethical, responsible and environmentally sustainable business practices with respect to all of their Teradata-related activities. We have also established a managed inventory program that requires suppliers to ship bulk quantities of product to local hubs near our manufacturing site, rather than discrete customer shipments. This not only reduces our inventory costs, but also greatly reduces the environmental impact of our manufacturing supply chain. | |
| Our Facilities: Teradata has designed our facilities to reduce the Company’s environmental impact and has implemented many programs in the areas of video conferencing, virtual employment, recycling and energy conservation that get the job done while using andre-using resources at the most efficient level possible. From printing all corporate business cards on stock that is 100% recycled/post-consumer waste material, to installing a cutting-edge building automation system to optimize efficiency in lighting and HVAC systems, to sending our annual report and proxy statement electronically to reduce unnecessary paper usage, we adopt sustainable policies and procedures at every opportunity. | |
For more information:
Visit our Corporate Social Responsibility website: https://www.teradata.com/About/Corporate-Social-Responsibility-en.
| 22 | 2018 PROXY STATEMENT |
Ownership by OfficersDirectors and DirectorsOfficers
This table shows our common stock beneficially owned as of February 1, 2017,15, 2018, by each named executive officer includednamed in the Summary Compensation Table found on page 5648 of this proxy statement, eachnon-employee director, and the directors and executive officers and certain former executive officers as a group.
| Name | Total Shares Beneficially Owned(1) | Shares Covered by Options(2) | % of Class Owned(3) | |||||||||
Non-Employee Directors | ||||||||||||
Lisa R. Bacus, Class II Director | 17,632 | 0 | * | |||||||||
Timothy C.K. Chou, Class II Director | 0 | 0 | * | |||||||||
Nancy E. Cooper, Class I Director | 48,382 | 18,642 | * | |||||||||
Daniel R. Fishback, Class I Director | 0 | 0 | * | |||||||||
Cary T. Fu, Class III Director | 57,010 | 29,312 | * | |||||||||
Michael P. Gianoni, Class III Director | 16,104 | 0 | * | |||||||||
David E. Kepler, Class I Director | 73,439 | 13,206 | * | |||||||||
James M. Ringler, Chairman of the Board and Class II Director(4) | 139,701 | 38,437 | * | |||||||||
John G. Schwarz, Class II Director | 41,730 | 9,423 | * | |||||||||
William S. Stavropoulos, Class I Director(5) | 99,183 | 23,954 | * | |||||||||
Current Named Executive Officers | ||||||||||||
Victor L. Lund, President, Chief Executive Officer and Class III Director | 56,605 | 0 | * | |||||||||
Stephen Scheppmann, Executive Vice President and Chief Financial Officer(6) | 312,538 | 244,486 | * | |||||||||
John Dinning, Executive Vice President and Chief Business Officer | 32,364 | 24,952 | * | |||||||||
Daniel Harrington, Executive Vice President, Consulting and Support Services(7) | 185,152 | 138,000 | * | |||||||||
Oliver Ratzesberger, Executive Vice President and Chief Product Officer | 14,230 | 13,091 | * | |||||||||
Former Named Executive Officers | ||||||||||||
Michael Koehler, Former President and Chief Executive Officer | 672,215 | 650,802 | * | |||||||||
Robert Fair, Former Chief Operating Officer | 275,835 | 246,946 | * | |||||||||
Richard Morton, Former President, Americas | 28,423 | 17,327 | * | |||||||||
| Directors and Executive Officers and certain former Named Executive Officers as a Group (20 persons) | 2,289,336 | 1,640,795 | 1.73 | % | ||||||||
| NAME | TOTAL SHARES BENEFICIALLY OWNED(1) | SHARES COVERED BY OPTIONS(2) | % OF CLASS BENEFICIALLY OWNED(3) | |||||||||
Non-Employee Directors
| ||||||||||||
Lisa R. Bacus, Class II Director
|
|
26,224
|
|
|
0
|
| * | |||||
Timothy C.K. Chou, Class II Director
|
|
0
|
|
|
0
|
| * | |||||
Daniel R. Fishback, Class I Director
|
|
9,534
|
|
|
0
|
| * | |||||
Cary T. Fu, Class III Director
|
|
65,602
|
|
|
29,312
|
| * | |||||
Michael P. Gianoni, Class III Director
|
|
24,696
|
|
|
0
|
| * | |||||
David E. Kepler, Class I Director
|
|
82,031
|
|
|
13,206
|
| * | |||||
James M. Ringler, Chairman of the Board and Class II Director(4)
|
|
145,041
|
|
|
35,185
|
| * | |||||
John G. Schwarz, Class II Director
|
|
50,322
|
|
|
9,423
|
| * | |||||
William S. Stavropoulos, Class I Director(5)
|
|
97,027
|
|
|
13,206
|
| * | |||||
Named Executive Officers
| ||||||||||||
Victor L. Lund, President, Chief Executive Officer and Class III Director(6)
|
|
154,801
|
|
|
0
|
| * | |||||
Mark Culhane, Executive Vice President and Chief Financial Officer
|
|
4,500
|
|
|
0
|
| * | |||||
Daniel Harrington, Executive Vice President, Consulting and Support Services(7)
|
|
237,042
|
|
|
165,529
|
| * | |||||
Oliver Ratzesberger, Chief Operating Officer
|
|
38,725
|
|
|
21,871
|
| * | |||||
Former Executive Officers who are Named Executive Officers
| ||||||||||||
John Dinning, Former Executive Vice President and Chief Business Officer
|
|
51,178
|
|
|
31,421
|
| * | |||||
Stephen Scheppmann, Former Executive Vice President and Chief Financial Officer(8)
|
|
294,336
|
|
|
199,270
|
| * | |||||
Directors and Executive Officers and former Executive Officers who are Named Executive Officers as a Group (18 persons)
|
|
1,505,442
|
|
|
678,574
|
|
|
1.22
|
%
| |||
| * | Less than one percent. |
| (1) | Unless otherwise indicated, total voting power and total investment power are exercised by each individual and/or a member of his or her household. This column |
26
| (2) | Includes shares that the executive officer or director or his or her respective family members have the right to acquire through the exercise of stock options within sixty days after February |
| (3) | The total number of shares of our common stock issued and outstanding as of February |
| (4) | Includes |
| (5) | Includes 2,000 shares held by Mr. Stavropoulos’ spouse, and 1,000 shares held indirectly by her through a family limited partnership. |
| (6) | Includes |
| (7) | Includes 41,031 shares attributable to units held by Mr. Harrington in a unitized stock fund under the Teradata 401(k) savings plan. |
| (8) | Includes 4,808 shares attributable to units held by Mr. Scheppmann in a unitized stock fund under the Teradata 401(k) savings plan. |
| 23 |
Stock Ownership
Other Beneficial Owners of Teradata Common Stock
To the best of our knowledge, based on filings with the SEC made in 2018 by beneficial owners of our stock, the following stockholders beneficially own more than 5% of our outstanding common stock.
| Name and Address of Beneficial Owner | Total Number of Shares | Percent of Class(1) | ||||||
First Eagle Investment Management, LLC(2) | 17,502,775 | 13.39 | % | |||||
The Vanguard Group(3) | 14,568,536 | 11.15 | % | |||||
The Bank of New York Mellon Corporation(4) | 8,817,453 | 6.75 | % | |||||
BlackRock, Inc.(5) | 6,922,354 | 5.3 | % | |||||
| NAME | TOTAL NUMBER OF SHARES | PERCENT OF CLASS(1) | ||||||
First Eagle Investment Management, LLC(2) 1345 Avenue of the Americas, New York, New York 10105
|
|
16,968,951
|
|
|
13.88
|
%
| ||
BlackRock, Inc.(3) 55 East 52nd Street, New York, New York 10055
|
|
10,925,922
|
|
|
8.94
|
%
| ||
The Vanguard Group(4) 100 Vanguard Blvd., Malvern, Pennsylvania 19355
|
|
10,492,749
|
|
|
8.58
|
%
| ||
The Bank of New York Mellon Corporation(5) 225 Liberty Street, New York, New York 10286
|
|
9,135,804
|
|
|
7.47
|
%
| ||
Wellington Management Group LLP and affiliated entities(6) 280 Congress Street, Boston, MA 02210
|
|
6,908,311
|
|
|
5.65
|
%
| ||
| (1) | Percent of class is based on |
| (2) | Information is based on Amendment No. |
| (3) | Information is based on Amendment No. |
| (4) | Information is based on Amendment No. 8 to Schedule 13G filed by The Vanguard Group with the SEC on February |
Information is based on Schedule 13G filed by The Bank of New York Mellon Corporation with the SEC on February |
27
| sole dispositive power over |
| Information is based on |
| 24 | 2018 PROXY STATEMENT |
28
Teradata’s Director Compensation Program is designed to enhance our ability to attract and retain highly qualified directors and to align their interests with the long-term interests of our stockholders. The program consists of both a cash component, designed to compensate independent directors for their service on the board and its committees, and an equity component, designed to align the interests of independent directors and stockholders. Mr. Lund has received no compensation for his service on the board since his appointment as an officer of the Company in May 2016.
The compensation of the Company’snon-employee directors under the Director Compensation Program is reviewed on an annual basis by the Board’s Committee on Directors and Governance (the “Governance Committee”) with competitive benchmarking provided periodically by an independent compensation consultant retained by the committee. In April 2017, the Governance Committee engaged Semler Brossy to conduct a competitive market analysis of Teradata’s director compensation levels compared to the Company’s peers, using Teradata’s executive compensation peer group at the time. Following this process, the committee determined that the compensation levels were reasonable and within market median levels, and slightly increased the retainer fees for the chairs of the Board’s standing committees, other than the Executive Committee.
Annual RetainerRetainers
Under theThe Director Compensation Program, for the 2016-20172017-2018 board year (the period between the Company’s annual stockholders’ meetings), eachnon-employee member of Teradata’s board receives anincludes the following annual retainer of $50,000. The Chairman of the Board of Directors (Mr. Ringler) receives an additional retainer of $100,000, and each director serving on the Audit Committee receives an additional retainer of $5,000. The Chair of the Governance Committee receives an additional retainer of $10,000. The Chair of the Audit Committee receives an additional retainer of $20,000 and the Chair of the Compensation and Human Resource Committee receives an additional retainer of $15,000.retainers:
Eachnon-employee director | $ | 50,000 | ||
Additional retainers: | ||||
The Chairman of the Board of Directors (Mr. Ringler) | $ | 100,000 | ||
Each Audit Committee member (including the Chair) | $ | 5,000 | ||
Governance Committee Chair | $ | 15,000 | (1) | |
Audit Committee Chair | $ | 35,000 | (2) | |
Compensation and Human Resource Committee Chair | $ | 25,000 | (3) |
| (1) | Increased from $10,000 in 2017. |
| (2) | Increased from $20,000 in 2017. |
| (3) | Increased from $15,000 in 2017. |
Prior to January 1 of each year, a director may elect to receive all or a portion of his or her annual retainer in Teradata common stock instead of cash. In addition, a director may elect to defer receipt of shares of common stock payable in lieu of cash. Payments for deferred stock may be made only in shares of Teradata common stock.
Annual Equity Grant
The Director Compensation Program provides that, on the date of each annual meeting of stockholders, eachnon-employee director will be granted restricted share units (“RSUs”) and/or stock options to purchase a number of shares of Teradata common stock in an amount determined by the Governance Committee and approved by the board. For the 2016-20172017-2018 board year, each of thenon-employee directors received an annual equity grant consisting of RSUs with a total dollar value of $250,000. The RSUs vest in four equal quarterly installments commencing three months after the grant date, and directors may elect to defer receipt of the shares of common stock payable when the RSUs vest.their vested shares.
Initial Equity Grant
The Director Compensation Program also provides that upon initial election to the board, eachnon-employee director will receive a grant of RSUs. ARSUs, with the same vesting schedule as the annual grant described above. Similar to the annual grant, a director may elect to defer receipt of the vested shares of common stock that would otherwise be received upon vesting ofsubject to the RSUs. The RSUs vest
Messrs. Chou and Fishback were the only directors to receive an initial equity grant during 2017 in four equal quarterly installments commencing three months afterconnection with their appointments to the grant date. Payment is made only in Teradata common stock.
No directorboard. In this regard, on February 22, 2017, Messrs. Chou and Fishback each received an initial equity grant during 2016.of RSUs with a grant date fair value of $75,000 on the date of grant.
| 25 |
Director Compensation
Mid-Year Equity Grant
Under the Director Compensation Program, the board has the discretion, based on the recommendation of the Governance Committee, to grantmid-year equity grants in the form of stock
29
options and/or awards of restricted shares or RSUs to directors who are newly elected to the board after the annual meeting of stockholders. If amid-yearMid-year equity grant isgrants made in the form of RSUs a director may elect to defer receipt ofhave the shares of common stock that would otherwise be received upon vesting.same vesting schedule and deferral options as the annual grants described above. Option grants made in connection with amid-year equity grant will be fully vested and exercisable on the first anniversary of the grant. Restricted share unit grants made in connection with aBecause they joined the board on January 31, 2017, the board exercised its discretion and awarded Messrs. Chou and Fishbackmid-year equityRSU grants on February 22, 2017 with a grant vest in four equal quarterly installments commencing three months after the grant date. Payment is made only in Teradata common stock.date fair value of $62,500.
No director received amid-year equity grant during 2016.
Benefits
We do not provide any retirement or other benefit programs for our directors.
20162017 Director Compensation Table
The following table provides information on compensation paid to ournon-employee directors in 2016.2017.
| Name | Fees Earned or Paid in Cash(1) ($) | Stock Awards(2) ($) | Option Awards(3) ($) | Total ($) | ||||||||||||
James M. Ringler, Chairman | 150,000 | 255,687 | — | 405,687 | ||||||||||||
Lisa R. Bacus | 50,000 | 255,687 | — | 305,687 | ||||||||||||
Edward P. Boykin (4) | — | 13,776 | — | 13,776 | ||||||||||||
Nancy E. Cooper | 68,611 | 255,687 | — | 324,298 | ||||||||||||
Cary T. Fu | 55,000 | 255,687 | — | 310,687 | ||||||||||||
Michael P. Gianoni | 50,000 | 255,687 | — | 305,687 | ||||||||||||
David E. Kepler | 55,000 | 302,259 | — | 357,259 | ||||||||||||
Victor L. Lund | 23,958 | 255,687 | — | 279,645 | ||||||||||||
John G. Schwarz | 65,000 | 255,687 | — | 320,687 | ||||||||||||
William S. Stavropoulos | 60,000 | 255,687 | — | 315,687 | ||||||||||||
| NAME | FEES EARNED OR PAID IN CASH(1) ($) | STOCK ($) | OPTION ($) | TOTAL ($) | ||||||||||||
James M. Ringler, Chairman
|
|
150,000
|
|
|
256,292
|
|
|
—
|
|
|
406,292
|
| ||||
Lisa R. Bacus
|
|
50,000
|
|
|
256,292
|
|
|
—
|
|
|
306,292
|
| ||||
Timothy C.K. Chou
|
|
53,750
|
|
|
398,534
|
|
|
—
|
|
|
452,284
|
| ||||
Nancy E. Cooper(4)
|
|
86,250
|
|
|
256,292
|
|
|
—
|
|
|
342,542
|
| ||||
Daniel R. Fishback
|
|
50,000
|
|
|
398,534
|
|
|
—
|
|
|
448,534
|
| ||||
Cary T. Fu
|
|
55,000
|
|
|
256,292
|
|
|
—
|
|
|
311,292
|
| ||||
Michael P. Gianoni
|
|
62,917
|
|
|
256,292
|
|
|
—
|
|
|
319,209
|
| ||||
David E. Kepler
|
|
55,000
|
|
|
256,292
|
|
|
—
|
|
|
311,292
|
| ||||
John G. Schwarz
|
|
72,500
|
|
|
256,292
|
|
|
—
|
|
|
328,792
|
| ||||
William S. Stavropoulos
|
|
50,833
|
|
|
256,292
|
|
|
—
|
|
|
307,125
|
| ||||
| (1) | Represents the annual cash retainers earned for |
| (2) | This column shows the aggregate grant date fair value, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation |
The number of RSUs outstanding as of December 31, 2016, for each of thenon-employee directors is Mr. Boykin, 0; and 4,910 for each of the other directors.
| The number of RSUs outstanding as of December 31, 2017 for each of thenon-employee directors is 5,225 for each of Messrs. Chou and Fishback, and 4,092 for each of the other directors. |
| (3) | There were no options granted to thenon-employee directors for the |
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| thenon-employee directors is as follows: Mr. Ringler, |
| (4) | As reported in the Company’s |
| 26 | 2018 PROXY STATEMENT |
Director Compensation
Director Stock Ownership Guidelines
Under the board’s Corporate Governance Guidelines, each director should hold stock valued at no less than ten times the amount of the $50,000 annual retainer paid to such director within five years after he or she is first elected to the Teradata Board of Directors. Stock or stock units beneficially owned by the director, for which beneficial ownership is not disclaimed, including stock or stock units held in a deferral account, should be taken into account. However, for this purpose, the board does not believe it appropriate to include stock options granted to directors by the Company. AllAs of December 31, 2017, all of our directors are in compliance with these ownership guidelines.
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In our filings with the SEC, information is sometimes “incorporated by reference.” This means that we are referring you to information that has previously been filed with the SEC and the information should be considered as part of the particular filing. As provided under SEC regulations, the following “Board Compensation and Human Resource Committee Report on Executive Compensation” and the “Board Audit Committee Report” contained in this proxy statement specifically are not incorporated by reference into any other filings with the SEC and shall not be deemed to be “Soliciting Material” under SEC rules. In addition, this proxy statement includes several website addresses. These website addresses are intended to provide inactive, textual references only. The information on these websites is not part of this proxy statement.
BOARD COMPENSATION AND HUMAN RESOURCE
COMMITTEE REPORT ON EXECUTIVE COMPENSATION
The Compensation and Human Resource Committee of the Board of Directors (the “Committee”) manages the Company’s compensation programs on behalf of the Board of Directors. The Committee reviewed and discussed with the Company’s management the Compensation Discussion and Analysis included in this proxy statement. In reliance on the review and discussions referred to above, the 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 Form10-K for the fiscal year ended December 31, 2016.2017.
Dated: February 22, 201720, 2018
The Compensation and Human Resource Committee:
John G. Schwarz, Chair
Lisa R. Bacus, Member
Daniel R. Fishback, Member
James M. Ringler, Member
| 27 |
32
COMPENSATION DISCUSSION AND ANALYSIS
This Compensation Discussion and Analysis (this “CD&A”) describes ourthe executive compensation program for 2016 for our named executive officers, including2017 established by the individuals listed in the table below (who are referred to as our “current named executive officers”Compensation and Human Resource Committee (the “Committee”):
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. Our named executive officers for 2016 also included three executives whose employment terminated during the year (who are referred to as our “former named executive officers”): Michael Koehler, who previously served as President and Chief Executive Officer, Robert Fair, who previously served as Chief Operating Officer and Richard Morton, who served for part of the year as the President of the Company’s Americas sales region.
Section 1: Business Overview and Program Highlights
Company Overview
Teradata experienced a year of significant transition in 2016 as the Company made great strides in continuing the business transformation process that was initially announced by our Board of Directors in the fourth quarter of 2015. This transition included the development and initial implementation of the following three key strategic changes during 2016:
|
Enabling Teradata analytics to be “easy to buy, easy to grow”, from traditionalon-premises deployments to hybrid cloud solutions, with simplified and consistent offerings that include operating expense alternatives in addition to traditionally capital intensive outlays. Through our Teradata Everywhere™ offering, customers can now get the same performance from Teradata software regardless of their choice of deployment option.
Transitioning from upfront perpetual to subscription-based Teradata database licenses with new flexible deployment options – whether in the public cloud, managed cloud oron-premises, or a hybrid combination of these – which will result in a more predictable, recurring revenue stream over time for the Company.
This last change – transitioning from perpetual to subscription-based license revenue – was a major shift in strategy that occurredmid-year after the board appointed Mr. Lund as our new Chief Executive Officer (“CEO”). As described below, he not onlyre-energized and refocused the Company, but he also accelerated our move away from our traditional sales and deployment models leading us toward
33
flexible pricing and delivery options for our customers. As a result of this customer-motivated transition toward subscription-based revenue, in 2016, we were not able to recognize as much upfront revenue at the time of the customer’s purchase of Teradata software; but the total value of the sales transactions was generally maintained because the revenue will be recognized over time. The bottom line is that, while 2016 revenue was impacted by nearly $70 million due to our change in strategy in the second half of the year – a significant difference from how our financial incentive targets were established for the year – the Company and its stockholders will receive the benefit of this more stable and predictable revenue longer-term over the life of the customer agreement.
Leadership Changes
In order to drive and execute Teradata’s business transformation plan, our Board of Directors made a number of senior management changes during the year. Most significantly, on May 5, 2016, the board announced that it had elected Mr. Lund, a Teradata board member since September 2007, as President and CEO. Mr. Lund succeeded Mr. Koehler, who stepped down as Teradata’s President, CEO and director at that time. Under the leadership of Mr. Lund, management worked diligently to clarify the Company’s strategy to enhance Teradata’s marketplace relevance and to realign the organization to operate with speed, clearer ownership and accountability, and greater customer focus.
Mr. Lund’s leadership of the Company has been transformative. He has injected a level of enthusiasm and focus throughout our organization that has positively impacted our employees, customers and stockholders. Employees are motivated by his frequent, energetic communications, as well as the clear direction provided by Teradata’s new strategy that was developed with his guidance. He has also gained customers’ confidence as Mr. Lund meets with them regularly to make sure Teradata maintains its role as a business-outcome led, trusted advisor. Lastly, our stockholders have benefited from Mr. Lund’s level of conviction and commitment to the Company as evidenced by the increase in Teradata’s stock price since the day before he started in May 2016, $24.40, to the day the Company announced its 2016 earnings and first quarter 2017 guidance in February 2017, $32.74 – a 34% increase.
In connection with these efforts, our Board of Directors, in consultation with our new CEO, continued to advance the evolution of the Company’s organizational model through the following senior management changes regarding our current named executive officers:include:
| POSITION | |
Victor Lund
|
President and Chief Executive Officer
| |
Mark Culhane | EVP and Chief | |
Oliver Ratzesberger | Chief | |
Daniel Harrington | EVP, Customer Support and | |
John Dinning | Former EVP and Chief Business Officer | |
Stephen Scheppmann | Former EVP and | |
Business Transformation Highlights and Key Compensation Decisions
34
The design of the long-term incentive opportunities for our executives is also consistent with the evolution of our business during the Company’s transformation. The goals for the performance-based equity awards based on
| 28 |
|
Compensation Discussion and Analysis
| 2017 results included key strategic performance metrics, including an EPS goal that was consistent with our guidance to investors for the year, and we achieved better than expected earnings results in 2017. In addition, as explained below on page 40 of this CD&A, the Committee had the ability under the terms of these equity awards to pay out above target level, but it chose to reduce the total payout level to 100.3% rather than 110.3%. |
2017 Strategic and Financial Performance at a Glance
| Teradata continued to make tremendous progress in transforming the Company by executing our strategic initiatives and delivering value to our stockholders, as evidenced by our stock price increasing more than 41% in 2017. Under the leadership of our President and CEO, Mr. Lund, we saw real traction with our strategy to provide customers with new purchasing and deployment options and enhanced opportunities to drive business outcomes with Teradata products, solutions and services. In addition, we exceeded our guidance to investors for the year with respect to revenue and earnings per share expectations. |
| FOR THE YEAR – 41.6% STOCK PRICE | ||||
|
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AND EPS GUIDANCE | ||||||
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Business Highlights
The Company achieved a number of key accomplishments during 2016 as part of our business transformation, including the following:
We completed the developmentOur strategic shift to multiple purchase and began the implementation of our comprehensive business transformation plan that will drive the execution of our strategy.
In the fourth quarter, we announced (1) that Teradata would be providing its full-scalebest-of-breed technology solutions via flexible deployment options in the public cloud, managed cloud,on-premises, orfor our customers led to more subscription-based licenses. As a hybrid combination of these – with our Teradata database software portable across all deployment options, through Teradata Everywhere, and (2) the release of our IntelliFlex™ platform which simplifies our offerings by more efficiently allowing customers to expand their Teradata analytic environments.
We shared our new strategic direction, financial plans, and the actions we are taking to return Teradata toresult, revenue growth and improving long-term profitability with stockholders at a successful and well-received Analyst Day on November 17, 2016.
Teradata completed the sale of its marketing applications business (the “TMA business”) in the third quarter of 2016, allowing us to focus all our attention, human and financial capital on our core data and analytics business.
During the year, Teradata successfully reduced costs by over $100 million which, going forward, will allow the Company to reinvest in our new strategic initiatives, including the changes described above. This cost-takeout achievement was approximately 43% better than originally planned for the year.
For the year, Teradata met or exceeded its guidance to investors with respect to revenue and earnings per share expectations. The Company’s revenue results continued to be slightly down somewhat in 20162017 from the prior year on a constant currency basis. This expected declinebasis, although revenue from subscription-based offerings was primarilyup for the resultyear in line with our changing business model. Other highlights of the continued market shifts in our industry as customers’ buying patterns were delayed due to the additional technology deployment and pricing options available for their analytic solutions. This challenge was magnifiedkey strategic advancements during the year as Teradata’s strategy evolved, and revenue from subscription-based software licenses and cloud-based solutions was accelerated. This shift away from perpetual licenses resulted in lower revenue recognition during 2016 as revenue is recognized over the multi-year life of subscription-based customer agreements. However, this trend will benefit the Company in the longer-term with a more stable and predictable recurring revenue stream over time.
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We are developing a team of capable, dedicated and respected leaders and introducing a new culture to the Company with an emphasis on responsibility and accountability, and our new CEO is committed to leading Teradata through our transformation process. We realize that the hardest part of Teradata’s business transformation is still ahead of us, and we are working diligently and enthusiastically to execute on our plan.
Key Changes to our Executive Compensation Program
In connection with the execution of Teradata’s business transformation plan, our executive compensation program has continued to evolve with the goal of balancing the Company’s business objectives with shareholder interests while aligning pay and performance more closely than ever. To that end, the key design changes approved in 2016 to our executive compensation program for our current named executive officers include the following:
| We introduced Teradata Everywhere™, which brings together our expanded offerings across cloudand on-premises with a flexible pricing and licensing model. Customers began adopting this offering through which they now can: |
with the addition of new These expanded | “DEPLOY ANYWHERE” either on premises or in | “BUY ANY WAY” through increased of-breed technology with new subscription | “MOVE ANYTIME” which allows customers to move their software with Teradata’s portable their businesses evolve. |
| 29 |
Compensation Discussion and Analysis
 | Our tradition of technology innovation continued, as we enhanced and introduced: |
INTELLIFLEX™ our data analytics platform that | INTELLICLOUD™ our managed cloud offering that provides data and analytics | INTELLIBASE™ a revolutionary multipurpose |
| We also realigned our consulting services organization to streamline our offerings to a more businessoutcome-led approach. |
| We continued to recognize the benefits of our newgo-to-market strategy of focusing on customers who represent the 500 largest analytical opportunities. |
During 2017, stockholders saw the benefits of our strategic initiatives
through financial and operating metric improvements and increased total
stockholder return. Key financial highlights for the year included:
| Our stock price increased more than41% during the year, and more than57% since May 4, 2016, the day before Mr. Lund began serving as CEO. | |
| Significant growth in subscription-based licenses that build future recurring product revenue, demonstrated in part by recurring revenue growth of7% over prior year. | |
| Within consulting services, total business consulting revenue from our strategic service offerings around analytics consulting and business consulting increased24% from prior year. | |
| Total annual recurring revenue (“ARR”) growth of13% over prior year. (ARR is the annual value at a point in time of all of our recurring contracts–includes subscription and cloud licenses, software upgrade rights, rentals, maintenance and, for 2017, excludes managed services.) | |
| ||
2018 PROXY STATEMENT |
In December 2016, the
Compensation Discussion and Human Resource Committee (referred to in this CD&A as the “Committee”) took the bold step of basing 100% of the long-term incentive opportunityAnalysis
Stockholder Engagement and Compensation Program Enhancements
Teradata received strong support from our stockholders for our current named executive officers on performance-based equity awards. This decision was based on the Committee’s desire to motivate and drivecompensation program, with a97% FAVORABLE“SAY-ON-PAY” VOTE at our executives to develop and execute a winning business transformation plan, and then to reward them for their successes when they meet the Company’s key strategic goals. By allocating 100% of the long-term incentive opportunity to performance-based equity awards and eliminating service-based restricted share units and stock options,2017 annual meeting. The Committee views this exemplary result as confirmation that our compensation program is more closely alignedappropriately structured to support our ongoing business transformation.
We greatly value the input received from our stockholders and engage with Company performance than ever before, them on a variety of matters–including strategy execution, executive compensation and corporate governance–as described below and under the heading“Pay-For-Performance Commitment:”
Increasing the weighting under our 2016-2017 long-term incentive program of performance-based restricted share units based on total shareholder return performance over a3-year period (from 25% to approximately 37% of total long-term incentive award value) demonstrates our commitment to align compensation with longer-term shareholder interests.
Our performance-based equity awards for the 2017 performance period are based on key business transformation financial and operational measures aligned to our strategy, with equal weighting between financial and operational measures. The financial measures are intended to drive growth and profitability in our core database software across different deployments, revenue growth in our consulting services business, and overall profitability. The operational measures are designed to drive the execution of our strategy through key actions for the year that cover pricing,go-to-market, implementation of Teradata Everywhere, consulting development activities, and developmentpart of a new sales incentive program for 2018.
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Stockholder Engagement
In 2016 — both as
| We reach out to largest investors to engage in discussions regarding issues that are important to them and to seek their input on executive compensation and corporate governance matters. Our outreach team includes Investor Relations, Executive Compensation and Corporate Governance representatives from Teradata’s management team, including the Chief Human Resources Officer and, if requested, the independent Chair of the Committee. | As we prepare for the proxy season, we consider investor feedback and perspectives in evaluating and structuring our executive compensation program and preparing proxy statement disclosures. | After proxy materials are filed, we invite our largest investors to discuss proposals to be considered at the next annual meeting of stockholders. As outlined on page 20 of this proxy statement, there are also a number of established channels that any investor may use to communicate with the Company. |
As part of the proxy solicitation process and following our 20162017 annual meeting, — we continued our practice of soliciting input from our largest 25 institutional investors, representing nearly 75%over 82% of our outstanding shares, and answering their questions regarding a variety of topics of interest to those investors, including executive compensation. Our outreach team includes Investor Relations, Executive Compensation and Corporate Governance representatives from Teradata’s management team and, if requested,them, such as the independent Chairdesign of the Committee.
We conducted conference calls with those investors who responded to our outreach efforts (and others who reached out to us) to understand their views regarding topics of interest to those investors, such as our executive compensation program, board diversity and board refreshment,corporate governance best practices, and to respond to their questions.the execution of our business transformation strategy.
The feedback we received from investors through this engagement process was generally quite positive. During these discussions, some common themes emerged:
A meaningful portionemerged with respect to our executive compensation program and disclosures, all of long-term incentive value should be allocatedwhich were consistent with what was under consideration by the committee based on management’s recommendations. Importantly, as described in the chart below, we continued to performance-based equity awards, and
Although investors generally prefer3-year performance periods over1-year performance periods for long-term incentive awards,1-year performance periods are acceptable if a strong rationale is provided and the applicable performance goals are directly linked to the Company’s business strategy.
The changesmake key enhancements to our executive compensation program that strengthen the link to our business strategy and the long-term interests of our stockholders.
| 31 |
Compensation Discussion and Analysis
| AREA OF FOCUS | WHAT WE HEARD | WHAT WE DID | ||||
| Program Design | Investors believe that the primary elements and core design features of our executive compensation program are solid, and they strongly support heavy weighting of performance-based awards in our long-term incentive program. |  | Continued our firm commitment to pay for performance by allocating70% of the long-term incentive opportunity to performance-based share unit awards. | |||
| Rounded out our long-term incentive program with a time-based restricted share unit award opportunity,providing a retention incentive for the executive talent we need to complete the execution of our business transformation. | |||||
| Performance Metrics | Investors favor an executive compensation program that demonstrates a clear linkage between the Company’s strategy and the program’s financial performance goals and generally support moving away from a total shareholder return performance metric. | | Granted performance-based share unit awards subject to two keyfinancial metrics that are strongly linked to our long-term business strategy: ARR growth and subscription-based bookings. | |||
| Included detailed CD&A disclosures regarding how the design of our executive compensation program aligns with the Company’s ongoing business transformation goals. | |||||
| Discontinued use of non-financial strategic goals to measure performance under the annual bonus program and operational goals under the long-term incentive program. | |||||
| Performance Periods | Several investors expressed a general preference for3-year performance periods rather than1-year performance periods for long-term incentive awards. | | Granted performance-based share unit awards that will be earned based on achievement of cumulative financialperformance metrics measured over a3-year period. | |||
| Peer Group | Some investors sought confirmation that the Company’s executive compensation peer group is reviewed regularly and includes peers that reasonably reflect companies of similar size and strategic direction as Teradata. | | Continued to conduct the Committee’s annual review of our peer group with input from management and its independent compensation consultant. | |||
| Refreshed the criteria and composition of our peer group to better reflect our size and strategic direction. | |||||
| Disclosure | Investors appreciate the strong narrative presented in our executive compensation disclosures, but encouraged us to consider using more graphic elements to illustrate the progress of our business transformation and the changes to our executive compensation program. | | Redesigned the entire proxy statement to improve readability by including infographics and more tables, among other things. | |||
| Expanded the executive summary section of this CD&A. | |||||
| 32 | 2018 PROXY STATEMENT |
Compensation Discussion and Analysis
The changes made to our long-term incentive program in 2017 were approved in 2016, as described above, were consistentimplemented with the common themes expressed bygoal of positioning the Company as a market leader in the analytics andsoftware-as-a-service industry with a portfolio of subscription and cloud-based offerings. With this goal in mind, the Committee focused on performance metrics that create strong incentives for management to accelerate our stockholdersstrategy and generally have been viewed very favorably by investors, because they reinforced the performance-oriented structure of the program. In addition, through our engagement process, shareholders reiterated their general view that there should be a reasonable basis for compensation levels for our executives as well as linkage between the design of the Company’s executive compensation program and Teradata’s future strategic direction. To that end,increase long-term stockholder value. As explained below in Section 23 of this CD&A, we have provided detailed disclosures regarding the basis forCommittee believes that the total compensation levels awardedfollowing metrics drive value and are aligned with stockholder interests:
| ARR growth, which is a measure that stockholders use to determine the extent to which we are shifting to a more predictable business model that will ultimately drive revenue growth over time; and |
| Percent of total contract value for subscription-based bookings compared to total contract value for subscription-based and perpetual license bookings, which demonstrates to investors that we are executing our strategy by growing a more reliable and profitable revenue stream that will benefit the Company and stockholders for years to come. |
Pay-For-Performance Commitment
Teradata is committed to rewarding talent that drives our current named executive officers and howorganizational success. As part of our executive compensation program is designed to meet the Company’s business transformation goals.
Wein 2017, we emphasized a culture of high performance, and our talent and rewards strategies centered on incentive programs that provided rewards based on meaningful demonstrations of business achievements and performance contributions to the Company. Moving forward, we will continue to engage withdrive this philosophy in all of our stockholders on variety of matters, including executive compensation,talent and take into account investor feedback in evaluating and structuring our executive compensation program.
37
Pay-For-Performance Commitmentrewards programs throughout the organization.
The Committee has designed the compensation program for our named executive officers to bereflect the importance placed on Company and business achievement in a high performing culture. To that end, our core compensation program is closely aligned with Company performance. Our core compensation programperformance and consists of base salary, annual incentives and long-term equity incentives (performance-based restricted share units).incentives. As illustrated below, in 2016,2017, approximately 92%90% of the target total direct compensation for our CEO, Mr. Lund, and 76%81% for the other named executive officers serving at the end of the fiscal year (i.e., Messrs. Culhane, Ratzesberger, Harrington, and Dinning), was performance-based.
38
| 33 |
SectionSECTION 2: Compensation Philosophy, Policies and PracticesCOMPENSATION PHILOSOPHY
AND GOVERNANCE
Our executive compensation program is designed to achieve the Company’s goal of attracting, retainingattract, retain and developing globalalign our business leaders with proven capabilitiesour goals to drive financial and strategic growth, while also delivering long-term stockholder value. We focus on providing compensation opportunities that are alignedLike our business, these programs must be dynamic and adjusted regularly to align with our stockholders’ interests,intensely competitive and changing business, particularly as the Company is undergoing a strategic transformation. Underlying this evolving structure, all of our compensation programs promote sound governance practices, and deliverpay-for-performance. Thebalance, driving results with mitigating risks. To that end, the Committee has also implemented policies andgovernance best practices to reduce compensation risks and to align compensation with industry norms.norms and stockholder interests. See Section 6 of this CD&A for more details regarding some of these key policies and practices.
What We Do
ESTABLISH COMPETITIVE COMPENSATION LEVELS for our named executive officers |
MAINTAIN A “DOUBLE TRIGGER” for change in | |||||||||||
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MINIMIZE COMPENSATION RISKS by periodically |
IMPOSE STOCK OWNERSHIP GUIDELINES in line with stockholder interests requiring robust ownership levels for executive officers | |||||||||||
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MAINTAIN A CLAWBACK AND HARMFUL ACTIVITY POLICIES so that |
RETAIN AN INDEPENDENT COMPENSATION CONSULTANT to provide expert objective, third-party advice regarding executive pay programs and competitive market practices |
ANNUAL ADVISORY VOTE ON EXECUTIVE COMPENSATION to give investors the opportunity to express their views on pay on a | ||||||||
REVIEW OVERHANG LEVELS AND BURN RATES to confirm that | ||||||||||
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Section 3: Core Compensation Program
Summary of 2016 Compensation Decisions
Mr. Lund
As noted above, in 2016 we began a management transition, including the appointment of Mr. Lund as President and CEO following the departure of Mr. Koehler, our former CEO, on May 5, 2016. In connection with his appointment as President and CEO, Mr. Lund received the following compensation:
a base salary of $800,000 per year,
a target annual incentive opportunity of 125% of his base salary (prorated for 2016),
pro-rated 2015-2016 long-term incentive awards with a target award value of $4,000,000 (based on an annual award value of $6,000,000), which were 100% performance-based and split equally between performance-based restricted share units subject to the same3-year total shareholder return performance goals established for other executive officers for the 2016-2018 performance period and performance-based restricted share units subject to the samenon-GAAP earnings per share performance goals established for other executive officers for the 2016 performance period, and
participation in the health, welfare, retirement and other benefit plans (but not including our Change in Control Severance Plan) generally made available to other senior executives.
The terms of this compensation package were negotiated between Mr. Lund and the Committee. They were believed to be necessary to induce Mr. Lund to assume his role immediately upon the termination of Mr. Koehler, and the Committee retained the advice of its independent compensation consultant when establishing Mr. Lund’s compensation levels.
The Committee increased Mr. Lund’s 2016-2017 long-term incentive opportunity from $6,000,000 (annualized) to $8,400,000 to align his total compensation with competitive market median levels and in recognition of the many contributions he made in leading and driving the Company’s business transformation and shift in strategy as described above in Section 1. Prior to this increase, Mr. Lund’s total compensation was significantly below the Company’s compensation peer group’s median level. Moreover, the Committee recognized the importance of retaining Mr. Lund through the completion of the Company’s business transformation process, including Mr. Lund’s vital role both with respect to the development of operational plans to execute our new strategy and the development of a management team who is capable, willing and enthusiastic to drive this strategy forward. Based on its desire to align pay and performance, the Committee allocated this market-based increase entirely to Mr. Lund’s long-term performance-based incentive opportunity rather than base salary.
Mr. Lund’s long-term incentive awards are generally subject to the terms of the Company’s standard equity award agreements, except that a termination of Mr. Lund’s employment for any reason (other than for cause) will be treated as his retirement, given his age and tenure with the Company, with full (rather thanpro-rata) vesting of any performance-based restricted share units earned if his employment terminates after 2016 (for the awards granted in May 2016) and after December 31, 2017 (for the awards granted in November 2016). However, in the event he is no longer employed by the Company, any payout of Mr. Lund’s performance-based equity awards will continue to be subject to the achievement of the performance criteria for such awards over the entire performance period. In other words, Mr. Lund would not receive any payout for his vested equity until after the completion of the applicable performance period when the Committee determines whether and to what extent those criteria have been achieved.
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Other Named Executive Officers
The Committee believes that the current named executive officers should be paid at competitive market levels and, as outlined below, took steps to better align the total compensation of certain of our named executive officers with the market in light of their new roles and responsibilities. These pay actions were considered critical to maintaining a fairly compensated senior management team committed to taking the difficult and transformative steps necessary to change so many aspects of the Company’s business, including our technology deployments,go-to-market strategy and license models. These changes were also intended to preserve continuity in the senior management team during the transition period, as any unplanned departures could jeopardize the successful execution of our new strategy.
The 2016 total direct compensation levels for our named executive officers, other than Mr. Lund and our former CEO, Mr. Koehler, were determined by the Committee as set forth in the following table. In 2016, the total direct compensation opportunity for Mr. Koehler, prior to his departure, was not changed from prior-year levels:
No Excise Tax Gross-Ups | ||||||||
No Hedging or Pledging of Company Stock
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No “Repricing” of
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| 34 |
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SECTION 3: CORE COMPENSATION PROGRAM
Summary of 2017 Compensation Decisions
Mr. Lund
The Committee believes that Mr. Lund has been an exceptional leader driving change and execution during the Company’s business transformation, and our results demonstrate it. As noted above, Teradata’s 2017year-end stock price increased more than 57% since the time he began as CEO in May 2016. Moreover, Mr. Lund has injected new leadership and direction to the Company, with all but one of the current executive leadership positions being held by different individuals than when he started as CEO. Even more importantly, Mr. Lund has exponentially recharged the culture and spirit of Teradata’s entire workforce through his dynamic leadership style and commitment to inspiring employees to achieve exceptional outcomes. He also focuses tremendous energy on our customers and meets with them frequently to ensure that our strategy and new offerings are resonating and meeting their business needs.
As described in more detail below, while Mr. Lund’s 2017 base salary and target annual incentive opportunity did not change, in recognition of his exceptional performance and his value to the Company as a seasoned leader who delivers on his commitments, the Committee slightly increased the total value of his long-term equity award. Given our CEO’s strong performance and capabilities, coupled with the Committee’s desire to continue incenting him to drive the strategic course of the Company through the business transformation, the Committee positioned his total compensation level above market median for our peer group with heavy weighting on performance-based incentives.
Other Named Executive Officers
The following is a brief summary of each element of our core compensation program for our named executive officers as of December 31, 2016.2017.
Base Salary
We provide a base salary to retain and as necessary, attract key executive talent and to align our compensation with market practices. Base salaries are reviewed and established by the Committee on a competitive basis each year to ensure they are appropriate and consistent with market median levels.levels and were not changed for our named executive officers in 2017. Mr. Culhane’s base salary was negotiated at the time he joined the Company as our EVP and CFO based on competitive market data, taking into consideration his relative degree of experience and new hire incentive considerations.
Annual Bonus Awards
All of our named executive officers except Mr. Morton participated in our 20162017 annual bonus program. The 2017 target incentive opportunity generallyopportunities of Messrs. Lund, Ratzesberger, Harrington, Dinning, and Scheppmann remained unchanged from 2015, with the exception of Mr. Ratzesberger2016, and Mr. Dinning who received increases as notedare set out in the summary above in connection with their expanded responsibilities, andtable below. Mr. Lund who assumedCulhane’s target annual incentive opportunity for 2017 was equal to 100% of his annual base salary on a prorated basis. The maximum payout opportunity under our 2017 annual bonus program was capped at 200% of the role as President and CEO in 2016.executive’s target annual incentive opportunity.
NAME |
TARGET OPPORTUNITY | OF BASE SALARY) | ||||
Victor Lund | 125 | % | ||||
Mark Culhane | 100 | % | ||||
Oliver Ratzesberger | 100 | % | ||||
Daniel Harrington | 100 | % | ||||
John Dinning | 80 | % | ||||
Stephen Scheppmann | ||||||
| 100 | % | ||||
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Total payouts under the 20162017 annual bonus program are generally determined by theour achievement of performance objectives based on two equally weighted measure of three different components:financial measures: (i) non-GAAPGAAP revenue, (i.e.,excluding revenue earned by the TMA business, which was sold on July 1, 2016, and any impact of foreign currency exchange rates frompre-established plan levels);(ii) non-GAAP operating income as reported in the Company’s 2016 earnings release (i.e.,(GAAP operating income excluding stock-based compensation expense the TMA business and other special items identified in our earnings release);releases for 2017 or in our financial statements or notes to financial statements), determined on a “perpetual equivalent value”non-GAAP basis withpre-specified adjustments approved by the Committee, as described below. Note that the Committee discontinued the use of strategic goals to measure performance under the 2017 annual bonus program, which had been the prior practice and (iii) strategic objectives. No single component is given disproportionate weight and each has a specific business objective.not universally favored by stockholders.
| BUSINESS OBJECTIVE | ||||||
GAAP Revenue | 50 | % | Reward our executives for achievement of revenue objectives | |||
Non-GAAP Operating Income | 50 | % | Incent our executives to deliver attractive contribution margins and stockholder value | |||
| 35 |
Section 3: Core Compensation Program
 | “Perpetual Equivalent Value” –Rationale and Calculation | |||
| When establishing the performance objectives under our 2017 annual bonus program in February 2017, the Committee formulated the targets for the financial measures on the Company’s guidance to investors with respect to its projected revenue and operating income plan for the year. In addition, as explained below, the financial goals based on these measures were established on a “perpetual equivalent value” basis to account for the Company’s shift to subscription-based license revenue from upfront revenue based on perpetual licenses. As a result of our changing business model, the target levels of revenue and | ||||
| “Perpetual Equivalent Value” represents the estimated value the Company would have recognized as revenue if the customer had purchased subscription licenses, rental or cloud under historical purchasing practices (i.e., under perpetual license purchasing options) and is calculated as follows: • The value is based only on new incremental contracts with a minimum1-year commitment that were executed during 2017. • For software subscription license and rental agreements, we applied the calculated discount for each transaction to the perpetual list prices for software and hardware. • For cloud offerings, we applied the calculated discount for the transaction to the perpetual list prices for such orders.* • For all transactions, we excluded maintenance, software upgrades and recognized revenue in 2017. • In all instances, the perpetual equivalent value could not exceed the contract value of the applicable transaction. * For external reporting purposes in our 2017 periodic reports, we applied a more conservative approach in calculating the Perpetual Equivalent Basis in that we only applied this methodology for software sold in connection with cloud transactions and excluded the value of any charges for hosting, infrastructure and support services from the total value of our cloud offerings. As a result, our executives were incented to | ||||
When establishing the performance objectives under our 2016the 2017 annual bonus programplan in February 2016,2017, the Committee formulatedalso approved the targets foruse of the financial measures onfollowing adjustments to the Company’s guidance to investors with respect to its projected revenue and operating income plan forfinancial metrics and results: (i) the year based on our traditional perpetual upfront license revenue model. Thenon-GAAP revenue target represented a 1%specified financial metrics would automatically increase from prior-yearto take into consideration the contributions of any significant acquisition transaction; (ii) the financial results on a constant currency basis, and thenon-GAAP operating income target was a 19% increase over 2015 results. As mentioned above in Section 1, although the level of rigor with respect to the revenue goals for the year stayed the same, they were generally down from the prior year due to the expected continued downward pressure on large capital IT investments and changing customer buying patterns, particularly delayed purchases as customers explored increased deployment and pricing alternatives. The projected significant improvement in operating income for the year was based on the Company’s exit from the TMA business and major cost takeout efforts.
In addition, the Committee identified a number of strategic initiatives that were important to accomplish in 2016 based on the Company’s then-current business plan, and decided to continue to weigh thenon-GAAP revenue andnon-GAAP operating income measures at 30% each and the strategic objectives at 40%. The Committee continued to believe that this allocation appropriately stressed the importance of achieving certain key strategic objectives and investment initiatives that would be criticaladjusted to buildingexclude the foundation for our business transformation strategy, but that might notimpact of foreign currency exchange rates frompre-established 2017 plan levels; and (iii) the financial results would be reflected appropriatelyadjusted to exclude the cumulative effect of changes in our short-term financial results. Other strategic objectives were intended to position the Company for growth in future years.
Following the appointment of Mr. Lund as Teradata’s new President and CEO in May, the Company’s strategy was shifted as part of the ongoing business transformation process. As discussed above in Section 1, a new emphasis was placed on driving recurring revenue streams by providing alternative pricing models and deployment options for customers, such as subscription licenses and hybrid cloud offerings which are priced as a service. As a result of this move from perpetual, upfront revenue to subscription-license based revenue, a meaningful portion of the Company’s revenue, nearly $70 million, was driven into future years but the related expenses were incurred in 2016. In other words, while we were not able to recognize as much upfront revenue at the time of the customer’s purchase of Teradata software during the year, the Company and its stockholders generally will receive the benefit of the sales transactions as revenue is recognized over the life of the sales agreements. To account for this shift and to reflect the strategic importance of this new model on the Company’s long-term growth, the Committee chose to determine the performance achievement for the
44
2016 annual bonus financial measures(non-GAAP revenue andnon-GAAP operating income) by measuring the Company’s results on a perpetual-license basis. The Committee believed that this approach would provide a fair and more comparable determination of the Company’s performance achievement for the year.
To determine the value of the shift from perpetual, upfront revenue to subscription-license based revenue that occurred during 2016, the Committee applied the following objective methodology (the “Conversion Methodology”):
| 36 |
|
Section 3: Core Compensation Program |
|
|
|
Through the application of this Conversion Methodology, the level of achievement for the annual bonus was able to be determined by comparing the actual results to the performance metrics that were set by the Committee before the significant shift in strategy during the year to move toward a subscription revenue model, which is key to our long-term success, as we believe this shift will increase our recurring revenue over time.
Financial Measures
The following chart sets forth thenon-GAAP GAAP revenue andnon-GAAP operating income targets for 20162017 and the related achievement levels afteron a perpetual equivalent value basis and the application of the Conversion Methodologyother adjustments described above.
Financial Measure (60% of total weighting | 0% (Threshold)(1) | 100% (Target) | 200% (Maximum) | Actual Performance(2)(3) | Achievement Level | |||||||||||||||
Non-GAAP Revenue | $ | 2,192 | $ | 2,369 | $ | 2,584 | $ | 2,312 | 84% | |||||||||||
Non-GAAP Operating Income | $ | 409 | $ | 486 | $ | 583 | $ | 513 | 129% | |||||||||||
FINANCIAL MEASURE (IN MILLIONS) | 0% (THRESHOLD) | 100% (TARGET) | 200% (MAXIMUM) | ACTUAL PERFORMANCE(1)(2) | ACHIEVEMENT LEVEL | |||||||||||||||
GAAP Revenue(1) | $ | 2,195 | $ | 2,307 | $ | 2,664 | $ | 2,364 | 116 | % | ||||||||||
Non-GAAP Operating Income(1) | $ | 353 | $ | 379 | $ | 621 | $ | 393 | 106 | % | ||||||||||
Total | 111 | % | ||||||||||||||||||
| (1) |
| When |
45
Strategic Objectives
As described above, 40% of the 2016 annual bonus opportunity was allocated to the achievement ofpre-established strategic objectives to further our long-term strategy and position the Company for future success. The 96% achievement level for this portion of the bonus program was based on the Committee’s subjective assessment of overall performance relative to a mix ofpre-established strategic performance criteria, as illustrated below:
|
|  Achieved significant cost reductions of over $100 million which far exceeded $70 million cost takeout goal. The benefit of these costs savings going forward are important because they will allow us to rebuild our organization with skill sets that meet the criteria of our new strategy. | ||
|  Successfully completed complex sale and transition of this exited business; however, sale price was less than desired. | |||
|  Completed deployment of Teradata database software | |||
| Developed and announced new strategic plan at the Analyst Day in November 2016 that was well-received by investors. Completely reorganized our management structure during the year and implemented programs to reduce attrition. | |||
|
| |||
|
|
| ||
46
|  R&D program milestones were met for these solutions, particularly Intelliflex and ecosystem architecture releases, and we were on track with analyst ranking objectives, but we generally did not achieve targets with respect to sales and new account targets. | |||
Solutions Compensation Incentive Program
Mr. Morton participated in the Company’s solutions compensation incentive program, which provides for incentive payments based on attainment of specified financial objectives. For 2016, Mr. Morton’s target incentive opportunity was 70% of annual base salary and 50% of his specific financial sales objectives were based on Americas sales revenue and 50% on Americas contribution gross margin. Performance was measured by comparing actualyear-to-date results through July 31, 2016 (per his separation agreement) against full-year objectives and paid upon the first and continued point of attainment against the objectives.
Payouts of Annual Bonuses
Each of the named executive officer, other than Mr. Morton,officers was entitled to a payout under theour 2017 annual bonus program equal to 102%111% of his target annual incentive opportunity, which reflected a 106.5%111% achievement level for the financial measures, and a 96% achievement level foralthough thepre-established strategic objectives, based on the Committee’s subjective assessment of performance relative to those objectives. Pursuant to their separation agreements and the Company’s standard practice, the 2016 annual bonuses paid to Messrs. Koehler and Fair werepro-rated for the portion of the year in which they were employed.
Mr. Morton received a payout of $127,752 under the 2016 solutions compensation incentive program equal to approximately 48% of his target incentive opportunity,pro-rated for the period prior to his departure which was determined as follows:
| Performance Objective | Performance | Achievement Level | ||||
Americas Solutions Revenue | $ | 712,149,313 | 48.1% | |||
Americas Contribution Gross Margin | $ | 380,619,354 | 47.9% | |||
The amount of the 2016 2017 annual bonus payments isto each of Messrs. Culhane and Scheppmann were prorated to reflect their respective period of service during 2017 as EVP and CFO. The 2017 annual bonus payment amounts are set forth in theNon-Equity Incentive Plan Compensation column of the Summary Compensation Table of this proxy statement on page 56.48. For more information on the 20162017 annual bonus program for our named executive officers, please refer to the “Grants of Plan-Based Awards” section on page 5950 of this proxy statement.
Long-Term Incentives (Equity Awards)
The total direct compensation levels for our named executive officers are heavily weighted to long-term incentive opportunities, which vest over a period of three years. This structure is intended to align executives’ interests with those of our stockholders, enhance our retention incentives and focus our executives on delivering sustainable performance over the longer-term.
47
Annual Grants (2016-2017(2017-2018 award cycle)
Our executives are generally awarded annual equity grants at the end of each year, including performance-based restricted share unit awards that are based on performance periods that commence at the start of the following fiscal year. As described under the heading “2017 Target Compensation” on page 49 of this proxy statement, the performance-based restricted share unit awards approved by the Committee on November 27, 2017, as part of our 2017-2018 long-term incentive program are treated for financial accounting purposes as granted in February 2018, when the Committee established performance goals for those awards. As a result, those performance-based restricted share unit awards are not reported in the 2017 Summary Compensation Table or Grants of Plan-Based Awards Table, and will instead be reported in those tables in next year’s proxy statement, as awards granted during 2018.
When the Committee established the long-term incentive opportunities for our current named executive officers as part of our 2016-20172017-2018 annual grantaward cycle (awards grantedapproved in 2016 for2017 that include performance-based awards with performance periods starting January 1, 2017)2018), it considered a number of factors, includingfactors. As noted above, the Committee increased Mr. Lund’s long-term incentive opportunity slightly (approximately 1%) over his target opportunity for the 2016-2017 award cycle. Mr. Culhane’s target 2017-2018 long-term incentive award opportunity was negotiated at the time of his hire as our goalsEVP and CFO based on competitive market data, taking into consideration his significant experience and new hire incentive considerations. In light of settingthe changing scope and impact of certain executive’s responsibilities, the Committee made the following changes to the 2017-2018 long-term incentive opportunities for some of our named executive officers: (i) to reflect his performance and strategic importance to the Company, Mr. Ratzesberger’s opportunity was increased by approximately 24% over the prior year taking into account competitive market data for executives at more competitive levels, increasing the retentive naturechief operating officer level; and (ii) the opportunities of the incentive program,Messrs. Harrington and appropriately managing our dilution and run rate levels. Moreover, before finalizingDinning declined. Mr. Scheppmann was not granted a long-term incentive opportunity for the2017-2018award cycle because he is on medical leave.
| 37 |
Section 3: Core Compensation Program
The target 2017-2018 long-term incentive opportunities approved by the Committee assessed eachfor our current named executive officer’s general performance duringofficers are set out in the year and efforts taken to drive the Company’s change in strategy as part of our business transformation, as well as his relative roles and responsibilities within the Company, along with internal equity considerations. After reviewing these factors, the Committee allocated a greater percentage of total direct compensation to long-term incentives and established the current named executive officers’ respective target long-term incentive award levels as follows:table below.
| Name | 2016-2017 Long-Term Incentive Opportunity | |||||||
| NAME | 2017-2018 LONG-TERM INCENTIVE OPPORTUNITY | |||||||
Victor Lund | $ | 8,400,000 | $ | 8,500,000 | ||||
Stephen Scheppmann | $ | 2,700,000 | ||||||
Dan Harrington | $ | 2,350,000 | ||||||
Mark Culhane | $ | 3,000,000 | ||||||
Oliver Ratzesberger | $ | 2,250,000 | $ | 2,800,000 | ||||
Daniel Harrington | $ | 1,750,000 | ||||||
John Dinning | $ | 1,600,000 | $ | 1,350,000 | * | |||
| * | As noted below in Section 5 of this CD&A, Mr. Dinning’s equity award was forfeited when he left the Company in February 2018. |
The Committee decided to allocate the entire 2016-20172017-2018 long-term incentive award opportunity 70% to performance-based restricted share units (“RSUs”) and 30% to signal the urgency of our business transformation and to motivate and drive our leadership team to execute key strategic objectives in connection with our transformation plan, using two separate performance-based restricted share unit awards.time-based RSUs. The following table describes each of the performance-based restricted share unit awards used in the 2016-20172017-2018 long-term incentive program, along with its weighting and the rationale for its use.
EQUITY AWARD AND DESCRIPTION AND RATIONALE (2017-2018 AWARD CYCLE) | WEIGHT | |||
| 70 | % | |||
• ARR growth is a key strategic lever for our future business because it represents the extent to • ARR is a standard market measure used by stockholders to gauge the performance of | ||||
Percent of Total Contract Value for Subscription-Based Bookings versus Total Bookings: 35% of the target long-term incentive award opportunity will be earned based on the achievement of cumulative annual goals regarding annual total contract value for subscription-based bookings over a3-year performance period (with annual goals set in the first quarter of each year during the performance period). • This measure is a key element of our strategy and is highly valued by our investors because it demonstrates that we are shifting to a more predictable revenue stream with respect to our core business for the longer-term. • Because it provides more predictability regarding our future financial performance, investors generally value subscription-based revenue at a higher multiple than perpetual license revenue. | ||||
Time-Based RSUs | 30 | % | ||
Retention of Key Executives During Implementation of Business Transformation: • The time-based RSUs provide our current named executive officers with the opportunity to receive shares of our common stock if they remain employed by us for a3-year period and are intended to help retain executives who are important to the successful implementation of our business transformation. • The 30% weighting of time-based RSUs is aligned with peer practices and the3-year cliff vesting schedule is designed to create meaningful retention incentives. • We received positive feedback from our stockholders regarding the allocation of 30% of the long-term incentive opportunity to time-based RSUs to create a more retentive and balanced executive compensation program. (For more information on the 2017-2018 time-based restricted share unit awards for our named executive officers, please refer to the “Grants of Plan-Based Awards” section on page 50 of this proxy statement.) | ||||
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2018 PROXY STATEMENT |
Section 3: Core Compensation Program
Payout of 2016-2017 Performance-Based Restricted Share Units
As part of our annual 2016-2017 long-term incentive award cycle, we granted performance-based RSUs to our named executive officers (other than Mr. Culhane, who was not employed by the Company at that time), providing them with the opportunity to earn share units based on the extent to which specified performance objectives were achieved.
EQUITY AWARD AND DESCRIPTION AND RATIONALE (2016-2017 AWARD CYCLE) | ||
Performance-based RSUs • • Half of these performance-based RSUs were based on three equally-weighted financial metrics and the other half were based on operational performance metrics | ||
• The
| ||
Relative
• The payout opportunity for these performance-based RSUs ranges from 50% | ||
| ||
| ||
For more information onAchievement of Financial Metrics for 2017 Performance-Based RSUs
The financial metrics for the 2016-20172017 performance-based RSUs were based on: (i) TCore consumption growth and profitability, a metric that tracks growth in the consumption of Teradata software by our customers, which can be calculated for all deployment options and is critical to our long-term incentive awards for our named executive officers, please refersuccess, and was subject to a minimum gross margin threshold; (ii) the “Grants of Plan-Based Awards” section on page 59 of this proxy statement.
49
Payout of 2015-2016 Performance-Based Restricted Share Units
In December 2015, as partrevenue growth of our annual grant cycle, we granted performance-based restricted share units to our named executive officers (other than Mr. Lund, who received his award in May 2016,consulting services business; and Mr. Morton, who received his award at the time of his appointment in February 2016), providing them with the opportunity to be credited with a number of units based on the extent to which a(iii) non-GAAP earnings per share goal was achieved during fiscal 2016.EPS calculated on a perpetual equivalent value basis as described above.Non-GAAP earnings per shareEPS was defined as earnings per share excluding stock-based compensation expense and any other special items identified in the Company’s earnings releases for 2016.2017. Thenon-GAAP
The payout opportunity EPS target for these performance-based restricted share units ranged from 25%2017 was consistent with the guidance given to 200%investors for the year, and the Committee believes that the goal appropriately took into account the expected impact in 2017 of the units subjectCompany’s continuing shift from perpetual to subscription-based license revenue and our commitment to make significant investments in 2017 in support of our ongoing strategic technology development andgo-to-market efforts.
When establishing the award; although, consistent with ourfinancial metrics for the 2017 performance-based RSUs in February 2017, the Committee determined thatpay-for-performancenon-GAAP culture, no payout forEPS performance would be determined on a perpetual equivalent value basis and further approved the adjustment of financial goals could have been earned if performance wasresults to exclude: (i) the impact of foreign currency exchange rates frompre-established 2017 plan levels; (ii) the cumulative effect of changes in federal accounting standards/GAAP; (iii) the cumulative effect of any changes in applicable tax laws resulting in a discrete item of tax expense or benefit during 2017; and (iv) the effect of share repurchases that exceed or fall below the threshold level.pre-established 2017 plan levels.
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Section 3: Core Compensation Program
The following chart sets forth thenon-GAAP earnings per share target financial metric targets for the 2015-20162017 performance-based restricted share unitsRSUs and related achievement level.level after the application of the applicable adjustments described above.
| Performance Goal | 25% (Threshold) | 50% | 100% (Target) | 200% (Maximum) | Actual Performance(1) | Achievement Level | ||||||||||||||||||
Non-GAAP Earnings per Share | $ | 2.25 | $ | 2.32 | $ | 2.60 | $ | 3.13 | $ | 2.55 | 91.1 | % | ||||||||||||
| PERFORMANCE GOAL | 25% (THRESHOLD) | 100% (TARGET) | 200% (MAXIMUM) | ACTUAL PERFORMANCE | ACHIEVEMENT LEVEL | |||||||||||||||
TCore Consumption Growth and Profitability | 18,800 | 22,000 | 26,300 | 21,271 | 88 | % | ||||||||||||||
Consulting Revenue Growth | 2 | % | 20 | % | 60 | % | 24 | % | 111 | % | ||||||||||
Non-GAAP EPS | $ | 1.97 | $ | 2.08 | $ | 3.44 | $ | 2.13 | (1) | 104 | % | |||||||||
Total | 100.6 | % | ||||||||||||||||||
| (1) | Non-GAAP EPS results for |
Achievement of Operational Metrics
The operational metrics applicable to 50% of the target number of the 2017 performance-based RSUs consisted of important business transformation goals in five equally weighted key objective areas: (i) establishment of new pricing; (ii) completion of key account market analysis; (iii) implementation of Teradata Everywhere; (iv) deployment of our services IP repository; and (v) development of a new sales incentive plan for 2018. The Committee believed that these operational objectives were essential for the execution of our transformation and that management needed to be keenly focused on achieving them under a schedule tied to our operating plan for the year. Each of these goals represent meaningful building blocks for Teradata’s strategy and future success.
A payout level was determined separately for each of the five equally weighted key objective areas, with no payout for performance below the threshold level, and a payout ranging from 75% to 125% for performance between threshold and maximum levels. To earn the threshold 75% payout level for a key objective area, at least 75% of the specific performance metrics for that area must have been met by the applicable deadlines. To earn the target 100% payout level for a key objective area, 100% of the specific performance metrics for that area must have been met by the applicable deadlines. To earn the maximum 125% payout level for a key objective area, 100% of the specific performance metrics for that area must have been met and at least two of those performance metrics must have been completed ahead of schedule.
The table below describes the operational metrics that were established by the Committee with respect to the 2017 performance-based RSUs and the level of achievement of those metrics. In making its objective determination of performance of these performance metrics, the Committee determined that all of the operational goals were completed on time or early during the year. As a result, under thepre-established formula for determining the achievement level of these awards, the calculated payout ranged from 100 to 120%. However, the Committee determined that a target level payout was more appropriate from apay-for-performance perspective, elected not to pay above target, and reduced the payout level by setting it at the lower end of the prescribed range which is 100%.
| 40 | 2018 PROXY STATEMENT |
Section 3: Core Compensation Program
ACHIEVEMENT OF OPERATIONAL METRICS
 | Completed Early | |||
| Completed On Time |
KEY OBJECTIVE AREAS | OPERATIONAL PERFORMANCE METRICS | RESULTS | ||
Establishment of New Pricing | New strategy and policy completed, documented and approved, including for key new offerings | | ||
| Developed and implemented new training and field pricing tools |
| |||
| Completed pricing assessment and recommendations for 2018 adjustments |
| |||
Teradata Everywhere | Teradata Managed Cloud services on IntelliFlex 1.1, IntelliBase 1.0 and AWS available for sale to customers |  | ||
| IntelliFlex 1.1 and IntelliBase 1.0 available for sale to customers |
| |||
| IntelliFlex 2.0 available for sale to customers |
| |||
| Teradata 16.10 available for sale to customers |
| |||
| Developed integrated service management model for cloud |
| |||
Key Account Market Analysis | Completed 2018go-to-market planning and reporting | | ||
| Completed planning for account resourcing and development of prospect list for 2018 |
| |||
Services Intellectual Property Repository | IP repository available for all services teams with documented process and training | | ||
| Developed and enhanced business value frameworks covering specified industries with specified increase in use of assets | | |||
| Systematic tracking of assetsre-used in engagements |
| |||
| Use of consulting-developed assets in specified number of projects |
| |||
2018 Sales Incentive Plan | Updated consultant compensation model to support intellectual property capture and reuse | | ||
| Analysis of 2017 compensation model criteria and performance used to develop 2018 compensation model design | | |||
| Developed new 2018 sales compensation plan based on cross-functional team input, with appropriate incentives to support performance beyond targeted objectives | | |||
| 2018 sales compensation plan completed, approved and communicated to sales team |
| |||
Based on actual performance results as adjusted,described above, our current named executive officers (other than Mr. Culhane) earned a payout equal to 91.1%100.3% of their target 20162017 performance-based share unit awards.RSUs. The units earned by our current named executive officers generally vestone-third on the date the Committee certified performance results,one-third on the first anniversary of the certification date, and the remaining third on the second anniversary of the certification date. The payoutdate, subject to continued employment with Teradata and other standard terms and conditions. However, as noted in Section 5 of 2016this CD&A, the 2017 performance-based share unitRSUs earned by Mr. Dinning vested in full upon his departure from the Company in February 2018. Also, pursuant to the terms of his award agreement, the number of 2017 performance-based RSUs earned by Mr. Lund are fully vested effective as of December 31, 2017, but payment of his 2017 performance-based RSUs generally is deferred until the vesting dates applicable to the 2017 performance-based RSU awards to Messrs. Fair and Morton washeld by our other current named executive officers.
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pro-rated for the portion of their employment during the three-year vesting period. Mr. Koehler did not receive any payout with respect to his 2016 performance-based share unit award.SECTION 4: COMPENSATION CONSULTANT AND
No Payout of Special 2016 PBRSUs and Long-Term Strategic PBRSUsPEER GROUP
In December 2012,Compensation Consultant
Until July 2017, the Committee approved a special grant of performance-based restricted share units for the period ending December 31, 2016, which were made in connection with the restructuring of our management team as an additional incentive to retain participating executives and drive strong performance. In February 2013, the Committee amended the special grant to allocate it between two separate awards: (i) 70% of the units were allocated to 2016 performance-based restricted share units (“Special 2016 PBRSUs”); and (ii) 30% of the units were allocated to special long-term strategic performance-based restricted share units (“Long-Term Strategic PBRSUs”). Only three of our named executive officers received these special equity awards: Messrs. Fair, Harrington and Scheppmann.
50
Each of these named executive officer’s opportunity to earn the Special 2016 PBRSUs was based on the extent to which Teradata achieved certain financial goals during 2016 as a function of both a GAAP revenue target and anon-GAAP earnings per share target. However, no payout could be earned for either financial metric if we did not attain the threshold level for thenon-GAAP earnings per share metric of $4.50 per share.
The executives’ opportunity to earn the Long-Term Strategic PBRSUs was based on a subjective assessment of performance over a four-year period ending in 2016 relative to a mix of long-term strategic measures with respect to such matters as data warehousing technology and offerings and integrated marketing management solutions, among other things, provided that a $4.50non-GAAP earnings per share threshold was achieved.
We did not achieve the thresholdnon-GAAP earnings per share metric for 2016 and therefore these special PBRSU awards were forfeited in their entirety.
Section 4: Compensation Consultant and Peer Group
Compensation Consultant
The Committee directly retainsretained Semler Brossy Consulting Group, LLC (“Semler Brossy”) to assist in developing and reviewing our executive compensation strategy and program. In August 2017, the Committee directly retained Frederic W. Cook & Co., Inc. (“FW Cook”) to replace Semler Brossy reportsas the Committee’s independent compensation consultant, reporting directly to the Committee and servesserving at the sole discretion of the Committee. It does not performNeither consulting firm performed (or performs) any other services for the Company, other than as an adviser toadvising the Board of Directors on its director compensation program. The Committee has assessed the independence of Semler Brossy pursuant to SEC rules and NYSE listing standards, and prior to engaging FW Cook, the Committee assessed FW Cook’s independence pursuant to those same rules and standards, and in each case the Committee concluded that there was no conflict of interest exists that would prevent the consulting firm from independently advising the Committee.
During their respective engagements, Semler Brossy and FW Cook each has provided information to the Committee regarding the target market compensation levels, pay mix, and overall design for the components of total direct compensation based on the pay practices of companies in our executive compensation peer group, as established by the Committee, and from a compensation survey described below.Committee.
Compensation Peer Group
Compensation Peer Group The Committee examines the Company’s peer group on an annual basis, with input from management and its independent compensation consultant. When establishing base salary and annual incentive levels in early 2017, the Committee took into account compensation paid by the members of the following compensation peer group (consisting of companies that generally: (i) are software focused or storage focused with a software component; (ii) have revenues of betweenone-third to three times our size; (iii) are publicly traded in the United States; (iv) sell predominately to businesses (i.e.,business-to-business); and (v) conduct business globally): COMPENSATION PEER GROUP (UNTIL SEPTEMBER 18, 2017) Adobe Systems Incorporated Akamai Technologies, Inc. Autodesk, Inc. CA, Inc. Citrix Systems, Inc. Cadence Design Systems NetApp, Inc. Open Text Corporation Red Hat, Inc. Salesforce.com, Inc. Symantec Corporation Synopsys, Inc. Unisys, Inc. Following the engagement of FW Cook, the Committee reviewed the Company’s compensation peer group and made several changes, effective September 19, 2017. With input from FW Cook, the Committee selected an updated compensation peer group consisting of companies that generally (i) have revenues of betweenone-third to three times our size; (ii) have a market capitalization of betweenone-third to six times our size; (iii) The Committee examines the Company’s peer group on an annual basis. In order to be included in our compensation peer group, a company generally must meet the following criteria: (i) be
be publicly tradedare U.S.-based (or Canada-based with a U.S.-style pay model and disclosure); and (iv) are in the United States; (iv) sell predominately to businesses (i.e., business-to-business);software, internet software and (v) conduct business globally.
Based on these factors, as well as input received during our stockholder outreach efforts, in 2016,services, or IT consulting industries. After evaluating potential peer companies that meet the above criteria, the Committee reviewed our compensation peer group. The compensationestablished the following updated peer group used bythat it believes includes a group of companies who better represent Teradata’s strategic direction as asoftware-as-a-service business. The chart also compares our revenue with the Committee in 2016 is as follows:revenues of our updated peer group, all of whom are technology-focused businesses with whom we compete for talent.
| 42 | 2018 PROXY STATEMENT |
Section 4: Compensation Consultant and Peer Group
Peer Group v. Teradata
| COMPANY | ||||
| REVENUE | APPROX. # OF EMPLOYEES | |||
| ||||
| ||||
| ||||
| ||||
| ||||
| $1,871 M | 7,094 | ||
| $1,913 M | 6,500 | ||
| $1,956 M | 9,000 | ||
| $1,980 M | 13,500 | ||
| $2,182 M | 10,615 | ||
| $2,291 M | 14,467 | ||
| $2,418 M | 6,200 | ||
| $2,521 M | 10,700 | ||
| $2,662 M | 10,362 | ||
| $2,746 M | 15,000 | ||
| $3,441 M | 8,071 | ||
| $3,485 M | 9,000 | ||
| $4,062 M | 11,500 | ||
| $4,143 M | 10,000 | ||
| $4,310 M | 11,000 | ||
| $4,686 M | 11,500 | ||
| $5,550 M | 10,700 |
* As of November 3, 2016, Rackspace Hosting, Inc. is no longer a public company.
51
For purposes of analyzing the pay levels of our peers, the Committee’s review encompassed two views of the market data: one including all of the peer group members and one excluding the two largest peer companies by revenue (VMware Inc., and salesforce.com, Inc.)Salesforce.com). The chart belowabove compares our revenue with the revenues of our compensation peer group for the last completed fiscal year.
Radford Compensation Survey
The Committee also reviewed survey information collected from Radfordcompetitive market data provided by FW Cook in designingconnection with the componentshiring of long-term incentive compensation forMr. Culhane as our executives. The Radford survey was used because it is focused on technology companies and technology-specific positions, and all of the companies in our current peer group participated in the survey.CFO.
| 43 |
SectionSECTION 5: Severance and Change in Control BenefitsSEVERANCE AND CHANGE IN CONTROL BENEFITS
Severance Agreements
We generally do not maintain employment agreements with any of our current named executive officers. However, we entered into an offer letter with Mr. Dinning at the time of his promotion to Vice President, Product Marketing & Management, VP in December 2011, pursuant to which we were obligated to provide certain benefits to Mr. Dinning in 2016; namely: (i) cash salary differential payments of $833.33 on abi-weekly basis as a result of his assignment in San Diego, California, which salary differential payments ceased at the time of Mr. Dinning’s promotion to Chief Transformation Officer in February 2016; and (ii)with mortgage subsidy payments over a five-year period endingthat ended in 2017.
52
Prior to As previously disclosed, the terminationposition of his employment, we maintained an offer letter withExecutive Vice President and Chief Business Officer was eliminated effective February 5, 2018, and Mr. Koehler, and as described below, we entered into severance agreements with each of our former named executive officers, the terms of which were negotiated at the time of termination of employment.
Severance Agreement with Mr. Koehler
Mr. Koehler’s employment with the Company was terminated effective May 5, 2016. Under the terms of an offer letter that was negotiated with Mr. Koehler in 2007, and upon review and approval by the Committee, Mr. Koehler was provided the following severance package: (i) a cash payment of $2,700,000, which represented 1.5 times his annual base salary, plus the approved target bonus opportunity; (ii) apro-rated bonus for 2016 based on the actual 2016 Company performance; (iii) subsidized health insurance coverage for 18 months. In addition to these benefits, the severance agreement that was negotiated with Mr. Koehler at the time of his termination provides for unsubsidized health insurance coverage for the period from the end of the18-month subsidized coverage period until he and his spouse each reaches age 65. In connection with his termination, Mr. Koehler forfeited all unvested stock options, restricted share units and other equity awards, although his vested stock options remained exercisable until the earlier of three years after May 5, 2016, or their expiration date. In exchange for these severance benefits, Mr. Koehler provided a release of claims to the Company, agreed to abide by the terms of restrictive covenants, includingnon-competition requirements in connection with his equity awards, and agreed to be available for consultation by the Company until December 31, 2016, for no additional compensation.
Severance Agreement with Mr. Fair
In July 2016, the Company implemented a new organizational model and determined that Mr. Fair’s position as Chief Operating Officer of the Company was no longer required. Since the Company did not have a comparable senior officer position available for Mr. Fair, we mutually agreed that Mr. Fair would resign from his employment effective November 1, 2016. Pursuant to the terms of a negotiated separation agreement, Mr. Fair received cash severance of $1,472,625, payable in installments over a fifteen-month period, and was entitled to continued health and dental coverage for eighteen months, with a subsidy by the Company such that Mr. Fair will be obligated to pay only the insurance premium contributions required of active employees. Mr. Fair also was eligible to receive his annual incentive bonus for 2016 under the Company’s Management Incentive Plan, based on the Company’s actual 2016 performance and prorated for the portion of the year through the separation date. In accordance with the terms of the Company’s stock incentive plans and award agreements as applicable in areduction-in-force, Mr. Fair was entitled topro-rated vesting of his outstanding restricted share unit awards. Mr. Fair also received accelerated vesting of 14,791 of the stock options granted to him on December 1, 2015, which otherwise would have vested on December 1, 2016, if his employment had continued through that date. Otherwise, Mr. Fair forfeited any unvested Teradata stock options as of the separation date, and his vested stock options remain exercisable until the earlier of three years after the separation date or the applicable expiration date. For up to one year following the separation date, Mr. Fair will be entitled to participate in the Company’s outplacement assistance program, as applicable to Teradata officers and senior executives in the event of areduction-in-force. In exchange for these benefits, Mr. Fair provided a release of claims to the Company and agreed that his restrictive covenants continue to apply after the separation date.
Severance Agreement with Mr. Morton
The board also accepted the retirement of Mr. Morton, who had been placed in the role of head of the Company’s Americas sales region as part of the business transformation efforts earlier in the year. Mr. Morton retired from the Company andDinning ceased to be an executive officer of the Company on that date, although he agreed to remain as an employee of August 1, 2016. Pursuantthe Company through February 28, 2018, to assist with the termstransition of a separation agreement negotiatedhis roles and responsibilities.
In connection with his departure from the Company, Mr. Dinning received severance benefits under the Teradata Executive Severance Plan, as described below. In addition, as agreed with Mr. Dinning in connection with his departure from(and in lieu of the
53
Company, Mr. Morton received cash severance treatment of $380,000, payable in installments over a12-month period,equity awards otherwise provided under the Executive Severance Plan): (i) all of his outstanding stock options vested as of his termination date and was entitled to continued health and dental coverage for eighteen months, with a subsidy by the Company such that Mr. Morton will be obligated to pay only the insurance premium contributions required of active employees. Mr. Morton also was eligible to receive his incentive under the Solutions Compensation Plan based on performance through July 31, 2016. In addition, Mr. Morton (i) received an extra year of vesting credit for purposes of calculating the vesting of service-based restricted share units and stock options (but not for purposes of determining the vesting treatment of performance-based restricted share units), (ii) was treated as having terminated employment as a result of his retirement for purposes of determining the vesting treatment of the equity awards, and (iii) is entitled to have all vested stock options remain exercisable until the earlier of three years59 days after the separationsuch date or the expiration of the applicable expiration date. Foroption; (ii) all of his restricted share units (other than the restricted share units granted to him on November 27, 2017) vested, withoutpro-ration, as of his termination date; (iii) all of his performance-based RSUs (other than the performance-based RSUs granted to him on November 27, 2017) vested (or will become vested), withoutpro-ration, to the extent they are earned based on actual Company performance for the entire performance period; and (iv) the time-based RSUs and performance-based RSUs granted to Mr. Dinning on November 27, 2017 were forfeited and terminated upon his departure.
Effective as of November 9, 2017, Mr. Scheppmann stepped down from his role as EVP and CFO and went on medical leave under Teradata’s short-term disability plan. No special compensatory arrangements were made with Mr. Scheppmann because of the change in his position with the Company.
We agreed to certain basic terms of Mr. Culhane’s employment at the time he was hired to succeed Mr. Scheppmann as EVP and CFO, including his initial base salary and annual and long-term incentive opportunity levels and his entitlement to an allowance of up to one year following$5,000 per month to cover the separation date, Mr. Morton will be entitledcosts of his commuting expenses to participateTeradata’s office in the Company’s outplacement assistance program, as applicable to Teradata officers and senior executives in the event of areduction-in-force. In exchange for these benefits, Mr. Morton provided a release of claims to the Company and agreed that his restrictive covenants continue to apply after the separation date.San Diego, California.
Change in Control Severance Plan
Each of our current named executive officers – other than Mr. Lund – participates in the Teradata Change in Control Severance Plan (the “CIC Plan”), the objectives and provisions of which are summarized below:
Business Objectives | •Increased Retention
•Alignment with Market | |
Severance Provisions | •Severance Protections on Double
•No Excise Tax Gross | |
| 44 | 2018 PROXY STATEMENT |
Section 5: Severance and Change in Control Benefits
54
Effective February 1, 2017, the Committee approved the Teradata Executive Severance Plan (the “Executive Severance Plan”), in which each of our named executive officers other than Mr. Lund is a participant. This plan was adopted to promote retention incentives for our executives by establishing severance protections for participants that are consistent with both market levels and Teradata’s past practices, while eliminating the need to negotiate individual severance agreements in connection with an executive’s termination or at the time of hire.
For our participating named executive officers, the Executive Severance Plan provides severance protections, as described below, in the event of termination of employment by the Company without cause (and not because of the participant’s disability or death) prior to (and not in connection with) a change in control of the Company. As described above, each of our named executive officers other than Mr. Lund participates in the CIC Plan, and in the event of a termination of employment by the Company without cause or by the participant for good reason in connection with a change in control, those participants would be entitled to receive severance benefits as provided under the CIC Plan. Each of our participating named executive officers would be entitled to receive the following top level of benefits under the Executive Severance Plan in the event of a qualifying termination of employment:
| • | For all retirement-eligible participants (i.e., participants aged 55 or older), an additional year of vesting service for stock options and time-based RSUs (but not performance-based RSUs), and the opportunity to exercise vested stock options until the earlier of three years after termination or the original option expiration date. |
To receive severance benefits under the Executive Severance Plan, a participant must agree to a release of claims against the Company. As a condition of participation in the Executive Severance Plan, each eligible employee must also agree to comply with certain restrictive covenants, includingnon-competition,non-solicitation,non-disparagement and confidentiality provisions to the extent permissible under applicable law.
More information on our use of severance agreementsthe CIC Plan and the CICExecutive Severance Plan, including the estimated payments and benefits payable to the current named executive officers, is provided under the “Potential Payments Upon Termination or Change in Control” section beginning on page 6454 of this proxy statement.
| 45 |
SectionSECTION 6: TaxOTHER COMPENSATION POLICIES AND PRACTICES
We maintain several key compensation policies and Accounting Considerationspractices that reinforce our pay for performance culture and promote the alignment of the interests of our executives and our stockholders, including the following:
POLICY/PRACTICE | DESCRIPTION | |
| Stock Ownership Guidelines | Our executives are subject to robust stock ownership guidelines, which require our CEO to hold at least 135,000 shares and our other current named executive officers to own 35,000 shares. Each of our current named executive officers other than Mr. Culhane has exceeded his required ownership level as of December 31, 2017, and Mr. Culhane has nearly met the guidelines ahead of schedule given his open-market purchase of Teradata stock after he joined the Company in November 2017. | |
| Clawback and Harmful Activity Policies | We maintain a Compensation Recovery Policy (commonly referred to as a clawback policy), which generally provides that we may recover performance-based compensation if the payout was based on financial results that were subsequently restated. This policy supports the accuracy of our financial statements and, in conjunction with our stock ownership guidelines, helps to align the interests of our named executive officers with those of our stockholders. In light of ourpay-for-performance culture, we felt strongly that our executives should be held to this higher standard of accountability. We also retain the right to cancel outstanding equity awards and recover realized gains if executives are terminated for cause or engage in certain “harmful activity,” such as violating anon-competition ornon-solicitation covenant. | |
| Prohibition on Pledging and Hedging | Our insider trading policy restricts our employees, officers and directors from engaging in hedging transactions involving Teradata stock, including short sales, or from pledging Teradata securities. | |
| Compensation Risk Assessment | Members of management from our human resources, legal and risk management groups assess whether our compensation policies and practices encourage excessive or inappropriate risk taking by our employees. This assessment includes a review of the risk characteristics of our business, our internal controls and related risk management programs, the design of our incentive plans and policies, and the impact of risk mitigation features. Management reports its findings to the Board of Directors and, based on that analysis, we do not believe that our compensation programs for employees are reasonably likely to have a material adverse effect on the Company. | |
| 46 | 2018 PROXY STATEMENT |
SECTION 7: TAX AND ACCOUNTING CONSIDERATIONS
In structuring our executive compensation program, the Committee takes into the account the tax and accounting treatment of our executive compensation arrangements. One such consideration is the potential impact of the limitation on Teradata’s federal income tax deduction for certain annual compensation over $1 million paid to covered employeesa “covered employee” under Section 162(m) of the Internal Revenue Code, as amended (“Section 162(m)”). In cases that it deems appropriate,making compensation decisions in 2017 and prior years, the Committee mayoften sought to structure our incentive compensation arrangements with the intention that such arrangements willwould qualify for an exemption from Section 162(m) as “qualified performance-based compensation.” However, the Committee has notnever adopted a policy that requireswould have required all compensation to be deductible because we wantthe Committee wanted to preserve the ability to provide cash or equitypay compensation to an executive that isour executives in appropriate circumstances, even if such compensation would not be deductible under Section 162(m) if we believe that it is in our stockholders’ best interests..
ForThe Tax Cuts and Jobs Act, which was enacted on December 22, 2017, includes a number of significant changes to Section 162(m), such as the repeal of the qualified performance-based compensation exemption and the expansion of the definition of “covered employees” (for example, annual incentive opportunities granted in 2016 to ourby including the chief financial officer and certain former named executive officers (other than Mr. Morton) wereas covered employees). As a result of these changes, except as otherwise provided in the transition relief provisions of the Tax Cuts and Jobs Act, compensation paid underto any of our Management Incentive Plan (the “MIP”), which is structuredcovered employees generally will not be deductible in 2018 or future years, to the extent that it exceeds $1 million. In response, the Committee has taken steps that it deemed appropriate with the intention of preserving the deductibility of certain of our compensation arrangements that bonuses paidwere in effect on the date of enactment of the Tax Cuts and Jobs Act. However, due to uncertainties regarding the scope of transition relief under the MIPTax Cuts and Jobs Act, there can be no guarantee that any compensation paid to our covered employees in excess of $1 million will qualify as deductible performance-based compensation for purposes ofbe or remain exempt from Section 162(m). The MIP provides annual incentive opportunities for each participating executive officer based on an incentive formula: 1.5% for the CEO and 0.75% for the other participants of our earnings before income taxes (“EBIT”). EBIT was selected as the appropriate performance measure under the MIP since the level of EBIT reflects the operating strength and efficiencyIn any event, in light of the Company. The EBIT incentive formula establishessweeping nature of the maximum amount payable each year under the MIP for each participating executive officer; but the executives are not assured of earning this maximum amount, and it was not paid in prior years. Instead,changes to Section 162(m), the Committee hasexpects that, after 2017, the authority to reduce the annual amount payable under the EBIT incentive formula based on its assessmenttax-deductible portion of the extent to which the applicable financial and strategic goals are achieved under our annual bonusTeradata’s executive compensation program as described above. The Committee also retains discretion to adjust payouts under the MIP based on the quality of Company and individual performance and adherence to our ethics and compliance programs, among other things.will decrease.
| 47 |
55
20162017 Summary Compensation
The following table summarizes the total compensation paid to, or earned by, each of our named executive officers for the fiscal year ended December 31, 20162017, and the prior two fiscal years. The 20162017 Target Compensation supplemental table following this table also provides additional information regarding the 20162017 total direct compensation levels for our current named executive officers as approved by the board’s Compensation and Human Resource Committee (the “Committee”).
| Name and Principal Position | Year | Salary ($) | Stock Awards(1) ($) | Option Awards(2) ($) | Non-Equity Incentive Plan Compensation(3) ($) | All Other Compensation(4) ($) | Total ($) | |||||||
Victor Lund | 2016 | 526,776 | 8,104,841 | 680,000 | 1,930 | 9,31,547 | ||||||||
Stephen Scheppmann | 2016 | 512,947 | 1,863,346 | 523,068 | 16,465 | 2,915,826 | ||||||||
| 2015 | 478,215 | 1,038,332 | 403,635 | 152,907 | 14,374 | 2,087,463 | ||||||||
| 2014 | 470,000 | 783,862 | 465,675 | 148,050 | 14,602 | 1,882,189 | ||||||||
Daniel Harrington | 2016 | 467,737 | 1,816,809 | 477,041 | 16,591 | 2,778,178 | ||||||||
| 2015 | 443,633 | 2,198,178 | 470,900 | 142,308 | 14,569 | 3,269,588 | ||||||||
| 2014 | 410,000 | 919,062 | 598,713 | 129,150 | 14,397 | 2,071,322 | ||||||||
Oliver Ratzesberger | 2016 | 434,719 | 1,431,715 | 429,675 | 16,398 | 2,312,507 | ||||||||
John Dinning | 2016 | 409,836 | 1,083,802 | 326,740 | 23,582 | 1,843,960 | ||||||||
Michael Koehler | 2016 | 273,224 | 2,567,096 | 340,000 | 2,730,999 | 5,911,319 | ||||||||
| 2015 | 800,000 | 3,892,068 | 1,345,435 | 320,000 | 15,180 | 6,372,683 | ||||||||
| 2014 | 800,000 | 3,322,368 | 1,995,720 | 315,000 | 15,045 | 6,448,133 | ||||||||
Robert Fair | 2016 | 467,260 | 1,283,548 | 522,478 | 1,519,592 | 3,792,878 | ||||||||
| 2015 | 528,384 | 2,306,558 | 672,717 | 185,387 | 14,569 | 3,707,615 | ||||||||
| 2014 | 410,000 | 919,062 | 598,713 | 129,150 | 14,397 | 2,071,322 | ||||||||
Rick Morton | 2016 | 222,186 | 1,011,214 | 199,628 | 127,752 | 419,512 | 1,980,292 |
NAME AND PRINCIPAL POSITION (1) | YEAR | SALARY (2) ($) | STOCK ($) | OPTION AWARDS (4) ($) | NON-EQUITY ($) | ALL OTHER COMPENSATION (6) ($) | TOTAL ($) | |||||||||||||||||||||
Victor Lund |
|
2017 |
|
|
800,000 |
|
|
8,693,440 |
|
|
1,110,000 |
|
|
1,206 |
|
|
10,604,646 |
| ||||||||||
President and Chief Executive Officer
| 2016 | 526,776 | 8,104,841 | 680,000 | 1,930 | 9,313,547 | ||||||||||||||||||||||
Mark Culhane EVP and Chief Financial Officer
|
|
2017 |
|
|
67,671 |
|
|
930,773 |
|
|
83,250 |
|
|
8,004 |
|
|
1,089,698 |
| ||||||||||
Oliver Ratzesberger |
|
2017 |
| 475,000 | 2,458,941 | 527,250 | 25,670 |
|
3,486,861 |
| ||||||||||||||||||
Chief Operating Officer
| 2016 | 434,719 | 1,431,715 | 429,675 | 16,398 |
| 2,312,507
|
| ||||||||||||||||||||
Daniel Harrington EVP, Customer Support and Services
|
|
2017 |
| 469,220 | 2,236,648 | 520,834 | 15,502 |
|
3,242,204 |
| ||||||||||||||||||
| 2016 | 467,737 | 1,816,809 | 477,041 | 16,591 | 2,778,178 | |||||||||||||||||||||||
| 2015 | 443,633 | 2,198,178 |
| 470,900
|
| 142,308 | 14,569 |
| 3,269,588
|
| ||||||||||||||||||
John Dinning |
|
2017 |
| 450,000 | 1,547,340 | 399,600 | 18,819 |
|
2,415,759 |
| ||||||||||||||||||
Former EVP and Chief Business Officer
| 2016 | 409,836 | 1,083,802 | 326,740 | 23,582 |
| 1,843,960
|
| ||||||||||||||||||||
Stephen Scheppmann Former EVP and Chief Financial Officer |
|
2017 |
| 515,346 | 1,915,306 | 508,750 | 18,092 |
|
2,957,494 |
| ||||||||||||||||||
| 2016 | 512,947 | 1,863,346 | 523,068 | 16,465 | 2,915,826 | |||||||||||||||||||||||
|
| 2015
|
| 478,215 | 1,038,332 |
| 403,635
|
| 152,907 | 14,374 |
| 2,087,463
|
| ||||||||||||||||
| (1) | Mr. Culhane’s start date was November 10, 2017, and he replaced Mr. Scheppmann as EVP and Chief Financial Officer at that time. Prior to February 5, 2018, Mr. Ratzesberger was EVP and Chief Product Officer of the Company. Mr. Lund became President and Chief Executive Officer of the Company in May 2016. |
| (2) | This column shows base salary earned during the year. For Mr. Scheppmann, this column also includes payments under our short-term disability program. |
| (3) | This column shows the aggregate grant date fair value, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation |
56
The following table sets forth the target number of units, their “target” grant date fair value reflected in the Stock Awards column above, and their grant date fair value assuming that the highest level of performance would be achieved.
| Name | Target Number of Annual PBRSUs (#) | Probable Grant Date Fair Value | Maximum Grant Date Fair Value | |||||||||
Victor Lund | 266,294 | $ | 8,104,841 | $16,209,682 | ||||||||
Stephen Scheppmann | 68,141 | $ | 1,863,346 | $ 3,726,692 | ||||||||
Daniel Harrington | 67,650 | $ | 1,816,809 | $ 3,633,618 | ||||||||
Oliver Ratzesberger | 51,714 | $ | 1,431,715 | $ 2,863,430 | ||||||||
John Dinning | 39,469 | $ | 1,083,802 | $ 2,167,604 | ||||||||
Michael Koehler | 106,232 | $ | 2,567,096 | $ 5,134,192 | ||||||||
Robert Fair | 53,116 | $ | 1,283,548 | $ 2,567,096 | ||||||||
Rick Morton | 21,386 | $ | 516,793 | $ 1,033,586 | ||||||||
See Note 5 of the Notes to Consolidated Financial Statements contained in our Annual Report on Form10-K for the year ended December 31, 20162017 (our “2016“2017 Annual Report”) for an explanation of the assumptions made in valuing the awards reported in this column.
| This column shows the aggregate grant date fair value, as determined in accordance with FASB ASC Topic 718, of the stock options granted to our named executive officers for the applicable year. See Note 5 of the Notes to Consolidated Financial Statements contained in our |
| This column reflects the cash bonus paid to our named executive officers under the annual bonus program for the applicable year. For more information concerning the |
| The amounts reported in this column for |
The dollar value of premiums paid to maintain life insurance for the benefit of each of Messrs. Lund, Scheppmann,Culhane, Ratzesberger, Harrington, Ratzesberger, Dinning, Koehler, Fair, and MortonScheppmann, in the amount of $1,930, $1,542, $1,479, $1,286, $997, $1,930,$1,206, $201, $1,528, $1,509, $1,447, and $1,769, and $669, respectively, under the Company’s life insurance program that is generally available to all U.S. employees;
The dollar value of matching contributions to our 401(k) savings plan, which are generally available to all plan participants and were made in 20162017 on behalf of each of Messrs. Scheppmann,Culhane, Ratzesberger, Harrington, Ratzesberger, Dinning, Koehler, Fair, and MortonScheppmann, in the amount of $13,195, $13,250, $13,250, $12,899, $13,250, $13,250$2,375, $13,500, $13,500, $13,500, and $13,024$13,500, respectively;
| 48 | 2018 PROXY STATEMENT |
Compensation Tables
For Messrs. Scheppmann,Ratzesberger, Harrington, Dinning, and Ratzesberger:Scheppmann, the dollar value of spousalfamily travel in connection with Company business events in the amountsamount of $1,687, $1,230$10,642, $493, $570, and $1,230, and related tax gross up payments of $41, $632 and $632$2,823, respectively; and
For Messrs. Koehler, Fair and Morton: the dollarperformance-based RSUs granted in 2017, the following table sets forth the target number of units, their “target” grant date fair value of cash severancereflected in the amountsStock Awards column above, and their grant date fair value assuming that the highest level of $2,700,000, $1,472,623 and $380,000, respectively, the dollar value of subsidized health and dental insurance coverage for 18 months after termination in the amounts of $15,819, $21,948, and $15,819, respectively, and for Messrs. Fair and Morton, outplacement benefitsperformance would be achieved. Mr. Culhane did not receive any performance-based RSUs with a dollar value of $10,000. In addition, Mr. Fair and Mr. Morton received accelerated vesting of equity awards with a value of $933,181 and $521,834, respectively. See “Potential Payments Upon Termination or Changegrant date in Control” for additional information.
| NAME | TARGET NUMBER OF ANNUAL PERFORMANCE- BASED RSUs (#) | PROBABLE GRANT DATE FAIR VALUE | MAXIMUM GRANT DATE FAIR VALUE | |||||||||
Victor Lund
|
|
192,875 |
|
$ |
6,056,275 |
|
$ |
12,112,550 |
| |||
Oliver Ratzesberger
|
|
50,644 |
|
$ |
1,590,222 |
|
$
|
3,180,444
|
| |||
Daniel Harrington
|
|
53,939 |
|
$ |
1,693,685 |
|
$ |
3,387,370 |
| |||
John Dinning
|
|
35,939 |
|
$ |
1,128,485 |
|
$
|
2,256,970
|
| |||
Stephen Scheppmann
|
|
60,997
|
|
$ |
1,915,306 |
|
$ |
3,830,612 |
| |||
57
20162017 Target Compensation
The Committee approved the long-term incentive award opportunity for each of the current named executive officers for the 2016-20172017-2018 grant cycle (the “2017 Equity Program”) in November 20162017 and February 2017.2018. The Committee decided to allocateallocated the entire 2016-20172017-2018 long-term incentive award opportunity 70% to PBRSUs, allocated as follows: (i) approximatelyone-third based on three-year relative total shareholder return (“TSR”),performance-based RSUs and (ii) approximatelytwo-thirds based on1-year financial and operational business transformation measures.30% to time-based RSUs. The1-year PBRSUs performance-based RSUs that were approved in connection withas part of the 2017 Equity Program2017-2018 grant cycle are not reflected in the “Stock Awards” column for 20162017 because they do not havenone of those awards had a “grant date” for financial accounting purposes until the Committee established the performance goals in the first quarter of 2017.2018. Instead, the “Stock Awards” column for 20162017 includes the TSR PBRSUstime-based RSUs that were approved by the Committee in November 2017 and also includes the1-year performance-based RSUs that were approved by the Committee in November 2016 and also includes both the1-year PBRSUs and the TSR PBRSUs that were approved by the Committee on December 2015 and for which the Committee established the applicable performance goals onin February 7, 2016.2017. As a result, the Summary Compensation Table does not reflect the manner in which the Committee viewed or determined the 2016-20172017-2018 long-term incentive opportunity or the total direct compensation values for our named executive officers. The following table, which is not required under the SEC’s rules and is not a substitute for any of the tables required under the SEC’s rules, provides an alternative presentation of the target total direct compensation levels for our current named executive officers as viewed by the Committee during the annual award cycle.in November 2017.
| Name | Salary ($) | Target Value ($) | Target Value ($) | Target Value of RSU Awards | Target Value of Option Awards ($) | Total Direct Compensation ($) | ||||||||||||||||||||||||||||||||||||||
| NAME | SALARY ($) | TARGET VALUE ANNUAL INCENTIVE ($) | TARGET VALUE OF PBRSU AWARDS ($) | TARGET VALUE OF RSU AWARDS ($) | TOTAL DIRECT COMPENSATION ($) | |||||||||||||||||||||||||||||||||||||||
Victor Lund | 800,000 | 1,000,000 | 8,400,000 | 0 | 0 | 10,200,000 |
|
800,000
|
|
|
1,000,000
|
|
|
5,950,000
|
|
|
2,550,000
|
|
|
10,300,000
|
| |||||||||||||||||||||||
Stephen Scheppmann | 550,000 | 550,000 | 2,700,000 | 0 | 0 | 3,800,000 | ||||||||||||||||||||||||||||||||||||||
Mark Culhane
|
|
475,000
|
|
|
475,000
|
|
|
2,100,000
|
|
|
900,000
|
|
|
3,950,000
|
| |||||||||||||||||||||||||||||
Oliver Ratzesberger
|
|
475,000
|
|
|
475,000
|
|
|
1,960,000
|
|
|
840,000
|
|
|
3,750,000
|
| |||||||||||||||||||||||||||||
Daniel Harrington | 469,220 | 469,220 | 2,350,000 | 0 | 0 | 3,288,440 |
|
469,220
|
|
|
469,220
|
|
|
1,225,000
|
|
|
525,000
|
|
|
2,688,440
|
| |||||||||||||||||||||||
Oliver Ratzesberger | 475,000 | 475,000 | 2,250,000 | 0 | 0 | 3,200,000 | ||||||||||||||||||||||||||||||||||||||
John Dinning | 450,000 | 360,000 | 1,600,000 | 0 | 0 | 2,410,000 |
|
450,000
|
|
|
360,000
|
|
|
945,000
|
|
|
405,000
|
|
|
2,160,000
|
| |||||||||||||||||||||||
| 49 |
Compensation Tables
58
20162017 Grants of Plan-Based Awards
The following table summarizes information for each named executive officer regarding (i) estimated payouts under the 20162017 annual bonus program, (ii) estimated payouts for the PBRSUsperformance-based RSUs (also referred to as PBRSUs) that were granted in 2016,2017, and (iii) stock options andtime-based RSUs that were granted in 2016.2017.
| Name | Grant Date | Approval Date(1) | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(2) | Estimated Possible Under Equity Incentive | All Other Stock Awards: Number of Shares of Stock Units(4) | Option Awards: Number of Shares Underlying Options(5) | Exercise or Base Price of Option Awards(6) | Grant Date Fair Value of Stock and Option Awards(7) | ||||||||||||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | (#) | (#) | ($/sh) | ($) | |||||||||||||||||||||||||||||||||||||||
Victor Lund | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 666,667 | 1,333,334 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 5/6/2016 | 5/1/2016 | 19,685 | 78,740 | 157,480 | 2,215,744 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 5/6/2016 | 5/1/2016 | 19,685 | 78,740 | 157,480 | 2,609,444 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 11/28/2016 | 11/28/2016 | 27,204 | 108,814 | 217,628 | 3,279,654 | ||||||||||||||||||||||||||||||||||||||||||
Stephen Scheppmann | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 512,812 | 1,025,624 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 3,984 | 15,935 | 31,870 | 368,417 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 3,984 | 15,935 | 31,870 | 401,721 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 11/28/2016 | 11/28/2016 | 9,068 | 36,271 | 72,542 | 1,093,208 | ||||||||||||||||||||||||||||||||||||||||||
Daniel Harrington | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 467,687 | 935,374 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 4,648 | 18,591 | 37,182 | 429,824 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 4,648 | 18,591 | 37,182 | 468,679 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 11/28/2016 | 11/28/2016 | 7,617 | 30,468 | 60,936 | 918,306 | ||||||||||||||||||||||||||||||||||||||||||
Oliver Ratzesberger | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 421,250 | 842,500 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 2,656 | 10,623 | 21,246 | 245,604 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 2,656 | 10,623 | 21,246 | 267,806 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 11/28/2016 | 11/28/2016 | 7,617 | 30,468 | 60,936 | 918,306 | ||||||||||||||||||||||||||||||||||||||||||
John Dinning | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 320,333 | 640,666 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 2,213 | 8,853 | 17,706 | 204,681 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 2,213 | 8,853 | 17,706 | 223,184 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 11/28/2016 | 11/28/2016 | 5,441 | 21,763 | 43,526 | 655,937 | ||||||||||||||||||||||||||||||||||||||||||
Michael Koehler | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 333,333 | 666,666 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 13,279 | 53,116 | 106,232 | 1,228,042 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 13,279 | 53,116 | 106,232 | 1,339,054 | ||||||||||||||||||||||||||||||||||||||||||
Robert Fair | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 512,233 | 1,024,466 | |||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 6,640 | 26,558 | 53,116 | 614,021 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/7/2016 | 12/1/2015 | 6,640 | 26,558 | 53,116 | 669,527 | ||||||||||||||||||||||||||||||||||||||||||
59
| Name | Grant Date | Approval Date(1) | Estimated Possible Payouts UnderNon-Equity Incentive Plan Awards(2) | Estimated Possible Under Equity Incentive | All Other Stock Awards: Number of Shares of Stock Units(4) | Option Awards: Number of Shares Underlying Options(5) | Exercise or Base Price of Option Awards(6) | Grant Date Fair Value of Stock and Option Awards(7) | ||||||||||||||||||||||||||||||||||||||||
| Threshold ($) | Target ($) | Maximum ($) | Threshold (#) | Target (#) | Maximum (#) | (#) | (#) | ($/sh) | ($) | |||||||||||||||||||||||||||||||||||||||
Rick Morton | ||||||||||||||||||||||||||||||||||||||||||||||||
Bonus program | — | 155,317 | 310,635 | |||||||||||||||||||||||||||||||||||||||||||||
Options | 2/8/2016 | 2/7/2016 | 23,822 | 23.12 | 199,628 | |||||||||||||||||||||||||||||||||||||||||||
RSUs | 2/8/2016 | 2/7/2016 | 21,385 | 494,421 | ||||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/8/2016 | 2/7/2016 | 2,673 | 10,693 | 21,386 | 247,222 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/8/2016 | 2/7/2016 | 2,673 | 10,693 | 21,386 | 269,571 | ||||||||||||||||||||||||||||||||||||||||||
| NAME | GRANT DATE | APPROVAL DATE (1) | ESTIMATED POSSIBLE PAYOUTS UNDERNON-EQUITY INCENTIVE PLAN AWARDS (2) | ESTIMATED POSSIBLE PAYOUTS UNDER EQUITY INCENTIVE PLAN AWARDS (3) | ALL OTHER STOCK AWARDS: NUMBER OF SHARES OF STOCK UNITS (4) | OPTION OF SHARES | EXERCISE OF | GRANT FAIR OF STOCK | ||||||||||||||||||||||||||||||||||||||||
| THRESHOLD ($) | TARGET ($) | MAXIMUM ($) | THRESHOLD (#) | TARGET (#) | MAXIMUM (#) | (#) | (#) | ($/SH) | ($) | |||||||||||||||||||||||||||||||||||||||
Victor Lund
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus Program
| 1,000,000 | 2,000,000 | ||||||||||||||||||||||||||||||||||||||||||||||
RSUs
| 11/27/2017 | 11/27/2017 | 72,034 | 2,637,165 | ||||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 2/22/2017 | 7,414 | 29,654 | 59,308 | 931,136 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 11/28/2016 | 40,805 | 163,221 | 326,442 | 5,125,139 | ||||||||||||||||||||||||||||||||||||||||||
Mark Culhane
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus Program
| 83,250 | 166,500 | ||||||||||||||||||||||||||||||||||||||||||||||
RSUs
| 11/27/2017 | 11/27/2017 | 25,424 | 930,773 | ||||||||||||||||||||||||||||||||||||||||||||
Oliver Ratzesberger
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus Program
| 475,000 | 950,000 | ||||||||||||||||||||||||||||||||||||||||||||||
RSUs | 11/27/2017 | 11/27/2017 | 23,729 | 868,719 | ||||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 2/22/2017 | 1,236 | 4,942 | 9,884 | 155,179 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/22/2017 | 11/28/2016 | 11,426 | 45,702 | 91,404 | 1,435,043 | ||||||||||||||||||||||||||||||||||||||||||
Daniel Harrington
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus Program | 469,220 | 938,440 | ||||||||||||||||||||||||||||||||||||||||||||||
RSUs
| 11/27/2017 | 11/27/2017 | 14,831 | 542,963 | ||||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 2/22/2017 | 2,059 | 8,237 | 16,474 | 258,642 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 11/28/2016 | 11,426 | 45,702 | 91,404 | 1,435,043 | ||||||||||||||||||||||||||||||||||||||||||
John Dinning
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus Program
| 360,000 | 720,000 | ||||||||||||||||||||||||||||||||||||||||||||||
RSUs
| 11/27/2017 | 11/27/2017 | 11,441 | 418,855 | ||||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 2/22/2017 | 824 | 3,295 | 6,590 | 103,463 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 11/28/2016 | 8,161 | 32,644 | 65,288 | 1,025,022 | ||||||||||||||||||||||||||||||||||||||||||
Stephen Scheppmann
| ||||||||||||||||||||||||||||||||||||||||||||||||
Annual Bonus Program
| 550,000 | 1,100,000 | ||||||||||||||||||||||||||||||||||||||||||||||
PBRSUs
| 2/22/2017 | 2/22/2017 | 1,648 | 6,590 | 13,180 | 206,926 | ||||||||||||||||||||||||||||||||||||||||||
PBRSUs | 2/22/2017 | 11/28/2016 | 13,602 | 54,407 | 108,814 | 1,708,380 | ||||||||||||||||||||||||||||||||||||||||||
| (1) |
| (2) | The information included in the “Threshold”, “Target” and “Maximum” columns reflects the range of potential payouts under the |
| (3) | The information included in the “Threshold”, “Target” and “Maximum” columns reflects the range of potential payouts under the |
| (4) | Reflects the number of time-based RSUs granted in |
| (5) | Reflects the |
| 50 | 2018 PROXY STATEMENT |
Compensation Tables
60
20162017 Outstanding Equity Awards at FiscalYear-End
The following table sets forth information for each named executive officer with respect to (i) each stock option that had not been exercised and remained outstanding as of December 31, 2016,2017, and (ii) each award of performance-based RSUs and PBRSUstime-based RSUs that had not vested and remained outstanding as of December 31, 2016.2017.
| Name | Grant Date | Option Awards | Stock Awards | Equity Incentive Plan Awards | ||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options(1) (#) | Number of Securities Underlying Unexercised Options(2) (#) | Option Exercise Price(3) ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(4) (#) | Market Value of Shares or Units of Stock That Have Not Vested(5) ($) | Number of Unearned Shares, Units or Other Rights that have not Vested(4) (#) | Market Value of Unearned Shares, Units or Other Rights that have not Vested(5) ($) | |||||||||||||||||||||||||||||
| Exercisable | Unexercisable | |||||||||||||||||||||||||||||||||||
Victor Lund | 11/28/2016 | 108,814 | 2,956,476 | |||||||||||||||||||||||||||||||||
| 5/6/2016 | 71,732 | 1,948,958 | 19,685 | 534,841 | ||||||||||||||||||||||||||||||||
Stephen Scheppmann | 11/28/2016 | 36,271 | 985,483 | |||||||||||||||||||||||||||||||||
| 2/7/2016 | 14,517 | 394,427 | 3,984 | 108,245 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 8,875 | 26,625 | 30.63 | 11/30/2025 | 19,122 | 519,545 | ||||||||||||||||||||||||||||||
| 2/9/2015 | 1,065 | 28,936 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 13,177 | 13,177 | 44.43 | 11/30/2024 | 3,550 | 96,454 | ||||||||||||||||||||||||||||||
| 12/3/2013 | 26,112 | 8,704 | 45.35 | 12/2/2023 | ||||||||||||||||||||||||||||||||
| 11/27/2012 | 26,122 | 61.55 | 11/26/2022 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 28,606 | 50.70 | 11/28/2021 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 32,579 | 41.09 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 12/1/2009 | 39,632 | 30.68 | 11/30/2019 | |||||||||||||||||||||||||||||||||
| 12/2/2008 | 18,631 | 13.77 | 12/1/2018 | |||||||||||||||||||||||||||||||||
| 10/1/2007 | 50,752 | 27.98 | 9/30/2017 | |||||||||||||||||||||||||||||||||
Daniel Harrington | 11/28/2016 | 30,468 | 827,816 | |||||||||||||||||||||||||||||||||
| 2/7/2016 | 16,936 | 460,151 | 4,648 | 126,286 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 10,354 | 31,062 | 30.63 | 11/30/2025 | 14,873 | 404,099 | ||||||||||||||||||||||||||||||
| 5/15/2015 | 23,196 | 630,235 | ||||||||||||||||||||||||||||||||||
| 2/9/2015 | 913 | 24,806 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 16,941 | 16,942 | 44.43 | 11/30/2024 | 4,565 | 124,031 | ||||||||||||||||||||||||||||||
| 12/3/2013 | 26,112 | 8,704 | 45.35 | 12/2/2023 | ||||||||||||||||||||||||||||||||
| 11/27/2012 | 26,122 | 61.55 | 11/26/2022 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 28,606 | 50.70 | 11/28/2021 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 29,865 | 41.09 | 11/29/2020 | |||||||||||||||||||||||||||||||||
| 1/3/2000 | 7,777 | 211,301 | ||||||||||||||||||||||||||||||||||
Oliver Ratzesberger | 11/28/2016 | 30,468 | 827,816 | |||||||||||||||||||||||||||||||||
| 2/7/2016 | 9,678 | 262,951 | 2,656 | 72,164 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 5,916 | 17,550 | 30.63 | 11/30/2025 | 8,499 | 230,918 | ||||||||||||||||||||||||||||||
| 7/1/2015 | 10,433 | 283,465 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 2,823 | 2,824 | 44.43 | 11/30/2024 | 2,282 | 62,002 | ||||||||||||||||||||||||||||||
| 12/3/2013 | 4,352 | 1,451 | 45.35 | 12/2/2023 | ||||||||||||||||||||||||||||||||
John Dinning | 11/28/2016 | 21,763 | 591,301 | |||||||||||||||||||||||||||||||||
| 2/7/2016 | 8,065 | 219,126 | 2,213 | 60,127 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 4,930 | 14,792 | 30.63 | 11/30/2025 | 7,082 | 192,418 | ||||||||||||||||||||||||||||||
| 7/1/2015 | 6,521 | 177,176 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 1,623 | 1,624 | 44.43 | 11/30/2024 | 1,313 | 35,674 | ||||||||||||||||||||||||||||||
| 12/3/2013 | 2,175 | 726 | 45.35 | 12/2/2023 | ||||||||||||||||||||||||||||||||
| 11/27/2012 | 2,177 | 61.55 | 11/26/2022 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 1,714 | 50.70 | 11/28/2021 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 3,077 | 41.09 | 11/29/2020 | |||||||||||||||||||||||||||||||||
| 12/1/2009 | 3,963 | 30.68 | 11/30/2019 | |||||||||||||||||||||||||||||||||
| 12/2/2008 | 5,293 | 13.77 | 12/1/2018 | |||||||||||||||||||||||||||||||||
Michael Koehler | 12/1/2014 | 28,236 | 44.43 | 5/4/2019 | ||||||||||||||||||||||||||||||||
| 12/3/2013 | 72,532 | 45.35 | 5/4/2019 | |||||||||||||||||||||||||||||||||
| 11/27/2012 | 81,630 | 61.55 | 5/4/2019 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 124,434 | 50.70 | 5/4/2019 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 157,467 | 41.09 | 5/4/2019 | |||||||||||||||||||||||||||||||||
| 12/1/2009 | 186,503 | 30.68 | 5/4/2019 | |||||||||||||||||||||||||||||||||
61
| Name | Grant Date | Option Awards | Stock Awards | Equity Incentive Plan Awards | ||||||||||||||||||||||||||||||||
| Number of Securities Underlying Unexercised Options(1) (#) | Number of Securities Underlying Unexercised Options(2) (#) | Option Exercise Price(3) ($) | Option Expiration Date | Number of Shares or Units of Stock That Have Not Vested(4) (#) | Market Value of Shares or Units of Stock That Have Not Vested(5) ($) | Number of Unearned Shares, Units or Other Rights that have not Vested(4) (#) | Market Value of Unearned Shares, Units or Other Rights that have not Vested(5) ($) | |||||||||||||||||||||||||||||
| Exercisable | Unexercisable | |||||||||||||||||||||||||||||||||||
Robert Fair | 2/7/2016 | 7,393 | 200,868 | 6,640 | 180,409 | |||||||||||||||||||||||||||||||
| 12/1/2015 | 14,791 | 30.63 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 12/1/2014 | 8,470 | 44.43 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 12/3/2013 | 17,408 | 45.35 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 11/27/2012 | 19,591 | 61.55 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 28,606 | 50.70 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 39,819 | 41.09 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 12/1/2009 | 41,963 | 30.68 | 11/1/2019 | |||||||||||||||||||||||||||||||||
| 12/2/2008 | 60,922 | 13.77 | 12/1/2018 | |||||||||||||||||||||||||||||||||
| 10/1/2007 | 15,376 | 27.98 | 9/30/2017 | |||||||||||||||||||||||||||||||||
Rick Morton | 2/8/2016 | 5,955 | 23.12 | 8/1/2019 | 2,165 | 58,823 | 2,673 | 72,625 | ||||||||||||||||||||||||||||
| 12/1/2015 | 771 | 30.63 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| 12/1/2014 | 882 | 44.43 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| 12/3/2013 | 1,088 | 45.35 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| 11/27/2012 | 1,929 | 61.55 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 2,304 | 50.70 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 4,525 | 41.09 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| 12/1/2009 | 5,828 | 30.68 | 8/1/2019 | |||||||||||||||||||||||||||||||||
| OPTION AWARDS | STOCK AWARDS | EQUITY INCENTIVE PLAN AWARDS | ||||||||||||||||||||||||||||||||||
| NAME | GRANT DATE | NUMBER OF (#) EXERCISABLE | NUMBER OF (#) UNEXERCISABLE | OPTION PRICE(3) ($) | OPTION EXERCISE DATE | NUMBER UNITS OF STOCK HAVE VESTED(4) (#) | MARKET OF STOCK HAVE VESTED(5) ($) | NUMBER OR OTHER RIGHTS HAVE NOT VESTED(4) (#) | MARKET OF OR OTHER RIGHTS HAVE NOT VESTED(5) ($) | |||||||||||||||||||||||||||
Victor Lund |
|
11/27/2017 |
|
|
72,034 |
|
|
2,770,428 |
| |||||||||||||||||||||||||||
| 11/28/2016 | 163,221 | 6,277,480 | ||||||||||||||||||||||||||||||||||
|
| 5/6/2016
|
|
| 78,740
|
|
| 3,028,340
|
| ||||||||||||||||||||||||||||
Mark Culhane |
|
11/27/2017 |
|
|
25,424 |
|
|
977,807 |
| |||||||||||||||||||||||||||
Oliver Ratzesberger |
|
11/27/2017 |
|
|
23,729 |
|
|
912,617 |
| |||||||||||||||||||||||||||
| 2/22/2017 | 4,957 | 190,646 | ||||||||||||||||||||||||||||||||||
| 2/22/2017 | 45,839 | 1,762,968 | ||||||||||||||||||||||||||||||||||
| 11/28/2016 | 45,702 | 1,757,699 | ||||||||||||||||||||||||||||||||||
| 2/7/2016 | 6,452 | 248,144 | 10,623 | 408,561 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 11,833 | 11,833 | 30.63 | 11/30/2025 | 4,250 | 163,455 | ||||||||||||||||||||||||||||||
| 7/1/2015 | 10,433 | 401,253 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 4,235 | 1,412 | 44.43 | 11/30/2024 | ||||||||||||||||||||||||||||||||
|
| 12/3/2013
|
|
| 5,803
|
|
| 45.35
|
|
| 12/2/2023
|
| |||||||||||||||||||||||||
Daniel Harrington |
|
11/27/2017 |
|
|
14,831 |
|
|
570,400 |
| |||||||||||||||||||||||||||
| 2/22/2017 | 8,262 | 317,757 | ||||||||||||||||||||||||||||||||||
| 2/22/2017 | 45,839 | 1,762,968 | ||||||||||||||||||||||||||||||||||
| 11/28/2016 | 45,702 | 1,757,699 | ||||||||||||||||||||||||||||||||||
| 2/7/2016 | 11,291 | 434,252 | 18,591 | 715,010 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 20,708 | 20,708 | 30.63 | 11/30/2025 | 7,437 | 286,027 | ||||||||||||||||||||||||||||||
| 5/15/2015 | 23,196 | 892,118 | ||||||||||||||||||||||||||||||||||
| 2/9/2015 | 457 | 17,576 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 25,412 | 8,471 | 44.43 | 11/30/2024 | ||||||||||||||||||||||||||||||||
| 12/3/2013 | 34,816 | 45.35 | 12/2/2023 | |||||||||||||||||||||||||||||||||
| 11/27/2012 | 26,122 | 61.55 | 11/26/2022 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 28,606 | 50.70 | 11/28/2021 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 29,865 | 41.09 | 11/29/2020 | |||||||||||||||||||||||||||||||||
|
| 1/3/2000
|
|
| 7,777
|
|
| 299,103
|
| ||||||||||||||||||||||||||||
John Dinning |
|
11/27/2017 |
|
|
11,441 |
|
|
440,021 |
| |||||||||||||||||||||||||||
| 2/22/2017 | 3,305 | 127,110 | ||||||||||||||||||||||||||||||||||
| 2/22/2017 | 32,742 | 1,259,257 | ||||||||||||||||||||||||||||||||||
| 11/28/2016 | 32,645 | 1,255,527 | ||||||||||||||||||||||||||||||||||
| 2/7/2016 | 5,377 | 206,799 | 8,853 | 340,486 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 9,861 | 9,861 | 30.63 | 11/30/2025 | 3,541 | 136,187 | ||||||||||||||||||||||||||||||
| 7/1/2015 | 6,521 | 250,798 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 2,435 | 812 | 44.43 | 11/30/2024 | ||||||||||||||||||||||||||||||||
| 12/3/2013 | 2,901 | 45.35 | 12/2/2023 | |||||||||||||||||||||||||||||||||
| 11/27/2012 | 2,177 | 61.55 | 11/26/2022 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 1,714 | 50.70 | 11/28/2021 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 3,077 | 41.09 | 11/29/2020 | |||||||||||||||||||||||||||||||||
| 12/1/2009 | 3,963 | 30.68 | 11/30/2019 | |||||||||||||||||||||||||||||||||
|
| 12/2/2008
|
|
| 5,293
|
|
| 13.77
|
|
| 12/1/2018
|
| |||||||||||||||||||||||||
Stephen Scheppmann |
|
2/22/2017 |
|
|
6,610 |
|
|
254,221 |
| |||||||||||||||||||||||||||
| 2/22/2017 | 54,570 | 2,098,762 | ||||||||||||||||||||||||||||||||||
| 11/28/2016 | 54,407 | 2,092,493 | ||||||||||||||||||||||||||||||||||
| 2/7/2016 | 9,678 | 372,216 | 15,935 | 612,860 | ||||||||||||||||||||||||||||||||
| 12/1/2015 | 17,750 | 17,750 | 30.63 | 11/30/2025 | 6,374 | 245,144 | ||||||||||||||||||||||||||||||
| 2/9/2015 | 355 | 13,653 | ||||||||||||||||||||||||||||||||||
| 12/1/2014 | 19,765 | 6,589 | 44.43 | 11/30/2024 | ||||||||||||||||||||||||||||||||
| 12/3/2013 | 34,816 | 45.35 | 12/2/2023 | |||||||||||||||||||||||||||||||||
| 11/27/2012 | 26,122 | 61.55 | 11/26/2022 | |||||||||||||||||||||||||||||||||
| 11/29/2011 | 28,606 | 50.70 | 11/28/2021 | |||||||||||||||||||||||||||||||||
| 11/30/2010 | 32,579 | 41.09 | 11/1/2019 | |||||||||||||||||||||||||||||||||
|
| 12/1/2009
|
|
| 39,632
|
|
| 30.68
|
|
| 11/30/2019
|
| |||||||||||||||||||||||||
| (1) | This column shows the number of common shares underlying outstanding stock options that have vested as of December 31, |
| 51 |
Compensation Tables
| (2) | This column shows the number of common shares underlying outstanding stock options that have not vested as of December 31, |
12/ | 12/ | 25% vests each year for four years after the date of grant | ||
12/1/ | 12/1/2018, 12/1/2019 | 25% vests each year for four years after the date of grant | ||
| (3) | This column shows the exercise price for each stock option reported in the table, which equaled the fair market value per share on the date of grant. |
| (4) | These columns show the aggregate number of performance-based RSUs and |
1/3/2000 | 4/30/2018 | 100% vests on | ||
2/9/2015 | 2/9/2018 | |||
1/3 increments over a3-year time period after performance level determination is made by the Committee | ||||
5/15/2015 | 5/15/2018 | 100% vests three years from the date of grant | ||
7/1/2015 | 7/1/2018 | 100% vests three years from the date of grant | ||
12/1/2015 | 12/1/2018 | 1/3 increments each year for three years after the date of |
5/6/2016
62
Q1 2019* | 2016-2018 performance period: 100% vests after performance level determination is made by the Committee | |||
2/7/ | Q1 2019* | 2016-2018 performance period: 100% vests after performance level determination is made by the Committee | ||
2/7/2016 | 2/7/2018, 2/7/2019 | 1/3 increments over a3-year time period after performance level determination is made by the Committee | ||
11/28/2016 | Q1 2020* | 2017-2019 performance period: 100% | ||
2/22/2017 | 2/22/2018, 2/22/2019, 2/22/2020 | 1/3 increments over a3-year time period after performance level determination is made by the Committee | ||
11/ | 11/27/2020 | 100% vests |
Additionally, this column under the “Equity Incentive Plan Awards” heading shows the number of outstanding PBRSUs at the “threshold” level, for awards with grant dates of February 7, 2016, February 8, 2016 and May 6, 2017, because our relative TSR performance through December 31, 2016 was below the “threshold” level for those awards, and at the “target” level, for awards with a grant date of November 28, 2016.
| * | Additionally, this column under the “Equity Incentive Plan Awards” heading shows the number of outstanding performance-based RSUs at the “target” level for awards with grant dates of February 7, 2016 and May 6, 2016, because our relative TSR performance through December 31, 2017 was above “threshold” level for those awards. For awards with grant dates of November 28, 2016 the number of outstanding performance-based RSUs is reported at the next highest level (150%) because our relative TSR performance through December 31, 2017 was above “target” level for those awards. |
| (5) | These columns show the aggregate dollar value of the performance-based RSUs and |
20162017 Option Exercises and Stock Vested
The following table sets forth information for each named executive officer with respect to (i) the exercise of stock options in 2016,2017, and (ii) the vesting of PBRSUsperformance-based RSUs and time-based RSUs during 2016.2017.
| Name | Option Awards | Stock Awards | ||||||||||||||||||||||||||
| Number of Shares Acquired on Exercise (#) | Value Realized on Exercise(1) ($) | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting(2) ($) | OPTION AWARDS | STOCK AWARDS | |||||||||||||||||||||||
| NAME | NUMBER OF SHARES (#) | VALUE REALIZED ($) | NUMBER OF SHARES (#) | VALUE REALIZED ($) | ||||||||||||||||||||||||
Victor Lund | — | — | — | — |
|
—
|
|
|
—
|
|
|
265,186
|
|
|
9,389,185
|
| ||||||||||||
Mark Culhane
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| ||||||||||||||||
Oliver Ratzesberger
|
|
—
|
|
|
—
|
|
|
9,757
|
|
|
347,711
|
| ||||||||||||||||
Daniel Harrington
|
|
—
|
|
|
—
|
|
|
18,102
|
|
|
643,703
|
| ||||||||||||||||
John Dinning
|
|
—
|
|
|
—
|
|
|
7,542
|
|
|
267,545
|
| ||||||||||||||||
Stephen Scheppmann | — | — | 16,995 | 453,276 |
|
69,383
|
|
|
657,797
|
|
|
15,118
|
|
|
537,006
|
| ||||||||||||
Daniel Harrington | — | — | 19,172 | 510,459 | ||||||||||||||||||||||||
Oliver Ratzesberger | — | — | 16,476 | 457,042 | ||||||||||||||||||||||||
John Dinning | — | — | 8,211 | 219,655 | ||||||||||||||||||||||||
Michael Koehler | 827,998 | 9,479,621 | 1,812 | 42,580 | ||||||||||||||||||||||||
Robert Fair | 75,000 | 1,227,460 | 6,060 | 150,363 | ||||||||||||||||||||||||
Rick Morton | — | — | — | — | ||||||||||||||||||||||||
| 52 | 2018 PROXY STATEMENT |
Compensation Tables
| (1) | The value realized on exercise equals the number of shares exercised multiplied by the excess of the closing market price of our common stock on the exercise date over the exercise price per share. |
| (2) | The value realized on vesting equals the number of shares acquired multiplied by the closing market price of our common stock on the acquisition date. For Mr. Lund, the amount reported in this column includes $7,440,226, representing the vesting date value of 193,454 performance-based RSUs that vested on December 31, 2017 and $1,948,958, representing the vesting date value of 71,732 performance-based RSUs that vested on December 31, 2016, which vested performance-based RSUs generally are paid on a deferred basis, in 1/3 installments on the date that the applicable performance level determination was made by the Committee and on each of first and second anniversaries of the applicable performance level determination date. |
Non-qualifiedNon-Qualified Deferred Compensation
We doThe Company does not maintain anyanon-qualified defined contribution plansplan or other deferred compensation plans. However, the1-year performance-based RSU awards granted to Mr. Lund for the 2017 and 2016 fiscal year performance periods were fully vested at December 31, 2016 and December 31, 2017, respectively, but generally are payable on a deferred basis in 1/3 installments (except for certain termination of employment scenarios described further in the Potential Payments Upon Termination or Change in Control section on page 54 of this proxy statement) on the date that the applicable performance level determination was made by the Committee and on each of first and second anniversaries of the applicable performance level determination date. As a result, theNon-Qualified Deferred Compensation Table below includes information about Mr. Lund’s 2017 and 2016 performance-based RSUs. The performance-based RSUs granted to Mr. Lund for the performance period commencing in 2018 follow the vesting terms of the award agreements granted to our other named executive officers, which generally require continued employment during the full performance period.
| NAME | EXECUTIVE ($) | REGISTRANT LAST FISCAL ($) | AGGREGATE EARNINGS ($) | AGGREGATE WITHDRAWALS / DISTRIBUTIONS(3) ($) | AGGREGATE BALANCE ($) | |||||||||||||||
Victor Lund
|
|
—
|
|
|
9,389,185
|
|
|
641,050
|
|
|
750,774
|
|
|
9,279,461
|
| |||||
Mark Culhane
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Oliver Ratzesberger
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Daniel Harrington
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
John Dinning
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
Stephen Scheppmann
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
| |||||
| (1) | For Mr. Lund, the amount reported in this column includes $7,440,226, representing the vesting date value of 193,454 2017 performance-based RSUs that vested on December 31, 2017 and $1,948,958, representing the vesting date value of 71,732 2016 performance-based RSUs that vested on December 31, 2016. The grant date fair value of the target number of Mr. Lund’s 2017 performance-based RSUs ($6,056,275) is reported as compensation to Mr. Lund in the Summary Compensation Table for the 2017 fiscal year. |
| (2) | Represents the appreciation in value in the number of shares of our common stock underlying Mr. Lund’s vested 2017 and 2016 performance-based RSUs from December 31, 2016 through December 31, 2017 (or, if earlier, until the time of settlement of those performance-based RSUs). No portion of this amount was reported as compensation to Mr. Lund in the Summary Compensation Table for 2017. |
| (3) | Represents the payment date value of the number of shares of our common stock that were delivered in settlement of Mr. Lund’s vested 2016 performance-based RSUs during fiscal 2017. |
| (4) | Represents the aggregate dollar value of 241,276 outstanding vested performance-based RSUs held by Mr. Lund on December 31, 2017, using our closing stock price on December 29, 2017 of $38.46 per share. The grant date fair value of the target number of Mr. Lund’s 2016 performance-based RSUs ($2,215,744) was previously reported as compensation to Mr. Lund in the Summary Compensation Table for the 2016 fiscal year. |
Pension Benefits
We do not maintain any qualified ornon-qualified defined benefit plans.
| 53 |
63
TERMINATION OR CHANGE IN CONTROL
Background
We have entered into agreements and maintain plans and arrangements that may require us to pay or provide compensation and benefits to our named executive officers in the event of certain terminations of employment or a change in control. For example, all of our current named executive officers other than Mr. Lund are participants in our CIC Plan, which provides “double-trigger” severance protections in the event that a participating executive’s employment is terminated under qualifying circumstances in connection with a change in control.control, and in our Executive Severance Plan, which provides severance protections in the event that a participant’s employment is terminated by the Company without cause (other than as a result of death, disability or a change in control). Estimates of the amounts to be paid or provided to each of our current named executive officers in connection with a termination of employment or a change in control are provided below.
The benefits actually payable to our former named executive officers (Messrs. Koehler, Fair and Morton) as a result of the termination of their employment in 2016 are also described below.
Estimated Payments to Current Named Executive Officers
The estimates set forth below of the amounts payable to our current named executive officers upon termination of employment or in connection with a change in control are based on the assumption that the various triggering events occurred on the last day of 2016,2017, along with other material assumptions noted below. The actual amounts that would be paid to a named executive officer upon termination or a change in control can only be determined at the time the actual triggering event occurs.
The estimated amount of compensation and benefits described below for our current named executive officers generally does not take into account compensation and benefits that were already earned at the time of the applicable triggering event, such as equity awards that have previously vested in accordance with their terms or vested benefits otherwise payable under our compensation programs. As a result, the estimates below for our current named executive officers do not provide information on the payout of 20162017 incentive awards under ourthe annual bonus programs,program for our named executive officers, because those awards were earned as of December 31, 2016,2017, subject to Committee approval, regardless of whether the executive terminated employment or a change in control occurred on that date. Please refer to the Outstanding Equity Awards at FiscalYear-End table for a complete summary of each named executive officer’s vested equity awards as of December 31, 2016,2017, and to the Summary Compensation Table for the annual incentives earned by our named executive officers in 2016.2017.
Non-Change in Control Scenarios
Executive Severance Plan
Each of our named executive officers other than Mr. Lund participates in the Executive Severance Plan, which was adopted effective February 1, 2017. In the event of an involuntary termination of his employment in connection with areduction-in-force, Mr. Lund would be eligible to receive severance benefits under our reduction-in-force programs that are generally available to the Company’s salaried, U.S.-based employees.
For our participating named executive officers, the Executive Severance Plan generally provides severance benefits in the event of termination of employment by the Company without cause (but not as a result of the participant’s disability or death). However, in the event of the termination of a participating named executive officer’s employment in connection with a change in control of Teradata, severance benefits generally would be provided under the CIC Plan, as discussed below.
In the event of a qualifying termination of employment without cause (not in connection with a change in control), each of our participating named executive officers would be entitled to receive the following severance benefits under the terms of the Executive Severance Plan:
| 54 | 2018 PROXY STATEMENT |
Potential Payments Upon Termination or Change in Control
| • | For all retirement-eligible participants (i.e., participants aged 55 or older), an additional year of vesting service for stock options and time-based RSUs (but not performance-based RSUs), and the opportunity to exercise vested stock options until the earlier of three years after termination or the original option expiration date. |
Severance benefits under the Executive Severance Plan are conditioned upon the participant’s release of claims against the Company, as well as compliance with certain restrictive covenants, includingnon-competition,non-solicitation, non-disparagement and confidentiality provisions to the extent permissible under applicable law.
Treatment of Equity Awards on Termination of Employment (not in Connection with a Change in Control)
The following chart summarizes the vesting treatment of our employeethe equity awards held by our named executive officers in the event of termination of employment, other than termination in connection with a change in control. The vesting treatment described below is conditioned upon the participant’s compliance withnon-competition andnon-solicitation provisions for a twelve-month12-month period (or, if applicable law requires a shorter period, for the maximum period allowed under applicable law), as well as confidentiality restrictions. Our PBRSUsperformance-based RSUs andtime-based RSUs generally pay out upon vesting. However, to the extent necessary to comply with Section 409A of the Internal Revenue Code, as amended, and avoid triggering adverse tax consequences to our executives, payment of vested PBRSUsperformance-based RSUs andtime-based RSUs may be delayed until termination of employment, six months after termination of employment, or the end of the scheduled performance or service period.
64
While he was anon-employee member of Teradata’s Board of Directors, Mr. Lund participated in our compensation program fornon-employee directors, including receiving equity awards in the form of restricted share units that generally vest in four installments on a quarterly basis over theone-year period after the date of grant, which awards would become vested in full upon Mr. Lund’s death or the occurrence of a change in control of Teradata prior to a quarterly vesting date. The chart below describes the vesting terms of the equity awards granted to our employees, which differ from those applicable tonon-employee director awards.
TIME-BASED RSUs | ||||||
Death and Long-Term Disability | In the event of death or LTD during the performance period, apro-rata portion of the award, calculated as of the date of death or LTD, will become vested based on actual results during the performance period.
In the event of death or LTD after the end of the performance period and prior to payment, awards vest in full, to the extent earned, upon the date of death or LTD. | Awards vest in full upon the date of death or LTD. | Awards vest in full upon the date of death or LTD. Awards granted after 2008 remain exercisable until the later of the expiration of the | |||
Retirement (termination on or after age 55, with the consent of the Committee, where applicable) |
Generally, apro-rata portion of the award, calculated as of retirement, will become vested based on actual results during the performance period.
| Generally, apro-rata portion will become vested as of date of retirement. | Unvested awards are forfeited. Vested awards expire the earlier of three years following retirement date or the expiration date. | |||
| 55 |
Potential Payments Upon Termination or Change in Control
65
TIME-BASED RSUs | ||||||
Termination without Cause | ||||||
Apro-rata portion of the award, calculated as of the date of | Apro-rata portion will become vested as of the date of | Unvested awards are forfeited. Vested awards generally expire the earlier of the fifty-ninth day after termination or the expiration date. However, retirement-eligible participants (i.e., participants aged 55 or older) are credited with an additional year of vesting service, and their options remain exercisable until the earlier of 3 years after termination or the original option expiration date. | ||||
Voluntary Resignation (other than retirement, as described above) | Unvested awards are forfeited. | Unvested awards are forfeited. | Unvested awards are forfeited. Vested awards expire the earlier of the fifty-ninth day after termination or the expiration date. | |||
The tables below quantify the amounts that would be payable to our current named executive officers in the event of termination of employment, other than termination in connection with a change in control.
Death or Disability
We would have provided each current named executive officer (or his beneficiary) with the following estimated payments or benefits had he died or become disabled on December 31, 2016.2017.
| Executive | Life Insurance ($)(1) | Disability Payments ($)(2) | Stock Options ($)(3) | Restricted Share Units ($)(3) | Total ($) | |||||||||||||||||||||||||||||||||||
| EXECUTIVE | LIFE INSURANCE ($)(1) | DISABILITY PAYMENTS ($)(2) | STOCK OPTIONS ($)(3) | RESTRICTED SHARE UNITS ($)(3) | TOTAL ($) | |||||||||||||||||||||||||||||||||||
Victor Lund | 1,200,000 | 636,898 | — | 4,221,733 | 6,058,631 |
|
1,200,000
|
|
|
642,028
|
|
|
—
|
|
|
19,263,215
|
|
|
21,105,243
|
| ||||||||||||||||||||
Mark Culhane
|
|
950,000
|
|
|
524,408
|
|
|
—
|
|
|
977,807
|
|
|
2,452,215
|
| |||||||||||||||||||||||||
Oliver Ratzesberger
|
|
3,450,000
|
|
|
527,454
|
|
|
185,305
|
|
|
4,309,504
|
|
|
8,472,263
|
| |||||||||||||||||||||||||
Daniel Harrington
|
|
938,400
|
|
|
570,543
|
|
|
324,287
|
|
|
5,115,814
|
|
|
6,949,044
|
| |||||||||||||||||||||||||
John Dinning
|
|
1,800,000
|
|
|
585,000
|
|
|
154,423
|
|
|
2,902,908
|
|
|
5,442,331
|
| |||||||||||||||||||||||||
Stephen Scheppmann | 958,800 | 532,079 | — | 1,000,865 | 2,491,744 |
|
1,100,000
|
|
|
564,473
|
|
|
277,965
|
|
|
3,818,814
|
|
|
5,761,252
|
| ||||||||||||||||||||
Daniel Harrington | 920,000 | 566,415 | — | 1,811,721 | 3,298,136 | |||||||||||||||||||||||||||||||||||
Oliver Ratzesberger | 3,300,000 | 501,014 | — | 935,532 | 4,736,546 | |||||||||||||||||||||||||||||||||||
John Dinning | 1,240,000 | 515,000 | — | 704,592 | 2,459,592 | |||||||||||||||||||||||||||||||||||
| (1) | Proceeds would be payable by a third-party insurer. Benefits provided upon death depend on the individual level of benefits chosen by the named executive officer during the annual benefits enrollment process. The named executive officers receive the same Company-provided life insurance coverage as is generally offered to U.S.-based employees. The coverage generally is 200% of base salary for life insurance. Each U.S.-based employee has the option of choosing a higher level of coverage at his own expense. Each |
| (2) | Benefits provided upon disability generally depend on the individual level of benefits chosen by the named executive officer during the annual benefits enrollment process. The |
66
| (3) | Equity valuations are based on a closing price of our stock on December |
| 56 | 2018 PROXY STATEMENT |
Potential Payments Upon Termination or Change in Control
Retirement
We would have provided each current named executive officer with the following estimated payments if he had retired (with Committee consent, where applicable) on December 31, 2016.2017.
| Executive | Restricted Share Units ($)(1)(2) | Total ($) | ||||||||||||||
| EXECUTIVE | RESTRICTED SHARE UNITS ($)(1)(2) | TOTAL ($) | ||||||||||||||
Victor Lund | 4,088,328 | 4,088,328 |
|
16,569,744
|
|
|
16,569,744
|
| ||||||||
Mark Culhane
|
|
27,161
|
|
|
27,161
|
| ||||||||||
Oliver Ratzesberger
|
|
—
|
|
|
—
|
| ||||||||||
Daniel Harrington
|
|
—
|
|
|
—
|
| ||||||||||
John Dinning
|
|
—
|
|
|
—
|
| ||||||||||
Stephen Scheppmann | 307,111 | 307,111 |
|
1,822,676
|
|
|
1,822,676
|
| ||||||||
Daniel Harrington | — | — | ||||||||||||||
Oliver Ratzesberger | — | — | ||||||||||||||
John Dinning | — | — | ||||||||||||||
| (1) | Equity valuations are based on a closing price of our stock on December |
| (2) | Only |
Reduction-in-Force SeveranceTermination without Cause (not in Connection with a Change in Control)
Each current named executive officer would have been entitled to the following estimated payments and benefits if, on December 31, 2016,2017 and not in connection with a change in control, we terminated the executive’s employment without cause (and not as a result of death or disability). For named executive officers other than Mr. Lund, the amounts reported in connection withthe table below reflect the benefits that would have been provided under the Executive Severance Plan in the event of areduction-in-force prior to, or more than two years after, a change in control. termination of employment without cause on that date.
| Executive | Cash ($)(1) | Restricted Share Units ($)(2) | Out- placement | Total ($) | ||||||||||||||||||||||||||||||||||||
| EXECUTIVE | CASH ($)(1) | STOCK OPTIONS ($)(2) | RESTRICTED SHARE UNITS ($)(2) | WEFARE BENEFITS($) | OUT-PLACEMENT COUNSELING ($) | TOTAL ($) | ||||||||||||||||||||||||||||||||||
Victor Lund | 400,000 | 4,088,328 | 10,000 | 4,498,328 |
|
400,000
|
|
|
—
|
|
|
17,493,220
|
|
|
—
|
|
|
10,000
|
|
|
17,903,220
|
| ||||||||||||||||||
Mark Culhane
|
|
950,000
|
|
|
—
|
|
|
353,097
|
|
|
15,147
|
|
|
10,000
|
|
|
1,328,244
|
| ||||||||||||||||||||||
Oliver Ratzesberger
|
|
950,000
|
|
|
—
|
|
|
1,768,697
|
|
|
15,147
|
|
|
10,000
|
|
|
2,743,844
|
| ||||||||||||||||||||||
Daniel Harrington
|
|
938,441
|
|
|
—
|
|
|
2,576,070
|
|
|
14,463
|
|
|
10,000
|
|
|
3,538,974
|
| ||||||||||||||||||||||
John Dinning
|
|
810,000
|
|
|
—
|
|
|
1,272,172
|
|
|
14,463
|
|
|
10,000
|
|
|
2,106,635
|
| ||||||||||||||||||||||
Stephen Scheppmann | 275,000 | 307,111 | 10,000 | 592,111 |
|
1,100,000
|
|
|
69,491
|
|
|
2,064,038
|
|
|
10,293
|
|
|
10,000
|
|
|
3,253,822
|
| ||||||||||||||||||
Daniel Harrington | 234,610 | 697,638 | 10,000 | 942,248 | ||||||||||||||||||||||||||||||||||||
Oliver Ratzesberger | 237,500 | 340,375 | 10,000 | 587,875 | ||||||||||||||||||||||||||||||||||||
John Dinning | 225,000 | 246,713 | 10,000 | 481,713 | ||||||||||||||||||||||||||||||||||||
| (1) |
| (2) | Equity valuations are based on a closing price of our stock on December |
Change in Control Scenarios
Change in Control Severance Plan
We maintain the CIC Plan to help retain key executives by reducing personal uncertainty that may arise from the possibility of a change in control and to promote their objectivity and neutrality in evaluating transactions that may be in the best interest of the Company and its stockholders. This plan establishes objective criteria to determine whether a change in control has occurred, and provides for severance payments and benefits on a “double trigger” basis (including vesting of equity awards that are assumed in a change in control transaction, other thannon-employee director restricted share units
67
held by Mr. Lund, which, by their terms, vest on a “single-trigger” basis on the occurrence of a change in control)transaction). The “double trigger” design is intended to further our goals to retain key executives upon a change in control.
| 57 |
Potential Payments Upon Termination or Change in Control
Each current named executive officer — other than Mr. Lund — participates in the CIC Plan. In the event of an involuntary termination of his employment in connection with areduction-in-force, Mr. Lund would be eligible to receive severance benefits under our reduction in force programs that are generally available to the Company’s salaried, U.S.-based employees.
Under the CIC Plan, if a participating executive’s employment is terminated by us other than for “cause”, death or disability or if the executive resigns for “good reason” within two years after a “change in control” (or within six months prior to a change in control, if the executive can demonstrate that the termination occurred in connection with a change in control), then Teradata or its successor will be obligated to pay or provide the following benefits:
A lump sum payment equal to 2.0 times (for Messrs. Scheppmann and Harrington) or 1.0 times (for Messrs. Ratzesberger and Dinning) the executive’s annual base salary and annual incentive. For this purpose, annual incentive generally means the average annual incentive earned for the prior three years;
A lump sum payment equal to apro-rata portion of the average annual incentive earned for the prior three years;
Continued medical, dental and life insurance coverage for two years (for Messrs. Scheppmannyears; and Harrington) or one year (for Messrs. Ratzesberger and Dinning); and
Continued outplacement and financial counseling services, if such services are offered at such time, for one year.
The CIC Plan provides that upon termination of employment, each participant is prohibited from soliciting our employees for aone-year1-year period and is subject to confidentiality restrictions. Moreover, each participant is required to sign a release of all claims against the Company prior to receiving severance benefits under the plan. The CIC Plan does not provide for any“gross-up” payments related to excise taxes that may be imposed on an executive in connection with a change in control.
For purposes of the plan, the term “cause” generally means the willful and continued failure to perform assigned duties or the willful engaging in illegal or gross misconduct that materially injures the Company. The term “good reason” generally meansmeans: (i) the assignment of duties inconsistent with the executive’s position, authority, duties or responsibilities as in effect prior to a change in control; (ii) a reduction in base salary; (iii) failure to pay incentive compensation when due; (iv) a reduction in target or maximum incentive opportunities; (v) a failure to continue the equity compensation plan or other employee benefit programs; (vi) a relocation of the executive’s office by more than forty miles (provided that it also increases the executive’s commute by more than 20 miles); or (vii) failure to require a successor to assume the plan.
The term “change in control” generally means any of the following: (i) an acquisition of 50% or more of our stock by any person or group, other than the Company, our subsidiaries or employee benefit plans; (ii) a change in the membership of our Board of Directors, such that the current incumbents and their approved successors no longer constitute a majority; (iii) a reorganization, merger, consolidation or sale or other disposition of substantially all of our assets in which any one of the following is true — true—our old stockholders do not hold at least 50% of the combined enterprise, there is a50%-or-more stockholder of the combined enterprise (other than as a result of conversion of the
68
stockholder’spre-combination interest in the Company), or the members of our Board of Directors (immediately before the combination) do not make up a majority of the board of the combined enterprise; or (iv) stockholder approval of a complete liquidation.
Treatment of Equity Awards
As described above, the CIC Plan generally provides for “double trigger” vesting of employee equity awards in connection with a change in control, meaning that, if the awards are assumed by the surviving entity in the change of control, vesting of the awards will not accelerate unless the executive also has a qualifying termination of employment (by the Company without cause or by the executive for good reason). In contrast, if the surviving entity does not assume the equity awards upon the change in control, unvested awards will become vested upon the occurrence of the change in control. The chart below summarizes the treatment of our employee equity awards awards–as outstanding on December 31, 2017–in connection with a change of control is summarizedcontrol.
| 58 | 2018 PROXY STATEMENT |
Potential Payments Upon Termination or Change in the chart below.
As noted above, while he was anon-employee member of Teradata’s Board of Directors, Mr. Lund participated in our compensation program fornon-employee directors, including receiving equity awards in the form of restricted share units that generally vest in four installments on a quarterly basis over theone-year period after the date of grant, which awards would become vested in full on a “single-trigger” basis upon the occurrence of a change in control prior to a quarterly vesting date.
69
| ||||||
| 3-YEAR PERFORMANCE PERIOD
|
| ||||
If the award is not assumed by the surviving entity, then the award will vest in full, either at the “target” level, if the CIC occurs during the performance period, or based on actual performance, if the CIC occurs after the end of the performance period and prior to payment.
| If the award is not assumed by the surviving entity, then the award will vest in full, either at the “target” level, if the CIC occurs during the first year of the performance period, or based on actual performance up to the date of the CIC, if the CIC occurs during the second or third year of the performance period. | If the award is not assumed by the surviving entity, then vesting accelerates upon the CIC. | If the option is not assumed by the surviving entity, then vesting accelerates upon the CIC. | |||
If the award is assumed, then, subject to the executive’s continued employment (except for Mr. Lund, whose |
If the award is assumed, then, subject to the executive’s continued employment (except for Mr. Lund, whose
|
If the award is assumed, then vesting accelerates if the executive’s employment is terminated other than for “cause” or disability or the executive terminates his employment for “good reason,” within twenty-four months after the CIC. |
If the option is assumed, then vesting accelerates if the executive’s employment is terminated other than for “cause” or disability, or the executive terminates his employment for “good reason”, within twenty-four months after the CIC. | |||
| 59 |
Potential Payments Upon Termination or Change in Control
70
The tables below quantify the amounts that would be payable to our current named executive officers in the event of a change in control or in the event of termination of employment in connection with a change in control.
Qualifying Termination Within Two Years After a Change in Control
Our current named executive officers would have been entitled to the following estimated payments and benefits if a change in control occurred on December 31, 2016,2017, and (i) for the current named executive officers other than Mr. Lund, the executive’s employment was terminated without “cause” or the executive terminated his employment for “good reason” immediately following such change in control, or (ii) for Mr. Lund, his employment was involuntarily terminated in areduction-in-force immediately following such change in control.
| Executive | Cash ($)(1) | Stock Options ($)(2) | Restricted Share Units ($)(2) | Welfare Benefits ($) | Out-placement Counseling ($) | Total ($) | ||||||||||||||||||||||||||||||||||||||||||
| EXECUTIVE | CASH ($)(1) | STOCK OPTIONS ($)(2) | RESTRICTED SHARE UNITS ($)(2) | WEFARE BENEFITS($) | OUT-PLACEMENT COUNSELING ($) | TOTAL ($) | ||||||||||||||||||||||||||||||||||||||||||
Victor Lund | 400,000 | — | 4,221,733 | — | 10,000 | 4,631,733 |
|
400,000
|
|
|
—
|
|
|
19,263,215
|
|
|
—
|
|
|
10,000
|
|
|
19,673,215
|
| ||||||||||||||||||||||||
Mark Culhane
|
|
1,900,000
|
|
|
—
|
|
|
977,807
|
|
|
33,349
|
|
|
10,000
|
|
|
2,921,156
|
| ||||||||||||||||||||||||||||||
Oliver Ratzesberger
|
|
1,073,975
|
|
|
185,305
|
|
|
5,259,441
|
|
|
33,349
|
|
|
10,000
|
|
|
6,562,070
|
| ||||||||||||||||||||||||||||||
Daniel Harrington
|
|
1,221,913
|
|
|
324,287
|
|
|
6,167,900
|
|
|
31,944
|
|
|
10,000
|
|
|
7,756,044
|
| ||||||||||||||||||||||||||||||
John Dinning
|
|
962,458
|
|
|
154,423
|
|
|
3,597,657
|
|
|
31,820
|
|
|
10,000
|
|
|
4,756,358
|
| ||||||||||||||||||||||||||||||
Stephen Scheppmann | 1,418,138 | — | 1,289,501 | 23,840 | 10,000 | 2,741,479 |
|
1,418,138
|
|
|
277,965
|
|
|
4,991,838
|
|
|
24,124
|
|
|
10,000
|
|
|
6,722,065
|
| ||||||||||||||||||||||||
Daniel Harrington | 1,221,913 | — | 2,148,466 | 32,223 | 10,000 | 3,412,602 | ||||||||||||||||||||||||||||||||||||||||||
Oliver Ratzesberger | 536,987 | — | 1,127,950 | 16,194 | 10,000 | 1,691,131 | ||||||||||||||||||||||||||||||||||||||||||
John Dinning | 481,229 | — | 864,949 | 15,629 | 10,000 | 1,371,807 | ||||||||||||||||||||||||||||||||||||||||||
| (1) | Mr. Lund does not participate in the CIC Plan (or Executive Severance Plan) and is not a party to any agreement with the Company that provides for cash severance upon a termination without cause or for good reason in connection with a change in control. However, as described above, Mr. Lund participates in our |
| (2) | Equity valuations are based on the following assumptions: (i) a closing price of our stock on December |
Change in Control and Equity Awards are not Assumed by Surviving Entity
Our current named executive officers would have been entitled to the following estimated payments and benefits in the event that a “change in control” occurred on December 31, 2016,2017, and the named executive officer’s equity awards were not assumed by the surviving entity. If the awards were assumed by the surviving entity, then the awards would not vest on a change in control, but would vest on a qualifying termination within two years after the change in control as illustrated in the table immediately above.
71
| Executive | Stock Options ($)(1) | Restricted Share Units ($)(1) | Total ($) | |||||||||||||||||||||
| NAME | STOCK OPTIONS ($)(1) | RESTRICTED SHARE UNITS ($)(1) | TOTAL ($) | |||||||||||||||||||||
Victor Lund | — | 4,221,733 | 4,221,733 |
|
—
|
|
|
19,263,215
|
|
|
19,263,215
|
| ||||||||||||
Mark Culhane
|
|
—
|
|
|
977,807
|
|
|
977,807
|
| |||||||||||||||
Oliver Ratzesberger
|
|
185,305
|
|
|
5,259,441
|
|
|
5,444,746
|
| |||||||||||||||
Daniel Harrington
|
|
324,287
|
|
|
6,167,900
|
|
|
6,492,187
|
| |||||||||||||||
John Dinning
|
|
154,423
|
|
|
3,597,657
|
|
|
3,752,080
|
| |||||||||||||||
Stephen Scheppmann | — | 1,289,501 | 1,289,501 |
|
277,965
|
|
|
4,991,838
|
|
|
5,269,803
|
| ||||||||||||
Daniel Harrington | — | 2,148,466 | 2,148,466 | |||||||||||||||||||||
Oliver Ratzesberger | — | 1,127,950 | 1,127,950 | |||||||||||||||||||||
John Dinning | — | 864,949 | 864,949 | |||||||||||||||||||||
| (1) | Equity valuations are based on the following assumptions: (i) a closing price of our stock on December |
| 60 | 2018 PROXY STATEMENT |
PaymentsCEO PAY RATIO DISCLOSURE
We are providing the following information regarding the relationship of the annual total compensation of our CEO and that of our “median employee,” as required by Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, and Item 402(u) of RegulationS-K. The pay ratio information provided below is a reasonable estimate calculated in a manner consistent with these new pay ratio disclosure rules.
For our 2017 fiscal year:
In determining the pay ratio information provided above, we first identified our “median employee” for the 2017 fiscal year by using the following methodology, as permitted by the SEC’s pay ratio disclosure rules:
The following table quantifies
Once our median employee was identified in the manner described above, we calculated the annual total compensation of the median employee using the same methodology that we used to determine the annual total compensation of the CEO, as reported in the Summary Compensation DiscussionTable on page 48 of this proxy statement.
It should be noted that the SEC’s pay ratio disclosure rules provide reporting companies with a great deal of flexibility in determining the methodology used to identify the median employee and Analysis.the pay ratio. As such, our methodology may differ materially from the methodology used by other companies to prepare their pay ratio disclosures, which may contribute to a lack of comparability between our pay ratio and the pay ratio reported by other companies, including those within our industry.
| Executive | Cash ($)(1) | Stock Options ($)(2) | Restricted Share Units ($)(2) | Welfare Benefits ($)(3) | Out-placement Counseling ($) | Total ($) | ||||||||||||||||||
Michael Koehler | 3,040,000 | — | — | 15,819 | — | 3,055,819 | ||||||||||||||||||
Robert Fair | 1,995,103 | — | 933,181 | 21,948 | 10,000 | 2,960,232 | ||||||||||||||||||
Richard Morton | 507,752 | 24,118 | 497,646 | 15,819 | 10,000 | 1,055,335 | ||||||||||||||||||
| 61 |
72
ON EXECUTIVE COMPENSATION
(Item 2 on Proxy Card)
The foundation of our executive compensation program is to pay for performance. Our executive officers are compensated based on the key financial and strategic drivers of our business and in a manner that is consistent with competitive practices and sound corporate governance principles. We believe that our executive compensation program aligns our incentive compensation with the long-term interests of our stockholders because it is designed to motivate our executives to deliver long-term sustainable growth and stockholder value, and to provide retention incentives. The board encourages you to review the Executive Compensation section of this proxy statement, including the Compensation Discussion and Analysis and related tables and narratives, beginning on page 3328 of this proxy statement, for additional details on our executive compensation program.
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act, stockholders are able to vote to approve, on an advisory(non-binding) basis no less than once every three years, the compensation of our named executive officers (a“say-on-pay” vote). Since our annual meeting of stockholders in 2011, we have provided our stockholders with annualsay-on-pay voting opportunities. In connection with our 20162017 annual meeting, our advisorysay-on-pay proposal was approved by approximately 87.1% of the votes castreceived a 97% favorable vote at the meeting.meeting, and our stockholders expressed a continued preference for annualsay-on-pay votes. Our Board of Directors has determined that it will provide our stockholders with annualsay-on-pay voting opportunities.
Since 2015, our Board of Directors has regularly engaged stockholders to solicit their input regarding the Company’s executive compensation program. This past year, we again sought feedback from our largest 25 institutional investors, representing approximately 72%over 82% of Teradata’s outstanding shares. Discussions with investors who responded to our outreach efforts (and others who reached out to us) touched on a number of themes including stockholders’ desire that a meaningful portion of long-term incentive value continue to be allocated to performance-based equity awards forthat are based on longer-term performance goals with a strong rationale and linkage between applicable performance goals and the Company’sto our business strategy. The changes to our executive compensation that were approved in 2016, as2017, including those described below and on page 28 of this proxy statement, were consistent with the common themes expressed by our stockholders and generally have been viewed very favorably by investors because they reinforce the performance-oriented structure of our program:
| A substantial majority (70%) of |
|
73
We are now providing our stockholders with the opportunity to castnon-binding advisory votes to approve the compensation of our named executive officers for 2016,2017, and are asking stockholders to vote to adopt the following resolution:
RESOLVED, that the stockholders of Teradata Corporation approve, on an advisory basis, the compensation of the Company’s named executive officers, as such compensation is described in the Compensation Discussion and Analysis section, the tabular disclosure regarding such compensation, and the accompanying narrative disclosure and related material, set forth in the Company’s definitive proxy statement for the 20172018 annual meeting of stockholders.
| 62 | 2018 PROXY STATEMENT |
Advisory(Non-Binding) Vote on Executive Compensation
Thissay-on-pay proposal vote is intended to provide an overall assessment of our executive compensation program rather than focus on any specific item of compensation. As an advisory vote, this proposal isnon-binding. However, the board and our Compensation and Human Resource Committee, which is responsible for designing and overseeing the administration of our executive compensation program, values the opinions of our stockholders and will consider the outcome of the vote when making future compensation decisions for our named executive officers.
| The Board of Directors recommends that you vote FOR this proposal. |
Proxies will be so voted unless stockholders specify otherwise in their proxies. Abstentions will have the same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote. Approval of this resolution requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business. However, the results of this vote are not binding on the board, whether or not any resolution is passed under this voting standard. To the extent there is any significant vote against our executive compensation program, the Compensation and Human Resource Committee will evaluate whether any actions are necessary and appropriate to address stockholder concerns.
| 63 |
74
ADVISORY(NON-BINDING)VOTE ON APPROVAL OF THE
ON FREQUENCY OFSAY-ON-PAY VOTETERADATA EMPLOYEE STOCK PURCHASE PLAN
AS AMENDED AND RESTATED
(Item 3 on Proxy Card)
Under SEC rulesThe Teradata Employee Stock Purchase Plan (the “ESPP”) was originally adopted effective as of September 30, 2007, and has been amended from time to time. On January 30, 2018, the Board of Directors amended and restated the ESPP, subject to stockholder approval as required, in connection withorder to:
WeStockholders are now providing our stockholders with the opportunity to castnon-binding advisory votesbeing asked to approve the frequencyESPP in order to allow the ESPP to continue to qualify as an “employee stock purchase plan” under Section 423 of futuresay-on-pay votes.the Internal Revenue Code, as amended (“IRC Section 423”). The Board of Directors believes that the ESPP continues to feel that annualsay-on-pay votes arebe an appropriate means to obtain stockholders’ views on the Company’s executiveimportant part of our compensation program, for consideration in making decisionsby promoting broad-based ownership of our common stock and helping to align the interests of our employees with respect to such program. Therefore, the board is recommending that we continue the practicethose of annualsay-on-pay votes.our stockholders.
| The Board of Directors recommends that you vote FOR |
Proxies
The complete text of the ESPP is attached as an Appendix to this proxy statement. The following summary of the plan does not purport to be complete and is qualified in its entirety by reference to said Appendix.
Summary of the Plan
The purpose of the ESPP is to provide eligible employees an opportunity to purchase our common stock through payroll deductions. It is intended to encourage ownership of our common stock to enable eligible employees to participate in the economic progress of Teradata during the term of the plan. The ESPP is intended to qualify as an “employee stock purchase plan” under IRC Section 423, although we may also make offerings under the ESPP that are not intended to qualify under IRC Section 423 for participating subsidiaries outside of the United States. The principal features of the ESPP are summarized below.
Administration
Subject to action by our board, the ESPP is administered by a committee of management, the Teradata Corporation Benefits Committee (the “Benefits Committee”), which has discretionary authority to interpret the ESPP, establish rules and regulations relating to the ESPP from time to time, and to make all other determinations necessary or advisable for the administration of the ESPP. A third party recordkeeper maintains an investment account for each participant with a record of the shares purchased by such participant.
| 64 | 2018 PROXY STATEMENT |
Vote on Approval of the Teradata Employee Stock Purchase Plan as Amended and Restated
Shares Available
The maximum aggregate number of shares of our common stock that may be purchased under the ESPP, as amended and restated, is 7,000,000 shares (increased by 3,000,000 from the 4,000,000 previously authorized for issuance under the ESPP). As of the record date, there were 202,933 remaining shares available for issuance under the plan. The maximum aggregate number of shares will be subject to adjustment in the event of certain changes to our capital structure as described in the ESPP. The shares of our common stock purchased and issued under the ESPP will consist of authorized and unissued shares.
Eligibility
Generally, any person who is employed by Teradata or any of its designated subsidiaries on the first business day of a purchase period, and who is not deemed for purposes of IRC Section 423(b)(3)f to own stock possessing 5% or more of the total combined voting power or value of all classes of our stock or stock of a subsidiary, is eligible to participate in the ESPP. Certain part-time, temporary and leased employees are not eligible to participate in the ESPP. As of the date of this proxy statement, there are approximately 9,500 employees eligible to participate in the ESPP.
Participation and Payroll Deductions
Eligible employees may purchase shares of our common stock at below-market prices through payroll deductions during each purchase period, using amounts accumulated during such purchase period. As described above, the ESPP generally provides for monthly purchase periods, but the Benefits Committee may establish different purchase periods from time to time, within the limitations established under IRC Section 423. Eligible employees may elect to participate in the ESPP by executing a stock purchase agreement in accordance with procedures established by the Benefits Committee. The amount of the payroll deduction specified in a stock purchase agreement must be a whole percentage between 1% and 10% of the employee’s compensation (before withholding or other deductions) paid during the purchase period by Teradata or any of our subsidiaries.
Deduction Changes and Withdrawal
Employees may change their rate of payroll deduction in accordance with procedures established by the Benefits Committee and pursuant to Company policy. A participant may withdraw from participation in the ESPP at any time by filing a notice of withdrawal. Upon a participant’s withdrawal, the amount credited to his or her stock purchase account will be applied to the purchase of Teradata common stock on the next exercise date, which occurs on the last business date of the purchase period. A participant who withdraws from the ESPP may again become a participant by executing a new stock purchase agreement.
Purchase of Shares
Funds held in a participant’s account on the last business day of each purchase period will be used to purchase shares of Teradata common stock at a purchase price equal to 85% of the average of the reported highest and lowest sale prices of shares of Teradata common stock on the NYSE on the last day of the purchase period. The average of the reported highest and lowest sale prices of our common shares as reported on the NYSE on February 20, 2018 was $36.60. Any dividends on shares purchased and held in a participant’s account would be credited to the participant’s account and would be used to purchase additional shares on the next purchase date, unless the participant elects not to have such dividends reinvested.
Limitation on Purchase of Shares
A participant may not purchase more than 50,000 shares of our common stock under the ESPP during any purchase period of not more than one calendar month. If the Benefits Committee establishes a purchase period of more than one calendar month, the maximum number of shares of our common stock that a participant may purchase during that purchase period will not exceed 50,000 multiplied by the number of full months in the purchase period (for example, a participant could not acquire more than 300,000 shares of our common stock under the ESPP during asix-month purchase period). The number of shares that may be purchased under the ESPP is also subject to applicable limitations under IRC Section 423, so votedthat no participant may purchase shares under the ESPP if such shares, together with common stock purchased by such participant under all other “employee stock purchase plans,” as defined in IRC Section 423(b), would have a fair market value in excess of $25,000 per calendar year.
| 65 |
Vote on Approval of the Teradata Employee Stock Purchase Plan as Amended and Restated
Termination of Employment
When a participant ceases to be our employee for any reason, the amount credited to the participant’s stock purchase account on the date of termination will be used to purchase shares of our common stock on the next applicable purchase date.
Amendment and Termination of the ESPP
Our Board of Directors may amend the ESPP at any time and in any respect, provided that, without approval of our stockholders, no amendment may increase the number of shares of our common stock reserved for purchase under the ESPP or reduce the purchase price per share below the purchase price specified pursuant to the ESPP. As amended and restated, the ESPP will continue in effect through January 30, 2028, unless the Board of Directors terminates the ESPP prior to that date. Upon termination or expiration of the ESPP, the entire amount credited to the stock purchase account of each participant shall be refunded to such participant.
Federal Income Tax Consequences
The following is a summary of certain federal income tax consequences under the ESPP, based upon the laws in effect on the date hereof. The discussion is general in nature and does not take into account a number of considerations which may apply in light of the circumstances of a particular participant under the ESPP. The income tax consequences under applicable state and local tax laws may not be the same as under federal income tax laws.
Generally, the ESPP is intended to be an “employee stock purchase plan” within the meaning of IRC Section 423. With respect to offerings of common stock intended to qualify under IRC Section 423, an eligible employee who elects to participate in the ESPP will not recognize any taxable income at the time shares are purchased under the ESPP for the employee.
If the participant disposes of the shares purchased under the ESPP more than two years after the date of grant of the ESPP purchase option and more than one year after the applicable exercise date and the amount realized exceeds the purchase price, the participant will recognize compensation taxable as ordinary income in an amount equal to the lesser of (i) the excess of the fair market value of the shares on the exercise date over the purchase price, and (ii) the amount realized on such disposition over the purchase price. The participant’s cost basis in the shares will be increased by the amount of ordinary income recognized by the participant. In addition, if the amount realized on such disposition exceeds the fair market value of the shares on the exercise date, such excess will be taxed as long-term capital gain. If the amount realized on such disposition is less than the purchase price of the shares under the ESPP, the participant will recognize long term capital loss in the amount of the difference between the purchase price and the amount realized. We will not be entitled to any deduction with respect to a disposition of the shares occurring under these circumstances.
If the participant disposes of the shares purchased under the ESPP within two years after the date of grant of the ESPP purchase option or within one year after the applicable exercise date, the participant will recognize compensation taxable as ordinary income, and we will be entitled to a corresponding deduction, in an amount equal to the excess of the fair market value of the shares on the applicable exercise date over the purchase price of the shares under the ESPP. The participant’s cost basis in the shares will be increased by the amount of the ordinary income recognized by such participant. In addition, upon such disposition of the shares, the participant will recognize capital gain or loss equal to the difference between the amount realized on such disposition and the participant’s cost basis in the shares, as so increased. We will not be entitled to any deduction with respect to the amount recognized by such participant as a capital gain.
Future Benefits Under the ESPP
Participation in the ESPP is voluntary and dependent on each eligible employee’s election to participate and election of the level of payroll deductions. As a result, the amount of future benefits under the ESPP cannot be determined at this time.
| 66 | 2018 PROXY STATEMENT |
Vote on Approval of the Teradata Employee Stock Purchase Plan as Amended and Restated
Registration with the SEC
Promptly following approval of the amended and restated ESPP by our stockholders, specify otherwise in their proxies. the Company intends to file a Registration Statement on FormS-8 with the SEC relating to the additional 3,000,000 shares reserved for issuance under the ESPP.
Equity Compensation Plan Information as of December 31, 2017
| PLAN CATEGORY | NUMBER OF SECURITIES TO BE ISSUED UPON EXERCISE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | WEIGHTED-AVERAGE EXERCISE PRICE OF OUTSTANDING OPTIONS, WARRANTS AND RIGHTS | NUMBER OF SECURITIES REMAINING AVAILABLE FOR FUTURE ISSUANCE UNDER EQUITY COMPENSATION PLANS (EXCLUDING SECURITIES REFLECTED IN COLUMN (A)) | |||||||||
(a)(1)
| (b)
| (c)(2)
| ||||||||||
Equity compensation plans approved by security holders
| $ | 5,372,528 | $ | 37.63 | $ | 7,092,801 | ||||||
Equity compensation plans not approved by security holders
| N/A | N/A | N/A | |||||||||
Total
| $
| 5,372,528
|
| $
| 37.63
|
| $
| 7,092,801
|
| |||
| (1) | Column (a) represents the number of shares of our common stock that may be issued in connection with the exercise of outstanding stock options granted under the Teradata Corporation 2007 Stock Incentive Plan and Teradata 2012 Stock Incentive Plan. |
| (2) | Column (c) represents the aggregate number of shares of our common stock available for issuance under the Teradata 2012 Stock Incentive Plan (6,896,562) and the ESPP (196,239), other than shares available for issuance in connection with the exercise of outstanding stock options. |
| The Board of Directors recommends that you vote FOR this proposal. |
Approval of this resolutionproposal requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business. However, the results of this vote are not binding on the board, whether or not this item is passed under this voting standard. In evaluating the vote on this advisory resolution,Proxies solicited by the board will considerbe voted FOR this proposal, unless you specify otherwise in your proxy. Abstentions will have the voting results in their entirety.same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote.
| 67 |
75
DIRECTORS’ PROPOSAL TO RATIFY THE
APPOINTMENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM FOR 20172018
(Item 4 on Proxy Card)
The Audit Committee of the Board of Directors, which is composed entirely of independent directors, appointed PricewaterhouseCoopers (“PwC”) as our independent registered public accounting firm for 20172018 to audit our consolidated financial statements. The board has approved this appointment and, as a matter of good corporate governance, is asking you to ratify this appointment.
In determining whether to reappoint PwC as our independent auditor, the Audit Committee considers, among other things, the length of time PwC has been engaged, in addition to considering the quality of the discussions with the independent auditor and an assessment of past performance of PwC. The Audit Committee annually reviews PwC’s independence and performance in deciding whether to retain PwC or engage another firm as our independent registered public accounting firm. In the course of these reviews, the Audit Committee considers, among other things:
PwC’s historical and recent performance on the Teradata audit;
PwC’s capability and expertise in handling the breadth and complexity of our worldwide operations;
The appropriateness of PwC’s fees for audit andnon-audit services;
PwC’s independence;
The potential impact of changing auditors; and
PwC’s tenure as our independent auditor, including the benefits of having a long-tenured auditor and controls and processes that help ensure PwC’s independence.
Based on its“Pre-Approval Policy” (as defined on page 7870 of this proxy statement) and applicable SEC rules and guidance, the Audit Committee has considered whether the provision of the tax and othernon-audit services described below under the caption “Fees Paid to Independent Registered Public Accounting Firm” was compatible with maintaining PwC’s independence and concluded that it was. Based on its review of the above factors, the Audit Committee believes that it is in the best interests of Teradata and our stockholders to retain PwC as our independent registered public accounting firm for 2017.2018.
PwC has been our independent registered public accounting firm since 2007. The firm is considered a leader in providing audit services to the high-technology industry. The board believes that PwC is well-qualified to serve as our independent registered public accounting firm given its experience, global presence with offices or affiliates in or near most locations where we do business, and quality audit work in serving us. PwC rotates its audit partners assigned to audit us at least once every five years in accordance with SEC rules, and the Audit Committee oversees the selection of PwC’s lead engagement partner. In addition, the Audit Committee has placed restrictions on our ability to hire any employees or former employees of PwC or its affiliates.
Representatives of PwC will be at the annual meeting to answer questions, and they may also make any statement they wish at the meeting.
| The Board of Directors recommends that you vote FOR this proposal. |
Approval of this proposal requires the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on this item of business. If the stockholders do not approve this proposal, the Audit Committee and the Board of Directors will reconsider the appointment, but may decide to maintain its appointment of PwC. Proxies solicited by the board will be voted FOR this proposal, unless you specify otherwise in your proxy. Abstentions will have the same effect as votes against the matter and shares that are the subject of a broker“non-vote” will be deemed absent and will have no effect on the outcome of the vote.
| 68 | 2018 PROXY STATEMENT |
76
The Company’s management is responsible for the preparation, presentation and integrity of the Company’s financial statements, accounting and financial reporting principles, internal controls, and procedures designed to ensure compliance with accounting standards, applicable laws, and regulations. PricewaterhouseCoopers LLP (“PwC”), the Company’s independent registered public accounting firm, is responsible for performing an independent audit of the Company’s consolidated financial statements and expressing an opinion on the conformity of those financial statements with generally accepted accounting principles. A more detailed discussion of the factors considered by the Audit Committee in appointing PwC as Teradata’s independent auditor is found on page 7668 of this proxy statement.
In the course of fulfilling its oversight responsibilities for the Company, the Audit Committee has reviewed and discussed with management the Company’s audited financial statements for fiscal year 2016,2017, as well as quarterly earnings releases and quarterly reports on Form10-Q, and, together with the Board of Directors, has reviewed and discussed the Company’s annual report on Form10-K for the fiscal year ended December 31, 20162017 and this proxy statement. In addition, as part of their oversight responsibility, the Audit Committee members have reviewed and discussed with management the adequacy and effectiveness of the Company’s internal control over financial reporting. PwC has also discussed with the Audit Committee significant matters regarding internal control over financial reporting that have come to its attention during the course of its audit of the consolidated financial statements. The Audit Committee also discussed with the Company’s management the process used for certifications by the Company’s Chief Executive and Chief Financial Officers for the Company’s quarterly andyear-end filings with the SEC, as well as the clarity and completeness of the Company’s financial disclosures. Further, the Audit Committee discussed with PwC the matters required to be discussed under the Public Company Accounting Oversight Board (PCAOB), Auditing Standard No. 161301 (Communications with Audit Committees). These matters include: (i) the overall scope and plans for PwC’s independent audit as well as approval of the terms of PwC’s engagement letter; (ii) review of Teradata’s internal audit plan; (iii) review of PwC’s audit strategy and approach, including accounting policies, practices and estimates; and (iv) PwC’s evaluation of our financial reporting and other key findings related to the audit. The Audit Committee also has received the written disclosures and the letter from PwC required by the applicable requirements of the PCAOB regarding PwC’s communications with the Audit Committee concerning independence and has discussed with PwC its independence from management and the Company. Pages 2017 to 2118 of this proxy statement contain a detailed listing of the Audit Committee’s areas of responsibility.
The Audit Committee met in executive session periodically in 20162017 with PwC, the Company’s Chief Financial Officer, and Vice President of Enterprise Risk and Assurance Services, and Chief Ethics & Compliance and Privacy Officer, each of whom has unrestricted access to the committee.
Based on the reviews and the discussions referred to above, the Audit Committee recommended to the Board of Directors that the Company’s audited consolidated financial statements be included in the Company’s Annual Report on Form10-K for the fiscal year ended December 31, 20162017 for filing with the Securities and Exchange Commission.SEC.
Dated: February 22, 201720, 2018
The Audit Committee:
NancyDavid E. Cooper,Kepler, Chair
Timothy C.K. Chou, Member
Cary T. Fu, Member
David E. Kepler, Member
| 69 |
77
FEES PAID TO INDEPENDENT REGISTERED PUBLIC
ACCOUNTING FIRM
The following table presents the fees accrued or billed for professional audit services rendered by our independent registered public accounting firm, PricewaterhouseCoopers LLP (“PwC”), for the audit of our consolidated financial statements for fiscal years 20162017 and 2015,2016, as well as the worldwide fees accrued or billed for other services rendered by PwC in 20162017 and 2015.2016.
| Service | 2016 ($) | 2015 ($) | ||||||||||||||
| NAME | 2017 ($) | 2016 ($) | ||||||||||||||
Audit Fees | 2,253,241 | (1) | 2,349,954 | (2) |
| 2,543,292
| (1)
|
| 2,253,241
| (2)
| ||||||
Audit-Related Fees | 64,075 | 0 |
| 450,000
| (3)
|
| 64,075
|
| ||||||||
Tax Fees | 50,000 | (3) | 69,416 | (4) |
| 75,000
| (4)
|
| 50,000
| (5)
| ||||||
All Other Fees | 4,500 | (5) | 4,500 | (5) |
| 4,500
| (6)
|
| 4,500
| (6)
| ||||||
Total Fees | 2,371,816 | 2,423,870 |
| 3,072,792
|
|
| 2,371,816
|
| ||||||||
| (1) | Includes fees related to the annual audit and quarterly review of our consolidated financial statements, the audit of internal control over financial reporting, attestation services and review services associated with our filings with the SEC, and consultations with management as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by regulatory and standard setting bodies (“consultation services”). Also includes $153,292 for the 2016 statutory audits of the financial statements of select foreign subsidiaries. |
| (2) | Includes fees related to the annual audit and quarterly review of our consolidated financial statements, the audit of internal control over financial reporting, attestation services and review services associated with our filings with the SEC, and consultations with management as to the accounting or disclosure treatment of transactions or events and the actual or potential impact of final or proposed rules, standards or interpretations by regulatory and standard setting bodies (“consultation services”). Also includes $154,289 for the 2015 statutory audits of the financial statements of select foreign subsidiaries. |
Includes fees related to the |
| Includes tax fees for consulting work related to the U.S. Tax Cuts and Job Act of 2017. |
| (5) | Includes tax fees for state tax consulting work. |
|
Includes license fees for PwC software products used to assist in conducting accounting research and other service tools. |
The Audit Committee has adopted policies and procedures regarding itspre-approval of the audit, audit-related, tax and all othernon-audit services to be provided by our independent registered public accounting firm or its affiliates to us or our consolidated subsidiaries (the“Pre-Approval Policy”). This policy is designed to assure that the provision of such services does not impair the independence of our independent registered public accounting firm. Under thePre-Approval Policy, at the beginning of each fiscal year, the Audit Committee will review the services proposed by management and our independent registered public accounting firm to be provided during that year. The Audit Committee will then provide itspre-approval based on the limitations set forth in thePre-Approval Policy. These limitations include the following:
In no case should we or any of our consolidated subsidiaries retain our independent registered public accounting firm or its affiliates to provide management consulting services or anynon-audit services that are not permitted under applicable laws and regulations, including, without limitation, the Sarbanes-Oxley Act of 2002 and the SEC’s related rules and regulations.
78
Unless a type of service to be provided by the independent registered public accounting firm has received generalpre-approval, it will require specificpre-approval by the Audit Committee. Any othernon-audit services and tax consulting services will require specificpre-approvals by the Audit Committee and a determination that such services would not impair the independence of our independent registered public accounting firm. Specificpre-approvals by the Audit Committee will also be required for any material changes or additions to thepre-approved services.
The Audit Committee recommends that the ratio of total tax and all othernon-audit services to total audit and audit-related services procured by us in a fiscal year be less thanone-to-one.
The Audit Committee will not permit the exclusive retention of our independent registered public accounting firm in connection with a transaction initially recommended by the independent registered public accounting firm, the purpose of which may be tax avoidance and the tax treatment of which is not supported in applicable tax law.
Pre-approval fee levels for all services to be provided by the independent registered public accounting firm will be established annually by the Audit Committee, and updated on a quarterly basis by the Audit Committee at its regularly scheduled meetings. Any proposed services significantly exceeding these levels will require separatepre-approval by the Audit Committee.
| 70 | 2018 PROXY STATEMENT |
Fees Paid to Independent Registered Public Accounting Firm
| regularly scheduled meetings. Any proposed services significantly exceeding these levels will require separatepre-approval by the Audit Committee. |
Back-up documentation will be provided as appropriate to the Audit Committee by management and/or the independent registered public accounting firm when requestingpre-approval of services by our independent registered public accounting firm. At the request of the Audit Committee, additional detailed documentation regarding the specific services will be provided.
Requests or applications to provide services that require separate approval by the Audit Committee will be submitted to the Audit Committee by our Chief Financial Officer, with the support of the independent registered public accounting firm, and must include a joint statement as to whether, in the view of management and the independent registered public accounting firm, the request or application is consistent with the SEC’s rules on auditor independence.
Under thePre-Approval Policy, the Audit Committee has delegated to its Chair limited authority to grantpre-approvals for audit, audit-related, tax and othernon-audit services in the event that immediate approval of a service is needed. The Chair shall report anypre-approval decisions to the Audit Committee at its next scheduled meeting for its review and approval. The Audit Committee has not delegated to management its responsibilities topre-approve services performed by the independent registered public accounting firm.
The audit, tax and all othernon-audit services provided by PwC to us, and the fees charged for such services, will be actively monitored by the Audit Committee as set forth in thePre-Approval Policy on a quarterly basis to maintain the appropriate level of objectivity and independence in the firm’s audit work for us. Part of the Audit Committee’s ongoing monitoring includes a review of any de minimis exceptions as provided in the applicable SEC rules fornon-audit services that were notpre-approved by the Audit Committee. All services provided by PwC in the fiscal years 20162017 and 2015 werepre-approved by the Audit Committee.
| 71 |
79
The Board of Directors does not know of any matters that will be brought before the 20172018 annual meeting other than those listed in the notice of meeting. If any other matters are properly introduced at the meeting for consideration, including consideration of a motion to adjourn the meeting to another time or place, the individuals named on the proxy card will have authority to vote on such matters in their discretion.
HOUSEHOLDING OF PROXY MATERIALS
The SEC has adopted rules that permit companies and intermediaries (e.g., banks and brokers) to satisfy the delivery requirements for annual reports, proxy statements, and Notice of Internet Availability of Proxy Materials (“Notice”) with respect to two or more stockholders sharing the same address by delivering one annual report, proxy statement and Notice addressed to those stockholders. This process, which is commonly referred to as “householding,” potentially means extra convenience for stockholders and cost savings for companies.
A number of brokers with account holders who are Teradata’s stockholders will be “householding” our proxy materials. A single annual report, proxy statement andand/or Notice will be delivered to multiple stockholders sharing an address unless contrary instructions have been received from the affected stockholders. If you have multiple Teradata common stock record accounts and/or share an address with a family member who is a Teradata stockholder and want to receive more than one copy of the annual report, proxy statement or Notice, you may contact our mailing agent, Broadridge Financial Solutions, at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 (phone:1-800-542-1061). Broadridge will remove you from the householding program within thirty30 days after receipt of this request and will mail you a separate copy of the annual report, proxy statement, and Notice. Stockholders who hold their stock through a bank or broker and currently receive multiple copies of the annual report, proxy statement or Notice at their address and would like to request “householding” of their communications should contact their bank or broker.
| 72 | 2018 PROXY STATEMENT |
80
Cost of Proxy Solicitation
We will pay the expenses of soliciting proxies in connection with the annual meeting. Proxies may be solicited on our behalf through the mail, in person, by telephone, electronic transmission, or facsimile transmission. We have hired Okapi Partners LLC to assist in the solicitation of proxies, at an estimated cost of $12,000$13,000 plus reimbursement of reasonableout-of-pocket expenses. In accordance with SEC and NYSE rules, we will also reimburse brokerage houses and other custodians, nominees and fiduciaries for their expenses of sending proxies and proxy materials as intermediaries to the beneficial owners of our common stock.
Procedures for Stockholder Proposals and Nominations
Under our bylaws, nominations for directors at an annual meeting may be made only by (i) the Board of Directors or a committee of the board, or (ii) a stockholder entitled to vote who has delivered notice to us within 90 to 120 days before the first anniversary of the date of the preceding year’s annual meeting and complied with the additional requirements set forth in our bylaws.
Proxy Access
Our bylaws permit stockholders to nominate director candidates through proxy access for inclusion in our proxy statement.
In general, a stockholder, or a group of up to 20 stockholders, owning 3% or more of the Company’s outstanding stock continuously for at least three years, may nominate and include in the Company’s proxy materials director nominees constituting up to 20% of the Board, provided that such stockholder(s) and nominee(s) satisfy the requirements set forth in our bylaws, which generally include the following three conditions.
| 1 | 2 | 3 | ||||||
a single stockholder, or qualified
3% for3 years
owning three percent outstanding consecutive years
|
the individual or qualified group may submit
up to20%
of the directors then in office (after giving effect to reduction in but in no case less than one nominee
|
stockholders and nominees who | ||||||
To be timely for our 2018 annual meeting of stockholders, the proposal must be received by our Corporate Secretary at the Company’s address provided on page 20 of this proxy statement no sooner than October 10, 2018 and no later than the close of business on November 9, 2018. For additional information regarding the Company’s proxy access provisions, please refer to the bylaws.
Advance Notice Procedure
Our bylaws also provide that business may not be brought before an annual meeting unless it is (i) specified in our proxy materials (i.e., proposals brought by the Board of Directors and stockholder proposals that we are required to include in our proxy statement under SEC Rule14a-8), (ii) brought before the meeting by or at the direction of the
| 73 |
Additional Information
board, or (iii) brought by a stockholder entitled to vote who has delivered notice to us (containing certain information specified in the bylaws) within 90 to 120 days before the first anniversary of the date of the preceding year’s annual meeting and complied with the additional requirements set forth in our bylaws. In order to include a proposal in our notice of meeting and proxy materials pursuant to SEC Rule14a-8, you must comply with the requirements of that rule.
A copy of the full text of our bylaws may be obtained upon written request to the Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342. A copy of our bylaws, which were last amended by the Board of Directors on July 26, 2016, is also available on our corporate governance website athttp://www.teradata.com/articles-and-bylaws.
Stockholder Proposals for 20182019 Annual Meeting
To include a stockholder proposal in our 20182019 notice of meeting and proxy materials pursuant to SEC Rule14a-8, a stockholder must satisfy all applicable requirements of that rule, and the proposal must be received by our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342, no later than November 1, 2017.6, 2018. To present any other proposal at the 20182019 annual meeting of stockholders, or to nominate a candidate for director election at the 20182019 annual meeting, a stockholder must submit an advance written notice of such proposal and/or nomination (as applicable) to us that complies with certain requirements set forth in our bylaws. Such advance written notice must be received by our Corporate Secretary at the Company’s address provided on page 1 of this proxy statementabove no sooner than the close of business on December 18, 2017,31, 2018, and no later than the close of business on January 17, 2018.30, 2019.
| 74 | 2018 PROXY STATEMENT |
 | Who may vote at the meeting? | |
| Only stockholders of record may vote at the meeting. A stockholder of record is a stockholder as of the close of business on February 20, 2018, the record date for the meeting. On the record date, there were 120,912,043 shares of common stock outstanding, | ||
| How many votes do I have? | |
| For each share of common stock you own, you are entitled to cast one vote on each director candidate submitted for election and to cast one vote on each other matter properly brought before the meeting, | ||
| When will I receive my proxy materials? | |
| Proxy materials for the 2018 annual meeting of stockholders are being made available in printed form on or about March 9, 2018. They will be available online on or about March 12, 2018. | ||
| How do I access my proxy materials? | |
Notice and Access. Proxy materials (including our 2017 annual report, notice of the 2018 annual meeting of stockholders and proxy statement, and proxy card) are being made available via the Internet pursuant to the “notice and access” rules of the SEC. A Notice of Internet Availability of Proxy Materials (“Notice”) is being mailed to most of our record and beneficial stockholders. The Notice includes instructions on how to access the proxy materials on the Internet or request printed copies of these materials. To receive future proxy materials by mail or email, follow the instructions included with the Notice. If you previously elected to receive materials via mail or email delivery, you will not receive the Notice, but you will receive your materials via the delivery method you requested. Electronic Delivery. At their request, many stockholders are receiving an email providing them with links to receive the Notice and Internet access to the proxy materials rather than receiving a printed copy of the Notice or printed proxy materials. Paper Copies. If you have previously requested paper copies of your proxy materials, or are otherwise required to receive paper copies, you will receive the 2018 proxy materials, including notice of the meeting, in printed form unless you consent to receive these documents electronically in the future. | ||
| How do I receive my proxy materials electronically? | |
If you are a stockholder of record (i.e., you directly own your common stock through an account with our transfer agent, Computershare Investor Services), you can choose to access your Teradata proxy materials electronically and save the cost of producing and mailing a Notice and other documents by following the instructions provided athttps://www.investordelivery.com or by following the prompt if you choose to authorize your proxy over the Internet. You must provide your sixteen-digit control number listed on your Notice or proxy card to make this election. Your election to receive proxy materials by electronic access will remain in effect until you revoke your consent athttps://www.proxyvote.com, or your consent is deemed to be revoked under applicable law. You must provide your sixteen-digit control number to revoke your consent. If you are a beneficial owner (i.e., you indirectly hold your common stock through a nominee such as a bank or broker), please review the information provided by your nominee for instructions on how to elect to view future proxy statements and annual reports over the Internet. | ||
Please keep in mind that choosing electronic delivery saves the Company and its stockholders money and preserves natural resources
| 75 |
Other General Information
| How do I obtain a separate set of proxy materials? | |
| To save costs, only one set of proxy materials is being printed and mailed to stockholders who have requested printed copies and share an address, unless otherwise requested or required under applicable law. If you have multiple Teradata common stock record accounts and/or share an address with a family member who is a Teradata stockholder and want to receive more than one copy of the Notice and/or proxy materials, you may contact our mailing agent, Broadridge Financial Solutions, at Broadridge Householding Department, 51 Mercedes Way, Edgewood, New York, 11717 (phone:1-800-542-1061). Broadridge will mail you a separate copy of the proxy materials and will remove you from the householding program within thirty days after receipt of this request. | ||
| How can I vote my shares of Teradata stock? | |
Your vote is important. Your shares can be voted at the annual meeting only if you are a record stockholder and present in person or represented by proxy. Even if you plan to attend the meeting, we urge you to authorize your proxy in advance. You may vote your shares by authorizing a proxy over the Internet or by telephone. In addition, if you received paper copies of the proxy materials by mail, you can also submit a proxy by mail by following the instructions on the proxy card. Voting your shares by authorizing a proxy over the Internet, by telephone or by written proxy card will ensure your representation at the annual meeting regardless of whether you attend in person. If you are a stockholder of record, please authorize your proxy electronically by going to thehttps://www.proxyvote.com website or by calling the toll-free number (for residents of the United States and Canada) listed on your Notice and proxy card. Please have your Notice or proxy card in hand when going online or calling. If you authorize your proxy via the Internet, you do not need to return your proxy card. If you choose to authorize your proxy by mail, simply mark your proxy card, and then date, sign and return it in the postage-paid envelope provided. If you hold your shares beneficially through a nominee (such as a bank or broker), you may be able to authorize your proxy by telephone or the Internet as well as by mail. You should follow the instructions you receive from your nominee to vote these shares. | ||
| How do I revoke my proxy for the annual meeting? | |
You may revoke your proxy at any time before it is voted at the meeting by: | ||
• properly executing and delivering a later-dated proxy (including a telephone or Internet proxy authorization); • voting by ballot at the meeting; or • sending a written notice of revocation to the inspectors of election in care of our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342. | ||
| What if I want to vote in person at the meeting? | |
| The method by which you vote and authorize your proxy will in no way limit your voting rights if you later decide to vote in person at the meeting. If you beneficially own your shares through a nominee (such as a bank or broker), you must obtain a proxy executed in your favor from your nominee to be able to vote at the meeting | ||
| What are the requirements for ensuring that my shares are voted by proxy at the meeting? | |
| Your shares will be voted at the meeting as directed by the instructions on your proxy card, voting instructions or electronic proxy if (1) you are entitled to vote, (2) your proxy was properly executed or properly exercised electronically, (3) we received your proxy prior to the voting deadlines for the annual meeting (April 16, 2018 at 11:59 p.m. for record stockholders who do not vote at the meeting, such time as directed by the nominee for beneficial owners, and April 12, 2018 for participants in our 401(k) savings plan), and (4) you did not revoke your proxy prior to or at the meeting. | ||
| 76 | 2018 PROXY STATEMENT |
Other General Information
| How do I vote the shares I hold in the Teradata 401(k) savings plan? | |
| If you are a participant in the Teradata 401(k) savings plan, your proxy includes the number of Teradata common stock units (share interests) allocated to your plan account. You may instruct the trustee how to vote the number of share interests allocated to your plan account. The trustee will vote the share interests allocated to your plan account in accordance with your instructions. If you do not vote your share interests in the Teradata 401(k) savings plan, the trustee will vote the unallocated share interests, as well as any allocated share interests held by the plan, in the same proportion as the share interests for which it received timely voting instructions. | ||
| What is considered a quorum to conduct the annual meeting? | |
| To have a quorum necessary to conduct business at the meeting, it is necessary to have shares that represent (in person or by proxy) the holders of a majority of our shares of common stock outstanding on the record date, which is the close of business on February 20, 2018. Shares of common stock represented in person or by proxy (including shares that abstain with respect to a particular proposal to be voted upon and “brokernon-votes”) will be counted as present for the purpose of determining whether a quorum exists at the meeting for that proposal. If a quorum is not present, the meeting will be adjourned until a quorum is obtained. | ||
| How many votes are required to approve each item? | |
With respect toProposal 1 (the election of directors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on the election of directors is required to elect each director. With respect toProposal 2 (the advisory“say-on-pay” vote on executive compensation), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such question is required to adopt this advisory resolution in accordance with Teradata’s bylaws. However, the results of this vote are not binding on the board, whether or not any resolution is passed under this voting standard. With respect toProposal 3 (the approval of the amended and restated Teradata Employee Stock Purchase Plan), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item of business is required to approve the plan. With respect toProposal 4 (the ratification of the appointment of the Company’s independent auditors), the affirmative vote of a majority of the voting power present (in person or by proxy) at the meeting and entitled to vote on such item of business is required to ratify the appointment. Abstentions effectively count as votes “against” the adoption of a proposal and the election of a director. Moreover, if you do not instruct your nominee (such as your bank or broker) how to vote your shares with respect to the election of directors, the advisory vote on executive compensation, and the approval of the amended and restated Teradata Employee Stock Purchase Plan, the nominee may not vote on these proposals. However, broker“non-votes” will have no effect on the outcome of the vote for any proposal or the election of any director. Broker“non-votes” occur when a nominee returns a properly executed proxy but does not vote on a particular item because the nominee has not received voting instructions from the beneficial owner and, therefore, does not have the authority to vote on a proposal. | ||
| How does the Board recommend that I vote my shares? | |
The Teradata Board of Directors recommends that you vote: • FOR the election of each of the four Class II director nominees, Ms. Bacus and Messrs. Chou, Ringler and Schwarz (see page 4); • FOR the approval, on an advisory basis, of the compensation of our named executive officers as disclosed in this proxy statement (see page 62); • FOR the approval of the amended and restated Teradata Employee Stock Purchase Plan (see page 64); and • FOR ratification of the appointment of PricewaterhouseCoopers LLP as our independent registered public accounting firm for 2018 (see page 68). If you submit your proxy without specific voting instructions, your shares represented by that proxy will be voted as recommended by our board. As discussed above, if you hold your shares beneficially through a nominee (such as a bank or a broker) and fail to provide specific voting instructions to that nominee, your shares will not be voted in the election of directors, the advisory“say-on-pay” vote on executive compensation, or the approval of the amended and restated Teradata Employee Stock Purchase Plan. | ||
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Other General Information
| What do I need to do if I want to attend the annual meeting? | |
If you plan to attend the meeting in person, please send an email to us atinvestor.relations@teradata.com to request a meeting reservation request form. You may attend the meeting if you are a stockholder of record, hold a proxy for a stockholder of record, or are a beneficial owner of our common stock with evidence of ownership. If you are a beneficial owner (i.e., you hold your common stock through a nominee such as a bank or broker), please include evidence of your ownership of common stock with the form (such as an account statement showing you own Teradata common stock as of the record date). If you do not have a reservation for the meeting, you may still attend if we can verify your stock ownership at the meeting. We will include the results of the votes taken at the meeting, as well as the frequency with which the Company intends to conduct thesay-on-pay vote in light of the results of the advisory frequency vote, in a Form8-K filed with the SEC within four business days after the date of the annual meeting or any adjournment or postponement thereof. You may also find information on how to obtain a transcript of the meeting by writing to our Corporate Secretary at Teradata Corporation, 10000 Innovation Drive, Dayton, Ohio 45342. | ||
The above notice and proxy statement are sent by order of the Board of Directors.
Laura Nyquist
General Counsel and Secretary
Dated: March 1, 20176, 2018
| 78 | 2018 PROXY STATEMENT |
81
TERADATA EMPLOYEE STOCK PURCHASE PLAN
(AS AMENDED AND RESTATED ON JANUARY 30, 2018)
1. Purpose
The Teradata Employee Stock Purchase Plan (“Plan”) provides Eligible Employees with an opportunity to purchase Teradata Common Stock through payroll deductions and is intended as an employment incentive and to encourage ownership of Teradata Common Stock to enable Eligible Employees to participate in the economic progress of Teradata Corporation (“Teradata”) during the term of the Plan.
The Company intends to have the Plan qualify as an “employee stock purchase plan” under Section 423 of the Code. The provisions of the Plan shall be construed so as to extend and limit participation in a manner consistent with the requirements of Section 423 of the Code. Notwithstanding the forgoing, the Company may make Offerings under the Plan that are not intended to qualify under Section 423 of the Code to the extent deemed advisable for Designated Subsidiaries outside the United States(“Non-423 Component”). Furthermore, the Company may make separate Offerings under the Plan, each of which may have different terms, but each separate Offering will be intended to comply with the requirements of Section 423 of the Code.
This Plan was originally adopted effective as of September 30, 2007, and has since been amended from time to time. The Plan was most recently amended and restated on January 31, 2012 and approved by the Company’s stockholders on April 20, 2012. The Plan is further amended and restated as set forth herein as of January 30, 2018 (the “2018 Restatement Date”), subject to approval by the Company’s stockholders.
2. Definitions
2.1 “Affiliate” means any person that directly, or through one or more intermediaries, controls, or is controlled by, or under common control with, the Company.
2.2 “Beneficiary” has the meaning set forth in Section 15.
2.3 “Benefits Committee” means the Teradata Corporation Benefits Committee.
2.4 “Board of Directors” means the Board of Directors of the Company.
2.5 “Code” means the Internal Revenue Code of 1986, as amended.
2.6 “Company” means Teradata Corporation, a Delaware corporation.
2.7 “Compensation” means the total amount received by a Participant from the Company or a Subsidiary as salary, wages, bonus or other remuneration including (i) overseas premium pay, (ii) appropriate commission or other earnings by sales personnel, (iii) overtime pay, (iv) payments forcost-of-living increases, and (v) sick pay, but excluding retention and work completion bonuses and contributions of the Company or a Subsidiary to an employee benefit plan thereof.
2.8 “Continuous Service” means the length of time an Employee has been in the continuous employ of the Company and/or a Subsidiary and/or an Affiliate.
2.9 “Designated Subsidiary” means a Subsidiary which shall have been designated by the Chief Executive Officer or the Benefits Committee of the Company to participate in the Plan; provided, that any such designation may be revoked in like manner at any time.
2.10 “Eligible Employees” means only those persons who on an Offering Date: (i) are Employees of the Company or a Designated Subsidiary, and (ii) are not deemed for purposes of Section 423(b)(3) of the Code to own stock possessing 5% or more of the total combined voting power or value of all classes of stock of the Company or a Subsidiary or the parent of the Company, if any. With respect to Offerings made under theNon-423 Component of the Plan, the definition of “Eligible Employee” may be further limited.
2.11 “Employees” means all persons employed by the Company or a Subsidiary, and unless otherwise prohibited by applicable law, excludes those persons whose customary employment is 20 hours or less per week and/or whose customary employment is for five months or less in any calendar year. “Employee” does not include leased
| A-1 |
Appendix A
employees within the meaning of Section 414(n) of the Code, and does not include “payroll service or agency employees” as defined in the following sentence. “Payroll service or agency employee” means an individual (i) for whom the direct pay or compensation with respect to the performance of services for the Company or any Subsidiary or Affiliate is paid by any outside entity, including but not limited to a payroll service or temporary employment agency rather than by the Teradata internal corporate payroll system, or (ii) who is paid directly by the Company or any Subsidiary or Affiliate, but not through an internal corporate payroll system (e.g., through purchase order accounts). The determination whether an individual is a “payroll service or agency employee” shall be made solely according to the method of paying the individual for services, without regard to whether the individual is considered a common law employee of the Company for any other purpose, and such determination will be within the discretionary authority of the plan administrator.
2.12 “Exercise Date��� means the last business day of each Purchase Period.
2.13 “Investment Account” has the meaning set forth in Section 12.
2.14 “Teradata Common Stock” means shares of common stock, par value $0.01, of Teradata.
2.15 “Offering” means the offering of shares of Teradata Common Stock to Eligible Employees pursuant to the Plan.
2.16 “Offering Date” means the first business day of each Purchase Period.
2.17 “Participant” means an Eligible Employee who elects to participate in the Plan.
2.18 “Payroll Department” means the department of the Company or a Subsidiary from which a Participant’s Compensation is disbursed.
2.19 “Plan” means this Teradata Employee Stock Purchase Plan.
2.20 “Purchase Period” means each calendar month during the term of the Plan, or such other period, as may be determined in the discretion of the Benefits Committee from time to time (but in no event will any Purchase Period be longer than maximum period permitted for an employee stock purchase plan under Section 423 of the Code).
2.21 “Recordkeeper” means the third party administrator that maintains records for the Plan.
2.22 “Subsidiary” means any corporation in which the Company, directly or indirectly, owns stock possessing 50% or more of the total combined voting power of all classes of stock.
3. Shares
The aggregate number of shares of Teradata Common Stock which may be purchased under the Plan shall not exceed a total of seven million (7,000,000). Notwithstanding the foregoing, the aggregate number of shares is subject to adjustment in accordance with Section 20 hereof. Shares issued under the Plan will consist of authorized and unissued shares.
4. Offering
Each Eligible Employee on an Offering Date shall be entitled to purchase, in the manner and on the terms herein provided, shares of Teradata Common Stock at the Purchase Price set forth in Section 8 hereof with amounts withheld pursuant to Section 6 hereof during the Purchase Period in which such Offering Date occurs.
Anything herein to the contrary notwithstanding, if any person entitled to purchase shares pursuant to any Offering hereunder would be deemed, for the purposes of Section 423(b)(3) of the Code, to own stock (including any number of shares which such person would be entitled to purchase hereunder and under any other similar plan or stock option plan of the Company, the parent of the Company or any Subsidiary) possessing 5% or more of the total combined voting power or value of all classes of stock of the Company, the parent of the Company or a Subsidiary, the maximum number of shares which such person shall be entitled to purchase pursuant to the Plan shall be reduced to that number which, when added to the number of shares of stock of the Company, the parent of the Company or a Subsidiary which such person is so deemed to own (excluding any number of shares which such person would be entitled to purchase hereunder), is one less than such 5% and any balance remaining in such person’s account to purchase shares of Teradata Common Stock under this Plan (“Stock Purchase Account”) shall be refunded.
| A-2 | 2018 PROXY STATEMENT |
Appendix A
5. Entry Into the Plan; Stock Purchase Agreements
Any Eligible Employee may become a Participant in the Plan by filing a stock purchase agreement (a “Stock Purchase Agreement”) in accordance with procedures established by the Benefits Committee. Once an Eligible Employee has filed a Stock Purchase Agreement and become a Participant in the Plan, he shall remain a Participant until he withdraws from the Plan in accordance with Section 13 hereof, and he shall not be required to file a Stock Purchase Agreement for any succeeding Offering until he withdraws from the Plan.
A Participant may change his level of payroll deduction in accordance with procedures established by the Benefits Committee.
6. Payment for Shares; Payroll Deductions
Payment for shares of Teradata Common Stock purchased hereunder shall be made by authorized payroll deductions from a Participant’s Compensation pursuant to this Section.
In his Stock Purchase Agreement, a Participant shall authorize a deduction from each payment of Compensation during a Purchase Period of an amount equal to any full percentage of such payment; provided, however, that the minimum deduction shall be 1% and the maximum deduction shall be 10% of any payment of Compensation.
A Participant on an unpaid leave of absence will remain a Participant in the Plan but no amounts will be credited to the Participant’s Stock Purchase Account during the time the Participant receives no Compensation.
7. Payroll Deductions
Amounts deducted from a Participant’s Compensation pursuant to Section 6 hereof shall be recorded by the Company and applied to the purchase of Teradata Common Stock hereunder. No interest shall accrue or be payable to any Participant with respect to any deducted amounts.
8. Purchase Price
The Purchase Price per share of the shares of Teradata Common Stock sold to Participants hereunder shall be 85% of the average of the reported highest and lowest sale prices of shares of Teradata Common Stock on the New York Stock Exchange on the applicable Exercise Date. Should no sale of Teradata Common Stock occur on any Exercise Date, then the Purchase Price shall be determined on the basis of the sales of Teradata Common Stock on the first day prior thereto on which such sales were made. Anything herein to the contrary notwithstanding, the Purchase Price per share shall not be less than the par value of a share of Teradata Common Stock.
9. Purchase of Shares; Limitation on Right to Purchase
As of each Exercise Date, each Participant shall be offered the right to purchase, and shall be deemed, without any further action, to have purchased, at the Purchase Price in United States dollars, the number of full shares of Teradata Common Stock which can be purchased with the amount credited to such Participant’s Stock Purchase Account. All such shares shall be maintained in Investment Accounts for the Participants. All dividends paid with respect to such shares shall be credited to the Participants’ Investment Accounts, and will be automatically reinvested in shares of Teradata Common Stock, unless the Participant elects not to have such dividends reinvested. Any remaining balance in a Participant’s Stock Purchase Account not used to purchase full shares of Teradata Common Stock shall be applied to purchase shares of Teradata Common Stock on the next Exercise Date or, in the event that there is no next Exercise Date, shall be refunded to the Participant.
At the time a Participant’s payroll deduction amounts are used to purchase the Teradata Common Stock, he or she will have all of the rights and privileges of a stockholder of Teradata with respect to the shares purchased under the Plan.
Anything herein to the contrary notwithstanding, (i) a Participant may not purchase more than 50,000 shares of Teradata Common Stock through this Plan in any Purchase Period of not more than one calendar month (or, in the case of a Purchase Period longer than one calendar month, a Participant may not purchase more than the number of
| A-3 |
Appendix A
shares of Teradata Common Stock equal to the product of 50,000 multiplied by the number of full calendar months in such Purchase Period); and (ii) if at any time when any person is entitled to complete the purchase of any shares pursuant to the Plan, taking into account such person’s rights, if any, to purchase stock under all other employee stock purchase plans of the Company, its parent and of any Subsidiaries, the result would be that during the then current calendar year such person would have first become entitled to purchase under the Plan and all such other plans a number of shares of stock which would exceed the maximum number of shares permitted by the provisions of Section 423(b)(8) of the Code, then the number of shares which such person shall be entitled to purchase pursuant to the Plan shall be reduced by the number which is one more than the number of shares which represents the excess, and any remaining balance of the Participant’s payroll deductions shall be refunded.
10. Expiration of Purchase Period
As of each Exercise Date the amount of payroll deductions for each Participant in the applicable Purchase Period shall be applied to purchase shares of Teradata Common Stock at the Purchase Price.
11. Issuance of Shares
The shares of Teradata Common Stock purchased by a Participant on an Exercise Date shall, for all purposes, be deemed to have been issued and sold at the close of business on such Exercise Date. Prior to that time, none of the rights or privileges of a stockholder shall exist with respect to such shares.
As soon as practicable after such Exercise Date, the Company shall cause a book entry to be registered in the street name of the Recordkeeper on behalf of the Participants, for the number of shares of Teradata Common Stock purchased by the Participants on such Exercise Date, as designated in the Participant’s Stock Purchase Agreement. Such designation may be changed at any time by filing notice thereof. The Benefits Committee shall have sole discretion to adopt rules governing the registration of shares purchased hereunder, and may restrict the types of designations permitted under a Participant’s Stock Purchase Agreement.
12. Investment Accounts Maintained by Recordkeeper
The Recordkeeper shall maintain an Investment Account for each Participant with a record of the shares purchased by the Participant. The Participant may at any time direct the Recordkeeper to (i) sell some or all of the shares credited to his Investment Account and deliver the cash in U.S. currency to the Participant, subject to any applicable delivery or transfer charge or (ii) provide the Participant a notice of issuance of uncertificated shares reflecting some or all of the whole shares credited to his Investment Account.
13. Withdrawal
A Participant may withdraw from the Plan at any time by filing notice of withdrawal. Upon a Participant’s withdrawal, the amount credited to his Stock Purchase Account shall go toward the purchase of Teradata Common Stock on the next Exercise Date. Any Participant who withdraws from the Plan may again become a Participant hereunder in accordance with Section 5 hereof.
14. Termination of Continuous Service
If a Participant’s Continuous Service terminates for any reason during a Purchase Period, the amount credited to his Stock Purchase Account as of the termination date shall be used to purchase shares of Teradata Common Stock pursuant to Section 9 hereof as of the next succeeding Exercise Date. The Participant may elect within 60 days of the date of his termination of employment to liquidate his Investment Account by either of the methods described in Section 12 or some combination of both. If the Recordkeeper receives no directions from the Participant within 60 days after his termination date, the Recordkeeper may deem that the Participant elected to retain ownership of the stock in the Participant’s own name and receive appropriate evidence of such ownership, and the Recordkeeper may proceed accordingly.
If a Participant transfers to part-time status during a Purchase Period, his payroll deductions for the Plan shall terminate as of the date of such transfer and the amount credited to his Stock Purchase Account as of the effective date of any such occurrence shall remain in the Stock Purchase Account until the Exercise Date. The Recordkeeper shall continue to maintain the Participant’s Investment Account.
| A-4 | 2018 PROXY STATEMENT |
Appendix A
15. Death
If a Participant dies during a Purchase Period, the amount credited to his Stock Purchase Account as of the date of death shall be applied to the purchase of Teradata Common Stock on the Exercise Date.
The Recordkeeper shall transfer the Participant’s Investment Account to the executor or administrator of the Participant’s estate. If no executor or administrator is appointed (to the knowledge of the Company), the Company in its discretion may direct the Recordkeeper to transfer the Investment Account to the Participant’s spouse or to any one or more dependents of the Participant.
16. Procedure if Insufficient Shares Available
In the event that on any Exercise Date the aggregate funds available for the purchase of shares of Teradata Common Stock pursuant to Section 9 hereof would purchase a number of shares in excess of the number of shares then available for purchase under the Plan, the Benefits Committee shall proportionately reduce the number of shares which would otherwise be purchased by each Participant on such Exercise Date in order to eliminate such excess, the Plan shall automatically terminate immediately after such Exercise Date and any remaining balance credited to the Stock Purchase Account of each Participant shall be refunded to each such Participant.
17. Rights not Transferable
Rights to purchase shares under the Plan are exercisable only by the Participant during his lifetime and are not transferable by him other than by will or the laws of descent and distribution. If a Participant attempts to transfer his rights to purchase shares under the Plan other than by will, he shall be deemed to have requested withdrawal from the Plan and the provisions of Section 13 hereof shall apply with respect to such Participant.
18. Administration of the Plan
Subject to the general control of, and superseding action by, the Board of Directors, the Benefits Committee shall have full power to administer the Plan. It shall adopt rules not inconsistent with the provisions of the Plan for its administration. It shall adopt the form of Stock Purchase Agreement, all notices required hereunder, and any on the registration of certificates for shares purchased hereunder. Its interpretation and construction of the Plan and Rules shall, subject as aforesaid, be final and conclusive.
19. Amendment of the Plan
The Board of Directors may at any time, or from time to time, alter or amend the Plan in any respect, except that, without approval of the stockholders of Teradata, no amendment may (i) increase the number of shares reserved for purchase under the Plan other than as provided in Section 20 hereof or (ii) reduce the Purchase Price per share as defined in Section 8 hereof.
20. Recapitalization; Effect of Certain Transactions
The aggregate number of shares of Teradata Common Stock reserved for purchase under the Plan as provided in Section 3 hereof, the maximum number of shares which a Participant may purchase in any Purchase Period as provided in Section 9 hereof, and the calculation of the Purchase Price per share as provided in Section 8 hereof shall be appropriately adjusted to reflect a subdivision or consolidation of shares or other capital adjustment, or the payment of a stock dividend, extraordinary cash dividend or other increase or decrease in the number of issued shares of Teradata Common Stock, effected without receipt of consideration by the Company. If Teradata shall merge or consolidate, whether or not Teradata is the surviving or resulting corporation in such merger or consolidation, any Offering hereunder shall pertain to and apply to shares of stock of Teradata or any shares issued in connection with such merger or consolidation in exchange for shares of stock of Teradata, unless prior to such merger or consolidation, the Board of Directors of the Company shall, in its discretion, terminate the Plan and/or any Offering hereunder. Notwithstanding the foregoing, a dissolution or liquidation of Teradata shall cause the Plan and any Offering hereunder to terminate and the entire amount credited to the Stock Purchase Account of each Participant thereunder shall be paid to each such Participant.
| A-5 |
Appendix A
21. Expiration and Termination of the Plan
The Plan shall continue in effect through the tenth anniversary of the 2018 Restatement Date unless terminated prior thereto pursuant to Section 16 or 20 hereof, or pursuant to the next succeeding sentence. The Board of Directors shall have the right to terminate the Plan or any Offering hereunder at any time. In the event of the expiration of the Plan or its termination or the termination of any Offering pursuant to the immediately preceding sentence, the entire amount credited to the Stock Purchase Account of each Participant hereunder shall be refunded to each such Participant.
22. Treatment of Fractional Shares
For any amounts of payroll deductions that are insufficient to purchase a whole share, the Recordkeeper may determine whether its standard practice will be to credit the Participants’ Investment Accounts with fractional shares or with the insufficient cash amount that will be carried over and applied to the next Purchase Period. If the Investment Accounts are credited with fractional shares, such fractional shares shall be cashed out when a Participant closes his or her Investment Account.
23. Notice
Any notice which a Participant files pursuant to the Plan shall be in the appropriate form and shall be delivered by hand or mailed, postage prepaid, to such Participant’s Payroll Department.
24. Repurchase of Stock
The Company shall not be required to repurchase from any Participant shares of Teradata Common Stock which such Participant acquires under the Plan.
25. Use of Funds
All payroll deductions received or held by the Company under this Plan may be used by the Company for any corporate purpose and the Company shall not be obligated to segregate such payroll deductions.
26. Alternate Contribution Methods
Anything herein to the contrary notwithstanding, in the event authorized payroll deductions from a Participant’s Compensation are not permitted by reason of the provisions of local law applicable to the Company or a Designated Subsidiary, or are not practicable in the opinion of the Benefits Committee, the appropriate alternative method pursuant to which affected Participants may make payment for shares of Teradata Common Stock purchased hereunder which would otherwise have been made pursuant to Section 6 hereof shall be designated by the Benefits Committee. Payments made hereunder shall be deemed to have been made pursuant to Section 6 hereof.
27. Fees
The Recordkeeper may charge Participants reasonable transaction fees, as agreed by the Company.
[END OF DOCUMENT]
| A-6 | 2018 PROXY STATEMENT |
TERADATA CORPORATION 10000 INNOVATION DRIVE DAYTON, OH 45342 | Your Internet or telephone proxy authorizes the proxyholders to vote the shares in the same manner as if you marked, signed and returned your proxy card.
VOTE BY INTERNET -www.proxyvote.com Use the Internet to transmit your voting instructions and for electronic delivery of information up until 11:59 P.M. Eastern Time on April
VOTE BY PHONE -1-800-690-6903 Transmit your voting instructions via telephone up until 11:59 P.M. on April
VOTE BY MAIL Mark, sign and date your proxy card and return it in the postage-paid envelope we have provided or return it to Vote Processing, c/o Broadridge, 51 Mercedes Way, Edgewood, NY 11717.
ELECTRONIC DELIVERY OF FUTURE PROXY MATERIALS If you would like to help Teradata reduce the costs incurred printing and mailing proxy materials, you can consent to receiving all future proxy statements, proxy cards and annual reports electronically viae-mail or the Internet. To sign up for electronic delivery, please follow the instructions above to vote using the Internet and, when prompted, indicate that you agree to receive or access proxy materials electronically in future years or go towww.investordelivery.com. |
TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS:
E17975-P87031-Z69440E35885-P00926-Z71612 KEEP THIS PORTION FOR YOUR RECORDS
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THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED.
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The Board of Directors recommends that you vote FOR the Director Nominees listed below
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1. Election of Directors
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1d. John G. Schwarz | ☐ | ☐ | ☐ | 4. | Approval of the ratification of the appointment of independent registered public accounting firm for 2018. | ☐ | ☐ | ☐ | ||||||||||||||||||||||||
For address changes and/or comments, please check this box and write them on the back where indicated. | ☐ |
NOTE: If you attend the meeting and decide to vote by ballot, your ballot will supersede and revoke this proxy. If signing for a corporation or partnership or as an agent, attorney or fiduciary, indicate the capacity in which you are signing.
This proxy card confers on the proxyholders discretionary authority with respect to matters not known or determined at the time of the mailing of the notice of the | ||||||||||||||||||||||||||||||
Please sign exactly as your name(s) appear(s)on this proxy card. When signing as attorney, executor, administrator, or other fiduciary, please give full title as such. Joint owners should each sign personally. All holders must sign. If a corporation or partnership, please sign in full corporate or partnership name by authorized officer.
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Signature [PLEASE SIGN WITHIN BOX]
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V.1.1
Annual Meeting of Stockholders
Teradata’sTeradata's 2018 Annual Meeting of Stockholders will be held at 8:00 a.m. local time on April 19, 2017,17, 2018, at the Waldorf Astoria Chicago, 11 East WaltonHotel Nikko San Francisco, 222 Mason Street, Chicago, Illinois 60611.San Francisco, California 94102. Please see your proxy statement for instructions should you wish to attend the meeting.
Important Notice Regarding the Availability of Proxy Materials for the 20172018 Annual Meeting:
The Notice and Proxy Statement and Annual Report are available atwww.proxyvote.com.
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E17976-P87031-Z69440E35886-P00926-Z71612
TERADATA CORPORATION
Proxy/Voting Instruction Card | ||||||||||||||
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR TERADATA’S | ||||||||||||||
The undersigned stockholder of Teradata Corporation, a Delaware corporation
The proxyholders or the trustees and administrators of the plans, as the case may be, will vote the shares in accordance with the directions on this proxy card. If you do not indicate your choices on this proxy card, the proxyholders will vote the shares in accordance with the
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(If you noted any Address Changes/Comments above, please mark corresponding box on the reverse side.)
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V.1.1
